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3:06
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4:35
>> You're watching Today is Friday, September 25th, 2026.
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5:02
Uh, we got some debates on the timeline.
5:05
I I identified four debates for you.
5:05
You You don't want to call them debates, though.
5:09
You want to call them arguments. Fights. >> I thought arguments. >> Okay. We're throwing down. We're throwing down.
5:14
>> Wouldn't Wouldn't someone rather listen to an argument than a debate? >> Okay. I don't know.
5:18
>> I don't want it to be I don't want it to be a health uh healthy mature conversation.
5:23
I want to be >> I want to be reaching over a debate fight.
5:29
>> Uh first one, Microsoft.
5:29
Is Microsoft about to have their Muse moment?
5:32
They've launched co-pilot.
5:35
Now they're launching a new product today.
5:37
Is it going to be a breakout success?
5:40
Is it going to compete directly with Meta and Muse or will it be a different thing entirely because it lives in the enterprise?
5:47
It lives in the Microsoft ecosystem. Let's go to Tay Kim. He says, "Shots fired.
5:50
Pum Microsoft will go after Meta's Muse from Alex Heath's interview of Sachin Nadella. He's doing the rounds. He talked to Drabosa.
5:58
talked to uh Alex Heath over on sources. news. Still cooking.
6:04
Uh quote from Sati Nadella or from Alex Heath.
6:08
He wants to bring autopilot AI chief of staff to your personal life, too.
6:13
It's not staying in Excel.
6:15
It's not staying in Outlook.
6:17
It's going to be cooking dinner.
6:20
>> Big move going from a co-pilot to autopilot. >> Autopilot. Yeah.
6:23
This >> says it says a lot about about their intentions with the product. >> Yeah. Yeah.
6:27
>> Yeah. Yeah. It is actually sort of the like a you know is this AGI is this not AGI like if you're in the co-pilot mode you're sort of signaling we're not really in the AGI era autopilot feels more like uh although it's a term it's a vague definition it is significant in
6:46
the brand term so uh it's a hardened version of open claw the agent gets its own computer workspace and memory to work continuously uh there is very funny post from somebody uh in Meadow who is like uh you know a lot of these agents like the the the value prop is that it has its own computer. It has its own virtual machine
7:07
It has its own virtual machine with some real hardware behind it.
7:10
So you can have a file system has I think eight gigs of storage so you can say oh I need you to download some images some files like keep them in your cloud so you can access them at all times.
7:19
It can obviously build a database, save records, your contact information, your calendar. It can mirror that.
7:26
So it doesn't need to be pinging every service all the time doing everything in the context window uh in the Ben in the Ben Thompson parlay is it can write things down. This is very good.
7:34
This is what everyone was doing with open claw on their Mac minis.
7:37
This is what people are doing with codeex clogged code on their computers and codeex of course has like cloud threads that do something similar.
7:45
The funny thing is that meta was like it's a real computer.
7:48
it's a real computer. this is a real computer and then and then and they're literally using a virtual machine which is still a real computer like you have access to hardware but it is a virtual machine like when you're not using it it goes dark and someone else uses it and I think there's still some cons confusion because people were like this isn't a
8:05
computer at all and it is >> well yeah it sounds a little bit too good to be true that uh >> they're not just going to rack for you and just let you if you sign up once and never use it that's just inefficient compute resources uh but but it's just funny that we live in such a virtual time that uh someone can very seriously and basically correctly be like it is real. It's a virtual machine. It can't It's a virtual machine.
8:25
It can't get any more real than that.
8:27
It's like yeah it could but why would you? So no one cares.
8:32
Uh anyway, Microsoft's doing the same thing.
8:34
Virtual machine for everybody.
8:36
Uh it'll have its own computer workspace and memory to work continuously.
8:39
When I ask about Microsoft's consumer strategy, he points to its 100 million plus consumer subscribers.
8:46
people that subscribe subscribe to consumer Microsoft services Call of Duty Micros Xbox Live. These are the consumers.
8:56
Now, uh Xbox is still like pretty anti- AI.
8:58
Uh they've they've been signaling like, "Hey, yeah, we're not going to lean in.
9:03
We're not going to stuff Copilot all over Xbox Live."
9:04
I'm personally I hate that because I think >> Yeah.
9:09
I want I want a basically like a company built aimbot.
9:14
>> No, I I mean, yes, of course. That's funny.
9:16
But but no, what I want is I want to be able to text my Xbox and say, "Hey, uh, like Grand Theft Auto 6 is coming out.
9:25
I want you to pre-order it.
9:27
I want you to get it installed and I want you to open it up and do the little config because every time you open a game now, it's like downloading an update, accept the terms and conditions, accept the privacy policy, adjust the HDR, adjust where the HUD is on the screen.
9:41
Do you want any accessibility features?
9:43
Do you want to do the tutorial?
9:45
It's gonna blow your mind, but if you press forward on the stick, you'll move forward. Lock in.
9:50
We got to do this tutorial. Here's how to jump.
9:55
It's going to blow your mind. It's the X button. Push it. Now, push it again.
9:59
Okay, you ace the tutorial.
9:59
It's like I want to be able to jump into the game, and I do think an AI agent could help me with that.
10:04
It can certainly do it on desktop.
10:05
You can just say, "Hey, go play the whole game for me.
10:07
Level me up until I'm ready to really get in the fight because this is my first rodeo."
10:11
But uh they Xbox been pushing back on it.
10:16
Microsoft broadly they're going all in with autopilot.
10:18
Autopilot should also go to the consumer side.
10:20
He sees consumer agents potentially cutting out today's middlemen, making that market more zero sum.
10:29
Uh in the enterprise, he thinks agents will make the market bigger than cloud by orders of magnitude. We got room to run. Satcha said it himself.
10:40
He's going to 300T 300 trillion dollar company. >> I like it. What do you think?
10:45
>> So >> I mean the the first thought is that again everyone is building the exact same thing.
10:52
>> So we we went through this for the last few years where everyone was >> everyone had a chat app.
10:56
>> Everyone's building that.
10:56
Funny thing is is is the lore on GPT4 that was first available in Bing like GPT4 the thing that like GPT3 3 uh GPT3.
11:04
5 powered the original chat GPT GPT4 was only available through through Bing.
11:11
Uh and then everyone was like oh I guess like Microsoft's going to make a plan and Bing's going to be doing AI and like this is going to be a challenger to Google.
11:21
and then they sort of like pulled back.
11:22
But >> well, and at that time when when Microsoft was >> backing up the Brinks truck for OpenAI, they certainly >> I don't think it was it certainly was nonobvious at that time that they would be creating a company that they would ultimately compete with as much as they are, >> you know, partners. So >> yeah.
11:42
Uh so uh Peter Steinberger, the founder of OpenClaw, chimed in.
11:45
He said, "Microsoft shipped a really compelling product on top of OpenClaw today.
11:48
We worked with them since March to make the codebase ready for large-scale deployments.
11:53
And of course, there's there might be some IP sharing agreement, right? Because didn't Oh, no.
11:59
Because OpenAI hired Peter, but they didn't acquire OpenClaw. Open source. >> Yeah.
12:05
>> So, anyone can build on top of it. Yeah.
12:06
But what's odd is that >> I think Nat Friedman stated that they didn't fork Open Claw.
12:11
They built something from scratch, but there are just conventions.
12:15
And so, you wind up having similar MD files.
12:20
It's just like, you know, if you build a web page, like you're going to have a product.
12:24
If you build an e-commerce site, you're going to have a product detail page.
12:26
You might have a similar site map and and architecture.
12:31
It doesn't mean that you forked Shopify to do that or whatever.
12:32
Uh, let me actually tell you about Shopify right now since I mentioned it.
12:36
Shopify is a 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.
12:47
So the the the debate point is how big will this be?
12:51
How what is the actual impact to Microsoft?
12:54
Uh how like the the there is the cool macro tech story which is just that the models have advanced to a point where there is a new use case like they're useful in a new way.
13:08
Not just knowledge retrieval, not just go and write a bunch of code.
13:12
They are useful but that requires a new type of harness.
13:17
Just like when the when the uh models got good at code, the harness became very important.
13:21
We saw claude code and codeex and cursor and a bunch of other companies.
13:24
Cognition really like define that era.
13:26
Now the models are pretty good with personal agent stuff, sending text messages, talking to people, integrating with Slack, etc.
13:33
So the harness and the integrations and the partnerships matter.
13:37
So we're talking about Micros partners with Amazon.
13:39
Who's part who's going to who's going to be Amazon's dance partner?
13:43
Who's going to be Walmart's dance partner?
13:44
Who's going to partner with Shopify?
13:46
How big is the open ecosystem?
13:48
Uh you need a lot of you need a different harness.
13:51
You need different integrations and you need a lot of new user education because I think there's a lot of people.
13:56
I mean there's people that are still online being like these things hallucinate like they have a knowledge cut off um because they're talking to like the voice model. >> Yeah.
14:05
The main thing with this launch is that uh I don't think there's anyone on X that's seeing Microsoft launch an an openclaw powered agent and thinking I got to use that. I'm so excited. I really want it.
14:16
I I >> Okay, >> that that that's that's my view and I think it's correct and you're free to steal man it.
14:22
>> Okay, >> that being said, they have such incredible distribution.
14:24
they can still roll this out to a bunch of people who are going to try it and be like, "Wow, that's really cool and useful and helpful and be the first way that they experience this new paradigm of agents, right?"
14:35
And so, >> as much as like I just think there's basically zero excitement from like the core insider agent maximalists, there's going to be just natural excitement from everyday Windows and Microsoft users. >> Yeah. Yeah.
14:50
It is it is uncommon in tech and maybe it's uncommon in X to like run your entire organization, your enterprise on Microsoft.
14:56
The the default tech stack for most startups is uh Google Enterprise, Gmail.
15:03
You set up the Gmail account for your for your employees and then you add Slack.
15:08
So then you're in the Salesforce ecosystem and Microsoft is there but usually with like oneoff Excel licenses here and there for the finance team.
15:19
Does that resonate with you in terms of like how these products like fit together?
15:25
There's usually some Microsoft, but you have to go to a financial company or like a real economy company to see like, okay, these guys are all in on Microsoft as a tech stack like Outlook down to Bang down to, you know, uh, the databases and like fully integrated Microsoft, but there are hundreds of millions of people who their life at work is just pure Microsoft and they're like, "Yeah, I don't use Gmail at work.
15:52
I don't use Google Calendar. I use Outlook."
15:54
And for those people, they're like, "Okay, I get this thing like probably for free added to the to subscription.
16:00
Maybe we already have some co-pilot stuff.
16:01
So, this just rolls in and I get uh, you know, near frontier capabilities, good enough."
16:06
And there's such an overhang in terms of what I can do that just going from, you know, zero to taking advantage of some decent automations is going to be uh potentially popular.
16:19
uh it feels like it could be more successful than the old co-pilot and a lot of that's driven just by capabilities.
16:26
The models are better, the harnesses are better, the integrations are better and so uh you can do uh more things.
16:32
I think there'll still be a lot of point solutions and a lot of competition.
16:37
The big question is like when is Google going to fire back because are they going to wait until the next IO?
16:42
like that's a long way away, but they do love releasing on, you know, those annual schedules.
16:48
And so it's like we might get a Google like a crazy Google open claw agent personal agent in mid 2027 and then Apple's close behind in like 2035 something like that would they would launch something that was >> I mean Google does have there is Gemini Spark which is like a 247 always on agent but like no one >> does it have a VM >> does it have a real virtual machine?
17:11
I mean, it says even if your phone and laptops are turned off, it'll still work.
17:18
>> But I I' I've seen like very little like no one's really talking about this.
17:20
>> They aren't really pushing that because they are pushing Gemini as like the chat interface, but man, that that the thing falls short times.
17:28
>> It's so funny and frustrating that you have all these companies building personal agents, but none actually has 100% coverage over the services.
17:38
>> Oh, Monopoly guy over here.
17:38
You're going to advocate for Monopoly.
17:40
to advocate for Monopoly. not advocating it but it would be helpful right now because even Google right you know everything around >> the full Google set of products would be absolutely amazing but then you don't have like native iOS integration >> no this is the irony of of monopoly is
17:56
that it's it's it's bad for uh you know pricing in some ways it's great for us >> it's great for user experience and it's often great for customers like how many times are you advertising on Facebook and you're like oh I wish like ad manager would just like also run Reddit ads and also run X ads and also do my YouTube ads, like just do it all. Uh, and the same thing is true even
18:16
Uh, and the same thing is true even when you fire up like a like a Netflix uh app.
18:21
You're like, "Oh, is the movie I want on Prime or Apple TV or Netflix or Paramount Plus or HBO Max or Peacock?"
18:30
Like there's 25 different things.
18:30
And as a consumer, you're like, "I'd love just one, but then they would have pricing power over you."
18:35
And so you gota you got to look ahead and know that there'll be dragons if you allow the monopoly to flourish potentially.
18:42
Um at the same time we've been in this odd regime where the monopolies have not actually damaged consumers like uh this is how Amazon got out of antitrust again was like they didn't raise prices uh pernitiously against their consumers.
18:57
And so uh the current antitrust law is written such that that you have to prove customer harm.
19:03
It's not enough just to have concentration in a market.
19:05
You also have to be extract extracting monopoly rents.
19:09
You also have to be raising prices, increasing profits, and hurting the consumer financially.
19:12
And so for something like Google has a search monopoly.
19:16
It's still a free product.
19:16
So it's very hard to prove consumer harm because you're just like, "Yeah, >> G Suite uh G Suite they are steadily hiking prices." Okay.
19:27
But there's viable alternatives.
19:30
That's yeah, that's much more alopistic for the technology suite.
19:35
Uh anyway, it'll be it'll be interesting to see if there's like, you know, a niche community of like, yeah, I'm a I'm a I'm a Microsoft autopilot guy.
19:41
I mean, the COD integration could change things.
19:46
It just depends on how you're positioning it.
19:47
Like if the brand if you talk to somebody and they're like, oh, you know, are you are you cloud guy?
19:50
Are you a codeex guy, a cursor guy?
19:52
Like all those things say certain things about you aesthetically. You're muse. Okay, we get it. you like the laboo guy.
19:58
But um but if you if you come out and you're like, "Yeah, I'm actually a Microsoft autopilot guy."
20:06
That could say two things.
20:07
It could say Excel jockey, king of the financial markets, apex predator predator of the economy.
20:12
Or it could say, you know, dropping a nuke on COD. >> Prestige Max. >> Prestige Max.
20:20
What's the >> He has diamond camo. >> Diamond camo. No, it's uh dark matter. >> Dark matter.
20:26
Yeah, that's when you get diamond though. >> Yeah.
20:28
So, if it's a if it helps you grind to dark matter, I think they got a winning product there. Don't you think? >> I agree.
20:34
>> Let me tell you about MongoDB.
20:34
What's the only thing faster than the AI market your business on MongoDB? Don't just build AI.
20:40
Own the data platform that powers it.
20:42
Okay, we we spent way too long on that.
20:44
We we we got three more and our first guest is joining in noon.
20:48
So, we're going to still we got to figure out a way to to make the tensions go up and actually get an argument going here cuz that was >> we were fighting a little bit.
20:55
>> That was too friendly. That's too friendly. Okay.
20:56
Well, >> um, >> you wanted you wanted to argue that everyone all the tech insiders were couldn't wait to get their hands on autopilot.
21:04
That was your stance, right? >> Yeah. Yeah. It's a tough one. Tough to steal, man.
21:09
That um anyway, Doge designer shared a photo from a dinner that happened at the White House featuring uh important tech people and none other than Cinping, the Chinese president.
21:22
So Elon Musk, President Trump, first lady Melania Trump, f China's first lady, uh AMD CEO Lisa Sue, Nvidia CEO Jensen Wong, and Apple's Tim Cook got the prime seating right in front of Donald Trump.
21:38
Uh and they were at the Prime Table together.
21:41
Uh no translator that I can see in this image, although there is an empty chair, so it's possible that there was a translator at this.
21:49
Empty chair would almost certainly be for Donald, right? Oh, yeah.
21:54
>> That would be >> Yeah, that's right. Okay.
21:55
So, >> we're gonna we're gonna put the translator just between Xi and Milan.
22:00
>> Yeah, because because Sin Ping is whenever he speaks he he he uh he gives his speeches even in America in Chinese.
22:08
Um but uh he seems to be able to to hang with uh Tim Cook, Elon, Lisa Sue, Jensen.
22:14
Although maybe there's some uh maybe maybe those tech leaders at least know that one important phrase.
22:18
If you want to really ingratiate yourself with a Chinese speaker, what do you say to them? >> Right. >> That's what you got. >> Always worked for me.
22:33
>> If you're ever seated with Cunping at a dinner at the White House, just throw that down and he'll be like, "One of us. >> One of us.
22:39
>> We now it's time to have a deal."
22:41
>> Notable that Elon and and Tim Yeah. >> No plus one. They're locked in. >> Okay.
22:46
>> No time for No time for No time for guests for them. >> Yeah. No John Turnis.
22:51
I feel like Tim Cook should get the the the John Turnis plus one.
22:54
Uh Elon should be able to bring like Nikita Beer along or something. That would be fun.
22:59
But uh it was a pretty tight guest list.
23:01
Although uh some some people did get plus one.
23:05
Jensen brought his wife, Lisa Sue, brought her husband.
23:07
Um what's interesting is that uh is that Daario wasn't there.
23:12
Uh he's sparred with the administration before. We've seen this.
23:16
Uh he's also attended plenty of uh meetings in DC and Tom Brown, the co-founder of Enthropic, has been uh on a reset with the administration and even went as far uh to praise Trump's let data reign post on Truth Social. This was September 1st.
23:34
Uh he said to Howard Lutnik at the G20 Innovation Ministerial in Chapel Hill, quote, I really loved President Trump's post from earlier this week.
23:46
And so there's clearly olive branches going out, but they haven't been fully received because the the dinner invite was maybe didn't materialize or maybe he turned it down. We don't actually know.
23:57
Um but I was offered 15 plus ones, maybe 10 plus ones, maybe five plus ones.
24:05
He decided to lock in and grind for the grind for the ASI.
24:09
>> Well, you know who was there?
24:10
>> Who was >> Lynn Martin?
24:12
>> Lynn Martin >> from president of the New York Stock Exchange.
24:14
Our friend >> to see it >> holding it down.
24:18
>> Let me tell you about the New York Stock Exchange.
24:19
Want to change the world?
24:21
Raise capital at the New York Stock Exchange. There's Lynn.
24:22
She's been on our show multiple times.
24:24
dear friend and also uh you know an important person to get around the table when the when the capital markets when the future of the global economy is at stake.
24:34
So uh very very exciting to see her there um as well as many other guests who made the list.
24:41
The list is is wild signal was really was really having some serious FOMO.
24:46
This was hilarious >> would have paid my entire net worth just to be a fly on the wall at this gathering.
24:53
I can only imagine the conversations, the subtext and the tension in that room.
24:57
Also, where are the venture capitalists?
25:01
>> It's such a good >> Wait, >> also where are the venture capitalists?
25:07
>> VC congratulating themselves.
25:07
Won't someone please think of the venture capitalists? Uh, yes.
25:11
>> Yeah, it really showed that there was levels. >> There's levels. Uh, it is.
25:13
This is like a Is this Is this a copy pasta of the like $15 million or or Dinner with Drake meme? Yeah, dinner with Jay-Z.
25:22
500K or dinner with Jay-Z.
25:25
>> 500K or dinner with Jay-Z.
25:25
Uh >> or the Grant Cardone like Yeah, I I slept in my car last night to come here and then >> it is it is very funny because like there truly are levels.
25:35
And if you as the humble poster, I obviously have a ton of respect for Signal, but if if he or I were at this dinner, we would just be seated way in the back and we'd be like, "Wow, look, it's Jensen. Wow, that's so cool.
25:48
I wonder what he's talking about. Cool."
25:49
And then you get to go up to him for two seconds and be like, "Dude, I love the GB."
25:53
>> Well, to be clear, he didn't want to be He didn't Dude, that's so cool, >> John.
25:56
He didn't want to be a guest.
25:56
He wanted to be a literal fly on the wall. >> That's true. That is different.
26:01
>> And you can see in that that original image, >> hope there's no flies around here.
26:03
We got some flies on the wall today.
26:10
>> Um, but uh >> uh but yeah, it was a stacked stacked list. There's a lot of folks.
26:16
Uh Sam Alman, Greg Brockman, Anna Brockman, uh Sergey Brin, Satcha Nadella, Sundar Pachai, uh Cristiano Aman from Qualcomm, our guest this week.
26:27
Made it to the dinner, came back from Hawaii, David Solomon from Goldman Sachs, uh tons of other folks.
26:34
Uh Exxon Mobile, it was really who's who of the global economy, son of Bernard Arno, also Bernard Arno is there.
26:42
>> A lot of people are saying Tai Lopez was snubbed.
26:45
Yeah, I would have liked to see a Jaco Willink.
26:47
I would have liked to see a Joe Rogan on this list.
26:48
Sort of disappointing that they didn't include podcasters except for David Saxs. He he did make it.
26:56
And also, >> yeah, he's a podcaster and avenger.
26:59
>> Secretary Kennedy is also has a podcast.
27:01
There's actually a fair amount of podcast.
27:02
>> Brad Gersonner podcast.
27:03
>> Sam Alman ran the Y Combinator podcast years ago, startup school. So, former podcaster.
27:08
Um, there's a few other people on here.
27:10
Um, but uh lock in, get your uh I I I think uh with your if you put your entire net worth into potentially uh becoming the CEO of a really important company, maybe you do wind up as a fly on the wall.
27:23
Never doubt yourself, Signal.
27:25
I think you can make the next cut. I believe in you.
27:28
I also believe in Railway.
27:30
Railway is the all-in-one intelligent cloud provider.
27:34
Use your favorite agent to deploy web app servers, databases, and more, while Railway automatically takes care of scaling, moderating, and security.
27:39
Uh my take on this is that uh it's uh is is the question is like should should Dario have been invited?
27:46
Uh I I I think even though they're having beef with the uh administration like it's such an important company, it's important that uh he's in the conversation.
27:54
He's also has like a very very hard line on China and I would I would feel better about his positions on China if he's like yeah ping I really do hate him or something like that. I don't know.
28:08
uh you know it's informed from like a 30,000 foot view. >> Yeah.
28:13
Daario's like >> he worked at at BU. >> Yeah.
28:16
But but since then his positioning has been like we got to win the race against China.
28:20
We have to you know dismantle authoritarian regimes etc.
28:25
Maybe he looks Sean Ping in the eyes and gets the stare and it's like oh wow I had you all wrong. You never know. >> Yeah.
28:31
>> But I I want to see the sit down happen.
28:34
I want to hear the down the downstream.
28:36
I want to be the fly on the wall.
28:36
Uh anyway, let me tell you about Figma agents. Meet the canvas.
28:39
Your AI agents can now create and modify your Figma files with design system context.
28:43
Has the AI slop gone too far this time. That's our third debate.
28:48
The third debate that will shock you.
28:50
So, uh we can pull up this Kshi ad.
28:52
It's their latest direct to consumer direct response.
28:57
>> And for everyone at home, this is a karaoke moment. Yeah.
28:59
You're sitting in the office.
29:01
>> This is going to be on the >> open floor plan.
29:02
Don't be afraid to start singing. >> Yeah.
29:05
add it to the to the Spotify playlist.
29:08
Uh so uh Brian Pmpus says, "This Kalshi ad is among the most dystopian ones I've seen from any betting app."
29:18
And you can sort of hear the AI song over the Pixar inspired AI generated video.
29:26
Uh the the lyrics are also odd.
29:30
Not to nitpick, but it says like he sends his girlfriend money and then he's handing her money.
29:35
Every month I send her money from groceries.
29:38
So, uh there's a lot of like it lacks the polish that removes something from slop.
29:44
Every once in a while you see a video that is AI generated, but you're like, okay, there was enough attention to detail there.
29:48
This was let's just rip it.
29:51
This is actually a popular format of AI swap that's been going very viral.
29:55
Starts with a really dramatic hook.
29:55
In this case, the man thinks his partner is having an affair, >> but actually she's just hedging food prices on cowi >> because she has inside knowledge on the market from working at a bakery in the morning. >> Yeah.
30:11
So that even though egg prices are going up, she's able to net out and remain even because she is profiting on trading the egg futures market on KHI.
30:21
I don't know how deep the market is.
30:24
I don't know how real those markets are.
30:27
Do they really have egg futures markets on Khi now?
30:28
That's kind of interesting.
30:30
I don't know if you can actually hedge your groceries.
30:32
Um I want to see a version of this ad from the Chicago Board of Trade where she goes a lot further.
30:38
Gets a Bloomberg terminal, establishes a relationship with JP Morgan, Morgan Stanley.
30:42
She's visiting the Chicago Board of Trade regularly, trading in size.
30:47
She's talking to counterparties, Millennium, Citadel, you know, she's on the phone constantly moving huge volumes of of uh of commodity futures at scale.
30:58
Uh kind of elevating herself past just the prediction market, small ball, and getting into the big leagues. That's the future.
31:07
>> Shane says, "Would you rather your girlfriend insider tra egg egg futures or cheat on you?" >> No.
31:12
So, this is not insider trading.
31:14
Like, you can actually do this.
31:14
uh you can be a baker and realize that uh prices are going up and and trade the the commodities markets.
31:22
In fact, the commodities markets are designed specifically to give that signal and that and that that is the purpose.
31:28
The purpose is to uh is to understand okay the weather is bad.
31:34
People can trade that uh fundamentally there's there's no law against insider trading in commodity markets effectively.
31:44
markets effectively. Um but there's a question of like is this a consumer ready product like is this something that someone who is uh maybe doesn't have you know desk and a research team and a Bloomberg >> term one one interesting thing is I I
31:58
found egg prices up in September the market right now there's a 72% chance >> okay >> but there's only $417 of volume >> yeah but if you're only buying $20 of eggs that's enough depth so it is a viable use case it's not It's not fraudulent. Uh I think most people are
32:15
Uh I think most people are responding to just like the sloppiness and like the the the clickbaitiness of like the weird hook.
32:23
Uh but somebody posted one of these that was done by a much less prestigious brand in I think like weight loss.
32:30
It was some sort of weight loss pill, but it starts with like this insane hook about a secret relationship, very soap opera script.
32:38
Um, and I feel bad, but I actually watched the whole thing because I couldn't look away because it was really the Pandora's box.
32:47
It was uh it was infinite jest for that three minutes.
32:52
And all the comments were like, why did I watch this?
32:54
And someone had put it on the timeline.
32:55
I was like, "This is the worst thing I've ever seen." >> Yeah.
32:58
The funny thing about this, the funny thing about this ad is it seems like there no one like proof read it because there's a lot of elements of it that just are not uh not even phrased properly. >> Yeah.
33:09
>> But sometimes putting in those details gets people to talk about it, gets people to go in the comments, actually amplifies things, it draws your eye in.
33:18
And so you never know with like uh the algorithmic ad generation where all this stuff goes.
33:23
Uh what about the uh the interesting thing is I I think the the consensus and we're going to talk to John John Arnold about sports betting and prediction markets at at at noon today.
33:33
Um but there is another interesting side of this which is um is people seem to be coalesing at least the vibes on the timeline are like this is not good like like this is like either either you should personally stay away from it like I I don't advise you to be sports betting and I think that's John Arnold's position.
33:52
Uh there is a a second debate point and question which is uh what about the uh the dopamine sites?
34:01
How do you feel about dopamine sites?
34:03
sites? though in South Korea the thing that the thing that I think is consumerism but continue >> my current concern about the state of the hyper casino that our world has turned into is that like as an adult I feel like confident in my own decision-m
34:23
ability and the ability to see ads for gambling all the time everywhere and still make the call that it's not for me I'm not interested >> you've never lost a I've tried one weekend >> John John got to witness me one weekend. I was like, "Look, I think I should I
34:40
I was like, "Look, I think I should I think I should try this gambling thing. It seems super popular.
34:43
I got to get to the bottom of it." So, I try I tried it.
34:47
Um uh I'm I'm I'm running in the running in the red.
34:52
>> And this is And but that being said but that being said, like you know, >> you're stuck in your >> as as a 30-year-old.
34:56
I've been I've been I've been advertised gambling products for a decade now, right?
35:01
Um >> and my concern is that while adults have the ability to just make the decision like, "Hey, this isn't for me."
35:09
And you have like more um >> Yeah.
35:12
You start young, you're more likely to stick with it for a long time. >> Yeah.
35:15
But but but young people today are going to go through that are growing up on the internet are going to go through this just like >> they will probably be served like a million gambling ads by the time they're 18. >> It's a lot. Yeah. Yeah.
35:26
And so I guess I didn't get served.
35:29
>> It's so so normalized.
35:29
It's so a part of society now.
35:32
It's instantly accessible.
35:35
>> If you're getting advertised stuff like this that's basically saying like, >> "Hey, you're you're you're you're sending this message that like this is your way out, right? Like this is this." >> Yeah.
35:46
The deep irony is like the way out is to not participate and be one of the people that makes it through without forming the addiction. Yeah.
35:52
Uh, but we maybe we need to run a slop ad about that.
35:57
Uh, we want to do a a slop ad like this where it's the same same premise.
36:02
Oh, I think my partner's having an affair and lo and behold, they're just watching TBPN for three hours every day getting informed about technology and business news.
36:11
Uh, what do you think about dopamine sites, though?
36:12
Because dopamine sites, which is where, >> explain this.
36:17
>> Dopamine sites are are are fake shopping experiences.
36:19
It's an e-commerce site where you can buy luxury goods, but you don't actually have to pay them and they don't arrive.
36:24
So, this is from an article shared by Adonis on X.
36:26
The final frontier of consumerism has arrived in South Korea.
36:31
Uh, quote, "This week, I placed orders for a $44,860 PC Philippe hand engraved watch, a two $12,500 Hermes bag, a $9,800 Tiffany diamond ring. Cha-ching.
36:48
Oh, I like I didn't realize that was the analog one. That's great.
36:52
Uh, and a $7,350 Cardier love bracelet in yellow gold.
36:57
I don't need any of them.
37:00
I certainly can't afford them.
37:01
Thankfully, they'll never arrive.
37:03
Instead of Amazon, this individual spent the past week browsing a new breed of website known as dopamine sites, a trend that emerged in South Korea.
37:12
These site, these websites like Dopamine Shop and Food Never Comes recreate the entire ritual of online shopping.
37:19
You search for products, compare reviews, add items to your cart, enter a shipping address, place an order, and even track your delivery. But it's all imaginary.
37:30
Is this not as bad as sports betting? Is this not bad at all? What is this?
37:38
Uh it's sort of strange and and sad and a a reflection of our society that is so infatuated with uh pure consumption instead of creation. >> Yeah.
37:50
>> Uh and it's dystopian.
37:50
But uh >> a dopamine site for TV adn merch.
37:57
>> You just create a carton.
37:59
>> Well, I was thinking you you should make like a dopamine arr where you log in.
38:05
It looks like a stripe dashboard and then you just see like, you know, >> there's a game that I played that is basically that.
38:10
It's like a cookie clicker game.
38:11
What are those mindless games? Uh I don't know.
38:15
>> Like Adventure Capitalist.
38:16
>> Yeah, I played Adventure Capitalist and you just like click a button and it's like open lemonade stand and then by the end you're like farming robots on the moon and you just watch the numbers go up.
38:25
>> Yeah, we we we made a we made a game called Burn the Runway back in the day.
38:29
I put it I put in the chat.
38:29
You can you can pull it up. >> It's still up. Wow. This is previbe coding.
38:34
You did it the oldfashioned way by hand. >> It's crazy.
38:38
>> Do you think this counts as laring?
38:40
Because it's not it's actually live action, right?
38:41
But it's like develop like an encyclopedic knowledge of luxury goods if you spend enough time on here. Um I don't know.
38:47
It seems like it's uh it's it's nowhere near as bad as something where real money's at stake because you are wasting time, but you're not wasting any money and there's no risk of downside.
38:57
So why would you buy bananas?
38:59
Well, that's the cheapest item like if you need them for But you can buy the max amount of bananas and then >> Oh, okay. Okay.
39:06
So, you buy different things for your startup and then you wind up running out of runway at the end. >> Yeah. >> Interesting. >> Wow.
39:14
>> To put this into perspective, uh there were no AI companies >> even on this list back then.
39:18
It was it was uh >> We work. You had early Anderrol.
39:21
And had only raised, I think, a couple hundred million at the time.
39:27
>> You had Quibby on there. >> Okay. Okay.
39:29
the whole >> Well, um there's it's not all bad in AI slop.
39:35
There's a video that shared by popular demand, his magnum opus.
39:41
>> No, it is all bad and AI slop.
39:43
>> You think this one's bad? >> Rewind.
39:44
There's this guy uh Henry says, "I am so beyond obsessed with this account.
39:48
For me, this is the moment that I am now very, very, very bullish on AI video." >> Okay.
39:52
>> There's an account called Jean >> Filenthro, >> who's like a French guy who's a boxer. >> Yep.
39:58
Uh it is uh just an somebody using basically making videos and then um >> translating this guy with a funny haircut. >> Yeah.
40:08
He looks very silly >> and he got 230,000 followers on Instagram. >> Yeah. >> Million, you know.
40:14
>> Oh, and he launched a coin.
40:15
>> Hundreds of millions of views.
40:15
And then and so the new the new meta, I guess, is you know, making an AI character. >> Sure.
40:22
>> That's silly, strange. Run up the views.
40:24
And then >> I think this was one of the top uh tokens. Okay. >> A few days ago. >> Yeah.
40:30
Well, sounds like a mess.
40:32
>> Anyways, um over to eights >> to what?
40:37
>> This is the video you were talking about. >> Oh, yes. Yes. Yes.
40:39
Uh by popular demand, his magnum opus.
40:41
He has repurposed uh the famous scene from American Psycho, the business card scene with pickles and >> new pickle. >> Um what do you think?
40:52
>> I can't really hear it.
40:52
So, >> we're doing our guest. >> Very nice. Look at that.
40:58
>> Picked them up from the deli yesterday. >> Good coloring. >> That's dill.
41:02
>> And the brine is something called mustard seed. >> It's very cool, baby. But that's nothing.
41:07
>> I remember when you had to do this.
41:07
You had to go into After Effects, track the actual business card, roto out the hand so that the card, whatever you put on the card was underneath.
41:16
And then you needed to blend the new card in if you wanted to make a joke.
41:21
It was very time inensive. Took hours.
41:23
Now that Bryce perform >> this is a neck pickle.
41:34
>> There's something about a pickle coming out of a >> whole pepperc corn. >> Extra crisp. Impressive. >> Very nice.
41:45
>> Let's see Paul Allen's pickle.
41:50
See the there's still like a spark of genius here, you know, mixing pickles with >> Let's see Paul Allen's pickle >> with uh pickle and the fidelity is >> olive coloring the tasteful thickness of it. Oh my god.
42:06
>> All right, we can move on. >> We can move on.
42:07
Let me tell you about Cisco.
42:10
Critical infrastructure for the AI era.
42:12
unlock real time seamless experiences and new value with Cisco.
42:15
Um anyway, uh there's there's a white pill on the slop narrative.
42:23
So AI video is clearly in the in the depths of the slopification, but uh code was there a year ago.
42:32
People were saying that uh the slop code would never get good enough and that if it did, it would destroy everything.
42:38
DHH is out with a new speech at Rails World 2026.
42:41
His opening keynote, he says, "It's pencils down people.
42:46
Writing code by hand is no longer an economically valuable viable skill for most programmers at most companies.
42:54
Of course, if you're in some highly secure environment, there might make might make sense to still write it by hand."
43:00
And so it sounds like a black pill, but then he says, "But the future of making software has never been brighter.
43:06
Don't you dare blackpill this beautiful moment.
43:09
So, you can go watch DHH's full >> looking like a megaurch preacher.
43:16
>> Yeah, he's he's having a good time.
43:16
Uh, so our fourth debate, our fourth and final debate.
43:21
Um, to what degree is the AI buildout driving interest rates upwards?
43:27
People are going back and forth about this.
43:29
Uh, interest rates are spiking.
43:31
Specifically, the 10-year yield has jumped 12%.
43:34
So it's actually what is that 1,200 basis points or something.
43:38
Uh because you're trying to you're trying to explain the move in the rate.
43:43
So it's not that we're at 18%, we're at 5.
43:46
18% but we were you know down much lower in the fours earlier.
43:52
And uh it's it's it's causing nervousness.
43:56
You know last time interest rates went up the venture capital world collapsed and uh nobody likes high mortgage rates. Can you afford a home?
44:05
There's a lot of knock-on effects.
44:07
We've covered this a bunch.
44:07
The vanilla explanation is just the Iran war was unexpected.
44:12
It caused an energy crisis that caused inflation that caused interest rate hikes and expectations for future interest rate hikes and thus interest rates are higher.
44:22
Uh AI is important in driving the economy but ma mainly a sideeshow in this uh in this story around interest rates specifically.
44:33
Um but in tech in tech there's a view that d the data center debt is simply too good to resist and so the capital markets are flooding over there.
44:43
Uh but there's a lot of debate around this.
44:45
So uh run said Iran oil prices is shortterm driver but broadly this is due to demand pressure from extremely attractive AI capex opportunities that are borrowing at nation scale.
44:56
They're certainly hoovering up trillions of dollars.
44:57
I think the total data center capex hyperscaler debt is now almost 20% of what the US government is is is buying something like that.
45:08
>> No, so it's actually higher. I I look up.
45:09
So basically um hyperscaler and Nvidia like debt issuance as a percentage of like total treasury bond issuance uh through 2026 has been like 70%. >> Whoa.
45:19
>> So and I think 2025 it was like around 30. >> Yes.
45:23
Uh and so Astrid Wild says this is correct.
45:26
global yields will continue to go higher because why would you invest in literally anything other than data centers when they have such a short payback period and you can throw tens of billions at it.
45:35
I mean we saw cluster max one I think had a few dozen neoclouds.
45:40
Cluster max 3 which we talked to Jordan Nanos about yesterday had 326 Neoclouds and they reviewed I think or they rated 200 something of them.
45:49
Um and uh and then that's not to mention that there were also data center construction projects from the actual hyperscalers.
46:01
The labs weren't on there.
46:01
Uh and then the chip companies Jordan called out.
46:03
He said like Cerebrus will have a neocloud and uh positron and etched will have neoclouds.
46:10
And so uh there's going to be a lot more of this.
46:13
Uh at the same time there's there there's the flip side of the argument.
46:17
Um, deep dish enjoyer says this is definitely currently not true.
46:23
Those opportunities are not riskless and importantly you can't use private illquid AI capex as collateral.
46:27
So if you're a bond investor and you're looking at two different markets, are you really shifting out of government treasuries that are historically the risk-free rate that they have a monopoly on violence?
46:42
They have the ability to tax their citizens to pay back the debt.
46:46
uh a NeoCloud that's doing a data center, they go bankrupt, you might actually suffer a capital impairment uh and and get back 70 cents on the dollar, maybe 90 cents on the dollar.
46:54
So there it stands to reason that there is more risk associated with the the AI buildout and so they're not completely apples to apples, but I still think that there's probably some sort of effect here.
47:05
Uh he said it's true that as real GDP growth increases substantially, rates should rise though, but we aren't there yet.
47:14
Um, >> Ro say has lots of scary talk in bonds these days, but it's mostly recency bias since 1960. The tenure is average 5. 8%.
47:24
We We're at 5% below average.
47:24
If you'd fallen asleep 20 years ago and woke up today, you'd think nothing happened in the bond market the entire time.
47:30
Ignore all the sovereign debt crisis talk.
47:34
Inflation expectations are adjusting to something more historically normalized. Carry on. >> Carry on.
47:40
So, which do you think it is?
47:46
Um, I'll uh I'll I'll defer to John Arnold on that, John.
47:51
>> Okay, we'll talk to him about it.
47:51
>> Okay, we'll talk to him about it. I I think that uh I think that the recent spike is 80% Iran war because I think that the the AI buildout has been going on uh for a while and has been maybe driving rates upwards broadly but uh the
48:13
the AI buildout has not been the thing that's been driving this most recent spike which we've seen over the last 30 days and it's not like we've we've been seeing a flurry of like, oh wow, like like we didn't know that Oracle was going to back up the truck. We didn't
48:25
We didn't know that Amazon was.
48:26
So there's no like the expectations in the last month on the like like we've been covering this every day.
48:33
We haven't done that many shows were like whoa, we didn't realize that this was going to happen.
48:37
We didn't know that this was going to be a thing.
48:40
Now, maybe you could say Jensen's securitization of GPUs initiative with all the big banks, maybe that's having knock-on effects now, but in general, it hasn't felt like there's acceleration.
48:55
That's a departure from the trend.
48:55
It's like, yeah, we're going to 3x compute every year. We're on trend.
48:59
We've been talking about this.
49:01
Some people don't buy it.
49:02
Some people are skeptical, but in general, there hasn't been like a massive revision to the upside.
49:06
It's hard to say like, yeah, rates are spiking because Muse is taking off and personal agents are going to drive token demand, which is going to drive the buildout further.
49:14
Like, we're not quite there yet.
49:16
There's a couple million. >> Yeah.
49:18
The other thing is when you look at these large pools of capital, it's not like they're sitting there saying, I was just going to go all in on treasuries, but instead I like this is still >> putting they're still putting capital at risk. Yeah. >> Right.
49:34
and instead of make there's a there's a number of other investments that they might make outside of AI capex but it wasn't like it's just binary thing like one or the other >> well whatever you want to do in the age of higher interest rates do it on public.
49:47
com investing for those who take it seriously they got stocks options bonds crypto treasuries and more with great customer service um so the Wall Street Journal is is sort of putting the higher bond yields in context saying the robust US economy economy powers through rate hikes and rising bond yields.
50:05
The US economy keeps powering through inflation, tariffs, and higher borrowing costs, defying a runup in Treasury yields, and a Fed rate increase that has the bond market spooked.
50:18
The usual economic breaks aren't slowing growth.
50:22
Hiring or an AI investment boom that looks to be unstoppable.
50:24
To some, AI's potential return seems so bright that even steep interest rates won't slow down tech companies investments.
50:30
And it does seem like the the math on the AI buildout is is is wildly different.
50:35
I I was talking to somebody who was saying like I I he knows a lot of people that are falling in love with the spreadsheet and so they want to start Neoclouds and data centers because uh the payback period is shorter.
50:46
I also saw an Instagram sort of like course hustler talking about how he bought a bunch of GPUs and is renting them to a data center and uh and saw that as an attractive opportunity.
50:56
allah like, "Oh, I bought a multif family apartment complex."
51:02
>> You must have watched the the Dylan Patel interview, the recent Dwarf one. >> Oh, yeah. Yeah. Yeah. Yeah.
51:05
I mean, this is this is all related to that for sure.
51:09
Um and and also a lot of the AI buildout, a lot of the AI companies were very much born in the era of higher interest rates.
51:16
Uh so I I I do believe that if you're a software company trading at a 100x revenue multiple and you weren't forecasting real earnings for 10 years or something like that like the traditional SAS playbook and interest rates go from zero to 4%.
51:34
That's a lot more damaging than than okay you were already born in the era of higher interest rates and interest rates go from four to 6% or something.
51:41
it's just not going to move the needle in the DCF that much because like you were already discounting cash flows in the future 4% and so as opposed to zero you're basically counting future cash flows as today's dollars.
51:53
So um anyway that's the take from the uh from the from the Wall Street Journal.
52:00
Uh they the Wall Street Journal also had an interesting uh article about real estate bargains in a higher interest rate environment.
52:09
uh they saying they say looking for real estate bargains watch these apartment loans and it's an interesting article.
52:17
So uh one pool of multifamily apartment mortgages issued in 2021 is already 53% delinquent.
52:22
And so what this means is that whoever bought the building had a floating rate interest rate and is now that the interest rate rise has put so much pressure under them that they might have to sell units.
52:38
They might have to sell the building.
52:40
And this is public information.
52:43
So you can actually I actually went to Codex and was like find a bunch of apartments that are could potentially be on the market for way below market rates because there are public filings of the loan delinquency and because those might be interesting things.
53:00
I found some interesting stuff. >> Yeah.
53:01
I mean, one one indicator of just how brutal the whole multif family investing world is is like 5 years ago. >> Mhm.
53:10
>> The multif family guys were extremely active on X, right?
53:12
Posting >> multiple times a day, clearly like incredibly fired up, doing tons of deals, and then most of them have gone completely silent since uh since then.
53:24
And and it's in large part because >> a lot of their bets are completely underwater.
53:27
They're they're you know basically there's been a number of funds that have basically not just lost money but gone to zero. >> Yeah. No, totally.
53:37
Uh there's also some interesting local knock-on effects here in LA.
53:42
Uh Los Angeles implemented a mansion tax for uh houses in theory houses uh above 4 a.
53:47
5 million, 5 million, something like that.
53:51
Um but it applies to commercial properties as well.
53:56
So, apartment buildings that change hands have to pay something like a four or five percent tax.
54:00
And so, that's obviously going to hurt the amount of building because when you go to sell and transact the building, you're taking this 5% fee off the top, but uh it's also, yeah, putting pressure on existing onexisting uh housing stock.
54:18
uh and sort of is like an odd knock-on effect because voters obviously go and say like, "Yeah, if you can afford a $10 million house, you can afford a $500,000 transaction fee, go for it."
54:26
Uh and it was a very popular uh bill or or or change the law, popular tax.
54:32
Um a lot of people would be like, "Wait, my my apartment is going to be taxed, too, because I just live in a building that's over $5 million in aggregate."
54:41
Like, this is maybe not what they wanted.
54:43
And so, who knows where that goes, but uh people are disappointed.
54:47
Uh anyway, moving on to Crowd Strike. Your business is AI.
54:52
Their business is securing it.
54:54
Crowd Strike secures AI and stops breaches.
54:59
>> America's newest trophy asset is a country home and the Cotswalds.
55:04
Cotswalds, can never pronounce that properly.
55:06
Uh Harry and Megan's return to the UK has put the region in the spotlight.
55:10
A bevy of US buyers are looking for homes in the area.
55:15
uh not very American to buy or invest out here.
55:18
Strange to see that it's becoming a sort of an American investment trend.
55:26
>> Well, everyone saw what Paul Graham did and they said, I want to be like that, you know? I want >> That's right. >> I want to putter.
55:32
>> Um are you interested? >> Absolutely not. >> Yeah. >> Next next story. Moving on.
55:43
A modern home in Silicon Valley, though >> lists for 44 million.
55:45
Sort of the Cotswalds of America. That's right. Silicon Valley.
55:49
Five-bedroom house which features four distinct courtyards, a pool, and is the most expensive listing in Palo Alto, California.
55:55
Now, I want to do a little tier list as I read you the various features.
55:59
I want you to put them in buckets from F tier to S tier.
56:01
So, I'll read through the article and I want you to quickly assign each feature of this $44 million PaloAlto home a tier.
56:13
So, for years, tech entrepreneur Asher Wald Fogle and his wife Helen Mlean dreamed of building a modern house in Palo Alto.
56:20
The couple, however, worried about clashing with the Mediterranean style architecture typically associated with their neighborhood of old Palo Alto.
56:27
So, they tapped an architect to design a home that paid homage to its surroundings with stucco, mahogany, and titanium zinc platting.
56:35
Where does titanium zinc platting go for you? Kick it off. You like it? A tier. A tier.
56:44
Okay, we're leaving some room for an even better feature.
56:46
They spent 20 million over several years battling a house. Completed in 2005.
56:49
So, now looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for 44 million.
56:55
Uh WGold is an angel investor who co-founded Redback Networks, a telecommunications equipment company.
57:02
Uh McClean previously had a career in fundraising.
57:03
The couple purchased the roughly >> career in fundraising. Let's go.
57:08
>> Generational run in fundraising.
57:08
Uh so the couple purchased the roughly 0.
57:12
4 acre site in terms of lot size. Where are you putting 0. 4 acres? Is that enough? F tier. F tier. Wow. Okay.
57:20
You need at least 30 acres to really make a make a splash and earn st here.
57:26
Um, they demolished the circa 1930s Spanish colonial home.
57:32
The house they built pinw wheels around a central staircase.
57:34
What do you think about houses that pinwheel around central staircases?
57:41
>> Uh, I like classic California one-story ranch style homes.
57:47
>> You don't want a staircase staircase at all because the alternative is two staircases.
57:50
is you have a front staircase, a main entryway, and then a back staircase.
57:53
This is a central staircase, but you're no staircase guy.
57:57
So, where is >> once once the kids are are grown up, >> then you introduce the staircase?
58:04
>> I could explore it, but for now, I'm putting it uh staircases in general going in D tier. >> D tier.
58:09
Okay, staircases are out.
58:09
Uh it has it has 7,900 square feet of livable space. Where does that go?
58:20
uh split across multiple floors. Uh I'm going uh B tier. >> B tier. Okay.
58:26
Four distinct courtyards. Are you a courtyard guy?
58:32
>> Problem with courtyards is like they're they're very cool in theory, but how often are you actually >> like it's really just like a >> it's really just it's like a feature that goes unused. Sure.
58:42
I feel like the average courtyard gets like five minutes of someone's time annually. Right.
58:46
So, I'm hearing like a C tier. >> Uh D tier. >> Dt tier.
58:51
Brutal for the four courtyards. What about the pool? It's got a pool. Where are pools for you?
58:58
>> Uh pools are still underrated. >> Okay.
59:00
So, what >> a lot of people would say pools properly rated.
59:03
Everyone thinks they're great.
59:03
I think they're better than than the average person thinks a pool is. >> I'm hearing S tier. Is pool is S tier. Okay.
59:11
>> We need to I want to see what the pool looks like. >> Okay.
59:13
Uh key feature of the home is a cast inplace concrete wall or spine. What do you like?
59:19
Do you like a spine in your house? Concrete wall.
59:21
Two stories high, 80 ft long.
59:24
There's a little bit of >> I like it. I like it.
59:27
Some sort of a continuous theme through the home. >> Yeah, >> I'm into it. >> Btier. >> Btier. >> Btier. Okay.
59:34
Uh he said his wife uh and him are thinking of the next phase of life.
59:39
They also have a home in Sun Valley, Idaho. >> S tier.
59:44
second home in Sun Valley is Sier. Okay, Sier.
59:47
>> Right now, they're trying to emotionally let go and decide what to do next.
59:48
Uh Palo Alto is the center of e venture capital and tech startups in Silicon Valley, home to some of the country's biggest tech titans.
59:56
Sales volumes and prices are rising with a median sale price of $3.
1:00:00
5 million for the three months ending in August, up 5. 8% year.
1:00:06
>> Yeah, it's tough to get excited about this home in LA.
1:00:07
This is like a probably >> $12 million home depending on where it's located.
1:00:14
>> But over there it's >> But over there like apparently it's S tier.
1:00:18
>> Yeah, >> apparently it's S tier.
1:00:21
>> Well, someone will pick it up and hopefully they enjoy it.
1:00:23
Hopefully they're into courtyards.
1:00:24
They're into concrete spines in their homes. And that's right.
1:00:28
They they make it >> a wonderful location.
1:00:31
>> I think it's that time. >> It is that time.
1:00:32
Let's bring in John Arnold, co-founder, co-chair of Arnold Ventures. >> Welcome to the show. How are you doing? >> What's going on? >> Doing great. Thanks for the invite.
1:00:43
>> Yeah, thanks so much for hopping on.
1:00:43
Um, I would love to start with just a little overview of your career since uh it's been a fantastic journey following it from afar and hearing you describe it.
1:00:54
But for uh for our audience, um h how do you tell how do you tell the story these days? >> Yeah.
1:01:02
So my first job out of college was at Enron.
1:01:05
Um so going there as a 21-year-old, it was kind of got there in 1995.
1:01:11
Um if you remember, company went bankrupt in December of 2001.
1:01:14
Um and I was there too and through bankruptcy and it was kind of remarkable uh ride up and a very educational um and sad ride down >> and probably learned more on the latter than I did on the former.
1:01:29
But um came out of there, we can talk a little bit more about that if you want to, but came out of there and tried to decide what I wanted to do next.
1:01:36
Um you know, kind of really wanted to run my own division of something.
1:01:42
I was running a trading desk at Enron.
1:01:44
I was, you know, in very quick order had become the head trader at Enron, which was the largest natural gas trading firm in the country.
1:01:52
Um, so I kind of had that top seat in the industry and and I I wanted to kind of take the next step and run a division of something and so looked at, you know, should I do this at a bank, should I do it at an energy company, at another hedge fund, but I got the chance to um to start my own hedge fund.
1:02:10
There was got approached by a few people and said, "We'll back you if you want to go do your own thing."
1:02:17
And >> yeah, why were you why were you why weren't why wasn't your immediate impulse Most of the people that come on the show for better or worse are like I couldn't ma imagine working for anyone but myself why why were you more excited initially about running a division at a at a bigger sort of platform? >> Yeah. Yeah.
1:02:40
So I think the question was, you know, how much of the information flow that I had at Enron that kind of helped create this kind of very profitable desk there could I replicate on my own?
1:02:53
>> And if you could replicate 95% of the information flow, did that translate into kind of 80 or 90 or 95% of the profitability >> or was the last 5% was that all of it? Right.
1:03:10
Did 95% of the information flow mean that you got 0% of the profitability? >> Yeah. Yeah.
1:03:15
>> What was the information flow at Enron in natural gas in 1995?
1:03:21
Did you know that you were stepping into an organization with uh strong footing there?
1:03:25
I I I I know the later years pretty well, but I actually don't know what the the brand positioning was to attract a 21-year-old at that time. >> Yeah.
1:03:38
So if you look back at the history of the natural gas industry um and like many industries in American history at one point at one point it was very highly regulated >> to the point where the United States set the price of natural gas >> um and you had producers who would go produce it and they would say like you know if you produce gas you get X dollars for it. Mhm.
1:04:00
>> It was viewed as, you know, h as an industry having some monopolistic characteristics and those characteristics were mostly around the pipelines, right?
1:04:08
So there's, you know, not necessarily three pipelines between point A and point B and it's more of a monopoly type of industry.
1:04:18
>> Um, and so over the years of that kind of government price setting, as you can imagine, uh, has a lot of downsides.
1:04:23
And so sometimes you would end up with shortages, sometimes you would end up with surpluses.
1:04:28
And so kind of starting in the 70s under Carter and then continuing with Reagan in the 80s, you know, you had a deregulation of a number of sectors including natural gas.
1:04:37
And the way that gas was deregulated was said that the the production of natural gas is a competitive field.
1:04:46
>> Um the end use of natural gas is competitive, but interstate pipelines are kind of monopolistic um at times and should be federally regulated.
1:04:56
>> And so kind of that happened.
1:04:56
Um, Enron at the time was this integrated natural gas company and all of a sudden, you know, you have, okay, you have a pipeline division that has Chinese wall between kind of the production side and the enduse side.
1:05:09
>> And kind of much like a bank now all of a sudden you have to somebody has to be that intermediary between the two.
1:05:14
And so you have a producer producing gas in South Texas, you know, a certain amount wants a certain pricing mechanism over, you know, certain time period and an end user someplace else who wants kind of different characteristics about how their gas is priced and somebody had to get in the middle of that.
1:05:33
And in fact, Enron's kind of first business coming out of this deregulation was kind of Enron gas bank.
1:05:39
Again, very similar characteristics to what a bank does.
1:05:42
Um, and so this industry was really kind of getting started in the in the late 80s, early 90s.
1:05:49
And you know, when I got started in '95, you I had the benefit of, you know, this was not a highly mature industry.
1:05:55
In fact, it was still trying to find its legs.
1:05:57
And so, as a young guy coming in, you know, I wasn't that far behind um because everybody else was kind of starting starting a fresh as well. >> Yeah.
1:06:06
How did you process the the the famous Enron pitch to commoditize and trade bandwidth?
1:06:12
Did that like were there other people that were like ah they might be too homogeneous of a market?
1:06:19
I don't know if it can be commoditized or or was there at least some glimmer of hope there? >> Yeah.
1:06:26
Oh um maybe luckily this was not my area.
1:06:28
Um but but I think there was kind of this notion that um by pro by kind of pricing and managing risk and connecting the producer of a commodity with the end users that you could create value. >> Mh.
1:06:44
>> And so you know it started for Enron and natural gas although you know the commodity markets you know had existed long before that.
1:06:51
Oil had been a traded commodity for a long time.
1:06:54
Um but electricity started to get deregulated and Ron kind of moved horizontally into that.
1:07:02
Um and then it started thinking about what other areas you know what about water, what about trucking, what about uh bandwidth.
1:07:08
Um and I think many of those you know had characteristics where you could tell an argument about how they could be a actively traded uh commodity.
1:07:19
Um but many of which I think when Enron got into them was a little ahead of their time and and didn't work out very well. >> Sure.
1:07:27
Um can you tell us the story of the all the options that were open to you post Enron?
1:07:33
Uh there's the famous story of of uh Ken Griffin and Citadel coming in and I'm wondering like going back to that pitch of like the the thing that a platform can offer the the the actual profit pool that's available like how was that articulated and how did you make a decision there ultimately? Yeah.
1:07:53
So, you know, I think around this time there had been kind of a number of hedge funds that were doing these arbitrage type strategies.
1:07:59
And so, like Ken Griffin famously got started with convertible bond arbitrage.
1:08:05
>> Um, and there were kind of a number of those strategies, but uh, you know, they were limited in number.
1:08:10
Um, as they were successful, more capital came into them >> uh, and they started to get armed away. >> Yeah.
1:08:18
Um, and so the returns for the hedge funds that were doing this were starting to decline and their assets were were increasing.
1:08:24
And I think a number of those hedge funds kind of had realized that they needed to start moving a little bit further out on the risk spectrum.
1:08:32
Take more risk rather than doing kind of pure arbitrage type uh trades.
1:08:38
>> And you know the most aggressive uh of of that was Citadel.
1:08:41
um and to the extent where whenever Enron went bankrupt, I think Citadel was already interested in the commodity markets um was already, you know, kind of trading some of them, but they viewed uh kind of the Enron collapse as a great catalyst in order to get into it.
1:09:01
>> And they sent a whole team down to Houston, kind of set up offices in the hotel across the street from the Enron building and just started interviewing almost everybody on the floor.
1:09:10
and they were just kind of recreating, you know, what was the edge that Enron had, what was the org chart, who was doing what, who were the real kind of value creators of the field.
1:09:21
And, you know, I I could kind of see what was happening.
1:09:25
I didn't really want any part of it.
1:09:26
Uh, and so I kept kind of, you know, the recruiter was calling me, uh, will you come talk to us?
1:09:33
Um, and I saw people around me were doing that and I just said no.
1:09:36
U and then there was um kind of a weekend trip with a kind of industry trip. I was headed to Aspen.
1:09:45
Um Ken Griffin called me at at the airport and says, uh you know, can I talk to you?
1:09:52
I said, I'm actually headed to Colorado right now.
1:09:57
Um he calls back a few minutes later and says, "If I if I come to Colorado tomorrow, will you meet with me?" I said, "Of course."
1:10:02
like if if you're going to put that effort out, you know, then you're serious about it and I'll meet with you.
1:10:07
Um and you know, had a great conversation with him.
1:10:09
Um had great respect for him, great respect for the Citadel organization, but kind of by that point I realized that, you know, the economics for me would be better if I did my own thing and that kind of the the real value that they could provide me is capital on day one.
1:10:26
And if I could raise that money, then uh I should do it on my own.
1:10:33
How did you think about uh risk when you were getting your firm?
1:10:36
You know, maybe in the first three years of building your own firm, having gone through uh been able to experience at least participate in um uh be involved with a firm that that experienced total collapse.
1:10:50
I feel like that probably does something to your psychology.
1:10:53
At the same time, you were quickly able to put up the kind of returns that typically will would take a manager taking on, you know, extreme levels of risk.
1:11:04
Uh, but I imagine that was uh probably priority number one. Don't blow up. Uh, don't blow up.
1:11:13
>> Yeah, I think that's priority number one for anybody managing money is don't blow up.
1:11:17
and you know, especially if if you think you have an edge.
1:11:20
Um, and then there's real value in getting to come back tomorrow and play again.
1:11:25
Uh, and so the biggest challenge was, you know, coming from a corporation using a corporate balance sheet and not really thinking about capital usage.
1:11:35
thinking about capital usage. to now all of a sudden I have, you know, just a an investment account um with x amount of dollars in it and I got to stay um under that in terms of capital usage um as well as you know thinking about what's the right value at risk that I should be running >> and these markets you know the natural gas market especially in that time um
1:12:02
could be exceptionally volatile >> and so there there was huge risk in um there was huge tail risk and that created a lot of the opportunity was that you know there were there was uh you you could get paid if you had capital to provide some insurance at times um but to do it smartly to size it correctly so that whenever you had to pay out on that you could again show up the next day. Um,
1:12:26
Um, but you know, I think that the the biggest challenge for me was this transition from corporate balance sheet to running my own money.
1:12:39
>> Um, does I I mean, we I think most people have heard the story of how you made your first dollar.
1:12:44
I'd love to have you uh tell it again, but I'm wondering if there's actually like a true lineage between your, you know, trading baseball cards to running arbitrage at Enron in 95 or are these are these sort of uh just coincidences that these two things happen or do you think that there is a clear line between like what it takes to make it as a trader showing up early in your life? >> Yeah.
1:13:09
Um, you know, I actually think that there were a number of similarities between between these two things of kind of trading baseball cards and trading natural gas.
1:13:17
And, you know, to some extent, you know, sports cards are a commodity, maybe a little bit less so today is there so much specialization.
1:13:27
There's the one of one card or one of 10 cards, you know, trying to trying to make them not commodities.
1:13:31
Um, but back then there they really did feel like commodities and you know I made money by knowing you know what every product was worth at every moment. >> Mhm.
1:13:46
And so I kind of connected, you know, when I was 15, 14, 15 years old, uh, you know, through this dealer network that was on, you know, of an early bulletin board, um, that kind of connected dealers around the country and into Canada.
1:14:02
Uh, and I was one of the few guys in Texas.
1:14:05
And so there was a lot of kind of geographic arbitrage that that I was doing.
1:14:09
Um, but also just, you know, that the the prices were volatile.
1:14:13
They would change week to week and if you knew what a product was worth in New York that week, you could go around and, you know, buy things cheaper and send them up to New York and make that money.
1:14:29
Um, and so kind of that notion of know what every part, what every product within the industry is worth at all times.
1:14:39
um certainly stayed with me and was a skill I used throughout my trading career.
1:14:44
And I think the second part was kind of just this entrepreneurial aspect of, you know, that that I wanted to do my own thing.
1:14:52
>> Um and you know, it kind of took uh took some courage, you know, at age 27 to go out and start my own firm, you know, hire people.
1:15:01
I kind of put most of my my capital at risk uh and just say let's give it a shot and if it doesn't work out I'm still young I can go do other things but let's give it a shot.
1:15:14
>> It feels like there's a sort of fork in the road that's been intentionally designed to potentially take advantage of of young people where you can get into sports which are fun.
1:15:25
I mean, every kid plays sports as a kid, pee-wee football and little league and AYso soccer or whatever.
1:15:32
Um, and then you can >> you can get into cards.
1:15:34
You get into cards and you get natural gas trading or >> not even getting into cards but the sort of digital representation of cards that that you know function as >> as slot machines and sort of fully disconnect the >> the sort of like passion for the thing from from the just sort of like finan you know it just becomes purely sort of a financial >> activity. Yeah.
1:15:58
Um, and we we were talking earlier on the show how um, you know, I feel very lucky to be, you know, a uh, >> you didn't hit the gambling bug. >> Yeah.
1:16:10
I, you know, as as a as a 30-year-old, I by the time we entered this sort of era of hyper gambling and everything becoming a casino, you know, my prefrontal cortex was, you know, developed and I I could say like, you know, maybe that would be fun or or maybe maybe there's some money to be made there or or loss, but it's not for me either way.
1:16:30
Um but uh but it feels like there was there was maybe a beautiful moment where you could just be into trading cards and then establish a business, you know, arbitrageing. >> Yeah.
1:16:42
>> Um but not go down this crazy road.
1:16:45
>> The the industry was much less of kind of the the the lottery system that I sometimes feel it is today, >> right?
1:16:54
you you know there was a card that was just pulled uh a couple months ago that got auctioned today or yesterday for $8 million.
1:17:00
This Cooper flag card, right?
1:17:03
And so someone, you know, buys a pack of cards, gets a an $8 million lottery ticket in there. >> Yeah.
1:17:11
>> Um and I think it's there is this kind of waterization of much of society.
1:17:13
You see this in a lot of financial markets today, right?
1:17:19
I >> it's not sexy to kind of buy the index fund and just sit on it.
1:17:25
And it's >> as the the markets have progressed, you've gotten to shorter and shorter time frame trades. >> Yep.
1:17:36
>> Um that are more the binary nature of I either lose one or I make 10 >> and that have a lot of characteristics of a lottery. Okay.
1:17:43
And so, you know, back 20 years ago, this was day trading.
1:17:49
And, you know, there was, you know, there was only so much risk out there.
1:17:54
You know, that was more of one for one.
1:17:56
You could make one, lose one.
1:17:56
But then, you know, financial quote unquote innovation happens and people come up with um products that allow you to take a lot of leverage um either through options or through just straight leverage.
1:18:08
And so kind of you can put a dollar up and try to make 10 or try to make a hundred.
1:18:13
Uh and there's this kind of whole conflation between investing and trading and gambling >> and there's always been some gray area across those but you open up a Robin Hood app today and it's you know do you want to you know do you want to day trade?
1:18:33
Do you want to buy zero day options?
1:18:34
Do you want to gamble on the sports game tonight? Mhm.
1:18:39
>> Or do you want to buy the index fund?
1:18:41
And it's got kind of all presented as this is all investing.
1:18:43
Uh and I think that's really really scary message that we're teaching you know the 16 18 20 year olds today.
1:18:53
>> Are you so I I I think uh the ton of agreement there.
1:18:57
I'm interested in where this goes forward.
1:18:59
Obviously there are things individually you can do just like you know stay away from the aggressive gambling products.
1:19:06
there are things that you can do in your community encouraging people not to not to take on unnecessary risk and stay with the the safer investments.
1:19:15
Uh on a national level there is a conversation about uh regulation restricting banning more aggressive financial products.
1:19:23
There's another side which is maybe fund more education to teach people about this is sort of what we did with cigarettes where there was a lot of regulation for who could buy them but also a lot of education where pretty much everyone knows that they cause cancer.
1:19:40
there's labels on there and uh and I'm wondering if you're if you're more optimistic that we get out of this with an education strategy or through a regulation strategy or is there is there no hope and it's every man for themselves and they have to resist the temptation individually. >> Yeah.
1:20:00
You know, education strategies take a long time. >> Yeah.
1:20:03
Um, and you also kind of have some vices that kind of catch on like wildfire and will eventually burn themselves out.
1:20:15
>> And you you can look at a lot of illicit drugs will have >> that type of characteristic. >> Yeah. >> Right.
1:20:21
Um, and regulation's always going to be slow, but I think it's faster than the education side. >> Yeah.
1:20:28
I think the scary thing today is that there's a number of products that have um kind of been again innovated to be uh of a higher intensity and easier access. >> Yeah.
1:20:44
>> Than what they've ever been in the past.
1:20:46
And the challenge is you regulation lags on those.
1:20:50
And so you can think about things like marijuana, right?
1:20:52
And like the the marijuana of 20 years ago is very very different than it is today.
1:21:00
And the access is much more available today, right?
1:21:01
And you can think about pornography, right?
1:21:04
The intensity of porn today is very different.
1:21:05
The access today is very different.
1:21:09
>> And gambling is the same way.
1:21:09
You know, you know, historically, you either had things that were high friction um and high speed of play.
1:21:18
So, think about like a slot machine where you have to go to a casino.
1:21:24
Oftentimes, that meant getting on a plane and going someplace, right? And you sit down.
1:21:28
You could pull, you know, the arm of the the uh slot machine pretty quickly.
1:21:34
In fact, they >> it was too slow, so they made it a button.
1:21:38
So, you could just sit there and boom, boom, boom, boom, boom. Right.
1:21:39
Um, but there was friction on high speed of play.
1:21:43
Or you had something that was low friction like I could buy a lottery ticket at the supermarket when I'm, you know, buying my meat, but it's low speed of play, right?
1:21:51
I buy my ticket, you know, I wait 8 hours or 3 days or, you know, I find out whether I want or not. >> Yeah.
1:21:57
Trading trading cards now, you can buy a pack of cards, but you don't have to wait for them to arrive with you to know what you got and you can decide, I don't want any of them.
1:22:04
I'll just roll the dice again. >> Right. >> Roll the dice again. Yeah.
1:22:07
And and so what gambling is today, right, with with kind of the phone access through the phone and being able to I don't even want to wait three hours and figure out whether my team won or not, right?
1:22:19
I can bet on the next pitch.
1:22:23
>> I can bet on every play, right? One minute mark.
1:22:27
>> Do you think Bitcoin will go up or down over the next one minute? And so that is >> next. Yeah. >> Yeah.
1:22:33
That is effectively a binary option on one minute which is is fairly fairly close to just a pure slot machine.
1:22:39
Uh but regulated very >> flipping a coin, right? >> Yeah. Flipping a coin. >> Exactly.
1:22:43
Because no one has information on on on a minute-to-minute basis.
1:22:45
I mean maybe something else, but um yeah, certainly not the average gambler. >> Yeah.
1:22:52
>> Yeah. And and so you you're mentioning earlier just about you know luckily this is happening when you know we're older but >> you know I have a teenage boy and teenage boys are kind of the most susceptible to these things
1:23:06
>> um and there's you know tens of millions of teenage boys out there >> um who are all getting drawn into these products and uh I think there's real risk to society and so the question is you know what's the right way to allow access to products Right? I have
1:23:20
I have libertarian bones in my body. Right?
1:23:24
Like I I think you know we need to be careful about >> banning access to products but you know what are the right and smart guard rails to put on them. >> Yeah. >> Yeah.
1:23:34
In some ways, um, in some ways, uh, multiaceted approach to regulation would would help a lot of companies that are in positions where the the the the right thing to do for shareholders is actually to make the gambling product, right?
1:23:51
Um, and we've seen this because there's investing apps now that make more money from, you know, gambling products, whatever they want to position them as, than stock trading.
1:24:02
And we even saw four months ago there was there was a series of headlines around how Meta was exploring building you know prediction markets which um you know I always felt was was completely at odds with their stated goal and and mission but at the same time um you can
1:24:22
make the argument as a as a Meta shareholder that you know they have a lot of attention there's people that are making a bunch of trades based on information they get on Meta and that product should be integrated into the product because it's generally legal, right? Um and it and it just feels like
1:24:35
Um and it and it just feels like um companies in in many categories will get punished by not rolling out these products because their competitors will and they will, you know, onboard more users and generate more revenue and be able to spend more money on marketing and and it's sort of this like really really vicious cycle.
1:24:52
And so I've gotten to the point where I I pretty strongly believe that a lot of this stuff needs to be um uh pulled back or or or or banned.
1:25:04
Of course that sort of human desire and energy to speculate will just naturally flow to other places, right?
1:25:11
You saw in some ways the AI trade over the last year sucked a lot of the wind out of the sales of like crypto, right?
1:25:16
there was like way less appetite for Bitcoin when you can make 10x on some bottleneck trade.
1:25:24
>> I did want to get to as much as I want as we could spend hours talking about um uh the our our casino world.
1:25:29
I did want to >> get your point of view on on how you've processed the overall sort of AI super cycle.
1:25:37
Um there's so many different elements of it that I'm sure you've drawn you have experience in through uh you know the early 2000s in that period whether it be uh obviously energy markets coming into play in tech for for the first time in a in a really meaningful way.
1:25:55
uh massive, you know, capex and and debt cycles and seeing some of some of these companies that have um historically had pristine balance sheets, you know, figure out all these um you know, super complex structures.
1:26:08
Uh and then I actually want to get into compute markets as well and how we should be thinking about that from your point of view, but but maybe start how you've processed the the sort of the last five years and and maybe your mental model for where we are today. >> Yeah.
1:26:25
Um, you know, I I probably, you know, started talking to people in this space in around the 2020 2021 time frame.
1:26:32
Um, and then kind of like everybody in in 22 was, you know, kind of surrounded by it.
1:26:42
Um, what I'm amazed at is the number of predictions that came true. >> Yeah.
1:26:48
And when I heard it as a guy that's kind of outside of the tech world um that uh that it just seemed far the growth that they were projecting that that they were saying that things would keep scaling forever. >> Yeah.
1:27:06
>> And tech people have been wrong so many times VR and flying cars and self-driving and NFTTS and all this stuff.
1:27:13
And then this was the one where it was like, oh, again with the crazy predictions and then it's been right on track. >> Very different. >> Yeah.
1:27:20
And that and that you could keep scaling, right?
1:27:22
And that you would never hit that plateau. >> Yeah.
1:27:26
>> Um and kind of again like in every other field, you know, you you hit plateaus, you start getting kind of significant decreasing marginal returns. >> Yeah. >> Input.
1:27:37
Um, and you know that that was kind of my expectation of how this would play out.
1:27:44
Um, and and it certainly hasn't.
1:27:46
And so, um, I think I've been open to the possibility but skeptical. Mhm.
1:27:55
>> Um, and now whenever the whenever the big money was coming into data centers a couple years ago and you had kind of the calls for the bubble, uh, I was, you know, I think my view was just because a lot of money's coming in doesn't make it a bubble, >> right? >> Yeah.
1:28:16
>> Now, it is true that you know, you always say it's different this time, right?
1:28:21
And occasionally it actually is different this time.
1:28:24
And the real test for the industry is, you know, can you find useful products and services that people are going to pay for?
1:28:32
And if so, it works out great.
1:28:34
And if not, there's going to be overinvestment.
1:28:36
I I I do think that kind of every commodity market, you know, goes through these booms and busts.
1:28:43
And that's because you have the producers see the same price signal.
1:28:48
signal. producers and end users see the same price signal at the same time and typically react in the same way and so that creates you know whenever prices are high people increase investment uh there's a delay before that comes on oftentimes the end users have figured
1:29:08
out ways to kind of optimize their demand or to find substitutes and then you get that bust that happens because too much capacity shows up in the future And I think that's the big risk now with data centers is that kind of every every megawatt that's been built thus far like keeps being worth more, right? And and it's a kind of a highly
1:29:30
And and it's a kind of a highly backwardated curve where if you can provide compute tomorrow that's worth a lot of money, compute in two years is worth less.
1:29:40
Compute in five years is worth a lot less. >> Right?
1:29:43
But everybody is seeing that that um if I can build today and supply today, I can make a lot of money by even renting it out in the short term.
1:29:50
And I think the question is is everybody overbuilding a little bit because they look at the same price signal and say, you know, even if we overbuild, we're okay because we can sell it to somebody else. >> Yeah. >> Yeah.
1:30:07
or even or even you know you can imagine some of these models saying well yeah you can discount the rate by 60% and we're still we're still making you know we're still going to be making money here so of course there's that should be plenty of margin of safety when in reality you could see a much larger you know drop depending on how how how much of an over supply there is. >> Yeah.
1:30:32
Have you uh have you been able to tease out the impact of AI on markets from other uh factors?
1:30:40
I mean, we were looking at uh uh 10-year 10-year interest rates are at, you know, very high.
1:30:48
There's been a big spike over the last 30 days.
1:30:50
All the tech people are sort of saying, look, it's evidence that data centers are just too good.
1:30:55
And so, everyone's investing there.
1:30:57
At the same time, there's a war in Iran and so that might be a bigger factor.
1:31:02
Um, but even in the GDP numbers, it's very hard to actually get to a ground truth of the impact on productivity.
1:31:09
The internet famously never really showed up in the pro productivity statistics.
1:31:13
An incredible amount of me wealth was created.
1:31:17
So, how do you think about teasing out the different effects?
1:31:19
Does it even matter or do you have a process?
1:31:23
Do you have a view right now on how much growth or or effect on markets AI is actually driving?
1:31:30
>> Yeah, I I think it's really hard.
1:31:30
Um I think you did a great job kind of setting the stage for um for the difficulties the field is having.
1:31:40
>> Um you know, I think >> the financial world and economists are notoriously just very bad at predicting interest rates and inflation. >> Yeah.
1:31:51
Uh and it's even hard to describe, you know, why have rates spiked so much just in the past month. >> Yeah.
1:32:00
>> Um and part of this is, you know, they probably, you know, there were times when everybody was scratching their head about, you know, why are rates staying so low for so long?
1:32:10
>> And now it's kind of the opposite that, you know, inflation is manageable at least today, right?
1:32:15
Kind of at, you know, that, you know, two and a half 3% levels.
1:32:21
um you know having the 10-year you know what 520 or so today um it it seems like those rural interest rates are at a level that I think people many economists uh were doubtful that that they would see again. Mhm.
1:32:37
>> Uh and so I think the question is this is how much of this is being driven by the AI super investment cycle. >> Mhm.
1:32:45
>> And is there just too much demand for capital because there is both all the sovereigns are issuing enormous amounts of debt as well as all everybody associated with the AI industry is trying to do the same. >> Yeah.
1:33:00
Um, you know, I think there's it's always easy to kind of assign causation after the fact.
1:33:06
Uh, but yeah, trying to predict where this is going in the future, you know, there's it's uh ended the careers of many a trader. >> Yeah.
1:33:15
How do you think about the bullwhip effect?
1:33:17
Uh, one thing that a lot of uh tech insiders have been pounding the table about is why isn't TSMC building new fabs fast enough?
1:33:25
We finally got AI working.
1:33:28
It's going to continue to increase and scale, scale, scale forever. Uh Nvidia is ramping up.
1:33:36
Everyone's fighting for chips and yet we can't seem to get TSMC to mention AI on an earnings call.
1:33:42
They're starting to uh but they've been burned before.
1:33:45
And I'm wondering if there's parallels in other markets that you've seen and how do you actually think about the the the nature of that bull whip when it actually comes around?
1:33:58
Yeah, and I I think that's exactly it, right?
1:34:00
right? that you know if you're a commodity producer like you know the memory chip companies you know kind of are um after you've kind of fallen for this you know the boom bust you you know that you expanded capacity at the top of the market and again like every all your competitors saw the same price signals and did the same thing and you know you
1:34:22
have that bust and that bust just causes so much financial pain >> um that that at some point you you're like, I'm not doing this unless you, my customers, are going to sign, you know, a three or five year offtake agreement at prices that pay for the whole factory and then some such that if we've overbuilt, you know, that's on the customer, that's not on me. Um and you
1:34:44
Um and you can certainly understand why a couple years ago, you know, all the hyperscalers were asking memory companies and the chip companies to increase production, increase capacity and you know because it would be beneficial to the hyperscalers who were buying this stuff and the producers were just saying like we're just much more hesitant. >> Yeah.
1:35:09
>> To do so because again like a couple years ago AI could have gone a number of different ways.
1:35:13
Um, and you know, it's gone the bull case to date, but you know, where it goes from now, I don't think these companies want to bet their their future on it.
1:35:22
Um, and you've seen the same thing kind of in the oil markets where I know the reaction to high prices, the industry um, interest and investor interest in funding uh, kind of recycling all the money back into drilling is much lower than it used to be.
1:35:39
>> And investors are saying like we fell for this in the past.
1:35:41
like whenever you're making the big returns, pay them out to investors.
1:35:47
>> Can you uh sort of reality check me on my history around the shale revolution?
1:35:53
I'm interested in could that have happened anywhere other than the United States.
1:35:57
How much of it is a technology story?
1:35:59
How unpredictable was it?
1:35:59
Because right now in tech, everyone's talking about energy.
1:36:04
People are talking about nuclear capacity that might come online in 2030, 2035.
1:36:11
uh if it comes I don't think it will be a surprise to the technologists who have been raising money and and you know proitizing and and evangelizing for nuclear.
1:36:22
Um but from my perspective as like an energy outsider uh the shale revolution looked like something that was an unexpected boon to uh energy in America.
1:36:33
But what was it like on the inside? >> Yeah.
1:36:37
>> Yeah. So yeah, the the shell shell volumes yeah have really been over the past 20 years >> but this is you know this industry kind of got started maybe 50 years ago okay >> so in the 70s uh federal government started investing in the technology you
1:36:56
through some basic science grants >> um in the 80s George Mitchell who was really the kind of the grandfather of this industry >> um started investing and doing some um you know using his you know his company's capital to go test wells. >> It was really in the '9s whenever George
1:37:14
>> It was really in the '9s whenever George Mitchell kind of came up with the slick water fraction, sorry, fracking. >> Yeah.
1:37:22
>> Um that >> uh that you could see well start to become economic >> and the industry kind of had the bonus of the commodity boom that happened in the 2000s.
1:37:33
um kind of culminating in 2008 when natural gas got to $13.
1:37:36
5 um versus the $3 it's at now, oil got to $147.
1:37:46
Um where kind of a lot of those wells even though they were expensive to drill, you know, were economic and that's when kind of that 2005 to 2008 period was really where uh kind of the the shell started to work. >> Yeah.
1:38:01
um you know the the technological triggers had happened and you had high prices.
1:38:08
>> Um and then the 2010s you had kind of the industry really start to figure out how to do this at scale and get all the benefits of coming down to the learning curve and the benefits of going from you know drilling you know a well here and a well there to really kind of turning this much more into a manufacturing process.
1:38:28
Do you think >> and then 2020 is it's now a mature industry.
1:38:32
So you know it was 50 years in the making and um you know I think the question is on nuke what happens right um in many ways.
1:38:40
Oh yeah, >> like there are there are aspects in which United States um is very conducive to the nuclear industry, right?
1:38:46
We have very robust capital markets.
1:38:49
We have a lot of great tech technologists here.
1:38:51
We have a lot of land in the United State United States, very deep electricity markets.
1:39:00
So if you come on with a gigawatt of power, Sure.
1:39:03
>> you can place it very easily. >> Yeah.
1:39:05
>> And you have bipartisan government support for the industry. >> Sure. >> Right.
1:39:09
So like all those things are working for it and the downside is that the US actually has fairly cheap electricity. >> Yeah. >> Right.
1:39:17
We have fairly high cost of labor especially kind of the craft labor >> and you know you and to build a nuclear plant requires a lot of labor at least today.
1:39:28
>> Um you know citing anything is hard in this country. Mhm.
1:39:33
>> Uh and you have this kind of very bifurcated utility system.
1:39:37
We don't have a national utility.
1:39:42
>> Uh it's it's kind of state by state.
1:39:45
It's utility by utility and you have they're investorowned and you know does the investor get the benefit of this?
1:39:52
They certainly get a lot of the risks.
1:39:54
>> Um and then last I think we just don't have the workforce that's trained on in this field today.
1:40:00
And so like in some ways like maybe the optimal thing is we develop the technologies here and they get built somewhere else where it's just easier to build and cheaper to build.
1:40:12
>> Yeah, we've seen that with a couple nuclear companies that have done their first plants in Southeast Asia and internationally and seen uh opportunities elsewhere.
1:40:19
But I'm I'm certainly hoping for it to hit America.
1:40:23
I have one more, but please Jordy, >> how have you processed the growth of the private markets and and the subsequent disconnect between the private markets and the public markets?
1:40:32
I' I've been >> personally having, you know, made at this point 70 odd private mark, you know, early stage investments over the last uh number of years.
1:40:44
last uh number of years. I've been really feeling like the inflation like inflation the feeling of inflation in the private markets where you have companies that are a 10 billion dollar company but only because there are a bunch of venture capitalists with $10
1:40:59
billion right and so you just have the these prices pushing up not based on the quality of the underlying asset or or the category >> um and I just so my head is really thinking about how long can you have this disconnect like the the the disconnect can't sort of continue forever at at with how extreme it is right now. Um and so I would expect it
1:41:20
Um and so I would expect it to correct sometime in the next two years maybe you know who who knows.
1:41:24
Um but but how are you processing it?
1:41:27
Yeah, we're certainly seeing that question right now in the kind of energy tech industry, right?
1:41:34
We're a year ago, you know, it's kind of probably the peak of almost exactly a year ago, peak of a lot of the SMR, you small modular reactor nuclear companies.
1:41:44
Um, and they've kind of been on a steady decline since.
1:41:49
>> Uh, and then a few months ago, you had, you know, Fervo go public.
1:41:51
Um, that, you know, had a great kind of first day, first couple weeks.
1:41:57
went public at a big number.
1:41:59
Um, and that's kind of gradually sold off.
1:42:02
You know, when Fervo went public, you know, a lot of companies in the kind of energy transition space thought that, you know, the IPO door was open, right?
1:42:11
And everybody called their banker.
1:42:14
The bankers call all these companies and say, "Okay, like get ready. We're we're going."
1:42:20
>> Um, and then, you know, everything is kind of sold off from there.
1:42:22
And now they're all getting the same message, which is, okay, the door closed really quickly.
1:42:28
And and now what do you do?
1:42:28
And you know, the the highs are higher in the public markets, >> uh, but the lows are lower, too. >> Yeah.
1:42:40
>> So, if you have these companies that, you know, still need to raise a lot of capital of going public, you know, if you catch it right, you know, can work out really well.
1:42:49
It can also kind of be handcuffs on you.
1:42:54
>> Um that if if your stock trades poorly from the you know from the IPO on um you know and you have to go do secondaries in the market um for a stock that's down you know 50 60 70%.
1:43:07
It becomes enormously difficult.
1:43:10
And so there's a lot of CEOs of kind of those energy transition companies who are now like trying to decide do we do we force this you know even take a lower valuation and try to get public or do we stay private and where we can have kind of more nuanced conversations we only have to convince a few investors to come in rather than the whole market >> more stable. >> Yeah. >> Yeah.
1:43:34
Yeah, the other dynamic that that is uh endlessly entertaining to me is companies repricing based on the category leader in their category.
1:43:42
So you saw this with SpaceX, right?
1:43:44
Like SpaceX is >> far, you know, is is probably like a thousand times more important than the next space company, right?
1:43:54
But every company right after the IPO starts to like repric in the private markets based on based on that and and you know you can see the logic from from the private market investors but but again there's those disconnects that that that have to be writed in the fullness of time like you can't no it doesn't matter how big your venture fund is eventually your businesses are going to price based on um market realities.
1:44:21
Um uh last question I had for you.
1:44:25
I I know we're over time.
1:44:28
Um uh how did you process the compute markets ban?
1:44:31
We saw uh recently we saw a couple prediction market players try to put up compute markets and apparently they got a tap on the shoulder from Washington uh and were asked to shut down um shut down the markets.
1:44:48
um seemed somewhat curious, but um how would you read into that?
1:44:55
>> Yeah, I I haven't followed this too closely.
1:44:57
I've always been, you know, somewhat the big question is is that compute is not a commodity where kind of where one data center is providing the same product as another data center, right?
1:45:10
And in order to have a, you know, a real tradable market, you either have to deliver into a certain product that needs to have a lot of buyers and a lot of sellers, you know, that are able to take that specific product to create and of a kind of an arbitragefree uh type of of um ecosystem.
1:45:36
uh or you need some type of index that the industry trusts that might look at across a number of different uh types of compute and say yeah you know compute that has you know characteristics in this range um the cost for that for the month of September is X >> and so yeah either a robust index or a kind of physical delivery product and I both are really challenging in this field of compute.
1:46:07
Um there just aren't that many short-term deals.
1:46:10
They um trans transparency into those is difficult.
1:46:17
The you know the the distinctions between the chips and the design of the data center um and all the specific needs is just different.
1:46:28
And so like trying to either come up with the physical delivery mechanism or the index that everybody trusts to be right is really hard. >> Yeah.
1:46:38
The other dynamic is just how much more valuable compute is to a couple companies relative to the the broader market >> um which feels >> quite different than than some of these other commodity markets.
1:46:50
I did have one my second final question and then we'll actually let you go.
1:46:55
Um how how much have you uh opened your mind to various uh sci-fi predictions given how correct many of them have been in the LA uh uh let's say from 2020 until 2015 until 2025.
1:47:11
So many of them sounded, you know, crazy at the time and and almost impossible things things happened that were almost impossible to predict and um given how correct many of them were, it's hard not to place way more weight um on them going forward except that they actually only get more insane from here, right?
1:47:32
And so you have to like take another uh leap of faith.
1:47:39
>> Yeah, it's it's a really interesting question.
1:47:41
I've I'm a natural skeptic.
1:47:44
I've always kind of been a bear trader.
1:47:45
I make more money when the markets are going down than when they're going up.
1:47:49
Uh I would be a terrible VC because of that.
1:47:51
And I would tell you all the reasons why this company's going to fail rather than why it's going to going to work. >> Sure.
1:47:57
>> Sure. uh you know I think you know getting to kind of an entrance into the tech sector that I've had of late um has helped kind of open my eyes and like you know rather than being naturally skeptical I try to be kind of naturally
1:48:10
open-minded to this >> but in terms of specifics um you know I think the the next 10 years could be crazy it could be a normal technology right and I think that's that's this huge question here and and I I try to keep my mind open to both of Mhm. That's
1:48:25
That's >> We're going to find out. One day at a time.
1:48:30
>> Yeah, >> just one day at a time.
1:48:31
Well, thank you so much for taking the time to come check it.
1:48:35
>> Really informative conversation. >> Do it again soon. >> Yeah, great. >> Have a great weekend.
1:48:39
Have a great rest of your day. We'll talk to you soon. Goodbye.
1:48:43
>> Uh let's move right into our next guest.
1:48:46
Uh we have Viswa Puru, the founder and CEO of Invetta with a huge fundraising announcement. Get that gong ready. Visa, how are you doing? Welcome to the show.
1:48:57
>> Thank you for having me.
1:48:57
Longtime listener, first time caller. >> Sorry for the delay.
1:49:00
We had to shift things around.
1:49:02
I'm so happy that we get to talk to you. Let's kick it off.
1:49:05
Jord's warming up the gong already.
1:49:05
Tell us about the most recent fundraising round.
1:49:10
>> The most recent round was a lot of capital to get a lot of medicines to people. >> There we go.
1:49:16
Uh, and a lot of a lot of >> 311 million.
1:49:26
>> I'm guessing I'll be back. >> Okay. So, yes.
1:49:28
What you're building, >> we're building the easiest way to describe it is think of it as a sequencer, but for life's chemical code instead of life's genetic code. >> Sure.
1:49:40
About 400,000 compounds have been discovered by the collective human endeavor from throughout history to now.
1:49:49
And it's expected that there's about 1 to 10 billion.
1:49:52
So 99% >> of what makes up you, a tomato in your garden or a random sample in the Amazon rainforest is still a mystery to science.
1:50:04
And that's because we've never built anything that can take a biological sample and answer two really important questions.
1:50:11
What are the molecules and what do they do?
1:50:13
So we've built the tech to do just that.
1:50:16
um talk about the positioning of the company as actually developing drugs going through FDA processes versus selling a software product to existing pharmaceutical companies or versus focusing on more general use artificial intelligence technologies.
1:50:35
How did you land where you did and what are the benefits of that of that approach?
1:50:41
As far as we can tell, throughout the history of the industry, there's only been one way to build a big company in this space, >> and that is to make and own drugs. >> Mhm. >> Right.
1:50:52
And even the biggest companies in this space are largely underpinned by cash flows from a single blockbuster franchise.
1:51:01
>> Something like 70% of Lily's EV is forward sales multiples of the GLP1 Plus family.
1:51:07
80% of novos is the same >> and 30% of seni is half of one a drug called dupixen for eczema. Wow.
1:51:17
>> So if you want to build a large and impactful drug company the rule is super simple.
1:51:21
Make drugs and make drugs that matter.
1:51:24
>> Give me some timelines.
1:51:24
AI is focused on curing cancer and I feel like we got to cure peanut allergies before we cure cancer.
1:51:32
It just seems easy to me. Am I misinformed?
1:51:34
What are your peanut allergy timelines?
1:51:36
I you know it's just something that seems a little bit quicker to test than cancer which could take you know months to actually fight and verify that you're in remission.
1:51:44
If you have a GLP-1 for peanut allergy >> this weekend figure out how to give yourself a peanut allergy.
1:51:53
>> I need a million dollars to compute I think >> and then fix it on Sunday.
1:51:56
>> But but but the the more anodine uh diseases uh are those actually more tractable or is it a straight shot to cancer and like the big ones?
1:52:03
I think they're both difficult in different ways.
1:52:08
Um I'll start with the simple fact that cancer isn't one disease. >> Yeah.
1:52:13
>> Uh and it's thousands of diseases.
1:52:13
Uh and we just call all of those diseases cancer for something that grows without control and invades other organs.
1:52:21
So I think that's going to have to be disease by disease.
1:52:25
And we've made a lot of progress for a lot of these diseases.
1:52:29
But it's going to help, I think, for us to be very specific about what cancers have been most recalcitrant and why.
1:52:34
And I think I'd love to see AI come up with completely new ways, whether it's molecules or mechanisms, to be able to hit cancers that we struggle the most with.
1:52:48
>> Common diseases are difficult for two reasons.
1:52:51
They're complex and multiffactorial.
1:52:52
So in other words, obesity is something you understand quite simply as excess fat in your body.
1:53:00
But we now know that at least two organs likely more are involved in obesity.
1:53:02
So your fat tissue, your brain, your muscle, your pancreas, all of those coordinate to ultimately give you that.
1:53:12
The second reason they're hard is the way each of these factors collude to give you obesity can be massively different across the population.
1:53:18
different across the population. M >> I was just reading something as I was waiting for you guys since you went over that 10 to 15% of patients don't respond to glip once >> right and it has probably something to do with the fact that hormones um affect
1:53:35
GLP-1 massively so women tend to respond better >> um and there's lots of other things that are just beginning to come out from the data and these are the two things that make common diseases more complex for AI but I think there's no reason to stagegate. We should absolutely attack
1:53:51
We should absolutely attack all of them at once uh and continue pushing the frontier for better medicines so each of us can live, you know, a better life on a day-to-day basis.
1:54:03
And that's the test we want each of our molecules to pass.
1:54:05
So yeah, I mean it seems like you're taking a pretty broad approach, but is there a decision criteria where you're looking at the economic opportunity of a particular drug and treatment versus the total harm uh caused?
1:54:17
Like obviously cancer is at the top of the list, peanut allergies a little bit lower.
1:54:22
Um or are you more just like let's generate a bunch of stuff and see what the impacts are?
1:54:29
Oh, turns out we cured uh you know, we cured cancer one day and then the next day we cure peanut allergies and it's sort of uh a random downstream effect.
1:54:38
How much of it is you picking the target versus just seeing what you're capable of?
1:54:44
>> Yeah, I'm glad you asked.
1:54:44
So, at Invea, we haven't started efforts on trying to treat cancer yet. Okay.
1:54:50
>> We're focused on really large diseases that still have big big swats of what we call unmet medical need.
1:54:56
For example, if you suffer from asthma, there hasn't been an oral medicine that isn't a steroid that has been approved for over 25 years. >> Interesting. >> Right.
1:55:07
If you are um one of the many, many Americans and the world's citizens that has trouble managing your weight, >> you can get on GLP1 um in one or two years, you're likely going to be off of it for one reason or another, >> and then you have no idea what to do about your weight. >> Interesting.
1:55:25
So our first two drugs are hitting exactly those problems.
1:55:27
We want to make a safe non-steroidal oral >> for diseases like attopic dermatitis or eczema and asthma for which there's millions of people in America alone and there isn't an ideal solution.
1:55:39
And our second molecule discovered a new hormone that's produced after you go for a sprint.
1:55:45
So it's essentially the chemistry of exercise and we did to it what semiglutide did to JLP1.
1:55:49
So, we put it in a pill that you can take once daily and we think it'll allow you to maintain your body weight and metabolic health over the long term, giving 55 million people in America an offramp over the next seven years that will have taken a GLP1 and then not know what to do next.
1:56:08
>> Um, a lot of discussion over should we give super intelligence a wet lab?
1:56:11
What is the actual human in the loop?
1:56:14
I mean, it feels like you're hiring.
1:56:16
It feels like this is a very rigorous process where you're coming up with candidate uh molecules, taking them through the full FDA process, but how do you make sure that your product is safe?
1:56:27
Are you confident in the current system or do we need to uh create new rules or slow down or what's your view on the future of actually getting new AI aided AI designed products in uh the the hands of Americans?
1:56:43
>> For better or for worse, um three quick things.
1:56:46
The first one is Enve's core AI models allow us to understand what evolution's already made.
1:56:51
So they're not optimized for creating new things either benevolent or malevolent or anywhere in between.
1:56:58
And so this allows us to for example push forward our frontier very very quickly without being particularly bottlenecked by the safety question.
1:57:07
>> Second is for people whose models are designed to make molecules.
1:57:10
I think that most uh the most important aperture or filter that those models have to pass through is the simple fact that most things that a model can design are not something human chemists can make.
1:57:25
>> So, and this doesn't get talked about often at all.
1:57:27
But 99% or more of the chemistry that any particular model comes up with is constrained by the physics and energetics of putting it together.
1:57:36
So, I'd say just because AI can come up with an incredibly powerful toxin doesn't mean that it be produced right away.
1:57:43
And that's the bottleneck even when you're trying to make medicines produced by AI.
1:57:48
>> Third, I think the big bottleneck uh overall that encompasses issues one and two really is the fact that AI is really bad at moving things uh in the physical world.
1:57:59
uh and I think a lot of biological surgery whether it's of cells or genes or assembly involves things that require custom workflows and uh automating and roboticizing that still is an endeavor that we're not very good at.
1:58:16
So unless there's a rogue agent in the loop with the AI uh I think it'd be hard.
1:58:21
Now couldn't a rogue agent be significantly more damaging? Yes.
1:58:24
But I think it's a more humanentric problem than it gets written about. >> Okay, I like that.
1:58:30
Well, thank you for breaking it down.
1:58:32
Congratulations on the progress.
1:58:34
>> Yeah, great to meet you.
1:58:34
Wish we had more time, but come back.
1:58:35
Yeah, we'll have to have you have backup. This is really great. Congratulations. Thank you. We'll talk to you soon. >> Goodbye.
1:58:43
>> Uh, let me tell you about console. com.
1:58:46
Console builds AI agents that automates 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets.
1:58:55
Coming back on the show, we got Jake Adler, founder and CEO of Pilgrim. Jake, how you doing?
1:59:00
Sorry for keeping you waiting. >> No problem.
1:59:03
Good to uh good to be back on. Thanks, guys.
1:59:06
>> What's the latest in your world? You raised some money. Anything gongw worthy?
1:59:09
Anything that's going to make Jordy stand up and smash that while you're giving us the important details, deafening us all? What happened?
1:59:16
>> Yeah, so we uh we closed the $25 million round to uh to build America's first final product. >> Fantastic. There you go.
1:59:30
It's so it's so funny like >> like two weeks >> two weeks ago uh I was it's been probably a year since you've been on the show but two weeks ago I was thinking about you and Pilgrim because of all the biocurity talk and I'm like he's got to be raising a new round uh just because it feels like you've you've uh been building to sort of meet uh many of the the current and future problems of of our world. >> Yeah.
1:59:55
>> Yeah. How how are you how are you pitching the pro uh the company right now and then the specific products because there there there is sort of a a differentiation there between being America's biological prime contractor and Kingswell the actual product correct >> yeah there's there's certainly been a bit of an evolution but I think the the
2:00:16
core the core etheis has remained the same yeah uh which is is really this idea that we're just trying to deploy biotechnology more efficiently right so there's like an abundance of like really compelling technologies that like languish in academia and the the bet of pilgrim is really on on the mechanism to take these like really critical technologies and get them deployed. So
2:00:33
So you know at the at the core when I think about you know what we're building today with like a system like Argus.
2:00:39
So you this is one of our our early prototypes that we deployed uh the the idea really is is to build up what is a a really substantial uh wedge and get technologies like this into the hands of a war fighter today.
2:00:50
uh but on the basis of of building what is a biop-rime it really does come back to that core mechanism uh of of being able to actually get technology into the hands of war fighters sooner uh and ensuring that more you know war fighters can go into conflict and and actually be able to return home.
2:01:04
Uh so it's it's been a very exciting mission but it all really revolved around just the idea of of getting bio uh into the hands of the people who need it the most.
2:01:13
>> The sign behind you says small pox keep out.
2:01:16
Is that because there's small pox in your facility and you don't want people coming into the facility or is that because you don't like small pox and you want to keep it out of your office?
2:01:28
>> You know, you you'd be shocked, you know, how easy it is to to procure some like really gnarly biological agents. >> Black bill. >> Yeah. But exactly.
2:01:34
Uh but you know, we don't we don't have small pox in the office.
2:01:39
Uh we have a bit of monkey pox here.
2:01:41
Uh, and you will for sure, you know, like some couple chemical weapons as well.
2:01:45
But like, you know, the the amount of validation that's required for these things is is bewildering.
2:01:48
You know, they they'll call me up on the phone and be like like, "Do you know what you're doing with these things?"
2:01:54
And and I'll be like, "Yeah, like we work with the government."
2:01:56
And they're like, "That's all we need to hear."
2:01:59
>> Which is again is incredibly alarming, you know, considering a lot of the infrastructure we have like deter, you know, a bioweapon attack or to stop the proliferation. Yeah.
2:02:08
>> None of this has changed in like 20 years. Yeah.
2:02:09
Yeah, >> it's a it's been a really cool mission.
2:02:12
You know, it's a a bet that we made nine months ago on on Argus and you know, candidly, you know, you look at things this year like uh you know, for example, the Pentagon shutting down four months ago due to like a false anthrax alert. Yeah.
2:02:24
Like there there are really serious events that are transpiring and I think that the the the rate and the incidents around bio have grown dramatically.
2:02:30
Uh even to a point now where I think just the sheer lack of that infrastructure has just become incredibly alarming.
2:02:36
Okay, that Argus system looks portable. It's on a tripod.
2:02:41
Where do you deploy that?
2:02:41
I've heard about uh in terms of our biod defenses sometimes uh airports, wastewater treatment systems.
2:02:49
There's a whole bunch of other places to plug in.
2:02:51
How did you land on that portable of a system as opposed to tapping into basically like a stream of biological data somewhere else in the you know American economy or American industrial system?
2:03:09
>> I think the the core bet is really on the platform itself like we really want to move beyond what is like the current precedent which are like these very manual workflows.
2:03:16
Like right right now, for example, like if I was to, you know, if I was to pull Jordy in and have him go work the line at TSA, for example, and some guy comes through and and I gave you like the best and most portable sensor in the world, it's able to, you know, tell you whether or not some person has Ebola, the question quickly becomes like, what are you going to do with that information, right?
2:03:34
So, we we definitely knew that the the system itself had to be portable, but it had to go just beyond, you know, from a platform standpoint, just doing the detection to actually enabling uh identification and characterization of the threat as well.
2:03:45
the threat as well. The reason that we opted for this this form factor first uh was was very simple uh it was really on the basis um especially in in the airborne um environment that like that is the primary mode of transmission for for viruses and and for pathogens right so when we're thinking about how these viruses spread between populations it's very important that we're actually monitoring the air a lot of information
2:04:05
that we don't typically see uh so we wanted this system to look scary uh and and really to to to stand out in an airport environment because we have to make a statement you to our adversaries uh that if they attempt to come into our
2:04:19
country and attempt to proliferate, you know, a biological weapon that we actually have the defenses in place to to be able to deter and identify, you know, that proliferation very quickly. Yeah. So, so that alone is is really Yeah.
2:04:28
So, so that alone is is really what contributed.
2:04:29
But the the core platform being able to detect, you know, viruses autonomously, that's just going to be deployed across all of these different types of media, wastewater, clinical, everything.
2:04:39
>> Last question for me on on the actual sensor fidelity.
2:04:41
Is this going to be something where I'm going through the airport, I take off my shoes, they take a picture of me, they scan my thumb print, I give them my ID, I give them my boarding pass, and then I also have to like breathalyze into this thing, or is this passive?
2:04:52
Like, are they taking my saliva?
2:04:55
Are they going to take a pint of blood from me?
2:04:57
Like, how far does this go? >> Yeah.
2:05:00
You know, I think if we make the TSA line any longer, people aren't going to going to be very satisfied.
2:05:04
Uh really the the goal here is simple is we just want to monitor the environment. Okay.
2:05:08
a a lot of a lot of tools in the past like uh you would call like contract tracing and like even just thinking about like just how crazy of a time co was.
2:05:17
I I remember my my sister like Lysol wiping bananas, you know, and this is sort of like the the world that we are living in.
2:05:24
Um a lot of the technology that has been built is tends to be hyperpersonalized and and what we recognized uh more than anything is like the current timeline to even detect a threat in the air is like a week. Mhm.
2:05:36
>> And you know that means like by the time you find out about a pandemic, it's typically in the newspaper, you know, before one of our sensors are even picking up on it.
2:05:43
So >> or like Google search trends for I lost my sense of taste or whatever. Yeah. >> Yeah. Like literally, right?
2:05:49
It's like these weird small ideas.
2:05:50
So we wanted something that would be quick and monitor the air and it's like a like the joke more recently is like a Shazam for the air.
2:05:57
Like how do we for the air? I like that.
2:06:00
Any plans to put it on a robotic dog?
2:06:02
You got the You got the drug sniffing dog, the bomb sniffing dog.
2:06:06
I like the idea of a pandemic sniffing robotic dog could probably carry that payload maybe. Who knows? What are you thinking?
2:06:15
>> Yeah, I mean it could certainly be interesting.
2:06:17
I think that there's also a possibility of putting this thing on on drones >> or or wheels.
2:06:21
Yeah, you can drive around >> shot on wheels. Yeah.
2:06:24
Have it run after people at TSA just like coming up to them and then staring at them. >> Yeah.
2:06:30
Um it would certainly be very interesting. >> Well, good luck. Congratulations.
2:06:32
I'm glad you have fresh funding to help keep the airways.
2:06:37
>> Yeah, very important work and uh fantastic progress.
2:06:40
>> Yeah, we love to see it. Great to see you, Jake.
2:06:43
>> Thanks so much for coming on, Jake. We'll talk to you soon. Have a good one.
2:06:46
>> Let me tell you about Codeex.
2:06:46
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2:06:50
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2:06:57
Our final guest of the show is the co-founder of Free Bean.
2:06:59
We have Adam here with the first appearance.
2:07:04
But there's been a little Easter egg this whole show.
2:07:06
We have his product here with us in the TBPN Ultradome on the desk >> cracking open a ramp. >> How you doing? How we started the show?
2:07:14
>> This was a dream of Jordies.
2:07:14
He had this idea uh a year ago, two years ago.
2:07:16
He wanted >> I was searching for more ad inventory.
2:07:22
We had we had more ad inventory than any show on earth, but I wasn't going to settle there.
2:07:26
I wanted more ad inventory and I thought we're drinking >> we're we're not getting paid to to drink on the show. How do we fix it? >> You're not.
2:07:34
But but now you have some new ad inventory courtesy of uh courtesy of Ram. >> Yes. And FreeBan.
2:07:39
Um so tell us about you, your business, your career.
2:07:42
Uh get us up to speed on all this. >> Absolutely. I'm Adam Kensky.
2:07:46
I'm the founder of Free Bean.
2:07:48
Freebean is a targeted, trackable, and tangible out ofome advertising medium built on free coffee. Okay.
2:07:54
Uh we started the business uh while I was in college, a senior at the University of Michigan, >> and I've never had a full-time job. So, >> yeah. Go, baby. >> Wow.
2:08:06
>> Uh very very very uh great story. >> Yeah. I uh Thank you.
2:08:11
>> How much do you know about the the sort of like whit space in advertising inventory?
2:08:17
I'm obsessed with, you know, uh app love and finding that people are playing hyper casual mobile games.
2:08:21
They went and found this pool that wasn't on Instagram, wasn't on Facebook, and they blew it up to a huge business.
2:08:28
At the same time, on the other end, I know someone who did like free napkins and fortune cookies for Chinese restaurants, but put ads on them.
2:08:35
And it was pure margin because the napkins are pretty cheap.
2:08:39
And so they would go and say, "Hey restaurant, do you want some do you want some adup supported napkins?"
2:08:43
And the advertiser would say, "Yeah, we'd love to put our logo all over that bar."
2:08:47
Uh, what is the shape of these opportunities?
2:08:49
Why did you pick beverage?
2:08:51
And then you know how has it actually been going distributing this to uh various uh places to get in the hands of consumers.
2:09:00
>> Distribution has been going incredible.
2:09:01
We just crossed the 100,000 can mark >> across a bunch of different channels.
2:09:04
Uh accelerators and incubators in partnership with >> Entrepreneurs First, Antler, Techars, >> conferences and trade shows are a huge channel for us as well.
2:09:13
And then on the consumerf facing side, college campuses and things like that.
2:09:17
Uh the reason for beverage mainly is because it's tangible and consumable.
2:09:22
We like to say that this is an ad you sip not skip.
2:09:25
Uh when talking to advertisers, it's it's really one of the only formats that's actually consumed.
2:09:32
It's it's super unique >> and the reason we chose coffee, 66% of US adults drink it every single day.
2:09:39
It's an extremely popular beverage >> and it's it allows us to target virtually any type of demographic.
2:09:45
M >> regardless of what brand is on the cans.
2:09:49
It could be Ram or it could be Red Lobster, another customer of ours, >> their customers all drink coffee or at least two of them do.
2:09:56
>> So it allows us to target those people effectively uh and drive high return for for our advertisers and brands. >> Yeah. What's the Oh, sorry.
2:10:02
fellow uh Michigan student just texted us and and uh or former student texted us didn't graduate but uh uh just texted us if you plan to expand into beers.
2:10:15
Is that uh is that is is that a potential category?
2:10:21
>> I have been asked that a lot. Alcohol is tough.
2:10:23
So, we're we're sticking with coffee for now.
2:10:25
Maybe down the line >> we'll expand to beer, but we'll have to we'll have to say beer.
2:10:30
Straight shot to the original four loco recipe. Bring it back.
2:10:34
Ramp >> wrap it in a brand.
2:10:38
>> Four loco might be might be the move.
2:10:38
I know you >> the uh on YC demo day when the guy had the humanoid and you were like, "Can you shotgun that ramp cold brew?"
2:10:46
And then somebody was like, "Ah, four loco."
2:10:48
So >> maybe these are shotgunable though. >> Maybe in the future.
2:10:52
What What is the What is the key uh to success as a brand partnering with you?
2:10:57
Is it I go to you, I I I buy a bunch of cans.
2:10:59
I mean, the brand looks great on on uh on the actual can.
2:11:04
Um, but then should I should I mail these to my to my customer?
2:11:06
Should I have this at my conference?
2:11:08
Like, how should I think about actually getting the most out of the the pallet when it's delivered?
2:11:14
Do you handle logistics if I want to send it to my customers to remind them that they should be talking to their sales to my sales reps, for example?
2:11:22
Like, what is the right way to actually get this in the hands of potential customers? >> Sure.
2:11:27
So, when it comes to distribution, >> if we're looking at gifting, something that RAMP does a lot of, actually, >> there's usually third party fulfillment partners who will handle the packing of those cans and then shipping them out to, >> you know, maybe a prospect or something like that.
2:11:44
>> For the right distribution channel for the brand, it's it's dependent on a couple factors.
2:11:48
Some brands take the approach of, hey, this is a brand campaign, or some look at it as an acquisition channel.
2:11:53
and conferences work extremely well.
2:11:56
Uh we've been outside some major ones.
2:11:58
Figma config uh with paper went super viral on Twitter >> and they basically called it the highest converting booth at the conference without a booth. >> Wow.
2:12:09
>> Because paper was everywhere at their direct competitors conference.
2:12:11
Uh, and so again, you think about like putting something that's tangible in somebody's hands >> where traditional advertising formats don't really deliver anything to the consumer.
2:12:24
>> Billboard companies, the consumer just sees a billboard.
2:12:26
But when you allow a brand to put something in someone's hands for free, especially something that's expensive and and increasing in price, you create this reciprocity effect where a person is opting in to seeing an ad.
2:12:40
And they're saying, "Okay, I'm going to take an ad.
2:12:42
I'm going to take a free coffee as well."
2:12:44
And it just drives higher return for the brand. >> Yeah. Uh last question for me.
2:12:50
Talk about uh what it takes to work with you.
2:12:55
Do you have hard minimums?
2:12:55
Do you have maximum capacity right now?
2:12:58
Uh what's the sweet spot of a brand coming to you?
2:13:03
Is it a thousand cans for a conference, 10,000 cans?
2:13:05
What where what's a what's a really down the line pitch for you these days?
2:13:11
>> For a conference, it's primarily dependent on the size of the conference.
2:13:16
If we're talking about Dreamforce, >> yeah, >> a brand is going to want a lot more cans.
2:13:20
If it's a smaller conference, they'll want a lot less cans.
2:13:22
Uh we do have a hard minimum. Okay.
2:13:24
Uh specifically for our storefront which we just launched our grand opening on Wednesday uh in New York City between >> Brian Park and Grand Central.
2:13:31
It is the world's first free coffee shop. >> Cool.
2:13:36
>> And as you can imagine, the coffee is literally free.
2:13:38
You walk in, you >> add supported coffee, >> you ask for what are the different >> Yeah.
2:13:44
What are the different What brands can I can I uh enjoy free coffee from?
2:13:50
So, at our storefront, we have RAMP, Novig, Warp, Outset, Paper, and Out uh and and Bland. >> Wow.
2:13:57
You can get AI, voice supported coffee, you can get gambling supported coffee, you can get enterprise payment supported coffee.
2:14:05
It's really like a choose your own adventure kind of thing. >> It is.
2:14:08
What I think is also really interesting, >> there's a negative sentiment around AI advertising, more so New York than San Francisco, >> of course, but people don't seem to care.
2:14:20
And as I alluded to, where you provide value to the consumer, >> yeah, >> they're like, "Hey, I'm I'm opting in to get this advertisement."
2:14:26
And yeah, it's okay if uh you know, a voice AI company is saying, "Hey, call this phone number to learn how >> sure >> customer calls can help." >> Yeah.
2:14:37
>> Yeah. Nobody's vandalizing any plans to add a speaker to the to the can the bottom of the can so it can chirp out you know >> uh while you're enjoying the sip you know you you might be interested in learning that you know ramp customers save an average of 5% on their expenses
2:14:54
>> probably probably no speaker but we are exploring uh thermocchromic ink similar like a corors can where if it's cold it displays something different than when it warms up a little bit I like it uh I love I love your clarity of of of thought on on this opportunity. It's uh
2:15:08
It's uh it's what a great entrepreneurial >> clearly very sharp and um uh yeah, I'm excited for you to scale to billions of cans annually. >> Thank you guys. Thank you guys. I appreciate it.
2:15:21
>> Come back to the show soon. >> Yeah, let's do it.
2:15:22
And and we have a bunch more advertisers, so uh let's uh let's get them all on. >> We got more cans. We need more cans.
2:15:29
>> We we have a solid amount of crossover. More than you think. Yeah. Fantastic ramp.
2:15:35
Obviously, we'd love to do more.
2:15:37
Thank you so much for coming to meet. Have a great weekend. We'll talk to you soon. Goodbye.
2:15:43
>> That's our show, folks.
2:15:43
We'll be back on Monday at 11:00 a. m. Pacific. Leave us five stars.
2:15:48
>> Lot of excitement heading into the weekend.
2:15:51
>> People, I mean, you can just It's You can feel the energy in the Ultra Dome. People are sitting here. We're hanging out.
2:15:59
>> We got three more sleeps till Monday.
2:16:01
People are counting it down. >> Counting it down. >> Counting.
2:16:03
Have people been counting down the days to Christmas?
2:16:04
I feel like we missed the road to Christmas today. >> What is it?
2:16:08
I think we're at 90 days. A nice round number. That's a huge deal.
2:16:12
We got 90 days until Christmas. So, start shopping. Start shopping. Start planning. Start thinking about it. >> Yeah.
2:16:19
And again, this is the weekend to get on it. Get your tree. Get set up.
2:16:24
Um, and uh get after it, you It's also only 455 days until the next Christmas.
2:16:31
So, you could start thinking about that as well.
2:16:32
But, >> uh, you know, you want to focus on the next 90 days.
2:16:37
>> We'll see you Monday, folks. >> See you. Goodbye.