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>> [music] >> We came to this world to reach the stars.
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We came to this world to shape a future.
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We came to this world [music] to reach the stars [music] to shape our future.
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[music] chain to feel the new [music] Let me let >> [music] [music] >> Good morning. Ho ho ho. >> Merry Christmas. >> Merry Christmas. >> You're watching TBPN.
4:58
Today is Wednesday, December 10th, 2025.
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We are live from the TBPN Ultradome, the temple of technology, the fortress of finance, >> the capital of capital. >> Um, ramp. Time is money. Save both.
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These use corporate cards, bill pay, accounting, and a whole lot more. All in one place.
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The perfect Christmas gift for that special person in your life. Get them on ramp.
5:21
Do them a >> stocking stuffer.
5:22
It can go under the tree.
5:24
Yeah, it can go anywhere.
5:26
>> So, uh, Nvidia can sell H200s to China now.
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It's a big reversal from the chip controls of a few years ago, which actually started during the Biden admin.
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We were really pushing to not allow uh big, you know, the best and the best and most amazing chips to go to China.
5:41
Well, all of that's changed with this H200 news.
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Now, Nvidia can sell to China, but they got to pay 25% to Uncle Sam.
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>> The big man, >> the big man, Uncle Sam.
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And so, um, the estimate for you, the taxpayer, assuming you're an American taxpayer, is that you will be $5 billion richer because Nvidia is estimating that they will be able to sell 5 billion dollars of chips to China every quarter. >> That's right.
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>> 25% of that, of course, is 5 billion per year.
6:17
Uh, but it's unclear where this will actually pan out.
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I'm not sure where it will land.
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It is an interesting uh question because there's been a lot of there's been a lot of diversion.
6:28
There's been a lot of engineering that's happened in China to work around the frontier, but then also they might have gotten their hand on some Blackwell.
6:36
There's a whole bunch of crazy headlines going back and forth.
6:37
Um, one interesting story.
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So, there's a bunch of good there's a bunch of good arguments on both sides and there's a bunch of terrible arguments as well.
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Um, but we should go through some of these.
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So the best argument that I have heard for allowing an American company, Nvidia, to sell H200s to Chinese companies is basically just free trade.
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Keep the government out of the boardroom.
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Uh Nvidia is over 30 years old.
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They make computer parts.
7:03
If you don't believe in nuclear level AI capabilities, then why would you be so worried about AI going to China? It's just autocomplete. It's just better SAS.
7:16
Um, it's not, you know, yes, it might increase their GDP, but there are tons of things that we sell to China that does increase their GDP.
7:23
We bring the business of manufacturing iPhones there, right?
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We >> we bring them quite a lot of business. >> We sell soybeans.
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We sell all sorts of food that they sell us stuff.
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Like free trade has happened for for decades.
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trade has happened for for decades. like yes there is a little bit of a decoupling but um for the most part the modus operandi of the American geopolitical system has not been try and reduce GDP growth in all of our geopolitical rivals at a full stop right
7:50
no that's it's never been that way um and at the end of the day if you're an American company uh you like I am sympathetic to this idea that uh Jensen is just like look I'm just trying to build a big company I want to sell my stuff everywhere um I think My stuff's good. I don't think it's dangerous. I
8:06
I don't think it's dangerous.
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I don't think I'm making nuclear weapons.
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I didn't get in the nuclear weapon business and now I'm being treated like I'm selling nuclear weapons.
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It doesn't quite make sense.
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I understand that there are other >> It's hard for him to argue go over there or go to Washington and argue it's not it's really not that important.
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It's just kind of like an extension of the existing software paradigm. It's just SAS. >> Well, yes, yes, yes.
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You're right that it's hard to do that and then also, you know, continue to sell this.
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Uh, >> did we just lose power? What's going on, boys? >> Yeah.
8:39
What's going on with the lights? It's crazy.
8:41
>> Probably a nation state as usual. >> Who knows?
8:44
>> Trying to take us offline. >> Indeed. Well, continue.
8:47
>> Uh, Privy Privy makes it easy to build on crypto rail securely, spin up white label wallets, sign transactions, and integrate on chain infrastructure all through one simple API.
8:53
Um so uh there are other factors in the trade relationship.
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One one sort of gigabrain take is you know if you believe that AI slop will oneshot people.
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It will reduce the birth rate because people will be so obsessed with AI avatars, romantic companions.
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Well then and if you are anti-China, maybe you should export as much as possible, right?
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Uh, I don't see anyone making those those arguments today.
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But I do wonder if there's someone if you are doomilled in that way where you think that AI is bad, but you also think China is bad.
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Do you have to argue in favor of the export of the H200? >> Maybe. I don't know.
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Uh anyway, >> everything there was something interesting because uh we don't we also don't know exactly how big of a deal this H200 you know unbanning is because last time there was news on this front.
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Uh the CCP basically said like hey we don't want our Chinese companies buying these even if they are available. We don't want them. We don't want them here.
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And the CCP, you know, kind of doesn't want Nvidia chips filling up Chinese data centers.
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It feels like China at the very least has been somewhat receptive to this idea that uh they don't want to become dependent on the American tech stack, right?
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>> Um but clearly Chinese companies do want Nvidia.
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We saw this with the Deep Seek team figuring out how to get some Blackwell apparently.
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Um and and it's actually going further than that.
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There's some Chinese nationals that have been recently risking legal consequences from the American justice system.
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This is very interesting.
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On Monday, the US Attorney's Office in Houston revealed something called Operation Gatekeeper. Very exciting name.
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Uh, which >> government is weirdly great at naming >> Yes.
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>> in coining some of these operations.
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>> Interestingly, when you Google When you Google Operation Gatekeeper, you get something about building a border wall.
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And it was but but from the presidency of Bill Clinton.
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So, Operation Gatekeeper originally was a measure implemented during the presidency of Bill Clinton by the United States Border Patrol, then the INS aimed at halting illegal immigration to the United States at the US Mexico border near San Diego.
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It was and so they I guess they had they constructed a wall on the beach in the 1990s.
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He literally built a wall, which is crazy to me because I thought that was like a Trump era thing.
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Anyway, the new operation gatekeeper, >> the operation for that Canadian snowboarder is called Operation Giant Slalom. >> Giant slalom. That's a good name, too.
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So, the new Operation Gatekeeper has nothing to do with the uh you know, domestic uh immigration across the across the the the US Mexico border.
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It instead is focused on AI chip smuggling.
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And this particular operation has just uncovered $160 million worth of illegal AI chip smuggling. Very, very interesting.
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So, a 43year-old Chinese citizen named Fui Gong was living in Yeah.
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His name's Gong, which I mean, we love Gongs here, but I don't >> Before we figure out the bad stuff that he's doing, let's let's give a quick rap.
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>> It's a fantastic name.
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Um, so he so this guy's living in Brooklyn, 43. Okay.
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and uh and also separately a a Canadian citizen from China.
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Uh they independently conspired with employees of a Hong Kong based logistics company and a China based AI technology company to circumvent US export controls.
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Basically, they bought a ton of Nvidia GPUs.
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Then they would send them to a c-acker or like a fulfillment center, remove the Nvidia labels, put new labels on the chips that would say Sand Keon, Sand K Yan.
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I'm not exactly sure how to pronounce it.
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Uh once the chips were packaged back up, they would ship them. Oh, I said chip them. I need to change that.
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Probably already went out.
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uh they would sh they would ship them to China or Hong Kong under a generic classification of generic computer parts.
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Uh and so everyone in everyone involved uh faces significant legal consequences.
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Now I couldn't figure out exactly what the consequences are.
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I'm not sure if it's like years in prison, but it doesn't seem good.
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Uh you know, you're you're responsible for diverting $160 million worth of chips. Uh that's rough.
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>> The question then becomes how did it get in their hands initially?
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Oh, because they they were just like, "Hey, I'm a Brooklyn guy.
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I want to buy some Nvidia."
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>> I know, but 160 million. It's a big company.
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They do a lot of revenue, but you would think, "Oh, what's this address that we just got this order from?"
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Is that a Is that a >> It'd be like, "Yeah, I'm shipping it to a company in Brooklyn."
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It's >> Oh, it's probably like a coffee shop or something like that. >> Yeah, maybe.
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Maybe it's like, you know, I want to have an accelerated uh, you know, design studio in Brooklyn, something. I don't know. >> I know. I know.
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But the the the seems like a KYC failure >> potentially. Yeah. I mean I don't know.
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There was the one of the guys involved it was technically a a Canadian citizen who was from China and so you you stack these all these up and you have like okay well I'm I'm shipping it to Brooklyn and the guy's a Canadian national and you know at a certain point you're like and it could have been through some sort of reseller. I don't know.
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I'm sure we'll find out more. Last name is gong.
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>> His last name is gong.
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>> ESPN hits a gong a lot.
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It's probably >> They probably got too excited and they were just like, "Wait, we sold how?
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We sold 160 million bucks today. Let's ring the gong." They just got fired up. But uh the uh Mr.
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Gong will uh unfortunately not be hitting any gongs soon because he might be going to jail. Uh very unfortunate.
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Um, but it's like one of the worst uh it's it's so stupid because he could have just done nothing in one like because today what he did is not illegal anymore.
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Like you could actually just >> they were H200s or >> I don't know if they were H200s.
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They were they haven't said exactly the mix of the GPUs but in general it's like this happened year or two ago. >> Why would why?
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>> So it's not like he was getting Blackwell.
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>> It's not like he would have been buying H200s in Brooklyn.
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They would have been even more like wait you realize we have an American >> version of this. Uh, no, no, no.
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So, so, so, so the the the H200 is the American version.
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Uh, you're thinking of the H20, the nerfed one. Sorry.
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So, so we initially were selling the nerfed one.
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Then now with this new with this new Trump rule, uh, you no longer have to sell the nerfed version.
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You can just sell the real American version.
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Uh, which of course is great for like actually >> Blackwells are shipping now.
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And so we're still like the the US policy is still keeping China one iteration behind. Yeah.
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Um, and maybe that will be the ongoing decision here, the ongoing um, strategy. I'm not exactly sure.
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It doesn't like the the administration hasn't really laid out a philosophy of this at all.
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I mean, originally, what was it?
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Lutnik said like we're not giving them the best we have.
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We're not giving them the second best we have.
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We're not even giving them the third best we have.
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We're giving them the fourth best we have. Like the the H20. It's like super nerfed.
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But now it's like we really are giving them the second best we have. So, I don't know.
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That seems like a shift in policy, but we shall see.
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Um, and so what's interesting is that, uh, now that Nvidia is approved for export, I'm interested to understand where will sales to China land.
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Like they've said if there were no geopolitical considerations, we could sell five five billion a quarter, uh, 20 billion a year, which is it's not a drop in the bucket, but it's not exactly, you know, half of their revenue.
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I think they did 60 billion last quarter or something like that.
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So you're looking at like a $200 billion company.
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This is like 10% of their revenue is going to be in China next year if they really take the take the take the handcuffs off u take the gloves off.
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So um but the big question is like how much smuggling was actually happening?
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Like we know 160 million was happening because we caught them.
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Uh but was there a billion happening?
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Because you don't catch 100% of what's going on, right?
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of what's going on, right? So in theory there could be like a couple billion maybe 10 billion that was happening and so you know how much what is demand actually for Nvidia GPUs in in China I would imagine it's higher but then of course you have the dynamic of the CCP there was also this debate about
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>> yeah it seems like netting at around 10% of global sales makes sense given they're projecting >> 210 billion or that sort of consensus for next year >> uh and nearly 300 billion for 2027 >> I would fact, you know, I I would expect something more like 30 40 50% if China is really trying to like keep up and win the race and and this is like the best supplier. Um but you know, I guess it
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Um but you know, I guess it does take time to build up a local industry that actually can support that level of investment in AI chips.
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Um so, uh there's a lot of debate over this particular deal, the decision to sell H200s to China for 25% tax.
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Um there is there's some debate over like whether this should be some sort of like you know big picture trade deal where we sort out the the rare earth element picture and Taiwan and we also work through the soybean issue and we work through you know a whole bunch of different export things all at once instead of just doing like one off one deal after another in isolation.
18:28
I'm not that nervous about that.
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I I I don't I don't really feel like I I really need it all to be resolved once once and for all.
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I feel like it's fine to have this happen and then watch the consequences of that and see how the chips stack up and how valuable is this because does China really are are are they going to be breathing a sigh of relief in six months?
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They're going to be like, "Okay, well, if you gave us this, we really do like the chips.
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We we're very thankful to that."
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and in exchange we will be loosening export restrictions on rare earth elements for example.
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Um I I I don't know that it has to all be done within one deal.
19:08
Um but regardless of whether America wins from this or China wins from this uh it's clearly that Nvidia wins and also that smugglers lose because the smugglers are going to jail. >> Yeah. >> So good luck to them. Don't break the law. Stay compliant. Get on Vanta.
19:25
Automate compliance and security.
19:25
AI that powers everything from evidence collection >> and in continuous monitoring to security reviews and vendor risk.
19:36
>> Without further ado, I think we bring in our first guest. >> Fantastic.
19:39
>> Brother Joe, >> we have Joe Weisenberg.
19:42
>> Joe Wisen >> in the studio. How you doing, Joe? Good to see you. >> I'm good.
19:44
Thrilled to be here on this wonderful Fed day. >> Yes.
19:49
Well, and also, is it not the 10 year anniversary? Was that yesterday?
19:54
When when did the party was last night? >> Last night.
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Yeah, the party was uh last night.
19:58
I'm sorry it didn't align with one of your hopefully increasing the number of uh trips to New York City. >> I can't wait. I can't wait.
20:05
Yeah, we're going to be there all the time.
20:08
>> 2026 on the IPO front is looking >> Yeah, I'm shocked.
20:10
I'm glad I'm glad you were able to to get out of bed, sober up by 2:00 p. m.
20:15
Eastern for this for this uh press hit >> for the rate cut. >> For the rate cut.
20:19
[laughter] >> It's very impressive that I was that I'm here right now. Of course.
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Yeah, everyone should be very impressed that I'm coming on TBPN today given the circumstances. >> Yes. Yes.
20:29
I'm sure it was I'm sure it was a lot of holiday cheer and a lot of revalry and and it's a massive it's a massive moment.
20:35
Uh and and again, just congratulations.
20:37
We've said it before, but uh what a what a generational run with OddLots 10 years.
20:41
Uh that's that's not easy.
20:44
A lot of people give up and uh and you've stayed the course and just built and built and built. It's fantastic. Yeah.
20:49
And everyone is clapping because we're all business. >> That's right. That's right. Let's share it. Let's keep going. Let's keep going. >> Yeah. Well, no reason to stop.
20:55
Let's just do this [laughter] one.
20:59
>> Anyway, >> did did you see uh did you see our post?
21:03
Uh Henry on our team hit the timeline.
21:06
It said >> Fed word scissor hands.
21:07
The Fed just cut interest rates by 25 basis points. >> I like Fed. >> Anyways, breakdown.
21:15
>> How have we gone this long without anyone making that?
21:16
I've I've heard a million Fed puns over the years. Inspiration.
21:20
I think that's the first time I've heard that one. The genuine novelty.
21:24
>> I think it is the first. >> That's really good.
21:26
>> Uh novelty is important.
21:26
Um but explain to us what happened.
21:29
How are you processing the news? What does it mean?
21:33
>> It's very interesting to think about this cut in the context of some recent developments.
21:37
So I think I would start by saying that you know two or three weeks ago uh the market didn't even think the Fed was going to cut.
21:43
If you looked at implied odds from various instruments in which traders trade the short end, it was below 50%.
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So I think that's an interesting place to start.
21:54
The fact is it seems like how uh had probably had to do some politics to bring the Fed around and actually make the case because there are crosswinds.
22:03
We know that the unemployment rate has been creeping up, but inflation is certainly not back to target.
22:08
And I think actually if you look at the uh statement from the Fed, one of the things they noticed they they noted is that inflation has uh has been elevated since the September meeting that it's actually gone up.
22:20
They're still not back to their 2% target.
22:21
In fact, it's actually drifted higher.
22:23
Now, you could say, okay, well, maybe this is a tariff effect.
22:27
And so, you look through that, but I still think it's quite notable that we've had basically 5 years of the Fed not hitting its inflation target.
22:33
Um it's still warm and yet they uh Powell got through a cut.
22:39
But you could so one might look at this and say um you know what the Fed is doesn't take 2% inflation as seriously as it used to.
22:46
In fact a lot of people on Wall Street are saying this maybe there's a soft you know 2.
22:51
8 inflation target right now which maybe the trade-off is worth it because you don't want employment to snowball.
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You don't want that to run away.
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So maybe you tolerate higher inflation.
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But look, I think fundamentally you could ask, does the Fed take 2% inflation as seriously as it used to?
23:06
But there's something else, an important dynamic, which is that as we know, um, you know, Trump is going to appoint or announce a replacement for Paulo very soon.
23:16
Trump would like to see more faster rate cuts than we've been getting.
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But, you know, there were three dissents.
23:23
And so the president of the Kansas City Fed, Schmid, the president of the Chicago Fed, Goulsby, they uh voted for no uh no cut.
23:31
The other descent was Steven Myron who voted for a 50 basis point cut.
23:36
But this is really important because whoever [laughter] um yeah, whoever was here for 50%.
23:44
>> Did anyone did anyone was anyone brave enough to call for a 200 basis point cut or maybe a 500 basis point cut? Let's go negative. Yeah, true.
23:52
Let's just go straight back to Zer and Zer in one shot.
23:57
>> A venture can we get a venture capitalist in there? Is that possible?
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Do you need Do you need credentials?
24:00
To be honest, >> we need a venture capitalist and we need like the most overleveraged real estate developer [laughter] that you've ever met and get them on the board and they would slash it to zero.
24:11
But there's an important element.
24:14
>> No, no, no, not at all.
24:14
There's an important element here though which is that like you know we know that Trump is not thrilled with Powell but Powell is good clearly at getting the votes on Sure.
24:25
>> And so it raises some interesting questions which let's say Trump were to uh appoint a real estate developer.
24:30
He's like you know what I want like that 500 basis point cut right away.
24:34
It's not a I mean let's let's do something less hyperbolic.
24:39
Let's say, you know, let's say he appoints someone who wants a very aggressive sequence of cuts.
24:43
That person has to win votes.
24:46
That person has to win the credibility from the other FOMC members to get to make that decision happen.
24:53
And so what it's saying already, there's already an significant number of dissents.
24:57
It's not clear how much a POW replacement will have the credibility or the political standing within the FOMC to actually get that increasing pace of cuts.
25:09
So, I know that Trump is not thrilled with Powell. Whatever. That's his prerogative.
25:12
But another way to look at this is he has a man in uh the chair position right now that could deliver cuts period when it's not obvious that most of the members of the FOMC are thrilled with further easing.
25:27
And yeah, it raises some question about even if there is going to be a more dovish Fed share come 2026, to the degree that he'll be able to like, you know, get those cuts through, it's not guaranteed. >> Yeah.
25:41
Can you can you help me like zoom out and and and understand the mindset of the of the Fed with regard to understanding that trade-off between unemployment and inflation?
25:53
Because >> sure >> I I could understand it if I'm a politician and just personally it feels like inflation is something that everyone feels.
26:03
Unemployment is something that >> you either feel it or you don't right because you're either unemployed and if you're unemployed you are upset with the government.
26:12
Uh and if you're employed you're like ah it's not great that my you know my brother doesn't have a job right now but at least I do.
26:18
Whereas inflation everyone feels it.
26:20
And so if I was purely in in politics mode, I could understand that trade-off, but how does the Fed think about that trade-off because it's a little bit different, right?
26:31
>> No, I mean, the way you described it is is absolutely perfect.
26:33
And it's interesting, you know, look, like if you're just going back a few years to sort of the worst of the pandemic, you know, if you think back to like spring 2020, you know, people were think, oh, is this going to be another great financial crisis, right?
26:46
Are we going to have another period of like terrible unemployment, etc.
26:49
Now, it turned out that the uh job uh the labor market bounced back very quickly, almost much faster than almost anyone had anticipated.
26:59
So, we might sit here and say, look, um you know what, we avoided uh you know, we avoided sustained 10% unemployment.
27:07
We avoided another great financial crisis.
27:10
But I don't think like most people really like think about their life in terms of counterfactuals.
27:16
[laughter] And so to that like the main phenomenon of those times was significantly higher prices higher prices that at least for some time was uh were significantly outpacing wage growth etc.
27:27
And so we know that was like incredibly popular.
27:29
You know, I think the thing to think about is that one of the phenomenons that reoccurs over and over again in the economy is they talk about uh unemployment increases tends to increase in a nonlinear fashion by which you get these small increases.
27:43
You go a little bit up every month you get a little bit increase in the unemployment rate and then suddenly it snowballs because it has the snowballing effect. I lose my job. I start spending less.
27:54
the various stores and restaurants and services that I was consuming.
27:59
They then have to cut uh workers because people are spending less at their establishments.
28:04
So unemployment has this tendency to snowball to go from modest being modestly worsening to rapidly worsening.
28:14
And once it rapidly worsens, then it's very hard to reverse that.
28:18
Then you have to ease massively and it takes years potentially to get back to where you were. Yeah.
28:22
So from the Fed's perspective, what they're thinking about right now is yes, inflation is too warm. It's not at our target.
28:28
People don't like it, but it'll be really bad if we let employment snowball.
28:33
And so the only way to avoid that is to sort of cut in advance to try to get ahead of it.
28:38
And so that is that is the balance.
28:40
And it's a very difficult balance.
28:42
Uh obviously, and we know that very few people have like sort of called the cycle correctly.
28:49
I mean, people have been predicting an imminent recession for a long time because you have all these signs.
28:52
It's like, "Oh, are we right there?
28:54
Is it is it all sort of one day away from falling apart?"
28:58
And so, they're trying to thread this very difficult uh path here where they're aware of uh warm warm inflation, but they really don't want that sort of they want to get ahead of the uh employment collapse. >> Yeah.
29:10
Uh I want to know more about inflation.
29:13
Sager and Jetty did OddLots.
29:16
Everyone should go listen to that episode.
29:17
uh just came out a week or two ago.
29:19
Uh he's coming on our show on Friday.
29:21
I know he's going to try and pin the inflation on the AI data centers.
29:23
Is there anything to that?
29:26
Uh have you seen any data that helps understand what's going on at a lower level within the inflation numbers?
29:33
Because I mean I was at Target last week and I feel like they were selling TVs for like 40 bucks.
29:38
And so stuff's still getting cheaper in certain segments, but then other things are getting more expensive.
29:43
are getting more expensive. what's actually happening within inflation if you try and unpack it a little bit >> I basically if something is made in China it's getting cheaper like that is like the phenomenon of the maybe the last 25 years which is that you can
29:59
break down things that China makes and things that China doesn't make so China makes TVs the prices have collapsed does China make your child's daycare center no unfortunately doesn't so child care costs does China build your homes unfortunately not and so the price have gone Yeah, a good example. >> So once the tea operated once the tea
30:16
>> So once the tea operated once the tea operated robots the humanoid robot is taking care of your kids and the tea operator is in China then it gets cheaper >> cheaper but that is the phenomenon of our time.
30:28
Look I think the data center story is very important there all kind you know I you guys I don't I assume you guys talked about it yesterday.
30:33
I thought the the boom aerospace story was super interesting because all of these different aspects of the supply chain are being reproposed towards AI.
30:41
It's like this is worth more >> their their technology at least at this point might be worth more in a AI data center to make natural gas turbines than in a plane that might or might not exist.
30:55
>> The the the narrative over the last with uh over you know Crusoe and Cororeweave and so many of these neoclouds.
31:01
I mean they started out as Bitcoin miners um and then and then the highest and best use switched and very quickly the these became AI factories. uh AI. >> Yes.
31:13
So what I think is there are a lot of resources that are being you know what this we could reallocate this better to AI and that means that there that creates an element of tightness in the supply chains certainly in key categories.
31:28
I think by and large it would be hard at this point to actually draw a line however between what's happening in data centers to measured inflation and even electricity prices which would be the most direct one because we know electricity prices have gone up quite a bit.
31:45
The link between electricity prices and data center buildout it's pretty tenuous at that point.
31:52
It's not really enough to be meaningfully moving the dial.
31:54
are other drivers of um higher electricity prices including just maintenance on the wires which has gone up for just sort of garden variety inflation uh reasons.
32:06
>> Yeah, I feel like the boom supersonic if boom did release a fleet of supersonic planes that should be deflationary to air travel in theory even though it's going to come in at the super high end.
32:21
just having more planes is a supply and demand uh equation and you're going to see deflationary if they move over into focusing on AI and it pushes out their time.
32:29
Of course, Blake at Boom is arguing that this actually accelerates their timeline because they can and I'm and I'm sympathetic to that argument, but but it was it was fascinating to see that like okay uh there were there are companies that I could see pivoting to AI.
32:43
Boom was pretty low on the list for me. >> Yeah.
32:46
didn't think that the airplane startup was going to pick it AI, but it makes sense. I mean, right?
32:51
Like if there's I mean, it's intuitive.
32:52
I mean, this is one of the ironyies about sort of talking about inflation on on the big scale, which is that what do how do we get things more uh how do we get things cheaper?
33:03
Well, we need more supply side capacity. We need more planes. We need more wires.
33:06
We need more all this in the meantime.
33:09
That all costs a lot of money and it absorbs a lot of resources, etc.
33:13
So supply side expansion sounds really nice because that's ultimately how society moves forward and things become more affordable etc.
33:19
However, to get there that is a resource inensive process and so it's not the kind of thing that like a none of that disinflation will happen tomorrow or the next week or the next year even and in the meantime it creates tightness >> across the supply chain which is potentially inflation. >> Yeah.
33:40
I mean the the other thing anecdotally I know a number of companies that were just like oh we have tariffs now I'm going to pass this on to consumer the consumer and they just immediately raise prices and so that that factor is very real.
33:50
How how is uh >> how is uh uh Wall Street in general thinking about uh the tariffs just being deter uh determined to be unconstitutional.
34:04
Yeah, >> there feels like that.
34:06
>> Wait, do you mean the Nvidia 25% tax?
34:08
>> No, no, no, not talking about export tax.
34:11
>> Yeah, the risk that the Supreme Court um says the tariffs are null. You know what I think?
34:16
Like >> I think Wall Street would just love to not have any more headlines about tariffs cuz look, the stocks are stocks are basically at alltime highs even with the tariff announcement. >> No more headlines. No more call them off. >> Moratorium.
34:30
it presumably if the Supreme >> 2% a day forever. That's all we want. >> Yeah.
34:35
Presumably if the Supreme Court strikes down these tariffs, the the assumption is that the administration will come up with new tariffs under some different rule.
34:44
Like they'll come up with some different argument that's not national security related.
34:49
>> But then we have more tariff headlines.
34:51
So it's like I think that in theory, yes, maybe it's better for stocks in the market if the Supreme Court strikes down the tariffs.
34:59
In reality, I think people are like, "Oh, we just let them be.
35:01
They have the stock market's at all-time highs, etc.
35:04
The last thing we need to do is to find have yet another liberation day where Trump unveils a new reason to have tariffs under some other statute, some other technicality of the law."
35:14
I think that's the last thing investors want to see right now. >> Yeah. Yeah.
35:20
>> Uh how how much are you paying attention to the to the 10-year uh now in the near in the near term?
35:25
It obviously dropped on the news and then it's just climbing climbing back up.
35:33
>> I think this is actually very important again thinking about who is uh when we think about the Fed in the future under any chair, right?
35:39
Because what is the 10-year yield?
35:42
The 10-year yield is the average overnight yield for the next 10 years.
35:47
That's how to think about it.
35:47
The Fed directly controls the overnight yield.
35:51
But let's just say, okay, let's say the Fed cuts aggressively.
35:53
Let's say we get that 200 basis point cut of people's dreams, etc.
35:58
Well, intuitively that would be inflationary, right?
36:01
You set off another boom, you set off the animal spirits again.
36:04
Suddenly, you get more inflation and people are looking out, wow, there's going to be more inflation over the next 10 years.
36:09
What does more inflation over the next 10 years equal?
36:12
Well, it probably means rate hikes sometime down the road.
36:14
So there is this tension where and so then the tenure goes up and so there is this tension where like cuts at the short end do not mechanically by any means do not mean lower rates at the long end and lower rates at the long end are what the juice where the juice is at.
36:32
Lower rates at the long end are what affect mortgages and credit cards and corporate borrowing and all this stuff.
36:37
So this is another thing that I think the next Fed share or and the administration has to think about which is that you could cut rates at the short end and not get any juice in terms of the actual lower rates from the parts of the uh the curve that actually affect the real economy.
36:53
And so even cuts don't necessarily lead to the kind of monetary easing that you would like to see.
37:02
>> Last question from my side.
37:02
We'll let you get back to nursing your hangover.
37:07
>> [laughter] >> I love how you just assumed that Joe had like such a wild night.
37:11
>> I thought people I imagine there was a lot of people surfing going on. >> I like that.
37:15
I like to imagine people surfing on all the all the fan tenure.
37:19
Um >> uh do you read anything into consumer confidence from Black Friday?
37:23
We we were covering it a lot like with our friends who run e-commerce stores and like there were a lot of good signals there, but it's hard because it's like one e-commerce store that we know and they're doing well.
37:35
It's not like the broader economy >> and it's a broader trend of Black Friday just moving online.
37:44
It's hard to get >> um you know it's hard to get a read.
37:46
Um you know JP Morgan actually uh they presented at a conference yesterday.
37:53
They said they're starting to see a little bit of cracks in the consumer.
37:54
I I don't want I don't remember the exact term, but they did call out potential frailties there.
38:01
So, that was very notable.
38:03
It's so hard to get a read on confidence because for the last 5 years, we've been getting the most dis the surveys.
38:10
We've been getting the most dismal consumer confidence measures in going back decades.
38:14
You get people still like spend like crazy.
38:17
>> It's the vibe session thing a little bit.
38:19
with the >> Kylo and so it's so hard to get a read on confidence but by and large yeah there was that I think that you have to take that those comments from JP Morgan seriously because they have like you know they have a great read on they have just so much business everywhere that they could see into these things but by and large there isn't a ton of evidence yet that like oh there's a real deceleration happening in consumption. >> Yeah. Yeah. No makes sense. Uh Jordan anything else? >> No.
38:45
>> Thank you so much for coming on. Merry Christmas.
38:48
Can we play some Christmas overnight? Overnight success music.
38:52
>> Play some Christmas music to let Joe go about his day. >> Merry Christmas. >> Merry Christmas.
38:57
Have a good >> see you weekend. We'll talk to you soon.
39:01
Uh Turbo Puffer Serless Vector in full text search.
39:03
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39:08
>> The the air horn over the Christmas music is not something I've ever heard before. >> Turbo.
39:13
Uh >> uh anyways, should we get into this post from Matt Lavine? >> Absolutely.
39:20
>> He says, "The Warner deal will take a while."
39:23
>> Uh we said >> something similar uh last week.
39:26
I'm sure he will have a >> also coming on the show on Friday, but let's give everyone a taste of his new also M&A AI data trillion dollar IPOs and good TV is bad for stocks.
39:39
>> We're really doing Bloomberg day. >> Warner Wars.
39:40
It's perhaps worth saying that Paramount uh offer for Warner Brothers Discovery Inc.
39:45
is not exactly a classic hostile tender offer.
39:46
Warner has signed a merger agreement with Netflix in which Netflix would buy most of Warner for about $27 per share in cash and stock, leaving Warner shareholders with a bit of the company worth somewhere between $1 and $5 per share.
40:02
That merger will take a long time to complete.
40:04
For one thing, Warner shareholders have to vote on it, which means that Netflix and Warner need to put together a proxy statement and prospectus for the deal, file it with the SEC, and hold a shareholder vote that could take months.
40:14
For another bigger thing, the US Department of Justice will need to review the deal for antitrust concerns.
40:18
Those concerns are significant, and Netflix and Warner have budgeted uh at least a year for that review.
40:24
That jump was announc the the that deal was announced last Friday and on Monday Paramount jumped in with an allcash $30 per share offer to buy all of Warner which we discussed on Monday.
40:35
It took the offer directly to Warner shareholders.
40:36
It launched a tender offer scheduled to expire on Jan 8th to buy those shares.
40:40
The two deals operate on different timelines.
40:42
Warner plans to ask its shareholders to vote on the Netflix deal, but that vote will happen long after Jan 8.
40:48
And if Paramount buys all the shares before the vote, then the question is moot.
40:52
>> Well, because they'll own all the shares, they'll vote no. Yeah. >> Interesting.
40:56
>> If the shareholders all sell their shares to Paramount in January, they can't vote on the Netflix deal in March.
41:00
And if 51% of the shareholders sell to Paramount, Paramount will control Warner, vote down the Netflix deal, and acquire the company itself. Interesting.
41:08
That is the classic benefit of the hostile tender offer. It's fast.
41:10
If Paramount's tender is more appealing than Netflix's merger, then Warner shareholders will sell their shares to Paramount before the Netflix vote and Paramount will win.
41:19
And if the deals are roughly equally appealing, if shareholders are more or less indifferent between the two bids, then the speed of the tender offer is a real advantage.
41:28
>> The the headline here is that this is this deal is going to take a long time.
41:31
And here he's saying it's fast.
41:31
So >> well, let's see where he gets. >> This is interesting. >> I'm hooked.
41:34
Then the speed of the tender offer is a real advantage.
41:36
Shareholders think, "Ah, I don't care too much, but if I tender to Paramount, I'll get this done faster.
41:41
So my so I might as well tender and Paramount wins."
41:44
>> Where that is a classic theory, but it is hard to achieve in practice.
41:46
And it's not really true here.
41:48
Paramount's offer says at the top that it expires on Jan 8, but it's not like it will buy uh but it's not like it will buy the shares on Jan 9.
41:57
Even if 51% or or for that matter 100% of Warner shareholders tender to the Paramounts into Paramount's offer, the offer will not close until two other conditions are met.
42:07
One, Paramount deal also requires antitrust clearance.
42:09
It is not legally allowed to buy the Warner shares until it gets that clearance. >> Interesting.
42:15
for a combination of fundamental and Trumpy reasons, Paramount thinks it will have a much easier time getting antitrust clearance than Netflix would.
42:23
>> But I I remember seeing that uh the Netflix team was arguing that from an antitrust perspective uh you know Paramount has a lot of watch time as well.
42:33
And so Paramount Plus, even though it's a much smaller streamer, you put everything together and they were like it's really not that it might even be more total watch time across everything.
42:44
I'm not sure that that pans out.
42:44
Um but uh but but but it was it was an interesting uh it was an interesting point that uh just from creating the monopoly perspective like maybe it's the fourth biggest the fourth most controlling stake.
42:57
Uh but there but there is an argument there and so it does need to go through review and so that will hold things up.
43:04
>> Uh yeah, Paramount's proposal expects to receive regulatory approvals likely within 12 months.
43:11
faster than Netflix's expected timeline, but a lot slower than Jan 8.
43:13
Two, Paramount's deal is by its terms conditional on becoming a friendly deal.
43:19
Condition of its offer is that Warner Brothers shall have entered a definitive merger agreement with Paramount and the purchaser substantially in the form of the merger agreement submitted by Paramount to Warner Bros. on December 4th, 2025.
43:30
That is, Paramount does not just want to buy a majority of Warner stock and block the Netflix deal that way.
43:36
It wants Warner's board to abandon the Netflix deal. pay that $2.
43:38
8 billion reverse termination fee and sign a deal with Paramount instead. >> Interesting.
43:47
>> The deal is too big and the antitrust approvals and financing are too complicated to do as a purely hostile deal.
43:53
Paramount will need Warner's help to close its deal in some sense.
43:55
Then the then the Paramount deal is not a real tender offer, one that depends only on the shareholders, one that shareholders can accept even over the board's objections.
44:04
The Paramount deal is a pressure tactic, a way to get shareholders thinking, "Hey, I would rather get $30 in a year than $27. 75 in 18 months."
44:14
And telling the board that if the shareholders all would tender into the Paramount deal, then it's hard for the board to stick with the Netflix deal as a matter of fiduciary duties and shareholder pressure.
44:24
But it's not like if those shareholders all do tender into the Paramount deal, it will just close.
44:27
It's a jumping off point for negotiations.
44:31
And so Bloomberg's Lucas Shaw reports that Paramount and Netflix are gerting for a battle they predict will stretch well into 2026.
44:39
>> Um, >> Lucas says, >> well, if you want to follow along with Paramount or Netflix, go to public. com.
44:46
Investing for those who take it seriously, multiasset investing, you're trusted by millions.
44:49
And yes, Netflix is on there. Paramount's on there.
44:52
Warner Brothers is on there.
44:54
At least for now private.
44:56
Lucas Shaw says Warner Brothers was given 10 business days to respond to Paramount's hostile $30 a share bid for the company on Monday since that offer was already rejected once.
45:03
The Warner Brothers board isn't planning to cancel the merger agreement signed last week with Netflix.
45:08
According to people familiar with the company's thinking, doing so would require Warner Brothers to pay Netflix a 2.
45:12
8 billion termination fee.
45:15
That puts the onus on Paramount to make the next move in what everyone expects to be a drawn out affair lasting months.
45:21
Paramount can follow through on its tender offer to buy Warner Brothers shares from investors at $30 each on Jan 8.
45:27
It can also extend the bid to stop the Netflix deal or increase the terms.
45:32
Shareholders of Warner Brothers, one of Hollywood's biggest film and TV companies, are hoping for a bidding war that further boosts the price of the deal.
45:38
Both companies have communicated that they have the ability to increase their offers.
45:42
Uh, and the Financial Times notes, "Some WBD shareholders expect Paramount to lift its bid before the tender offer expires after Ellison's company said in a regulatory filing that $30 was not its best and final price." >> Going up.
45:57
Well, you get another sovereign in or something like, you know, spread that across everything.
46:03
>> How many more How many more sovereigns do we got?
46:05
We got >> We got the big There's always >> We got to go to He's got to go to Norway. Norway would be cool.
46:13
>> Uh, Paramount is privately weighing an increase or whether to instead add sweeteners intended to give WBD's board greater confidence in its regulatory prospects versus Netflix.
46:23
>> Uh, and Matt goes, "Yeah, you don't go around saying on television, as Paramount did, that your offer is not best and final [laughter] if you want shareholders to tender so you can close next month.
46:31
They know there's a lot of negotiation to come."
46:33
Uh I yeah it's uh this position that the Ellison's are in where feels like every other week they have to offer a higher price.
46:43
It's like how do you how do you um it's kind of a vicious cycle. >> Yeah.
46:50
It's uh it's pretty pretty crazy um to have them uh yeah going back and forth here.
46:56
I I feel like it's going to land with Netflix. I don't know.
46:59
I mean, I this is the first time I've tracked one of these this closely in my entire life.
47:06
It's it's also just sort of an unprecedented deal because of the scale and and all the political stakes and whatnot, but it just feels like the breakup fee is real.
47:13
Like the fact that there's a massive multi-billion breakup fee on both sides that's like material to their market cap, material to their to their uh you know, you you you have to pay, you know, essentially 1% 2% of your market cap in the event of a breakup.
47:29
that that feels like like like Warner Brothers and Netflix were like, "Let's actually make this happen.
47:35
Let's be really sure this is going to happen.
47:39
Let's make sure it makes it through antitrust.
47:40
Let's make sure like I don't know."
47:42
Then then again, like the Adobe Figma thing, I was shocked when that broke up because that felt like a crazy breakup fee.
47:47
But 1 billion was still lower than what Adobe was trading at at the point. It was less than 1%.
47:52
This is higher on a percentage of market cap, breakup fee to market cap ratio. So, I don't know.
47:59
It feels like it feels like Zazlav probably like thought about it a lot, but we have some more folks coming on the show today to talk about this.
48:07
We can answer a lot more questions.
48:08
We have Ben Smith from Semaphore.
48:09
He's the co-founder and editor and chief at Semour.
48:11
He's joining in just 15 minutes.
48:12
Um, while we move on to our next story, let's tell you about Graphite.
48:17
Code review for the AI age.
48:20
Graphite helps teams on GitHub ship higher quality software faster.
48:26
There's so much clapping going on across the studio and the soundboard that >> Should we get into this uh piece on Meta? >> Absolutely.
48:33
>> From Eli Tan over at the New York Times. >> What does it say?
48:37
>> Meta's new AI superstars are chafing against the rest of the company. It's chafe. We've established this.
48:45
>> Uh Eli writes, "An us versus them mentality has emerged between Meta's top artificial intelligence team and longtime lieutenants to Mark Zuckerberg." >> Yes.
48:54
Eli writes, "When Mark Zuckerberg revamped Meta's AI operations this year, he recruited a new leader, >> former guest of the show, Alexander Wang, a 28-year-old entrepreneur to build a team of top researchers from rivals like OpenAI and Google."
49:06
That team called TBD Lab or to be determined was placed in a siloed space next to Mr.
49:14
Zuckerberg's office at the center of Meta's headquarters surrounded by glass panels and sequoia trees. Mr.
49:18
Zuckerberg wanted to separate the new AI group from the bureaucracy of the company which owns Facebook, Instagram, and WhatsApp.
49:27
Um said two people familiar uh with the matter.
49:30
Uh >> I'm glad those people know that Facebook owns Instagram.
49:34
[laughter] No, I'm just kidding.
49:37
Um five months later, that divide has become more than physical.
49:39
In meetings this fall, Mr.
49:41
Wang has privately told people that he disagreed with some of Mr.
49:45
Zuckerberg's longtime lieutenants including Chris Cox and Andrew Bosworth, chief product officer and CTO, respectively.
49:52
So yeah, so this you're going to you're going to be interested in this, John. So in one case, Mr. Cox and Mr. Bosworth wanted Mr.
50:00
Wang's team to concentrate on using Instagram and Facebook data to help train Meta's new foundation model to improve the company's social media feeds and advertising business. >> Let's go.
50:13
>> Which is you you've been wanting this this whole time.
50:14
It's like do this whole thing personal super intelligence and then just make >> the algorithm better make the ads better you know grow grow the business in that way. >> So what did Mr. Wang say?
50:26
>> He argued that the goal should be to catch up to rival AI models from OpenAI and Google before focusing on products.
50:33
The people said this makes sense right >> this makes sense for Wang.
50:36
I don't know that it makes sense for the company.
50:38
I would like I would like from everything that we've seen so far, it feels like Meta could >> like add a trillion dollars to its market cap by just focusing all this incredible talent on just making the core business better.
50:55
But Wang and the rest of the team are going to be a lot less motivated by that than having the biggest data centers, doing the biggest training runs, having the best model, competing on the global stage.
51:08
Um, and so I can see why Wang is pushing the other direction.
51:16
>> Okay, so let me tell you about Adio, the AI native CRM.
51:18
Adio builds, scales, and grows your company to the next level.
51:20
Um but uh you know like like let's actually unpack this because like if if you know Mr.
51:31
Wang here who says he's developing the model.
51:33
He argues that the goal should be to catch up to rival AI models from OpenAI.
51:37
Like if they wind up having a model that is, you know, actually in the same league as as as Claude and Gemini and OpenAI and XAI and it's this like, you know, closed source, it's an API. It does well on MMLU.
51:52
It does really well in the benchmarks.
51:55
It's like what value does that really bring?
51:59
Because like >> that's what I'm saying.
52:00
>> that's what I'm saying. just go and you could just go and get a model off the like if you want to compete in search knowledge retrieval even even agentic commerce you can take models off the shelf >> in in the same way that in the same way that Apple's doing
52:18
>> yeah oh it's good enough for Apple but not meta interesting interesting >> yeah so I'm just trying to think you you make the best model in the world are you going to go compete with so so we've seen this we've we've run this with XAI right >> they are trying to build the best model in the world. >> Yes. >> Yes.
52:31
>> And it's now becoming clear that just having a great model does not automatically give you a meaningful amount of market share. >> Yeah. No. No.
52:39
You need to productize it and open AAI has productized very well with a viral like it is synonymous with AI, consumer AI.
52:47
Everyone has the app mostly on their their home row. They're using it a ton.
52:51
They have a billion DAUs.
52:53
It's growing, you know, doing great or MAUs.
52:55
But uh then you have Google just so much surface area to actually stuff knowledge retrieval AI in knowledge retrieval products.
53:03
They are you're already trying to do that with Google search.
53:07
So you do AI searches, you do uh you know you stuff Gemini and sheets and docs and all the different products. Makes a ton of sense.
53:13
Uh anthropic super focused on code, super focused on on on B2B.
53:18
Facebook doesn't have a B2B team like they they're not like a hyperscaler like that.
53:23
might make sense for Amazon to be like, hey, we want to get, you know, we want to we want we want to take that approach.
53:28
And then XAI is sort of the same thing.
53:30
At least they have uh, you know, X to distribute through, but um being the fifth the fifth like hottest even if the model is is for this week like the number one, right?
53:42
It's like no one can really tell.
53:44
It's very hard to be like definitively number one for seven months straight.
53:49
Like it just doesn't >> Yeah.
53:50
get excited to look at benchmarks and have people on to talk about that.
53:55
Does it change my behavior?
53:56
>> And does it stick and does it stick?
53:56
It rarely sticks because it's like, you know, what did we see?
54:00
Gemini 3 was at the top of all the benchmarks. Then Opus 4. 5 comes out. That's at the top.
54:04
Now we're seeing, you know, 5.
54:06
2 from OpenAI probably coming probably going to beat on a number of benchmarks.
54:10
Probably going to be, you know, better in a bunch of different ways.
54:14
But is that going to radically change consumer behavior?
54:16
Even radically change business behavior? No.
54:20
And so I don't know I I would be I would be very focused on on what can what can be done within Instagram and Facebook and and WhatsApp to a lesser extent.
54:27
Um the the flip side the the other question is >> just >> the reason the reason to be excited about that >> as a Meta shareholder >> is that AI is such an obvious tailwind >> for Meta's business, right?
54:44
It's it's uh you know talk to Sean Sean Frank from Ridge, right?
54:49
He's creating he's having to create hundreds of new ad assets a week. Yeah.
54:54
If AI if meta can help him create thousands, he will spend a lot of incremental dollars on meta, right?
54:59
If you can get better at targeting, if you can better get better at serving content, right?
55:04
Um and and uh that will ultimately >> over time provide even more resources for these sort of like moonshot style projects.
55:14
Meta has been pushing, you know, this personal super intelligence narrative.
55:19
The only problem with that is that I don't know what that means, right?
55:24
It sounds awesome, but uh and I'm I'm happy to uh wait and see, but they've been having, you know, there's been a number of employees kind of turnurning out already.
55:37
>> Uh and it's possible that that there's that they don't necessarily know exactly what that means themselves yet, right?
55:44
They're running it like a startup internally. >> Yeah.
55:46
Let me tell you about Finn.
55:46
ai, the number one AI agent for customer service.
55:49
Automate the most complex customer service queries on every channel. So, I agree with you.
55:54
What does personal super intelligence mean?
55:56
I feel like there is room for productled innovation in AI, new new instantiations of the underlying like new ways to interact with the fundamental like like you know we're having this AI moment and then we get video models, we get image models, we get image editing, we get knowledge retrieval, we get agents, deep research, we get coding agents.
56:20
We've had three or four or five like really cool instantiations of it and not every lab is is frontier at every single instantiation.
56:29
Enthropic doesn't have an image generator, right?
56:32
Uh other other labs like there, you know, obviously OpenAI really thrives in the consumer and has created a just a great app that is reliable and answers your questions reliably.
56:43
Uh other other companies have struggled to, you know, to hit that to hit that instantiation.
56:48
Um, >> yeah, >> it would be very very cool to watch the Facebook team figure out what is a way that they can bring AI to bear inside of Instagram in a cool way, in a new way.
57:00
The problem is is that um Facebook and Instagram don't really have that DNA.
57:05
that DNA. uh they sort of tried it with the vibes app but also as soon there's very low uh like ROI on that because as soon as you as soon as you like let's say that they do come up with like the next stories and it's like oh wow like you take AI and you stuff it in a social app and you do this one special thing and then everyone loves it it's great
57:23
it's not just like >> create that I know I know but let's say that they did it's like it's going to get copied everywhere anyway so it's not really that much like they really should just wait around for everyone else to do their R&D they should wait they should be Evans Spiegel what are you come on, invent something for us, you know. Um,
57:37
Um, and so, and so I I I can actually see Alex Wang's push back on like, hey, you you want to you want to use Instagram and Facebook, you you want to you want to do something more incremental, but like what what are we going to how are we going to do something great in AI in those in those ecosystems?
57:54
those in those ecosystems? Like I don't know that there is that much because again the actual like feed ranking team that's not the Gen AI team that's not MSL that's not TBD Labs that's that's core AI that that team is cooking they've been using GPU accelerated
58:10
algorithms for a long time they're doing fine they're they're shipping ads and also all the advances in AI they're showing up in the financial results over there like the ads are definitely getting better targeted they're showing people more ads they're showing people 0 to 50 billion. >> Yes. And a lot of that is an AI story >> Yes.
58:28
And a lot of that is an AI story and they're not getting credit for that because it's it's core AI.
58:31
It's not it's not Gen AI and Gen AI is the cool one because it's like oh cat picture video awesome music you know. >> Yeah.
58:40
>> But what do you think Tyler?
58:42
>> Um yeah I mean I feel like a nano banana pro product in Instagram is like very obvious or like um Sora is also just like >> in Instagram. Yeah.
58:50
If they just made that that's like a killer product.
58:52
So, I had this pitch during Yeah.
58:54
I I had this pitch during the uh the Studio Gibli moment.
58:59
I was like, "They should figure out how to giblify every single person's profile picture in Instagram."
59:04
So, you just the next time you open Instagram, it just says like, "Hey, we made a cool cartoon version of your profile picture.
59:12
Do you want to share it on your story?
59:13
Do you want to make it your profile?
59:13
Do you want to share it to your grid or whatever? Here's here.
59:16
Let's just preload this because it's clearly very resource intensive."
59:19
Um they but they could have done it on some sort of cron job.
59:23
It's runs in the background, burns a bunch of GPUs.
59:25
Um but it gives you a bunch of cool outputs and it just gets people into the oh wow like AI filters are here.
59:31
Clearly there's a lot of work to be done on the AI frontier like the actual developing the model.
59:35
Doesn't seem like they have a nanobanana quality image generator model.
59:38
Also I don't know if they have the GPUs to actually you know release that to a billion users.
59:44
And then at the end of the day, I don't know if it's makes any sense because it's like everyone opens Instagram and they're like, "Oh, cool.
59:48
You did something nice for me. You spent a dollar."
59:51
And then it's like >> somebody's making great AI generated content elsewhere over and post it. >> Yeah.
59:57
So, it's a little bit uh a little bit uh disappointing because it's like, oh, you want to do this things, but you can just they're in the do nothing win scenario.
1:00:05
[laughter] What do you I mean it it feels like Google is getting like a massive like they in the past like what two months like Google stock has gone crazy because of like oh they're actually are applying an AI.
1:00:15
So it's like if uh Instagram basically takes all the people that started uh that got a Gemini subscription because of Nanabet Pro which is like probably a fair amount if they just move them back to meta you know products.
1:00:28
>> I don't think people will think about it that way.
1:00:29
Like I think people see Google and Meta very differently.
1:00:31
I think people see Google as like it's Google for work. It's my workplace.
1:00:34
It's where I do research.
1:00:36
It's where I learn things.
1:00:38
It's where I organize my life, my data, my files, my spreadsheets, my slides.
1:00:42
And on Meta, it's like that's the place where I look at reels.
1:00:45
It's an entertainment platform. >> Yeah.
1:00:48
I think also um uh for a while, I don't even know if they still have them, but Instagram had the companions and that seemed like extremely halfbaked.
1:00:55
>> Are you talking about stepmom? >> Yes.
1:00:57
[laughter] There was like a egg you could talk to cow. >> Yeah.
1:01:00
It might have been on Facebook, but it was like extremely like not well implemented.
1:01:04
not dialed, but it was also not their team, right?
1:01:06
Wasn't it uh wasn't it like a >> No, that was not MSL. That's what I'm saying.
1:01:10
>> No, not only was it not MSL, it was like a feature that was released by a Meta team that then anyone could go in and create a personality.
1:01:16
So, it wasn't like a Facebook employee was like, oh, I I bet people want to talk to a cow.
1:01:20
It was like it was like, I'm going to release into the wild the ability to talk to anything.
1:01:25
And then someone was like, oh, I have an idea. I as a user will do UGC.
1:01:30
It was it was >> part part of what maybe we haven't discussed so far is how >> TBD will tie into reality labs, right?
1:01:39
Is it possible that they need in order to fully realize the reality labs vision of having a pair of glasses that see and process everything that you see and can provide you that personal super intelligence.
1:01:52
So yeah, >> you're walking around, it's like, oh, I forget that person.
1:01:55
You know, it just pops up like a name tag for somebody, right?
1:01:59
You see an item in the real world and you're like, uh, you know, you do this and you buy it, right?
1:02:02
So it's very possible that they need to get eventually get that on device in order to be um fast enough in order in order to be super valuable.
1:02:14
And so they do need this internal competency.
1:02:15
Y >> and so I would there's of course stuff that we're missing here, but ultimately I can see why Bos and Chris Cox were like, "Hey, why don't we just figure out how to make an extra $50 billion a year >> by taking some of the best researchers in the world." >> Yeah.
1:02:34
>> And applying them to the core business.
1:02:35
>> Also, I mean, I I I like that. I like that philosophy.
1:02:38
I like I they're bought in on the metaverse, the AR, the XR, all this stuff.
1:02:42
But uh I mean, they do got to buy time.
1:02:44
It just feels like they need to buy time because it feels like it's still not at some sort of inflection point where oh yeah, this is going to be the iPhone moment.
1:02:54
Everyone's going to be using these augmented reality glasses next year or the year after.
1:02:58
It's like it's still very niche. I was in a Best Buy.
1:03:00
I saw the Meta uh the Meta Ray-B band displays I believe there and it was they were not they were certainly not being swarmed.
1:03:09
So, I don't know if we'll ever get any data on how many pairs they se s sold, but uh it it I'm not seeing it on a lot of lists of like the hottest tech items this year.
1:03:19
I'm not seeing a lot of people buy them, gift them.
1:03:21
It does it still feels like, okay, they've created something really cool, which is a, you know, technologically it's a heads up display. It looks good.
1:03:30
It's cool, but like there's a lot of work to be done to actually educate people, create software for it, make it seamless.
1:03:37
But >> I think it'll be a popular gift.
1:03:39
I'm planning to get >> to what? But to what degree?
1:03:42
Like 10 million units or a million? I don't know.
1:03:46
It's a It's a big question, but I know people are going to be giving each other cognition. >> That's right.
1:03:52
>> Time with the AI engineer.
1:03:52
Devon, crush your backlog with your personal AI engineering team.
1:03:57
Well, without further ado, we have Ben Smith from Semaphore joining.
1:04:04
He's in the re waiting room.
1:04:06
Ben Smith, good to finally have you on the show.
1:04:09
Thank you so much for joining us.
1:04:12
>> It's good to finally be on. >> Yes. >> Nice to be here.
1:04:15
>> Well, we were confused.
1:04:15
[clears throat] We were confused because early early in the show about a year ago, you broke a story about a a group chat, Chattam House, and we were very confused because we assumed that Ben Smith was a pseudonym because it sounds like the name that goes on every kid's fake ID if you don't want someone to know who you are. You make up a name. John Doe, Ben Smith.
1:04:35
This is just a name that you pull off the shelf, but it is in fact your real name. Correct.
1:04:41
>> Wow, that's a really insightful observation.
1:04:42
[laughter] But yes, it is my real name. Fantastic.
1:04:47
>> Uh, well, maybe I should have used a pseudonym.
1:04:48
A lot of people were mad about that.
1:04:50
>> They were they were upset about that, but I thought it was an I thought it was an insightful piece.
1:04:53
I thought it was a a fun little peak behind the curtain of the Chattam House.
1:04:56
But anyway, uh, we are here to talk about the Warner Brothers Discovery News.
1:05:01
Uh, first, can you c can you actually uh introduce yourself since it's the first time on the show?
1:05:07
Uh, would love to get up to speed on the a little bit of the semaphore journey. >> Yeah, sure. Sure.
1:05:13
I mean, I've been a political and media reporter for my whole career.
1:05:15
Was at Politico when we founded that and then ran BuzzFeed News for eight years. Oh, yeah.
1:05:20
>> Was media columnist for the New York Times.
1:05:22
And so, I've had like a real front row seat on how insane the media is in in all sorts of ways.
1:05:26
But, but and also how frustrating it is for consumers right now in particular, how overwhelmed people feel and how hard it is to figure out who to trust.
1:05:34
out who to trust. And that at se4 that's was sort of the core impulse was to try to create a platform that thinks a lot about just sort of how you make yourself trustworthy by being really straightforward and transparent and then how you just try to cope with the fact
1:05:48
that everybody's overwhelmed by incoming and there are great new outlets popping up all the time that you want to be across and there are garbage all over the place that you want to avoid and how do you help an audience and really like the most the people who are most driven insane by this are the most sophisticated consumers. like how do you
1:06:01
sophisticated consumers. like how do you help people navigate this and that >> well a big big problem right now part of the chaos is on X specifically there's like thousands of accounts that are like headline accounts right they're just acting they all they do is post headlines they do breaking just in all this stuff and so now there's a whole
1:06:20
new crop of accounts that are purely fake news but they use the same formatting and so now I just never I don't some of the stuff I'm like I I'll I do think it's been it's it's put media in an interesting position Because if in some ways if you're like legacy media, you know, the think newspapers, cable networks, things like that seem to have uh their durable edge is they have like monopolized the truth. Like I I I still of course they put out
1:06:48
Like I I I still of course they put out fake stuff now and then by accident or they just get the reporting wrong and they'll issue a correction.
1:06:55
But it still seems like a lot of headlines happen online and I'm just like I'll wait till an account from a company that is has existed for more than like 10 years post it because until then I can't really verify it. >> Yeah.
1:07:11
I mean Axe, you know, Axe was this incredible machine I thought for a long time for just figuring out like what is going on in the world and had lots of other problems and we got very politicized and you could have people, you know, tell you to kill yourself all day and stuff like that.
1:07:24
But like it was a decent place to know like what is happening and it definitely kind of rewired my brain.
1:07:28
I feel like I now there's nowhere and honestly to some degree this is what we're trying to do in our newsletters like there's not somewhere you can log on and just be like what is happening in the world. >> Interesting.
1:07:37
>> And and be confident that you're getting an accurate read on that. >> Yeah.
1:07:40
Do you think there's a difference between like the the the opinion and the factf finding side?
1:07:43
I feel like with a lot of the legacy media outlets, um, people maybe still believe that like that's a good source of truth.
1:07:50
That's a good source of facts, but they might not com they might not, uh, agree with like the conclusions or the contextualization or the opinions that are wrapped around those facts.
1:08:01
But most people still have faith in the traditional media actually following like factf finding guidance.
1:08:08
But there at the same time there has been an immense amount of pressure uh may maybe on the back of opi people's disagreements about their opinion section that has led to the questioning of their factf finding sections.
1:08:18
Yeah, I think this is like truest in coverage of technology actually.
1:08:23
Like you guys feel it most intensely because there's been this to me at this point like kind of boring and repetitive war between journalists who particularly post Trump saw everything bad they thought was happening in America as the fault of Meta and then on the other hand technologists who felt that they were like just there trying to build companies and being persecuted by these psychotic journalists.
1:08:44
And um I don't know but like I having been part of that on on the journalism side like there's a lot of truth to both sides of that. Yeah.
1:08:51
>> Um >> but I do think that we're also in a world where consumers like are just not going to take a single view a single perspective. Don't want that.
1:08:59
Want diverse perspectives.
1:09:00
And so like just literally what we do at some is we like break the stories up into here are the facts and here's the journalist's opinion which is transparently displayed and here's somebody else's opinion instead of in the traditional way trying to kind of weave those together. >> Yeah.
1:09:13
And I think people would rather disagree with you o openly and disagree with your analysis than kind of feel like you're sneaking it in. >> Yeah.
1:09:21
No, that's a good >> sense.
1:09:24
>> Um, how have you been processing the the the Warner Brothers story?
1:09:25
Like how long have you been covering this?
1:09:28
Have you been covering Zazlov like the entire time?
1:09:31
Because the there's been there's been like the the writing on the wall that like this was being packaged for years. Correct. >> Yes.
1:09:40
>> Yes. I mean I think that you know I mean this is incredibly I mean Warner is obviously this kind of cursed company that has been acquired and sold and the each acquirer regrets the whole thing you know Warner >> the brothers were never split up though
1:09:55
>> the [laughter] brothers but it is also the you know it's the great Hollywood studio right um and >> and and when Zazlo with this sort of unbelievably audacious acquisition of this Hollywood gem by this kind of garbage reality TV cable conglomerate for it of discovery. You know, Dr. You know, Dr.
1:10:12
Pimple Popper was buying HBO was this incredible bit of, you know, cable um business magic and financial engineering and that then just immediately destroyed enormous amounts of value and the stock [clears throat] went down to like what seven or eight dollars.
1:10:27
>> Um >> I mean, as a pure financial story, it's amazing, right?
1:10:31
Like the value destroyed and now created in this bidding war that that Zas Love has created.
1:10:35
Um, but [clears throat] also obviously a story about movies and politics and power and all the other stuff wrapped up in it. >> Yeah.
1:10:42
Did you uh did you think that the bidding war was fake or that were you expecting the bidding war to materialize in a way that uh that that felt real?
1:10:51
We >> Yeah, we were talking with a friend who we tr who who uh has had an incredible career in media who I won't name, but he was like, I don't think there's going to be I don't think there's a war here.
1:11:03
I think I think a deal will get done, but I think this uh there's only one person who's a real or or one group here that's a that's a legitimate buyer.
1:11:13
This was again >> maybe six weeks ago at this point.
1:11:16
Uh certainly hasn't played out that way.
1:11:21
>> I would have said exactly the same thing.
1:11:22
I think Netflix >> did either like a very convincing head fake or changed their mind and I think no one thought they at least I didn't think they would seriously bid.
1:11:30
I thought, you know, the the um Warner Media is both a bunch of interesting but like quite challenging to operate cable businesses.
1:11:40
CNN being like the most culturally important and then >> and then and then a studio a movie studio and and there were a lot of people who really wanted the movie studios.
1:11:48
As was going to, you know, spin out the cable assets and then sell the movie studio and that seemed on track.
1:11:53
And so when Ellison came in and just said, "I'll take the whole thing." Yeah.
1:11:57
Did I I definitely assumed like no one else really wants that.
1:11:59
and and and he's and Ellison isn't really an he's sort of a non-economic actor here.
1:12:04
He's a you know fundamentally like a kid who wants to buy a movie studio and so how do you how do you bid against that? >> Yeah.
1:12:13
>> The history of the movies is being bought by people whose motives aren't economic. >> Yeah.
1:12:16
Kind of like sports themes, right? >> Yeah. Totally.
1:12:19
>> How do you think about >> That's a great analogy.
1:12:20
>> Uh how do you think about this from Netflix's perspective?
1:12:22
Um, like obviously as a tech company, Netflix has been like such an incredibly performing stock became so big.
1:12:30
Was at one point Fang, which was basically Mag7 uh before there was Mag 7.
1:12:34
Uh, but from my perspective, I've been a subscriber of Netflix forever.
1:12:40
I I don't really see myself ever turning, but I just there's only a few things that have really broken through.
1:12:46
Like I know Squid Game, I know Stranger Things, there's like a few moments and it's hard for me to picture the staying power the there's not as much FOMO TV as I look over the last decade of my, you know, entertainment watching career.
1:12:59
It's like, oh, like I couldn't have missed Game of Thrones.
1:13:03
I couldn't have missed Succession.
1:13:04
There's like all these important moments that only came from HBO.
1:13:09
They only came from Warner properties.
1:13:10
And so from my perspective, maybe it's expensive, but it felt like uh this was a way to backfill some really like legacy assets that you just can't create overnight for no amount of money because, you know, it just takes 50 years to create Porky Pig.
1:13:26
I guess >> that's a [laughter] that's an amazing assertion.
1:13:32
Um yeah, but I think you're Yeah, you're basically totally right.
1:13:36
There's something about the staying power and the and the cult the even just sort of like internal creative culture at HBO that has had this string of high impact things and then also write a library that includes Harry Potter that includes like North by Northwest Three
1:13:48
Days the Condor Lord of but like just you know decades and decades of amazing TV and cinema Columbbo I think is in there right like that that sometimes are in there Rambo there there's >> sometimes you want to watch that and sometimes you want to watch Yeah. And so
1:14:01
And so there's a logic to there's a logic to that.
1:14:05
Netflix already also spends I think hundreds of millions of dollars licensing stuff from Warner >> and so there's some logic to I mean there's there's some you know some actual synergies there. >> Yeah. Yeah.
1:14:17
>> Uh does cable end up with does the cable business end up with Paramount Sky Dance either way Netflix doesn't want it.
1:14:26
Clearly Ellison the Ellison's really would like the whole the whole thing. >> Yeah. I was sort of confused.
1:14:31
But if the cable business just stays out in the ether, what what is it just going to just pick that up? >> Bunch of debt.
1:14:38
Do they not do they do they really only care about uh what's your read?
1:14:45
>> So, you know, I don't know.
1:14:45
I mean, I think my the basic thing that people would always say at at at Paramount is CBS News is 5% of the company, 5% of the revenue, and 80% of the headaches.
1:14:56
And the way in which the news business has gotten swept up into this is that that's what Donald Trump cares most about.
1:15:02
I mean, he also wants a remake of Rush Hour 4, by the way.
1:15:05
That was a scoop one of my colleagues had recently, so he doesn't >> Oh, 100%.
1:15:09
He has It's been confirmed.
1:15:09
He told Larry Ellison, >> that's crazy.
1:15:14
>> I want I want Rush Hour four. There's only been three. I want four.
1:15:15
Jackie Chan's like 71, so it's challenging.
1:15:20
They like these days they shoot his fight scenes like in the dark.
1:15:21
But um >> but no, that's Brett Ratner is making that movie because Donald Trump wants it.
1:15:27
And but but mostly what Donald Trump wants is favorable coverage of Donald Trump.
1:15:31
And by the way, however favorable it is, however favorable you're making it, that is not favorable enough.
1:15:35
He wants it more favorable than that.
1:15:38
>> As the Ellison are now finding, like they've I think softened CBS's approach a bit.
1:15:42
And all Donald Trump is going to do is yell at them about negative coverage of Donald Trump.
1:15:45
So it's like a bit of a slippery slope there.
1:15:47
And also a disturbing thing that the president is, you know, interfering in regulatory matters to affect.
1:15:53
matters to affect. president get a does the president get a report every day of like here's the different takes because I'm assuming he's watching Fox >> and I'm assuming he's dailying Fox so does he getting like a deep research report do you think he's running like a query in in chat GBT it's like tell me
1:16:10
>> he's watching a lot of TV he's he's got a bunch of screens up he's switching between them and then he has an aid who has an iPad who brings him things that are of particular significance >> sure that he then watch >> something happens on a different screen you can you can see >> yeah he's he's watching a lot of television Don't worry. >> In any case, the CNN the CNN part of
1:16:26
>> In any case, the CNN the CNN part of this and I don't I think the Alison do care about news particularly.
1:16:29
They're very very pro-Israel and they were disturbed.
1:16:32
They felt CNN got CBS got too anti-Israel.
1:16:34
Um but and I think they would like I I do think they are sort of ambitious about CNN and and there's always been a thought that CBS and CNN would make a good combination, but the driving force here is the movie business and the news business is implicated as a way to make Donald Trump happy. >> Yeah.
1:16:51
And is that just uh David Ellison's like passion for movies?
1:16:53
I mean he did I think something that's getting lost here is like he founded a movie studio 20 years ago like he's not like new.
1:17:01
This isn't like a pet project that he picked up today because Oracle stock popped.
1:17:04
Like this is this has been his life's work.
1:17:06
Now he's had you know a massive advantage with his dad.
1:17:09
But like it's not like he's was he it's not like he was doing a basketball thing last month and now he's doing movies.
1:17:15
He's been doing movies the whole time. >> Yeah. No, totally.
1:17:18
And in fact, like lots of rich people dabble in the studio business.
1:17:22
And he's built something totally real and made a lot of movies. We've all seen Top Gun.
1:17:25
I mean, like, you know, like really like big stuff and and Sky Dance has been like a successful important part of Hollywood.
1:17:31
And he's also I think he importantly kind of like learned a lot.
1:17:35
Like he's not a newcomer to this weird business. >> Totally. Yeah.
1:17:38
What What did you read into the text message?
1:17:40
He says uh he says you know he he said he sends this message to Netflix to say uh we you know we had dinner and we you know you will find out that we are who we were at that dinner.
1:17:53
Um if he's buying the company is that is that you know is that setting the expectation that they'll be continuing to work together for 5 years 10 years or is it just like in the course of this sale process we'll be good people?
1:18:08
>> I mean I have no idea what that text message was.
1:18:09
It was sent I think hours after his lawyers had sent like some kind of flaming letter to the board saying you guys are screwing us and aren't playing you know and are refusing and aren't negotiating on in good faith and giving it a sweetheart teal to Netflix and then sent a kind of to me like kind of hapless and plaintiff message to Zaz love saying really I love you.
1:18:28
Um >> good cop bad cop is a classic strategy.
1:18:33
>> Yeah >> I guess [laughter] so. >> Good cop bad cop.
1:18:34
Um, what do you think are some of the uh the like the the the outsider interpretation of the deal?
1:18:41
A lot of people are are worried about, you know, just Warner Brothers getting sold.
1:18:48
It feels like some people are anti- Warner Brothers getting sold to anyone because they're like, no matter where it goes, they're going to cut jobs or they're going to pull back from uh from movie theaters.
1:18:57
Um, how how are you interpreting?
1:18:59
And I and I do think the people that are like, "Oh, well, you probably subscribe to Max and Netflix and you'll be able to cut one of them." Yeah.
1:19:08
>> But I just don't buy that Netflix wouldn't just They might give you like a sweetheart deal for a couple years until everyone forgets and then it's like, "Hey, we have like by far the best portfolio of content in the world and we're >> you might even call it a bundle.
1:19:23
>> We can we're bundle maxing.
1:19:23
We're back back to the bundle."
1:19:25
And and as a consumer, I am annoyed enough at having different accounts and and boopping around.
1:19:32
I' I'd be happy for just one.
1:19:34
I'd be happy for rebundling.
1:19:37
>> Uh but I I just don't buy that it's like such like a a win for consumers and even in the medium term and probably not at all in the long run.
1:19:46
>> You know, I don't know if it's not a win for consumers because that thing you said like it's so annoying.
1:19:49
This landscape is so annoying for consumers.
1:19:53
You realize, "Oh my god, I signed up for MGM Plus two months ago to watch something and it's still billing me."
1:19:58
And everybody is living in this world of like >> two or three streamers you feel like you have to have three or four others that you forgot you signed up for.
1:20:06
>> And and it's not a tenable situation.
1:20:08
And and I think that is that that kind of consumer push >> is pretty real and is the kind of like the obvious like in the media is a boring straightforward business.
1:20:18
like trading credit default swaps here like and I think that just obvious to have the number the the notion that you solve it by basically having the number one and number two merge with each other >> is like is not the obvious solution to that I think and I totally agree with you obviously means prices grow up I
1:20:39
mean the people who are most freaked out though are the sellers right are the issue of like is this a monopsiny or like the you know the movie makers the actors is going to take a haircut because there's only one buyer left and they're very and Hollywood is obviously very concerned about that. >> Yeah. If you have one buyer, you have >> Yeah.
1:20:52
If you have one buyer, you have you're a price taker. >> Yes. Yes. Yeah. It's funny.
1:20:56
I was uh on on the consumer side. Uh I agree with you.
1:21:01
I was looking for uh posts about the deal potentially being a monopoly.
1:21:06
And I found multiple posts that were like, "I miss when Netflix was a monopoly and they had everything in one place.
1:21:10
Now I have to [snorts] go to six different streamers."
1:21:12
And I was like, "That's funny."
1:21:13
Um but yes on on the buyer side that is obviously more of the the risk.
1:21:18
I I wonder how are you interpreting the rest of the big tech companies playing in um in Hollywood right now because it feels like Apple has a lot of money to spend on buying media assets and buying movies and producing stuff. Amazon as well. Who knows?
1:21:36
Maybe Mark Zuckerberg buys the rights to UFC for VR then eventually starts getting into movies.
1:21:40
It feels like there's a lot of money chasing media generally.
1:21:43
Do you think that we're going to see like like more of like a pullback from the other big tech companies or do you think they'll go harder than ever?
1:21:51
How how are you interpreting the rest of big tech's role in Hollywood changing?
1:21:59
>> You know, it's a great question.
1:21:59
I mean, Amazon and Apple in particular both spend a lot of money.
1:22:02
Neither have quite fig built the I mean I would say almost the creative culture that Netflix did manage to and that um and that HBO is really the you know the best at which is kind of willingness to take these cultural risks like it's not a tech business.
1:22:17
It is a business of taste and of relationships and of all this stuff that's hard to hard to scale.
1:22:20
Um, Apple Apple's made a lot of obviously like wonderful stuff that has some cultural impact, but they're also incredibly careful about their own brand >> in a way that I think is ultimately like makes it really hard to do to do the things that really cut through culturally.
1:22:38
>> I talked to a filmmaker years ago right as Apple TV was getting spun up and Apple was starting to take it more seriously and he said like, "No way.
1:22:46
It's not going to work because Hollywood is a hits driven business.
1:22:49
It's a venture capital style business.
1:22:52
You have a lot of Fminus movies for that one A+ movie.
1:22:57
It's all about this high risk.
1:22:59
And Apple does not like having, you know, egg on their face for a bad result.
1:23:04
And so Apple everything has to be an A minus level basically to get out the door.
1:23:09
And if you have that if you have that brought to uh to to to Hollywood like he was saying like that wasn't really the culturally thing.
1:23:15
wasn't really the culturally thing. Then I think what he was missing was the fact that Apple probably wants to distract from the services monopoly and so there's a whole bunch there's a whole extra incentive to continue saying like what what app store revenue what are you talking about when we say services we
1:23:30
mean Ted Lasso like [laughter] we you know we have this so I don't I don't know if you buy that Brad Pitt but I I've always enjoy I've enjoyed that conspiracy theory uh cropping up over this year just this idea Apple but you know how how have you interpreted that >> I love I love the idea that movies are venture capital except without the returns. >> Yeah. >> Yeah.
1:23:48
>> Um it's like you get the risk but you don't get the outsiz but like at best you don't get the outsized returns. >> Yeah.
1:23:53
Maybe that'll be Roloff Bo's next business. [laughter] >> Yeah.
1:23:56
>> He wanted he wanted venture capital um return free risk >> but you know Yeah.
1:23:59
And I mean the risk also we actually mentioned Ted Lasso like for instance one thing that cannot that you will never see in an Apple TV production is anybody throwing or damaging an iPhone. >> Yeah.
1:24:08
>> Like there's just like it's just like you're living in their world and there's smooth edges to it.
1:24:11
Um >> the smooth edges are crazy.
1:24:13
>> the smooth edges are crazy. I saw this I saw this whole conspiracy theory about how the lighting in Ted Lasso and Severance are both very highkey, very flat, not a lot of contrast, and that that would potentially like prepare you for this metaverse where you're in the
1:24:28
Apple Vision Pro because the Apple Vision Pro looks like this and it's all like it's like the Apple brand brought to cinematography within their like media assets and it was like maybe it's just their culture bleeding over there, but also maybe it's something more about like their view on the world and like their their opinions. It was very very
1:24:43
It was very very interesting.
1:24:45
But uh at least the shows are beautiful. >> They are beautiful.
1:24:49
>> The shows are beautiful. I think they're not.
1:24:53
>> They're just not they're not divisive. >> They're not divisive.
1:24:56
>> Really good good culture, good art is always divisive in some way. >> Totally.
1:24:58
I mean, even Game of Thrones, I remember like watching season 1 and being like, "Oh, this is this is like maybe going too far.
1:25:04
Like this is like can this be on TV?" It's like edgy.
1:25:06
It's like it's like there's a lot of like, you know, the the adult content, the violence.
1:25:11
violence. like it it definitely pushed boundaries even though it was like you know R-rated I guess it was like aggressive and you just don't expect that from Apple but uh so yeah may maybe you're back to monopsiny if you're selling something that's going to be for mature audiences uh where are you going other than Warner Brothers Discovery
1:25:30
Netflix [laughter] you know this this conglomerate >> yeah and so I think like Hollywood in some way is very torn because they they really hate Trump and they hate the idea that Trump's friends are jamming this thing through with threats of kind of illicit regulatory pressure and on the other hand they hate Netflix. So it's
1:25:44
So it's like a tough >> rocking a hard place. Yeah.
1:25:48
Rocking rock in a hard place [clears throat] for sure.
1:25:51
Um >> let's switch gears to something uh they they hate even more which is uh AI. >> Yeah.
1:26:00
>> I'm cur I'm curious like how you guys have been trying to >> focus your coverage, how you personally feel about it.
1:26:07
if you could snap your fingers and make it disappear, would you?
1:26:11
Uh or or do you enjoy it personally?
1:26:13
I'm I'm curious like just kind of Oh.
1:26:17
>> Um >> yeah, I'm curious on on your your kind of semaphore's kind of view and how you've even been approaching coverage because our a lot of our coverage is obviously positive. We use AI a lot.
1:26:26
We work uh we we get a lot of value from it, but at the same time, we're well aware that most it feels like most of the world at this moment is using it.
1:26:38
but even sort of like hate using it uh which has happened quite quickly. >> Yeah.
1:26:44
I mean, you know, I guess I mostly see it as just the greatest story.
1:26:45
Like it's just, you know, it's incredible story right now in of politics, of economics, of of and of technology and, you know, we're just covering it obsessively.
1:26:54
Reed Alberg, my our our tech reporter, broke the story two days ago that that Nvidia is going to be selling, you know, allowed to sell H200s to the Chinese.
1:27:02
I mean, you know, it's just it's a story that is pulling everything in.
1:27:05
you have this, you know, American economy that is limping along except for AI which is driving all the growth.
1:27:11
I, >> you know, you know, talking to yesterday I interviewed um Governor Shapiro of Pennsylvania.
1:27:15
It's all he wants to talk about.
1:27:17
I mean, it's just a fascinating >> political.
1:27:19
I mean, I use it and we use it I think probably I bet the way you guys do in like for the most boring stuff.
1:27:24
It's like incredible for video production transcription. Yeah.
1:27:26
you [clears throat] know, and essentially like I think the way a lot of companies are using it, which is just to take out cost on extremely boring things that you're happy to have software do. >> Yeah.
1:27:37
>> Um but yeah, but I think like yeah, we're mostly thinking about I think the story that I'm obsessing about now is really the the coming political backlash.
1:27:44
Like I was just talking to a Republican consultant here in Washington who's essentially shopping for a candidate to lead the anti-I basically sees thinks there's this big lane.
1:27:56
And I kind of buy this against JD Vance.
1:27:58
Like he's the frontunning Republican nominee and the attack on him will be this guy is a tool of the tech industry.
1:28:04
He's a tool of these AI guys who want to take your jobs, poison your children's brains, and build like these weird boxes in your neighborhoods.
1:28:13
>> And it's just not it's not a popular. It's like not popular.
1:28:16
And one of the strange things is that, you know, Trump is just unbelievably pro AI.
1:28:19
It's probably the most important decision this administration made is that David Sax really persuaded him. Came in day one.
1:28:25
He's with Sam Alman, he's with Elon, like all in for AI, but he didn't campaign on it.
1:28:30
He hasn't really like bothered explaining it or selling it at all.
1:28:35
>> And so I think we're just set up for a huge backlash that you're going to see in the midterms.
1:28:39
>> Yeah, it's a fascinating story.
1:28:39
I mean, I agree with you about AI touching just like everything.
1:28:43
You can look at it from what is it doing to your kids to, you know, you can be sci-fi and say in a thousand years the robots are going to control everything. You can talk about jobs.
1:28:52
You can talk about taxes and all this stuff.
1:28:54
Um, but uh, >> yeah, for for consumers that aren't working in tech, they're like, I it's cool to make a video of a cat surfing, but I'd rather just keep my job and keep the cat surfing videos.
1:29:09
>> It's just fascinating how much tech missed this.
1:29:12
missed this. They like they didn't even with social media like you pointed out this whole thing about uh you know the the the war between media and tech around Facebook maybe stealing the election that type of stuff right uh
1:29:26
it's like well at least everyone kind of enjoyed social media for like a decade like from 2006 2016 like yes people were like there's some I saw a bad picture or like oh you know I found out some bad information or something but there was it was it was mostly like, "Oh, cool. Instagram. I saw a photo that my, you Instagram.
1:29:44
I saw a photo that my, you know, aunt posted." Like, "This is nice."
1:29:47
People had a pretty good time with it for like years, years, years, years.
1:29:52
And then eventually it turned and now we've grappled with it.
1:29:54
We talk about the the pros and cons, but we all kind of used it and we're all like okay with it.
1:29:59
With AI was like on day one, I hate this.
1:30:01
I hate everything about it. Looks ugly. I don't like it. I I don't trust it.
1:30:05
Um, and and oh, by the way, uh, go do some research.
1:30:08
Uh the people who are making the AI, they've been talking about how it's going to kill everyone for like a decade.
1:30:13
They've been writing books about this for like a decade. Yeah.
1:30:18
>> Well, what do they think in Silicon Valley about this?
1:30:21
>> Yeah, we kind of created the crisis cuz Yeah.
1:30:22
Some of these videos pop up and [laughter] you're like, wait, this was four years ago and they said there's, you know, someone at a lab is on record saying it's very likely that AI on a long enough time horizon will kill all of us.
1:30:35
[laughter] like >> no one was saying that on social media.
1:30:39
You go back and no matter what you think of Mark Zuckerberg, you go back and you find the the scandalous video of him before he was so powerful.
1:30:44
It's like yeah, he's drinking a beer out of a solo cup with a journalist in an interview.
1:30:49
It's like it's pretty harmless. It's pretty harmless.
1:30:51
It's like a little sloppy, but it's like not it's not him saying like, "Yes, I believe this will definitely swing the election in 10 years. Mark my words." And then it does. It's ridiculous.
1:31:00
>> Yeah, we skip straight to skip straight to the apocalypse.
1:31:02
And right, it is also totally Sam Alman's fault.
1:31:04
flash an incredible feat of marketing that you say like I have this new product so incredible that it's going to kill everyone definitely got people's attention.
1:31:13
>> Yeah, I mean there there is a long lineage of technology uh millinarian technologies actually being uh like it's easy to marshall resources around them.
1:31:24
I mean in many ways SpaceX is of the same cloth in the sense that the [clears throat] you know Elon Musk was out there saying like if we don't go multilanetary all of humanity could be wiped out.
1:31:35
So there is this existential crisis that if an asteroid comes and hits Earth, >> it's over for humanity.
1:31:42
But if we build my company SpaceX and we get to Mars and we put a Mars colony there, then we have a backup plan.
1:31:49
And if the and if the asteroid comes and destroys one of those planets, well, the other one's still got some people on it. We can rebuild.
1:31:54
And so it was it was an apocalyptic, you know, scenario in some ways.
1:31:58
It wasn't the backbone of the business, but it was a piece of his rhetoric.
1:32:02
And but it's still more positive because it's not the rockets that are going to destroy us.
1:32:08
It's the rockets that will save us, but it's still conjuring the idea of an apocalyptic scenario in some ways.
1:32:12
So I always found that interesting. >> Yeah. Yeah.
1:32:16
And I mean I do think that that you know by the end of the social media era all these CEOs and it's still true were so like kind of beaten down by being grilled by Congress and hated the media and felt like everyone was out to get them.
1:32:28
They're still like they all when they don't want like talking to the media.
1:32:31
They like all you guys all live in your signal group chats and like feel that everyone is out to get them.
1:32:36
actually the successful CEOs of this moment now talk to everybody are back to being these kind of mad visionary prophet types who as you say like millinarian um figures and I think if you look at like you know Daria or Altman or any of these guys it's sort of a throwback to an earlier style of maybe overselling but of being very very interesting when they talk about their products not being >> sort of embedded in the culture wars. >> Yeah.
1:33:06
I mean like you you just you you you go back through the story of like Amazon and Jeff Bezos and it was like finance guy delivering packages then he's hosting some web servers like there was never really this like world consequential thesis that bubbled up.
1:33:21
He's done some great interviews.
1:33:21
He's done some great interviews. He's been inspiring in many ways, you know, uh but he's never he's never brought that uh you know like world historic consequences to bear in his rhetoric and uh I don't know maybe that's benefited
1:33:37
the company it the company certainly done well so maybe it didn't hurt it would be funny like if we don't deliver this package in two days everyone dies we need to do prime we have to the entire fate of humanity rests on you getting diapers in two days Yeah. Well,
1:33:51
Well, that's that's how I feel about the podcast industry. >> Yes. Yes.
1:33:55
Uh, how do you see the the podcast industry evolving? What what's your take?
1:34:00
You I mean, you mentioned like consumers being unhappy with media and I and I and I think I could think about a bunch of different instantiations of that, but like the fragmenting media landscape, like how are you thinking about what it means to be like independent this the like the micro niml community?
1:34:17
like uh h do you think that there's like a pendulum swinging and we'll see reconsolidation, rebundling, or do you think it's just going to diffuse and be smaller and smaller operations forever?
1:34:29
How are you thinking about like the new media landscape?
1:34:34
>> Yeah, I mean, you know, it's it's gosh, it's been like new media as long as any of us can remember.
1:34:39
>> Someone was calling Verge new media or or legacy media and and I'm like there like Yeah, they felt very new. It was very funny. Anyway, sorry.
1:34:46
Yeah, like I was a I sort of was a blogger when that was new media, right?
1:34:49
was new media, right? So, it's I feel like I've and but you know the core I do think there's like still a nostalgia for a 20th century media that's like not coming back because that was because you needed a broadcast tower or a printing
1:35:00
press to reach a lot of people and that was a and there's been a tech and I think when people people in my business and the east coast media often try to figure out like what went wrong, you know, was it when the CBS News got something wrong about Bush in 2004? or
1:35:11
something wrong about Bush in 2004? or was it when the New York Times put up its payw wall too soon or too late or something and like no these there was a huge technological shift around distribution that kind of swept away a lot of this old stuff and it wasn't it wasn't something they could have tactically really avoided like it was
1:35:27
just a huge technological change and so there'll never be that kind of or not in our lifetimes that kind unless the government imposes it reconsolidation around a very limited number of new sources like you got to go to North Korea for that um but [snorts] >> but Um, [clears throat] but that said, I think we are because consu it's driving consumers crazy. The pendulum has swung
1:35:46
The pendulum has swung out.
1:35:48
You know, they say media only bundles and unbundles and we're out at the unbundled moment >> and you can just see it swimming back.
1:35:54
Like Fox is rolling up right-wing podcasts.
1:35:56
MSNBC is about to roll up a bunch of leftwing podcasts.
1:35:59
By the way, are we still calling these things podcasts? Like it's TV. Um, >> yeah.
1:36:04
>> And and everything is converging on this tell this very familiar but kind of boring television format that will start to get juiced up and become a game show with 19 boxes and whatever.
1:36:12
Um, >> and and we're all going to have to start spending production.
1:36:16
[laughter] >> No, you know what I mean though?
1:36:19
Like we also produce a podcast that like I I think looks fine, but I can feel the pressure to raise the production values as whereas like two years ago we could all been like in our pajamas in our basement and it would have been fine.
1:36:31
And so I think there is this convergence and the audience is going to expect it.
1:36:35
It's going to be competitive.
1:36:35
It'll have to look better.
1:36:36
It'll have to be tight more tightly edited.
1:36:37
I suspect people are going to want that.
1:36:41
>> Um and it [clears throat] won't look it won't look like old TV.
1:36:42
But I do think you're going to see consolidation around all the advantages you get when you're consolidated.
1:36:48
You have a central guy selling all the ads.
1:36:49
You can build subscription technology. You can cross-promote.
1:36:52
Like there's all these again media business is so unlike the tech business and unlike the finance business in how uncomplicated it is. >> Sure.
1:37:00
And and I think like you're going to just see consolidation for all these really dumb and obvious reasons that that have to do with and also it's sort of exhausting to run a small business for a long time and people who start them will >> I don't know how you guys actually I'm curious because you're in this like how how are you feeling about it?
1:37:18
>> Do you want to stay independent?
1:37:18
Do you want to be consolidated?
1:37:20
>> Well, I would say the best way to think about it is we we like being the talent side.
1:37:25
We're not in this to run a we don't we don't have any interest in running a multiund person organization.
1:37:31
We don't really even care that much about scale.
1:37:33
We're very okay with our niche.
1:37:36
We think it's like a couple hundred thousand people in the world that like are really going to enjoy this content and millions more will see the content in different forms.
1:37:45
Uh but uh knowing friendly environment like like just earlier on the show we had Joe Weisenthal from Bloomberg.
1:37:52
like we're not trying to poach him to do the Joe Weisenthal show on the TBPN network because like the whole network thing is a joke. Uh it's just a show.
1:38:00
We And so I'd much rather you know Joe just does Odd Lots which is a fantastic show and then comes on our show when he feels like it and it makes sense and uh and we >> Yeah.
1:38:12
The question going back to like saying you know MSNBC what MSNBC is doing with podcasters and what the cable networks are doing with podcasters.
1:38:19
networks are doing with podcasters. my uh when you look at the revenue that these cable networks you know the basically the revenue streams that they built up over time getting a dollar from every home that that uh that is
1:38:34
subscribed etc per channel uh it depends on depends on the network but I don't like it's so hard to rebuild that with independent creators and get back to the scale right it it basically shifted to >> the streaming you know you need a website like a website or an app is now the distribution. Uh and so I think that
1:38:53
Uh and so I think that you know we just we understand like this huge bifurcation between the platforms and then the individual creators that can command attention, right?
1:39:07
>> But if somebody came to you and said like you know I heard you I heard you guys say on TV just the other day with Ben that you wanted to be talent and like you know what like we'll just just like we'll take all this off your hands. We'll pay you a salary.
1:39:18
will commission you in some way on the but you don't have to worry about anything else.
1:39:21
have to worry about anything else. we'll get you hair and makeup like whatever you know >> fly business class whatever you want you know and treat you as talent and you just don't have to run a company and worry about all that stuff like I think that's going to be the pitch to people who are getting exhausted who are super successful creators but are sick of
1:39:37
running a small business don't really >> sure >> aren't I mean you guys are actually entrepreneurs so it's a little different >> it's weird because anywhere I've only >> so we've built out you know we we hired >> but I but I understand that from a lot of perspectives for sure >> we hired somebody I've worked with in the past Dylan uh who started his career back at CNBC, worked at HQ Trivia, like understands media really well. We've
1:39:57
We've built out a team around us that allow us to do that and allow us to work on the stuff that we really enjoy.
1:40:03
I think uh one one thing that's been interesting is how many how many traditional journalists have gone independent, but historically they were in the scoop business and then they go independent and they realize like when you're part of a bigger media company, you can get one crazy scoop every three months and you're like from my from my view like you're killing it like you're adding a lot of value to the organization.
1:40:28
But when you go independent and you're like getting three a scoop every few months is that enough are you creating enough value to justify having people give you a lot of money every every single month.
1:40:42
I think yes to some degree, but I think you'll see a rebundling in certain niches around, let's say, a bunch of like scoop driven technology journalists that say like, hey, we all went independent, but we should actually kind
1:40:54
of rebundle together because it'll just create a more incentive for somebody to subscribe because they know like on an ongoing basis, I'm going to be getting and and that's what obviously like TBPN roll up of like Alex Heath and Casey Newton. >> We wouldn't want to we wouldn't want to
1:41:07
>> We wouldn't want to we wouldn't want to we wouldn't want to do that. But I >> No, I'm joking.
1:41:10
But but but I could but I totally [clears throat] see what you're saying.
1:41:13
you're saying. I mean in a way the way that's kind of what you're doing and I think >> totally there's a kind of scoopy aggressive being reporters basically what I am >> who >> who wants that who I think I want and people want that kind of direct connection with an audience and
1:41:28
>> authenticity and transparency that you get with Substack but also they're features of that kind of reporting that it makes more sense to be part of a newsroom and we've tried to create a space that is >> that is the best of both of those worlds for journalists. Yeah. And I think when Yeah.
1:41:39
for journalists. Yeah. And I think when a journalist goes from like being able to spend all their time like obsessing over a company or an industry and getting scoops to then, okay, I have to do all of that still to put food on my
1:41:53
plate, but then I also have to like develop an ad sales business and I have to like figure out and I have to manage a podcast editor and I have to hire another editor and and uh I got to do my taxes and things, you know, like it just really adds up. And then are you going
1:42:08
And then are you going to be as elite of a journalist if you're doing all those things?
1:42:12
And there's a very real scenario where someone else just join takes your job that you had previously and ends up out competing with you on scoops because they don't have to worry about any of that stuff.
1:42:24
So >> I think that's something that a lot of people will have to figure out.
1:42:28
>> You know a lot about newsrooms.
1:42:28
That is so much about like the way we're thinking about founding some of >> that's hilarious because I don't have you ever been >> I've never been in a newsroom but I just but but I mean yes.
1:42:37
So, so much of >> part of uh a lot of the success of the reason that we've uh been able to break through this year is we're not trying to do anything else besides besides media, right?
1:42:49
I mean, you've seen how many people have you seen build a tech media company and become a venture capitalist as soon as they have >> any amount of I got to get out of >> I got to get out.
1:42:58
I got to get out of this.
1:42:59
I just enjoy I I there's there's very few things on earth that I love more than advertising. So, I love I love media.
1:43:06
There's very few things on earth I love more than talking with John that about business and technology.
1:43:10
So, >> uh, we know we know our >> Anyway, final line round.
1:43:15
What's the biggest fish you've ever caught?
1:43:20
>> The biggest like fish fish? >> Yes. >> Not a fish.
1:43:22
Not a >> I went out with my uncle in the I go out fishing for stripers with my uncle in the middle of the Hudson River. >> Cool.
1:43:29
>> I think we got like a 45 lb striper.
1:43:29
I'm probably It's probably 40.
1:43:31
I'm like I'm obviously it's grown since I caught it. >> Nice.
1:43:36
We're we're hitting the gong for you. >> All right. Thank you. Thank you. >> Last last question.
1:43:40
>> I've only gone for scoops, but I'll I'll take it.
1:43:43
>> We love to hit the gong for scoops, but uh uh I'm curious if you think that um kind of blowback against uh widespread gambling will be at all a part of the next election cycle.
1:43:55
Do you think it'll be something that certain politicians kind of like latch on to and realize that there's a large number?
1:44:00
Yeah, the AI the AI thing feels obvious right now, but the gambling thing it feels like maybe that's coming soon.
1:44:10
>> Yeah, I think you know whenever there's something where you're like it's crazy that this was ever illegal, we like why why did the idiots of the past why were they ever against this?
1:44:17
We should obviously just legalize it, then like brace for backlash.
1:44:21
There was probably a reason. >> Yeah. >> And and totally. Yeah. Yeah.
1:44:24
I mean, I think lots and lots of people, lots of religious people, lots of non-religious people are like going to get pretty are getting pretty upset about this.
1:44:30
And there's going to be there have been these sort of smallcale belist athlete corruption scandals. Oh, yeah.
1:44:36
>> But we're going to have our, you know, Chicago whites black socks moment, right? >> For sure.
1:44:40
>> And that'll be the thing that drives it, I bet. >> Yeah. Yeah. Yeah. Yeah. Yeah. That makes sense.
1:44:44
That would definitely be like more of a national story that nothing's really broken out and been like the current national story for like a full week.
1:44:51
>> But I mean, imagine how much money you could make fixing the Super Bowl. >> Exactly. Yeah, that'd be crazy.
1:44:54
And that would really Yeah, that would be really depressing to a lot of fans, but not me because I don't watch the Super Bowl anyway.
1:45:02
[laughter] >> And actually, it could just be like a parlay where like you fixed like the, >> you know, how many how your shoelaces were tied in the second half or whatever. Maybe.
1:45:13
>> Anyway, thank you so much for coming on the show. Great to meet you.
1:45:14
Yeah, nice to meet you guys.
1:45:16
Thanks for thanks for having me on. >> This is a lot of fun. We'll talk. >> Bye.
1:45:21
Uh, let me tell you about numeral. com compliance handled.
1:45:23
Numero worries about sales tax and VAT compliance so you can focus on growth.
1:45:28
Our next guest is Matt Hicks, the CEO and president of Red Hat.
1:45:34
We've been keeping him waiting too long in the reream waiting room.
1:45:35
So, let's bring in Matt Hicks to the TBPN Ultradome.
1:45:40
Uh, wait, we have a second.
1:45:42
I'm sure he's been tuned out [music] because we had him. >> There he is.
1:45:46
I'm sorry for keeping you waiting, but thank you so much uh for joining the show today. How are you doing? >> Hey, I'm doing great. Great. Thanks for having me.
1:45:54
>> Yeah, really happy to have you here.
1:45:54
Uh would love would love an introduction on your on yourself a little bit.
1:45:58
I know that you became uh the CEO in July of 2022, but I'm I'm more interested in understanding the the landscape of the of the business today.
1:46:07
how you see the how you describe the shape of Red Hat and all the business all the different business lines that have developed over your tenure to become what the company is today.
1:46:18
Yeah, we've uh you know, I've been at Red Hat for a long time, actually over 20 years now.
1:46:22
And so I started at Red Hat actually in it success >> when it was just uh it was just ra at the time.
1:46:30
And and if you if you fast forward to today, we have >> re we have open shift, we have an we have Red Hat AI.
1:46:38
Um I like to describe as like when I started uh >> in open source, you really only had an operating system that was there.
1:46:45
And today you have any software that you could create any company idea to help you do that.
1:46:53
And and we try to cover that that gamut.
1:46:55
Everything from operating systems to you know clustered capabilities with Kubernetes to AI capabilities and smaller models.
1:47:02
So it's been a fun uh fun ride for a couple decades here. >> Yeah.
1:47:07
I I would love to just jump into the the AI side of the business.
1:47:08
Um, how are you thinking about bringing a Red Hat appropriate product to bear in AI?
1:47:18
Are you, it sounds like you're not training your own huge model trying to compete with the, you know, the big foundation models, but I'm sure there's a bunch of ways that you can plug into your your client base.
1:47:28
How are you thinking about um the the shape of the AI business over the next few years?
1:47:35
Yeah, I think for us, and this is how we use things internally, we think you're going to end up using Frontier models and the capabilities there.
1:47:42
Um, >> in addition to smaller open- source models, um, and I I often describe if you go back to like when Google search was >> invented, >> you had this feeling like it was going to change everything in business, >> but you didn't apply a Google search appliance to everything you did.
1:48:00
Like you still had relational databases.
1:48:02
you still had specialized applications because you needed that control.
1:48:07
Um, frontier models to me are sort of like Google search.
1:48:11
They're going to change everything.
1:48:13
It's going to be pretty incredible.
1:48:14
We don't know what will happen there, but they show possibilities.
1:48:19
>> Small models for us are the things that you can train. You can specialize.
1:48:22
Uh, you can run them in a factory or space station or you can run them as a mere mortal yourself in your own data center.
1:48:32
Um, and that combination is really powerful.
1:48:34
Like that's what we use internally.
1:48:36
So, our business is squarely in that smaller open-source models.
1:48:39
Um, when I say small, they're still >> Yeah.
1:48:44
>> pretty large compared to traditional computing, but compared to those frontier models, um, they're just a very different tool. >> Yeah.
1:48:51
Walk me through what a customer might experience if I come to you and I say, "I have a business problem.
1:48:55
I have a whole bunch of you know like like data flowing in images that I need to OCR and transform into JSON or something like I have a defined business problem that uh that transformerbased large language models will be good for but I want something that's you know 59s of reliability that's you know I control the the the ownership of the code it's it's economical um what are you bringing to bear to help the customer achieve chieve their goals. >> Yeah.
1:49:28
So I think if you have that use case and I often talk about them as like the three Ps we use frontier models to understand what's possible >> once you know it's possible with frontier models.
1:49:39
If it's not possible with frontier models it's like just stop there.
1:49:44
>> It's not going to translate that well.
1:49:47
>> But if it is yeah >> then your second P is production and your third P is profit with it.
1:49:51
uh the models we look at are about a hundred times smaller um just in size.
1:49:57
And so generally you could say if you can run them well, they're going to be a hundred times cheaper >> to answer those questions you're going to ask it.
1:50:09
And so we work with customers to really find that use case.
1:50:11
It doesn't always fit every aspect, >> but how many of those pieces can you move to something that is a hundred times cheaper with it?
1:50:21
And it requires some you know you're competing with the Googles of the world or Microsofts in terms of operational discipline.
1:50:29
So you have to be able to run these things well and this is word you hear inference that pops up.
1:50:36
We help enterprises with inference just normal mere mortal data centers GPUs Nvidia AMD and running these models efficiently.
1:50:46
So you can start to decompose that problem into you know what are the areas we can optimize and really control ourselves.
1:50:52
So that that's one of the use cases.
1:50:55
We have a lot but that's a a popular one because >> so yeah getting getting more specific company comes to you and they're saying like I'm I'm spending $2 million a month with this with the on these like frontier models and and how where do you go from there?
1:51:13
are you like breaking down exactly how they're exactly what those tokens are being used on and then basically saying like hey we we can actually break out the spend and reduce the cost by this amount.
1:51:24
Obviously, Red Hat has a margin uh but but how did those conversations go specifically and how much spend today on frontier models really shouldn't even be going to frontier models and should be going to uh some of these smaller uh more more um uh uh specific models.
1:51:46
>> Yeah, I think if you look at not overly simplified but we sort of live in the world of text on it.
1:51:50
So if you said, "Hey, my use case is um video generation and all of these capabilities," that's not really our wheelhouse.
1:51:59
That that often isn't in that space where um a lot of your business is going to operate.
1:52:05
Understanding policies, um understanding numbers on it.
1:52:08
So that's the first thing we look for is does this fall into that classic enterprise use case?
1:52:12
Um because there are things you'll keep on frontier models.
1:52:18
The second part for us is where do you want to run these?
1:52:20
can rent space at a core for example to get GPU capacity or it might be data sense enough you want to host it yourself and then you're in a hardware purchase.
1:52:31
Um but for us then it's about going one by one.
1:52:34
Sometimes it requires changing the data a little bit but it's making those use cases run efficiently on it.
1:52:42
efficiently on it. when I look at um what's that mix of what we use these big models for that we just don't need to I think it's going to be really similar to cloud spend um in my role they're really powerful I love the learning experience
1:52:59
people are going through and using them but I'm going to bet there's a 7030 8020 split of where we could take things that were paying more than we need to and be able to optimize them and it's just in that balance cloud was really good at learning a new operational mechanism and skill set. We're going through that same
1:53:17
We're going through that same phase, but I think we'll be able to optimize a lot the majority to smaller models even if you start in what's easiest and shows you what it can do in the larger ones.
1:53:28
H >> how have your how how have your thoughts on the relationship between building a for-profit business in and around open source technology changed over your career?
1:53:43
It's um so I started at Red Hat as I loved the open-source model.
1:53:47
I was actually a consultant at the time and you know I had worked with Linux in college and my first experience like I couldn't be stopped when I was working with Linux because if it wasn't working for a customer I could change it.
1:54:01
I could figure anything out.
1:54:03
I didn't have to be dependent on someone.
1:54:04
And I loved that >> that feeling that power that came with it.
1:54:10
it. um just open sourcing things and assuming a business will happen I think is also pretty flawed with it like you you have to do something different that customers value that the open source community doesn't do and in in our case open
1:54:28
source communities is a great innovation model they move really fast >> we help customers that they can't keep that pace and speed of open source they want the innovation model, but once they've built their app, they need someone that's going to help support it for 10 years. >> And that's that value we do that
1:54:46
>> And that's that value we do that communities just don't care about.
1:54:50
They're on to the next feature.
1:54:50
And so, it's been a really nice balance of we work with a community, we complement it, but we provide enterprise value.
1:54:57
but we provide enterprise value. I think that's what's going to shake out in this world with AI of how do you find that that symbiotic relationship where you can leverage open source you can you know use innovation models or other areas but you still provide a concrete value to customers where they know what they're paying you for >> how have you been processing the the fact that it feels like meta is pulling
1:55:21
back from you know largecale open- source AI efforts uh China seems to be running away with it uh Is there any other nuance to is it just like a business model problem that we haven't seen uh like the red hat of AI kind of
1:55:38
crop up or or stick around in the case of OpenAI as they've kind of evolved their business model although they do of course have GPTO OSS uh and and you know Metal Lama is is is still a real product. Um, but it does feel like China
1:55:49
Um, but it does feel like China has just taken open source AI way more seriously.
1:55:53
And I'm wondering if you have any read on like uh like was that always the way it needed to happen? Were there alternatives?
1:55:59
How did you interpret the open-source AI LLM war play out?
1:56:04
>> You know, I I put it in two buckets.
1:56:06
There's um a race to AGI. >> Yeah.
1:56:10
>> Personally, I'm not a big believer in that, but you know, it's going to produce some incredible things on that journey. you.
1:56:15
We'll see if we get there.
1:56:17
But I think a lot of the big players when they talk about these billions of dollars that go into training models, >> they're in the race for AGI >> at that point.
1:56:26
And that that's a new and exciting domain for them to chase.
1:56:28
And I think Meta is in a similar boat there >> what they're investing.
1:56:32
Um I love the fact that they open sourced it, but they're in that AGIish >> camp and race.
1:56:39
Um the number one innovator in open source models I would say is academia at this point.
1:56:45
It China has always been strong in open source. US is very strong. Europe is very strong.
1:56:52
But if you go look on hugging face at the sheer number of specialized tools we have out there.
1:56:58
It's more than you're going to understand how to use well today.
1:57:03
Um, so I often the coaching I give customers is I don't think we necessarily need a lot more.
1:57:09
It's just that stability in a few.
1:57:12
So I worry less about um, you know, China's created some pretty impressive innovations like in the Quinn model on training, >> but as long as those are shared in academia, we'll see the next mistra pop up with options there.
1:57:28
But but that's how I separate the two. There's an AGI race.
1:57:32
I don't think the um the financial mechanics are going to work out for open sourcing there.
1:57:39
>> But then there's an academled ecosystem that already exists that's incredibly vibrant um that is not chasing AGI that'll fit really really well with the um the boring enterprise use cases like how do you run a company a bit more efficiently?
1:57:56
>> How do you um chase the next engineering innovation more efficiently?
1:57:58
that doesn't necessarily have to be those uh those big guys.
1:58:03
>> Last question for my side and then we'll let Jordy ask anything he has.
1:58:04
But um I I'm interested in advice for we talked to a lot of founders, a lot of startups that are kind of building the Red Hat of X.
1:58:15
They're thinking about open sourcing a great piece of technology, building an open source community.
1:58:20
Uh we often talk to Y Cominator founders that come on and tell us, I have 5,000 GitHub stars already. I'm raising money.
1:58:27
I'm going to build the next thing and they're not going after Red Hat directly.
1:58:30
They're just they're they want to learn as much as possible from you.
1:58:34
So, do you have any advice for founders who are earlier in the journey?
1:58:38
They might have built something um great, a a useful tool, a piece of software, and they really want to get the the red-hot model correct.
1:58:48
They want to have an open- source community, and then they also want to build a great for-profit business on top of it.
1:58:53
You know, I think the the mistake I see the most is um I want to use it for a marketing tool and then keep all the control >> myself.
1:59:04
Um almost always those fade out. You can you can do that.
1:59:07
You can get a lot of eyeballs with open source.
1:59:09
But if you don't know who your community is, it could be a user community, it could be a contributor community, >> but if you don't know the value you provide them and they provide you, that marketing effort of stars only will fizzle.
1:59:26
>> And it is very tough to give up some control and product roadmap to your competitors to build a contributor community, but it's what you have to do.
1:59:36
We work with our biggest competitors side by side in Kubernetes. Yeah.
1:59:40
>> Um, so I think for founders really knowing um, is it the right time for them to give up that control and being authentic of their model, it'll give them staying power in open source. It's a savvy ecosystem.
1:59:55
>> No one's going to get tricked into like a star count and then you build a, you know, durable forever business off that.
2:00:02
But a lot of options down there, but I think knowing those and putting some thought into that is a really important first step. >> Makes a ton of sense. Jordy, anything?
2:00:10
>> What uh do you think working for one company for 20 years is underrated?
2:00:16
Feels like uh >> company man.
2:00:18
>> May maybe maybe some of the people that are coming on the show will end up uh >> Satella. >> Yeah.
2:00:23
>> Perfect example of this >> Satia.
2:00:25
But uh but kind of what what what are some like un unexpected sort of positive elements of being, you know, deeply embedded with a company for as long as you have?
2:00:34
You know, I think when I walked into Red Hat as a joining the IT team to port Pearl applications to Java, I didn't really see myself in this seat 15-ish years later.
2:00:49
Um, I didn't, you know, I was lucky enough to be involved in Open Shift in the early days.
2:00:53
I didn't really see that.
2:00:55
But the tenure um especially working in IT, seeing every part of the company, working in a startup in Red Hat with Open Shift and just the pain and struggle that goes into bootstrapping something in a pretty successful company.
2:01:10
Um it's what lets me do the job that I'm doing now because I I have the depth and breadth to push on things in a different way than if you were an outsider.
2:01:21
And I think it's really powerful.
2:01:22
It's um you know people bounce around there's there's there's a lot of learning to be gained with that but for me I certainly use every day my 20 years of um you know all the challenges and you know benefits things that have worked things that haven't to guide my decisions dayto day.
2:01:38
So that's um you know I still pinch myself every day.
2:01:43
I'm like, I'm surprised I'm sitting in this seat.
2:01:44
But, uh, [laughter] but it's been a, you know, it's been a great runup to it, and I don't think I could do a good job without that that depth of experience. >> How do Yeah.
2:01:52
How do you help, uh, a lot of people, you know, are impatient for for the raise, impatient around the the new title?
2:02:01
What like what kind of framework do you give to somebody that comes to you maybe at a different company and says, "Matt, I'm at this company.
2:02:09
I've been here for three years.
2:02:11
I just got an offer that'll I will immediately make more money.
2:02:13
I'll have a more senior title.
2:02:15
Maybe the company happens to be the other the company making the offer is growing faster. Maybe has more capital.
2:02:21
There can be a lot of reasons to jump ship.
2:02:23
Uh but what's your framework uh for helping people make that decision?
2:02:30
>> One, I always warn them it's a personal framework.
2:02:32
I'm like it's worth what you paid for it, which is is nothing on it.
2:02:36
But uh but for me my driver has been am I learning something new in this space.
2:02:42
If I'm learning things I can be patient for the right opportunity to leverage it.
2:02:46
Um and I also tell them like you have to be accepting there's some luck in the game as well.
2:02:52
Like just being in the right place at the right time with the right skills.
2:02:56
You can't always manufacture that.
2:03:00
But for me, I always look at opportunities of they're going to come with some pain and challenges, but if you learn a tremendous amount, you're going to leave that being more valuable than you came in to it.
2:03:12
And you know, I take that into this role.
2:03:15
It's why I, you know, in limited hours I'm still learning AI myself to not just delegate it down the org, but to really build that hands-on experience, but that learning dimension has always been the most important uh dimension for me.
2:03:32
>> Well, thank you so much for taking the time to come on the show today. Great to meet you.
2:03:35
Great to meet you and >> open source champion of the world. >> Merry Christmas.
2:03:37
Have a great rest of your day. We'll talk to you soon. >> Yeah, love the show.
2:03:40
Appreciate you all having me on.
2:03:42
Thanks back on so We'll talk to you soon, Matt. >> Goodbye.
2:03:46
>> Let me tell you about Figma.
2:03:46
Think bigger, build faster.
2:03:48
Figma helps design and development teams build great products together.
2:03:54
>> Um, gyms are coming to airports. >> This is big. >> This is big.
2:03:57
Will you on your next >> consumers have been saying the other passengers aren't sweaty enough. >> Yeah.
2:04:03
So, this is from >> We got to We got to have gyms in right next right next to the gate.
2:04:08
>> We We have another We have another guest joining just a minute, but I want to riff on this for like 10 minutes.
2:04:10
Uh this is hilarious because it it seems to be a collab between the the uh uh Secretary Kennedy who's the health and human uh services secretary.
2:04:23
So there's like HHS crossing over with DOT somehow and they're like let's let's let's make the airports healthier which is like a funny thing.
2:04:32
I feel like I feel like these I feel like these like labs don't happen before but they're happening now. Um, I don't know.
2:04:38
The the idea of working on an airport, it's kind of crazy because if you are all sweaty and then you have to and they also said like you should dress up when you go to the airport and if you're dressed up and then you are all sweaty, that seems pretty rough. But, uh, I don't know.
2:04:55
I I like the idea of doing something new in airports. I think it's cool.
2:04:59
I think it's good that there's some some opportunity for some sort of grant program.
2:05:03
I guess the question is the $1 billion grant program with how much it costs to make like is this like 10 gyms?
2:05:10
Well, so I don't know because like there's a world where you build like a proper gym in the 10 most premier airports that has like a sauna, showers, like full laundry, like you know, you're good to go.
2:05:23
You can spend like a couple hours in there, really get a serious workout in.
2:05:26
Or it could just be like a couple pull-up bars and you put one in every in every terminal in America. I don't know.
2:05:32
It depends on how how like like can you imagine if it's just like okay yeah like you know turns out JFK put in an awesome awesome application they got all one billion >> little calisthenics sound >> they got it all.
2:05:45
I don't know it's it's a very funny story anyway let me tell you about fall the generative media platform for developers develop and fine-tune models with serverless GPUs and ondemand clusters.
2:05:54
And we have our next guest in the reream waiting room, Steven Schwarz from There he is.
2:06:04
Stephen, what's going on? >> Oh, what's up, man? How are you? >> We are great.
2:06:08
It's great to uh great to have you back on the show.
2:06:11
Uh you you and the team have been insanely insanely busy it seems.
2:06:16
Uh give us give us the update from the last few months. >> Yeah.
2:06:21
Um so I think we talked in March and since then um things have been really crazy.
2:06:26
Um I I think the best way to put it is that at this point in time in our company in order to even grow the business by 50% um we have to add more than a billion dollars in [clears throat] earnings on our platform each year.
2:06:40
And I guess just to put in perspective what that looks like, if we were to onboard um 1,000 businesses that do a million dollars a year, which uh those are not small businesses.
2:06:48
Um that would only grow our business under 50%. Which is pretty bad.
2:06:53
So I think that the story of our of our recent months has been how are we going to really 10x this thing and that requires us to think a lot bigger.
2:07:01
So we've been expanding pretty aggressively internationally.
2:07:02
Um we we have been partnering with really amazing platforms.
2:07:07
We had an announcement earlier today and I think that I mean there's a lot of stuff that breaks when when we when we grow, but um the year's been pretty nuts.
2:07:15
There's a lot of stuff coming out soon and >> I'm really excited.
2:07:21
>> And and how big is the team today?
2:07:21
The core team, you know, people w2 by WO because I know I imagine like part of the benefit is you know everyone on the platform has some incent, you know, incentive to grow the platform and support but uh I'm curious what the core team looks like. It's about 75 people.
2:07:39
Um, so it's actually pretty similar size.
2:07:41
I think that everyone's going at a really high RPM.
2:07:42
I we like to have our our team really lean and and um everyone has a lot of autonomy and and almost no bloat anywhere.
2:07:50
So I think uh it's we're definitely underwater right now.
2:07:53
Um and there's about 75 people total. >> Wow.
2:07:58
Uh so talk about talk about the shape of the business.
2:08:00
The uh you know you guys had a a post going viral uh this week.
2:08:06
this week. Somebody was saying you know team talking about grinding you guys the team's grinding because you guys are you know generating uh billion you know there's billions of dollars uh flowing through the platform and only 75 people working on the team uh but uh the the criticis the common criticism would be
2:08:24
like you know is uh you know a course platform and obviously like some of these partnerships you're announcing like the bigger broader vision I think is certainly uh starting to uh crystallize for me, but talk about the shape of the business and really like where where this is all going. >> Yeah. Um well, I think it's really funny >> Yeah.
2:08:44
Um well, I think it's really funny how how many people get offended when when um these teams that are hard at work.
2:08:50
I think it's it's obviously like results are are the most important and I think that um is not really the the intention is is nothing about trying to rage bait anybody or or um even to seek necessary attention.
2:09:01
I don't even think Cameron expected that to go down viral.
2:09:05
But I think at the end of the day, I mean, when when our team is is excited about something, people are going to be working hard.
2:09:10
And um given the nature of our team, we have a lot of former founders and a lot of former entrepreneurs that are are really driving huge parts of our business forward.
2:09:18
And I think that um the the common people know W for so many different things, right?
2:09:23
We started in in sneaker bots and then that naturally progressed into more a broader variety of different desktop software and then people are like, "Hey, can we sell chats with the software?"
2:09:33
And we're like, "Yeah, that sounds like a good idea.
2:09:36
Let's make sure you can do that."
2:09:36
And then people are like, "Hey, can we drop the software entirely and just sell chats?"
2:09:41
And we're like, "That sounds pretty cool. Paid chats. Let's do it."
2:09:44
And then people started to do that.
2:09:44
And then they're like, "Can we also add long form video?" And that made sense.
2:09:48
People used to make the long form video as a way to explain how to use the software.
2:09:55
And pretty quickly people are like, "Wait, we don't even need to sell software or chats.
2:09:57
We can just sell long form video."
2:09:59
And that's what a course is.
2:10:01
And I I don't think that we ever set out to be a course platform at all.
2:10:03
We really focus hard on on the primitives that are necessary for the future of work and and for the future of commerce generally.
2:10:11
And I think that the one of the lowest way lift ways to start a business is making a course.
2:10:16
And I think that when you look at our business today, I mean I think we probably do more more than a billion dollars a year in uh paid groups and educational programs.
2:10:26
We probably do almost a billion dollars in in agency services that are sold on the platform.
2:10:31
Um we we'll do maybe do um three400 million dollars of pure software sales and I mean on the emerging side I think we even have more than $50 million of physical product sales each year now.
2:10:43
Um so I think that the when you go to our homepage we do a pretty poor job showcasing a lot of the supply.
2:10:48
That's not been a huge priority of ours to date.
2:10:52
we are very focused on our infrastructure for the sellers and and for the the platforms now that are integrating with our product.
2:10:57
So I I think that there there's a the core sellers are generally the loudest because they're very good marketers and um they typically run out I think a lot of the the other stuff in the platform and people know what as well for clipping and things like that which are also really awesome ways to to make money.
2:11:13
Um but yeah the the course stuff is is is funny >> totally.
2:11:17
uh what's going on on the actual infrastructure side?
2:11:20
You guys used to work with Stripe on the back end. You killed that part.
2:11:25
You moved on from that uh partnership at at some point.
2:11:30
How how are you guys processing payments today on all these different verticals?
2:11:36
And uh I'm I'm assuming that's like a core part of the offering for these uh individuals, businesses that are coming onto the platform and you're giving them a variety of ways to monetize. >> Yeah.
2:11:49
So you can kind of think about the core value prop to be payments and distribution all out of the box.
2:11:53
And I think that we never really set out to be a payments platform.
2:11:57
I think that's pretty boring.
2:11:58
And I think that there's a lot more that we can do.
2:11:59
I'd say that today money is is much more commoditized than it was 10 years ago.
2:12:04
And especially on the payments front, we don't think that that's a real long-term way to to create value.
2:12:11
And I think that when we look at our ecosystem as a whole, the the mentality is like how can we bring all these parts of the internet together in a way that makes it really easy for retail and for general consumers to actually get what they need to start a business, right?
2:12:26
You have when people think of payments today, they really only generally know Stripe and and after that is a huge falloff is no one really can generally name even another company that's similar to Stripe.
2:12:35
You may have Shopify in the picture, but they're very very focused on physical and and larger shops now.
2:12:41
So for us, it's really really important that everything is extremely tightly integrated.
2:12:45
And when when you're asking about infrastructure, um the way that we look at it is is we have people earning about $200 million a month on the platform today.
2:12:54
So part of our infrastructure is dedicated to to thinking about how can we get uh more functionality delivered to those merchants so they can do a lot more with their money.
2:13:04
Today just for for reference the the uh process is almost universal across every merchant.
2:13:09
They'll make money and then they'll withdraw to their bank and then they'll go invest on on Meta and Tik Tok ads or or whichever ads platform of their choice and then they'll invest in in crypto.
2:13:19
And I think that um it's really exciting right now on the infrastructure side because we're about to let merchants do a lot more with their money.
2:13:26
So you can imagine you make money, go invest it into ads, you go invest it into cryp bitcoin, you go place pred bets on poly market, you go um and do a lot more with your money.
2:13:36
So we're we're doing a lot to bring a lot of our um activity on chain and and to tap into the broader um financial application layer that exists today.
2:13:45
application layer that exists today. Um so that that's one part of our infrastructure side and the other part of our infrastructure side is um on on the uh the advertising front I think it's it's um distribution is critical
2:13:59
and we've recently partnered up with a number of different for example games on Discord or uh publishers uh writing blogs that will actually render products that are listed on and that means that anybody selling on our platform gets to take advantage of pretty immediate distribution. Um, so, so those
2:14:15
Um, so, so those are the things I think I'm pretty excited about in the infrastructure side.
2:14:20
The move away from Stripe.
2:14:20
I think I mean I've been building on Stripe since I was 12 years old and I love Stripe so much and I think that we're we're still partner with Stripe and and we still use Stripe and um, I have nothing but great things to say about Stripe.
2:14:31
I think that when you're looking at our mission, which is to deliver everyone a sustainable income, there's certain primitives that need to be uh, available and those are simply not available on Stripe.
2:14:41
So I mean getting paid out in Venmo, getting paid out in crypto in other emerging markets throughout Africa is very very important um to our our mission. >> Interesting.
2:14:51
>> So So talk more about the partnership with Micro One that you guys announced today.
2:14:55
That is uh uh I'm I'm curious like maybe break down Micro One and their business for people that aren't familiar and then and then how you guys are integrating.
2:15:05
>> Yeah, so Micro One is a really cool business.
2:15:07
They basically uh partner with AI labs to offer general public um access to pre-recorded videos and um situations that the general public can weigh in on and say uh what would they interpret the most likely solution to any set of visual problems to be and the AI labs will use that as fuel for their training data.
2:15:33
and micro one um is essentially aggregating all those opportunities and delivering payouts at scale to the general public um that's paid for by the AI labs.
2:15:44
So when we're thinking about and what the partnership means to us um there there are so many ways that people can earn income on the internet today and it's only going to get crazier and crazier.
2:15:55
So we've invested a lot over the last few months in our public SDK and our developer infrastructure so that platforms can tap into our network and uh that's exactly what what Micro One is doing.
2:16:05
>> That's pretty interesting.
2:16:05
Did you did you think about getting into data labeling earlier and in a direct way?
2:16:11
Uh like or or Yeah, I mean did you ever think about like just offering data labeling tasks to the current community of people on Uh because didn't didn't Door Dash like launch the or Uber was going to launch like the ability to do data labeling tasks while you wait for your next thing or something like anyone with a pool of huge human capital is is looking at this right now, right? >> Yeah. Yeah.
2:16:36
I mean, like, how do you think about the different eras even?
2:16:37
think about the different eras even? It felt like the 2010s where if you had a cell phone, you could make money in the real world and now it's kind of the continuation of that is like if you have an internet connection, you guys are
2:16:50
trying to just enable somebody to open an app and >> yeah, >> make uh maybe you know, may maybe they're not going to immediately make some, you know, incredible income, but it's a most of the apps you open them, they suck your attention and money and and all that. You guys are trying to
2:17:02
You guys are trying to have an app that you can open and and have the opposite effect.
2:17:10
>> Yeah, I think I grew up on Facebook all day every day and Skype and I think that there's two ways you could have gone on the social media platforms.
2:17:16
You could have maybe um sat there and just read and watched videos and what the kids call brain raw today.
2:17:23
I think the other way is to try to get as much productivity and value out of the network as you can, meeting new people and maybe uh finding customers and whatnot.
2:17:32
And for for me and and the people that I met early on in the internet, we focused on the latter.
2:17:36
And I think that the the goal of is to bring together all of the pieces of the internet that are super scattered right now and and hopefully make it a place that's a lot more worth your time to spend.
2:17:49
And I think that the the money is is one part of it, but I'd say it's also like the idea and dream of starting your own business is very much um aspiration to a lot of people.
2:17:58
And we think that um you open the app and I mean you can you can start a business, you can find ways to to uh make money by providing value to other peers on on the network.
2:18:08
You can meet people in chats and it's a very much um expansive expansive application that I think uh I think it's it's makes it difficult for people to understand what we do. >> Yeah.
2:18:21
So with with with Micro One, are you you're just providing the uh like the payment backend?
2:18:25
They're actually going to source the experts to do the data labeling. Is that right?
2:18:29
And then they're also handling the relationship with whatever lab they're selling the data to. >> Yeah.
2:18:34
So to answer your question, have we thought about going into that type of market? Yeah.
2:18:37
I think that for us, we really try to stay on on what we're good at.
2:18:41
And I think what we're good at is and and how we how we handle payments, how we handle payouts, how we handle uh what you can what else you can do with your money as well as distribution.
2:18:50
And um we don't know as anywhere near the the amount of of industry expertise that Micro One does.
2:18:58
And I think that [laughter] that that's why we wanted to partner with them.
2:19:01
And [clears throat] um we don't have any we don't have that's not our forte.
2:19:05
So I don't think we we really have thought much about going into that.
2:19:09
I mean we did the clipping stuff and the content reward stuff and now I mean there's actually a lot of other platforms that are starting to implement our SDK as well on that front because again like we built that app in two days as a test case to show what you could do with the WAP ecosystem and it obviously blew up.
2:19:24
I think we still pay out millions of dollars a month to people all over the world that are clipping, but there's also other platforms now that are integrating that stack um and are able to focus really really hard on making sure that's an amazing product.
2:19:39
>> Yeah, I feel like you sort of live in the future because you're so tapped into young entrepreneurship broadly and such a wide swath of individuals.
2:19:45
Um can you help me get up to speed on how the next generation is thinking about sports betting and gambling?
2:19:52
Um because I feel like there was like the drop shipping wave, there was the course wave, the clipping wave.
2:19:59
Like is sports betting in a is it going through a boom right now?
2:20:04
Because in tech with the prediction markets, I think everyone's like starting to be a little bit more top of mind, but they might forget that, you know, we had we had the CEO of DraftKings on the show with yesterday and I think Google invested in that company in like 2017 and so it's not new.
2:20:19
Uh, but it does seem like it's growing a little bit.
2:20:21
But I'd love to know like how are you >> Capital G invests I think in Flutter or FanDuel. >> Oh, that's right. Okay. Sorry. Yeah.
2:20:26
So, so, so like obviously like like sports betting is not a new invention.
2:20:30
Uh, but it does feel like maybe it's going through a renaissance.
2:20:35
How are you seeing like the the trend within that industry?
2:20:40
Like what what are the trends that you'd even describe?
2:20:44
>> Yeah, it's a good question.
2:20:44
I mean, sports betting has been around since like coliseum days and even before that.
2:20:50
So, I think that it's just it's a really good way for people to be literally bought into what they're watching.
2:20:54
And I think that what's happening now is is you're seeing a lot of entertainment, a lot of social, and a lot of integration between all of that on top of sports betting, which makes it a lot more fun.
2:21:06
And I think when when you imagine somebody to be watching a football game betting alone, it's it's a lot less fun than betting with your friends.
2:21:13
And I think that when when people think of sports betting and a lot of a lot of that um notion is around the communities that are on the platform talking about sports betting and participating in sports betting, but they're not really participate.
2:21:26
They're not really betting on our platform.
2:21:28
Um and I think that the I mean people very much love to to bet and I don't think that's going to change.
2:21:34
I think that the the types of bets will evolve and I mean I'd say that sports betting in the 2000s was probably more popular for retail than investing in stocks which is definitely changing now with Robin Hood and all of the other uh more retail friendly applications.
2:21:48
So I think that people like to invest in in things and and to put their money where their mouth is and and I'd say that that trend is going to continue on and um we're seeing during this fourth season.
2:21:57
So right now it's definitely pretty popular. >> Yeah.
2:22:01
>> Yeah. Uh I mean like like there has been a long history of folks uh doing financial education teaching you how to trade stocks trading forex has been a big thing that uh there's been a lot of courses around uh are there courses around sports betting are they like roughly the is that the same size business or is that like more niche because it's like more random
2:22:24
>> yeah well I think asking what kind of categories are on is kind of like asking what categorical content exists on social media it's just ephemeral and it evolves so much that maybe somebody will launch a sports betting community and they'll add a course to it, but it's not necessarily the core part of the product that that somebody to other users. >> Sure. Sure. Sure. Yeah. I'm just I'm >> Sure. Sure. Sure. Yeah.
2:22:45
I'm just I'm fascinated because I feel like a lot of tech people are like like, "Oh, there's like this crazy breakout moment."
2:22:51
And I think a lot of people, if you zoom out, they see it as much more of like a smooth curve that's been happening for for for decades.
2:22:59
How much uh do you do you and the team try to predict uh these sort of like future trends like what is the next sort of trend like clipping?
2:23:10
Are is is is it more like reactionary to the current moment and saying like let's build the best possible infrastructure for what's happening today or are you trying to looking in corners of the internet uh you know maybe some subreddit that's gaining popularity or things like that uh to try to predict these things and actually be ahead of them.
2:23:30
Um, I think that we lean on our existing customers a lot to to u build around them and to make sure that if they're on to something early that our platform can support what they want to do.
2:23:40
Um, I I'd say that every shift in what the predominant form of of way to start a business and way to to earn income on our platform has been trailblazed by a few subset of merchants and then we've quickly built the product to better support that.
2:23:55
So, I actually don't think it's it's worth time to to try to predict it because it's getting really crazy and I I don't think we're very tapped into to what the people are are doing, I think, in the in the trenches across the internet, but it's very very very hard to predict.
2:24:08
Um, and rather kind of really focus on the primitives that we know are going to be true throughout all these different trends.
2:24:16
>> That makes a lot of sense.
2:24:16
Uh, what are you most excited for for next year?
2:24:18
Um yeah, I think Wobb is very underinvested in AI right now and I think that we're that's about to change and um the the platform is very complicated still.
2:24:29
There's a lot of of components we've created.
2:24:31
We're a very engineering heavy heavy team that's created a lot of infrastructure, but I think that we're we're now flattening a lot of that, simplifying a lot of it and riddling AI throughout the entire platform.
2:24:40
So I think that's going to be pretty crazy.
2:24:43
Um, and and that's probably what I'm what I'm most excited about uh for next year is just making sure that you guys are actually on the app starting businesses and and find it worth your time to do so.
2:24:52
Um, so that's what I'd say. >> Amazing.
2:24:55
Well, thank you so much for taking the time to come.
2:24:58
>> Great to get the update and uh congrats to the whole team on on a wild year.
2:25:01
I I remember >> uh we have we have a >> uh a mutual friend.
2:25:07
won't name him uh because he's anonymous, but I think he he told us at the end he told us at the end of last year, yeah, Q4 of last year, the company that he was most, >> and this is like an institutional investor.
2:25:21
He was like, "The company I'm most bullish on >> that is most under the radar, most underhyped is WOP."
2:25:26
And uh you guys have certainly delivered this year. So, >> well done. >> Really appreciate it. Long, long way to go. >> Fantastic. Job's not finished. Love to hear it. >> Cheers.
2:25:37
>> We'll talk to you soon. Have a good one.
2:25:39
Let me tell you about profound.
2:25:39
Get your brand mentioned in chat GBT.
2:25:41
Reach millions of consumers.
2:25:45
>> Uh who use AI to discover new products and brands.
2:25:48
Um >> Gavin Baker says, "Deeply amused by all the confident commentary that data centers in space do not work from a physics or engineering perspective.
2:25:56
Elon operates two of the largest coherent uh GPU clusters in the world.
2:26:01
SpaceX is responsible for over 90% of mass to orbit.
2:26:06
SpaceX operates the largest satellite constellation in the solar system.
2:26:10
More than 10 years later, no other company or country can consistently land and reuse orbital rockets.
2:26:15
He publicly states that the lowest cost way to do AI compute will be with solar powered satellites.
2:26:21
Maybe, just maybe, his pencil and paper analysis of the physics or the economics at play is superior to yours.
2:26:28
There might have even been more than just a pencil and paper analysis of the subject done by some of the best engineers in the world.
2:26:37
Perhaps they have thought of a cooling solution that has not occurred to the galaxy brain accounts here even after they took several minutes to carefully think about the problem.
2:26:44
The CEO of Google also agrees that data center data centers in space will be normal within a decade.
2:26:51
If you're not currently operating a large AI data center, a large satellite cluster, and have not landed a rocket, that takes most uh most of the accounts on X, >> uh maybe a little less quick to confidently assume that Elon and Google are both wrong on this topic, >> especially when they are working, albeit very small, data center in space today.
2:27:11
StarCloud's orbital setup just successfully trained an LLM, great name, by the way.
2:27:15
Yes, I'm biased on these topics and as ever, time will tell.
2:27:17
Uh yeah, I think um I think a lot of the reaction was just like hey like 3 to four years feels super aggressive. >> Yeah.
2:27:30
>> But at the same time I don't know I was trying to put it in in in like where where would I uh how would I quantify my position and I would probably say like there will be under one gawatt of capacity in space by the end of 2027.
2:27:47
And by the end of 2027, I expect to see several gigawatts of like AI data centers online in terrestrial base.
2:27:52
But maybe that's maybe that's too conservative and maybe that's not even what Gavin's saying.
2:27:59
Maybe Gavin is is targeting something more like 2029, maybe 2030, something like that.
2:28:03
Um but but if you were to if you were to try and say you know like there will be a significant amount of compute like you know 10% of overall compute or something like that um in space in you know a year or two that feels maybe more aggressive but you know in 20 years I I don't think anyone disagrees with that.
2:28:24
In two years I think everyone everyone agrees it's not there.
2:28:27
So, it really feels like we're we're we're we're talking about, you know, timelines here more than if. It's more when. Um, but I'm not sure. I don't know.
2:28:38
>> Elon responded and said, "Fools are determined to be fools.
2:28:40
Trying to stop them from being so is futile."
2:28:43
[snorts] >> Hey, optimists get rich. Pessimists sound smart.
2:28:48
Um, easy to be pessimistic on this.
2:28:51
>> Should we pull up this clip?
2:28:52
>> I am optimistic about Julius AI, the AI data analyst that works for you.
2:28:54
Join millions who use Julius to connect their data and ask questions and get insights in seconds.
2:28:59
Uh, I'd love to pull up a clip.
2:29:02
I >> pull up this clip from uh, see of Netflix. >> Oh, yeah.
2:29:06
>> We go from 8% view hours today in the United States to 9%.
2:29:08
So, we're still behind YouTube at 13%.
2:29:11
And potentially worth noting that we would be behind what would be if Paramont combined with WBD them at 14%.
2:29:18
So we think that there's a really strong fundamentalsbased case here for why regulators should approve this deal from 8% of view hours today in the United States.
2:29:32
>> So So yeah, view hours is that is that like a good metric.
2:29:35
There's something he's definitely including YouTube in there that and and and using view hours at the same time.
2:29:43
I think that's that's valuable. I I I don't know.
2:29:47
Um, it's it's hard to to kind of grapple with as as a consumer.
2:29:52
It doesn't seem like it's it's oh no, all of a sudden there's only one place to get content like that that's not what people are the most worried about.
2:30:00
They're maybe worried about a one buyer scenario for the movies that they make.
2:30:02
Um, anyway, you can always just make a movie and put it on reream.
2:30:06
One live stream, 30 plus destinations.
2:30:09
[screaming] You want multiream, go to reream. com.
2:30:10
Reream is going to stay independent.
2:30:14
>> There's a post here from Julian.
2:30:14
He says, "If you thought paying for your kid's college tuition was nice, Larry Ellison is writing a $40 billion check for his son to acquire a movie studio and a television network."
2:30:25
>> Yes, >> that, my friends, is father of the year. >> Totally agree.
2:30:28
We should all >> aspire to one day write a $40 billion $40 billion check for our children. >> 100%.
2:30:37
>> Each of them actually.
2:30:37
I can't I can't It's hard to think of a better use of what 20% of the net worth than picking up a movie studio, >> doing a deal with your son. >> It seems fun.
2:30:49
It seems like uh Larry is definitely in the conversation.
2:30:52
He's at the dinner, you know, he's hanging out.
2:30:55
He's he's part of this even though David's obviously driving the story.
2:30:57
Uh Larry Larry's very much there right in the show, but also participating.
2:31:03
>> Joe commenting on >> we already talked about that on the show. Let's skip ahead.
2:31:06
Let's go to this data on a quiet year for venture capital.
2:31:10
Uh Bryce Roberts posted it.
2:31:13
Looks like it's from the information, but the source is pitchbook.
2:31:14
So, there's a couple things going on here, but uh terrible, terrible.
2:31:19
I thought we were so back.
2:31:22
I I with the AI boom, I am shocked by this data.
2:31:25
Are you shocked by this data? >> I'm shocked.
2:31:28
>> It certainly hasn't felt like that.
2:31:31
>> I thought it was going to be higher than ever.
2:31:32
It feels like there's so many new funds.
2:31:34
There's so many new massive funding rounds, but are we still working through the 2022 glut of capital or something? Like what's going on? >> Yeah.
2:31:43
I mean, sentiment was that AI saved >> venture, >> private markets, venture capital. >> Yes.
2:31:50
>> Because it it was a we we were on a crazy sugar high in 2021.
2:31:55
>> And we had so many folks come on the show that just yesterday, yeah, I raised $500 million seed.
2:31:58
It's like that's got to come from somewhere, but apparently only $50 billion flowed into venture in 2025. >> Well, yeah.
2:32:06
So, so these funds are deploying capital.
2:32:08
Some of them might still be deploy hopefully there's still some not all of obviously the the funds that were raised in 2022.
2:32:15
It's not like they just were like, I'm going to deploy this all this year.
2:32:19
It's like that it trickles out.
2:32:21
The other thing, the reason that this is surprising is that uh some of these big headline deals that the industry has been focused on this year are um sovereigns going direct.
2:32:36
They're they're hyperscalers making these big equity investments in labs. Yeah.
2:32:41
And so that kind of Yeah, that's kind of you know Nvidia I think we've had u uh a couple guests today say Nvidia.
2:32:51
Uh so uh uh throwing me off.
2:32:51
But anyways, it doesn't it certainly doesn't feel like this.
2:32:57
The question then is uh I mean you're also just seeing way less venture funds being formed.
2:33:04
Maybe that's maybe that's healthy, right?
2:33:08
>> Um >> so Katie Roof who broke this story says venture fundraising is the worst it's been in at least a decade.
2:33:13
And I don't mean for startups which are seeing an AI boom bubble.
2:33:18
The firms themselves are often struggling.
2:33:20
We are seeing the lowest number of venture funds raised in at least 10 years. I'm fascinated by this.
2:33:26
I wonder if we're going to see venture funds close down or is this just a function of the the everyone gets a fund phenomenon sort of pulling back?
2:33:39
Because maybe maybe it's really that 2021 2022 were just complete deviations from the norm because I mean it really was a time when everyone got a fund. It was crazy.
2:33:50
Anyway, let me tell you about linear.
2:33:52
Meet the system for modern software development.
2:33:53
Linear streamlines work across the entire development cycle from road map to release.
2:33:57
[applause] Um, we also have a venture capitalist joining the show.
2:34:02
S can break it down for us.
2:34:05
And I'd love to know his thoughts on this bombshell report from the say you're cooked. You're cooked.
2:34:11
It says, you know, if you're in venture, pivot to, you know, uh, uh, toiletry. Not toiletry. Uh, plumbing. Be an electrician.
2:34:22
>> Become a become an electrician because it's all over. Do you think it's over?
2:34:25
Do you think venture capital the game's over?
2:34:29
>> Uh, guys, the game is it's never been better.
2:34:31
I think >> we uh, >> let's [laughter] go.
2:34:34
>> Thanks for having me on. >> Venture capitalist. It's never been better. Put the headlight up. I love it.
2:34:43
Greylock turned 60 years old this year.
2:34:45
So this firm started investing before the internet.
2:34:47
The original partners would find companies.
2:34:49
>> Wait, how many years old? >> 60. >> Yes. >> What? That's so old. I had no idea.
2:34:54
I thought it was like 10 years old. That's crazy.
2:35:00
>> I No, I the oldest firm in the US. >> Overnight success. I love it.
2:35:04
>> Yeah, overnight success.
2:35:04
And we're in our 17th fund.
2:35:06
And I would tell you our the company quality we see right now, we've never seen anything like it.
2:35:10
I I mean there's there of course there's a lot of things that are crazy going on, but if you just look at the overall secularity of what's happening. Yeah.
2:35:17
I think I I really think the game's never been better. >> Yeah.
2:35:21
But you're in a unique position.
2:35:23
You have a name brand, you know, like >> not seem insane that that we raised there was more money raised in >> 21 22. >> Yeah.
2:35:34
So, so, so help me understand it because Greylock is in a great position. It's a great brand.
2:35:37
It's a name that everyone knows, been around for 60 years. It's crazy.
2:35:41
Um, you can get into the companies that are doing really well.
2:35:45
If we are witnessing like, you know, more monopolistic markets, more winner take all bets, more okay, the the champions being crowned in this category.
2:35:55
Everyone's just got to get in.
2:35:56
You're going to be one of the funds to get in.
2:35:57
A lot of people are not going to get in.
2:35:59
Do you think that's what's driving the lower amount of new funds that are being raised? Is that what's going on?
2:36:07
How how are you interpreting the fact that um that the number of funds seems to be going down year-over-year for the past four years?
2:36:15
>> I think we had and you guys were talking a little bit about this, but there was almost this like one-time anomaly in the market structure in the 21 period where you saw like an explosion of new funds and on the one hand it was like super exciting all these solo GPS, new funds, new guard, etc.
2:36:28
And then I think like once you hit an air pocket and you realize like life is not just straight and up to the right, but these cycles have ups and downs and even the best companies have ups and downs.
2:36:37
I mean I think about the companies we've been a part of from when they got started.
2:36:40
The most recent success case being Figma.
2:36:44
Like it took Figma several years to get the product right and start accelerating sales and they became one of the fastest growing companies of all time.
2:36:50
Entrepreneurs want firms that are in this for the very very long run.
2:36:52
And so what you're going to see is a reconentration to a small set of firms that are like venture capital is a 100% of what they do.
2:37:00
They don't have any other jobs. It's not a side gig.
2:37:02
And those firms are going to raise more capital and be stronger partners to the best companies.
2:37:08
It wouldn't surprise me if like the net number of firms goes down because most firms don't perform.
2:37:14
But uh but but I think if you think about it on an aggregate basis and like what lies ahead for venture uh it's there's good reason to be extremely optimistic.
2:37:22
Let's talk about SPVS because I think that might be a piece of what's going on here.
2:37:25
Do you does does Greylock historically have a policy around when to pull the SPV off the shelf?
2:37:31
I know some firms they never use them.
2:37:33
They never have in their history.
2:37:35
Other firms, you know, yeah, they use them as much as they want.
2:37:38
>> They're not even that special.
2:37:40
>> I just call them purpose vehicles.
2:37:40
I don't call them special purpose vehicles.
2:37:43
Just regular purpose vehicles.
2:37:45
Uh just internally, walk me through Greylock uh uh Greylock's thesis on SPVS.
2:37:52
Our business model is very simple, which is we want to partner with a small set of founders and be their most meaningful partner.
2:37:57
We we keep everything else really simple. We have a single fund.
2:38:01
It's a billion dollar vehicle.
2:38:01
We've raised billion dollar vehicles consistently over the last >> 15 to 20 years.
2:38:05
That billion dollars goes into a really concentrated set of core positions, something like 25 companies.
2:38:12
>> And then if we do our job right and we partner with the right teams, some subset of those go on to become iconic public businesses.
2:38:17
And the founders do really well, our investors do well, we do well.
2:38:21
We're not trying to like optimize at the margin and spin up an SPV here and spin up an SPV there.
2:38:24
We think it like takes the eye off the ball.
2:38:27
Like the only thing that really matters is leading that first or second round in in the great companies. >> Okay, love that.
2:38:32
Uh, do you think that the fact that there are other firms spinning up a lot of SPVS for bigger and bigger deals could be just I'm trying to resolve the cognitive dissonance of like I'm looking at a chart going down down down in terms of money and then every day I'm hearing bigger and bigger numbers around the AI boom and the AI bubble potentially.
2:38:52
And it just feels like maybe some of the dollars that are flowing into just tech and growth investments and high growth companies is maybe not being captured by v traditional venture capital firms.
2:39:02
It might be sitting outside of the normal system.
2:39:05
Do you think that's possible?
2:39:07
>> Yeah, I think I I think it is.
2:39:07
So maybe two-part answer.
2:39:09
So one is power laws always dictate a technology in venture.
2:39:13
AI makes the power law more extreme.
2:39:13
So we'll, as we're saying, there's going to be a smaller set of companies, but also a smaller set of firms and capital pools that are involved with those companies and supporting those companies, and they will become larger than ever before.
2:39:22
And I just saw the news about the most recent SpaceX tender.
2:39:25
It's just the latest example of that.
2:39:29
>> But then the second is you're right like a lot of the capital especially at the very late stages may not look like traditional venture.
2:39:35
I mean a lot of it is actually corporate capital.
2:39:36
is actually corporate capital. If you look at the role that Nvidia just Nvidia alone plays in AI financings that's a big portion of dollars uh SPVS are are for sure a piece um other capital pools that we wouldn't view as traditional venture capital firms crossovers >> credit debt I mean there are there are companies where they're hard tech and
2:39:55
they'll see you'll see a big headline number 100 million 200 million raised and actually 80% of that's debt because yeah they're going to be buying a building and you don't want to pay for that in in equity and so yeah that's another maybe distortion to the financing >> and as a as a as a as a founder like you want to pick the mostly optimal way to finance the business at any junction in time. It's not always going to be
2:40:14
It's not always going to be traditional venture capital.
2:40:16
If there's a that provider or strategic capital provider who doesn't think about ROI on the capital the same way a traditional venture investor would like that could be a lot more attractive for you at a certain point in the company's life.
2:40:25
So I think it's probably overall healthy for the ecosystem and honestly great for founders but that could explain what you're seeing in the the report that you're referencing.
2:40:34
>> Talk to me about Greylock Edge.
2:40:34
how like what's the pitch to founders?
2:40:38
There's so many different ways to start a new business.
2:40:41
I'm I'm I'm interested in how you carved out a unique product there.
2:40:47
>> So, one thing I love about Greylock is our history is defined by helping founders get started from scratch in our offices.
2:40:53
If you rewind the clock 20 years, there are two companies that got started at adjacent desks in our San Mateo office.
2:40:59
One is a company called Palo Alto Networks, which is a ballpark $150 billion cyber company today.
2:41:02
And the second is is a company called workday.
2:41:07
>> Since then we started other we've helped start >> um celebrating. >> Yeah. Keep them going. Keep them going.
2:41:18
>> They got two banger companies. Let's go.
2:41:21
>> Uh >> do you still have do you still have those desks?
2:41:23
Like do you do you keep them in like a glass box and pull them pull them out?
2:41:29
>> We have we have a variety of good luck charms from that office.
2:41:31
I don't think we we've now elevated to the modern standing desks uh which I don't think were used back then.
2:41:36
Um but uh but and then I'd say since 2005 we've had another eight or nine companies get started that way including you know abnormal which is late stage private and others.
2:41:45
So with Greylock Edge we took all of that and we said hey let's go take that to the market so entrepreneurs understand when they get started they can work with us before there's an idea and we will work with them to help identify the right idea.
2:41:56
We have nine senior recruiters on our team.
2:41:58
They place an engineer at a portfolio company every other day.
2:42:01
So we'll help build out their initial engineering team and then we have a large customer development arm that sources like somewhere between 40 to 70% of the first two years of pipeline.
2:42:09
So kind of the way I look at it is we're an Iron Man suit.
2:42:11
You plug into the Iron Man suit, we accelerate you out of the gate and then once you're on your own, you kind of get rid of the Iron Man suit.
2:42:18
>> Do you think it's particularly good uh for B2B enterprise companies?
2:42:20
I mean that that sounds like where because if I'm like ah I'm starting a I'm starting a like a consumer company for you know Midwestern moms or something I'm going to be like how how are you going to help me go to market necessarily. >> Exactly.
2:42:36
I I'd say our focus is horizontal enterprise software. >> Okay.
2:42:41
>> And and what I mean by that is by the way like there's 20,000 21,000 companies in the world that do north of a billion a year in revenue. >> Cool.
2:42:48
>> They control like most of IT spend in the world. Yeah.
2:42:50
>> So very simplistically, if you're an enterprise software entrepreneur and you can build something that can sell to those 20,000, >> you can build not just a public company, but a company of the scale of what I just spoke about and for those we have an understanding and an ability to accelerate.
2:43:02
It's not going to apply to everything what you know but but for that shape of company, it's very very successful. >> That's amazing. Cool. Jordy, anything else? This is a great >> Yeah.
2:43:11
Do you uh do you guys have any kind of thesis around uh what's been happening uh to SAS in in public markets?
2:43:19
I was listening to uh the new Invest Like the Best episode uh yesterday uh with um sorry I'm blanking on his name.
2:43:28
He talked about space data centers.
2:43:29
Uh >> Gavin Gavin Gavin Gavin Baker, sorry.
2:43:33
It's Gavin Baker was on and uh talking about how he thinks like they're there's a lot of these uh enterprise SAS companies that are not really willing to uh kind of like cut into their margins and lean heavily enough into AI.
2:43:45
and lean heavily enough into AI. like what's your guys' like general clearly you're bullish on the enterprise like for these companies that are getting off the ground and then maybe even latest stage companies like what is your general framework for how to think about how SAS is evolving I think in order to see a new rise in software you need three things to be true you need a new pricing model you need a new underlying software interface
2:44:13
and you need a new data model last time that happened was in 2005 with cloud and the rise of those companies that's happening again now and in our view it creates an opport it creates the first opportunity by the way investors have been looking for this for a long time like 8 years ago was mobile and people like mobile CRM mobile HR software but that was just a new interface it wasn't fundamentally disruptive I think the
2:44:32
confluence now with sort of this agent era is fundamentally disruptive and we are going to see uh us uh like let's say latestage and public software companies at threat from new startups that come in with an outcome oriented model an
2:44:45
agentic based interface and oper operating directly on the unstructured raw data versus a structured schema and it's it's very disruptive right and like you know for example we're investors in a company called resolve AI which
2:44:56
automates software operations on top of observability tools >> but now when you have agents doing all that work instead of users and humans you have to ask yourself okay well if I'm a large public SASCO in that space all of a sudden I've been
2:45:08
disintermediated from my end user what does that really mean for my long-term durability and so we take like a very constructive view on it which is really good good for new startup s and new companies. I think Gavin was making the
2:45:17
I think Gavin was making the comment that these late stage and and also public companies, they're in a bit of a stuck between a rock and a hard place because they worry about short-term margins.
2:45:26
In order to really lean into AI, you have to be willing to take down your margins with the belief that over time you're going to drive value and margins will come back up as the unit cost drops.
2:45:33
A lot of companies are not willing to make that long-term investment and in that dilemma creates the opportunity for startups. >> Makes a lot of sense. Well, thank you. Thank you for joining.
2:45:43
Uh, great to meet you and uh, sure will be back on soon.
2:45:48
>> Thanks for having me, guys.
2:45:49
>> We'll talk to you soon.
2:45:49
Have a good day and merry Christmas. >> Merry Christmas.
2:45:53
>> Gemini 3 Pro, >> Google's most intelligent model yet.
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2:46:06
We have our next guest in the reream waiting room, Nicholas Kellis from Xite.
2:46:10
He's the CEO and the CTO. pulling double duty. Some people work 996.
2:46:17
>> Working two jobs at the same company. Is that right? >> That is correct.
2:46:22
>> How explain that to me.
2:46:22
What What does your day look like? What do you do? What are you building?
2:46:26
But also, uh, walk me through the life of a CEO and a CTO all in the same one body. >> All right.
2:46:33
So, a lot to unpack there.
2:46:35
Uh, so I'll I'll first start with what we're building. >> Yes.
2:46:38
>> Uh, and in order to do that, uh, let me start with some context.
2:46:41
So I think it's valuable to step back and you know first recognize like semiconductors are an essential part of modern society.
2:46:49
Um they're critical to our economic and national infrastructure you know in terms of AI you know HPC data quantum and they span all the way to you know virtually everything that's under the Christmas tree this year is going to have semiconductors integrated.
2:47:02
So they truly are you know probably our our most you know important commodity to this nation.
2:47:09
And so what [clears throat] Exite is doing is we're building the world's most powerful lasers to transform the manufacturing of those semiconductors.
2:47:17
>> So we make them better, we make them faster, we make them cheaper, and we make them require less energy to produce. >> Mhm.
2:47:25
>> So that's what we're doing at Xite. >> Yeah.
2:47:27
>> Um, as far as my role, Yeah.
2:47:27
Uh, it's like I think anybody in a startup, it it is wearing a bunch of hats.
2:47:32
I actually get credit for a couple hats.
2:47:33
Um, but, uh, most people don't.
2:47:35
Uh so yeah, we've been you know focused on building out the technology and now of course with this LOI which we're getting a lot of u you know press around um that's really ramping up our efforts to build our prototype and advanced to our first commercial products.
2:47:51
>> How did you meet Pat Gellzinger?
2:47:51
We had him on the show a couple months ago, a couple weeks ago and it was amazing.
2:47:58
Huge fan, but I would love to know about your relationship and how it's developed. >> Yeah.
2:48:04
So so met Pat through XLite.
2:48:04
>> Yeah. So so met Pat through XLite. Um so he was you know I'm sure as he described to you out looking trying to figure out what his next thing was going to be um exploring the world of venture capital happened to come to playground but was already aware of Xite and you know what
2:48:19
we're doing with light and its applications orthography you know that is something that is near and dear to Pat Pat is a technical person at heart he believes very strongly and the need for this type of you know capability to drive the innovation that's going to bring you know leading edge semiconductor manufacturing back to the us. So he he kind of sought us out um to
2:48:35
So he he kind of sought us out um to some extent and then from there it just became uh you know an incredible relationship.
2:48:43
Um Pat has had a profound impact on the company.
2:48:47
Um from you know just adding that kind of gravitas and cache and recognition of what we're doing through to being you know he's taken on the uh undesirable role of trying to make me a better CEO.
2:48:58
Uh so he's and he does everything in between.
2:49:02
So, uh I am eternally grateful to him and I can't uh give him a high enough regard.
2:49:07
>> And can you can you take me through the the the the US Department of Commerce announcement, the deal?
2:49:13
Um and I I mean I I I want to know like how the deal came together, but how I should think about it from the perspective of uh is it more of like a venture capital style investment or like a contract to deliver specific things?
2:49:26
Walk me through uh exactly what your relationship with the Department of Commerce will be over the next few years. Sure.
2:49:31
Um and hopefully it extends beyond a few years. Yeah.
2:49:34
Um first and foremost, I want to recognize that, you know, this administration um really did approach this with an incredible urgency >> and creativity.
2:49:45
>> And I'll just kind of give a sidelight that I really believe that it's going has to be an essential part of our industrial policy going forward.
2:49:53
>> We cannot continue to believe that the status quo is going to keep us competitive.
2:49:57
>> Um so I'm really grateful for that.
2:49:57
But I have to emphasize that that urgency and that ability to move quickly was premised on lots of incredibly, you know, diligent work that has done by the Department of Commerce.
2:50:10
We've been engaged with them for over two years.
2:50:14
>> Uh so there's over two years of tech diligence of commercial diligence of financial dig diligence that they were able to leverage.
2:50:21
So they moved quickly, they have the sense of urgency, they're acting creatively, but they it's really rationally founded. Mhm.
2:50:28
>> So what does getting to the first commercial product look like, you know, uh more tangibly?
2:50:36
>> So it it definitely goes through our prototype.
2:50:38
Um so one of the key things that XLite is doing is we're leveraging very mature technologies that have been developed in the national labs over decades.
2:50:48
>> Um and so we take these mature technologies that have been, you know, operating in light sources for science and we're commercializing them for semiconductor manufacturing.
2:50:54
So we have the advantage of their mature and proven.
2:50:58
We've you know taken the opportunity to apply some unique IP and how we bring that system together and how we apply it [clears throat] for semiconductor manufacturing.
2:51:05
And so we're now in the process of building our first prototype and this is not a you know proof of concept prototype.
2:51:11
This is a basically kind of you know for lack of a better term a show me the money prototype.
2:51:17
The the semiconductor industry wants to see that you know you connect this to a scanner you expose wafers it works as it should. Mhm.
2:51:25
>> So that's that's the starting point and then you know along that path we're continuing to work very closely with our customers.
2:51:31
Our customers are the fabs and building that you know value proposition so that the you know as soon as we have that first prototype done we're already going to be building our first commercial system. >> Yeah.
2:51:41
How how much of uh your business is like capital intensive actually just you know dollars out the door facilities equipment versus human capital intensive like over the next few years how do you expect to balance the different costs in the business? >> Yeah.
2:51:58
So it's a you have to be kind of calibrated when you talk about capital.
2:52:03
So I came from quantum computing before this uh and you know spent a long time building these types of facilities.
2:52:07
So compared to quantum fusion, it's not capital intensive.
2:52:11
Uh but compared to you know SAS or something like that, it's very capital intensive.
2:52:16
>> Um so it's you know to build the facilities in the you know few hundreds of millions of dollars.
2:52:20
>> Um >> and just you know kind of getting back to my previous response because we're leveraging mature technologies.
2:52:25
It's you know it we are able to you know kind of stand on the shoulders of a lot of work that's already been done.
2:52:32
So from a personnel perspective we're quite lean.
2:52:36
Um but from you know a capital expenditure it's it's all going in you know for the most part into hardware into infrastructure to build these facilities out. >> Yeah. >> Uh that is amazing. Congratulations. I want to ring the gong.
2:52:49
>> We have to we have to >> congratulations. >> Very very cool.
2:52:54
Uh yeah congrats again to the whole team uh on on the grant and uh yeah we're we're excited to follow the journey.
2:53:03
>> We will talk to you soon. >> The loop.
2:53:04
>> Have a good rest of your day. Good morning. >> You too. Thanks.
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2:53:15
Our next guest is the CEO of DuPont Registry Group.
2:53:18
Uh we I believe he's in the reream waiting room now.
2:53:22
We will bring him into the TV penulture. Welcome back. Back in the garage.
2:53:26
Thank you so much for joining the show. >> Hello. How are you?
2:53:31
>> Great to have you back. >> Fantastic.
2:53:31
What are you in front of today?
2:53:34
Uh, it's a 575M from Ferrari.
2:53:38
>> Very nice little roof scoop on there. Uh, I love that.
2:53:40
Uh, what else is new in your world?
2:53:42
Give us the latest update.
2:53:45
What news is going on in your world?
2:53:48
>> So, the big news that, um, we've been working on for a while is that we launched Dupon Registry Live, which is the Dupon Registry online auction platform.
2:53:57
Completely different value proposition.
2:53:59
We are the only uh online auction platform offering 100% sell through.
2:54:04
So if you come and you want to sell your car with us, we guarantee that the car will sell at the price that you decide.
2:54:10
>> And the second thing is that for the buyers, we are giving 14-day return policy. >> Mhm.
2:54:15
>> So it removes buyers remorse.
2:54:15
You can buy that car, you can drive it, you can return it, we'll take it back. >> That's crazy.
2:54:20
Is that extremely capital intensive?
2:54:22
Do you have to raise a bunch of money to make sure that you're guaranteeing liquidity? >> Yeah, we did. We did raise capital.
2:54:27
We have a we have a bank partner at the moment.
2:54:31
We raise $34 million in working capital.
2:54:34
>> We're working on extending that line by the end of the year >> and it allows us to acquire the cars.
2:54:40
Most of the cars today are own inventory but we believe that a lot of dealers are going to sign up as well as private.
2:54:46
>> So I mean I imagine that there has to be a rigorous vetting process on the way in in that case, right?
2:54:50
You don't you can't just take any any old Nissan Morano C Cross Cabriolet and throw it on the site. Uh there's a bar.
2:54:58
How do you think about setting that bar for what can make it onto the DuPont Registry?
2:55:06
>> So, so we do have a big location in Nashville.
2:55:08
We're actually uh moving into the location next week.
2:55:10
It's a bigger location, 65,000 square foot.
2:55:14
>> So, we take ownership of the car.
2:55:14
We're going to ship the car to that location.
2:55:17
We're going to do an inspection that will bring the Dupon registry certification to the car and then we are taking nice picture of the car. We're pushing it online. >> Mhm.
2:55:27
>> And then we uh we make sure that our >> So, have you have you guys been specifically acquiring inventory in order to launch the platform or were you historically holding inventory?
2:55:35
cuz I I always have leveraged the platform just as a as a buyer and enthusiast to just browse cars and and know that you guys are sourcing from a ton of different dealerships.
2:55:50
>> Yeah, we're sourcing from our dealership partners.
2:55:52
We're sourcing from private sellers.
2:55:53
This has been going on for the past 18 months.
2:55:55
Uh we're now transacting close to a thousand cars every month. Mhm.
2:56:00
>> Uh and part of those now cars is the new omni channel strategy >> to be able to uh sell those cars to the potential buyers.
2:56:08
We do have dealers today on our platform that are bidding for cars.
2:56:11
We do have clients as well.
2:56:14
This is the power of the Dupont Registry Group ecosystem. >> Mhm.
2:56:16
What's the most underrated car on Dupont Registry today?
2:56:21
>> Right now, the only one that I would build on >> for me personally, yeah, >> I have my eyes on that target singer by Singer. That's the one. >> Beautiful car. It's olive green. It's taga. It's just amazing. >> Yeah. Yeah. It looks remarkable. >> It's stunning.
2:56:36
[laughter] >> What What do you like how how is the uh I can understand, you know, having the having the guarantees, having that return policy, having the certification, that all makes a lot of sense.
2:56:48
It's nicely counterpositioned against other auction platforms uh both both new and old that are kind of relying on you know kind of winging it.
2:57:00
Uh but uh what what are am I missing anything around like the other ways in which the platform is opinionated or differentiated?
2:57:10
>> No, it's exactly that.
2:57:10
Those are the two main differentiator.
2:57:12
Um this is our secret ingredients.
2:57:14
This is where how we are differentiating from platforms that are also doing online auction.
2:57:19
It's it's very disruptive.
2:57:21
A lot of people are asking us how do you do it?
2:57:23
Uh this is our secret source.
2:57:25
We have the platform and we have the ecosystem to uh uh making us able to do these kind of things. >> Yeah. Yeah.
2:57:34
I mean it's a great great uh value prop. Makes a ton of sense.
2:57:38
>> Uh what are you what are you most excited about uh for 2026 uh in the industry broadly?
2:57:42
uh how did you react to uh some of the regulatory changes here in the US?
2:57:48
Are you expecting to be selling a bunch of mini mini Toyota trucks on [laughter] I don't know if those will meet the bar, but yeah, what's most exciting to you broadly in >> Yeah, for me the most exciting things there is a there is a report coming on Friday.
2:58:03
It was a it's a report done by Boston Consulting Group and they they used our data and our audience to run the report.
2:58:09
It's estimating the luxury car market in the US to be $ 110 billion.
2:58:14
And it's a market that in the next 10 year is going to double.
2:58:18
>> We actually see that in the transaction we run now.
2:58:20
There is a lot of potential.
2:58:22
All the tariffs etc are actually fueling the luxury used car market at the moment.
2:58:28
There's a lot of demand for those cars and our buyers are really really looking to have convenience to be able to transact online.
2:58:36
And this is what we're building over the next 18 months.
2:58:40
You will see a massive technology transformation in Dupon registry group and we will start enabling transactions online with the capacity for any buyer to buy the car from your phone, get it delivered. >> Love it.
2:58:54
Uh question from the chat.
2:58:54
Uh how are you thinking about Chinese electric vehicles?
2:58:59
We've talked about BYD on the show and Xiaomi.
2:59:02
Uh do you think that there that there's promise there? opportunity there.
2:59:07
Do you understand how your business might integrate with them because they're not being sold in the US yet?
2:59:13
But do you have any predictions for where that market might go?
2:59:18
>> I mean, electric cars, some of them are amazing electric cars and we've seen one of them beat the world record for the fastest cars on the road. >> Yeah.
2:59:27
>> To me, 30 years from now, everyone is in a robo taxi.
2:59:30
No one is driving for their day-to-day, daily driver. >> Yep.
2:59:34
>> And they're going to drive on weekends to have fun. >> Yep.
2:59:36
Would you drive a Chinese electric car or would you drive a manual Ferrari? Right.
2:59:43
[laughter] >> So, our business, the business we're in, I think we're fine. >> You think we're fine? I love it.
2:59:49
>> Do you think do you think there'll actually be a resurgence in kind of like track and and racing culture?
2:59:53
I know there's uh some change of uh I don't know if this is public, but there's a a uh uh real estate developer that's currently buying uh uh a racetrack here in California.
3:00:09
Uh I think there could be some renewed and and if if people no longer uh have to drive on their commute, I think there will be more excitement around track days and things like that. But uh does that align?
3:00:23
>> Of course, it's completely aligned with our strategy.
3:00:25
We have a lot of experiences today where we get people on the road where we are making sure that they can drive their cars in a very safe condition but in the best condition.
3:00:33
It includes track days, it includes rallies in the best places around the world.
3:00:37
Uh and I do believe that there will be more and more of that in the in the future. >> Yeah.
3:00:44
Maybe maybe that's the next filter that you add on.
3:00:47
I'm looking at DuPont registry and I see, you know, you can filter by price, mileage, year, you know, transmission, drivetrain. Uh track only.
3:00:56
You got to give us a track only uh a filter, but hopefully soon.
3:00:58
Uh I I know the product's continually iterating, but thank you so much for taking the time to come chat with us.
3:01:06
>> Yeah, great to get the update.
3:01:06
Congrats on on all the all the progress. Always a great time.
3:01:10
>> Excited to uh start bidding myself.
3:01:12
>> We'll talk to you soon.
3:01:12
[laughter] >> Great to see you. >> Thank you everyone. >> Have a good one. Goodbye.
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3:01:44
And oh, there's my phone. Let's see how I did.
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Well, we have our next guest here live in the re in in the not the reream waiting room, the real stream waiting room, the TVP Ultradome waiting room.
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We have Phillip from Vicata. Welcome to the show. >> I want to here.
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Uh, introduce yourself, but then get ready.
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Just go hit that gun right now. >> Let's do it.
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>> Let's hit that gun right now. >> Let's do it. >> That you don't know.
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You don't know anything about him or his company yet, >> but you know he's here for a good reason because the company has of course raised money.
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But please introduce yourself, introduce the company, and then we'll get into the news. >> Sure. Yeah.
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So uh excited to be here. I'm Philip.
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I'm one of the founders and CEO of a company called Verata.
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>> And Verata is solving a super important uh problem in the world, which is the problem of safety in the physical world.
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And we solved that problem with AI.
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We solved that problem with software.
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And we deliver that through devices like cameras, like door access controllers, alarm systems and uh so on. >> Yeah.
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So I mean Anderol in some ways is physical security for the military and you have flock safety at the municipal level.
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Are you at the B2B level, the BTOC level?
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Like who are your customers? >> Yeah.
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So think of uh think of enterprises, think of schools, think of uh government buildings, think of uh anyone and everyone in the world, places you probably interact with every day, airports, hospitals.
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If you go to the gym, gyms, >> airports in the gym, the gym's gonna be in the airport.
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You're two for one there.
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>> So, you get two for one there.
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[laughter] >> Uh but but let me make it real for you of like an example.
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So, you know, we do uh like a hundred of the Fortune 500 users today.
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Uh but to give you a sense >> and and and that's in their office buildings, other campuses, >> office buildings, campuses, [laughter] we're getting after them. Yeah. So, we'll get them all.
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But, uh but yeah, to give to put it in perspective, I think, you know, it's sort of like an example makes sense.
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So just in LA recently we got a customer which is Terowatt, right?
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They are a commercial vehicle charging station.
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So they charge the self-driving cars, the Whimos of the world, you name it.
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Um and their challenge is they've got you know kind of premises outdoors parking lots where all expensive vehicles come in and they need to secure that, right?
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And they don't want a guard on every parking lot.
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Uh and so what's their best next alternative?
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Well, up to this point it was you can put cameras and then you can hire people watching those cameras and they're very expensive.
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And if you know anything about people, they're really bad at watching video. Oh yeah.
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People need especially because you could watch 300 hours and there's only 30 seconds actually. Exactly.
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>> And so you take out your phone one time to watch that one Tik Tok and then >> it was a really good meme.
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It was a really good me and you miss and you miss exactly what's going on.
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You miss the guy jumping the fence.
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You miss the guy stealing the cable or doing whatever.
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And so that's what we're able to do in real time.
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I imagine this product sells itself because if uh if if you don't have security, your sales people can just go straight to the CEO's office.
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They just break right in. Don't do that.
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>> So, you raised uh new money from Capital G, Google, $5. 8 billion valuation.
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>> You are uh it sounds like some some or a good amount of it was used uh was secondary.
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>> Um when did you start the company?
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Uh I think >> what were the first products? >> Yeah.
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What were the first products? >> Yeah.
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Look, so let me just give you like a brief on the business and how it's grown, right?
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So the business is about 9 years old, almost 10 years old.
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Uh you know, in its history, we started in 2016.
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>> Sorry, you can't you can't hear that.
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I just I just overnight success.
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>> This is the overnight success one.
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>> But yeah, it's been 10 years.
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We're at 30,000 customers globally, 17 offices around the world.
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Like I said, 100 of the Fortune 500.
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Uh so that's that's kind of the journey of the business.
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We started in video security initially.
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So that was the first idea and then from there we expanded to a platform of physical >> and that product video security was that a white labeled video camera and then you were doing the the SAS product the software around it or were you building hardware on day one? How did that all come? >> Yeah.
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So think of it like an end toend solution, right?
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Like think of it almost like the iPhone of the video security industry.
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You buy it from us, we guarantee it. It works.
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You know we do the hardware.
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We do the software that runs on the hardware.
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We do the cloud software and we seamlessly integrate it all together and that was the magic that our customers fell in love with from the beginning. That's where we started.
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So that's 2016 2017 we launched the camera that goes really well.
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I mean the market you know really loved the product when we launched it >> a few years.
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>> Was there any doubt or was it just up and to the right immediately?
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>> Well you know it's it's interesting like there was doubt at the very very beginning right like in 2016 we were starting the company and people said Philip why are you doing hardware?
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Why not just do software?
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Just build, you know, just build back then computer vision.
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It wasn't even AI back then, right?
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>> There were so many hardware failures around that and hardware is hard, right?
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So I I get like I get why people were skeptical.
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>> But then once we got the product to market, people got it and it just worked well.
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The customer reception was phenomenal and it was one of those stories where it just took off.
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>> Um and from there, you know, two three years into the business, we realized that the opportunity is much larger than that, right?
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It's not just video security.
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It's actually this broader world of physical security.
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The customer base has a dream of an integrated system that solves broader problems.
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So we started looking at access control.
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Think of all the badge readers, how you get into buildings.
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We started looking at alarms. Massive market.
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Every building that closes at night has an alarm system.
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You know, all of those send you false alarms.
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They've been invented years and years ago.
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All it takes is a truck drives by, a sensor shakes, and you're getting a call at 2 a. m. What is that about? Right?
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Police stopped going to alarms because they get so many false alarms.
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So we said, "Let's solve that."
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It's the same thing with car alarms on the street. You walk cars going off.
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No one even just psychologically in our society really stops everything if they hear a car alarm going out.
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If you're at a restaurant, you're not going to be like, I got to go check on that.
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Something serious is happening. You're like, yeah, car.
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>> So, you know, so that's where it evolved to.
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We, you know, we now have the full sweet platform. Uh I'm super stoked.
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Like one of the cool things is, you know, we it's only been like four years, 5 years really since we expanded beyond physical security.
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77% of my core customers now use two or more of our products, right?
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50% use three or more and so on and so forth.
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So this platform story is really resonating.
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It's playing out really nicely.
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>> Will we see robots integrated into your platform?
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I've had this uh thesis that uh not not the most original thought but uh this idea that like security guards are primarily there to just be a human that is like at least a human-shaped thing that is on the premises providing this sort of deterrent effect.
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And I could see humanoid robots getting traction faster and just standing in places that need to be secured and being like having a physical presence >> sort of looking intimidating.
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>> Looking intimidating before they're really good at like actually adding value in my home. Yeah. And I don't know.
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I'm sure you've like >> how do you think about human [clears throat] >> I mean look I think you might have some of that.
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I mean I don't know how close that future is right but um I think you know fundamentally if you think about physical security it is a human problem and I think humans are not going away from the problem of solving physical security for other humans.
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So yes we might have robots yes we might have sensors but ultimately at the end of the day I think you know security personnel is going to exist and it's going to address those human problems.
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Yeah, >> it's just the technologies that we're building, technologies like humanoid robots will make that security personal have a superpower in a way, right?
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It'll make them more aware.
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It'll make them do more useful things.
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It will save them hours of time watching mindless video or missing things and focus them on actually resolving the emergency at hand.
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>> Yeah, it's interesting thinking about the the the role of the human security guard.
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Like you can almost think about it as like a bundle of tasks or or or or jobs to be done.
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One is basically a camera that you can move.
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You know, a security guard can go look behind that gong and see if there's something going on there.
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But at the same time, like you can just put a lot of cameras and get coverage.
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Uh but a security guard can also go and ask for more context.
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Say, "Oh, hey, are you supposed to be here?
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Let's have a conversation about this."
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And that's something that we're not quite there with the humanoid robot.
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Um, and so are there any other formats that you're excited about like the the four-w wheeled robots or the drones?
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I mean, I saw doesn't Amazon sell a a drone camera inside your house, which I thought was very odd.
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I don't know if that product's doing well, but uh, how do you think about the other form factors that might be a little bit more economical, a little bit more tractable before we get to the full humanoid?
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to the full humanoid? I think look the reality of it is is I think you know the cost of sensors and the cost of being able to be aware of what's going on is just going down as it's not a new idea right we've had sensors in the world you know for decades really we've we've had it right uh and so you know my sense is
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the ease of deployment of cameras the form factors of cameras it's going to get easier it's going to get simpler it's going to be easier for the customer to use uh and it will take all sorts of form factors right it might be a camera that's drilled into the ceiling it might be a camera that's running on solar power. It might be a camera that's on a
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It might be a camera that's on a drone.
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Uh, and by the way, it might not just be cameras, right? It might be radar. It might be microphone.
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It might be other sensors.
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I think the challenge becomes >> what do you do with that information and how do you effectively process that information ideally in real time so that you can mitigate the situations, right?
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Like you don't want to >> you don't want to use it after the fact. Yeah. >> This happens.
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So, like we have great footage of you getting robbed. It's amazing.
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You guys have do do you work with museums?
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>> Yeah, so we we work with, you know, all forms of customers all around the world.
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I mean, you bring up museums, which pops to my mind immediately to Liz. >> Yeah. What happened there?
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>> Which is crazy, right?
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I mean, in broad daylight, you know, people came with a uh, you know, with a lift and and got in there.
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Uh, but it's actually a very difficult problem to solve, right?
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Because if you think about it, um, they have to secure the perimeter of that building.
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And if you've ever been to that building, it's a massive structure.
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If you literally had humans or even robots roaming around that building, that would be a lot of humans and a lot of robots, right?
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And so, uh, one of the things we're excited about is, you know, camera technology paired with AI is now getting to the point where monitoring for things like that, uh, is is more reliable than humans doing it.
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Uh, it's faster than human humans doing it.
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faster than human humans doing it. Uh and so in a situation like that we could totally you know alert the physical security response team like hey something suspicious is going on right here right and we could do that in real time with very high accuracy uh without
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missing events right so those type of situations we think we can uh we can solve >> yeah help me walk through how AI actually impacts like decision making on top of a sensor platform because I imagine uh you know the the first version was probably just some business logic >> if movement send push notification or email or something. Uh then you get to some sort
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Uh then you get to some sort of heruristic based, you know, linear regression or something.
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But now you actually could take a video and upload it to an LLM and ask it, does this look suspicious?
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And it would just tell you like, yeah, that does look suspicious or not. Uh are we there yet?
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Are we using generative AI?
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Are we using transformer-based models for this stuff?
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Like what's the state-of-the-art?
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Yeah, look, so this the state-of-the-art frankly is it's amazing and the amount of progress in the market in the last two years has been just phenomenal, right?
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Like if you take a video clip and I don't know take it and upload it into Gemini, Gemini will know everything that happened in that video clip and it just blows your mind, right?
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Like 5 years ago that was science fiction. Today that's a reality.
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Uh so you know we rely on some of that, right?
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of that, right? uh and and and I think the way we think about that is >> you know we uh you know we try to understand what's going on on in all of these scenes in real time with particular sensitivity to things that might be security incident related right and so if you think about that you know kind of premise like what is common to
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all security incidents or most of them while they mostly involve humans they mostly involve vehicles >> there's at least some motion in the frame >> there's some motion going on that was the basis right and so 10 years ago >> you don't need to just be uploading you know Oh, there's 10 seconds of video where nothing happens. Upload it to Upload it to Gemini. Pay the token. No way. >> Yeah. Yeah. Exact.
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Well, and so you're on to something, right?
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So, so, so, so I think that's that's kind of the crux of it, right?
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Which is like >> processing all of the video from all sensors and all cameras today is still prohibitively expensive.
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And so, you can think of almost as like a layered filtering approach, right?
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We use different heristics and different mechanisms.
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Some on the edge on the processor that's on the camera, some then in the cloud, and some with like heavier models that we offload to.
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But with that full stack, we're able to, you know, discern things that really matter.
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And that might be something like, you know, a person climbing a fence, right?
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Or a person carrying an object or an object left behind or, you know, soon enough a person pulling a weapon. >> Yeah. Yeah. Interesting.
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Uh, is there a demand for uh sort of on premise inference for any security stuff like this?
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Do you see do you feel >> Yeah.
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>> Yeah. I think look the as I said I mean like the whole thing is you know how do you deliver this inference at scale at a reasonable cost that makes sense to you know kind of the broad base of customers and I think the only way to do that frankly is to do some of that inference um on premise the way we think about
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that is we do that on the edge on our device uh the two reasons for it one is you know purely the inference cost the second is is actually if you think about it most of the world is actually not connected with fast enough bandwidth to push all the highquality high resolution data in real time to the cloud to do the processing in the cloud. And so that's
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And so that's yet another reason that we you know take this like you know kind of hybrid cloud approach as we call it where we do some processing on the edge and that's been phenomenal for our devices.
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>> How do you think about pricing for nonprofits for more sympathetic audiences?
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When I think about like security for, you know, a big tech company, I'm like, they can pay the full price.
3:15:28
But for a local school who might be worried about an intruder or some sort of, you know, uh uh disastrous situation that could happen at at a public school, uh you know, you don't want them it would just feel so bad if it was like they they almost said yes to the contract, but it was just out of reach.
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How do you think about making sure that you're delivering the product? >> Yeah.
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So, look, we try to be flexible and understand our clients and their needs.
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in some product categories.
3:15:49
We actually even have, you know, kind of special pricing for that, you know, for that.
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But, um, you bring up a good point, right?
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Schools are a big customer segment for us, particularly in the US, K12 education.
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Uh, and, you know, some of it stems from, you know, kind of the the very scary security issues.
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the very scary security issues. But what we're finding which is really interesting is you know the school might invest in our system to sort of you know prepare for these dramatic scenarios but then they're finding so many more daily uses okay because we had made the
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software intuitive right so we're solving problems like kids vaping on campus or kids bullying each other right or you know I love the cases where like the principal sends us some video of like you know these two kids got into a into a fight and I was able to pull it up on my phone and and figure it out. Oh, and by the way, I could like on my
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Oh, and by the way, I could like on my phone, you know, quickly obscure the faces of other kids in the scene and share the two kids that were in trouble with the parents, right?
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So, things like that are, you know, in my mind, it's you're building it out because you're, you know, you're going after the very scary problem, but there are so many more positive externalities.
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>> It's a completely different lifestyle.
3:16:55
You used to be able to >> You used to be able to say, >> you used to be able to throw down and get away with it. >> Well, let's be real.
3:17:00
Kids kids are creative, right?
3:17:01
So, they they will do they will do fun stuff no matter what. Yeah, that's amazing.
3:17:06
>> Uh what's what's next?
3:17:06
You'll get the rest of the Fortune 500, the other 400.
3:17:11
Uh are you going to go public at some point?
3:17:14
You want to stay private forever?
3:17:17
>> Yeah, look, I mean, I think we're a business that is definitely going to be a public company.
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Uh if you think about it, we've got a market that supports it.
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Uh you know, $55 billion a year in spend in the categories that we operate in today.
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Uh that's six product categories.
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We're chasing other adjacencies.
3:17:31
You know, massive customer adoption.
3:17:33
Our customers are buying more from us every year.
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So a customer who buys Vicata 12 months later they double their spend.
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You know uh 24 months later they triple and so on and so forth.
3:17:43
Uh so it's you know it's the kind of business that has the profile to be a public company.
3:17:49
We're not ready to make that announcement today yet.
3:17:50
But stay tuned and yeah we'll keep you posted. Yeah.
3:17:56
>> What about uh like the supply chain?
3:17:56
I mean if you're building physical hardware I imagine that the tariff like liberation day was probably stressful to you.
3:18:03
How are you thinking about um what and also security is important, right?
3:18:08
Like this is like potentially critical depending on who you're selling to.
3:18:11
Uh how do you think about building out your supply chain for manufacturing? >> Yeah, look.
3:18:15
So, uh yeah, lots of change in geopolitics.
3:18:17
Obviously, we have a you know, kind of Asia heavy supply chain. We started in Taiwan.
3:18:20
We diversified away from Taiwan.
3:18:22
So, we've got, you know, multiple regions in Asia where we manufacture uh you know, our products.
3:18:28
And there's also just different pieces like you know a plastic housing coming from China is different than a semiconductor coming from China right. >> Yeah. Yeah. Exactly.
3:18:33
And then you know then the chips and the RAM and you know all the different components.
3:18:36
But look I would say over the last couple of years we've diversified our supply chain uh you know quite a bit.
3:18:43
Uh so we feel you know like we're in a good spot uh as it comes to that. >> That's cool.
3:18:48
Uh any is there anything that you plan on like reshoring or you're thinking about or looking about uh making in America?
3:18:54
Is that an interesting opportunity?
3:18:57
>> You know, not not at the moment.
3:18:57
Uh yeah, not at the moment. >> Yeah.
3:19:02
>> Uh maybe maybe in the future. I don't know. Maybe. Uh anyway, thank you.
3:19:04
Do you have anything else, Jordy? Great. >> This is fantastic. Thank you so much. It was fun to be here. >> This was great.
3:19:12
>> We need uh we need rata. >> We do. We do.
3:19:14
>> Let's get Let's get you uh >> Thank you so much for having me on the show.
3:19:18
Uh I'm going to tell you about wander. com.
3:19:20
Book a wonder with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and 24/7 concier service.
3:19:24
It's a vacation home but better.
3:19:27
I wanted to close up the show by just reading this post because I just thought of Tyler immediately when this post came up from Jonah Catz.
3:19:34
He says, "Great job on that project, man.
3:19:37
I really like the way you prompted Claude and did nothing else at all."
3:19:44
That's >> Claude is a great model.
3:19:46
>> Claude, it's a good model, sir.
3:19:46
It's a good It's a good slop app that barely [laughter] works.
3:19:49
Well, we have to actually do the show without you, too. Really appreciate you.
3:19:53
>> Have to actually close on this post from Charlie Puth. >> Oh, yes. >> He says, "Hi, Elon.
3:19:57
These sonic booms have gotten progressively louder since they started launching the rockets in Santa Barbara."
3:20:04
>> He's talking about Vand Vandenberg Air Force Base. This one at 3:00 a. m.
3:20:07
today felt like 150 to 160 dB, violently shook our whole house, and really frightened my pregnant wife.
3:20:15
I hope they do not get louder.
3:20:17
Uh anyways uh I I was far enough away and didn't didn't hear anything but uh given the given given the pace at which uh I think the the number of launches >> you see this poses you may want to consider you may want to reconsider living near Vandenberg launch cadence is about to hit a hundred per year from two complexes.
3:20:40
So you're just going to have sonic booms like every every 24 hours eventually. Uh bizarre.
3:20:45
The there is a community note on this.
3:20:48
People are kind of going back and forth.
3:20:49
Says SpaceX does not launch rockets from Santa Barbara.
3:20:52
They launch it from Vandenberg which is 68 miles north.
3:20:54
But he might be saying Santa Barbara County or it might be going past Santa Barbara.
3:20:59
But I mean the outrage from the Santa Barbara crew if this is a real thing is going to be intense.
3:21:06
You got uh >> I mean it's really generous.
3:21:08
It's the Monosto crew that will really come down. >> Santa Barbara.
3:21:13
It's the It's the It's the Monaceto of of California. I don't know. Um No.
3:21:19
>> You mean it's the Connecticut Connecticut? >> Yeah. No. No.
3:21:21
It's not the Connecticut. I don't know.
3:21:23
I haven't I haven't mapped it. I actually don't know.
3:21:24
It's the Catskills, right?
3:21:25
Isn't the Catskills upstate?
3:21:27
It's kind of upstate New York coded. Yeah. Right.
3:21:28
I'd say something like that. I don't know.
3:21:30
We'll have to get some resident New Yorker to break it down for us.
3:21:34
Um but uh yeah, people are people are going back and forth.
3:21:36
I was I was digging into like, is this even possible?
3:21:39
Can it really get up that high?
3:21:41
I feel like we need Brian Johnson to weigh in on this since uh since he is he's both, you know, I believe he's like a big Elon Bull, but he's also extremely sensitive to loud noises and so um I'm sure he'd get up there final post.
3:21:53
We'll start with a black pill and then a white pill on the topic of Southern California.
3:21:59
This person Sam says, "It's actually kind of crazy how washed LA is as a city right now.
3:22:04
Lots and lots and of closed failing restaurants.
3:22:07
The wages here are shockingly low compared to cost of living.
3:22:11
Film industry still hasn't recovered from that double strike two years ago.
3:22:14
I've been saying it's been kind of feel [snorts] like Detroit energy lately.
3:22:19
>> Don't come at me with that activity, brother.
3:22:22
>> Trevor says things are definitely changing and will be painful for a bit, but the glass half full take is that all the boomers who held on to power for far too long are being shaken out.
3:22:30
New blood pumping into every corner of the city next 20 years is going to be magic. >> What is this picture? He's attached. This is hilarious. I like this. >> It's Randy Newman. I love LA. Okay. >> The music video. >> Yeah.
3:22:44
Well, this is a this is a great way to play it out. I love LA. I love that song.
3:22:48
Anyway, thank you for tuning in today.
3:22:50
We will see you tomorrow at 11:00 a. m. Pacific. Sharp.
3:22:52
Leave us five stars on Apple Podcast and Spotify. And have a great day. Merry, merry Christmas. Merry Christmas to you.
3:23:02
>> The [bell] holiday season is upon us >> and we love you. We'll see you tomorrow. Goodbye. Cheers.