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>> [music] >> You are watching TVP live.
4:36
Today is Thursday, March 5th, 2026.
4:39
We are live from the TVP and Ultra Dom, the Temple of Technology, the >> of finance, the capital capital of capital.
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Let me tell you about ramp. com. Time is money. Save both.
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Easy-to-use corporate cards, bill pay, accounting, and a whole lot more. All in one place. We have We are sick.
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John and I are both very sick.
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>> Sick of not podcasting. Let's go.
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We are actually very sick, but >> ill, but >> the beauty of watching TVP live.
5:00
There's no risk of me getting you sick because you're on the other side of a screen.
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Screen time And that's the beauty of a daily show.
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There's no you don't ever have sick days.
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>> Yeah, there's no days off.
5:12
Because there's no days off.
5:13
Uh and uh we have a fantastic lineup today.
5:16
We have Mark Gurman joining us.
5:19
Pull up the linear lineup.
5:20
Linear of course is the system for modern software development.
5:22
70% of enterprise workspaces on Linear are using agents.
5:25
Uh we have Dan Primack coming on from Axios to break down IPO market, what's going on in venture capital, what's going on with venture capital returns.
5:32
Uh we have Do we have Zach from uh uh from uh Plaid coming on today? That'd be awesome if so.
5:40
We have Ken Record from Nominal, massive unicorn round that just happened with Founders Fund coming on uh in person, live.
5:48
>> Of course, Max from Vast Space.
5:48
Well, uh, thank you so much for tuning in today.
5:54
Um, speaking of Plaid, Plaid powers the apps you use to spend, save, borrow, and invest.
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Uh, securely connecting bank accounts to move money, fight fraud, and improve lending now with AI.
6:07
>> why is no one talking about Daniel Gross?
6:09
No one, literally no one is talking about Daniel Gross.
6:12
Uh, he you know, he should be a household name.
6:13
He you should get into the a taxi and they should be like, "Oh, did you you know, did you see how how incredibly dialed, uh, Daniel Gross's AGI trades were in January >> 14th, 2024. >> Yes.
6:26
Uh, this is, uh, great, great website.
6:29
Uh, it's, uh, what is it? danielgross. com/agitrades.
6:35
The the classic Times New Roman serif font, 12-point, just, uh, just hammering it out in the in the vanilla HTML.
6:41
No need for styles, no need for bootstrap templates. Uh, what what's that? CS Tailwind?
6:51
He doesn't need Tailwind for this.
6:52
He just, uh, wrote it in probably markdown or HTML directly.
6:55
And a lot of it has come true.
6:58
Uh, it's interesting because a lot of them are framed as just like open-ended questions, but if you think about, you know, if you believe in AGI and then you go through the questions, like you will see exactly what happened over the last 2 years.
7:10
Um, and this has been the like the under pinning thesis of situational awareness in many ways.
7:16
Uh, Daniel Gross, uh, was a was an anchor of the fund.
7:21
Uh, this that of course is And it's particularly relevant today cuz I'll read the intro.
7:25
Uh, this is January 14th, 2024, over 2 years ago.
7:27
He says, "I think we can all agree that GPT-4 completes many tasks at human-level proficiency.
7:34
It is imperfect in odd ways.
7:36
It can write software like a smart MIT undergrad, but can't do basic task planning like an entry-level EA.
7:40
It speaks all languages but can barely do math.
7:45
Suppose the progress doesn't stop, just like GPT-4 was better than three, GPT-5 is capable of basic agentic behavior, i. e.
7:52
able to accept a task, work on it for a while, and return results. Nailed it.
7:57
And of course today OpenAI is has released GPT-5.
7:59
4, which uh does exactly this quite well. >> Yeah.
8:07
Their uh reviews are coming in. >> Yep.
8:09
And they are quite, quite good.
8:12
Uh Daniel continues, "Some modest fraction of Upwork tasks can now be done with a handful of electrons.
8:17
Suppose everyone has an agent like this they can hire.
8:21
Suppose everyone has 1,000 agents like this they can hire.
8:23
What does one do in a world like this?"
8:26
So, So, let's go through them one by one.
8:30
There's 17, 18 questions, something like that.
8:33
Uh first, let me tell you about Labelbox reinforcement learning environments, voice robotics, e-commerce and expert human data.
8:39
Labelbox is the data factory behind the world's leading AI teams.
8:41
Um so, he kicks it off with uh an an easy question.
8:47
In a post-AGI world, where does the value accrue?
8:50
The people were debating this at the time, application layer versus foundation model layer versus infrastructure layer.
8:57
Uh value has definitely accrued to the infrastructure >> layer.
9:02
I mean, you're even post-AGI, John's new haircut is is paying for >> Paul Graham wrote a whole piece about how brands are important.
9:08
Uh we'll we'll we'll cover that tomorrow, but uh he he compares it to the quartz crisis in the watch world and uh has a bunch of thoughts about value in the post-AGI era.
9:19
Um but just looking back in the last 2 years, value has clearly accrued to the infrastructure layer.
9:24
So, that means chips, packaging, power, etc.
9:26
And this is the situational awareness trade by and large.
9:30
Um Nvidia basically captures and and did for a while more than 100% of the profits from the AI boom because so many of the other companies in the AI space were losing money.
9:42
And so, the foundation labs are losing money, and Nvidia's profit margin went from like 30% to 60% gross margins.
9:48
And the uh it's born out in market cap. So, Nvidia added 3.
9:53
2 trillion in market cap from when Daniel wrote this piece.
9:56
And I remember listening to him on Stratechery talk to Ben Thompson alongside Nat Friedman and say, "Yeah, based on based on ChatGPT, Nvidia seems sort of undervalued."
10:09
And I was like, "Oh, well, if they're saying it on Ben Thompson's Stratechery podcast, it's obviously priced in. Everyone knows this." And I was wildly wrong.
10:18
Never Never doubt yourself.
10:22
Um But, uh what's interesting is that the rest of the platforms uh did not see, you know, 3x gains.
10:28
They did not add $3 trillion in value.
10:31
Microsoft from uh from uh January 2024 to today is only up 4%. Uh Amazon's up 30%.
10:37
And then you do have OpenAI, Anthropic, xAI in the private markets.
10:43
The gains there, they've been huge and staggering, and then it's like the fastest-growing companies in private markets history, shaking the venture capital world.
10:52
You're either in or you're out. It's a huge deal.
10:54
But, you add them all up, it's only 1. 4 trillion.
10:58
>> So crazy when you think it Satya in many ways went on such a generational run. You got a 4% bump.
11:05
>> you had If you had If you hadn't If you hadn't looked at the stock price at all, you would think, "Oh, it's got to be up what? 40 40%?" No, it's up 4%.
11:11
And so, that was that was Daniel Gross's next question.
11:16
What happens to Nvidia and Microsoft?
11:18
These are the two interesting players at the time, the big the some of the biggest companies, the most AI-aligned.
11:24
Nvidia absolutely crushed.
11:26
Revenue tripled from 60 billion in fiscal year 2024 to 215.
11:29
9 billion in fiscal year 2026.
11:32
Microsoft has been far less dominant, so Azure growth actually is accelerating.
11:36
It's at 40% year-over-year, but the stock only returned 4% as we said.
11:41
Um the market punished the $80 billion in AI CapEx that Satya Nadella has been uh telling to investors because uh everyone's asking, "Well, I could be in Nvidia and they're not they don't need to really invest that much cuz they're a fabulous semiconductor design company.
11:59
Their their gross margins are increasing. They're printing cash.
12:03
And you are saying, "Okay, you got to spend $80 billion."
12:08
And we don't know when we're going to get the profits from that.
12:09
So, there's an open question there.
12:10
So, when it comes to the when it comes to the picks and shovels trade, you don't want to tie yourself up to an individual startup or a foundation model lab.
12:18
You just want to own the simplest thing that that that value will accrue to. Nvidia all the way.
12:25
They were the clear winner of the picks and shovels trade.
12:27
Um Microsoft's infrastructure play, I think it's a good decision.
12:31
It's just the bets have yet to pay off for shareholders.
12:33
Uh much more pointed question, Daniel Gross asked, "Is copper mispriced?
12:40
Was mis- Was copper mispriced in January 2024?"
12:43
The answer was, "Oh, yeah. Majorly."
12:46
Uh now, raw materials don't move like meme stocks.
12:51
So, the actual move, uh copper was $3.
12:54
75 a pound in January of 2024.
12:56
2 years later, it went to an all-time high of $6. 61 a pound.
13:04
So, it's not like it even doubled, but that type of move in a basic material that we've been mining for the hundreds of years uh is remarkable.
13:12
And that's because AI uses a lot of copper.
13:15
Nvidia's GB200 NVL72 server rack uses over 5,000 copper cables.
13:21
There's 72 GPUs wired together, but you need 5,000 copper wires to get it all to work together.
13:26
If you stretched out all of the copper wire in an NVL 72 from one side to another, it would go 2 mi long.
13:35
And And this is one server rack.
13:38
Like this is like it's not like going across the data center.
13:39
This is not taking the data from AWS East to California.
13:44
This is within that one server.
13:46
You stretch out the copper wire, you're you're going 2 mi.
13:48
It's an incredible amount.
13:49
A single 100 MW data center, which is a data center for ants by modern standards, uh needs around 3,000 tons of copper.
13:56
I think that's like half a million dollars or something like that when you multiply it all out. Um uh or or Oh, no. No.
14:04
It's uh data centers broadly will be using half a million tons of copper annually uh in a few years.
14:13
And people are actually saying that copper's the new oil, uh but there are a bunch of things that are also the new oil.
14:17
So, in the in the AI build-out, so uh it's so complex.
14:20
There's bottlenecks everywhere.
14:22
So, you got to take that with a grain of salt.
14:23
But, copper is >> Hey, certainly.
14:24
It's looking like oil is the new oil.
14:26
[laughter] >> is the new oil? What is crude at? Uh 80. 80.
14:30
So, it was at 70 before the the the Iran uh war broke out.
14:33
Um There was predictions that it would go to above a 100.
14:38
Oil is another is another commodity that does not move in the same fashion as a meme stock or a >> Except for today. Except for today.
14:45
Big move today, but >> But but but typically as prices go up, um uh the the the the the firms drill more and the prices uh reach equilibrium.
14:54
US drillers aren't rushing to increase oil production is on the front of the Wall Street Journal business section today.
15:02
Uh The Middle East is on the cusp of a prolonged conflict that could push oil prices to heights not seen in 4 years.
15:08
For now, American oil drillers are sitting this one out.
15:10
The US oil benchmark settled at 74.
15:12
66 a barrel Wednesday, the highest front month settlement since the 12-day exchange of Israeli, Iranian, and American strikes last June, but West Texas oil men, it makes But to West Texas oil men, it makes little sense to add expensive rigs and boost production when the war could be short-lived and crude prices drop.
15:33
So, that's what's happening in the oil markets.
15:35
Anyway, moving over to real estate, Daniel Gross asked, "Is Is San Francisco the new Detroit?"
15:42
And I didn't not exactly sure what he means by new new Detroit because new Detroit meaning like the old Detroit when it was Motor City and they were building amazing cars there or the new Detroit in the sense of like Detroit today is a hollowed-out shell of what it used to be, a former boomtown.
15:57
Um The The one thing is clear is that SF is back.
16:02
SF is completely booming.
16:02
Office vacancy Office vacancy fell from 36. 9% to 33. 5%.
16:08
OpenAI has a million square feet of offices.
16:11
Anthropic has a 25-story tower.
16:12
Sierra, an application layer company, signed 300,000 square feet of office space in San Francisco.
16:20
The Bay Area received 78% of AI venture capital in the first half of 2025.
16:23
And there is a flip side to this.
16:26
So, overall employment in San Francisco is still down relative to the pre- pan- pre-pandemic. Um Some people left.
16:32
Uh some legacy companies aren't hiring as much.
16:37
All All All the hiring is happening at the AI startup lab area.
16:39
Um but housing prices remain strong.
16:43
It's certainly not a hollow shell by any means.
16:46
And if you've ever visited San Francisco, you can tell that it's cleaner and safer than it has been in previous years.
16:51
So, AI overall was not a total rethinking of San Francisco, and it did not become open source or the or the hub of of activity in tech.
16:59
Didn't move to Miami or New York or Austin or Los Angeles.
17:04
Like San Francisco is still where it's at.
17:06
Um The next question he asked, "How does AI change wealth inequality?"
17:12
It's sort of too soon to tell.
17:12
The data is not entirely clear.
17:14
The data hasn't moved that much, but there are some interesting studies.
17:19
So, the International Monetary Fund released a working paper in 2025 that said that AI could reduce wage inequality. Reduce wage inequality.
17:31
So, the amount of money that people make on an annual basis could be, you know, reduced. How is that possible?
17:37
Well, what they say in this paper is that high-income tasks, the job of a lawyer, the job of an executive, the job of a management consultant, those will be automated before the job of the machinist, the gardener, the street sweeper.
17:54
And so, you will see wages at the high end fall, while wages at the low end remain stable.
18:01
And also, at the bottom end, you have the minimum wage.
18:04
And so, you will see higher-end wages go down, the bottom wages will stay the same, and that will reduce wage inequality.
18:11
On the other side, AI could worsen wealth inequality because it's concentrating capital returns into tech owners.
18:20
So, the the OECD found that wage growth was actually the strongest in low-skilled occupation, assemblers.
18:29
I didn't even know that was a job, but if you're an assembler, you've seen your wages increase by 11. 6%. There we go.
18:36
You know who's had it the hardest? CEOs.
18:39
The high-skilled workers, those chief executives, saw their wages increase by just 2. 7%.
18:47
It's rough out there for a CEO, Brutal.
18:49
Um, this is mostly because of minimum wage increases, but in general, we're seeing wage inequality decrease, but wealth inequality increase because there is incredible stock market concentration right now.
19:01
So, the Mag 7, the seven biggest tech companies in America, they now comprise 32% of the S&P 500 market cap, and they drove 42% of total returns in 2025.
19:11
So, if you're invested in Tesla, Meta, Microsoft, Apple, Google, Amazon, etc.
19:19
, Nvidia, you did very well. Your wealth increased.
19:26
But, if you weren't in those and you had a broad index or you didn't have a lot of capital to begin with, you were left behind.
19:33
So, [clears throat] that's increasing wealth >> shared 2 days ago, "Companies grow fast now.
19:37
That's the reason economic inequality is increasing, not some sinister policy shift." Yes.
19:43
>> he was highlighting uh Anthropic's uh recent growth.
19:46
He said, "When companies grow fast, it makes founders doubly rich.
19:50
The company not only hits a given revenue number sooner, but it is more valuable when it hits it because the value of the company will be a multiple of the growth rate.
19:56
People who don't understand the math of valuations can't imagine that founders would get so rich naturally, whereas to founders and investors, it's the most obvious thing in the world.
20:06
This is one of the reasons there's such a disconnect between the tech world and politicians." Yes.
20:10
So, if you want to invest in the Mag 7 or you don't, head over to public. com.
20:15
Investing for those who take it seriously.
20:17
Stocks, options, bonds, crypto, treasuries, and more with great customer service.
20:21
So, um this is also true in private markets, as Paul Graham mentioned.
20:27
AI startup mega rounds, $110 billion for OpenAI, $30 billion for Anthropic.
20:31
This concentrates enormous private wealth among a small number of founders and investors.
20:37
So, wealth inequality, AI will probably change it.
20:39
At the very least, it will change it as much as previous technology technological booms.
20:46
If you were the founder of Instagram, you did very well um because there was a lot of wealth creation all of a sudden in one major tech boom, mobile.
20:52
Uh AI is is broader and bigger already than mobile.
20:57
So, moving over to energy and data centers.
21:00
If it if it does become an energy game, what's the trade?
21:03
It did become an energy game and the trade was buy everything basically because every energy thing basically did very well.
21:13
Um anyone who got the trade correct did very well. Vistra returned 321%.
21:19
It was the second best performing S&P 500 stock of 2024.
21:22
You know who beat them in 2024? Palantir.
21:28
Palantir mooned that they were already in the S&P 500.
21:29
They did very well, but Vistra was sort of the secular energy winner.
21:36
Constellation Energy tripled in size after ChatGPT's launch.
21:39
NRG Energy, which is a good great name, NRG gained 95% in 2024 alone.
21:48
>> 700% in 12 months and that's without I think even having any producing any energy.
21:53
Just the idea that they will produce energy Yeah. someday. >> Yeah. Nuclear went on a tear.
21:58
Oklo's in more of like the startup pre-revenue camp I would say or pre-product camp, but Microsoft signed a $16 billion 20-year PPA to restart Three Mile Island.
22:11
Google signed with Kairos Power for 500 megawatts of small modular reactors, and Meta contracted 6.
22:16
6 gigawatts across multiple nuclear providers.
22:21
So energy was just such a great trade from the the beginning of the AGI boom in 2024.
22:28
Across the next up across the entire data center supply chain, which components are hardest to scale up 10x?
22:37
What is the chip on wafer on substrate data center? Yeah.
22:40
So chip on wafer on substrate, that is TSMC's secret sauce.
22:46
That is the the most gating factor in scaling TSMC's 2-nanometer chip production.
22:52
It's what allows them to package HBM and the GPU all on one chip.
23:00
And the reported that they were like sold out like years in advance.
23:02
It was a huge bottleneck.
23:05
In the data center world, the biggest bottleneck was probably power transformers.
23:09
We heard a lot about this lead time for new lead times for new power transformers reached over 3 years in some cases with a 30% supply shortfall.
23:19
High voltage circuit breaker >> my mom was my mom was in escrow on a condo >> Really?
23:25
that and closing was contingent on the development getting a transformer.
23:30
She waited like 6 weeks or something like that.
23:33
They were like, "We don't know when we're going to get it."
23:36
And she ended up just backing out. >> Wow.
23:37
Um Yeah, just because there was there was so much demand. >> Yeah.
23:41
I mean, we really got caught off we really got caught off guard by this.
23:45
I mean Um transformers, the cost surged 150% since 2020.
23:48
It's a 100-year-old technology. It's not It's not new.
23:51
It's not crazy innovation. >> Overnight success. >> success.
23:58
Uh but it became the binding constraint on how fast data centers could connect to the grid.
24:01
If you are running a transformer company, you're selling transformers, you got to get on Shopify.
24:07
Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents.
24:15
If you're selling transformers, start running some ads.
24:19
>> Imagine Imagine checking out for a transformer with Shop Pay.
24:21
It'd be an incredible incredible experience.
24:23
Uh coal, was coal mispriced?
24:25
Sort of, but not nearly as much as copper.
24:31
Thermal coal prices actually declined 2020 22% in 2025, but they rebounded a little bit by early 2026. Coal stocks did fine.
24:38
Peabody Energy gained 34% over 12 months.
24:41
Consol Energy was up 37%.
24:47
On the operational side, US coal-fired generation I love how you're like, "Coal stocks did fine." Yeah.
24:51
They were up only 34% and 37%.
24:57
I mean, compared to everything else that's doubling and tripling, it's like nah, you know, okay.
25:01
You know, if you were like I'm the coal guy.
25:04
I I I believe coal is the thing like >> Peabody Energy is up 73% in the last 6 months. Where? Where?
25:13
>> [laughter] >> Just kidding. Only 37.
25:17
>> Only up 161% >> [laughter] >> in the past year. Yeah.
25:19
Only only only up only up 728% in the past 5 years. It did it did fine.
25:26
It's just not as exciting as as copper.
25:29
It's not as exciting as as nuclear.
25:33
Um coal generation surged 13% overall in the in America.
25:39
23% in Ohio, 58% in Oklahoma where they're sort of data center hotspots.
25:45
Like there's more data centers in those in those areas.
25:47
So bringing more coal onto the grid allowed for you know more load balancing. Anyway. Nations. Who wins and loses?
25:56
Take a wild guess at who won. America, baby. America won. Next question.
26:04
>> [laughter] >> But it's really true.
26:05
Like the stats are crazy.
26:07
The United States is truly the dominant winner of the of the last 2 years in the AI era.
26:12
$109 billion in private AI investment in 2024 alone.
26:14
Way more now if you look at 200 billion capex guide from AWS, 110 going to open AI, 30 going to Anthropic, tons of money going into XAI.
26:26
Like the money is truly flowing in America.
26:28
In 2024, China had just 9.
26:32
3 billion invested in private AI companies.
26:37
There's 470 billion cumulative since 2013, more than all other countries combined in America.
26:41
The US produced 40 notable AI models in 2024 versus China's 15. Now the game's not over.
26:47
Lots of countries are making big investments now.
26:52
>> And you can't forget France's 30 million euros.
26:55
>> They put in 30 million, yeah. Yeah, it's it's serious. It's been serious.
26:59
Uh Well, let me tell you about the New York Stock Exchange.
27:02
Want to change the world?
27:04
Raise capital at the New York Stock Exchange. Just do it. So, Next up. India.
27:09
What's going on in India?
27:12
>> DG says 250 billion of India's GDP exports are essentially GPT-4 tokens. What happens now?
27:20
John says, "This is starting to take shape, but it's still early.
27:21
Situational awareness is placing some short bets, which map to the decline in hiring."
27:27
>> they were short Infosys, which is an IT outsourcer.
27:30
You need some software written, uh you will basically send a prompt, and basically you would get back code, which is what these models are fantastic at.
27:38
And so, that does seem like some really, really steep competition in the near term, even in the long term.
27:47
And so, uh I think he's right to to question that.
27:51
Although, we aren't seeing it in the overall India hiring data, the overall Philippines hiring data just yet, but it is showing up a little bit in the in in India's IT export center.
28:01
So, major Indian IT firms collectively in 2024 and 2025, they shrunk by 58,000 employees roughly.
28:12
And that's a dramatic reversal from the previous 3 years, 2021 to 2023, when they were staffing up.
28:18
They added 360,000 employees.
28:21
Yeah, the only thing here is that big tech, this like is in some ways like a proxy for big tech hiring, cuz a lot of a lot of the Sure.
28:28
labor that's happening at these firms is effectively offloaded to the to to some of these firms in India.
28:35
So, it's like in some ways it's like if there was over-hiring at big tech, there was could have been effectively over-hiring here, Yeah.
28:45
and then it's re-retracing. Yeah. Makes sense.
28:48
Uh and yeah, you didn't put it in here, but uh it's also interesting to look at the hiring activity in the Philippines, which is not as dramatic to the downside as as one might think. What do you mean?
29:04
Oh, just >> when we looked at the data, I think it was a couple weeks ago.
29:06
It's not like you there was just like job jobs like falling off of a cliff.
29:10
Like it's relatively stable.
29:11
Yeah, there's sort of these like concentric circles with all of these stats.
29:16
Like if you look at Block, what's happening at Block?
29:18
Like well, they lost 50% of their workforce.
29:23
Like that's a massive cut.
29:23
And then you look at tech hiring overall and it's like slowing down.
29:27
You look at white-collar work and it's like we're not adding a lot.
29:30
It's maybe shrinking by 0.
29:33
1% and then you zoom out to the American economy and it's like it's actually growing.
29:38
And so you have these like concentric circles of impacts.
29:40
And so if there's like one company in India that's doing IT outsourcing that might be hurt and then they're the least they're the worst performing, but the best managed one might be able to make it through.
29:53
And then and then you zoom out and you're like, well, the overall Indian economy is doing okay.
29:56
And then overall the global economy is doing okay.
29:58
And so there's all these like like cascading effects.
30:02
And uh I think uh the the interesting takeaway was when when somebody like Daria says uh 50% of white-collar work might be automated, like it's going to be the bottom 50%.
30:12
It's not going to be the it's not going to be at random.
30:14
It's not going to be flip a coin if you keep your job or entry level.
30:16
It's going to be it's going to be were you not at the top of your were you not at the top of your game?
30:22
Um so, the question is if we are displacing software engineers, will software engineers become machinists?
30:32
This is what Daniel Gross asks.
30:32
He says, what is the Euclidean distance of reskilling in prior revolutions?
30:36
And how does AGI compare?
30:39
The typist became an executive assistant.
30:41
Can the software engineer become a machinist?
30:44
So, we're not seeing this yet.
30:46
Software engineers aren't grabbing blue-collar jobs just yet, but there is a divergence that's starting to show up in the data between software developers and programmers.
30:57
So, programming jobs are in decline, but software engineering jobs are actually growing.
31:05
And so, I think what's happening is that as coding models and agentic systems allow for building systems at higher levels of abstraction, demand for AI engineers has grown 143%.
31:19
And so, if you're going to hire someone to help you build software, you want them to be like AI native.
31:23
You want them to go beyond full stack or which typically meant you could do front end in JavaScript and back end in Python.
31:33
And now, full stack or AI engineer means everything from prompt to design to product development to deployment to operations and DevOps to database migrations to front end and a back end because all of that is going to be handled by agentic systems.
31:48
And so, entry-level hiring at top tech firms has dropped 25%.
31:55
Maybe AI, maybe over-hiring from COVID overhang, we'll see.
31:57
Internship postings fell 30%.
32:02
So, the decision is either, you know, reskill upwards to more of a manager of infinite minds, I think was the quote, but manager of agents role or yes, you might it might be time to work on those machinist skills.
32:14
I'm extremely bullish on Tyler.
32:17
I watched him assemble the first iPhone ever in America.
32:19
And he's also an incredible software developer, not really a programmer cuz he doesn't really know the programming languages that he employs, but Not true. That's not true. There we go. Yes.
32:30
I think Tyler makes it whether he becomes the the manager of infinite minds or the machinist.
32:37
I I I am pretty bullish on like the like the light blue color like thesis which is that like um you'll have robotics but you'll just have like yeah so you'll be in the machine shop but you're just using an iPad.
32:48
You're not actually working on stuff.
32:49
>> Yeah, I think we drop you in a Nike factory.
32:50
You're running that place in like two weeks. Guaranteed. I'm not kidding.
32:53
Like I I I'm so bullish on on young people who can uh use all the tools and uh and actually go and understand the leverage that they're getting from the modern systems natively and not need to fall back to old habits.
33:10
>> Yeah, there was a good um journal article yesterday about uh the Colgate um like Yeah. uh head of AI. >> Yeah.
33:15
And it was very interesting cuz I was like, oh, this is like I feel like I could do a pretty good job at this.
33:20
>> [laughter] >> Coming after you.
33:22
You're like, I I I I could do this stuff.
33:24
>> telling everyone like, yeah yeah guys, you actually got to use AI like despite what these these random surveys might say.
33:29
>> Guy guy has had one job in his life working on a on a podcast and thinks he can >> [laughter] >> thinks he can dominate in the big toothpaste space. Yeah. I love the confidence.
33:38
>> Corporate athlete seems We got to we we got to get him on the show.
33:41
>> You are a corporate athlete.
33:41
We got to get him we we got to get the Colgate guy on the show and see see whose takes are better.
33:46
Tyler Cosgrove or or Colgate AI guy. Um anyway.
33:50
The chat's saying you're not they don't think you're a supply chain guy, Tyler.
33:53
I think I think you could pick it up.
33:55
Ask ask me and I'll um >> Vlad what do I do? Yeah, make no mistake. >> Claude, right?
33:59
This Let me tell you about What happens if I hit if I hit this? Let me see.
34:05
Does that take Does that take over? fin.
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34:15
>> [applause] >> Uh Electrification and assembly lines lead to high unemployment and the New Deal including the Works Progress Administration, a federal project that employed eight and a half million Americans with a tremendous budget. Does that repeat?
34:28
So, clearly hasn't happened yet.
34:31
We also haven't seen higher employment yet, so we'll we'll see.
34:35
Uh the Trump administration did launch America's AI action plan in July of 2025.
34:39
We talked to one of the authors of that AI action plan, Dean Ball, yesterday on the show.
34:46
Uh and they issued some executive orders on AI education and skilled trades, but the Department of Labor uh and then the Department of Labor awarded $84 million in apprentice apprenticeship expansion grants.
34:59
But, that's like France money.
34:59
That's like not enough to do to really make an impact.
35:02
Uh overall US workforce development spending is at 0.
35:05
1% of GDP, which is second to last among OECD nations.
35:11
I wonder who's actually last. We should look that up.
35:14
Anyway, no no program currently approaches the scale of uh the Works Progress Administration or the New Deal.
35:21
Uh I think this will change very, very quickly if the data uh comes through that we're actually shedding tons of jobs.
35:29
Uh America's very good at creating new jobs and uh and and running the printing press and and this is the whole reaction to the Citrini article.
35:36
Anyway, he also asks a more philosophical question that doesn't really have a detailed answer, but uh I'd love your take on it, Jordy, too.
35:45
Uh is lifelong learning worth investing in?
35:48
Something worth doing beyond the economic value of mastering the task.
35:52
It's a very abstract question.
35:55
It's very personal question. I tend to think yes.
35:57
I tend to think that uh uh on Maslow's hierarchy of needs, you know, you need food, shelter, family, friends, uh clout, or whatever.
36:05
Uh at a certain point, uh learning a skill for the for the sake of learning that skill is edifying in even in a world I you know, it's like going to the gym.
36:18
Like I uh I was I was listening to Sam Altman talk about how kids will never kids that are born today will never be smarter than the smartest AI systems. And that's weird. That's different.
36:31
But I was thinking about like But like I was There was a time, hundreds of years ago, when you could actually be the the the the best thing in the world, the best option for like carrying lumber, other than like maybe an ox or something.
36:46
But like in general, like before we created machinery, like before we created the car, like you could be the fastest person.
36:53
And then as soon as as soon as the the the the the ZR1 axe was released, you didn't stand a chance.
36:59
Uh and I had to explain this to my son at some point.
37:02
He was he was very interested in cheetahs.
37:03
And and I was telling him like cheetahs are the fastest animal.
37:05
And he was like, "But is it faster than a car?"
37:09
And I was like, "Not even close."
37:10
Like Like me in a car, I'm smoking that cheetah.
37:13
I am slower than that cheetah, but I'm way faster Yeah, so in my Cadillac.
37:17
DG says, "Something worth doing beyond the economic value of mastering the task." >> Yes.
37:23
And the way I would kind of flip this, I feel like most of the gains in my life have come from mastering myself or understanding myself, learning about myself, and then understanding the world, and then combining those two things in a way.
37:37
It hasn't been about mastering any one specific task.
37:44
>> And so I still think there's tremendous tremendous gains to, again, under- understanding yourself, understanding the world, how do these two things fit together.
37:54
So, I agree with you on just the on just the level of like there will be not just tasks to master, but like ideas and and combinations of skills that will be valuable economically.
38:05
But even in a even in an ASI world where there is no economic value to any task mastery, I still think it is worth investing in lifelong learning because that will be edifying. That will be satisfying. Yeah, just enjoyable.
38:24
It it you know, it's becoming a painter.
38:26
Becoming someone who who gets joy purely out of the process of painting the landscape when cameras exist, when generative AI exists, it can still be edifying and valuable to to sit there and look at a landscape and paint it and wind up with the result, even if the result is not economically valuable or uh or anywhere near what you could get with technology like a camera or gen AI.
38:54
So, very abstract, but still something fun to think about.
38:57
Before we move on to inflation, let me tell you about CrowdStrike.
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>> [cough] >> So, if AI is truly deflationary, how would we know?
39:11
What chart or metric would show it first?
39:14
And you could look at AI API pricing is probably the best answer here.
39:19
So, uh you know, there are certain tasks that AI can do now.
39:26
And so, those tasks have moved from being limited by regulation or human output or the population workforce to the compute allowed or the compute allocated.
39:38
And the cost of compute is falling.
39:42
So, uh TVs were expensive.
39:45
They got cheaper as we made more and more factories that were more and more automated that could produce ever cheaper TVs.
39:51
And that's why when you look at the inflation trends, you see healthcare, education, anything that's highly regulated, there are only so many lawyers that are allowed to pass the bar, there are only many that that many doctors.
40:03
And so, healthcare has increased in cost where TVs has been this like knockout, drag-out fight between the most ruthless companies all over the world.
40:11
Uh and the price of TVs has fallen.
40:14
And so, if you start putting more of those more of those jobs on the AI on the AGI curve, you see deflation.
40:21
Where should we see it first?
40:24
We should see it in AI API pricing.
40:25
And GPT-4 equivalent inference costs have collapsed.
40:31
In late 2022, they were which is like right before GPT-4, I think GPT-4 came out January 2023, it was $20 per million tokens.
40:38
In December of 2025, the same model $0. 40 per million tokens.
40:46
So, this is a 50x decline in 3 years.
40:49
I think that you can even get more intelligence for cheaper depending on how you're inferencing these.
40:55
You can run some of these models locally and the energy cost is even cheaper at that point.
40:58
So, this 50x decline in 3 years, this is falling faster than PC compute costs.
41:05
It's also falling faster than dot com era bandwidth costs.
41:07
And so, this should be the leading indicator for downstream service deflation in any example that you give of like, "Oh, I was just able to use ChatGPT to check my I I talked to somebody who said they love ChatGPT because they their check engine light came on.
41:23
They were able to take a picture of it and it identified the car, told them what they needed to do and they felt like they when they went in to for servicing, they weren't going to get rigged over the coals by their mechanic because they had like sort of a mechanic in their camp in their fighting in their court.
41:38
And so, this should this should effectively act as like, okay, you have your own mechanic on your side and then you can do it yourself, but you can also just go and negotiate and say, "Hey, I know that this the fair price for this is 50 bucks not 200.
41:50
So, give me the good price."
41:53
And so, you should see that you should see >> Yeah, you can assume that tokens are going to get cheaper and more effective indefinitely.
42:00
But, all these new product launches, things like OpenClaw are actually expanding the number of tokens. Yes.
42:06
And and and and so, you are seeing deflation, but then you're also seeing Jevons paradox and increase in demand and that's why overall growth is increasing.
42:13
So, how should one think >> it's like one person, one AI chat.
42:19
You're only using so much.
42:19
Then you have agentic products, then you can actually multiply the number of agents that an individual can be running and the output goes through the roof.
42:30
>> Time to head to Gas Town, baby.
42:30
Um, >> [clears throat] >> so he asks this this follow-up question.
42:35
How should one think of deflation if demand for intellectual goods continues to grow as production costs go down?
42:39
AI API costs are plummeting, but AI lab revenues are skyrocketing.
42:44
So, prices fall, volume surges, total spend increases, and the really interesting wrinkle is we're living through a SaaS-pocalypse, we're living through the Citriniti article, but SaaS vendors are imposing like an AI tax of I think the stats were somewhere between 20 and 37% of renewals.
43:03
So, um, AI vendors, you know, you go for your renewal and they say, "Hey, we got AI features now.
43:08
You got to pay a little bit more."
43:10
SaaS revenues are still increasing and growing even as the underlying cost to build software approaches zero.
43:19
Uh, this mirrors computing's history under Moore's law.
43:21
Each unit gets cheaper, total spending grows as new use cases emerge.
43:25
So, classic Jevons paradox.
43:27
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Build in the right direction with Figma. So, geopolitics.
43:41
This was interesting because he put this question in the geopolitics section that feels much more like a server AI build-out question, but he asks, "Does interconnect actually matter?"
43:53
And and I was very confused because interconnect typically refers to sort of like the the Ethernet cables between servers or like NVLink or you know, the what what what TPU is doing Ironwood between like the three Taurus topology.
44:09
And I think that the answer to that is like absolutely in large GPU clusters, 30 to 50% of training time is spent on inter GPU communication, not actually computation.
44:20
And so, all the hype around TPU V7 Ironwood is due to their 3D Taurus technology that topology that connects 9,216 chips together.
44:29
Nvidia's NVL 72 connects 72 chips together.
44:32
Interconnect is incredibly important.
44:34
I'm wondering if the fact that interconnect is in is in the geopolitics section is maybe talking about the interconnections between Samsung and and SK Hynix in South Korea and Taiwan TSMC and and America.
44:51
That's obviously relevant and we'll get into that in the next question, but um uh it it is both are incredibly important.
44:58
So, yes, I do think inter interconnect actually matters no matter where no matter how you read this question.
45:03
Um the the bigger question and the interesting like hot take question he has in here is does node process matter if the country has more energy?
45:11
So, China has not been able to get their semiconductor manufacturing their fab champion SMIC.
45:20
Uh they have SMIC, which is the TSMC equivalent.
45:23
They have Huawei, which is the Nvidia equivalent.
45:28
And they have SME, which is their ASML equivalent.
45:30
They have not been able to clone uh TSMC to the level of Taiwan Semiconductor.
45:36
Um but they can produce 14 nanometer chips.
45:42
And so, the question is usually they take those chips and they put them in just random, you know, consumer electronics goods that they ship over here.
45:48
So, if you go to China and you want a a co-packer or manufacturer to build you something and you're like, "Yeah, I want it to connect to the internet."
45:54
Or I want it to have a speaker inside.
45:57
They're like, "Yeah, go great.
45:57
We will we will fab a 14 14 nanometer chip or or something even even less frontier than that.
46:06
But can they just marshal a ton of lagging edge capacity and then just say, "Hey, you know what?
46:11
We have cheap energy, we're burning coal, we have nuclear, we have the Three Gorges Dam, we have hydropower, we have so much free energy.
46:17
Let's just spend 10 times as much energy on the lagging edge.
46:19
Can we achieve AGI that way?" And it seems like no.
46:27
It seems like leading edge nodes are incredibly important.
46:28
You can't just throw a ton of leading lagging edge 14 nanometer chips at the problem, at least with current architectures.
46:34
Now, this might change, but no frontier model to date has been trained on hardware older than 5 nanometer.
46:41
All the leading chips, that's Blackwell, Google's TPU V7, AWS's Trainium 3, they use TSMC 4 nanometer or 3 nanometer process.
46:52
And I think when we dig into Grok and Cerebras and some of the newer stuff that's coming, everyone is saying we want to be on the the most frontier node.
47:00
We don't want to go backwards on that front.
47:03
So, China's best effort, Huawei's Ascend 910C, is on SMIC's 7 nanometer class DUV process.
47:09
They're not at It's a It's extreme ultraviolet lithography.
47:12
They're a deep deep ultraviolet lithography process.
47:18
That's competitive for inference, but requires dramatically more chips and energy for training at scale.
47:21
So, brute forcing AI progress through disregard for energy consumption, it feels like it still hits economic walls at some point.
47:29
And then there's also the question of how valuable like are the weights what are the nuclear weapons or is it the actual deployment?
47:40
I was listening to this this conversation about, you know, what are the geopolitical implications of AI?
47:46
Is it that you you have Okay, yes, you have the genius, you have that 2,000 IQ god model, but you can only really ask it like one question.
47:56
Is that what's valuable or is it you have a thousand, you know, country of geniuses in a data center and you're able to marshal effectively 10,000 cybersecurity experts for each person on the enemy team.
48:11
And there's just a thousand people that are trying to hack your phone and a thousand people that are trying to hack Tyler constantly.
48:19
Is that is the inference actually what matters?
48:22
Is the compute uh what where the power comes from as opposed to just the training.
48:27
Training's obviously important, but inference might also be important.
48:30
So, so there is a there's a big question there.
48:34
And last, but certainly not least, DGS what is the likely Taiwan event and what would be a leading indicator for it?
48:42
John writes a Taiwan blockade would be the biggest trigger, but Taiwan Strait tensions are already escalating.
48:46
China conducted Joint Sword 2024B exercises in October of 2024 surrounding Taiwan with coordinated military operations.
48:56
In December 2025, Justice Mission 2025 deployed over 100 aircraft, 90 crossing the median line, 13 warships, and 27 rockets fired from Fujian.
49:07
10 rockets landed in Taiwan's contiguous zone. >> Contiguous zone. >> Contiguous, sorry.
49:13
Just 12 to 24 nautical miles offshore.
49:15
So, they're just like firing rockets and being like they didn't hit land.
49:20
They're just You can see them from the beach probably.
49:22
10 miles offshore, 12 miles offshore.
49:25
I think that it's like just over the horizon. >> Yep.
49:30
Uh China also recently separated peaceful from reunification when talking about Taiwan in their 2026 to 2035-year plan.
49:38
Gives you an idea of where things might be going.
49:40
TSMC is planning ahead working on a fab complex in Arizona, which Tyler visited.
49:44
Should be able to handle 30% of total advanced chip [cough] production at scale, but it's on a knife's edge.
49:52
>> [laughter] >> If you want to know roughly how how far that is, you've seen Catalina Island off the coast of LA.
49:58
Catalina Island is I think 26 miles.
50:00
And so, imagine So, very visible.
50:03
Yeah, you can see Catalina Island from Long Beach and imagine a missile coming and landing like halfway between where you are and Catalina Island. Crazy.
50:12
Very >> Yeah, the the question is how does Iran and the conflict there update China's kind of thinking on this? There's Yeah.
50:22
uh some of the um intel accounts have been sharing, who knows if it's true, that uh China actually has operatives in Iran uh like kind of learning in the same way that the US has learned uh from Ukraine uh specifically uh in in regards to missile capability.
50:45
So, wild wild time and uh yeah, it just feels like a day hasn't passed so far since this was published that Taiwan a Taiwan event feels less likely than it did the day before.
51:01
Yeah, I think that's why Palmer has been trying to message around the blockade specifically as being like a line in the sand because that's somewhat of an abstract concept because if a blockade happens, um it could be very bad.
51:16
It could be the start of a turning point, but it would not be a hot war.
51:22
It would not be boots on the ground.
51:25
It would not meet the level of like a declaration of war that many people would uh would wake up to.
51:33
And so, he's been trying to message that like, "No, a blockade is the start of something bigger.
51:37
We need to be aware and uh and we need to hold the line on on not allowing a blockade to happen."
51:43
Anyway, um we will continue following that.
51:45
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52:13
>> Parmesan is like the worst cheese to just chomp on. Disagree. You think >> Disagree. All right, it's so hard. I know.
52:20
I feel like it's going to I know, but but uh Elite snack, I agree.
52:25
I haven't I haven't been snacking on Parmesan since I was probably >> Yeah, oh, it's such an elite snack.
52:30
I've never once caught you snacking like a mouse on a block of Parmesan cheese. >> eat like a mouse.
52:37
>> Stated preference versus revealed preference.
52:38
I don't eat much like a mouse. Fake mouse.
52:42
>> But as a kid I'd have like a bunch of big carrots and some blocks of Parmesan. >> Okay.
52:46
And I'd just be going mouse mode. >> Mouse mode. That's good.
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So if he says it's on Slack, bro, it's in the drive.
53:00
I just put it in the Notion, bro.
53:02
I literally sent it to you on Teams.
53:04
Did you check the Airtable, bro? It's in the Box, bro. It's single sign-on. It's on Octa, bro.
53:07
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53:22
Uh this morning >> I like that riff.
53:25
It's This is a This is a copy-pasta from the It's on Tubi. It's on Hulu. It's on Zoobie.
53:30
Like the all the streaming services.
53:32
Anyway, what happened this morning?
53:34
This morning uh President Trump gave a phone interview in which he said, "I fired Anthropic.
53:42
Anthropic is in trouble because I fired them like dogs, which You don't fire dogs. >> You don't fire dogs.
53:49
I would have fired my dog years ago.
53:50
He's the the least effective dog, but >> Yeah, isn't the phrase he he died like a dog?
53:57
>> Yes, yes, he's just adapting that.
53:57
But He sent Anthropic to the farm.
54:01
>> No, if he's comparing them to dogs, it's man man's best friend. This is bullish.
54:05
He's [laughter] saying He's saying they're my dogs.
54:09
Uh this uh also coincided with Anthropic, I guess, officially being uh designated as a supply chain risk, which is again not something that I've seen a single person in the industry actually push for from OpenAI to Amazon to Apple, uh pretty much everyone across the board.
54:33
>> Even Elon, I don't think has been like outspokenly for this.
54:34
Like he cuz he I mean, Dean Ball was talking about how Elon sort of went through a lot of this with the during the Biden administration.
54:44
And so I don't I don't I Elon's usually pretty opportunistic about about dunking on competitors, but uh in this regard it feels like he's he's been sort of quiet.
54:53
I don't know, maybe I just haven't maybe I missed the post, but >> Yeah, I mean, part of this I I wonder so Dario sent a memo on Friday that was pretty scathing and looked really really really bad.
55:07
And the timing here maybe played a factor.
55:09
It felt like they were still seemingly like trying to work towards a deal.
55:13
Yeah, let's read what he let's read what he said.
55:15
He said in his memo that he believes the attempted spin/gaslighting is not working very well on the general public or the media, though he added that it is working on some Twitter morons.
55:28
Is he talking about the administration?
55:30
I mean, they're all on Twitter, right?
55:31
Like that's the that's the whole thing with this administration.
55:35
Uh he's talking about lots of people, obviously, but uh, you know, not the most polite way to handle this, I suppose.
55:42
Uh, obviously >> He's Dario Dario says, "You're a [Ā __Ā ] if you believe OpenAI's story around this." Yeah.
55:51
>> But, um, less than a month ago Dario was running greenlit Super Bowl ads that were intentionally designed to mislead >> It's a good time.
56:01
>> hundreds of millions of Americans >> Yep. on OpenAI.
56:02
And so, now now he wants to be the one to say he wants to be >> Yeah.
56:08
the most trusted source >> Yeah.
56:10
through this whole debacle. Yeah.
56:12
>> And Yeah, I mean, there's also the the the the back and forth on like being the most leaned in bidding on one contract that's to develop autonomous weapons, but the AI doesn't run on the autonomous weapons, and there's a whole bunch of different wrinkles here.
56:28
It's just such a nuanced conversation.
56:30
I was I was digging into the question of autonomous weapons.
56:35
Not only are there apparently, according to Ukrainian intelligence uh, fully autonomous Russian lethal Russian uh, uh, weapons that will just be sent off, and if they see a tank, they'll just go and and attack it.
56:50
Like, that exists, and so there's always the game theory about if they have it, do you have it, do you need it, what you know, what's that?
56:57
Where's the line in the sand?
56:57
And then also, um, America, like the Patriot missile system apparently has a fully autonomous mode where it can just decide what to attack.
57:06
Uh, and there's a whole bunch of other nuance here that I think is lacking from these little snippets. It's I don't know.
57:11
I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm I'm glad he went on CBS and sort of unpacked a lot more of it, but I'm still left uh, dissatisfied with the level of discussion around where the line in the sand is drawn.
57:24
Even on the privacy issue, like the there are six levels of laws around mass surveillance.
57:30
It's not just the Fourth Amendment. There's a ton more.
57:34
Some of them are very precise.
57:37
Some of them are more broad and like how the company interacts with that is clearly important.
57:40
That's actually probably happening in these discussions, but then it gets boiled down into like one sound bite that everyone has to interpret and read the tea leaves on and it's left me unsatisfied, but Yeah, Dean Dean Ball yesterday says I really cannot see Anthropic positions benefits at this stage from communications like this.
58:00
Seems like it just pushes the Trump admin to escalate further while also alienating potential allies in the industry.
58:06
So, yeah, I guess like the you know, seems clearly when he was writing this seems fairly confident that this was going to stay private, but you have thousands of people working at the company and it's an insane thing to send to your whole team.
58:21
So, Tyler, do you need to delete a post? What happened?
58:27
>> so again, well, no, time will tell.
58:29
We'll see, but I So, I think when the the first like rumors or whatever saying that maybe we'll we'll put a supply chain risk on Anthropic. Yep.
58:35
I posted nothing ever happened.
58:38
>> [laughter] >> So, I'm looking I think you jinxed it.
58:40
Yeah, I'm not doing well on that right now. Something happened.
58:43
>> Yeah, something happened.
58:43
But you know, it's always unclear.
58:45
Like maybe this is just another you know, I think this brings them to the table.
58:50
It's such a ridiculous thing in a world where DPC is saying >> headlines coming out like right now that that are saying Dario is still trying to get something done.
58:56
They they they have to go to the table and they have to and they have to work this out because it it just doesn't it just it just it's just unpopular and and I think that >> [clears throat] >> I just think that the actual like the the real individuals, like the real Americans and the real AI researchers are not as far apart as the rhetoric makes it sound.
59:19
Like I think that there's a lot of comms and PR and bluster and ego at play between all of the parties involved and folks are are at each other's throats, but I think that when when if they actually sit down and try and like like I have a I have a buddy who was on a nuclear submarine for like a year underwater and I was like what was that like?
59:39
Were you like finger over the button?
59:41
He's like no, it was like a ton of paperwork.
59:42
Like every day I'd like go and like see how many whales are there and then like count them up and like with pen and paper like write down a report on how many whale It was like the the most boring and least automated No, seriously.
59:54
And that was the thing that we learned from Project Maven.
59:56
Like Google had this major protest, a big walkout, and at the end of the day like Google was giving the Department of Defense just access They weren't building killer robots.
1:00:07
They were giving them access to TensorFlow APIs that that other defense contractors would be able to use to run just classical machine learning programs to classify items in in images.
1:00:21
So, how many cars are in this city?
1:00:24
How many like like what like where are our drones on the map? Like what are we seeing?
1:00:29
Like basic stuff that was typically the the providence of or the the domain of like an Air Force Reserve person sitting in an office probably in Nevada just clicking okay. Yeah, tagging.
1:00:41
Okay, yeah, that's a house. That's a car.
1:00:43
Like this is what this is.
1:00:45
It was not the true like command and control and end game that people worry about.
1:00:49
So, figuring out where these where these models can actually have an impact, I think that there's going to be a lot more agreement than there is disagreement.
1:00:54
What do you think, Tyler?
1:00:56
Yeah, I I do think like basically before this like memo got leaked, there was a sense that like okay, clearly like he's positioning himself firmly against the the the admin. Yeah.
1:01:05
At least there was like it seemed like the researchers like generally were on his side.
1:01:10
Like you you see a lot of Totally.
1:01:11
Anthropic researchers or Yeah.
1:01:12
OpenAI researchers who were like, oh, maybe I should you know, I don't really agree with with what OpenAI is doing.
1:01:17
Maybe I should actually go over to Anthropic like publicly posting this.
1:01:20
But then this memo comes out and calls every OpenAI researcher So aggressive. Complete crash out. Yeah. Oh, well. >> Crash out.
1:01:32
>> tell you about Cisco, critical infrastructure for the AI era.
1:01:34
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1:01:39
>> [applause] >> So, what did Miles Brundage have to say?
1:01:42
So, I'm not super surprised.
1:01:42
I've said before that Anthropic has too much of their identity wrapped up in Open AI bad, but this memo doesn't look great, IMO.
1:01:51
Totally agree with the criticism of much of Open AI's political activities, and I think people should be very skeptical of the safety stack stuff.
1:01:56
I had a whole threat about it the other day, but this this is who they are. Gullible, etc. stuff is a bit much.
1:02:02
It's getting to be ad hominem.
1:02:04
They got to back off the aggressive rhetoric.
1:02:06
Rune was feeling sort of gullible today, maybe due to selection effects. [laughter] I love that.
1:02:14
Have to say I really enjoy these crash outs.
1:02:16
It's pretty keno to read communication that's poorly calculated and wasn't meant for your eyes.
1:02:20
So few today are able to speak in these sweeping Shakespearean terms that they hate their competitor and let it blind their calculus.
1:02:29
That is a wild, wild time.
1:02:32
Yeah, and I just I just don't think Dario is in that strong of a position to be complaining about or insinuating that Open AI is lying when he's running Super Bowl ad campaigns that are just lying to everyone about Open AI. Yeah.
1:02:49
Why should anyone trust you? I do I do wonder.
1:02:53
This feels I'm still very interested in like you know, Anthropic gets a lot of credit for predicting the future, predicting how there would be a showdown between the US government and the AI labs.
1:03:09
And I'm wondering like how much of this exact what we're seeing right now was predicted. Um and and is that good? >> it was not predicted.
1:03:20
Cuz they don't seem to be handling it with handling it like very carefully. >> Maybe.
1:03:24
Maybe, or maybe this is all this is all what Dario wants.
1:03:27
Like he wants to be labeled a supply chain risk.
1:03:29
He wants to have to go his own way.
1:03:30
He wants to be fully out and and all of this was like like a like a ruse to be to force the hand of the administration to be like I'm I'm on the outside. I'm leaving.
1:03:42
>> you want to do inspire himself to have to grind harder? Maybe. I don't know.
1:03:47
It's just like it is it is I'm still I'm still processing that idea of like the the the the Truman Oppenheimer interaction.
1:03:57
>> Mays says imagine autonomous weapons powered by this.
1:04:00
He got a screenshot from Claude Opus 46.
1:04:02
Says tell me a color and I'll try to guess it. Claude says blue. Blue. Mays guesses blue. Claude says nailed it. Nailed it. I love it.
1:04:14
You know what else nailed it? Sentry.
1:04:16
Sentry shows developers what's broken and helps them fix it fast.
1:04:20
That's why 150,000 organizations use it to keep their apps working.
1:04:23
Uh the Trump administration is drafting rules that would require US approval for nearly all AI chip exports, giving Washington sweeping power over companies like Nvidia and AMD.
1:04:33
The draft framework sets licensing rules based on shipment size from simplified reviews for small orders to government level approval for massive deployments, potentially tying exports to security guarantees or US investments.
1:04:46
Officials say the goal is to make American AI the global standard while controlling critical infrastructure through delays or strict conditions.
1:04:57
Though delays or strict conditions could disrupt international AI projects. Interesting.
1:05:06
I this I mean it depends on like it's so odd when someone comes out and says like we're going to create like a framework for control cuz if like in the most extreme you could be like okay now the government's deciding to like send all the frontier send all Blackwells only to China, right?
1:05:22
Like that would be the most extreme formulation.
1:05:23
That's clearly not what's going to happen.
1:05:25
Ben Thompson's take is that the last the previous generation chips, that's fine to send over to to China, keep them dependent, keep them from you know needing backed into a corner, keep them from attacking Taiwan.
1:05:43
I I still don't know where I sit with it.
1:05:45
What do you think, Tyler?
1:05:46
Yeah, I I think even in this context like the Anthropic thing is so interesting because like if you take this as saying the US is going to be more restrictive. Yes.
1:05:55
>> Like that's what Dario has been saying. Yeah, exactly. Exactly.
1:05:56
It's like a lot of stuff on paper he almost like agrees with, right? >> Yeah, totally.
1:06:02
>> action it's like completely different.
1:06:03
Yeah, that is weird, right?
1:06:03
But I mean again maybe maybe there's like you know is this is this a a piece on the chessboard?
1:06:11
Is this a chip that's being traded metaphorically to Dario in some ways where where you know it's like how do I win over the labs, get them to work with me more effectively?
1:06:23
Well, I'll give on the thing we agree on, which is export export control.
1:06:28
So I will be more aggressive about export controls in in exchange for you know yes, I want unfettered access to the best AI in classified contexts.
1:06:39
I'm still also very very interested in the rollout of the the different models into classified contexts.
1:06:45
It just feels like so so crazy that Anthropic was able to get such a lead there.
1:06:50
I know it's hard, but we have AI.
1:06:55
Don't don't make mistakes.
1:06:55
Like make it make it compliant with FedRAMP. Please please do it. Don't make mistakes.
1:07:02
Really quickly, let me tell you about MongoDB.
1:07:04
What's the only thing faster than the AI market?
1:07:05
Your business on MongoDB.
1:07:06
Don't just build AI, own the data platform that powers it.
1:07:09
Douglas says, "Why is everyone so mad at Chamath?
1:07:14
All he did was lose billions in retail investors' money by promoting one-pager SPACs.
1:07:17
It's not like he then told them to enjoy their capital losses or anything. Give the man a break."
1:07:23
Chamath says, "Yes, I did."
1:07:26
The capital lossing >> Uh he is he's uh on a rage-baiting tear this morning. >> Yes. The This is a hot tip.
1:07:31
If you're going to be If you're going to be talking about a financial asset, you need to not be specific about whether you're you're whether you're advocating for a long position or a short position.
1:07:46
So, you just need to say, "I got this company. It's a winner. It's a winner. Now, it's up to you.
1:07:52
Are you going to buy puts or calls?
1:07:53
One of them is going to be correct.
1:07:55
But, I'm not going to tell you which one, but you should look into it." >> That's on you. No.
1:07:59
Uh There are There are a lot of There are a lot of retail investors that are that are upset, but uh Chamath is is in the arena fighting it out, duking it out on the timeline.
1:08:09
Uh Dan Primack says the IPO market was expected to be huge this year, but so far pricings and filings are both down more than 20% year-over-year.
1:08:18
Of course, >> [laughter and cough] >> we're just getting started.
1:08:21
We have a number of uh bigger IPOs lined up.
1:08:22
Uh there was an interesting article >> Yeah.
1:08:28
>> [clears throat] >> in the Financial Times on the SpaceX IPO. Mhm.
1:08:30
Uh Robin shared SpaceX probably has revenues less than 20 billion and loses money after the merger with xAI, but is targeting a $1. 75 trillion IPO.
1:08:44
Um Alphaville explored how Musk might try to pull off what could be the biggest bag holder operation in history. >> I love it. That's such a good one.
1:08:53
Should we read through some of this?
1:08:54
>> Yeah, we can read through it.
1:08:55
>> First, let me tell you about Cognition.
1:08:56
They're the makers of Devin, the AI software engineer.
1:08:58
Crush your backlog with your personal AI engineering team.
1:09:02
Uh in Alphaville, Craig >> It's a good start.
1:09:04
Star Trek's warp drive allows a starship to bend space-time and exceed the speed of light without breaking Einstein's general theory of relatively relativity.
1:09:10
As SpaceX prepares to go public at a reported 1.
1:09:14
75 trillion valuation, Elon Musk is attempting a comparable feat defying the laws of financial gravity in pursuit of something the equity capital markets have never witnessed.
1:09:23
The only thing I would immediately jump in on is Elon has been extremely consistent in being able to defy the financial laws of gravity.
1:09:36
We've talked about this before, but Ben Thompson has said like he won't even cover >> Yeah.
1:09:40
Elon companies as closely as, you know, uh or or really at all in comparison to the traditional hyperscalers because Yeah. >> Go for it.
1:09:51
Well, well, I mean, what's interesting is that Ben Thompson has always kept Stratechery out of politics.
1:09:58
And so a lot of people will read him not talking about Elon now in the modern era as like a political referendum, and that's not it.
1:10:04
He wasn't covering Tesla before Elon said anything political because it was always defying financial gravity. Yeah.
1:10:11
It was always hard to actually >> traditional laws of business. Exactly.
1:10:16
Um For early investors, bankers, employees, and advisers, the fees, returns, prestige, and bragging rights would be stratospheric at the mooted valuation.
1:10:25
Even a tiny 3% float would comfortably eclipse the US IPO record set by Alibaba's $25 billion float in 2014. >> Mhm.
1:10:34
A rumored $50 billion raise sounds formidable until you consider how much larger public markets have become since Alibaba went public.
1:10:39
Back then, Apple, then the world's most valuable publicly traded company, was worth around $600 billion.
1:10:45
By the end of 2025, 10 companies had surpassed $1 trillion, and Nvidia today, around $4 and 1/2 trillion.
1:10:52
The firepower clearly exists exists.
1:10:56
Musk is arguably the most impactful entrepreneur of his generation and has built a remarkable company.
1:11:00
The question isn't whether there will be demand for SpaceX stock, but rather what IPO investors would should pay based on what has been reported.
1:11:09
This price being contemplated is truly out of this world.
1:11:14
Uh the super jumbo deal promises not to be a conventional exercise in price discovery.
1:11:18
Musk has reportedly timed it to coincide with the alignment of the planets Jupiter, Venus, and Mercury, but that's one of the more humdrum features.
1:11:28
More to the point, the SpaceX IPO looks like a carefully controlled liquidity event, a solution for a centicorn whose scale has long since outgrown the confines of private capital. Moonshots and moonshine.
1:11:38
The fundamental challenge for any investor is reconciling the company's financial performance with the sticker price at IPO.
1:11:45
Last year, SpaceX generated an impressive 8 billion in EBITDA on 16 billion of revenue.
1:11:51
However, the mothership has recently docked.
1:11:53
This writing is uh quite colorful.
1:11:57
With XAI, with the latter valued 250 billion despite revenues of only 210 million and a cash burn of 9 and 1/2 billion for the first 9 months of 2025.
1:12:06
So, I think they're sort of breaking out X uh or Twitter with this.
1:12:08
Obviously, with Twitter combined, uh it would be quite a bit more.
1:12:13
I want to put this in the truth zone.
1:12:16
So, more to the point, the SpaceX IPO looks like a carefully controlled liquidity event, a solution for a centicorn. Centicorn is 100, centi.
1:12:28
Are they in the hundreds of billions?
1:12:30
They still technically are. No, 1. 75 trillion.
1:12:32
No, but they're currently at 800. Oh, wait, wait, really? Okay.
1:12:36
Well, anyway, once they go out, they're not going to be a centicorn anymore.
1:12:40
We're going to need a new word.
1:12:42
Do you know the word for a thousand billions?
1:12:46
It's going to be a kilocorn. Yeah, kilocorn. >> Kilocorn. Kilocorn.
1:12:48
I guess you could do a millicorn, too, but kilo-corn is a good one.
1:12:55
Giga-corn is I think a quadrillion dollar company would be would be something like that. We'll get there.
1:13:01
Musk marked up the private valuation of SpaceX to 1 trillion citing increases in revenue from its Starlink broadband >> Vindicated. Vindicated.
1:13:07
Been marked up to a trillion.
1:13:09
It's not a centi-corn anymore. It's a kilo-corn. Sorry.
1:13:12
Okay, but that yeah, yeah, I guess you're right. Boom.
1:13:14
But that that was that was as part of the merger.
1:13:16
I don't think there was a lot of primary capital, but yeah, you're vindicated.
1:13:21
Uh prospective IPO investors would be expected to back valuation more than seven times higher than the approximately >> [cough] >> 200 level recorded in October 2024.
1:13:29
That would qualify as an astonishing re-rating in any market.
1:13:38
With these numbers and with SpaceX and XAI combination happening almost concurrently with the expected IPO, investors must make comic book heroic assumptions about sustained hyper-growth.
1:13:48
Elon is the king of >> comic book heroic assumptions about sustained hyper-growth. Uh really being a dick.
1:13:55
>> has been guided to expect 2026 revenues of 22 to 24 billion given the likely mid-year timing.
1:14:00
The investors will be pointing to 2027 projections, presumably with even punchier year-over-year growth.
1:14:09
Yeah, I wonder how how much Starlink is continuing to grow.
1:14:14
Like uh they're doing a lot of deals, but some of those deals are slow.
1:14:16
Some of those deals have to be big with the airlines and whatnot.
1:14:18
Uh it feels like you know, the market for internet is so big that you're just getting more and more people.
1:14:26
Like I see them at Best Buy.
1:14:27
And so you just have to imagine that every month there's just more and more people signing up.
1:14:31
And then once they sign up, they just let it ride for a long time or switch over full-time.
1:14:36
Um but uh that that switch from they are capturing 100% of the launch capacity.
1:14:44
I think we have the uh the chart somewhere in here about uh uh The media as basic as revenues were basically completely flat because they were just like yeah, we did it.
1:14:52
We we captured 100% of the launch market.
1:14:55
If you want to launch something into space, you call us and we pay and you pay us and we have good margins, but it's not really growing because there aren't that many satellites to launch and then they were like we got an idea.
1:15:04
What if we launched a thousand times more satellites? And they did. Yeah. Great.
1:15:08
Uh so yeah, they they talk about uh the mother of all lockups.
1:15:13
Uh they don't think a standard 6-month lockup will cut it and so they could see it being staggered.
1:15:21
Uh Facebook had a staggered uh lockup.
1:15:25
>> I mean there's just so many investors, so many employees, 20 years of stock grants, 20 years of investments going into this.
1:15:32
Lots of people looking for liquidity.
1:15:34
Lots of people that will want to hold, but you know, if you open the floodgates, like yeah, that could be crazy for the stock.
1:15:40
But I think that there's going to be so much excitement.
1:15:44
The narrative is just so much clearer than uh than Tesla.
1:15:47
Tesla's really had to you know, retell the story around Cybertruck and Roadster and and the truck and the delivery truck and autonomy and then the Optimus robot, whereas uh like a scaled, you're going to space.
1:15:59
If you believe in Mars, you're going to be a retail investor, you're going to buy the stock.
1:16:03
Like uh there's going to be a lot of people that are excited about this.
1:16:06
And then also the the AI narrative as well. So we'll see.
1:16:11
>> and then yeah, the only other thing here that they're kind of uh poking around at is index inclusion. Mhm.
1:16:14
Nasdaq has already signaled the desire to accommodate mega listings by proposing rule changes for the Nasdaq 100.
1:16:24
Nasdaq, of course, willing to get a bit more aggressive than uh something like the S&P uh which has uh held back against rule changes. >> Yeah. Well >> past.
1:16:37
Alphaville closes with five key questions for potential SpaceX investors.
1:16:43
If you are thinking about investing in SpaceX once it goes public, you got to ask yourself these five questions.
1:16:49
First, what specific growth rates are required to support a $1. 75 trillion valuation? Mars.
1:16:56
That's a lot of smackeroos. Mars. What?
1:16:59
That's not a growth rate.
1:17:03
>> [laughter] >> I'm just saying that's that is Yes.
1:17:06
>> ignore ignore traditional financial metrics. >> Yes. Two. Focus on Mars.
1:17:09
What is the specific schedule for lockup expirations?
1:17:13
When are you going to see that?
1:17:16
>> [laughter] >> Well, the timing, the number of shares.
1:17:19
When are When are insiders going to be selling?
1:17:21
When is there going to be selling pressure coming?
1:17:22
And when when when might that affect your investment timing?
1:17:26
Uh three, how quickly will SpaceX enter the indices and how much passive buying is expected? >> to Baja blast.
1:17:33
>> They're going to Baja blast directly into the S&P 500, directly into the Mag 7.
1:17:38
It's going to be Mag 8 on day one.
1:17:40
They're going to be in the QQQ.
1:17:40
They're going to be in every index and everyone's going to buy it passively, potentially.
1:17:45
Uh four, how much of the order book reflects genuine conviction versus marking the book, political signaling, or the search for a quick flip?
1:17:55
How many of these people are here to stay?
1:17:57
How many of them believe in moon?
1:17:59
How many of them believe in Mars? What's after Mars?
1:18:02
Where are we going after that? Alpha Centauri.
1:18:04
You know how long it takes to get there? It's like What is it?
1:18:06
Like it's like light-years away, so like it takes like years and years and years to get to Alpha Centauri.
1:18:11
Yeah, the the only other thing that was interesting here is they they talked a little bit about retail allocations and the idea that retail would get a a greater uh share of of the actual 25 trillion miles away, so four light-years.
1:18:31
>> SpaceX isn't even close to going light speed yet, so you're looking at Got room to run.
1:18:35
>> centuries to get to Alpha Centauri.
1:18:35
The last question, how much is being allocated to unconnected institutional investors?
1:18:41
So, ask yourself those questions then head over to Kalshi to track when will SpaceX officially announce an IPO?
1:18:49
Currently, before August 1st of 2026 is at 79%.
1:18:57
So, uh maybe September, maybe October, but uh it's coming. It's coming.
1:19:04
Uh Elon wants this one out in the public markets.
1:19:06
Let me tell you about vibe.
1:19:06
co where D2C brands, B2B startups, and AI companies advertise on streaming TV.
1:19:12
Pick channels, target audiences, and measure sales just like on Meta.
1:19:16
Moving on in the timeline, Mike Solana is uh reacting to the size of the PokƩmon franchise.
1:19:21
Have you ever played or watched or consumed anything from the PokƩmon >> I had a Pikachu Gameboy.
1:19:28
You had a Pikachu Gameboy.
1:19:30
Did you have the Did you have the PokƩmon Yellow game cartridge to play it?
1:19:36
>> goldish colored cartridge. >> the game? Yes. Did you finish it? Uh probably not. Mhm.
1:19:42
It was much more of a thing I'd pick it up for like a road trip and then I wouldn't pick it >> PokƩmon Red and I think I did actually finish it.
1:19:51
I think I got all the way through.
1:19:52
I think I might have collected all 151 PokƩmon or something in the original game.
1:19:56
Then I kind of put >> have anything better to do when you were 8 years old?
1:20:00
No, I had not discovered locking in yet.
1:20:02
Uh but regardless for our distaste for the PokƩmon franchise, uh it has become one of the biggest franchises in the world.
1:20:13
It's of the world's highest grossing media franchises, PokƩmon is bringing in $288 billion over the lifetime across films, games, toys, books, and merchandise.
1:20:23
Hello Kitty is languishing at a mere $88 billion.
1:20:28
Winnie the Pooh, sad to see.
1:20:28
I I I'm a Winnie the Pooh fan. Uh 76 billion.
1:20:33
Mickey Mouse and friends is up at 74.
1:20:35
Star Wars is at 73 billion.
1:20:35
How is PokƩmon bigger than Star Wars? That is a shock to me.
1:20:41
Uh but the rest are basically Disney properties across uh uh across >> Is PokƩmon PokƩmon just more global than Star Wars? Is that it? >> I suppose.
1:20:52
Um so Hunter says it's kind of insane how much bigger PokƩmon is than any other media franchise. Um And Pan Man?
1:20:59
I've never heard of this, but uh there's a su- su- a Japanese superhero made of red bean bread that's apparently very popular.
1:21:07
And Mike Salon says, "What's really insane is the franchises this popular and you still can't buy the old games.
1:21:13
No one has remade the original with new tech and gameplay.
1:21:15
There are no PokƩmon parks and there are no major blockbusters.
1:21:20
There's probably half a trillion dollars on the table right now."
1:21:23
Well, there was one uh Detective Pikachu did well in terms of uh film performance.
1:21:28
Uh I don't know if there's a park, but remaking the original with new tech and ga- new gameplay, that's i- there are two attempts.
1:21:36
There's the There's the mod retro chromatic where you can play the original.
1:21:40
Uh it's not remastered or built with new tech, but it is the original experience.
1:21:45
Um and then and then you do have They are releasing new PokƩmon games on Nintendo Switch Nintendo Switch 2.
1:21:53
And so but they are completely different mechanics.
1:21:57
Like you're walking around in 3D as opposed to this like top-down 2D.
1:21:59
But uh PokƩmon is interesting because it is the it is the best critical review of a video game adaptation film in history.
1:22:11
And so for a very long time Hollywood said, "Okay, we want to do films that have uh they're bought in.
1:22:19
They have audiences already. People know Batman.
1:22:21
We'll just make another Batman movie and people will show up. The Avatar. We'll make Avatar 2.
1:22:25
People will just show up cuz they're familiar with it.
1:22:30
And people thought that that would apply to video games and so they adapted a ton of video games.
1:22:33
Final Fantasy, Doom, and they all Some of them did okay financially, but almost all of them were panned critically.
1:22:41
And what wound up happening was uh there were This was true for like a decade or two.
1:22:46
Like Lara Croft, the Tomb Raider.
1:22:48
Uh I think it did financially well, but everyone was like, "Ah, it's not really that great of a movie.
1:22:51
It's not going to win awards."
1:22:52
Then PokƩmon came out and got pretty good reviews, I think like 86% on Rotten Tomatoes, something like that.
1:22:58
And then Last of Us, directed by Craig Mazin, who had done Chernobyl on HBO, uh started winning critical awards.
1:23:05
The first season was very well reviewed.
1:23:07
The second season is like sort of half of the second game, uh and I don't think was reviewed as well, but is still um at that level of like critical acclaim generally.
1:23:18
So, Uh and anyway, let's get into some uh important calculations prior to our presentation. >> first.
1:23:26
Tyler, do you believe in straight lines on log graphs? Yes. >> You do. Okay.
1:23:31
So, we have some straight lines on log graphs here.
1:23:33
We have graphed out the price of the cheapest MacBook, And we have Ethan over at [laughter] SF Compute.
1:23:40
We have a graph that is uh that is log linear. >> numbers.
1:23:45
And Ethan Anderson plotted the most expensive McDonald's burger versus the least expensive MacBook over time, and the analysis projects that the most expensive burger will be more expensive than the cheapest laptop as soon as 2081.
1:24:01
Do you think this is true?
1:24:01
I mean, like Honestly, okay, like you're not seeing exponential growth in in cattle, right?
1:24:07
But you are seeing it in compute.
1:24:07
So, like I think it's possible.
1:24:11
>> like, you know, I think it's actually possible.
1:24:12
Ad-supported MacBook could be free. Ad-supported burger. Ad-supported burger. No one's tried this. Yes.
1:24:18
Is it Would that be you eat it and then you have this sudden urge to go buy a MacBook or are there just MacBook ads all over the all over the container?
1:24:27
Yeah, you could kind of impress a logo on the bun or something.
1:24:31
>> Well, we have the perfect person to talk about MacBooks getting cheaper with.
1:24:35
First, let me tell you about Vanta.
1:24:37
Automate compliance and security.
1:24:37
Vanta is the leading AI trust management platform. We have Mark Gurman. The Gurminator.
1:24:45
He's a journalist at Bloomberg and he's here in the TVP and Ultra Dumb. How are you doing, Mark? >> Great to see you. >> Doing good.
1:24:51
We're in my Apple sweater today in honor of the the conversation. Very nice. And what is behind you? You're in Los Angeles?
1:24:58
>> Has there actually ever been a day where it didn't make sense to wear your Apple your Apple hoodie?
1:25:03
Yeah, like if I go to a Google event or a meta event, probably not wear the Apple hoodie, you know?
1:25:08
But uh Well, take So, take us through your predictions.
1:25:12
Anything that surprised you?
1:25:14
What was actually released?
1:25:16
Like what have the last few days been like for you?
1:25:19
Uh last few days have been interesting. You know, 6:00 a. m.
1:25:21
Pacific time, they've rolled out the the new products.
1:25:25
Monday started off with the iPhone 17e and the M4 iPad Air.
1:25:28
Tuesday obviously was a big Mac day with the M5 Pro or M5 Pro and M5 Max MacBook Pros, the M5 MacBook Air and the two new Studio Displays.
1:25:39
Then we got the big one yesterday on Wednesday, obviously the MacBook Neo.
1:25:44
In terms of surprises, there were no surprises.
1:25:47
These were a bunch of products that had a lot of pent-up demand.
1:25:49
They needed to roll out a new iPad Air. Yeah.
1:25:53
Sales have been flagging there a little bit.
1:25:55
It was time for them to roll out the iPhone 17e.
1:25:56
And obviously this new cheap MacBook has been in the works for for several years.
1:26:01
The MacBook Pros with the M5 Pro and M5 Max, some may have expected that last October because that's traditionally when they've done the MacBook Pro updates.
1:26:11
But this time around the chips weren't ready until recently.
1:26:13
They used this newer generation TSMC fabrication technology, so those rolled out for the spring.
1:26:20
So, overall, a really nice set of updates.
1:26:22
Think it'll help Apple have a really strong quarter.
1:26:23
Remember, they guided an extremely strong March quarter.
1:26:27
We had a feeling, we knew why, but now we know why for sure because all these products are now hitting the market.
1:26:32
And I think at 600 bucks and 500 for education, the MacBook Neo is going to be a game-changer, not only for the computer industry, but for Apple's bottom line.
1:26:42
Was there any conversation about Mac minis?
1:26:47
Uh no, no, just just on Twitter. Yeah, just on Twitter.
1:26:50
Yeah, open claw and all the AI stuff and everything going on there. Yeah.
1:26:55
There'll be a Mac mini this year, but I'm not expecting it until closer to the end of the year.
1:26:59
Yeah, I I I I'm just thinking of like uh if you get a Mac mini, you need to plug it into something, you need a display, you need a keyboard, mouse, like there's a lot of extra features that drive up the cost, and um it's people aren't actually buying them for the power of the Mac mini.
1:27:14
They're buying it just to be able to interface with iMessage, and so the MacBook Neo might actually sort of displace the Mac mini potentially because you have I mean, not if you're wiring them all together or something, but I'm wondering if there's any like odd, unpredictable, orthogonal uh purchasers of Neo, or is it just like the Chromebook market? But I don't know.
1:27:35
Well, I think it's a secondary computer market also, right?
1:27:36
Like I have this big 16-in MacBook Pro that I need to lug around. Yeah.
1:27:41
For 500 bucks, I can get something at half the weight Yeah.
1:27:45
>> and you know, half the volume that if I really needed it to take to an event or for a flight and have macOS, something a little bit more formidable than iPadOS, it's a great alternative.
1:27:53
So, probably not going to do it. >> Mhm.
1:27:56
Uh I'm saving my Mac budget, I think, for this big MacBook revamp in the fall, the touchscreen version of the MacBook Pro Yeah. uh with OLED.
1:28:05
I don't really need the Neo.
1:28:06
I can I can get it if I really wanted it, but Yeah.
1:28:09
definitely I think it's going to do well and crush the Windows PC market. Right?
1:28:13
I mean, if you look at the price point >> it is it is it surprising that that it took this long to come out with a device that was going straight for the jugular with the the everyday PC market?
1:28:29
I think um you finally had alignment on the chip side to be able to do something like this.
1:28:35
And the A18 Pro that just came out a couple of years ago, that is on par with an iPhone or a Mac grade chip, right?
1:28:43
You can really run benchmarks and see that it's probably close to an M1 or M2 or even an M3 in some you know, single thread use cases.
1:28:53
So, that chip coming out and Apple rewriting Mac OS a few years ago to be able to run on these arm-based chips as part of the transition away from Intel is what allowed this to all come together. So, it took a long time.
1:29:06
This would have been very difficult for them to pull off in the Intel days.
1:29:10
Would have been very difficult for them to pull off 5 years ago, but once they had alignment on all of those factors, they were able to do it.
1:29:17
One thing that they didn't really talk about yesterday with the launch is another factor here was a new aluminum-based manufacturing process that has basically allowed them to save more aluminum, reuse aluminum scrap metal, and build these machines in volume while saving a lot of the manufacturing costs.
1:29:34
And so, that's a big part of how they were able Should I buy a MacBook Pro or should I wait for this touchscreen OLED newfangled thing that you just described?
1:29:48
You humbled me by telling me that my MacBook Air did not have a good display.
1:29:52
I never want to make the same mistake ever again.
1:29:56
But at the same time, I'm not really convinced that I need a touchscreen.
1:30:00
What What's the trade-off right now?
1:30:04
Well, you've got the what?
1:30:04
The 13-in Air, remind me, or the 15-in Air? >> 15-in Air.
1:30:09
>> [laughter] >> Good machine. I got the big small one. The small big one. I don't know. >> It's a good machine. Uh it's a good computer.
1:30:17
>> [laughter] >> Yeah, I mean, I think you just wait for the OLED.
1:30:19
I mean, we're talking about screens here.
1:30:20
You want to have the best screen, that's the OLED.
1:30:22
Whether you use the touch or not, it's a breakthrough difference.
1:30:25
You know, one thing on the uh on the MacBook Neo, the screen technology they're using is actually a different type of screen tech than what you're getting on the Air.
1:30:33
And so, I would say the Air is like pretty like down the middle, it's pretty good.
1:30:39
The OLED is like huge step above, and the screen tech they're using on the MacBook Neo, it's a step below.
1:30:43
And if you've like if you use the Pro, the Air is not going to look so good compared to the to the Pro.
1:30:50
If you use an Air, you're going to see the Neo screen, you're going to be like, "This is subpar." Sure. Sure. That makes sense.
1:30:57
Uh talk about the naming for Neo.
1:30:57
It's the first time Apple's ever used that phrase.
1:31:01
They had Nano right there. They didn't go Nano.
1:31:05
What do you think they mean by Neo? Why that term? How's the response been?
1:31:12
I think they wanted something cool and futuristic.
1:31:13
I wanted I think they wanted something to show that this was something entirely new.
1:31:19
And I think they were looking for a new cooler term than SE.
1:31:21
SE had been sort of their term for these low-cost products in the past.
1:31:26
You have the Apple Watch SE.
1:31:29
They used to have the iPhone SE.
1:31:29
So, they're clearly trying to move away from that SE naming.
1:31:33
And it seems to me like Neo is that replacement.
1:31:35
So, I wouldn't necessarily be surprised if we eventually see them rename the low-end products to all be part of that Neo family.
1:31:42
And so, what they've basically done is they have like Neo at the base, Air is the mid-term, and Pro is the high-end, and then they've got things like Ultra and Max to differentiate further at the high-end.
1:31:54
And so, I think this strategy they've always had, which was good, better, best, you know, low spec, mid spec, high spec, they just have their fancy marketing names for it and I think Neo is a really great name.
1:32:08
And just like Air was a super catchy name back in 2008 when Jobs and built the first MacBook Air, now that Air name is across the whole portfolio, I think Neo has that same potential.
1:32:18
Three letters, cool, memorable.
1:32:21
But if I were tabula rasa, in charge of naming products at Apple, and I was given the iPhone lineup, I would probably go iPhone 17 Pro, iPhone 17 Air, which is not what they did, they just did iPhone Air, then iPhone 17, and then iPhone 17 Neo.
1:32:38
Because I like this new term.
1:32:40
Instead, they did 17E, they did Air with no number.
1:32:43
What's the thought that there?
1:32:46
Well, I feel like on the phone, they've always just been completely all over the place on name.
1:32:49
Basically, become like Samsung or Android.
1:32:53
I remember when they launched the iPhone, what was it?
1:32:55
The the 10S Max, iPhone 10S. Right?
1:33:01
And you have the the Pro Max, right?
1:33:03
So, you're jumbling a bunch of names together.
1:33:05
I think over time, it'll become a little bit clearer.
1:33:09
In terms of iPhone naming conventions, those are harder to strip away because um you have case makers, you have carriers, you have people around the world who are used to these naming conventions.
1:33:22
So, changing the naming structure on the phone is is much more difficult than doing it on something like the Mac or the iPad. Got it.
1:33:29
But I'm sure they'll get there eventually for simplicity.
1:33:30
You know, they're still doing What What What's playing out right now in the low end of the smartphone market in the US?
1:33:38
Well, the low end of the smartphone market in the US is is is not so great.
1:33:43
I mean, you've got some Samsungs there, you've got some of the phones made from some of the Chinese phone makers that people are importing here.
1:33:50
But in terms of the price point, Apple really abandoned the low end of the phone market.
1:33:54
At some point, you had, I believe the SE was 350 bucks.
1:33:56
Then it eventually went up to 430 bucks. Now it's 600 bucks.
1:34:01
So I'd say Apple has basically given up on the on the low end of the phone market.
1:34:06
They're playing in what we call the mid-tier of the phone market.
1:34:10
And I >> It's so interesting to go low end on the computer on the on the PC side, but not but stop competing on the low end on the phone side.
1:34:21
Just give given that I don't know.
1:34:24
I mean, growing up there was just like such such a big divide.
1:34:26
It was like it was Apple PCs were luxury products. Mhm.
1:34:32
They really didn't care about the low end.
1:34:34
Calling it an Apple PC is hilarious.
1:34:36
Perso- personal computer. Yeah. The divide is gone now.
1:34:40
And you know what I think this MacBook Neo is going to do?
1:34:43
It's not only going to help with Mac sales, but it's going to sell a lot more iPhones and Apple Watches and iPads.
1:34:49
It's going to bring a lot more people Yeah. into the ecosystem.
1:34:50
So, you know, for Apple from a business standpoint, you know, they've always said they're not going to cheap ship, you know, cheap products to shape to to to chase market share.
1:35:01
Uh that's clearly changed.
1:35:01
Apple needs to do bigger and bolder things to expand its business and grow.
1:35:05
They're in new markets, uh you know, Eastern Europe, uh developing parts of Asia, India obviously is a big focus there.
1:35:12
I think eventually they'll be, you know, in Africa as well.
1:35:15
Uh so clearly they they had to do this.
1:35:18
It was decent timing for them.
1:35:20
And you know, there's all these concerns about recession and, you know, war and everything going on right now.
1:35:26
So $600 MacBook I think is you know, pretty timely. Yeah.
1:35:29
Uh what what's new since we last talked on any any kind of leaks or insights on on their AI strategy and the and the rollout of the new Gemini-powered Siri?
1:35:42
Yeah, the Gemini-powered Siri was supposed to launch this month.
1:35:44
They were supposed to hold an event in New York about 2 weeks ago to walk press through uh the new Siri.
1:35:50
Uh they've continued to face delays there.
1:35:52
It was originally supposed to come out in iOS 26.
1:35:54
4, which is scheduled for the end of this month.
1:35:59
Uh now they're still splitting the features, but they've punted it to 26.
1:36:01
5, which is supposed to come out May June WWDC time frame.
1:36:06
So, potentially some features then, and then the rest of the features uh coming out at the tail end of the year as part of iOS 27.
1:36:15
Uh my bet is that nothing significant will really probably come out until iOS 27. Mhm.
1:36:21
Uh yeah, uh and and >> Not great.
1:36:23
Yeah, is that that doesn't Is that good?
1:36:26
>> [laughter] >> Uh what >> No, that's not good. No, that's not good.
1:36:30
>> Is part of that Is part of that just like the management shakeups and you have new leader, you know, basically New leadership, and it's sort of like, you know, we've taken this long.
1:36:40
Uh it's only going to be worse if we release it and it doesn't work. Sure.
1:36:43
>> Big other questions are like, do people really care at this point?
1:36:45
People are just going to use the ChatGPT or the Anthropic app or the Gemini app anyways.
1:36:52
Our Our AI hardware is industry-leading.
1:36:54
We can run all these third-party models on the phones through applications anyways.
1:36:57
We might as well wait until we we get it right.
1:37:00
Same with Apple's AI strategy.
1:37:02
If you were to say that this was a strategy, uh then, you know, that that's a pretty good look for them.
1:37:09
But it this hasn't been the strategy.
1:37:10
They fell ass-backwards into it to be completely honest with you, right?
1:37:11
The intention was never to fail to fail upwards. Yeah, but they did.
1:37:15
It's Yeah, it's fascinating. Strategy. We fail upward. >> For now.
1:37:20
Yeah, but I mean, they have to be looking at the at the revenue curves of uh of ch- of ChatGPT and and OpenAI and Anthropic.
1:37:30
>> I mean, Yeah, and just seeing that like >> lever for them. Yeah, yeah, yeah.
1:37:31
It's a It's a huge growth lever.
1:37:33
It's a huge market, and you can see the way Mark Zuckerberg's positioning to like make a real play into GenAI in some meaningful way, and uh he's taken a very, very different approach.
1:37:45
Been honestly slower on actually releasing features, but just feels like he's taking it a lot more seriously.
1:37:52
There's a lot more DNA there.
1:37:53
>> How much are you planning to cover Open AI's hardware?
1:37:56
Is that going to be in your territory at Bloomberg?
1:38:01
>> [clears throat] >> Front and center.
1:38:02
That'll be Okay, so give us give us your how have you processed the kind of the leaks?
1:38:05
We had we had the the dime leak around the Super Bowl which looked like >> that was real.
1:38:13
I mean I don't everyone I spoke to says this is not a real product.
1:38:17
Uh, it's Yeah, but then Joe Gabbia is sitting there in San Francisco using it like this week at a coffee shop.
1:38:25
Which didn't exactly look the like the most organic.
1:38:29
Yeah, there's a lot of conspiracy around it.
1:38:31
I'm trying to figure >> if if the if the dime ad was fake, then it was an incredibly good model because I forget the name of that actor. But SkarsgƄrd? SkarsgƄrd. >> SkarsgƄrd, yeah.
1:38:43
Yeah, but it didn't look it looked like okay, leading frontier video model. >> Yeah.
1:38:49
Yeah, yeah, it Maybe it's a teaser of their models.
1:38:51
But but here's the thing. Yeah.
1:38:52
The hardware is going to be beautiful. Yeah.
1:38:55
>> We know the hardware is going to look great.
1:38:56
It's going to be designed by LoveFrom, Jony Ive, all those guys, the former Apple people.
1:38:59
There's no questions there.
1:39:02
The question is who's going to buy these things, right?
1:39:04
Like are people really going to trust Open AI as a hardware company?
1:39:09
And Apple has this ability to fast follow.
1:39:12
Let's say Open AI does come out with something pretty nifty.
1:39:16
What stops Apple from copying it immediately and taking all their market share?
1:39:19
Apple has the retail stores, they have the privacy story, they have the brand. >> Yep.
1:39:24
Open AI has this great AI brand, but they don't have a hardware brand.
1:39:28
And so it's almost like they have the opposite problem of Apple.
1:39:29
But the leg up they have is that their underlying technology is clearly better.
1:39:32
Yeah, there's this new there's there's rumors around their new voice model that they're working on.
1:39:39
And so the question the question to me is like can they create a beautiful device and have a meaningful breakthrough on the model side that somehow makes it uh more difficult for Apple to just fast follow, right?
1:39:53
Well, I would say, you know, for sure yes on point A, for sure yes on point B, maybe yes, maybe no on Apple's ability to fast follow based on the models, but I just think the bar to sell people hardware, even if it's good and even if it comes from a big brand, Yep. it's a really high bar. Yep.
1:40:13
It's a really high bar to sell in these Apple-like quantities. Yep.
1:40:17
I mean, even look at Google in terms of their market share on their hardware. Yep.
1:40:21
They have amazing software and they have amazing hardware and they have the best advertising for consumer electronics uh for phones at least in a very long time.
1:40:30
I think we talked about the ads last time I was with you guys. Yeah.
1:40:33
And uh they've made little to no dent. Yeah.
1:40:36
And obviously there's big questions there if Google should even be doing hardware. Yeah.
1:40:40
And and and Meta Ray-Bans, too.
1:40:42
You open up Instagram and you see like a full bleed special modal ad for Meta Ray-Bans and they're doing okay, but it's not, you know, 80% of the population.
1:40:54
>> The Meta Ray-Bans are considered a smash hit and they've sold fewer than 10 million units. >> Yeah, it's not a lot. Yeah.
1:40:58
Uh Apple sells 10 million units of uh AirPods. >> Socks.
1:41:05
Yeah, probably a probably a quarter. Yeah.
1:41:07
So, the bar is just unbelievably high. Yeah.
1:41:10
What's going on with the Meta with the that lawsuit with Meta?
1:41:16
They had contractors that were just able to view the recordings of Meta Ray-Ban users. >> I I missed that.
1:41:22
I haven't I haven't covered it or haven't followed it very closely. It's it's crazy.
1:41:26
This is reminiscent of when people figured out that Apple with Siri and Amazon with Alexa and Google with the had these folks, they're called um annotation analysts who listen to everything you're putting into the voice assistant and they're comparing it to the output.
1:41:45
So, they're listening to the raw audio and comparing it to the output, so what Siri thought they said.
1:41:53
And so, they're able to correct it manually in order to improve the underlying model. Yeah.
1:41:56
And that was a big blockbuster when everyone discovered that that was happening a few years ago.
1:42:02
This is not audio, this is camera footage.
1:42:05
This is people in potentially uh you know, uh intimate moments.
1:42:07
And this is not just what you're saying or facing you, it's what you're seeing while wearing these glasses everywhere.
1:42:16
And so, I think that raises really big questions about the smart glasses category.
1:42:20
When Apple releases their smart glasses, they're going to have a big focus on privacy, a big focus on uh seeing the surrounding environment for you.
1:42:29
Uh at the same time though, I don't think that this changes uh the overall equation for smart glasses.
1:42:35
I still think that this has been a successful pioneering product for Meta.
1:42:41
I still think they're pushing forward here.
1:42:42
I still think they're going to release several new models that I'm, you know, based on what I'm hearing are pretty uh exciting there, too, for the for the Meta smart glasses.
1:42:49
But will they need to make some privacy adjustments? Yes.
1:42:52
But I think in this case with the smart glasses, the first mover advantage is real and and Meta has that.
1:42:58
And in terms of glasses, they've got the biggest partner with uh Luxottica. Yeah, that makes sense.
1:43:01
Uh talk about the Studio Display XDR.
1:43:04
Is this a complete replacement for the Pro Display XDR? Okay.
1:43:11
And [clears throat] and Uh How are they pitching pitching this? Yeah.
1:43:16
Well, this is it's pretty expensive, right?
1:43:17
Uh $3,300, but it's still much better than uh what you had before.
1:43:23
Remember when they announced the the Pro Display XDR, people lost their collective minds when the stand, right?
1:43:29
So, you got the monitor for five grand, but then the stand came separate, which is ridiculous.
1:43:34
And that was a thousand on its own.
1:43:36
People lost their minds, and now you can get two MacBook Neos for the same price as that stand up there with an education discount.
1:43:44
So, now they've been able to go a little bit down market on the monitor.
1:43:47
It the resolution isn't as high as what they had before.
1:43:51
It's not like they went up to a 7K.
1:43:53
You have a 27-in panel instead of a 32-in panel.
1:43:56
There's a lot of savings on the shipping and the logistical side and the product engineering side with those products.
1:44:02
So, I think this new Studio Display XDR is going to be pretty popular.
1:44:04
I'm actually probably going to get one myself for my office at home.
1:44:07
So, I'm pretty pretty pumped for it.
1:44:11
>> So, grab the Studio Display XDR, but maybe wait on the MacBook Pro.
1:44:16
Yeah, you know, I need the most reference monitor-like quality.
1:44:17
I need medical image need all of that my very intense engineering work in lives, but I ordered I ordered a new MacBook Pro Max. >> Yeah. I got 48 gigs of RAM. It was like 6:15 a. m. I was at the gym.
1:44:33
I just went through the order flow pretty quickly cuz I wanted to be first in line, and then I realized I didn't max out the RAM.
1:44:41
And I tried and then I was on with Apple support saying, "Hey, can you just switch me for the version with with more RAM?"
1:44:48
And they said "I was not feeling the AGI in that moment because they said you have to cancel your order and re and place a new order and lose your spot in line."
1:45:00
>> this point it was like 5-6 hours later. Oh.
1:45:03
>> And I was like, "How how how do we not have the technology for this?" >> this, yeah.
1:45:06
It is it is wild, but so question for you, why get this M5 version knowing that they'll have M6 version with OLED and touch in 6 months?
1:45:16
I cannot stand when people touch the screen of my computer.
1:45:19
And so, I don't even want to I don't want to give them another reason.
1:45:23
They already seemingly have enough reasons.
1:45:25
People come [laughter] around here the office.
1:45:27
They're They're pointing and stuff on the screen.
1:45:29
I don't I don't want them I don't want them to even be tempted.
1:45:31
So, uh no, I mean, I I I I just look at I I think that uh computers are these amazing things that we use for something like 8 hours every single day uh at least of the of the work week and the their their cost relative to the value is just so extreme that if the new device comes out in the fall and it's amazing, then I would just get that. All right, it's fine.
1:45:59
Maybe I'm going to have to get the M512 to hold me over to the M6.
1:46:02
But, you know, one thing we didn't talk about is, you know, Samsung has this new S26s.
1:46:05
Uh the ultra version, it has this privacy display on it. Oh, yes. >> guys seen it?
1:46:11
No, I haven't I haven't actually seen the demo. I've heard of it. It sounds amazing. Explain.
1:46:13
The pixels turn off uh in certain places.
1:46:18
So, if someone's re- reaching over and looking at your screen, not touching it, uh but looking at your screen, uh they won't be able to see what's going on.
1:46:25
So, so so so on like in control center, if you're on a plane, you can basically, you know how you have that uh polarized uh screen protector?
1:46:33
You can effectively turn that on in software dynamically.
1:46:35
So, you're on the plane and you say, "Yeah, I don't want this person reading my emails." Turn that feature on.
1:46:41
It probably gets a little bit dimmer, maybe a little bit blurrier.
1:46:44
But, then when you're just hanging out by yourself, you can turn that feature off and get the full uh display resolution.
1:46:49
Yeah, really really innovative.
1:46:51
That's That's got to come to Apple soon.
1:46:52
But, talk about following. >> Soon is wrong, right? Soon is wrong, right? Don't forget Yeah.
1:46:57
This is This is the interesting thing about Samsung, right?
1:47:01
Where they are the component maker and the hardware maker and the component supplier to Apple.
1:47:04
There are certain things they're not going to want to give to Apple.
1:47:09
Cuz it's a it's a competitive advantage for their own hardware.
1:47:11
We saw this with OLED many years ago where it took Apple, I think, 4 or 5 years to get OLED after Samsung. >> Yeah. Right?
1:47:18
Apple just basically OLED transition a year or two ago Uh on the phones at least, they haven't even done OLED yet on on the Mac.
1:47:24
They've only done OLED on one iPad.
1:47:28
Uh they'll have it on a second iPad this year and the others in the next couple of years.
1:47:31
But this privacy display is I think a hot feature and it's going to be a few years at least before Apple's able to to to get it. Yeah.
1:47:38
This is my my overall skepticism.
1:47:40
Like I completely agree with you on the idea that it's very hard to sell tens of millions of units of a new consumer hardware, but I just am not necessarily buying the idea that Apple can fast follow things that work because it took them a decade to get a VR headset out and it wasn't a smash hit and like they you know they they they are like you know at least a few years behind on even the most basic little implementation features that happen.
1:48:06
>> you know, let's say Open AI does earbuds and they have these remarkable AI features.
1:48:12
You know, Apple could cook up some new models with Google and try to get >> in software, you know, within a year. >> Yeah. Yeah.
1:48:18
It's hard to imagine the the suite of Apple products on your body across vision, watch, phone in your pocket, laptop, and AirPods like not being able to satisfy like your demand for AI.
1:48:31
So I completely agree with you on that.
1:48:33
Well, the question is are like do people actually want these things, right?
1:48:36
Like we talk about these AirPods with cameras, we talk about these smart glasses, we talk about this pendant, we talk about a pin, talk about whatever. Smart cane, staff. Yeah.
1:48:46
I mean none of this is you know not proven these are not proven products, right?
1:48:51
7 million units on Meta glasses is really successful, but it's not proven at at Apple quality and Apple caliber.
1:48:56
I mean there could be a situation look back a few years from now like say this whole AI hardware thing was just a big you know whatever and people are just still glued to these things.
1:49:06
So we'll have to see what happens, but at least Apple's going to give it a shot. Appreciate it.
1:49:13
Well, thank you so much for Thank you for to come talk to us on a busy day. Always great to see you.
1:49:18
And have a great rest of your week. Talk to you soon. Goodbye.
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1:49:28
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1:49:32
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1:49:35
And without further ado, we are joined >> [music] >> by Dan Primack. A legend. >> From Axios. Dan, how you doing? Hey, what's going on? Good. How you guys doing?
1:49:43
We're doing fantastically.
1:49:43
Thank you so much for taking the time to come talk with us. Great. Long long overdue. Long overdue. First time on the show. Crazy.
1:49:50
What uh story from this morning? I'm a PM virgin here. Yeah, crazy.
1:49:52
Uh story from breakfast this morning.
1:49:55
I was talking with John uh when we were looking over the schedule and I was telling him uh when I first got on Twitter in college, I followed a bunch of VCs as one does and you know, I see them every day, you know, talking about oh, I backed this company at seed or series A.
1:50:12
And you were the first person to really highlight like, oh, man, you know, like They're Sometimes these VCs don't make Sometimes they don't meet they don't beat the the S&P 500.
1:50:24
>> Yeah, so you were the I initially had some cognitive dissonance, but uh came around to your uh VC Yeah.
1:50:29
returns truth thing over time.
1:50:32
But that's a good place to start.
1:50:34
What yeah, what what is the health of the of the VC industry, the VC market?
1:50:40
I mean, it's not great, right?
1:50:40
Uh we reported the other day uh you know, that that median returns are uh under the S&P 500, they're under the NASDAQ, they're under the Russell 3000 for 25 years.
1:50:49
And and I know there's a little bit of lumpiness cuz you know, you're coming out of certain things.
1:50:55
That's coming out of kind of the great financial crisis, but that was true for the public markets as well. Uh so, it's not great.
1:51:00
Now, look, you know, top top funds in those top 5% they're doing great.
1:51:05
But the reality is you've got so much more money flooding into the market now, that means more money's going to be at that median and and that's not great for them.
1:51:13
And and and it's you know, you're talking 401(k)s, you're talking more money coming from insurance companies, etc.
1:51:17
It It's not a great place to be.
1:51:19
Uh it's It's one LP told me and this quote I use, it's kind of the the story of hope over experience, and that's what venture capital seems to be right now.
1:51:26
Yeah, talk about that money that's flooding into VC because there's smaller funds that had a particular playbook that have scaled up massively, become growth funds.
1:51:35
There's stuff that There's the crossovers, there's SPEs, there's strategics.
1:51:40
Like, what is the shape of the venture capital funding boom over the last few years?
1:51:46
I mean, it's hard even to find what venture capital is anymore, right?
1:51:48
Like, I mean, can you say that somebody who's putting half a million dollars into, you know, a a founding team of maybe two people in a garage?
1:51:54
Is that the same as giving, you know, 10 billion dollars to open AI?
1:51:58
I mean, they're they're not even vaguely the same industry.
1:52:00
But, they're all quote venture capital.
1:52:02
But, there is an enormous amount of money, and it's coming from everywhere, right?
1:52:07
You know, it used to be that if you wanted exposure to venture capital, you had to, you know, either be an institutional investor or have a friend and be very high net worth.
1:52:13
At this point, you can get some exposure to this stuff by just having a Fidelity mutual fund, right?
1:52:18
You know, Fidelity, you know, Contra Fund has a bunch of quote-unquote startups in it.
1:52:21
You know, and what's coming soon out of the Trump administration is letting your 401(k) plan invest in private funds.
1:52:27
Now, are they going to actually invest in individual funds?
1:52:31
Will they try to kind of put money into pools? Unclear. It hasn't happened yet.
1:52:34
But, but there's a huge It's a lot of money coming, and it's the thing that venture capitalists and private equity firms have viewed as kind of the holy grail forever cuz they haven't had access to any of, you know, that defined contribution money.
1:52:45
So, when you saw the news, you jumped out of your chair.
1:52:47
You said, "Yes, finally my 401(k) will be deployed into venture capital."
1:52:52
I mean, look, this is the moment when traditional limited partners in venture capital have been, if not getting out, at least trying to give themselves some optionality, right?
1:53:02
You You've seen some of kind of the biggest endowments, Yale, Harvard, etc.
1:53:03
, do big secondary sales of their private equity and venture portfolios.
1:53:08
They're not getting out, but they're recognizing they were a little bit too concentrated.
1:53:13
And so, it's the very minute when some of the smartest money is if not leaving, at least hesitating, that I hate to say it, all the dumb money is about to come flooding in.
1:53:20
So, what does that mean for this K-shaped dynamic that we see in venture capital where there's a few funds that are getting bigger, they still have solid returns, and then smaller managers seem to be getting crushed, but what are you actually seeing?
1:53:34
I mean, I I think that's what we're going to continue to see, but and and this is where the hope over experience part comes in.
1:53:39
The best returns still, in terms of actual cash on cash, are still the young funds, right?
1:53:43
It's not the It's not the firm that invested in SpaceX two years ago.
1:53:47
It's the firm that invested in SpaceX eight years ago, and those were generally smaller funds.
1:53:53
Granted, it was Founders Fund, but they were small at the time.
1:53:55
So, it is That's still where those massive, massive returns that when people think of venture capital, what they're thinking about.
1:54:01
You know, if you invest at a you know, half a trillion-dollar valuation in a company that you hope's going to go public at a trillion, that's nice.
1:54:08
I mean, 2x is nothing to sneeze at, right?
1:54:10
You'd be happy with that, but that's not a venture capital return.
1:54:14
That's not the reason you have this, you know, the illiquidity premium on venture capital.
1:54:17
Yeah, what's the shape of the illiquidity premium this like around like recently in in recent fundraises?
1:54:22
I mean, everyone goes back to the two and 20, but there's obviously a dispersion around that. What are you seeing?
1:54:31
I mean, there is I mean, the this is the the problem is when is what that illiquidity is right now, because it used to be you think you're invested in a startup, depending on the stage, right?
1:54:39
But say from inception, you know, seven years, maybe.
1:54:43
That sounded about right, at which point maybe it worked, and if it worked, that means an IPO, or that means a sale, or if it didn't work, it didn't work, and and that's understood cuz it's venture capital.
1:54:50
Now, though, you've got companies, you know, decade, you know, 15 years old, and you've got lots of limited partners in these companies or in or in these funds who are looking and saying, "I've got great paper returns.
1:55:01
These things are amazing on paper, but I keep going to my investment committee and you know, say you're a college endowment, right?
1:55:05
And and your job is to produce money that then gets used by the school every year, right?
1:55:10
It's not to take money out of the core endowment, it's to produce returns that then can be used to fund operations.
1:55:15
And the investment committee keeps looking at you and saying, "Yeah, you keep giving us these great numbers. We need cash. We gave you cash.
1:55:22
We would like cash back."
1:55:24
And and the managers just kind of have to shrug and go, you know, Stripe doesn't want to go public.
1:55:27
You know, what what can we do?
1:55:28
But it's changing this year, right?
1:55:30
[clears throat] We might get like $4 trillion of liquidity this year between SpaceX, OpenAI, Anthropic.
1:55:36
Walk me through the maybe. What what's at stake?
1:55:39
>> Before before you jump in there, I I did have a a story.
1:55:41
I There's a friend of mine that I that I've invested with in the past and he's started to look at some new investments and uh he's uh closer to 60 than he is 50.
1:55:52
And so he's starting to run the numbers and being like, "Do I really care to make Assume this goes incredibly well, do I really care to get a 10x when I'm 75?"
1:56:02
Like at at at some point he's like, "I might just leave it in the market and and uh go play another round of golf." >> Yeah. Yeah, that's impressive. That's a real thing.
1:56:15
How much on the on the LP when you have conversations with LPs, uh so much of the reason that I personally have invested in a bunch of startups and and some funds is is basically FOMO and like there's like the there's the healthier dynamic which is I generally I meet a a founder that I'm excited about and I want to support them and usually money is the most effective way to do that uh at least at at scale.
1:56:43
Uh but a lot of it is just kind of FOMO and you know, venture is a small part of the money that they uh are allocating and they just want to be able to tell their friends or their or their uh or their fund that they're in all the great names and I don't actually care if it underperforms a little bit if uh I have something to talk about it at dinner.
1:57:08
Yeah, I mean look, a limited partner doesn't necessarily care about that, right? The the FOMO piece.
1:57:10
Their their job they literally get paid based on if they outperform a benchmark, whatever that benchmark might be.
1:57:15
Uh so that's really where they care and and on the FOMO side, I mean there is this old story uh going back to like a I don't know, mid-2000s where Harvard stopped investing with Excel, the big Silicon Valley firm.
1:57:26
They were livid at Excel for something they had done uh in terms of kind of splitting some funds and not giving money back.
1:57:31
They were mad and they wanted to make a big point of not investing.
1:57:34
So the next fund for Excel, the one that Harvard very loudly did not invest in, is the one that seeded Facebook, right?
1:57:39
So that didn't work out very well for them.
1:57:41
So they had there the FOMO thing is real.
1:57:42
I I will say, I mean you asked uh what do you ask about the crossovers earlier?
1:57:46
I mean that there is this part of the market, right? The Fidelities, the T.
1:57:49
Rowe Prices of the world and the reason they're investing largely in these companies isn't for the return necessarily on those startup stocks.
1:57:56
It's to have a nice foothold if and when the company does go public, right?
1:58:00
And to have a relationship with the company so then they can take a really big position, then they can you know, get their mutual fund clients and their high net worth clients access into the IPO.
1:58:07
So is that more about context to talk to their clients?
1:58:12
So uh a Fidelity has a bunch of high net worth individuals with accounts and they can say, "Hey, we've been investing in this company while they were private so we can bring a more confident thesis to bear or is it No, I think it's literally access.
1:58:26
I think it's literally access.
1:58:27
I I think they'll I think what this often means is because they have a relationship and if you've got a very, you know, if you've got an issue or that's oversubscribed for an IPO, it's a very popular IPO, the company's got to make decisions.
1:58:37
Who gets an allocation and what those allocations are and what if you're Fidelity or T.
1:58:42
Rowe, what you really want is to be able to go to your existing clients and say, "We've, you know, we've got ac- you've got access to the OpenAI IPO if you want it. Do you want it?"
1:58:50
And then the client's like, "Oh, they you know, they had access to Open AI. I I like these guys.
1:58:53
I'm going to stick with them, etc." That's what they want.
1:58:56
They want the relationship and they want and they and they can say to the CEO, "Look, we believed in you 6 years ago.
1:59:01
Of course we still believe in you today.
1:59:02
We're a long-term investor."
1:59:04
So, talk about the IPO market.
1:59:06
Is it over or are we back? It's slow.
1:59:08
Uh I mean, if you look, I mean, despite the fact there was this little boom in January in terms of both number of pricings, in terms of filings, we're down over 20% in both of those year-over-year from last year, which was a garbage year for IPOs.
1:59:20
Yeah, so everybody is looking at the big dogs, right?
1:59:23
Everybody's looking at SpaceX.
1:59:23
Uh everybody, you know, coming sooner.
1:59:27
Everybody's looking at potentially Open AI or Anthropic.
1:59:28
I I think Databricks is another one that people are sleeping on.
1:59:32
That's almost certainly going to come in the second half of this year.
1:59:33
So, I think what we might end up with is a really skewed IPO market.
1:59:36
You know, the dollar numbers are going to look good uh cuz you're going to have some huge ones, but you're not necessarily going to have an enormous number of actual issuers, at least at this moment. I mean, Yeah. it's pretty dead.
1:59:46
We've got one coming tonight. That's all for the week.
1:59:47
Is that because uh Who's tonight? Oh.
1:59:52
Uh tonight's something called MiniMed, not a venture-backed startup.
1:59:53
It's a diabetes management spinout [clears throat] of Medtronic.
1:59:55
Is that because like you sort of have uh some sort of liquidity premium for the first name to go out in a category like CoreWeave gets out and there's like the one public neo cloud and so that puts like the bar goes a lot higher for the next three neo clouds to get out, something like that?
2:00:14
I mean, I I like I would like to think it that may that that was a good argument or that that like that it's that much.
2:00:19
I think it's really a vibes thing and and it's and a cowardice thing.
2:00:23
Kind of been writing this story now for 3 years, which is these companies are scared to go public.
2:00:28
Bankers are scared to necessarily bring them, even though bankers are coin-operated and IPOs are good for them. Yeah.
2:00:32
They're a little bit scared of having a lousy IPO and then having a bad reputation off of it.
2:00:35
And also, a lot of them are spending a lot of time on SpaceX because there's a lot of money in that for them.
2:00:40
No, I think I think people are scared.
2:00:42
They're scared of, you know, what if this doesn't work?
2:00:45
It's going to be a lot more work.
2:00:46
There's going to be a lot more scrutiny on us.
2:00:47
Um and and I think folks have just been terrified of going public for years and I don't think that's necessarily changed. >> Yeah.
2:00:55
Well, and and of course uh the choppiness of of the market this year, the SAS-pocalypse narrative.
2:01:02
There's so >> all sorts of But this is the problem, right?
2:01:05
There's there's going to be choppiness every year, right?
2:01:06
You know, last April you obviously had the liberation day stuff.
2:01:08
Now you have a war, you have the SAS-pocalypse.
2:01:10
There's always going to be a reason to not go public and I think a lot of people take that reason.
2:01:15
You know, there's always something. Yeah.
2:01:16
What should we What have you What have you uh heard uh obviously bad bad week to be fundraising in the middle in the Middle East?
2:01:26
How how much are you looking at at uh the war as having kind of like downstream impacts on capital flows?
2:01:31
Do you think it's you know, it this started as like, you know, we thought it was going to be a couple days, now it then it was a few weeks, and now apparently it's looking like September, so who knows at that point. >> Yeah.
2:01:46
Um and and so many of the some like I every time I log on to X there's a refinery that's, you know, on fire, things like that, which is kind of the economic engine for a lot of this capital. Yeah.
2:01:58
Yeah, I I'll take kind of the counter argument, I think, on this, which is the the one of the reasons that whether it be Saudi Arabia or Qatar or some of these other countries have decided to do so much venture capital/private equity investing, particularly in the US.
2:02:10
And by the way, it's worth noting, the folks who are doing these investments often are based in New York.
2:02:14
They're not based in the Middle East.
2:02:16
So it's not actually impacting their day-to-day lives.
2:02:17
It's because they want diversification from oil.
2:02:20
So yeah, there there could be some issues in terms of actual capital flows because people are like, oh wait, we're going to have less actual money coming through to invest.
2:02:27
But at the same time, the point of diversification and it's possible that what's happened over the past week or two is going to only kind of solidify that desire for diversification.
2:02:37
Oh wow, oil is our economy, we need other stuff. Mhm.
2:02:42
What should we into Michael Grimes going back to Morgan Stanley?
2:02:47
Uh that you don't that that working for the White House is a is a complicated thing.
2:02:51
You don't want to do it for too long.
2:02:52
Um beyond that, I mean, look, he's like SpaceX is about to go public.
2:02:55
Um you know, that and there's going to and the thing is the reason bankers love IPOs isn't for the IPO per se, although they like that.
2:03:03
It's all the business that comes after that, right?
2:03:05
It's the secondary offerings. It's the debt offerings.
2:03:07
It's the acquisitions because the companies now have a public stock and it's easier to buy stuff.
2:03:11
It's all that other business.
2:03:13
It's the reason everyone wants to be the left lead and and Grimes, you know, is an Elon banker and has been and I think this is a great time for him and for Morgan Stanley.
2:03:20
It makes all the sense in the world to bring him back in the fold.
2:03:22
There's also the wealth management piece, I believe.
2:03:25
Like after the Facebook IPO, you have a whole bunch of potential new clients, right?
2:03:30
And so there's Yeah, you do.
2:03:32
That's also a piece of lead left.
2:03:34
What what actually goes into winning lead left?
2:03:35
Is is that is that is it sort of power law distributed in the allocation or the amount of work?
2:03:42
Or is it more of just like a symbolic title and everyone's sort of splitting it equally?
2:03:49
I I think there is more work.
2:03:49
I I think getting lead left and the reason, you know, that it's JP Morgan over Morgan Stanley or somebody is really the relationship usually between the CEO / board and that particular banker or maybe that banking team.
2:03:59
It's really a comfort thing.
2:04:01
It's the first call, right?
2:04:03
If something's not going well or something is going well, you need to have that one person.
2:04:06
You don't want to have to call 10 bankers at 10 different banks to give them the same information.
2:04:11
You want one source of information.
2:04:11
They can be kind of the distributor to everybody else. Mhm.
2:04:16
Uh what what are you tracking on the other AI lab side?
2:04:18
There's a whole bunch of rumors, Anthropic, OpenAI.
2:04:21
Uh what what what are you seeing on that side of the of the IPO market?
2:04:29
On the IPO market I mean I open there I do think there is perceived You mentioned earlier this kind of first mover in a the I I do think there is a sense between Sam and Dario that going first might have some advantages to it.
2:04:41
I think there could also be some disadvantages.
2:04:42
I I do think even though we all know the losses are huge, I think the market's going to be shocked when they actually see it in black and white from the companies how large these losses are.
2:04:49
Uh but I I so I think there is a little bit of a race between the two of them.
2:04:53
It's going to be a huge headline.
2:04:54
It's going to be a huge story.
2:04:56
Open AI does seem to be a little ahead on that.
2:04:58
When you look at you know they have a CFO who's done this before in Sarah Friar, right?
2:05:01
She helped take Square, now Block public. She then ran that store. She's done this before.
2:05:04
Uh so I I think that's going to be the story of the second half is is going to be those two companies maybe battling and I do think Open AI goes first.
2:05:13
Again, unless there's some you know extraneous event.
2:05:14
Uh you you mentioned that companies are afraid of going public.
2:05:21
Obviously like at the high level there's completely different equations around what SpaceX, Open AI, how they're thinking of this.
2:05:27
But at that sort of like mid-tier of decacorn, centacorn, the the the Stripes of the world.
2:05:31
Uh do they see that there's now infinite liquidity in the private markets to raise endlessly or are they more aware that their current investors, their VC backers are fine rolling everything into endless continuation vehicles so they can get profitable and operate as a highly venture backed profitable company in the private markets for a long time? I I think it's that.
2:05:58
I think there's enough capital and and they can get some So it used to be one of the main reasons to go public outside. So there was two, right?
2:06:06
One was get cash on the balance sheet.
2:06:08
Well, as you say there's tons of money in the private market you can get cash.
2:06:10
To be honest, probably easier in the private market than you can in the public market if you're a strong growth company.
2:06:15
And then there was liquidity not only for investors but but for early employees.
2:06:18
That was always a very big deal, right?
2:06:20
You know, how do you help get you know, how do you help get money for these folks who have all these options?
2:06:24
Well, you've got this kind of industry of of secondary tenders which is happen.
2:06:27
Stripe does one annually. They did one what? Two weeks ago.
2:06:29
So you can satisfy both of those problems now.
2:06:34
So, there's not a real great reason to go public if you're not somebody who really wants to.
2:06:37
There There are certain founders who like the idea of ringing that bell and being that CEO who does the quarterly earnings call.
2:06:43
It's a feeling, you know, it's a big league thing, right?
2:06:46
We We've gotten the big leagues.
2:06:47
It's what Bill Gurley always I'm sorry, Fred Wilson used to talk about Uber like, you know, getting the [Ā __Ā ] ring, go public.
2:06:51
Um but, you know, some folks though, you know, if you're the Collison brothers, I'll I'll end with I'll if they ever do go public, I'll be kind of stunned. They don't want to.
2:07:01
They clearly don't want to because they could have and they still could and they haven't.
2:07:04
And I know when Sequoia Capital did kind of a quasi continuation vehicle about a year or two ago for Stripe where they basically said to other investors, "We'll buy your stock, you know, if you want to.
2:07:15
We're going to buy your stock in this so you can get out. We want to double down."
2:07:19
You know, I spoke to somebody over there.
2:07:20
I said, "How do you get out of this thing ever?
2:07:21
Like, how do you Sequoia, how do you ever get liquidity?"
2:07:24
And they said, "Well, they're going to go public."
2:07:25
And I said, "What gives you the What What gives you any confidence in that?"
2:07:30
And there wasn't a great answer to it outside of just faith.
2:07:32
And so, you know, I guess faith. Faith.
2:07:34
What about secondary fund growth LP demand for secondary funds, even like the fee structure of secondary funds because it feels like so much lower risk if you're managing a fund that is just going to buy secondary that's been priced by the best VCs.
2:07:55
You're just following along.
2:07:55
You're buying maybe at a little bit of a discount.
2:07:58
Can you really justify two and 20 on that type of fund?
2:08:03
Uh to you or to me, probably not.
2:08:03
But, can they to their investors?
2:08:06
Apparently, they can cuz that's what they generally get.
2:08:08
Not always, but it's what they generally get.
2:08:10
You know, the secondary market's interesting because even just probably like maybe say 10 years ago, it was still very much a cottage small industry.
2:08:17
You had a handful of firms that did it that traded, you know, LP interests in venture capital funds or private equity funds.
2:08:21
A very small number who did direct secondaries, which is, you know, buying actual portfolios or individuals company stocks from somebody else.
2:08:29
Now it's this massive business and and big private equity firms or have gotten into it, right?
2:08:33
So several years ago Carlyle bought something called AlpInvest, which was a huge secondaries investor.
2:08:38
EQT, which is kind of this private equity firm most people in the states might not know about, but it's one of the biggest in the world.
2:08:44
Uh they just bought AES, which is this huge utility.
2:08:46
They bought something called Coller Capital, which is one of the original secondaries firms to build up that practice.
2:08:50
So it's it's becoming a really mature marketplace.
2:08:52
Um and and it is another way that companies can stay private longer.
2:08:57
It's also way that, you know, institute that limited partners can get some liquidity so they can feed it back into the system.
2:09:04
Otherwise, given the kind of the lack of, you know, so-called DPI, distribution to paid-in capital, the whole market would grind to a halt because a lot of these investors haven't been able to get their money back via traditional means.
2:09:17
Do you think we will see a well-known venture capital firm go public in the next 3 years? Yeah, General Catalyst. You think they will?
2:09:28
>> they I mean they're they're they're the one.
2:09:29
I mean they're cuz they're not really a venture capital firm anymore.
2:09:30
I mean they it's it's their core.
2:09:32
It's still what they do and they invest, you know, in series A rounds and startups and they still do that, but they've got a wealth management business. They own a hospital.
2:09:40
I mean they own a hospital.
2:09:42
That is not a venture capital thing.
2:09:42
And by the way, have to say and I I this is not a knock on them.
2:09:46
Man, if I was admitted into a hospital and somehow there was like a plaque on the wall that said, "We are owned by a Silicon Valley venture capital firm."
2:09:52
I'd be scared out of my mind about what is about to happen to me in that room.
2:09:55
Um but I they're not a they're not a venture capital Well, you'd be you'd be getting a YC company robot would be doing your surgery. It'd be great.
2:10:03
That's exactly what I want.
2:10:03
I, you know, as you know, whenever you see a doctor, particularly for a procedure, you want to hear the word experimental.
2:10:10
That's always what you're looking for.
2:10:12
Um and and you know, uh so I they're not really a VC firm anymore and and they they've diversified and they want a diverse fee paying asset base, which is what they're building. Good for them.
2:10:20
And to be honest, it's not even that different if you look on the kind of the private equity side, you know, Blackstone started as a private equity firm doing leveraged buyouts, but then they got into other stuff, right?
2:10:29
They have private credit.
2:10:30
They arguably became a real estate investment firm more than anything else. Diversified asset base.
2:10:35
Yeah, I think GC will do it.
2:10:35
Sequoia has been talked about forever, but they don't seem to have an appetite.
2:10:39
And the way that they operate in terms of management, it doesn't seem it doesn't seem like it's going to be them. What about Andreessen? >> Maybe Andreessen. Yeah, maybe Andreessen.
2:10:46
>> Maybe maybe Andreessen, but can you honestly imagine Marc Andreessen doing quarterly earnings calls? I can't. >> fun.
2:10:51
I mean, they do a lot of podcasts, so it's somewhat similar.
2:10:53
They got the reps they can talk.
2:10:54
They do a lot of podcasts with their friends. Sure.
2:10:55
Um what about uh the fact that private equity and private credit has sold off so significantly in the public markets?
2:11:06
Isn't that downward pressure?
2:11:06
Any any VC firm has to be looking at that and saying like, hey, maybe we want to stay out of this for a while. I I would think so.
2:11:14
I mean, it's it's an interesting thing.
2:11:16
I you know, we were just I was just having a conversation with a colleague before I got on with you guys and this question, is there systemic risk in the private credit market or is there not?
2:11:23
And and the argument for yes, if there's any, would be that so much of the money that's gone into private credit has come from insurance companies.
2:11:29
That's been this big boom into it.
2:11:31
That's kind of the counterparty here.
2:11:33
And like, you know, if insurance companies have problems, we've seen this act before.
2:11:36
We know what happens when insurance companies have problems.
2:11:38
It goes bad for everybody.
2:11:41
But that said, you know, the private credit sell-off right now seems to be a reaction to the to the SaaS apocalypse and some of that.
2:11:47
We haven't yet seen a large number really any significant defaults in private credit.
2:11:50
People are trying to get their money out of funds.
2:11:53
There's been big redemptions.
2:11:53
That's a liquidity story, but it's not that, oh my god, you've got, you know, these 20 companies that have gone under that are in these portfolios. Look at those dominos.
2:12:01
You can see what they're doing.
2:12:03
>> different than, you know, a private credit fund that's getting a bunch of redemptions or kind of a run on the bank.
2:12:08
They can just say like, hey, we're we're cutting off redemptions.
2:12:10
This is a you know, 10-year fund.
2:12:13
We'll see you basically we'll see you later.
2:12:16
It's different than an actual bank run where you can just go and say like I'd like my money back and then you have a a collapse. You're right.
2:12:25
And and look, and that and they consider that a feature not a bug, right?
2:12:28
That's one of the arguments private credits made for why they are stable.
2:12:31
You can't just, you know, the funds can't just have all the money pulled out in a day. Yeah.
2:12:34
Um how much have you tracked uh the volume of SPVs that have been happening over the last 12 months?
2:12:42
I I imagine it's pretty hard to actually get a lot of data, like high-quality data on this.
2:12:49
There's been this narrative that uh you know, that the average person has been cut off from benefiting from the overall uh gains in the in the in the market caps of a lot of the AI labs in particular.
2:13:03
I would push back and be like, "Everybody, you know, if you've got a 401k, you own Amazon and Nvidia and Microsoft."
2:13:10
And so you actually do have quite a bit of exposure to the labs, but and the other side of that is that it didn't feel impossible to get exposure to Anthropic over the last 6 weeks if you wanted it because people were posting on X, "Hey, I've got a slug here, a slug there."
2:13:27
If you wanted it, you could have probably get it. Um Probably.
2:13:32
I mean, two things about SPVs.
2:13:34
One, to answer your first question, I don't have a great sense on the tracking in terms of actual volume, except you know, this sense that it's through the roof.
2:13:40
When people advertise an SPV or say even for example advertise, maybe you know, somebody you know personally and they send you a note about it, you don't necessarily know they actually have exposure.
2:13:49
What they're trying often to do is build up enough money that then they can go to somebody and offer a good price.
2:13:53
They're often putting the cart before the horse.
2:13:57
I will say I mean, certain companies, big companies included, have tried clamping down a little bit on it.
2:14:01
I mean, CEOs and CFOs particularly hate SPVs generally speaking.
2:14:06
Not always, but generally don't like SPVs because it complicates the cap table.
2:14:09
It becomes, even though it's a single entity, it still becomes way more investors.
2:14:13
It becomes a lot more exposure.
2:14:15
They would generally rather have a traditional investment firm in them than a or a traditional investment fund than an SPV. Yeah.
2:14:23
Yeah, general solicitation potentially overrated. Definitely overrated.
2:14:28
>> [laughter] >> Probably you can avoid it.
2:14:28
Anyway, thank you so much for taking the time to come and chat with us. >> to have you on, Dave. Great to have you on.
2:14:33
Uh thank you for all of your coverage and come back on anytime. We'll talk to you soon. Thank you, guys. Have a good one.
2:14:39
Let me tell you about AppLovin.
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2:14:59
Um well, our >> Sweeney Tim Sweeney is feeling good. >> good.
2:15:05
He's out front of Google.
2:15:05
He, uh according to The Verge, has signed away his right to criticize Google until 2032.
2:15:12
There's some nuance here.
2:15:12
He agreed not to criticize Google related to App Store distribution and fees.
2:15:17
They got They're to a uh Please.
2:15:20
Just give us give us Stop talking trash. Stop dragging us. >> We just need a break. We're exhausted.
2:15:29
>> Verge put it in harsh harsh words as Google has finally muzzled Tim Sweeney.
2:15:34
So, uh he might be one of the most outspoken people in the history of the world.
2:15:37
He fought two of the world's most valuable and profile and powerful companies al- almost all the way to the US Supreme Court insulting them again and again.
2:15:46
Crooked, deceitful, insanely sneaky, calling Android a fake open platform, calling both companies gangster-style businesses that will do anything they think they can get away with.
2:15:58
Telling me how Google's Project Hug was an astonishingly corrupt effort at a massive scale.
2:16:03
Wow, he does not mince words, but Google has finally muscled Tim Sweeney.
2:16:09
It's right there in a binding term sheet for his settlement with Google on March 3rd.
2:16:12
He not only signed away Epic's right to sue and disparage the company, he signed away his own right to advocate for any further changes to Google's App Store policies.
2:16:23
He can't criticize Google's App Store practices.
2:16:24
In fact, he has to praise them.
2:16:27
The contract states, "Epic believes that the Google and Android platform with the changes in this term sheet are pro-competitive and a model for App Store / platform operations."
2:16:38
>> have also agreed to terms about a new class of apps they're calling metaverse browsers.
2:16:43
According to a heavily redacted section of a revised binding term sheet.
2:16:47
While the term metaverse has largely fallen out of favor, uh Epic CEO Tim Sweeney has been talking for years about the metaverse and how it might work in the future.
2:16:57
And this actually isn't the first time there's been a connection with Epic and Google about the metaverse.
2:17:02
In court in January, while discussing a secret $800 million Unreal Engine and services deal, Sweeney blurted out that the agreement related to the metaverse.
2:17:13
Uh unfortunately, the redactions in the binding term sheet cover up a lot of key details about what a metaverse browser actually is.
2:17:21
But what's from vis- what's visible in the document, metaverse browsers will have the primary purpose of allowing the navigation of exploration of metaverse worlds, support virtual items and identity that are portable across different worlds, and must support modern security considerations.
2:17:35
Well, if you don't see me here one day, I'll be in my Apple Vision Pro playing Fortnite in the metaverse browser, for sure.
2:17:43
It's going to It's going to get me.
2:17:45
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2:17:58
And without further ado, let's bring in we the Lambda lightning round. We're kicking it off.
2:18:04
Let's take a look at that beautiful camera move. We got graphics.
2:18:09
We got a I have the gong out here actually, but we will kick off with the first guest of our Lambda lightning round, Max from Vast Space. Max, how are you doing?
2:18:21
>> Hey guys, good [music] to see you. Thanks for having me.
2:18:21
Thanks for coming on the show.
2:18:23
Uh give us the give us an introduction on yourself and the company first.
2:18:28
Yeah, Max Haot I'm the CEO of Vast.
2:18:28
Um so we we are a space station company based in Los Angeles.
2:18:33
Uh our short-term goal is to have the privilege of replacing the International Space Station for NASA and its partner.
2:18:41
There's a competition this week this year uh that we we hope and expect to win.
2:18:46
And our key differentiator is that we are not waiting to get the contract.
2:18:50
We are building right now the the world's first commercial space station, Haven 1, that we are launching in Q1 next year.
2:18:55
Uh the team I have the privilege to lead is a thousand uh people that are mostly technician and engineer.
2:19:00
And and we are getting on. We're building it.
2:19:03
And after that we will be uh launching more module and basically creating a multi-module station that can ensure uh American astronaut, but also allied astronauts are able to be in space permanently.
2:19:14
China is out there with a permanent space station, so we need to succeed it uh before the ISS is retired.
2:19:20
How do you get into this?
2:19:22
>> first step by the way.
2:19:22
Just start by >> Yeah, going straight for the space station.
2:19:26
What Yeah, what were you doing before?
2:19:27
[clears throat] The uh so I'm an internet entrepreneur originally.
2:19:30
I I created a uh a couple of companies that I've exited.
2:19:33
One is a called Livestream, so my video is pretty similar to to familiar to me.
2:19:37
Uh also a video camera company called Mevo that I sold to Logitech.
2:19:42
Uh Livestream was sold to ICVimeo uh in 2017.
2:19:46
And then my my first space company was called Launcher.
2:19:50
Uh it's a small launch company.
2:19:50
We we launched two satellites.
2:19:52
We built an amazing engine.
2:19:54
And then the founder of Vast, Jed McCaleb, I acquired it uh in 2013.
2:19:58
So, at the time Vast had about uh 40 people and uh my team had 80.
2:20:01
We became 120 and then we we embarked on the the current strategy and grew to now a thousand people and uh and obviously our our first external fundraising uh that we are announcing today. Yeah.
2:20:13
Uh going after space stations >> Wait, you said first external fundraise? >> Yes, yes. Give us the numbers. How much did you raise?
2:20:20
What's the fun What's the total history?
2:20:21
So, you guys had combined your teams >> Well, the first one um So, the the original uh investment were from our our founder, Jed. It's pretty unusual.
2:20:29
It's it's over 900 uh million dollar uh since 2001.
2:20:34
And then today we are announcing our 500 500 is the number. Thank you for the gong.
2:20:44
500 >> Break down uh break down what what the what the why we need uh new space stations.
2:20:52
What are the different use cases other than just having a strong presence?
2:20:59
I mean, today if you look at the International Space Station, it's been there for 25 years.
2:21:01
It's been amazing in safety, in keeping a continuous crew for 25 years.
2:21:06
So, we've had people outside of Earth for 25 years. It's pretty amazing.
2:21:10
Uh what it has not been great at is the cost.
2:21:12
You know, it's the single most expensive object created by humans and it's not sustainable to the taxpayer or to the NASA budget.
2:21:18
We need to focus more on exploration uh including Moon and Mars um as you had Jared yesterday or a few days ago. >> Yeah.
2:21:25
Uh and so the NASA basically wants to reduce the cost.
2:21:27
That's why they wanted to move to commercial provider uh and and they also need to retire the ISS.
2:21:34
It's a partnership with Russia.
2:21:34
Uh obviously not desirable geopolitically right now long term uh and it's also aging.
2:21:40
So, all of these reasons create the the commercial opportunity to succeed it.
2:21:43
Uh short term, you know, the main business model are international space agencies, NASA, Europe uh with ESA, JAXA in Japan, and other nations getting involved in human space flight, uh, long-term, uh, it's the orbital economy.
2:21:57
So, it means manufacturing drugs, semiconductors, and so on, uh, in space.
2:22:01
And our our space station will become more factories, uh, as opposed to, uh, government mission.
2:22:05
But, that will take a while.
2:22:07
So, today the the key opportunity is to help, uh, all the governments around the world get into human space flight to do important science, and NASA and other government to save money with a fast iterative low-cost, uh, approach. Very cool.
2:22:18
Where are you able to partner with the existing orbital economy, the the existing, uh, space community?
2:22:25
Because, uh, there's so much that goes into actually, uh, building and deploying a space station.
2:22:33
Uh, what where I imagine that you're standing on shoulders of giants, but, uh, walk me through all the things that allow you to accelerate your mission.
2:22:42
I mean, the first step is to go from zero to one.
2:22:43
It's actually to have a space station and a crew visit it.
2:22:45
And if you compare that effort versus the effort of bringing payload and from partner in science, you know, having it going beyond renders and beyond MOUs and dream and press announcement, still have it there, right?
2:22:58
Whoever has it there and is profitable will figure out these, uh, application.
2:23:02
More concretely, we have, uh, partnered with companies like Redwire, a company in Europe called Yuri, uh, and other companies.
2:23:08
And we have a laboratory on the first station, Haven 1, uh, which is which basically are companies that have already done science and are doing now on the ISS.
2:23:18
So, we brought them in on our space station that we launch next year, and then our astronauts will be will be continuing the science and research.
2:23:23
Uh, beyond that, you know, right now we are in the R&D phase, whether it's materials, semiconductors, uh, you know, making drugs in space that we can't make on Earth that thanks to the microgravity environment.
2:23:34
Uh, it's still R&D, right?
2:23:36
There's no killer app, no product.
2:23:36
Uh, in through being commercial, doing more flights, being commercially friendly, uh, we confident we will we will unlock it.
2:23:44
So, uh, we super excited with what NASA did, right?
2:23:46
They created thousands and thousands of experiment and they found some interesting application and so we benefit from that that full pipeline uh when our station will be up.
2:23:56
How important is the next generation of reusable rockets, the Starships of the world, to unlocking new capabilities in deploying space stations?
2:24:07
I mean, if you even go back to reusable rocket uh even before, right?
2:24:08
Falcon and what SpaceX has done, uh we couldn't be here without the the early transition to commercial that NASA and SpaceX have done with the Dragon spacecraft.
2:24:17
You know, it's pretty, you know, if you if you were still in the Space Shuttle era, uh I don't think I could be buying a ride to our commercial space station Haven-1 from from NASA and because of what they did with that program, hopefully they'll get Starliner up and running, the the Boeing version, you know, we can go call SpaceX and buy a ride for astronaut to to our space station.
2:24:36
Starship will, you know, take that, you know, what we hope is it will lower the cost of uh transportation to our space station by at least an order of magnitude.
2:24:45
Uh it'll allow us to bring not four people, but maybe 20 people.
2:24:47
Uh so, that's really a a big timing and a big unlock.
2:24:51
Uh you know, it still will take a little while for for it to arrive.
2:24:55
It will get there and our our goal is that by the time Starship is ready that we have a large enough space station uh so that, you know, in relation to the volume in size Starship, we are still, you know, four, five time larger.
2:25:07
We have lot more power, a lot a lot of equipment.
2:25:09
So, so we, you know, it's a key enabler why we are here and and why uh the future is exciting for space station, uh the arrival of Starship. Uh Curious.
2:25:18
It's sort of a random question, but I'm just curious, what what is the planned process for retiring the current space station?
2:25:25
You do the humans leave and it just kind of continues to orbit?
2:25:30
Do they uh take it out of orbit?
2:25:31
What is that Do you have any idea what that'll look like?
2:25:34
Yeah, it's interesting when they design the space station, they sort of planned that, right?
2:25:37
Like none They don't have the ability to deorbit itself.
2:25:40
And so they always had the plan to build a special, you know, spacecraft that will push it in the Pacific.
2:25:45
And that's called a USD orbit vehicle.
2:25:49
SpaceX won that contract.
2:25:49
I think NASA is hoping to get it there, you know, 2 or 3 years before the retirement of the ISS.
2:25:55
The current retirement date is the end of 2030.
2:25:57
There's discussion now to extend it to '32, but somewhere in that region.
2:26:01
So, it will be there, ready to go, especially if there's a safety issue or something like that and to do testing.
2:26:06
And then they will just push it, um, you know, with some delta V, some some propulsion, uh, to eventually it will reenter in a in a pretty interesting, uh, display if there was anyone there to to a place called Point Nemo in the in the in the Pacific.
2:26:19
Uh, I think NASA is expecting to decrew it nominally, meaning not in an emergency scenario due to the aging.
2:26:26
Um, maybe a year ahead of that, uh, but but I I I don't know the exact date.
2:26:32
Well, hopefully they can get a camera there and and live stream it because, uh, I'm sure they're they're they're pretty good at at watching the rockets come down even when they're, uh, landing in the middle of the ocean.
2:26:41
So, hopefully we can see the deorbiting of the >> saw some of some of the Starship, uh, re-entry was pretty spectacular.
2:26:47
So, hopefully we'll see the same.
2:26:49
So, Yeah, yeah, in the in the in the ocean.
2:26:51
That was a remarkable video.
2:26:52
What, uh, Dramatic ending.
2:26:54
is is the entire team based in Los Angeles?
2:26:56
Where's kind of where's the team dispersed and what are you hiring for going forward?
2:27:02
Yeah, we just have about a thousand people and, you know, more than 900 are in in the Los Angeles in Long Beach specifically.
2:27:07
They know manufacturing, you know, we have control room, we have integration room, we we manufacture our primary structure.
2:27:13
We brought that capability to America for for 20 years it has been outsourced, uh, abroad.
2:27:17
You can see actually on on, uh, my right, our test site in Mojave.
2:27:22
Then we have an operation in the Mojave desert where we test things.
2:27:25
Uh, you know, we're pretty small team there.
2:27:29
Uh, we have an office in DC.
2:27:29
We just opened an office in in Japan, uh, where where you've seen some of our investors are from Japan, um, the largest bank in UFG, Mitsui uh, from Japan and and Nikon, the camera company.
2:27:42
Japan is actually one of the key market for human space flight.
2:27:44
You know, they were really a core builder of the of the International Space Station and and they want to continue with their 10 billion fund. That's amazing.
2:27:51
Well, congratulations on all the progress. Thank you so much. >> meet.
2:27:55
So so excited to follow along. >> Yeah.
2:27:57
And congrats on the milestone. Thank you. Thank you.
2:28:00
And I hear John you are watch space watch fan from your interview with a Oh, yes. Yes.
2:28:05
Do you have any recommendations if I'm going to space? >> with IWC. Here you go. >> There you go.
2:28:10
That's a great selection.
2:28:12
Bring bringing new revenue stream to to commercial space and in April we announcing a new watch that we've designed with them that that's designed for space.
2:28:20
So hopefully check that out soon. >> Incredible.
2:28:23
That's yeah, it's amazing.
2:28:25
Last year we were partnered with the company called Bezel where a marketplace for buying those watches.
2:28:28
I'm sure they'd be flying off the shelf.
2:28:31
So thank you so much for advancing space and advancing equally important industry of fine watch making.
2:28:37
We appreciate everything you do.
2:28:39
Have a great rest of your day. >> meet Max. Thanks guys. I'll talk to you soon.
2:28:42
Let me tell you about Turbo proper serverless vector and full text search built from first principles on object storage fast 10x cheaper and extremely scalable.
2:28:49
Oracle has joined the rate payer protect protection pledge.
2:28:53
They said we are proud to be part of the White House's mission to advance American AI leadership while protecting the communities in which we build data centers.
2:29:04
We are committing to pay we are committed to paying our own way on energy, hiring locally, protecting local water resources and enriching communities across the country.
2:29:13
AI isn't just about technology, it's about strengthening communities while fueling America's future.
2:29:19
Let's go with some GPT written copy.
2:29:23
>> a dog They had a dog food. >> Maybe. Who knows?
2:29:25
But But it's I mean it's a good point.
2:29:28
Google, Oracle, XAI, Meta, Microsoft, OpenAI and Amazon have now signed on to the ratepayer protection pledge. Very smart.
2:29:37
That seems like a really, really important move because you have the resources, you have the capital, go build the energy, do not spike the local do not spike the the local energy rates because the communities will protest and they will block you and it's just game theory 101 to just not not not let the negative externalities run wild in the communities of a democracy. Anyway.
2:30:03
Ben Smith and Semaphore Rachel Jones are covering a new AI costs hardened data centers.
2:30:12
They say building new data centers in underground nuclear hardened bunkers which some companies began doing recently cost more than 2,000 square dollars per square foot in the US.
2:30:22
According to Larry Hall who owns Kansas based bunker real estate firm Survival Condo. >> Wow.
2:30:28
That's we got to get Nick, if you're hearing this, we got to get Larry Hall We got to talk to this >> Kansas based bunker real estate firm Survival Condo.
2:30:36
That's twice the cost of constructing a facility from scratch above ground and building in the Middle East can be more expensive depending on the terrain.
2:30:45
Given the average data center spans the size of a Manhattan city block an underground concrete shelter of that size might go for 200 million and that's before factoring in the cost to cover energy, cooling, and servers. Of course GPUs.
2:30:57
The cooling seems to Still most of Survival Condo's clients are looking for a facility smaller than that.
2:31:01
The cheapest facility the firm has priced was for an existing 54,000 square foot bunker costing just 45 million.
2:31:10
This is there's some extra context from Matthew Shaw.
2:31:13
After Amazon's Bahrain data center was hit, this will likely be heightened.
2:31:17
I'm sure people at CISA are looking into this issue.
2:31:21
So in the Middle East particularly while there are conflicts undergoing underway, I'm sure people will be looking at the future of how they build these data centers.
2:31:31
Let's >> Netflix acquires AI filmmaking startup founded by Ben Affleck >> No way.
2:31:37
who will serve as advisor to Netflix. Very exciting.
2:31:39
Company is called Inner Positive. >> Mhm.
2:31:43
It makes AI-powered tools for filmmakers.
2:31:45
The system builds AI models from a film's dailies?
2:31:49
Dailies are the Oh, yeah, you guys want to explain? >> Explain dailies, Ben. That's good. Do you know that, John? >> Come on, filmmakers.
2:31:57
Yes, I know what dailies are.
2:31:58
For my >> Dailies are when you were shooting on film, you would send the daily print to the lab and they would look at it and they could review it to make sure if they needed to reshoot the next day. >> Yeah.
2:32:08
So, it's basically like reviewing the film that you shot in one day at the end of the day or before you go shoot because you might not have torn down the set.
2:32:16
You might still be at the same location.
2:32:18
You don't want to leave and wrap that particular shoot until you have reviewed the footage.
2:32:22
But, dailies it just means that post-production tasks like color, re-lighting, VFX.
2:32:27
So, you're on set, you go and you shoot that one cinematic scene, the dramatic scene, and typically when you're watching it there's no monster in the background, there's no color grade, it's very flat, it doesn't look like the final movie.
2:32:43
If you can use AI and AI-powered tools to get you much closer to something that looks like what the final movie will look like, then very quickly you can turn around that daily shoot into okay, it's you know, we got a bunch of raw footage.
2:32:59
Let's edit it together so that if we're filming me and then we're filming you, we cut it back and forth, cut it back together, color grade it, do some basic sound design.
2:33:06
Even if it's sloppy AI slop, it's like going to be much more watchable than just watching like the raw >> What do you What do you think Netflix like plans to do with this tech?
2:33:13
Is this something they'll offer to productions that they're funding? Is that the idea?
2:33:21
Yeah, I I would imagine that uh uh I'm not I'm not exactly sure how much more they're going to be scaling up their their, you know, in-house production budget, but I could imagine that that this gets deployed into uh projects that are being filmed and run and produced by Netflix directly.
2:33:40
But, uh we'll have to see.
2:33:42
We'd love to have someone on from there.
2:33:44
Without further ado, let me tell you about Graphite, code review [music] for the age of AI.
2:33:47
Graphite helps teams on GitHub ship higher quality software faster.
2:33:51
And, without further ado, we'll bring in Christian Howell, the CEO of Cognito Therapeutics.
2:33:57
Christian, how are you doing? Gentlemen, how are you?
2:34:00
Thanks so much for having me. We're doing fantastic. >> Great to have you.
2:34:03
Thanks so much for taking the time to join us. >> day. Big day. Big day.
2:34:05
Introduce yourself and the company.
2:34:10
Yeah, so uh I'm Christian Howell, I'm the CEO of Cognito.
2:34:12
Um my background is I'm a former Navy officer and a long-time medtech Wow.
2:34:17
uh executive, and then the the company is um you know, sort of an amazing story.
2:34:24
It spun out of MIT, >> Yeah.
2:34:26
and it's uh developing a non-invasive therapeutic for uh driving brain activity to promote brain health, and starting in Alzheimer's disease.
2:34:34
Yeah, uh give me the shape of Alzheimer's uh for those who might not know the scale of its impact uh in America or even globally today.
2:34:47
Yeah, it's it's really um unbelievable, candidly.
2:34:50
So, there are about 6 million people and families in the United States that are impacted by Alzheimer's disease.
2:34:56
There are another 15 million people that are impacted by something called mild cognitive impairment, which is the early stage Yeah. of of cognitive decline.
2:35:05
Um what's even scarier is about uh 12 million of those people are undiagnosed um because there just haven't been available therapies Yeah.
2:35:15
for for patients and their families.
2:35:15
And so, in the last couple years there've been a series of therapies that have come to market called the monoclonal antibodies, but unfortunately um they're they're not indicated for patients with more advanced Alzheimer's disease, and um there's some risks associated with them.
2:35:31
So, uh yeah, the almost 50 million people around the planet are impacted by Alzheimer's disease.
2:35:36
>> And is it is it fair to say that Alzheimer's has sort of like always existed, but if you go back a couple hundred years, uh lifespans were just so short that people would die before they had the chance to fight with their brain, they were fighting with their heart, basically.
2:35:53
And now that we've extended lives, now we're grappling with brain deterioration. Is that roughly correct?
2:35:59
I think that's exactly right.
2:35:59
I think that we have we are entering an age where we have just made so many diseases chronic, whether it's cancer or diabetes or cardiovascular disease, that we are now our bodies are living longer than our brains.
2:36:15
And that is why we are, you know, moving into this space where we're seeing more neurodegeneration.
2:36:21
And and I think we're trying to remove the stigma from it, so people aren't just calling it dementia, or, you know, people are, you know, they're really thinking about, you know, why am I experiencing cognitive loss?
2:36:32
Why am I seeing, you know, why why am I seeing loss of independence?
2:36:38
Um but you're exactly right.
2:36:38
I mean, I think it I think it is become I think the next 20 years is going to be about, you know, um brain health, but really thinking about, you know, how do we preserve structure and function of our brain so we can we can have our brains living as long as the rest of, you know, the rest of us.
2:36:52
So, you mentioned monoclonal antibodies.
2:36:55
You mentioned invasive [clears throat] techniques.
2:36:57
Walk me through the spectrum of treatments, cures that are available, and how you fit in.
2:37:03
Yeah, so no cures, um unfortunately, today.
2:37:05
So, everyone is focused on just figuring out how we can slow the progression of the disease.
2:37:09
And really what's happened, you know, for years is people have sort of focused on the sort of underlying pathogens, right?
2:37:16
So that you hear about things like amyloid and tau.
2:37:20
And they're actually not causing cognitive and functional loss.
2:37:24
They are they are biomarkers of the disease, but what's actually causing the cognitive functional loss is network dysfunction.
2:37:32
So the brain is no longer Think of it like a symphony.
2:37:34
The brain is no longer able to be in harmony.
2:37:36
And when it falls out of harmony, it's unable to drive the biology that preserves its cognition and function.
2:37:43
And so what a brilliant group at MIT led by Li-Way Tsai discovered over the last several decades is that one that you can actually stimulate the brain back into harmony.
2:37:54
And that when the brain is at a particular activity rate um that they call the gamma brand uh gamma band when the neurons are firing north of 40 uh hertz per second then what you see is you see this sort of profound biology that is driven that helps drive synapses and myelin and really preserve brain structure and brain function.
2:38:13
And they then learned that you could you could use an external stimulation to drive that level of activity.
2:38:18
And actually if you stimulated the visual and the auditory cortices that would give you the most profound sort of response.
2:38:27
And uh what ultimately then they discovered is that you could use sensory stimulation.
2:38:32
You could use light and sound at a duty cycle of you know, 40 hertz uh that would then drive the nerves to promote that type of activity in the brain and then you would ultimately see this really profound biological expression.
2:38:48
So I mean it's an it's an amazing >> So for the So for the folks with uh with uh brains that maybe are not fully working, is this a fancy hat? No. It's Okay.
2:39:00
You know, it's it's it's a really you know, it's it's a good question because I say all the time that I think the first principle challenge of Cognito is that the science seems too simple to be plausible. Right?
2:39:14
So, you're going to you're going to you're going to flash light and sound >> Okay.
2:39:17
and you're going to get my brain active and that's going to drive biology that protects the loss of cognitive function, right?
2:39:21
Again, >> And specifically the light and sound goes through my eyes and my ears. Eyes and ears, right?
2:39:25
Because we want to we want to stimulate >> Here we go. optic nerve. Yeah, there you go.
2:39:30
You want to stimulate the optic nerve and you want to stimulate the vestibular cochlear nerve in the ear. >> Yes. Okay. Right?
2:39:33
And so, light and sound are really effective at stimulating those cranial nerves. Yes.
2:39:39
But, what's great is because the science candidly was perceived as being sort of so simple, it meant that there had to be this massive investment in clinically validating it. Yeah.
2:39:48
So, there's been more than a billion dollars invested between MIT and Harvard on exploring the science.
2:39:54
We are currently um fully enrolled, almost completed what is the largest non-drug uh randomized clinical trial that's ever been conducted.
2:40:05
We're doing 673 patients across 70 sites in the United States.
2:40:10
We're studying them for 12 months and we're looking to see can we preserve their cognition and function using this type of, you know, this type of therapy.
2:40:18
So, uh So, over 12 it ultimately becomes a tailwind for us. >> Yeah.
2:40:22
So, over 12 months, uh that gentleman with the device on his head Was that Morgan Freeman?
2:40:29
>> How often is he Where how often is he wearing that for how long? >> Yeah. What intervals?
2:40:35
[clears throat] Walk me through sort of what a typical treatment program might look like. Yeah.
2:40:39
So, the the first thing we do is we which which is exciting is we confirm that the brain responds to the therapy. So, patients come in.
2:40:44
We give them the the the device. Yeah.
2:40:47
Then once we determine they can tolerate the light and the sound and then we're under an EEG, we confirm that we can get the brain to 40 hertz and hold the brain at 40 hertz. >> Got it.
2:40:54
Then they are uh they get a personalized device that they go home with.
2:40:59
We ask patients to wear an hour a day >> Okay. every day. Yeah.
2:41:02
Um what we hear from patients is they feel empowered.
2:41:06
They feel like they get an opportunity.
2:41:08
I get up, I have my coffee, 9:00, I sit for an hour, I'm doing something proactive to address my disease. Yeah.
2:41:15
And and candidly that has manifested itself in one, you know, in our steady state, we have a almost an 85 or 86% adherence, meaning patients are wearing it 6 days a week at least 50 minutes a day. Yeah.
2:41:26
We have almost 90% of patients that are when they end the study want to stay on Yeah.
2:41:33
>> the therapy and go into additional studies.
2:41:34
>> Have you considered putting advertisements in it?
2:41:38
Um I you know, it's funny you said that.
2:41:40
There is a you know, this one was designed for AD patients.
2:41:42
But this idea that you can use light and sound to stimulate brain activity, I mean, it the the platform opportunity here is really interesting to think about.
2:41:51
You know, we know we've got indication in other disease states and conditions.
2:41:54
We're going to study those.
2:41:55
There's the opportunity to think about it for um you know, Yeah.
2:42:00
preventative or or even, you know, sort of brain health proactivity.
2:42:04
And then there's opportunities for us in things like sleep and stroke and and traumatic brain.
2:42:09
But the default path will be FDA approval, uh prescribed by a doctor, maybe they send it home with you.
2:42:17
It's probably expensive, but insurance will cover some of that if not all.
2:42:20
And then uh patients will be able to use this uh sort of non-invasively to treat their Alzheimer's hopefully for as long as it takes. Exactly right, right.
2:42:30
So we will we will read out the study in Yeah.
2:42:34
>> We hope to go to the FDA in November. Yeah.
2:42:37
The hope is that we see an approval mid of next year.
2:42:38
You're right, we'll work with CMS to make sure that it's covered. >> Sure.
2:42:43
And then um patients will have a very sort of straight-line path to be from diagnosis to getting the device uh personalized for them to getting the device in their homes.
2:42:52
And you're right, they can do it anywhere, right?
2:42:54
They can They don't have to go to the hospital, they don't have to go to a clinic. That's great.
2:42:58
If they travel, they can take the device with them. I have one here.
2:43:00
You can you know, you can it really makes life um it it it it sort of bends to their life more than asking them to bend their life to a therapy. That's amazing. Uh well, good luck.
2:43:10
Uh you raised some money.
2:43:10
How much did you raise and what does it allow you to do?
2:43:17
Yeah, so we we over subscribed the round. Oh, we look at that. We love it. The gong.
2:43:22
Uh we over subscribed the round to 100 105 million. That's right.
2:43:28
Uh it's not not an easy time to raise money in the life sciences, especially when you have something completely sort of non you know, unconventional. Yeah.
2:43:34
Um and you know, that was it was a really interesting time, right?
2:43:39
Because as as investors got more conservative, they didn't want to operate outside their thesis and we're we're not a traditional biotech, we're not a traditional medtech, right?
2:43:47
So, we really had to find investors that weren't looking at it from the modality in, but we're looking at it from kind of the disease disease state out.
2:43:54
Um but it allows us to now sort of downshift.
2:43:56
So, we are um you know, going to continue on, you know, get the hope read out, get to the regulators and then start the commercial work. Cool.
2:44:05
And really try to you know, meet that urgency in the market and we're doing it with in partnership with big academic medical centers that are going to help us learn, you know, how to identify the patients, how do you get the therapy to patients. >> Yeah.
2:44:17
How do you help them adopt it and adhere to the therapy and then how can we explore new new indications? That's amazing. Super exciting.
2:44:25
My my grandfather, my late grandfather suffered from Alzheimer's and I remember he was doing the antibody treatments, but I I just remember the frustration of waiting for those treatments and then kind of waiting to see what kind of impact that they would have and and just he was fully willing and excited to do whatever it took. >> Yeah.
2:44:50
And not having something outside of you know, kind of more basic everyday health stuff uh to do uh was, you know, deeply frustrating.
2:44:57
So, very very excited that you're building this and uh come back on as you make more progress and congrats to the whole team on the milestone. Thanks, man. I really appreciate it.
2:45:06
I mean, it it is I said to people all the time, I I got the best gig in the world, right?
2:45:11
Cuz I get to see this really interesting science get delivered to families that need it desperately.
2:45:15
And and as much as I'd love for your story to be, you know, unique and it's unique for you guys, uh there's not a day that I don't run into people that say, you know, my mom or my dad or my aunt or my uncle or and so it's just it's just such a desperate need.
2:45:30
I can't I'm so I'm so fortunate to be the guy that gets to kind of steward this.
2:45:33
So, I appreciate you guys giving us an opportunity to talk about it and share us you know, the work that we're doing. Yeah, thanks.
2:45:39
Last couple questions from the chat.
2:45:41
Ryan in the chat says suspected effect size if successful, how many cog points are you aiming for?
2:45:48
I don't Yeah, I can't I'll give you the yes.
2:45:51
It's it's a it's a different >> those questions for for me and then >> [laughter] >> What what we're trying to measure is, you know, how much can we preserve cognition and how much can we [clears throat] preserve function, right?
2:46:02
So, think of cognition as like memory and think of function as agency and independence.
2:46:07
And so, in our uh feasibility study, which was a study we did just before this one, we showed uh on almost 77% preservation of function and a 76% preservation of cognition.
2:46:19
And that those numbers are best in class by a long ways.
2:46:21
And so, um if we in the big study show something similar to that or even a little bit less than that, it it is it will be, you know, the most significant clinical impact.
2:46:34
In addition to we've never had an adverse event related to the therapy. That's right.
2:46:38
And you know, it's non-invasive and patient can use it in their home.
2:46:41
So, um that yeah, that's kind of how we're thinking about the impact.
2:46:44
And then we'll support that through biomarkers and all the stuff that you show in the studies that that you're making an actual you're actually making a difference. That's great.
2:46:50
Well, thank you so much for coming on the show. Great to meet you.
2:46:53
Look forward to Yeah, I love I love what you guys are doing.
2:46:57
It's a It's such a cool It's such a cool scene.
2:46:58
So, and and and welcome looking forward to coming back and talking to you guys about the work that we're doing.
2:47:03
Yeah, we'll talk to you soon.
2:47:05
Thanks so much, Christian. Goodbye. >> Thanks, guys.
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2:47:26
And our next guest is here live in person with us in the TBP and Ultrado.
2:47:30
We have Cameron Record from Nominal.
2:47:32
Welcome back to the show. Good to see you.
2:47:35
How should we kick this up?
2:47:35
Can we just hit the gong right away? What happened?
2:47:39
Tell us Tell us what happened.
2:47:39
Today, we are announcing a $80 million raise at a billion-dollar What was that? That was a loud one.
2:47:50
That was a He broke the mold.
2:47:53
>> [laughter] >> He broke the mold.
2:47:53
That's a powerful powerful omen right there. Yeah, I'm excited.
2:47:57
We're announcing our latest our latest financing led by Founders Fund. Fantastic. Fantastic.
2:48:04
What do we What do we have here?
2:48:05
>> Have you been working with them before?
2:48:06
We had been working with them before. >> Okay.
2:48:08
>> Yeah, so they Founders Fund have been an investor since the seed round. Um >> Okay.
2:48:12
>> Um through Delian, Trey, both? Delian and Trey. Okay, yeah, both.
2:48:16
And really I think really how this Yeah.
2:48:18
came about was I think Founders Fund has a really good perspective obviously on the evolving hardware landscape, broadly speaking. >> Yep.
2:48:28
Um but a unique perspective into particularly Anduril.
2:48:33
We announced our partnership with them Yep. uh 2 weeks ago now.
2:48:35
know if it's working or not. >> Yep, exactly.
2:48:38
They're going to know if it's working or not.
2:48:39
And so, I think um, you know, some direct feedback from them and in other uh FF portfolio companies.
2:48:45
>> Um, and so yeah, we we were not raising.
2:48:47
I mean, we were on the show uh 8 months ago announcing the the Series B led by Sequoia.
2:48:53
Um, but we got approached by Founders Fund uh at the end of the year, really over the holidays.
2:48:58
Um, with a pretty good offer to lead a like preemptive financing and it made a ton of sense. So. >> That's great.
2:49:04
You're like, why not make a magazine? >> Yes. Yes. Yes.
2:49:06
So, I brought I brought props.
2:49:09
>> Uh first, sort of reintroduce the product for those who were didn't see the previous uh Yeah, so Nominal, we build a a platform for hardware test and operations, right?
2:49:18
So, we're managing everything from um the end of the manufacturing process uh so, think quality testing, inspection, end-of-line through to more like lab testing, benchtop testing, think power supplies, stacks, oscilloscopes, instrumented hardware.
2:49:35
>> Anduril's making a submarine. Yep.
2:49:35
They need to test the battery that goes in that submarine.
2:49:39
As soon as it comes off the manufacturing line, even if they buy it from a supplier that they trust, it comes in, they have to know that it has the right voltage and >> Yeah, and that's exactly it.
2:49:46
It's honestly, that is a really really like, we're seeing that use case really explode in the product.
2:49:51
Um, I think particularly as there's been a a big rush of more onshoring manufacturing.
2:49:57
Frankly, I think quality in the entire industry is sort of going down as there's a little compression effect.
2:50:02
So, um people making yeah, components, widgets, uh you know, servos, motors, uh etc.
2:50:08
Um, when these uh the OEMs, the bigger companies, the Andurils of the world who receive them, they they need to run through some yeah, some initial inspection.
2:50:16
>> And does your business grow as businesses that you work with shift from R&D and testing and prototyping to actual scaled manufacturing? >> Yes.
2:50:26
Yeah, and that's a huge part of the thesis.
2:50:28
Like honestly, like some of the earliest Like what you unlock. Yeah, exactly.
2:50:31
Some of the earliest vision of Nominal is like, testing is a really powerful place to start because every organization is kind of always testing.
2:50:37
if you're iterating, there's normally some budget, there's a little bit of risk tolerance to try new software, new tools, new processes, get whatever advantage you you can squeeze out.
2:50:44
And then a lot of the thesis is like if that works, you want to use the same software when you're actually doing high-scale production manufacturing, and you want to use the same software again when you deploy your asset, let's pick submarine, you know, wherever it is in the world.
2:50:58
Submarine's probably a bad example.
2:51:00
Again, I was a former submarine officer, so Cool. know a thing or two.
2:51:06
You're not going to get a ton of live telemetry coming off of a submarine ideally, but but if you deploy an asset in the field, you want to be able to link all of that telemetry sensor data logs back to the the system. Interesting.
2:51:16
And and and is that for like testing like the feedback loop for manufacturing?
2:51:20
So it's like let's switch over to like the sensor tower analogy.
2:51:23
You put up a bunch of sensor towers somewhere.
2:51:26
There's a bunch of telemetry that's coming off that, not just the purpose of that sensor tower, which might be object identification, but also the battery Yeah.
2:51:36
failure The battery is a really good example, and we'll we'll use you know, sentry tower kind of US towers as an as an example.
2:51:42
Often deployed in places in the world that are very hot, and so they can have a lot of battery issues, it happens all the time, and you want to be able to correlate if you're getting anomalous or or spurious readings on the battery, you would use something like Nominal to be able to monitor that.
2:51:55
So think like how DataDog is monitoring, you know, Yep.
2:51:58
like a a server or or you know, generic software.
2:52:02
Like we'd be you set up a conditional to monitor any weird anomalous behavior in that battery, and then you want to be able to link that, correlate that with the physical assets, maybe the the group of batteries that you received from a supplier, and you want to be able to
2:52:14
trace that backwards through your whole process and say, "Hey, actually those batteries that might have similar issues are deployed in these like five areas cuz I can track those assets and understand and sort of you know, think think that way." Cuz the battery might
2:52:25
Cuz the battery might perform differently in different temperature conditions, even just how much the CPU is turning. >> Yeah.
2:52:33
Really it's just like yeah and I think what Nominal's unlocking is really just like the ability to do this correlation at scale.
2:52:38
And frankly like what we we the way we we store and organize all of this you know massive amounts of telemetry and sensor data is just like a much you know more thoughtful approach that you can query at scale and sort of make these types of connections.
2:52:51
Really the industry status quo which is a good segue into the the stuff we brought here.
2:52:56
I think the industry status quo is like it's just there's a lot of legacy tools in the space.
2:53:00
So it really is it is Excel, it is MATLAB, it's PDF, you know it's it's old old pieces of of software that have not really kept pace with Yeah last time last time we were at the track getting some laps in the the software that that the team was using to track lap times and you know just all the different data coming off the car would [clears throat] literally look like 90s era software.
2:53:26
Talk about the partnership with Pratt Miller. How's that evolving?
2:53:32
Are you are you going to add more teams?
2:53:33
Is that like a great feedback loop for maybe more traditional partners?
2:53:39
>> Yeah I mean so so last time we Bryce dialed in is you know this is very cool being in person but he was at the pits and that's pretty sweet.
2:53:48
You know the partnership is going great.
2:53:49
I think I'm personally very excited like we we we get to go and attend a bunch of these races and we get to bring our customers or potential customers which is great because they get to see Nominal in action and so it's a really like nice like way to kind of do that.
2:54:05
Then yeah the partnership is is expanding.
2:54:07
There's I won't say too much on that but I think we're we're expanding in the automotive and in racing sector kind of broadly based on the success there. So yeah. Very cool.
2:54:15
But yeah I Thanks to this.
2:54:15
Yes tools for progress >> tools for progress.
2:54:19
Yeah our sort of slogan for this financing has been ambition is timeless tools are not.
2:54:26
And so going in the history lesson, you know, used to be in the '80s, '90s, you know, software was industrial software was serious.
2:54:35
It was purpose-built for, you know, aerospace, defense, mechanical engineering, etc.
2:54:41
We then entered two decades of very unserious software, dot com, you know, click optimization, pass-through, you know, metrics, etc.
2:54:53
And then Nominal is trying to get back to serious software for the next five decades of engineering.
2:54:57
And so what we put together here, a very tactile in a thing, this is this is waterproof, weather proof, also, which it had would have to be.
2:55:07
The tools tools for progress.
2:55:08
This is an old school catalog.
2:55:10
This is where like the best tools in the world and the best companies in the world used to write about their products in paper.
2:55:19
It's kind of crazy to think.
2:55:19
Print it up, send it to engineers all over the world, and that's how they would know the latest and greatest of capability.
2:55:24
So we have our catalog here, and we have some retro features for some of our some of our customers showing a little bit of the breadth of the Nominal platform. Shinkai. Sorry about that one.
2:55:35
So robotic, you know, fish processing.
2:55:38
So a nice you know, Shinkai Antares, you know, nuclear power We've got Pratt Miller Motorsports, Hermeus, Albedo, satellites, planes, Regent.
2:55:53
So yeah, we've been sending these all over the the country over the last couple days.
2:55:57
So incredible Yeah, how how have conversations with investors been around the SAS apocalypse?
2:56:04
Everyone says I mean you know, Toby Lutke was like I I vibe coded my own telemetry data.
2:56:11
Is this not a threat to you? What's going on?
2:56:13
I think conversations given that you can hit the gong again now.
2:56:16
The conversations I think have been good.
2:56:18
good. Yeah, I think we actually see Nominal I'll frame it this way which is we're sitting at an incredibly interesting Nexus of like data coming off of hardware machines real human enriched engineering judgment like people are doing this work in our platform like they are deciding that
2:56:36
that battery is good or bad right and they're transitioning that sort of engineering judgment and insight into the data and enriching it all of that is living in our platform and it's growing exponentially so when you actually think about if [clears throat]
2:56:50
you believe this like world where models will long tail commoditize and it just becomes about interesting access to to data and sort of like most around that I feel really good about where nominal is positioned particularly there and then I think we talk a lot about like what
2:57:03
we've done in in our three and a half years so far I think it's taken a set of an industry and a set of tools from 1990 to you know 2022 and we've done that fast and now we have the opportunity and we've earned the right to basically bridge the industry into 2026 2027 right
2:57:22
and so a lot of talking about you know what we'll do with some of the funding I think a lot of it is like we you know we have our own sort of cutting edge we have our own AI team we're hiring and kind of building up and people focusing on how do we incorporate how do we both
2:57:33
a nominal build with AI but also how do we operationalize this for the industry cuz right now going from you know a spreadsheet to to I don't know cloud coding your own whatever is like let's say it's not a big jump Yeah it's interesting I I think [clears throat]
2:57:52
even in a racing context the car is out on the track it's producing all of this data you can imagine a world where an AI is able to more quickly like respond and help the team make decisions than any human right that's like kind of managing all these different data I mean I'm
2:58:07
really bullish on that I think like we sometimes frame nominal a little bit is like we want to be and we think we will be like a part of one of those systems of record so so, think about when you're using we'll just use Cloud Code, when you're using Cloud Code, right? Like it's still
2:58:20
Like it's still it's still interacting with like GitHub or whatever your version control sort of system, right?
2:58:25
Like it is for for sort of doing things like that.
2:58:28
The same equivalent like doesn't really exist in this like software-defined hardware world.
2:58:31
And I think those need to be built, frankly.
2:58:33
Um Yeah, I wonder I wonder how you think about like the economies of scale with regard to effectively software as a service because I imagine that even if software the the instantiation of software, the writing of software is commoditized, there are still hard-won lessons and almost secrets.
2:58:57
Like you can't go to every LLM and say predict every problem that this drone manufacturer will have and then build software for that that will you know, immediately generalize to hypersonic flight or nuclear power generation.
2:59:15
>> really good Yeah, it's really good.
2:59:16
We're we're we're working on some of this right now, I would say.
2:59:19
And I think like a lot of our vision is the world of hardware testing right now in 2026 generally looks like, you know, setting out sort of a matrix of test points. Like very deterministic.
2:59:34
My system my battery needs to be between this and this voltage and or this condition.
2:59:37
And then you sort of run that out.
2:59:40
It happens very sequentially.
2:59:40
Like that is how all of these systems are tested.
2:59:43
And frankly, that's how talk about, you know, the the government.
2:59:47
That's how testing happens.
2:59:47
We are trying to bridge from a world of like what if you actually can one do more and more in simulation and use outputs of pretty high-fidelity, often physics-based models of the world. That's one input.
3:00:01
And then two, what if you actually start to build like AI test agents?
3:00:03
And their whole job is to determine the next best test point to run.
3:00:09
So, instead of running linearly through this matrix, like you're actually sort of in a kind of a three-dimensional space where you are trying to kind of retrain and update the model and say, "Hey, if I could put this physical piece of hardware in any condition or state space, what would I put it in to optimize and sort of knowledge maximize my next step?" Knowledge maxing.
3:00:29
I like Yeah, knowledge maxing. Yeah.
3:00:31
So, that's where I think that's where it's going.
3:00:32
I imagine like Shinkai likes that whatever you're learning from Anduril and whatever you're standardizing there applies to them, but then I was at Hermeus the manufacturing plant and they had like a Pratt & Whitney Yeah.
3:00:45
jet engine that I don't think I've seen any Anduril products that operate at that scale.
3:00:51
And so, whatever you're doing with Hermeus is going to translate to Anduril and vice versa and there's going to be there's going to be sort of like synergies there and Oh, totally.
3:00:58
There's a ton of There's a ton of compound >> where it doesn't necessarily make sense for every company to have their own system. No.
3:01:04
Um I do you mentioned I think physics-based simulation, CFD.
3:01:10
Um what what is off-the-shelf?
3:01:10
What what bespoke systems continue to exist?
3:01:15
Because it seems like the the messy Excel sheets, the messy Python version 27.
3:01:21
3 maybe goes away, but but what what actually sticks around long term?
3:01:29
Yeah, it's really good question.
3:01:31
I intermediate we go to a lot of our our customers and they're sometimes shocked to believe that we can actually and this is not like necessarily a master, but we can deprecate MATLAB like just like People gain can get off of And for the for the F1 fans out there, is MATLAB a tool that you could use to like visualize the airflow over a race car? Is it that?
3:01:52
It's MATLAB is more it's MATLAB is sort of like the OG you'd use it in every mechanical engineering like master's.
3:01:59
It's just like it's it's all that yeah, it's like it just basically plotting, graphing, but running like actual math just engineering analysis.
3:02:07
Like and it is so much of the post-processing of this like hardware generated data still happens in MATLAB.
3:02:15
MATLAB's like a single player by definition, right?
3:02:18
And so I think one of the big value unlocks we've had is just like take a tool like that and put it in the cloud. >> Yep.
3:02:26
Horizontally scale it so a ton of humans can access it and you can actually do engineering math and computation transformation in the cloud.
3:02:33
Like that's that's not I mean incredibly revolutionary itself, but it's incredibly powerful in what it unlocks.
3:02:39
So when you have to your point of like I think positive compounding effects between multiple different, you know, companies.
3:02:46
I think just within a place like Anduril, which is approaching 10,000 people, the fact that they're getting off of single player engineering and being able to do so much more in in multiplayer is a huge unlock.
3:02:58
Then walk me through some of like the the FedRamp ITAR compliance because >> one.
3:03:04
if I if I'm running a company and I want just a cloud hosted Jupyter notebook that's multiplayer, I could go to Colab.
3:03:09
Like it's available, but it's not designed with that use case in mind.
3:03:15
It's a very general purpose tool.
3:03:15
But walk me through some of the more defense to government applications and Yeah, so we we we call it rugged deployability, but like if you if you come in and you walk in and you say, "Hey, I want to use Nominal."
3:03:27
We can deploy our entire stack fully air-gapped on prem.
3:03:31
That's something that we invested in Interesting.
3:03:34
from day zero and and obviously a lot of our customers have that use case.
3:03:39
>> that actually look like?
3:03:39
Like We'll ship you a server.
3:03:40
Yeah, we'll just >> Oh, you'll ship the hardware.
3:03:43
>> Yeah, we have a bunch of servers in Austin.
3:03:44
Yeah, just And that's your central hub.
3:03:46
Is that Is that like a Dell server with like a GP >> team.
3:03:50
Okay, so you can kind of pick.
3:03:52
Yeah, we call them the deploy deploy boys. We we have that. >> boys, okay.
3:03:55
No, so we um Cuz I I remember I talked to Shyam Sankar at Palantir and he said that the first time that they tried to ship a Palantir binary to run on prom.
3:04:02
The the the the person on the other side of the deal was like great, but this isn't running.
3:04:11
And he was like you don't have nearly enough memory blah blah.
3:04:12
And that's the birth of the Ford deployed engineer. Yeah, yeah, yeah.
3:04:16
I think it's so we can we can with some customers it's easier. We'll just ship a tower.
3:04:20
We'll ship a server to them or we can just provide specs.
3:04:22
I think I think people are the the department and and these like if the government is your customer I think people are getting getting a lot better at that right now. So you can do that.
3:04:32
We can also just deploy our software inside of our customers VPCs.
3:04:35
That's often it's an inherent all of their you know security and credentialing and things like that.
3:04:40
But I do think that's been a big differentiator is like we've invested that would not normally be a place where I think you would spend valuable like startup engineering points if you were not in the industry that we are in.
3:04:49
But from day zero essentially we were like we needed to be able to deploy this.
3:04:54
What about like approval, cybersecurity, compliance?
3:04:57
Like I imagine that even if you have the best team of engineers possible like you still want third parties to work with that.
3:05:03
What does that look like?
3:05:06
>> Yeah, I think there's a long long tail of of you know security and compliance. I think things there.
3:05:12
I think you know we're continuing to I think to work through that.
3:05:17
Some of the basics are like you know people have to trust that the tool is going to perform the the things that we you know we say it is.
3:05:22
And so in the early days we'd have lots of fun conversations with folks around like how are you doing like a low pass you know filter like it's like explaining like basic math you know functions etc.
3:05:30
But we're we're well past that now.
3:05:32
So yeah, I mean I think we're we're continuing to to burn down that.
3:05:36
We we do like we support classified work right?
3:05:38
We have a facility clearance as a company.
3:05:39
A lot of our engineers are are are in a red and and I think all of the not all of a good portion of the one like most interesting work with a lot of our federal customers is happening at at uh classifications.
3:05:56
And I think there's a direct correlation as you go to higher classification programs of like uh a lack of tools. Yeah, of course.
3:06:02
And so I think from a business perspective, if we can get like there's there are really big budgets.
3:06:07
Um people are, you know, they're all just give facts like I mean, you know, $3 million a day being spent on on test campaigns alone, right?
3:06:14
And so if Nominal's able to bring in some of those test timelines by, you know, a day.
3:06:20
Yeah, that's a lot of money.
3:06:20
And we can do more than that.
3:06:22
It's like it's really valuable.
3:06:23
But when you go to some of those high-side programs um that are doing, you know, testing, uh you really are restricted in what you can can use. >> Crazy.
3:06:30
Doing the most important work and the fewest tools. >> Yeah.
3:06:34
Is AWS sort of like the IBM of uh federally compliant uh cloud hosting these days?
3:06:40
You remember IBM like you know whenever gets fired for buying IBM?
3:06:44
Is AWS still this leader in just like the default tool that you pull off the shelf if you want >> we see a lot of it, but we also see um it it it really and this is one thing like I We see a bunch.
3:06:55
We see Azure, we see other places like that.
3:06:57
Yeah, so I think we we have sort of partnerships with all of the the the cloud providers.
3:07:00
Um and and they all have their own efforts I think to provide, you know, some often some of the times like the the reason why we get slowed down is just because there isn't uh environment for us to deploy the software in, right?
3:07:12
Like the customer wants it, they they're asking for it.
3:07:14
Um and we have to figure out ways to to get the software deployed, but yeah. Yeah. What's the team like?
3:07:20
Where are where are you based?
3:07:21
Yeah, so we are uh we're around 135 employees today.
3:07:23
We'll probably grow to around 240 um over the course of the calendar year.
3:07:28
Uh uh headquartered in Los Angeles, uh Austin office as well, New York, DC, and we opened an office in uh in London late last year. >> London. Yeah. So.
3:07:38
Is that for international clients? >> Yes. Yeah. Interesting.
3:07:40
Um I went over to I went over to London um probably six or eight months ago now, set up a bunch of meetings um and kind of keep >> deal.
3:07:49
Yeah, and came back basically came back and all of those opportunities like materialized into real customer traction.
3:07:55
I think we we sort of knew like this is not this is not a US-centric problem.
3:07:58
This is a global like industrial sort of problem and there's a ton of opportunity.
3:08:02
And especially in more of the defense adjacent work, unsurprisingly, they're the proximity that they're feeling is like is heightened.
3:08:09
Yeah, what's the mix of of business with companies that sell to the government versus government contracts directly? Yeah.
3:08:18
Are you feeling pull from the DOW directly? Yeah.
3:08:21
Yeah, so we we have we have around 60 customers.
3:08:28
Around 2/3 of the work we do is is actually is totally commercial.
3:08:30
It's just a B2B engagement.
3:08:32
I mean like company like Shinkay or Antares etc.
3:08:37
And then we also directly work with the the federal government.
3:08:39
And I always say the biggest, you know, tester and validator of hardware in the world is is like the, you know, Department of War right now.
3:08:48
And so I think we're we're very happy to to support a lot of that that work and it's very needed. Sounds great. Jordy. Very insane progress.
3:08:56
Uh where can people get these?
3:08:58
Do Do you just sell these?
3:08:59
Do you ship them to people? >> We've shipped a ton. We've shipped a ton out.
3:09:03
I my sense is we will the reception's been very positive.
3:09:04
We'll probably be printing a lot more so. You're printing? I love it. Yeah, we're printing. We're printing. Yeah, we're printing.
3:09:13
We'll be we'll probably be shipping them out. Yeah.
3:09:15
Uh what what is the meaning of Y Combinator here?
3:09:17
Yeah, [laughter] we we had fun with this one.
3:09:21
So it's graduates who became astronauts. >> Okay.
3:09:24
Uh Y Combinator doesn't have it. >> Oh no.
3:09:28
Oh, graduates who became >> We we support the US Air Force Test Pilot School. TPS.
3:09:33
Some of the the coolest humans in the world doing amazing work.
3:09:36
>> to get Johnny Kim to go back through YC. We do. Next thing. We do. Yeah.
3:09:38
He's a legendary astronaut. Yeah, we do.
3:09:42
Hopefully that maybe that'll change one day, but yeah.
3:09:43
I would believe it, but if you're on the YC track, you're probably off of the Off the astronaut track. Yeah.
3:09:49
You got to build an >> to make decisions. Yeah. For now.
3:09:50
You got to build unserious software. Yeah, for sure.
3:09:54
Well, thank you so much for taking the time to come talk to us. >> Thank you. Always good to be here.
3:09:59
>> Have a great rest of your day. Yeah, appreciate it. Thank you guys. Yeah. Thank you.
3:10:02
And we will talk to you soon. Okay.
3:10:04
Have a good rest of your day. >> out the show.
3:10:07
Yes, thank you for watching today.
3:10:08
Leave us five stars on Apple Podcast and Spotify.
3:10:10
Sign up for our newsletter at tbpm.
3:10:11
com and >> Yeah, we didn't get enough into GPT 5. 4. a. m. GPT 5. 4?
3:10:16
The reviews are incredible and we'll stack the beginning of the show tomorrow with updates there.
3:10:26
>> Lots of fun benchmarks to dig into, lots of graphs to analyze, lots of models to play with, and examples to go and build or vibe code and see if they have that smell, if people like the the vibes.
3:10:40
Anyway, thank you for watching. We'll see you tomorrow.
3:10:42
>> Have a wonderful evening. Goodbye. Goodbye.