Monday, November 3rd — searchlore

Monday, November 3rd

Published Nov 3, 2025

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[music] Reaching to feel the new Heat. Heat. Morning [music] Kronos. Good morning SW. >> Good morning John.

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[music] [music] >> You're watching TVPN >> and today is Monday, November 3rd, 2025.

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We are live from the TVPN Ultradome, the temple of technology, the fortress of finance, the capital of capital.

5:06

Uh the timeline has been in turmoil over the Brad Gersonner podcast with Sachin Nadella and Sam Alman.

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Uh interesting dynamic, lots of hype.

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You know, people continue to uh call tops on bubbles and there's a whole bunch of other stuff.

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Uh on the topic of bub talk, um you know, if you want to get ready for the collapse of a bubble, you got to save time and money. You got to go to ramp. com.

5:36

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Um, there was this article in Bloomberg.

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The AI buildout is so big even a haunted house owner wants in.

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[laughter] The co-owner of Pennsylvania's Pennhurst Asylum has big plans for a data center about an hour's drive northwest.

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>> We got to get through Halloween and then I'm all in on AI.

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>> It is funny that Halloween is >> we got to get through spooky season.

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>> I mean, that's basically what's going in.

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I think that's basically what's happening because um what what's that famous Halloween store?

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Uh do you know what I'm talking about? >> Spirit Halloween. >> Is it Spirit? >> Like it pops up. >> It pops up.

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It comes into town for like a day or a month and then it disappears.

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And it's always like how do they even set up a store so quickly?

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But they're clearly just really good at like short-term leases.

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>> You ever been to a Spirit Halloween like at like 6:00 p. m. on Halloween? >> No. Is it packed?

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>> It's an absolute nightmare.

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Oh, it's probably crazy because people >> because they just let it get destroyed basically.

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Like [laughter] the employees are just like, "All right, it's basically over. >> It's over.

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We're just going to pack up and leave tomorrow."

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>> Looks like a stampede of horses just through it.

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>> It's interesting that they can't ride that into like spirit Thanksgiving, spirit Christmas.

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They just got to get in and out around Halloween.

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Um, but apparently haunted houses are converting into data centers.

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Uh, we actually heard this.

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We heard a rumor through uh the makeup artist that did the makeup on the Friday show that there are a number of Hollywood soundstages studios that have been set up in >> Atlanta, I think she said, Georgia, and they're not monetizing well as studios.

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And so they're converting them into data centers.

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And it's sort of the same crypto boom.

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She she basically said she knew somebody that was walking around one of these lots and poked her head in the door server racks >> or maybe they were filming the social network too. You don't know. Or the open eye. >> You don't know.

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But the the greater conspiracy theory there was they were using the tax incentives provided to the film industry in order to just >> Well, I mean, if they're generating Sora, that should count as filming tax deductions.

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>> [laughter] >> You're like, "We need to film it.

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We need to film the social network, too."

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Or I I do hope that a lot of the OpenAI documentary takes place in a data center.

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I hope it's about the minutia of racking the servers to do the GPT3 training run.

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I want to know I that's the core drama.

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I want to know were the were the GPUs seated properly? Were the racks working?

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Was the power continuous?

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Was the delivery continuous?

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Or were there brown outs? Were there blackouts?

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what was going on in the data center.

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That's where I want the most of the tension to occur.

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Uh, and then I want them to take the movie and reream it.

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I want them to put it on reream, one live stream, 30 plus destinations, multiream, reach your audience wherever they are.

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Uh, so it's here where real estate developer Derek Strin has been scaring locals for years.

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His haunted attraction, Penhurst Asylum, every fall, hosts tens of thousands of v visitors for a wellontrolled fright.

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But Strin has a new idea for the property.

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One that some locals even more that has some locals even more disturbed.

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He wants to turn the nearly 130 acre grounds into a worldclass data center.

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The kind of massive service server facility that is central to the artificial intelligence boom.

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Never mind that his first foray into Never mind that this is his first foray into such an investment.

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One that would require more cash than any of his past projects.

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He's also not ftting about coraling the necessary electricity, which would be enough to power as many four as as many as 400,000 homes.

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And he can even see past the >> So, I was a little bit skeptical of people just hardcore pivoting.

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>> And we're having the CEO of Iron on today who was doing Bitcoin mining, >> had a lot of energy. Yep.

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and now just signed a nearly10 billion dollar deal with Microsoft >> uh that got announced this morning. Yeah, stocks way up.

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Uh the CEO will be on um >> uh the show around in about an hour.

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So, I'm excited to meet him.

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>> Uh well, let me tell you about Privy.

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Wallet infrastructure for every bank.

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Um he he you know, I think he knew that people were going to take shots at him.

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Oh, what are you doing pivoting from a haunted house uh to a data center?

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And he said, uh, how do you eat a whale? One slice at a time. Right.

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[laughter] >> Is that a is that a common phrase? >> It's a real quote.

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Uh, what I've heard is how do you eat a dinosaur? One bite at a time.

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at a time. That's that was the SpaceX motto when they were saying they're going after the legacy industries and it's going to take a huge amount of time to actually unseat NASA or if you're Ander to unseat Lockheed like it's just

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it's not just going to happen over like it's not like the internet distribution where you're trying to displace all of these systems and structures and and political incentives and voting blocks in certain reg and contracts and and manufacturing prowess. Like it's just

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Like it's just it's just not an overnight.

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It cannot be an overnight success.

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Even even if you have a stacked team, we're still going to play for you.

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Um so you have to eat the dinosaur one bite at a time.

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But I just think it's fun.

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>> Eating whale one slice at a time. >> One slice at a time.

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It's it's much more visual. It's very funny.

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A horde of investors, developers, and speculators are racing to put picks and shovels in the ground for a technological revolution they are betting is here to stay.

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artificial intelligence infrastructure spending could surpass $3 trillion in the next three years by one measure.

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Uh Trump hailed more than 92 billion in AI and energy deals from the likes of Blackstone and Brookfield during a visit to Pennsylvania this year.

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Many say there's too much money flooding in, but our intrepid haunted house proprietor uh sees the challenge as part of the value proposition.

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His bet is that if he does the grunt work, getting a grid connection and securing the town's blessings, another developer will pay a premium to come in alongside him.

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That he expects will bring in new equity and expertise.

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We're going to derisk for the deep pocketed guys.

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He said the big value play is getting this ready for a hyperscaler to go vertical in less than a year.

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So, he's just setting it up.

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He's just setting it a little layup. >> I've seen enough.

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He should back based on his Halloween revenue >> for sure >> and then use that capital to uh to to go all in.

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>> Some of this stuff's crazy.

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Uh anyway, very very fun story.

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Uh he should also be vibe coding.

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He should uh also >> he's going to need to get over to Google >> AI Studio.

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Um, he should, um, he should head over to Google AI Studio, create an AI powered app faster than ever.

12:36

Gemini understands the capabilities you need to automat and automatically wires up the right models and APIs for you. Get started at ai. studio/build.

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Um, let's go through the timeline. Bugo Capital. >> Yeah.

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Did you want to read your post to give some context? >> Yes. Um, >> start there.

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>> So, my question was, uh, how sticky are these deals?

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So, um, the timeline's going pretty crazy on the BG Squared.

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Although, is he going to rebrand the Brad, uh, Gersonner >> BG? >> Yes.

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Maybe just BG >> or he could or he could mirror he could just have two videos of himself >> and the guest.

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>> It was good that it feels like a sequel.

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He can do the prequel, just the BG1 maybe.

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Um, but he had Satcha Nadella and uh Sam Alman on the show and everyone is debating whether or not a $14 billion revenue company, OpenAI, can afford to pay 1. 4 trillion.

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And Brad asked this question directly and it was kind of a crazy moment because a lot of people were saying like, well, he's an investor.

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This should be like the softest ball interview possible.

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He's like deeply conflicted.

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Like a lot of journalists were like, h how is this happening?

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like like h how is it that Sam Alman's like getting it's like a harder interview with a direct investor than with a traditional media journalist which is just interesting.

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Um but uh >> yeah and I don't I don't think it was I don't think Brad meant meant for it to be a tough question. >> Yes, I agree.

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>> Like the whole interview was a layup.

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You could argue you could argue that it was it was >> like Brad is like you said he's heavily aligned with OpenAI.

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got just woken up in a bad mood that day because the answer was absolutely horrible. >> Yeah.

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Well, so what's interesting is that I think that are you familiar with that story of JFK and Nixon, the debate? >> No.

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>> So, there's a presidential debate um between JFK and Nixon and it was right around the time Tyler, do you have the actual like date or details of like of like when this happened?

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But it was right around the time that they first started televising uh presidential debates.

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And so >> so this was uh 1960. >> 1960.

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So 1960 JFK Nixon [laughter] >> JFK and Nixon are are going at it at the presidential debate.

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But uh what what happens?

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Nixon didn't want makeup or something. >> Yeah.

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So um yeah, it's like one of the first televised ones.

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Uh Nixon doesn't want to wear makeup cuz like I think maybe he's like anti- makeup. >> He's anti- makeup. Okay.

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>> But he like looks really bad because um he had been doing he had some speech the like that day and he was like so he like looks not great. >> Okay.

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>> And then JFK is like this very like preppy guy. He like looks very nice.

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>> Y >> um and then so it's like the whole thing is like some people hear the the debate just on the radio or just or on TV and then their ideas of who won is like totally different based off >> like JFK like looks way better physically. Yep.

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And so so it was this famous moment where like JFK mogged in the visual medium but Nixon mogged in the audio medium.

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And when I first listened to the BG Squared podcast, I was just listening to the audio and I was like, "Oh, like that's like a totally reasonable answer."

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>> But when you watch the video and you see the body language and you get into all that, I feel like a whole Sam got pressed.

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He went, >> "See, you don't you don't hear that on the audio.

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>> You don't hear that on the audio.

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And so you see what I'm saying how like you can win in one medium but lose in another.

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>> Anytime I'm anytime I don't like something you're saying, John, I'm just going to go >> well the well the audio listeners won't know. >> Yeah. >> Won't know.

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Shout out to people and and the timeline was also fixating on this fact that uh at at some point uh Brad takes a step back from the microphone.

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They were reading into that like that's something that just doesn't come across in audio.

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And so you hear it and you're just like, "Okay, yeah, this actually sounds like pretty reasonable."

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>> And Satcha Satcha is just sitting back laughing. >> Yeah, exactly.

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>> It was like the It was the one of the most I was actually surprised that that they released it.

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>> I was surprised that like nobody basically caught or at least like they could have easily >> edited or killed it.

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>> Uh I think it's good that it was released. >> Yeah.

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>> Because this is the question that is on everyone's mind. >> Yes.

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Yes, >> everyone's mind, right?

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And Sam's answer, I summed it up by saying his answer, he says, "How will you afford 1.

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4 trillion in spending with only 12 billion of revenue?"

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And Sam was like, "Actually, we have more revenue than that." >> Yep.

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>> Of course, they lost 10 or so billion dollars last quarter.

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So, they have a lot of revenue.

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They have a lot of losses.

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Sam's answer was basically, "Sell your shares." >> Yep.

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we're automating science and we're gonna release a hardware device and we're gonna need a lot of compute for that. >> Yep.

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>> Which was like, you know, obviously I'm summarizing and he he was more drawn out than that, but but I I can't think of a more uh poor answer when people deserve to have I think a bit more clarity around it.

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>> It does feel like it's getting >> the timing the timing of that with the the new deal with uh >> Amazon that got announced this morning, right?

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I think the question that even all these different partners are running the calculus on is like how how real are these commitments, right? >> Yep.

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>> Because I don't think that like >> Sam is smart enough to not sign up for $1.

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4 trillion of like liabilities, right? He >> Yeah.

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>> There there is a world where he can thread the needle. >> Yep.

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and and spend all this money that he's sort of soft committing, >> but everything has to go perfectly.

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Agenta Commerce has to has to be massive. Ads need to be massive. >> Yeah.

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>> Subscriptions need to keep growing at the same rate.

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People need to not turn off of their $200 a month plan because they realize they can get a very similar product experience for $20 a month elsewhere or free elsewhere. Mhm.

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>> And so a lot of things need to go right and it was just a really weak answer. >> Yeah.

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>> And and here's the other thing.

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The only person that I saw defending the answer and the whole interaction was Brat >> and one of his colleagues, >> two people at Altimter. >> Yeah. Not not Yeah. Not a lot of people.

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I I did not see there was not even a single other OpenAI investor that was like >> that's willing to stick their neck out and say like here's how we actually can >> Okay, well, you know, it's that time.

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We got to steel man this thing.

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[laughter] >> We got to steal man this thing. It's the only way.

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This is how the show works.

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We can't we can't be we can't be one-sided.

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This is uh this is a this is a pull and bear show.

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>> Can you bring me the tin foil hat now? We're strapping this in. >> Okay.

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So, so first off, uh, [laughter] Cognition, makers of Devon, the AI software engineer, uh, crush your backlog with your personal AI engineering team. >> Um, okay.

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So, I really need to get a better like strap because this thing just flips back like this the more I put the strap on.

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>> I guess I could Oh, if I balance it, maybe it feels better. Okay.

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Anyway, um so first off, uh okay, so Sam said that the revenue is incorrect. It's not 14 billion. It's higher. >> That's 0. 1 [laughter] point 2.

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Open said that OpenAI has never missed projections.

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They've never missed projections.

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>> It's worth noting that the losses are dramatically greater than the revenue.

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Yeah, but that doesn't matter for the for the deals because you pay the you pay the deals from the revenue like like the the when you bring in the revenue factoring and stockbased >> cont.

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Well, the losses are from the are from the contracts like like like you you you don't need to find new money to pay your cloud bill because like that's the reason there are losses.

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the losses exist because they're paying these deals.

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Like, so it's not really fair to be like, like, yes, of course, if you're a shareholder, you want higher, you want profits, obviously, like that makes total sense, but but if you're Amazon, like or or if you're if you're Azure and you're like and you're like, how are you going to pay me a billion dollars?

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It's like, well, if they bring in two billion of revenue, like, I'm at the I'm at the top of the capital stack.

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I'm at the top of the I'm I'm higher than the than the debtors.

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I'm higher than the equity.

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I get paid out first because I'm I'm a supplier. I'm cogn I'm cogs. Yeah, I'm COGS.

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So, I'm I'm above everything.

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So, so I I I think that that that matters a lot less genuinely.

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Uh Saji Nadella said that OpenAI has never missed projections.

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They've never they've never put a projection forward that they haven't beat.

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So, if history repeats, you're good.

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Uh also, OpenAI's revenue growth has been insane. Look at this ramp.

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Look at this ramp >> in 2020.

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This is this is this is the thesis that I that I like.

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>> This is the bullish this is the most bullish thesis. Okay, bullish thesis. I'll run you through. I'll run you through. >> Extrapolate. >> Extrapolate. Extrapolate.

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So, look in 2020, how much did OpenAI make in revenue? 3. 5 million. What they do next year? 28 million.

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What they do the next year? 200. Then 1. 6 billion. Then 3. 7 billion. Now north of 14 billion. What are they doing?

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They're tripling revenue every year.

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Do you understand the value of compounding? I do, John.

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>> So, what happens if you compound OpenAI's revenue at 300% for a decade?

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>> They get into the quadrillion.

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>> They get into the quadrillions. That's right.

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And so, the question you should be asking is not how can a 14 billion company pay for 1.

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5 trillion of of uh a multi-quadillion multiillion business payillion.

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1% of the revenue will go over there. It's not a big deal. It's not a big deal.

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If you get into the quads, you're good.

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>> And they're automating science.

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>> And they're automating science.

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>> And they're going to launch a hardware device.

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>> But but but but truly like like the the revenue ramp has been in insane.

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It really has been insane.

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And so it's not that crazy to actually think that like it will continue to grow and and so a lot of it is like how fast will it grow relative to how fast did these contracts grow?

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And so if the growth continues like the cloud deals really can work out but the question is how perfectly do the next few years have to go because interestingly revenue growth right now is accelerating.

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They are growing faster at least according to these basic numbers like 2025 will be higher growth revenue-wise than 2024 because in 2024 they went from 1. 6 6 to 3. 7.

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That's like 200% growth or uh like like they basically like a little over doubled.

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Now they're more than tripling.

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And so they've actually inc they're actually accelerating revenue.

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Now if that's if they're if they're you know expecting continued acceleration forever and there's a hiccup could be an issue.

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Um but it's not that crazy because they have so many irons in the fire.

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There's a whole bunch of things that could hit.

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You got chatbt could grow.

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API business can get big. It already is. Can get bigger.

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Sora, agentic commerce, scientific discovery, new hardware.

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Some of those feel crazier than others.

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Like the API business, you're not like, "Oh, there's no way they can make a billion dollars off of API."

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It's like, yeah, they're going to no problem.

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They're making more than that now.

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Um, new hardware, it's like that could be three years out and it could be very slow.

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It could be a complete flop. >> Yeah.

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I just I didn't like the saying we were going to have a hit consumer hardware device is not doesn't make me feel that comforted. >> Totally.

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>> When when you're becoming too big to fail, right?

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when you have >> so many different businesses where their market caps are riding on their partnership with you >> and you're just saying like, "Yeah, we're going to just uh hit a grand slam with a new consumer hardware device when every other attempt at it so far has not >> managed to make anything even really that useful." >> And so I'm excited.

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I'm excited to >> I'm excited for OpenAI's hardware device.

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I think it will be I I expect it to be somewhat like Sora and that you're taking >> not necessarily the most transformative like it Sora was an app but at least it had it it and it was a feed and you could create content with it but at least it had some like novel >> uh some novel things about it.

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Specifically, the Cameo feature was like novel and great and viral and cool.

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>> And I expect their consumer hardware device to be like a fresh take >> on >> on on an exist somewhat existing form factor and I expect it to be cool.

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>> But saying like so hard like >> don't worry about a a $13 billion, you know, given the benefit of the doubt like $20 billion revenue run rate company committing to 1. 4 trillion of spend.

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don't worry about it because the the product that we haven't launched yet uh is going to be such a smash hit that uh well we're good for it. >> Yes. Yes.

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I I if there really is a scenario where all of these other bets have to hit in some epic parlay like that is extremely nerve-wracking. I agree with you.

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But the question is how solid are these deals?

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Like I remember we were live on Liberation Day.

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remember April 2nd of this year?

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Like it was the largest global market decline since the co era 2020 stock market crash and at the time it seemed like a complete disaster.

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Remember Jordan from China talk coming on being like this is the end of the world basically.

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And I was like but what if Trump just reverses it?

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And he was like oh no this trade war is going to be way worse.

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And like he was kind of right like the trade war was more significant this year than the previous administration.

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But at the end of the day it really was possible for Trump to just roll back a lot of the tariffs and he did that.

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And so the question is if if if if Open AI doesn't accelerate to a trillion dollars in revenue or quadrillion dollars in revenue and all of a sudden there's a whole bunch of folks who are like wait a minute like how are you going to pay us for our cloud stuff and they're able to say okay well let's actually wind this back or let's stretch this contract out let's make this 5-year contract let's make it a 10-year contract.

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Like if all of that can happen smoothly and efficiently with just the stroke of a pen, like it's not that big of a deal.

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It can >> except if you're Oracle and you spend tens of billions of dollars building infrastructure that you ultimately can't monetize in the way that you thought you were going to monetize the reason and they have massive debt.

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>> And so the reason I'm wearing the tinfoil hat is I would like to propose the the glut theory which is that I believe I believe there's a chance >> Yeah.

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that Sam actually wants to create a massive overbuild so he can he can ultimately >> he predicted a glut on the show. >> He's glutil. >> He's glutil.

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>> He said he's going to know if it's going to happen in 206 or 27 or 28 or 29 or something, but he was like it's coming >> and I would just say like I think OpenAI will be a beneficiary of a compute glut.

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>> It certainly seems like that.

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It doesn't seem like they have a lot of debt.

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It doesn't seem like I I we don't know.

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We that's the thing is that we don't know how these contracts are are written.

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Like there could be an easy mutual out.

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It could just be like for for convenience.

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These contracts can be revocable for convenience. >> Yeah.

28:24

>> And it's like okay well then it's completely different conversation than than if you don't pay your AWS bill OpenAI. There's 37 billion.

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If you don't pay it, we own the company. You go into receiverhip. You go bankrupt.

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Like they're wildly different contracts. And we don't know.

28:38

There's there hasn't been any reporting on where where >> I think Sam Sam is smart enough to know that he's like I'm gonna give you this commitment >> y >> and your stock's gonna pop massively >> and you're going to be able to use that to raise >> this everyone loves press >> and because I know what I'm going to do for you.

28:57

You got to give me an out.

28:58

Yeah, >> everyone everyone [clears throat] loves press releases >> that that just doesn't it doesn't tell you >> press release economy, >> but it doesn't actually tell you anything about the the where the risk sits.

29:08

So, we don't actually know.

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>> We don't actually know.

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We just know that like, you know, >> if the revenue if AI revenue slows down, >> it's going to be bad for somebody.

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>> But it but it's worth noting that OpenAI, I believe, will be a massive beneficiary of a glut and an overbuilt.

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Maybe not in the case where >> business. Yeah. Yeah.

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Where where where where they go into receiverhip and Oracle and >> Yeah.

29:33

And I just I think I think the people around the table are smart enough to know how much leverage they have right now and wouldn't be signing up deals that require the company to burn a hundred to$200 billion a year and not have any way to get out of that.

29:48

>> Like like eventually >> I don't know. I don't know.

29:50

It it I it's it's I mean Sam has a lot of leverage.

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So these could be these could be very favorable deals for OpenAI.

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At the same time, it could just be, you know, uh a very rough deal and and it could wind up being a situation.

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>> I think I think Sam went from having low leverage pre-Chat GPT, which is how you get these >> and and you know, needing$10 billion, needing to do a $10 billion training run. He had low leverage.

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That's how he gets into this >> deal with Satya, right?

30:19

where he's giving not only is he's going to spend $250 billion or says he's going to spend uh $250 billion with Microsoft, he's got to give Satcha 20% off the top first, right?

30:31

So, that was the interesting [laughter] >> that this interview was just absolutely wild because they're both they're both um >> you know you know you have Brad in the middle who's like I'm I I'm I'm friends with both of you guys.

30:43

I'm I'm sure he's invested in in both companies. Clearly one of them.

30:46

Someone in on that podcast is the crying wojack with the smiling wjack face on. >> And it was Sam. >> Maybe. [laughter] I don't know.

30:54

>> I mean I mean it it certainly wasn't Satcha. >> It might be Brad. You don't know.

30:57

It all depends on how it plays out. It could be SA.

31:01

Ben Thompson take is that it is Satcha.

31:04

That's the Ben Thompson take right now.

31:06

The Ben Thompson take is that is that Microsoft should not be winding down this partnership.

31:09

They should not be winding it down.

31:11

They are getting out of it.

31:12

They have all these clauses that allow them not to have access to the technology in the future post AGI or post 2032.

31:20

post 2032. like they can just wait like even if even if the the the tech just plateaus and and there's no AGI and expert panel never says AGI like in 2032 it just becomes OpenAI's property and and and once they pay their 250 billion cloud which is crazy but let's say it

31:38

happens then Microsoft is just a shareholder on the cap table and from Ben's perspective he's like there is an opportunity for Microsoft to have a much deeper relationship with this company and have them be like a really solid R&D arm for the business like forever that was on the table and that was not taken. So

31:54

So >> yeah and remember that that was a scenario during the during the uh during the coup which we'll get into table reading of uh of some of the deposition but that was an opport that was a scenario where it seemed like a lot of the openi team and Sam were going to land at Microsoft and just keep working on a lot of the same things.

32:13

>> Oh yeah that was a crazy moment.

32:13

He a couple other things that uh stood out. Satya had a quote. I I wrote it down.

32:17

Uh I may it may not be perfectly accurate, but it was something to the effect of um uh how he was deciding uh which of OpenAI's compute kind of wishes they would prioritize.

32:33

And he said something there's certain he basically was like there's certain requests that make sense for OpenAI that doesn't make sense long-term for Azure.

32:42

And so these are he gave the example of uh you know building a data set data building a data center for a specific training run >> which he has done in the past but as you scale these things up he's like I want fungeibility of the fleet I want diversity across geographies right he's trying to set up Azure for the long term

33:02

he's clearly extremely ROI focusing >> and what I read into that is like >> there's very there's a very real scenario where Oracle is massively levering up things that are to get in the AI game >> cuz they were somewhat sidelined and they are going to do things that are really good for Open AI and maybe not so great for >> Oracle >> over the long term. Um but uh

33:26

Um but uh >> yeah, it's the job of the CEO to be the fox, not the hen. This is the job.

33:32

Uh should we play any clips from the actual podcast?

33:37

I realized we should have >> Let's play this.

33:38

Let's Let's pull up this post from Buo Capital right at the top.

33:42

>> That's just a reaction video, right?

33:45

>> What does this guy say?

33:46

>> It says Sam Alman, if you ask him how he'll afford 1.

33:48

4 trillion in spending with only >> This is rude.

33:52

[laughter] Let me go to an ad read.

33:54

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33:56

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33:58

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34:00

Uh [laughter] let's play the actual clip.

34:02

Uh I I I want to play the one that compound uh compound 248.

34:08

>> How can the company with 13 billion in revenues make 1.

34:10

4 trillion of spend commitments?

34:15

>> You know, and and and you've heard the criticism 1.

34:17

4illion well more revenue than that.

34:19

Second of all, >> that's not such a I'll find you a buyer.

34:23

[laughter] >> This is sort of a just like, >> you know, people are I think there's a lot of people who would love to buy OpenAI shares.

34:30

I don't I don't think you >> including myself >> including myself >> who talk with a lot of like breathless concern about our comput stuff or whatever that would be thrilled to buy shares.

34:41

So I think we we could sell you know your shares or anybody else's to some of the people who are making the most noise on Twitter whatever about this very quickly.

34:47

We do plan for revenue to grow steeply >> is growing steeply.

34:51

We are taking a forward and it's going to continue to go.

34:54

>> So pause pause for a second.

34:57

One thing is I think it's possible to still have a lot of questions on the 1.

35:01

4 trillion of spend and not be bearish on OpenAI at 500 billion. >> Totally.

35:08

>> And so I think when I when I uh >> Sam is entirely right.

35:11

He's actually smart to say focus on let's focus on demand for the stock, right?

35:16

If you want to get out, I'll help you get out. >> Yep.

35:19

And uh I think there's some people on the timeline that are seeing this answer and they're bearish on OpenAI 500 billion >> when I don't think that's I don't think that's necessarily >> I mean like if you comp OpenAI to Palunteer it's like remarkable just on terms of topline growth and market cap like you get to 500 billion no problem no problem >> yeah and Palanteer is trading at 666 times earnings >> and opening eye is losing money so infin PE. >> There we go.

35:51

>> So, [laughter] it's it's like it's terrible.

35:53

Uh, but uh I mean it's just like a crazy crazy revenue ramp.

36:00

And I think that I think that's what has everyone like so excited.

36:04

Uh and and there's like even if I people are just so like like underwriting the 500 the 500 billion is like pretty pretty simple.

36:12

Um because you can just say okay if it just keeps growing. >> Yeah.

36:17

And and I think if you're an investor of with in any of the companies that Sam has announced these spend these like press releases with, >> it's totally fair to say I'm not bearish on you, Sam.

36:31

>> I'm bullish on OpenAI.

36:33

>> This is the interesting hypothes.

36:41

And I want to know >> Oh, yeah. Yeah.

36:42

Brad's a big Nvidia holder, too, right?

36:45

>> He I'm sure he's invested in all these He's probably invested across.

36:48

>> So, it's a fair question to say what's what's the like there were so many other ways to answer this.

36:53

>> Oh, that is interesting. Yeah. Yeah. Yeah. Yeah.

36:54

It could be like it could be like are you going to nuke my portfolio and I'm going to be fine on your deal, but all the rest of my portfolio is getting cooked.

37:01

That's kind of a funny outcome. Yeah.

37:06

>> That's that is the that's >> that's the risk. That's one risk.

37:10

>> That's why that's why people want to know about this. >> Sure. Sure. Sure.

37:12

It's it's what h how real is the backlog, right? >> Sure. Sure.

37:19

>> Like is is is this Oracle 300 billion commitment >> how much actually comes through >> I mean no one knows it's predicting the future like usually when companies would come together and announce a deal like this Yeah.

37:35

>> there is is is a lot more like >> you could have done a few of these press release press releases And there wouldn't have been as many questions.

37:45

Like there's a lot of big numbers that you could throw out. >> Sure.

37:49

>> Before people are like would say like Opening Eyes revenue ramp is insane.

37:54

They have the biggest consumer product. >> Yeah.

37:58

>> Created in the last >> Yeah. >> 10 years. >> Yeah.

38:03

>> Everyone people love this product, right?

38:05

It is it is entirely mainstream. It is magical.

38:08

It's the first real >> thing that can compete with search.

38:12

And I just think that uh it's still like when you announce a hundred billion dollar deal, a $200 billion deal, another hundred billion, a $50 billion deal, and then less than 72 hours after this internet interview releases, there's another $38 billion deal announced. >> Sure.

38:30

And now is now is a is an appropriate time I think for people to just press press them harder on this because the the joke of like open AI is holding up the stock market is incredibly real right now.

38:46

I mean I I don't know what more people want though.

38:48

Like it it is it is like like the logic is there which is just like we've been growing three 3x every year.

38:59

We project that we're going to continue to grow 3x.

39:01

The quadrillion number is a joke but clearly they back the envelope to being a hyperscaler. >> So say that.

39:10

Don't say we're automating science. Sell your shares.

39:12

science. Sell your shares. uh >> like you didn't have to answer like >> I I think that the fact of the matter is is Elon >> there might there might Elon does very similar things right >> yeah totally we're going to go to Mars and we're going to have a flying car and

39:27

we're >> going to do data center in space >> I think the difference is that Elonoids Elon is >> probably 10 to 50 times more likable than Sam >> and I'm just saying that based on the timeline like >> I mean it's it is Elon's app but yeah [laughter] like >> I I think in general >> Yeah. >> people like you know

39:50

>> people like you know >> Yeah. Yeah.

39:53

I mean it's hard to tell like you could go in the comments of the Rogan episodes because they both done Rogan.

39:58

I mean Rogan clearly likes Elon more than Sam.

40:00

Like if you listen to the Rogan interview with Elon Elon's been on a bunch and he's like he's he's he's echoing that sentiment.

40:07

Um there are certainly people that like Sam more than Elon but >> Sure sure.

40:12

I'm just saying like, >> yeah, >> in general, >> yeah, >> Elon is more likable and so people give him the benefit of the doubt.

40:21

He also has a longer >> Yeah.

40:25

>> like longer track record of delivering on, >> you know, there's the there's a thing of like Elon, you know, gets the timing wrong, but he delivers. >> Yeah. Yeah. Yeah. Yeah.

40:35

>> And so, >> I don't know. I don't know.

40:36

It's weird because like I I do feel like there's a benefit to uh not going like private equity guy mode on this answer and actually doing the Elon mode and saying like curing cancer and new hardware device and we have these really grand ambitions.

40:51

There is a different flip on this which is just like like yes like like revenue has been growing.

40:56

We expect that it'll compound at, you know, 50% and then 40% then 30%.

41:00

And so we projected out our revenues and we projected out our COGS and it looks like in five years our revenues will be 500 billion and our COGS will be 300 billion.

41:11

And so where are we going to get the COGS from?

41:13

We're going to get the cost of goods sold from Amazon and Oracle and and AWS and Azure.

41:17

And so we went and did deals to supply, you know, our infrastructure for those like like that's a totally reasonable like spreadsheet answer, but like it's just going to be >> Yeah.

41:30

I just think I just think that we're we're going to cure cancer answer.

41:34

We're automating science answer. >> Yeah.

41:38

>> Isn't good enough anymore at this scale when there's this many trillions of dollars on the line.

41:43

I mean, yeah, it does it does feel like a pivot away from just like, hey, we're just going to make a ton of money off a chatbt because like I feel like there's a world where it's like, hey, yeah, actually like catchupt is going to make the same amount of money as Google search like it's going to be at that at that tier at that in that league and and that justifies the investments.

42:03

Google spent a ton of money on capex.

42:06

I mean Google's spending all the hyperscalers are spending 60 70 80 billion a year.

42:10

So he could have just like there is a world where he just says hey look uh the reason you're seeing all these numbers is because we're building a hyperscaler and our our products are going to make the same amount of money and get the same amount of attention have the same amount of users as Facebook and family of apps and Google and all the different Microsoft products.

42:31

And so we need servers to serve those up and so we went around and got all of those.

42:35

And you know how all of those other hyperscalers spend you know 50 60 70 80 billion a year.

42:41

Yeah, we're gonna do that, too.

42:42

And so, you add that all up and you get to 1.

42:44

4 trillion over the next decade, and that's the plan.

42:48

>> But he's projecting more spend than that. >> 1.

42:51

4 over the next five years, something like that. We don't even know.

42:55

>> So, he's growing faster, much lower revenue base.

42:57

>> Also, I mean, it's like h how much are they on the hook for some of these?

43:01

Like, I was looking at the uh >> I was looking down included included in the 1.

43:06

4 trillion is Stargate, >> which is like straight up not on OpenAI's balance sheet.

43:10

Yeah, >> it's like just a new it's an entirely new company, new thing, new project like OpenAI has some some some loose structure to it. >> Counting counting.

43:20

Yeah, >> but basically it's like we are at we are at a like I I I agree with you on on the assessment of the timeline, but we are definitely in a moment where every single time one of these deals gets announced, you they just everyone mentally just takes the headline number and puts it as liability on OpenAI's balance sheet.

43:39

And that's just like not the way these things are structured because they can be like they can have get out of jail free clauses. >> I think so.

43:45

So here's one thing is certainly >> going private equity guy answer and just laying out all the numbers. >> Yeah.

43:52

Then there's the kind of more product oriented answer, not the handwavy like we're automating science and we're going to have a hit consumer product, but there's like, hey, like Aenta Commerce we think is going to be is a multi-t trillion dollar opportunity.

44:08

And we're not monetizing there yet, but we will be soon. >> Mhm.

44:13

>> That kind of asks the follow-up question of like, okay, well, like what if it doesn't pan out?

44:18

>> And I'm not betting against Aenta Commerce.

44:20

Like I think that people are going to buy a lot of products through chat >> GBT, >> but it it opens up a follow-up question of like, okay, well, what if that doesn't happen?

44:29

Are you on the hook for all this all the spend?

44:31

And then Sam can say like if he answered honestly, he'd have to say, well, I imagine it would be something to the effect of like, we have certain minimums that we have to hit, but we're not on the hook for, you know, the full deal sizes.

44:44

the full deal sizes. And that nukes then I'm just saying like every every hyperscaler involved every company >> because you don't get credit for fake PR for fake press releases right >> yeah so so the Amazon dealer

44:59

>> Amazon Amazon announced a deal it's $ 38 billion over seven years stock went up 150 billion [laughter] >> what >> so does the press release >> yeah wow okay so uh I don't know it's yeah it's it's odd because It's like these games are clearly working in the public markets. Like there are investors

45:18

Like there are investors like the marginal investor on Wall Street apparently thinks the value of $1 of OpenAI revenue is $10 or something like that, right? What was the ratio?

45:29

He said it went up 130 bucks or something for for 40.

45:34

So So they're they're applying like a three or four times multiple on a dollar of open eye revenue, which again is only 30% margin. It's only 30% margin.

45:43

like it's not it's not 99% margin.

45:45

I I think it's like 30 maybe 40.

45:48

Um so so it is very weird to apply >> pull up this post from Grant Hawkins.

45:56

>> How can a how can a company with 13 billion in revenues make 1.

45:57

4 trillion of spend commitments.

46:00

Brad, if you want to sell your shares, I'll find you a buyer.

46:04

[laughter] >> A low tam banger. 13 likes.

46:04

I'm going to throw like 12.

46:07

We we're liking it while we're >> Hey man, how are you going to pay for the 1.

46:12

4 four trillion of spend you've promised proceeds to crash out.

46:16

[laughter] [gasps] >> I mean the timeline the memes are are fantastic.

46:20

They're impeccable today.

46:20

Uh you know what else is impeccable? Vanta.

46:24

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46:35

>> Compound compound 248 was just going off. >> Oh yeah. >> How can we afford it? Who knows?

46:38

But what I do know is you can sell your shares.

46:44

>> [laughter] >> It's so ridiculous.

46:44

What a bizarre What a bizarre club. Yeah. Uh I don't know.

46:50

>> Le Shrub says, "I'm sorry, Brad, but if CEO of one of my holdings spoke to me like that, I wouldn't be a quote buyer.

46:55

I would be a seller of all my shares."

46:58

>> That's a weird like vibes based analysis. I don't know.

46:59

I don't I don't like that one.

47:02

>> I I've invested in a lot of companies.

47:04

>> Y >> post investment I have realized that some of the CEOs Yep. >> I don't like. >> Sure.

47:10

But that doesn't mean I'm actually bearish on the company. True.

47:13

>> Sometimes it's just like kind of a personal judgment.

47:15

And >> I think I I think it's okay to be invested in a company with with a with a management team you're not necessarily a fan of.

47:23

>> But I don't think I don't think Brad was offended by how Sam answered the question. Not at all.

47:28

Like I I think I think they were kind of I don't know.

47:33

They they're trying to have a public conversation about the relationship of a CEO with an investor.

47:37

like and they're it's almost like they're they're like there's some realness there, but then there's also some like we're trying to show what our what our perception of each other is.

47:50

It's a very complicated dynamic.

47:52

It's an very it's very it's it's it's ultra neo media.

47:54

It's neo corporate media. I don't know. There's something weird.

47:58

[laughter] It's a very it's unprecedented.

48:00

It's a very interesting interesting piece of content.

48:03

Um do you want to read any of uh Brad's breakdown? It's pretty interesting.

48:09

>> He says, he says, "People are reading too much into Sam being feisty." Yeah.

48:12

Who would spend 30 minutes on a show talking about this?

48:15

It's like not that big of a deal.

48:19

[laughter] I love I love that about him.

48:21

And in our founders, uh we laughed about it afterwards.

48:23

Uh if you listen to his words, here's what he said.

48:25

A lot more than 13 billion revs in 2025, which is insane considering they were doing less than four last year.

48:31

They're going to quadruple revenue, quintuple revenue, half of a $4 billion vase. Like that is crazy.

48:38

But so are the spend commitments.

48:41

[laughter] Hundred billion dollar 100 billion revs sooner than people expect.

48:44

So they got to get there pretty quick because once they get to 100 billion, that's still they have to do 14 years at a hundred billion to pay for 1.

48:53

4 trillion if that's what they were actually on the hook for.

48:56

Spending commitments aligned with revenue expectations.

48:58

Uh risk of too little compute far greater than risk of too much.

49:03

Uh at that growth rate could be 200 billion revs in 2030.

49:05

Match that against 200 billion of capex and you have an absolute juggernaut. Agree.

49:13

If revenues come in slower. Okay, Tyler.

49:16

We need to map these against uh our our different projection our different timelines.

49:21

So, so we need the Brad Gersonner tab of the spreadsheet uh next to Leopold Ashen Brener's projections next to what we've heard from OpenAI in the past.

49:34

You know what I'm talking about? >> Yeah. Yeah.

49:36

>> Um so we >> AGI 2027 has that too. >> Yeah.

49:39

I think we also need a quick exchange rate between dollars of capex to gigawatts to flops uh and and be able to exchange rate between all of them to really understand in apples to apples like like is this is this more is this is this more bullish than what we were hearing before because I'm I I feel like the general vibe is a deleveraging of the bullishness in the AI economy.

50:05

Every time I hear a new number, it's always like pushed out a year and like a little bit less than the previous projection.

50:13

And so we're getting and we saw this first with like the we could reach super intelligence in a few thousand days soft singularity, right?

50:22

Like that felt like a stepping back in the aggression, right?

50:24

And so, so I feel like uh there's a lot of these things where where the actual read on this could be, oh yeah, like uh they're going to hit they're going to hit 200 billion revs in 2030.

50:36

Like that could be way off of the previous projections based on like exponential fast takeoff, right? What do you think?

50:45

>> So, uh AJI 20 2027 has hundred billion revenue uh by June of 2027. [laughter] >> Sick. Let's make it happen. It's got to happen.

50:55

Wait, 100 billion across all the labs? >> Uh, no.

50:57

That's just like Well, so that story that's like the big It's like open brain or >> 100 billion.

51:03

Wait, 100 billion rev 2027?

51:06

>> Yeah, >> that actually seems pretty doable.

51:08

>> It's totally reasonable. >> Yeah, I know. You're bullish.

51:09

Yeah, because because wait, if if they're tripling if they're tripling this and they're going to close 25 at 20 and then they're going to close they're going to close 20 26 at 60, they're going to be at 180.

51:25

>> Yeah, extremely bullish.

51:28

>> Yeah, it's I mean it's >> take take 500 days off the singularity clock.

51:33

>> The singularity is only 2,000 days away now. Yeah.

51:35

I mean, what it comes down to is that whether or not like whether or not Brad like Brad obviously is is >> Yeah.

51:47

>> Like from what I know about Brad, he's not he's not he's I can't it would we would be in such a dark place if Brad was trying to offload OpenAI shares preIPO.

51:58

Like things would be so bad, right? >> Uh yeah. Yeah.

52:00

I do think this this >> but it has nothing to do with but the question is not >> again the question is for people that are not invested in open AAI but invested in all the companies that they're partnered with. [snorts] >> Sure. >> Yeah. Yeah. Yeah.

52:16

>> So >> sell your shares is just not a good >> game of musical chairs.

52:20

>> Uh yeah, that would have been an interesting way to flip it around would be like hey Sam I'm still bullish at 500 on open air.

52:26

I'm still a buyer, but should I be bullish on Broadcom [laughter] or Oracle? Like, >> yeah.

52:33

>> Uh, >> this just goes back to my overbuild thesis of like who's a beneficiary of the overbuild? >> Yes.

52:37

The Jordy Hayes overbuild thesis trademarked right now when it happens. >> We're glutton. We're taking a glut.

52:42

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52:54

Not going to lie, if a CEO's response to, hey, how are you going to pay for all this stuff you don't have cash for is you're welcome to sell your shares, you should probably take them up on that offer.

53:01

Lots of the the timeline is just going crazy.

53:04

Got to give it to Altman.

53:05

Very forward thinker, itching to go public for the sole purpose of crushing the hypothetical short sellers that don't exist yet. Can't wait for the S1. I love that.

53:11

Uh I mean I it's a I I thought the short seller thing was was was fine. It was good. Good point.

53:16

Um people this wojack this is a crazy who is this Kenneth Dread.

53:22

So you're doing 11 billion or 13 billion in revenue but making $1.

53:27

4 trillion in spending commitments. How does that work?

53:28

First of all we're making 13.

53:29

1 [laughter] billion revenue.

53:31

And second of all that's hilarious the time. >> Yeah.

53:37

There was not there was not no one came to Sam's defense on this one. >> Okay. Okay.

53:42

So from a media perspective, I am interested in this because uh uh I I do I have this right that that Altimter is a hedge fund.

53:50

They they're not like long only buy back the founder like never sell your shares hold forever like they like it is a different type of fund.

54:00

And so there is like if you do a if you do a podcast with a portfolio company and you're a series and you're a series A founder and you walk into a podcast that's run by a venture capital firm like there's no scenario where they like walk out of that podcast and they're like we got to sell this.

54:16

I mean maybe a little bit but like not re there isn't that there isn't that tension.

54:22

Like in general, the critique of of fund media is that they're long only.

54:26

And so they'll never they're they're only >> they'll never give you an accurate view into the company. >> Exactly.

54:34

Because they're just always they're always they're turbo bulls or uh turbo longs or whatever the word permeables. They're permeables.

54:39

Um but alimter is not right.

54:42

And so you could wind up in a situation you're doing podcast and you actually walk out of that meeting and you're like, "Oh wow, like he's sold after that." Like figure that out.

54:54

>> So Alimter and >> it's making there's [laughter] going to >> Yeah. So I love Brad. I love Alimter.

55:02

I and and there is a class of funds right now >> that like there are going to be plenty of funds that don't make it through the AI capex trade.

55:15

Like we're in the midst of the AI capex trade. >> Okay.

55:19

>> If you get this wrong and you get this wrong enough, you just won't you'll you'll there will be funds that shut down over being being long into >> into a correction.

55:30

>> into a correction. And so I view this this question in my view is is for more so for the hedge fund community >> to try to get a sense of like okay what what actually happen you know and obviously they have other sources besides listening to a to a podcast

55:49

>> but what happens in a scenario where open AI can't can't meet the meet the kind of soft commitments it's made to all these partners like if open AI growth like >> so So, I believe that if OpenAI came out and said, "Hey guys, actually everything, all of our special bets, we're we're not going to do the hardware device. We don't like that. Sore is not We don't like that.

56:11

Sore is not really working.

56:12

We're taking it out of the app store.

56:13

Uh we're doing the $200 a month plan, the $20 a month plan.

56:16

Uh we're basically guidance for next year.

56:20

We're going to do 15 billion and then maybe next year we'll do 16 and then 17 and like it's going to be like an eight 20 billion run rate business."

56:26

And so we're canceling all the spend commitments.

56:30

I believe that the market would just retrade right back to where it was.

56:34

And I believe that that Amazon if they got 130 billion of credit, they just lose that.

56:39

And we just see exactly what happened at liberation day. >> Yeah.

56:42

Or so Oracle traded up 30%. >> Yep.

56:44

And I and I think it trades down 30%.

56:46

I don't think it trades down 60%.

56:48

>> Now they have a a 5x the debt.

56:51

>> They don't have 5x the debt. That's just not true.

56:53

>> They didn't actually go.

56:55

>> Maybe it's not 5x, but they have have significantly more. No, no, no, no, no.

56:59

It's not even significantly more yet.

57:01

Like it will be like little a drip of debt like every quarter more and more and more.

57:06

It's not just going to pop up all of a sudden.

57:09

>> Like it's not just like if you go and you have 300 billion, you're not just getting it like overnight.

57:15

Like I mean there's this news about about Meta.

57:17

Meta is also doing this and and they uh and and like they so they Meta increased uh spending on capex 71 billion up from 69 billion previously and their guidance is that they will be notably larger in 26 than 20 than 25.

57:36

And so like yes that's like a couple more billion that's significant but it's a big company and so they're doing this bond deal. It's 30 billion. That sounds huge.

57:46

It's a It's a$ two trillion dollar company.

57:50

>> It's like 10 AI researchers. >> Exactly. It's like nothing.

57:51

It really is like not that big.

57:53

Bank of America tallied 75 billion of AI related public debt offerings in the past two months.

58:00

So in the past two months, 75 billion of AI AI related debt offerings total.

58:02

Like it's a lot, but it's not like it's not like destroy the global economy yet. It's just not there.

58:10

AI AI Morgan Stanley had an AI AI capex related debt is already between like one and five trillion.

58:20

>> So there's there's over a trillion dollars of debt already tied to >> I think I think people are reclassifying.

58:25

It's like it's like when people change their.

58:26

com toai and they're like, "Oh, okay.

58:29

I want I'm an AI company."

58:31

It's like, "Actually, this is an AI loan.

58:32

This is an AI debt debt instrument.

58:35

This is an AI this is an AI debt instrument." Okay.

58:38

I I have I have a few more things.

58:39

One, uh I got some bad [laughter] news from poly market.

58:44

There's a 36% chance of a US recession by the end of 2026.

58:46

So, uh we could be looking basically 30 36% chance that it's uh 1999 right now, which I don't >> What's the definition of recession?

58:56

>> Yeah, what's their definition?

58:58

>> Uh doesn't need to be >> it's seasonally adjusted.

59:00

uh uh so you you have two consecutive quarters of negative economic growth. So less than 0. 0 GDP growth.

59:13

So GDP goes negative in real GDP terms.

59:17

So not inflation adjusted.

59:20

So inflation adjusted basic basically.

59:22

So you're taking economic growth for two consecutive quarters in real terms not in not in nominal terms.

59:31

um it needs to be negative for two quarters and it also is seasonally adjusted so you don't get like a little Christmas bump.

59:37

Uh [laughter] and uh this data will come from the National Bureau of Economic Research and they will publicly announce that a recession has occurred in the United States at any point during 2025 or 2026 u with the announcement made.

59:52

So, uh, the NBER, they just they call it when they call it, but it's based on, uh, economic, uh, economic contraction basically.

1:00:00

And you can't contract for just one quarter.

1:00:02

You get one free one before you get called a recession.

1:00:07

So, you can have a little blip in your economy for one quarter.

1:00:09

As long as you make it back the next quarter, you double down, you parlay, you do something crazy to get out of the hole, then you're good.

1:00:16

But if you go down two quarters in a row, you got a gambling addiction and you're putting the recession hole. You got to get back in.

1:00:25

Uh anyway, um I wanted to share that.

1:00:29

Then I wanted to talk about Buo Capital Bloss assessment of this.

1:00:30

Sam breaks people's brains just like Elon. There's a thin line.

1:00:37

>> AB in the chat says, "Don't believe the recession hype until the price of a nautilus drops to sub 100k."

1:00:40

I think that is >> that's a great analysis.

1:00:43

AB, welcome to the stream.

1:00:45

new name, but fits right in here.

1:00:48

Honestly, uh, thank you for chiming in.

1:00:50

Also, if you're looking for a Nautilus for under 100K, you got to go over to getbzzle. com.

1:00:56

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1:00:59

>> Might be able to get a boysized Nautilus for under 100K.

1:01:02

But >> yeah, ladies Nautilus, that could go. >> Yeah.

1:01:06

>> Uh, [sighs] so Sam breaks people's brains just like Elon.

1:01:09

There's a thin line between grifter and visionary.

1:01:11

And creating true believers to harvest their capital requires rhetoric that makes non-believers recoil.

1:01:17

Sam hates Elon hates Sam be not just because he stole his company, but he stole his whole playbook.

1:01:25

And so I always like this idea of is is Elon Barnaman Bailey the circusman or is he Thomas Edison or Nicola Tesla? Well, he's both.

1:01:35

and why he has such a power loss, such an incredible impact on the economy is that not only is he the inventor and the and and not only can he lead engineers to invent the thing and build the thing, but then he can also promote it and he can promote it really really well.

1:01:50

And so he's both the grifter and the visionary.

1:01:54

He's both the real deal and the fake guru.

1:01:56

And when you put those together, it's really really powerful.

1:02:00

Sam seems to be doing something similar.

1:02:02

>> The question is in the Tesla and in the this is this is my question for you. Maybe it is different.

1:02:07

I know I know that your position is that it is different, but uh in in the in the buildout of Tesla, in the buildout of of SpaceX, there was never a moment where it was like if if Elon goes bust, everything is dead, right?

1:02:23

It was never like if Tesla doesn't hit earnings or continue to grow, like Ford and all these different supply chain companies will be economy will collapse. >> Yeah, exactly.

1:02:36

>> Yeah, exactly. Elon has never big difference between the two is like one going back to the likability thing like you know uh not not saying this from from uh like speaking generally >> timeline assessment >> Elon is more likable than Sam he has also made tens of thousands of retail

1:02:55

investors so much money for believing in him right >> that's true >> and so not only is he just generally people listen to him and they like they like listening to Elon talk more Yeah, >> but so many people believed in the Elon crazy vision and a lot of it has come true. Some of it hasn't, but at least

1:03:13

Some of it hasn't, but at least tens of thousands, maybe hundred thousands of of people have like made money because of Elon's vision and and believing in him.

1:03:22

And so Sam doesn't have the benefit of having like there's no retail army defending Sam.

1:03:25

Even the even even that the thing that was notable is retail army.

1:03:32

>> Brad, it's a oneman retail army. retail army.

1:03:35

Uh and so there was not a single other VC that I saw that stood up and said, "No, actually they're they're good for their 1. 4 trillion.

1:03:41

Here's how they're going to hit it." Yes.

1:03:44

>> Like nobody put their >> So Sam actually did say that one of the reasons why he maybe wants to go public is to actually have a retail army to basically Was this what you were going to say? >> Yeah. Yeah. >> Yeah. Yeah. Break it break it down. What is >> uh Yeah.

1:03:56

I mean, basically, uh, they were talking about IPOs and then cuz there was that thing, I think, from from Reuters about how they were maybe planning on IPOing mid 2027. Yep.

1:04:05

>> Or or late 2027 and then Sam was like, oh, that's just like maybe in the future.

1:04:09

But one of the reasons we >> I don't know why people write those pieces and it's like, dude, everyone knows why they write them. It's amazing. It's so entertaining. >> Yeah.

1:04:18

But basically he says like one of the reasons he would want to IPO is so that he could basically bring >> uh you know not just venture capitalist but the entire economy with him you know keep going up.

1:04:26

So clearly he wants the retail army.

1:04:29

>> Yeah I mean uh it is UBI everyone should get one share of open AI in the in the >> he prices if the IPO gets priced too high he'll get a >> yeah everyone just needs to be riding with him.

1:04:40

Uh anyway let me tell you about Julius the AI data analyst.

1:04:45

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1:05:01

Uh Elon and Sam were also beefing on the timeline. This is interesting.

1:05:07

So Elon says, "You stole a nonprofit."

1:05:09

Sam Alman says, 'I helped turn the thing you left for dead into what should be the largest nonprofit ever.

1:05:16

You know as well as anyone a structure like open what Open AI has now is required to make that happen.

1:05:25

You also wanted [music] Tesla to take over Open AI.

1:05:26

No nonprofit at all and you said we had a 0% chance of success.

1:05:33

Now you have a great AI company and so do we.

1:05:35

Can't we all just move on?

1:05:35

Uh, >> somebody was giving pushing back a little bit of the can't we all just move on because Sam like a day earlier was giving was was saying a tale and the next post >> uh Victoriao posted 911 911 I'd like to report a murder and it's and it's Sam um Sam basically giving [ __ ] to Tesla not being able to do a refund.

1:06:01

>> And so the followup to you stole a nonprofit and you forgot to mention act four where this issue was fixed and you received a refund within 24 hours, but that is in your nature.

1:06:08

So again, uh >> Elon refunded him. Refund confirmed. >> Yeah.

1:06:14

So Sam obviously keeps poking >> the the Dark Souls overlay refund granted [laughter] of Elon paying Sam. Um, no.

1:06:22

Why why this was interesting to me was that uh uh the nonprofit I was told that OpenAI was going to convert from a nonprofit to a for-profit and I feel lied to because what we actually got was the nonprofit is still in existence and there's now a new for-profit and they're actually separate.

1:06:47

I wanted [clears throat] the nonprofit to fully convert.

1:06:50

And now you have this nonprofit that's sitting there with $136 billion of OpenAI shares.

1:06:54

I want to finish the job.

1:06:58

Let's go back to the nonprofit.

1:07:01

Let's convert it to a for-profit.

1:07:02

Let's take that public as an open AI hold.

1:07:05

So you have 136 billion in the treasury.

1:07:10

Let's get that ripped in the public markets while we wait for the real open AI IPO. What do you think? >> Two IPOs. >> Two IPOs.

1:07:20

You could have two companies and then they could merge and they could de merge. It is interesting.

1:07:24

Uh >> two is a bigger number. >> Yeah. Than one.

1:07:28

>> So there's this funny thing that Sam keeps saying like oh the nonprofit is like going to be so wellunded like uh it's the you know it's the largest nonprofit ever.

1:07:37

But he hasn't really unpacked like will it be a what kind of nonprofit will it be?

1:07:41

Will it be a good nonprofit or a bad nonprofit?

1:07:44

>> Because there's some bad nonprofits out there.

1:07:45

I I don't I I really think that people are skeptical of nonprofits now.

1:07:50

Like people do not just assume, oh, it's nonprofit.

1:07:52

Everything's going to go perfectly for sure. 100%. Oh, good. It's a nonprofit. Nothing bad can happen. It's ridiculous.

1:07:59

>> I think the best case for the nonprofit is they kind of create some sort of like research arm and then they start making products and then, you know, maybe maybe it'll become like a consumer product at some point that they can have. Yes. >> Just the nonprofit. >> I love it. I love it.

1:08:11

>> And then they can turn into a for-profit. >> Yes.

1:08:13

the the the nonprofit is basically just spinning out endless for-profit companies.

1:08:17

This is >> that could be the greatest nonprofit of all time.

1:08:21

>> That would be the greatest nonprofit of all time.

1:08:22

Um >> yeah, a lot of lot of I mean there's so many >> but they really should wind it down.

1:08:27

Like I was promised a forprofit conversion. I feel lied to.

1:08:29

Anyway, uh get over to fall the generative media platform for developers.

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1:08:42

Um there Oh, speaking of cars, there's a review for the new Porsche 911.

1:08:48

It's a hybrid and the review in the Wall Street Journal in OffDuty uh says, "Yes, it and it's the fastest, most powerful, best handling 911 yet."

1:08:59

And Jordy Hayes, as a former uh Porsche 911 Turbo S owner, I want your review of this review.

1:09:07

And I'll read you some of this. So, it's a hybrid 911. >> View of the review.

1:09:13

>> Still seething now smoother, more refined.

1:09:15

A few days before I left Spain, I got a note from my name from my friend Dave Scriber, a producer for the television show Motor Week.

1:09:22

Did I want to share a car on Porsche?

1:09:25

Uh, did I want to share a car on Porsche's 911 Turbo S test drive? I'd love to.

1:09:30

I knew from past outings that Dave is not only an ex is not only is Dave excellent company, he's a father of 12, funny as hell, but a superb driver. Let's hear it for Dave.

1:09:48

Uh, and on this trip, he put he put on a master class with me in the right seat looking like Chewbacca in the asteroid field.

1:09:55

Dave utterly thrashed the Porsche 911 Turbo S Cabriolet assigned to us, attacking the granite tooth switchbacks of the Andalooian Hill Country like he hated them.

1:10:08

We actually went faster and harder getting to the Circuto Ascari racetrack than we did when we were on it.

1:10:17

I have pretty good car control.

1:10:19

I can generally get it together on a racetrack quick. >> Yeah, it's crazy.

1:10:21

Uh but Dave, the te the senior driver for the television uh show Motor Week and and prolevel road racer is fearless, deathdeying even.

1:10:31

I might have preferred not to test the Turbo S's biggest ever carbon ceram brakes while pointed over a cliff at 100 mph.

1:10:40

Dave reasons, when else would they matter?

1:10:42

To the untrained eye, the Turbo S might look just like another 911.

1:10:45

One of dozens of variants with inscrable nomenclature GT2, Carrera 4S, Cabriolet.

1:10:55

But this, dear friends, is the big one.

1:10:57

The quickest, most powerful, most versatile, most luxurious car in the 911 lineup.

1:11:02

The legend, the prover, the proverbial gorilla in a tuxedo.

1:11:04

Did you ever refer to your car as a gorilla in a tuxedo? Maybe black.

1:11:09

It was black on black on black.

1:11:12

introduced it as the gorilla in the tuxedo and that's why you were like I got to get out of this thing.

1:11:17

Uh, and now it's a hybrid notwithstanding the 200 mph top speed.

1:11:21

The goal of >> I'm actually about to crash out. >> You are okay. Break it up.

1:11:25

>> Because I was not aware until we were reading this that the tur they were making the Turbo S a hybrid. >> Okay.

1:11:31

And why are you crashing out?

1:11:31

Why don't you >> thought they were going to have it?

1:11:33

I mean, uh, no Porsche owner is sitting there being like, I want them to make the cars heavier, and I want them to depreciate.

1:11:43

>> They they they hold their value so well.

1:11:45

I want them I want them to depreciate.

1:11:45

I want you to make it give make it a hybrid. >> Okay.

1:11:51

>> Um, the uh anyways, continue and then and then I'll more >> So, so I can give you some more details on the actual impact of this move.

1:11:58

So, uh, it still has a twin turbocharged 3. 6 L flat 6.

1:12:05

Uh, and it has, uh, and it has it's a brand new engine.

1:12:08

Has fuel injectors all the way up.

1:12:10

Uh, with no belt driven accessories.

1:12:13

The unit is a few inches more compact.

1:12:15

Uh, the turbos themselves are also smaller.

1:12:18

These adjustments make just enough room on top of the engine for the pulse inverter and the DCDC converter. Uh, I don't know why.

1:12:27

I'm I'm I don't know enough about uh engines to understand what's going on there.

1:12:31

But um I will tell you that uh Porsche invented an entirely new flat 6 uh different bore diameters and everything just to clear 11 centimeters under the engine cover.

1:12:40

But it's not like the engineers had a choice.

1:12:42

Nobody was going to tinker with the Turbo S's silhouette, were they?

1:12:45

Likewise, the 8-speed PDK transmission is totally changed.

1:12:49

Wrapped inside the transmission housing is an electric motor.

1:12:51

Uh 80 horsepower, 139 pound- feet of torque.

1:12:57

connected to the crankshaft via a dual mass flywheel.

1:12:59

Um, there's some more information here.

1:13:01

These can add up to there's also uh electrically powered turbochargers.

1:13:06

These add 38 horsepower of electric boost on their own as well as recovery energy from engine braking.

1:13:13

Uh, the car's 590 pound- feet of electrified torque is sustained from 2300 RPM to 6,000 RPM.

1:13:18

The acceleration is terrifying.

1:13:21

Uh, it can get up to 701 horsepower shaking its fist at the sky. Um, the e- turbos.

1:13:28

So, uh, this is this is the point that I want you to react to.

1:13:32

Uh, purists, that sounds like you, Jordy. Are you a purist?

1:13:34

Purists may sniff that the hybrid Turbo S weighs 187 pounds more. Fair point.

1:13:42

But what is also staggering, it's 14 seconds faster around the Nurburg Ring.

1:13:49

And they say, "Hell, the audio system probably weighs more than 187 lbs." So, what do you think?

1:13:56

You get 14 seconds faster around the track, but you get 187 lbs heavier.

1:14:03

Why is this so upsetting to you?

1:14:06

>> I think you just feel the weight as a driver. Sure.

1:14:08

Doesn't matter if it's like slightly faster >> in a straight line or improved in a number of different ways.

1:14:14

Like driving a super heavy car fast >> Yeah. is just I don't know.

1:14:18

It's less It's less enjoyable.

1:14:22

I It's hard because this this is the most dentistcoated car I've ever seen in my life.

1:14:27

A white Turbo S with >> pulling the top down while you're driving though. It's pretty sick.

1:14:35

>> So, I mean I I I really dislike the I I really dislike Cabriolets in general.

1:14:38

If this is the car that getting a dentist gets you, I >> no no no shade to dentist, but this is a great car.

1:14:48

If you were if you're buying a sports car to drive to work at your dentist office, this is a great option.

1:14:53

But in general, I it would have been cool to see them test something.

1:14:57

Um, >> dude, if I pull up to the dentist office, I'm I'm like, this is going to be a good teeth.

1:15:06

>> So, yeah, I guess true.

1:15:06

But no, my my issue here is that this is not what customers want.

1:15:14

>> Well, we'll see how it sells.

1:15:14

We'll see the depreciation.

1:15:16

I don't I I think I disagree with you in that like the depreciation shouldn't be nearly as extreme as it with like the fully electric cars like >> Yeah, but but we've already seen that hybrids depreciate horribly compared to >> SF9 SF90. >> True.

1:15:32

[laughter] Yeah, good point. Yeah.

1:15:35

I mean, yeah, it it does feel like it's uh is is the is the rationale here some sort of a blended uh emission standard?

1:15:42

I've heard I've heard that's a big thing in in Europe where you need to have a variety of cars. Do you see that?

1:15:47

Like, so it's like 10% of your cars that are on sale need to be electric or or 30% need to have better than 20 miles per gallon, something like that.

1:16:00

So, like >> no, they are certainly getting And it's regulators have a gun to their head >> and they're saying ruin >> take away everything.

1:16:08

So you realize this is just an option like like the the 911 is not a hybrid now. The 911 has an option.

1:16:17

The turbo s you can just get I'm pretty sure you can just get a normal turbo. >> The refreshed 992.

1:16:21

2 >> introduces a hybrid powertrain.

1:16:27

>> So you cannot get it without one. >> Is hybrid.

1:16:29

The new Turbo S is hybrid only.

1:16:31

Oh, that's not gonna >> So, this is not an option.

1:16:33

You're forced into doing this.

1:16:37

>> And so, I'm sure it's still going to be amazing driving experience. >> Yeah.

1:16:40

>> Like, it's one It's probably the greatest car in history all around, >> but uh it's not what customers want.

1:16:45

And it's unfortunate that uh >> you know what customers do want?

1:16:50

They really want turbo puffer.

1:16:51

They want to search every bite.

1:16:53

They want serverless vector and full text search built from first principles and object storage. They want it fast.

1:16:59

They want it 10x cheaper and they want it extremely scalable.

1:17:03

That's why they go to turbo pumper.

1:17:06

>> Uh yeah, we will we'll see on this run.

1:17:09

You we were we were at the track yesterday. >> Yes.

1:17:12

>> And seeing there was there was a there was an interesting group that was also at the track uh taking a different approach to their track day.

1:17:19

They would go [laughter] >> it seemed like they were I mean they were having fun.

1:17:24

Uh, but watching that Turbo S go around the track, it made me never want to buy a Turbo S again. >> Interesting.

1:17:32

>> It just didn't look cool.

1:17:32

It was somebody had a red Turbo S that they were tracking and it just was the most >> I mean it was one of the craziest like okay I I I have put I've put a decent amount of value on like sports cars and just like having a fun car to drive daily or on the weekends and seeing a track car truly was like there is no value in sports cars at all.

1:17:53

Actually >> track cars are the only thing that matters.

1:17:57

Yeah, >> they are 100% the only thing that you should ever get if you want a fast car or have a fast car experience comparing.

1:18:05

There was a there was also GT4 RS that was going around at at at some of the same times as the Turbo S and it and it it looked and sounded remarkably >> such a half measure.

1:18:16

Even even the uh I I was talking to our our new friend about the uh the the the Formula Mazda series where Mazda makes the engines and he was saying you can get one of these race cars for I think it was like 20k and the entire season is like 10k to run or something like that and uh it and like just the speed the actual handling like the track times are just way better than any street car. >> Yeah.

1:18:43

>> It's it's just night and day. So yeah.

1:18:46

Uh, but speaking of cars that might be able to do well on the track, I want your review.

1:18:51

>> WMW YMWLM says, "Play it.

1:18:51

Play play a clip of a GT3 RS with a Gentani exhaust." I would love to.

1:18:58

I think it [laughter] might blow out everyone's ears.

1:19:00

We'll uh we'll save that. Save that for later. >> Completely miss that.

1:19:04

Uh anyway, um the uh speaking of cars, Elon Musk teased on the Joe Rogan Experience that the Tesla Roadster will be a flying car. He danced around it.

1:19:18

He didn't say that exactly.

1:19:20

>> Uh but he did say, "My friend Peter Teal says we should have flying cars, and I think we should give him one."

1:19:27

[laughter] Which is about as clear an indication. Let's play the clip.

1:19:28

I want to hear We got to get better about playing the clips before we just run into it.

1:19:33

But let's play the clip from the beginning. Full full audio.

1:19:36

>> Are you still doing the Roadster? >> Let's go. >> Yes, >> let's do it. >> Eventually. >> Eventually.

1:19:43

>> We're getting close to demonstrating the prototype.

1:19:46

[snorts] >> It's been so >> I think this will be >> Look at that.

1:19:52

I One thing I can guarantee is >> that this product demo will be unforgettable. >> I love it.

1:19:59

[laughter] [gasps] >> Unforgettable. How so?

1:20:06

>> Whether it's good or bad.

1:20:06

[laughter] >> Whether it's good or bad >> be unforgettable.

1:20:13

>> Um stakes for bad or it could be really bad.

1:20:17

>> Well, you know, my friend um you know uh once reflected that the future was supposed to have flying cars, but we don't have flying cars. >> Amazing.

1:20:29

>> So, you're going to be able to fly?

1:20:30

Well, I mean, Joe's face.

1:20:33

>> Uh, I think if Peter wants a blank car, we should should be able to buy one.

1:20:39

>> Okay, pause it right there.

1:20:40

>> It's like the uh the the PR team.

1:20:40

I don't even know if there is a team, but like like whoever's Andy orbit is like, please don't leak the full road map right now.

1:20:50

>> What if it just actually is a flying car? >> It could be. It could be totally. >> Uh, okay.

1:20:55

I want to keep talking about >> get your brand mentioned in CHBT. There you go.

1:21:00

>> Reach millions of consumers who are using AI discover new products and brands.

1:21:03

What do you want to talk about Jordy?

1:21:04

>> We got to talk with uh Dan, CEO of coming in right now.

1:21:10

>> Bring them in from the >> massive [music] deal.

1:21:11

Dan, how you doing the show? >> Hi guys. Good to see you. Thanks for having us on. >> Great to see you.

1:21:17

Massive, massive day today.

1:21:20

We saw you announced uh a pretty big deal and so we said what better day to have you on the show. >> Yeah. Yeah.

1:21:27

You know, it's a big weekend, so a lot of uh sleepdeprived iron bodies around, but it's uh it's super exciting. >> What?

1:21:35

Give us the headline number.

1:21:35

We like to ring the gong around here when there's a big deal that gets inked. >> All right.

1:21:43

Iron and Microsoft 200 megaww 9.

1:21:46

7 billion in revenue 2 billion. >> Absolutely massive. Absolutely massive.

1:21:55

Um break down break down the year for us.

1:21:57

We we've uh we've covered uh Iron's rise a little bit.

1:22:00

Uh we kind of figured you had some type of deal like this in the works, but what what catch us up to speed uh on the last sort of six months?

1:22:11

>> Yeah, look, it's been super busy.

1:22:11

Um so AI popped up really in force probably last April and since then we've been building out our um GPU cloud business which basically involves us buying the GPUs and providing access to those via cloud rather than an alternate model which is colllocation where you build the infrastructure and you allow one of these tech giants to lease it back.

1:22:35

So we believe in owning the compute and providing that uh to the end customers.

1:22:41

Um it's been a journey talking to a number of the uh the large global technology companies but really uh happy to consummate it with Microsoft.

1:22:50

>> Yeah, I remember it was earlier this year Satia had a line that something to the effect of I'm happy to be a leaser and so uh I'm sure you guys you guys uh picked up on picked up on that.

1:23:02

>> Can you give us the >> what? Sorry.

1:23:03

So so >> I want the history. >> Yeah.

1:23:06

One thing that Satia's I guess been saying over the last couple years is maybe not a couple years but over the last years he feels like he's more uh energy constrained than he is uh GPU constrained.

1:23:18

>> What kind of advantages has Iron had uh on the on the power side that that made a deal like this possible?

1:23:27

>> Yeah, that's absolutely right.

1:23:27

And I think it's almost a little bit more nuanced than just power constrained.

1:23:30

I think it's actually data center constrained as well.

1:23:35

But let me come back to that.

1:23:36

I think when my brother and I set up this business 7 years ago, our underlying thesis was that the real world can't keep pace with the digital world.

1:23:47

So the digital world is driving all these exponential demand curves.

1:23:49

You know, adoption goes from zero to one overnight.

1:23:53

Whether it's Bitcoin, nothing 15 years ago to $15 trillion today.

1:23:58

whether it was AI uh not really spoken about 2 years ago to the latest humanity defining technology and at the center of that is these exponential growth and demand but the ability to service that is constrained and limited by the real world.

1:24:13

So when we started this business 7 years ago, we explained to people, it sounds simple.

1:24:16

You can't plug a computer into a high voltage transmission line.

1:24:21

It takes years and years of permits, approvals, dealing with riskadverse utilities, giving you access to that network.

1:24:28

So yes, having access to power and having put in the groundwork very early is now paying dividends.

1:24:33

But it's actually going a step further than that where you might have access to power, but do you have the framework to go and build the data center?

1:24:44

Do you have the governance regime and the flexibility of a of a corporate to give you that decision to go and build and start building ahead of the curve?

1:24:51

Do you have the internal knowhow on how to build these new generation data centers?

1:24:57

Because fundamentally they're a different asset class.

1:24:59

These are not metropolitan data centers providing corporate shared drives doing cat videos like they're fundamentally different.

1:25:09

Um how do you think about the like the the predictability about the shape of compute workloads going forward?

1:25:18

How important is it for you to project those out?

1:25:20

Uh I'd love some like history of like what was the first compute workload that you were doing because I imagine it wasn't LLM inference.

1:25:27

uh there was probably crypto mining in the business.

1:25:29

There's all these different workloads that were super valuable at certain times then changed.

1:25:35

Now we're in the reasoning era.

1:25:37

We might be in a completely different paradigm.

1:25:38

How much do you want to bake onto AS6?

1:25:40

How much do you want to you know use Nvidia GPUs more generalized chips versus flexibility?

1:25:45

Like how do you think about projecting out the future?

1:25:51

So, I would just bring it back to a really big picture and say as society, do we believe that we're becoming more digitized?

1:25:59

Do we believe that we're going more online and that's going to grow?

1:26:03

And again, during our seed investment round, we quoted movies like The Matrix, like Ready Player One, Wreckit Ralph, and directionally I think humanity is heading that way, which is going to drive this appetite for high performance compute.

1:26:16

None of us have a crystal ball.

1:26:18

We don't know what's going to be next.

1:26:19

We had AI in our seed deck.

1:26:21

We also had a whole heap of other stuff that hasn't eventuated. >> Sure.

1:26:25

>> But what it means for us from a business perspective is a number of smallcaled bets along the way creating optionality.

1:26:33

To go and pay an option fee on 500 hectares of land in West Texas is a really really small exposure.

1:26:38

To go and pay 10 20 million to get the grid connection is now a relatively small exposure for our business.

1:26:44

So, it's right sizing your bets to a point where you get to sign a Microsoft deal underwriting $9. 7 billion of revenue.

1:26:54

You go, "Okay, that justifies more capex." >> Yep. Yep.

1:26:56

That makes a lot of sense.

1:26:58

>> Uh what other are are are you looking at other opportunities and sites in in other areas or is Texas the focus going forward?

1:27:07

Look, Texas was the focus early on because we did the lap of the world, worked out the best place to get power, low cost, excess renewables, lots of land, uh, cheap power, u ease of grid connections, lots of fiber backbones, and and now the world's there.

1:27:21

Um, we do have additional sites.

1:27:24

We've publicly announced 3 gaw, but we don't talk about development sites that aren't 100% secured by virtue of a connection agreement.

1:27:34

So there is a multi- gigawatt pipeline behind that um outside Texas and globally. >> Yeah.

1:27:39

How how do you think about the like the current playbook for companies that are doing partnerships with hyperscalers or open AAI?

1:27:48

Like what are the dos and don'ts of announcing a big partnership?

1:27:53

Uh because we're hearing so many of them and I think a lot of people are having >> we're in somewhat of a press release economy right now. >> Yeah.

1:27:59

People are having trouble handicapping them.

1:28:00

Like you can just throw out a big number.

1:28:02

You could you could date it a hundred years in the future and get really crazy numbers.

1:28:08

Like what does the market actually want to get out?

1:28:11

>> This deal feels significant in some ways because Satia has been so much more conservative than other >> uh let's say like an oracle is. >> Totally. Totally. Totally. >> Yeah.

1:28:22

Look, I think it's good to be skeptical, right?

1:28:24

The world works in memes and headlines and public markets.

1:28:28

So I come from a private market background, infrastructure funds management and going into the public markets, there is a lot of narrative, there is a lot of hype.

1:28:34

Um we've tried to keep it >> very limited to binding contractual deal announcements. So this is binding. This is real revenue. >> Sure.

1:28:44

>> Uh just like >> let's give it up for real.

1:28:46

>> That's [applause] amazing. Yeah.

1:28:46

I I honestly think that needs to be clarified, but thank you.

1:28:48

Like that is very very helpful. >> Yeah.

1:28:52

we're in an uh there's so much incentive for for two parties to announce a the biggest possible number without any real underlying commitments.

1:29:02

And so uh yeah, I was excited to see you guys uh get this done and announce it with such a great uh counterparty. >> Yep.

1:29:08

Uh well, we'll let you go.

1:29:08

We know you have a busy day, but thank you so much for stopping by the show.

1:29:12

>> Yeah, congrats to the whole team.

1:29:14

Massive, massive milestone. >> We'll talk. Thanks, guys. Good.

1:29:19

Um Elon Musk says a large solarp powered AI satellite constellation would be able [laughter] fix him would be able to prevent global warming by making tiny adjustments in how much solar energy reached the earth.

1:29:33

>> That would be I wonder how much how much capex does that cost?

1:29:37

Uh yeah, it it's interesting that Elon I I don't know.

1:29:43

There's just like um when he says something like that, it hits just as like sci-fi techno optimism and it doesn't it doesn't hit as like I mean people still trade the stock off of this like news.

1:29:55

People will look at this and be like oh well like you know like like maybe Tesla will get a piece of that, right?

1:30:01

Uh and it becomes a little bit of a narrative but people don't uh people don't dig in that far.

1:30:05

Um, we have >> one thing one thing that was uh super notable to me uh or standout kind of section of the uh Elon was on Allin >> Friday and he was talking about the the shareholder vote around his compensation but also the the voting power that he'll have and one of the things that he said was >> I don't want to create a robot army if I don't have if I can be like fired by ISS or any of these these voting groups.

1:30:32

Uh, and I thought that was [laughter] I mean it's just like the most Elon way way to to uh >> who should control the robot army? It's a good question. >> I don't know. >> He's like Yeah.

1:30:46

He basically was saying I don't want to be fired for political reasons.

1:30:49

>> Typically typically armies are controlled by democratically elected leaders.

1:30:53

Like we have a system for electing who is the commander-in-chief of the army.

1:30:58

Uh very interesting question.

1:31:00

if you actually wind up with a company that has control over a robot army.

1:31:04

That's a that's an interesting philosophical question.

1:31:08

Uh >> also, you know, you're going to need to manage that army.

1:31:12

You got to get on linear.

1:31:13

Linear is a purpose-built tool for planning and building products.

1:31:15

We need the system for modern software development.

1:31:18

Streamline issues, projects, and product road mapaps.

1:31:21

>> So, we have Mark German coming on in just a few minutes.

1:31:24

But, we had a question >> uh message to us.

1:31:27

I thought it'd be good to get into kind of break it down.

1:31:29

So, here is the question.

1:31:30

Advice for my friend's company.

1:31:34

He has around 400 million DAU, but he's been diluted by 90% since the IPO.

1:31:39

He still has full control of the company, but he can't sell because of antitrust. Should he bail? >> I I think no. >> Take it out. I don't know.

1:31:50

There's nothing about that that's identifiable.

1:31:54

Uh I think that you stick with it.

1:31:54

I think it's got to be fun to run such a big company with that many DAU.

1:31:57

Even if you've been diluted, you know, you're you're probably rich.

1:32:01

You've sold a lot along the way.

1:32:03

You're you're post economic, but it's better to be post-economic and have control over an interesting organization than post-economic and just kind of retired. That's my take.

1:32:14

>> My mind's just racing on what what company could this possibly be?

1:32:16

And and it feels like at 400 million DAUs, it's got to be Snap.

1:32:22

>> Maybe could be something.

1:32:22

Somebody should look into it and see if see if um >> see what the dilution has been like over there.

1:32:29

I think Snap is a company uh >> that uh I think if you read the numbers it's like every 10 years they just give away the entire company to uh the team.

1:32:39

>> It was a billion in stockbased comp last year something like that >> and it's a what what is it >> company so giving away 10%. >> Absolutely crazy.

1:32:47

Um, >> well, we have uh Markman, the legend, the Germinator in in [laughter] the waiting room. >> Welcome to the show.

1:32:57

>> Welcome to the show, >> Mark German. How are you doing? >> Thanks for having me.

1:33:01

>> Thank you so much for joining.

1:33:02

>> You know, we to be on here.

1:33:04

>> This has been you're kind of like our like this is the guest we've been waiting for since the very beginning.

1:33:08

We you were we were like >> we've been waiting for this moment for so long.

1:33:13

So, uh we're super excited to have you on. >> Yeah, >> here I am. >> Thank you so much.

1:33:17

Uh may maybe since this is the first time we've actually met uh I'd love to go a little bit back in time just to set the table like how did you land on Apple?

1:33:26

How did you become uh you know so focused on Apple?

1:33:31

Was this like a gradual thing?

1:33:31

I mean I I know you from your reporting it's been fantastic for as long as I can remember.

1:33:37

But I imagine that there was a time when you were you had to make a decision.

1:33:42

>> Well I was an Apple fanboy back in the day.

1:33:45

I remember when I was uh very young.

1:33:47

I wanted an MP3 player >> uh for the holidays that year and I was lucky enough that you know my parents were able to to get me one and the the local mall there was a mall in LA called the Westside Pavilion.

1:34:00

It's uh it's actually closed now and and Google I think actually bought the mall to turn into a headquarters in LA >> and that whole place fell apart.

1:34:09

the whole deal fell apart.

1:34:11

But it's neither here nor there outside of I think Bloomingdales or Macy's or whatnot.

1:34:15

They had a cart, a Dell cart, believe it or not.

1:34:21

And they were touting at the time what they called the Dell DJ.

1:34:24

And that was the MP3 player of uh of Note at that time.

1:34:30

And so I wanted a Dell DJ for Hanukkah that year.

1:34:32

And so I was going to get a Dell DJ.

1:34:34

And so my dad, you know, went to Best Buy, went out.

1:34:36

He's like, I forget the Dell DJ.

1:34:37

got me a uh blue iPod mini instead. >> Okay.

1:34:43

>> And got that iPod mini.

1:34:43

It was my first Apple product and I fell in love with it.

1:34:47

So over time became an Apple family. Got an iBook.

1:34:50

Uh then you know that became an iMac and MacBook Air and whatnot.

1:34:55

And so I just fell in love with Apple.

1:34:56

I was a huge Apple fanboy.

1:34:56

Always glued to the forums uh and the rumor mill and whatnot.

1:35:02

I was a commentator uh and sort of fell in love with it and started wanting to do my own reporting on it.

1:35:08

And I joined a website back in the day called 9to5Mac. Uh it still exists.

1:35:12

I left that at when I graduated from Michigan in 2016 and join Bloomberg and I guess the rest is history. >> That's amazing.

1:35:21

>> Uh how do you think you're perceived by the folks at Apple?

1:35:23

Because in one way like you know you're promoting Apple, you're a real fanboy, but at the same time it feels like every time you get a scoop I'm like oh they must not be happy. >> Yeah.

1:35:34

It's a hard company to be a critic of even even a critic that wants the best for the company >> because I feel like they I I just have this sense that >> that they're like >> they kind of want you to ride with them no matter what.

1:35:50

>> But what's >> I think they love me personally.

1:35:51

I mean they they should love me.

1:35:53

I mean I'm here talking about their products all the time.

1:35:57

>> Uh I think I usually have a pretty good attitude about it.

1:35:59

I think I'm balanced and realistic and, you know, I try not to go down the the the angle of, you know, the skies on fire, everything is burning, Tim Cook should be out of there as, you know, some other news outlets like to do, whether it's it's fair or not.

1:36:14

Uh, talking about their products, keep up keeping people interested in their products.

1:36:18

And, you know, clearly some people there like me because, you know, this information just doesn't come off trees, right? Yep.

1:36:24

So, definitely uh I think it's nuanced.

1:36:27

Do you think Tim Cook's underpaid?

1:36:32

>> Do I think Tim Cook is underpaid?

1:36:34

>> So, he barely he barely makes about the same amount as this baseball player that plays for the Dodgers. >> Yeah. >> Annually.

1:36:41

>> Well, maybe the question is, are athletes overpaid, right?

1:36:43

I mean, LeBron is getting like 55 million a year on his contract.

1:36:49

And then you think about how much money do they bring in from ticket sales because of him?

1:36:52

They're probably making, I don't know, two or three hundred million a year because of him.

1:36:56

So, you know, what's the margin? What should a margin be? Right? And you have Tim Cook. He's what is he making? 70 million a year. >> 75. >> He was make 75.

1:37:03

He was making a hundred million a year a few years ago.

1:37:06

Then everyone flipped out and he had no choice but to cut his pay because they were kind of sick and tired of the backlash, right?

1:37:13

So, he was making a hundred million.

1:37:15

I mean, what is the value that he brings to the company?

1:37:18

I mean, obviously, it's multiples of billions. >> I completely agree.

1:37:23

We we were very close to taking a break from the show and going and just doing a hunger strike outside in Certino that would get his pay up because we're on your side.

1:37:34

We think he's clearly >> just the trade war, like just the fact that he's been so masterful in not becoming a target or staying out of politics like that level of >> the only real critique you could you could make in my view >> is the way he waved the F1 flag.

1:37:56

[laughter] >> Like it just wasn't it was somewhat it was somewhat lackluster. >> I saw that.

1:38:00

>> It was just a rough wave.

1:38:00

You know, he was >> maybe he's off there thinking about supply chain.

1:38:04

You know, maybe he's focused on work. His mind's at work.

1:38:07

He's not >> he's thinking about he's thinking about how was that flag produced and could have I gotten better pricing on it. >> Exactly. Exactly. Okay.

1:38:14

Uh what uh what what's uh what's your update updated take on uh the new suite of iPhones, John and I?

1:38:24

Uh, I had a very funny experience because I ordered my phone.

1:38:29

Uh, I I tried to just order a phone online, walk into the store, be able to pick it up immediately. Wasn't able to.

1:38:35

I I paid and they said they were going to ship it to me.

1:38:37

John, like a week later, just walked in the store and bought one here in LA.

1:38:40

I was [laughter] like I was like, "What is going on?"

1:38:42

Uh, and we've both been, uh, we're not really case guys, and we've both just been amazed at how they could release a phone that, uh, that just gets damaged so uh, intensely, so quickly. >> Wait, wait. So, you have a case. What case is that?

1:38:58

>> It's the Apple Clear case.

1:38:58

I I rotate between the case and not using.

1:39:00

So, here's what happened. case.

1:39:04

>> So, uh, last year they effed around and found out launched this terrible AI service, Apple intelligence, that didn't really work well.

1:39:13

Uh, and what they found out is that it didn't resonate with customers as much as prior iPhones.

1:39:20

This year, they did not f around and find out.

1:39:22

They did exactly what customers want.

1:39:25

Market research data, man on the street conversations tell you what customers want.

1:39:30

They don't want their phone to overheat.

1:39:32

They want the camera to be incredible.

1:39:35

They want the processing speed to be fantastic.

1:39:40

Uh they want battery life to be better.

1:39:43

And so what Apple did for the phone this year is they focused on the core competencies.

1:39:47

Battery life is through the roof.

1:39:50

The phone doesn't require you to use an oven mitt to hold it for extended periods of time. The camera is amazing.

1:39:57

I think they hit them hit right on target with the colors.

1:40:00

I think the new design is terrific.

1:40:02

They did everything the consumers wanted.

1:40:05

They did everything customers want in a phone upgrade.

1:40:09

It came at the right time, which is 5 years after the COVID influx.

1:40:16

You know, I get a new phone every year.

1:40:17

You guys might get a new phone every every year.

1:40:19

Your viewers may get a new phone every year or two, >> but vast majority of people are not getting new phones for four every four or five years.

1:40:25

And so, they set themselves up for uh a pretty nice upgrade cycle.

1:40:28

And you're going to see that with their first $140 billion quarter uh when they report at the end of January, early February.

1:40:34

So, I think all things considered, it's terrific.

1:40:36

Uh >> what about the iPhone is still at the center? >> Yeah. What about the iPhone?

1:40:44

>> Were you did you expect it to sell better than it has or were you always kind of bearish?

1:40:49

>> I've been extremely bearish on on the iPhone Air.

1:40:52

I don't think that there's a significant market for it.

1:40:55

See, Apple because of their large numbers have reinvented what a significant market is.

1:41:02

Uh for Apple, the iPhone Air is not a significant market.

1:41:04

If that was a Google phone, I mean, Google would be do a lot to to sell Pixels in the numbers that the iPhone air is selling.

1:41:10

Uh Samsung would be happy if their iPhone edge sold in the quantities the iPhone air is selling.

1:41:16

Um it's a beautiful piece of technology, but that's what it is.

1:41:19

It's a technology exercise to uh really set the stage for an eventual foldable iPhone.

1:41:25

They have to create thinner form factors, thinner batteries, more advanced materials like titanium for the casing in order to create something like the foldable phone to compete where Google has been for 3 years, where Samsung has been for 7 years.

1:41:38

And so the iPhone Air gets you on that trajectory.

1:41:42

But in terms of overall sales, they didn't even really mention the iPhone Air as a key driver uh and nor is it mentioned in their 10K. >> That makes sense.

1:41:49

The follow-up question would be how how important do you think the foldable market is? >> I think it's uh TBD.

1:41:58

I think they don't know yet.

1:42:01

I think Apple is in a position right now where they basically have to pull every lever possible to keep people in the ecosystem.

1:42:07

If you somehow have a market of, I don't know, 10, 20 million people who demand foldable phones and they're willing to leave Apple to Google or Samsung cuz they want a foldable phone, that is a bad thing for Apple.

1:42:21

Not because you're losing those 20 million customers on that one device, but because Google has an excellent ecosystem now with all sorts of peripheral products and operating systems.

1:42:30

Samsung has the same, the Chinese players have the same.

1:42:32

So if you lose a customer because of one product, you risk losing them uh across the board.

1:42:38

You risk losing them for for entertainment services.

1:42:40

You risk losing them for your laptop, your tablet, your smartwatch, because everyone has everything now.

1:42:45

You kind of need everything. >> Mhm. Yeah.

1:42:48

>> How do you think about the change from titanium to it's aluminum on the new phones?

1:42:54

Uh does that fit within the framework of like revealed preferences, man on the street interviews?

1:42:59

People say they wanted an iPhone that doesn't scratch, but in practice they'll just put on a case or is there more thought to that? >> It's okay.

1:43:08

So, people aren't asking for aluminum, >> but aluminum is tried and true.

1:43:12

They've used it on laptops for many years.

1:43:16

>> The benefits of titanium is the durability.

1:43:18

If you've seen a bend test of the iPhone Air, that thing does not you can't manipulate that.

1:43:23

>> I have a I have a story.

1:43:23

I have a story you'll appreciate.

1:43:26

We uh we were having dinner uh with a group a couple weeks ago and uh one person in the group had an iPhone air and was bragging to the whole room of how strong it was.

1:43:37

They were saying, "This is the most durable iPhone ever made.

1:43:40

It's it's impossible to break."

1:43:43

And he's going like this.

1:43:45

He's like he's showing showing the group.

1:43:46

He's like, "I can't even bend it."

1:43:47

He's like, "I dare anyone in this room to try to break my phone."

1:43:50

And this guy raises his hand and takes the phone and puts it down here and just gets leverage it.

1:43:59

a second and the guy's just sitting there in disbelief saying like I'm going to I'm going to email Tim Cook right now.

1:44:06

[laughter] This is this is ridiculous.

1:44:07

But >> well, first of all, I I I love that story.

1:44:10

Um I'm all for stuff like that.

1:44:13

Um but to your point, >> you know, aluminum dissipates heat so much better.

1:44:17

And it was like a big mistake that they moved to titanium with the 15 Pro and 16 Pro lines a couple of years ago.

1:44:25

>> You could do some interesting color treatments on it.

1:44:27

They had some cool colors like the natural titanium, the gold titanium stuff they're not doing with the aluminum. So, it looked nice.

1:44:37

>> I like that I could drop it without a case onto cement and it would be >> more durable.

1:44:42

It was absolutely incredible.

1:44:45

>> The durability was great.

1:44:45

And >> that's why I used it for the iPhone Air.

1:44:48

But if you have to make that trade-off, which clearly there is a trade-off. Titanium more durable.

1:44:51

Aluminum, you know, it's not as durable.

1:44:54

You drop this thing, you're going to get a big gash in it.

1:44:57

Y >> uh the way the color is anodized, it doesn't stick like it does on titanium, but it's not going to overheat and as the performance of these things improves as the chips get better, you need better and better heat dissipation.

1:45:09

And so this was a reversal uh that they had no choice but to make.

1:45:14

uh we had this framework for uh Apple's uh strategy right now which is do nothing win with regard to the AI race like cuz people have said like yes they lost and you mentioned it with Apple intelligence and I agree with you I've taken that I've been like ah Siri doesn't work as well as I want it doesn't even it doesn't even have

1:45:32

whisper APIs like it can't even dictate >> the main thing was was promising this magical experience and everyone being underwhelmed the one thing they overd delivered on was humor they were the first AI company to reliably make people laugh through the summarization of >> summarization is very funny but but basically they didn't get over their

1:45:50

skis they didn't invest a trillion dollars in capex and it's a $4 trillion company now like they've done nothing in AI and they've won basically but is that narrative click with you is that taking hold in Certino are they happy with the way it's played out >> I think they recognize that it's been a disaster I mean still the biggest thing

1:46:11

to me is they were completely completely caught off guard by ChachiPT, Gemini, Copilot back at the the end of 22 into 2023 and a company that does this much uh research, a company that has supposedly this kind of understanding of where the world of technology is going to just completely like it's like >> they had no idea the internet was coming. It's completely unbelievable to

1:46:32

It's completely unbelievable to me.

1:46:34

Um it's sacrilegious that a company like Apple could have had that big miss.

1:46:39

Apple Intelligence like they brought it out and their marketing scheme is always just like we're the best. We're Apple.

1:46:47

We're going to do it better. We're correct. Everyone else is wrong.

1:46:48

And that's sort of the message they put out about AI when they launched Apple intelligence.

1:46:54

But it turns out no Apple, you were completely wrong.

1:46:56

And I think any observer would have understood that people want chat bots. They like chat bots. It is a winning formula.

1:47:02

And to date, they have been completely anti- chatbot, which I think has been a very big mistake.

1:47:08

The integration of chat GPT into Siri is very much subpar.

1:47:14

>> Still, they support all the chatbot apps, but they really need first party stuff.

1:47:19

>> The big AI thing for Apple is the revamp Siri coming out in the spring.

1:47:22

They're using a Google Gemini model to power it, which I think is going to make it pretty top tier.

1:47:28

I mean, Gemini's models are, you know, pretty excellent as we know for anyone who's used, you know, the Google AI services.

1:47:33

But what really you you have to understand is that the brand damage that has been done to the Siri name over the last 15 years, there's a big question whether or not it's insurmountable.

1:47:46

In my viewpoint, if they've get gotten Siri to a point where this thing actually meets the promise of this AI voice assistant, they have to change the name.

1:47:56

On the other hand, Siri, as damaged as the brand is, it is still a ubiquitous name.

1:48:00

So, I'd be curious to see uh I don't think they're going to make a name change, but uh they should.

1:48:07

>> So, Gemini powering Siri under the hood.

1:48:10

Who pays who in that scenario?

1:48:13

>> Apple is paying uh Google.

1:48:13

Apple, >> you think it stays that way forever?

1:48:17

[clears throat] Because Google provided a wonderful search engine in the Safari iOS browser.

1:48:24

uh and uh and Google paid Apple for the right to do that.

1:48:30

>> Uh well, it's more of a revenue share for the the payments there on the search engine.

1:48:34

So, this is completely separate.

1:48:36

>> This is like you're developing something for me.

1:48:39

You're my supplier >> and I am paying you for it like I'm paying you for it.

1:48:44

Y >> uh whereas revenue share because Google is making a ton of money uh by getting people through the Apple interface.

1:48:55

>> Won't that be the long-term state of affairs with these >> I don't believe so this is this is no I think what I know is that this is an under the hood whitelabeled model.

1:49:06

They've developed the model here.

1:49:06

Uh but if it wasn't for my reporting no one would probably know that this is this is a Google model.

1:49:13

You can be >> sure >> pretty sure that Apple's not going to advertise this as a uh as a Google model.

1:49:19

You can also bet at some point they'll probably figure out their own model to replace the Google thing.

1:49:23

So, I don't think it's a long-term bet. >> Yeah.

1:49:26

How how uh competitive was that process?

1:49:29

I remember it was probably your reporting talking about how Anthropic was in the running as well and they wanted it was a bake off.

1:49:35

They Anthropic wanted a huge number >> for it.

1:49:40

Thropic wanted multiples of billions.

1:49:43

Uh I believe starting in a billion in year one and doubling every year thereafter at least for the next three years.

1:49:50

Uh Open AI wanted things like an investment and a stake and all sorts of stuff.

1:49:56

And so you know they originally were talking to OpenAI then they were talking to Anthropic then they were talking to Google.

1:50:01

They did a bake off of all three.

1:50:02

I think they kicked OpenAI out of the running pretty early on until about 2 months ago it was going to be anthropic and then once they got into the financial terms uh it quickly pivoted to to Google.

1:50:14

Uh my belief is that the quality of the Google engine and the anthropic engine are pretty much on par.

1:50:22

So I think >> so what do you think is the is this in your view a threat to chat GBT usage?

1:50:30

Is the chat GPT Siri integration gonna exist after this next release?

1:50:37

Are people going to be using this as as a replacement for web search in a browser?

1:50:42

>> Weird because even though the chatbt Siri integration is a little weird, if there are people that are love that then you take that away.

1:50:47

That's like >> they're not they're not taking that away. They're not taking away.

1:50:50

So again, it's an underlying under the hood model to enable the existing Siri functionality and the new Siri functionality.

1:51:00

So Apple, let's talk about the new Siri. >> Yeah.

1:51:02

So the new Siri is what I'm getting at because if I can suddenly use Siri to do deep research and do web searches and stuff like that, that feels pretty significant. >> Yeah.

1:51:12

>> So So what is what is the new Siri?

1:51:14

Well, the new Siri so far, what Apple's announced is three things.

1:51:16

Uh one is onscreen awareness.

1:51:18

So you see something on your screen, you can ask uh the voice assistant about it.

1:51:23

Uh the second thing is personal context.

1:51:26

So, the ability to um ask questions and have it search through your personal data in order to answer those questions, like make an itinerary uh based on conversations I had with someone who's uh visiting me in town.

1:51:44

Uh and there's a few other bells and whistles related to the new Siri that Apple has uh previously announced.

1:51:50

What they haven't talked about is AI web search.

1:51:53

And so the new series is also going to have a chat GPT perplexity competitor for things like deep research and summarizing uh search that is going to be an Apple built an Apple powered system. >> What is that?

1:52:08

>> That's just a little sound effect we use.

1:52:10

That felt that feels significant >> when there's something super dramatic.

1:52:14

>> Your significant button. >> Exactly. You play it again. >> Yeah.

1:52:18

>> It's like we're going to war. >> We're going to war.

1:52:20

>> The companies are fighting. [laughter] >> Yeah.

1:52:23

So this is Apple going after chat GPT perplexity at least for web search.

1:52:27

Y >> uh I think it's going to be pretty useful. It's very necessary.

1:52:29

It's one of the main use cases.

1:52:31

Uh and you'll see them eventually embed things similarly into Safari and other parts of the iPhone operating system.

1:52:38

So it's going to be a big year for Apple AI and that's just the beginning with the rolling out in March, April.

1:52:44

They're able to pull it off.

1:52:45

Do you think >> do you think there's any world where Apple >> wants to monetize commerce off of this assistant?

1:52:53

They obviously >> because because that's I can see the exact same thing that chat GBT wants to do.

1:52:59

>> Order me a new pair of shoes. Order me some hotels. >> Yeah.

1:53:02

Find me find me find me Yeah, exactly. >> Book me a hotel. Book me a flight.

1:53:06

>> It's just not good enough.

1:53:06

You're not g So it comes down to this. Okay.

1:53:11

[laughter] >> Will Uber, Postmates, Uber Eats, Amazon, whatever.

1:53:18

>> Right now, you can integrate all of those apps.

1:53:19

Uh, it's called an extension into Siri.

1:53:22

In fact, this has been a feature for 10 years.

1:53:24

Nobody uses it because it's unbelievably terrible and unreliable.

1:53:28

You cannot trust your iPhone to call you an Uber via Siri.

1:53:31

Like, you'd have to be out of your mind to need to call an Uber in a pinch and use Siri versus using the app.

1:53:37

And so there's really no >> take me from point A to point B with Uber. >> Yes.

1:53:43

>> Taking you to Antarctica.

1:53:43

[laughter] >> So there is really there's really no way for Apple and these companies to come to some sort of financial agreement around that.

1:53:52

That's why they haven't yet.

1:53:54

>> But when this new series starts working, when it has those upgraded technologies that mean that I can call an Uber from my phone and know that it's actually going to happen, then they'll be able to come to those financial agreements because people are going to start using it.

1:54:07

Right now, there's no point in monetizing zero dollars.

1:54:09

But once the real money starts flowing through uh in Siri, you're talking about a big business for Apple and AI uh and really what the future of apps and services revenue is for the company.

1:54:21

>> Yeah, >> I'm I'm pretty bullish on this. >> Yeah.

1:54:23

No, that makes a ton of sense.

1:54:23

Uh, I I guess the question is just like it it feels like Apple the reason Apple is paying Google is because they don't want a situation where I click the Siri button and say, "Hey, order me an order me some paper towels."

1:54:38

And then Gemini under the hood says, "Yeah, we'd love to process that through Google Payments and Google Shopping and all of our under the hood stack."

1:54:48

And then they start monetizing.

1:54:49

Yeah, that's not what's happening.

1:54:51

>> How uh >> it's it's it's like just hold on one second.

1:54:54

It's like you guys are really really good at what you do.

1:54:55

So, I'm paying you to uh >> to to to to write my to create my podcast for me. >> Sure.

1:55:04

>> But you guys have nobody knows I paid you to do it and uh I'm the presenter and everything.

1:55:10

>> Pure pure white label.

1:55:11

>> Y >> how uh what what's your been your read on Apple's kind of M&A strategy?

1:55:14

They've bought a number of companies this year.

1:55:19

Mo almost all of them are are I think to my knowledge very small companies that are probably uh talent focused.

1:55:23

There had been some rumors that I have to imagine were were kind of like leaked by Perplexity that Apple was like taking a look at that.

1:55:34

That never felt real to me.

1:55:36

When you look at Apple's history in M&A, they'll buy they bought Beats for like one or like two times revenue.

1:55:40

like they that when they buy comp that the only times that I've seen them buy a company that for a large price was like a relatively like conservative.

1:55:51

We don't just take swings at $20 billion companies with like 100 million in rev.

1:55:57

That just doesn't >> with no underlying.

1:55:59

>> Here's what I could tell you.

1:55:59

First on the perplexity one, I was the one who who broke that. That was real.

1:56:02

That did not come from perplexity.

1:56:04

The idea there was Apple was sort of scared out of its mind that it was going to lose this Google search deal.

1:56:12

>> Um there was a very real possibility the judge was going to tear that thing up and Apple would be out of billions of dollars.

1:56:18

And so buying Perplexity when it wasn't as big of a a price tag as it is today for that company would have made sense.

1:56:27

It could have been a pretty easy plugandplay to replace Google search on the iPhone and and have a Apple revenue stream there.

1:56:33

>> Oh yeah, >> that's out of the picture because a >> per where would the revenue have come from?

1:56:39

>> Oh, they would just integrate their Apple network in perplexity. >> Yeah. Ads in Perplexity. >> Yeah.

1:56:45

You go to in, you go to default search on iOS, it hits perplexity and then there are a whole bunch of advertisers that are buying to be at the top of those results.

1:56:54

>> So similar to the apps app storely, you know, it would have been a pretty buying perplexity would have been a quick plug-and-play painless uh replacement for Google search, but that deal wasn't torn apart, giving Apple more time to build its own in-house AI web search product.

1:57:08

Uh in terms of the M&A strategy, so they really, to your point, have not veered from their strategy.

1:57:13

uh biggest acquisition to date even post inflation appears to be that $3 billion beats deal back in 2014.

1:57:21

Yeah, >> I do believe they continue to be on the hunt for smaller AI M&A deals in addition to Perplexia.

1:57:27

They looked at Mistral which developed their own LLM and related technology um out of Europe >> but would never I I can't imagine France would be like yes buy our national AI champion we'd love to >> Well, stranger things have happened but given the situation with the EU I'd be shocked as well. >> Yeah.

1:57:47

Uh what about uh what can you say about their reaction to the new Meta Ray Bands release and and VR broadly?

1:57:59

>> Well, the Apple Vision Pro, have you guys used one? Do you guys have one?

1:58:02

>> I had one for two weeks and then I returned it.

1:58:04

>> But I did find it like it was remarkable in terms of screen fidelity, but content library wasn't there and weight wasn't there.

1:58:13

I like that they put the battery in a pack there.

1:58:15

It was a It was a mixed bag.

1:58:17

And at five grand, it was like, "Why am I doing this?"

1:58:21

>> So, I got the Vision Pro on the day it came out back in February of 2024. >> Yep.

1:58:26

>> Uh, a friend of mine for the first time got one. Does that make sense?

1:58:30

It's been a year and a half and finally a friend of mine got one. >> Totally. >> Okay. >> Totally.

1:58:35

>> And so, I had my first Vision Pro to Vision Pro FaceTime experience actually a few nights ago. >> Oh, wow.

1:58:42

>> And we tried out this new Persona thing.

1:58:44

You can literally like turn on a movie and sit side by side and see the person sitting next to you watching a movie together.

1:58:49

Y >> it's freaking unbelievable.

1:58:50

Okay, >> here's the problem.

1:58:52

Most people don't want to put a pound and a half helmet on your on their head, >> right?

1:58:58

>> And so Apple is limited by a combination of price >> uh as well as people just not wanting to use that form factor.

1:59:07

I also think they've done a pretty terrible job marketing it because I'm ingrained in this ecosystem more than anyone else I know and probably most people in this world.

1:59:17

And despite the fact that I've had a vision pro, despite the fact that I'm totally tuned into this, I had no idea what that experience was like that I experienced the other night.

1:59:25

And so all that tells me is they've just done a terrible job marketing these features.

1:59:31

Obviously, they've done some, you know, executive interviews about personas in the last few days or whatnot.

1:59:34

People don't really care about that.

1:59:35

They care about TV ads and they care about um demos and what have you.

1:59:38

So they need to up their game.

1:59:41

Anyways, long story short, they're full steam ahead on smart glasses.

1:59:45

The first version won't have displays like the older metal ray bands or the base level metal ray bands.

1:59:51

>> Those are coming out in 2027.

1:59:51

I think they'll be >> a non display smart glasses without a display will come out in 2027. >> Yeah, early.

2:00:00

And I think it'll be early enough in 27 where there's a possibility, they haven't decided yet, there's a possibility they'll be able to announce it before the end of next year.

2:00:10

>> And people will want to buy that because the Apple assistant is so good that it's >> Well, I thought you were going to say because of the Apple brand, people are not going to want to buy it because the Apple assistant, but theoretically good unlocks that. Yeah.

2:00:23

Because if it's not good, like I don't need to wear a pair of glasses. >> But it's a pitches.

2:00:29

You don't need to wear AirPods anymore.

2:00:30

It's like a substitute for AirPods potentially.

2:00:34

>> It's like AirPods with souped up battery life with cameras. Yeah.

2:00:40

>> You know, they've also been working on AirPods like I'm wearing with cameras in there as well.

2:00:43

And so I think there's actually a bake off going on internally too. >> Yeah.

2:00:48

Between the two form factors.

2:00:50

>> Well, between the form factors or if you need both.

2:00:53

>> I would bet that they'll do both. >> Weird.

2:00:56

And then >> well yeah because if you need if you need glasses >> like for your vision >> a pair of smart glasses that have a speaker built in. You can do phone calls.

2:01:07

You have a camera and you have prescription lens lenses like that.

2:01:12

There's a over a billion people that wear that need prescription eyewear.

2:01:16

>> And those people will probably be like this is amazing.

2:01:18

I get to wear >> I I get to fix my vision and I get all these added features.

2:01:23

I'm already wearing glasses.

2:01:24

I'll pay the $2,000 to where have another kind of like device on my on my on my person.

2:01:32

>> Um, >> and the bet is that the Apple brand is stronger than the Ray brand uh Ray-B band brand.

2:01:38

And I would guess the Apple brand is stronger.

2:01:41

And if you had to choose between Ray-B band glasses and Apple glasses, especially with the context that Apple has severely limited the ability for the meta glasses to sync with your iPhone and the iPhone and the Apple glasses will sync perfectly.

2:01:54

I think most people are going to lean in the in the Apple direction.

2:01:57

But Meta deserves so much credit for >> creating a category >> and making a category so terrific.

2:02:04

I have the Ray-B band displays that Meta gave me to test out.

2:02:09

Those are amazing and they're like two, three years ahead of whatever Apple's got. >> Yeah. Do you do you >> Wow.

2:02:16

>> So I was with the with the Rayban displays, I could imagine that being having like pretty real product market fit for people in the world that are dependent on WhatsApp and already need glasses, like they need to wear glasses for their eyesight.

2:02:31

is if you have those two things and you can get WhatsApp messages just like popping up, you can do phone calls, like that feels like pretty compelling.

2:02:41

And so I can imagine the kind of person that is.

2:02:43

Maybe it's a European executive or some Gen Z person in in Europe >> that's just a WhatsApp power user.

2:02:52

>> But um but I what what's your read on it?

2:02:54

I know it's not your kind of cover.

2:02:58

>> Well, they feel like a prototype.

2:02:58

No, I cover all hardware, too.

2:03:00

They feel like a prototype if I'm being honest.

2:03:02

Uh >> but like a good prototype, I think they're priced perfectly.

2:03:08

I think $800 is totally reasonable for um what their features are.

2:03:14

You give it a generation or two, uh they're going to be amazing.

2:03:18

The trick for Meta is beating Apple by a year on something that's a bit lighter and better displays and what have you.

2:03:24

See, the current Meta, they have one screen in them.

2:03:26

the the second generation version will have displays in in both eyes, maybe making them a little bit more expensive, but uh Meta is on to something.

2:03:35

They have a multi-year head start.

2:03:36

What you're going to see is Google come into this space, too.

2:03:40

They're going to launch, you know, their smart glasses with Samsung in a few months, their glasses with Warby Parker and a few other glasses brands in a few months.

2:03:48

>> And there's going to be a lot of competition in this space.

2:03:49

I think this is going to be really hot across 26 to 28.

2:03:54

>> We have a question from the chat.

2:03:54

Uh, could you get us up to speed on the John Proser situation? >> We haven't.

2:04:01

>> Uh, this one I'm not This one I'm not terribly read up on. >> Okay. Yeah.

2:04:04

Well, we'll we'll need to revisit it at some other point. >> How about this? Put it this way. I I I lied. I'm very read up on it.

2:04:09

I don't want to get into it.

2:04:11

It's not my It's not my uh It's not my problem to deal with. >> That's totally fine. >> That makesense.

2:04:16

What did you What did you read into uh there maybe this was your reporting?

2:04:20

So, this is why we were so excited to have you on the show.

2:04:22

It's like it's been so many stories that you've originated, but uh uh uh Evan Spiegel and Snap Snap were saying that they might be spinning out specs >> uh and raising capital for it.

2:04:35

I was a bit surprised to see that given that um I haven't seen a pair of specs, you know, out in the wild like in years.

2:04:43

And uh if I'm an investor kind of looking at this category and you can you can get exposure to smart glasses through Meta, Google, and Apple, like it's hard it would be hard to kind of underwrite, but uh I'm curious if you're more up to speed on on what they've been cooking on. >> I like Evan a lot.

2:05:05

Uh I'll just tell you that.

2:05:07

And I think that they're trying some pretty cool stuff.

2:05:09

And their big differentiator there is what these glasses are going to be used for and the social integrations.

2:05:15

In my mind, they might be just better off sort of lowering their R&D on these things by focusing on their hardware, partnering with a company like Google and putting their own social layer over Android XR.

2:05:27

>> Uh, but obviously they have their own Snap OS.

2:05:29

They're trying to get this consumer version of the glasses out on the market uh next year.

2:05:32

They look quite a bit different than what you've seen from Meta and Apple and some of the Google prototypes.

2:05:38

Uh, so we'll see what happens.

2:05:40

It's going to be a multiverse race here.

2:05:43

Is true VR just kind of dying or something?

2:05:46

Because you have like camera glasses at Snap.

2:05:48

It seems like all the focus is on camera glasses at Meta and then Apple maybe pivoting away from Apple Vision Pro and then Google's really focused on the on the uh Samsung glasses that are again seeth through with a camera on there.

2:06:02

Maybe a little overlay, little HUD.

2:06:04

Um but what is there anything exciting going on in just like vanilla VR?

2:06:08

I want to watch a IMAX movie on my face.

2:06:14

Well, vanilla VR is just incredible.

2:06:15

Like, there's no better video watching experience than what you get on an Apple Vision Pro. Yeah.

2:06:19

Uh, I've tried all the VR headsets. I've had all of them. I have all of them.

2:06:23

It's just a remarkable category, but it's only a remarkable category for the people who want it.

2:06:26

I mean, there's very few people where VR, I think, works.

2:06:31

I'm out and about all day. >> Mhm. >> I have a family. >> Yeah.

2:06:36

>> Uh, I go to an office, too.

2:06:36

And when do I have time to put this thing on my head to watch a movie?

2:06:42

The answer is almost never because I have people in my life. I have needs around me.

2:06:47

I have things I need to do and it just does not fit into my life.

2:06:52

>> For people who can put on a headset and be secluded from the world for 2 hours, there's nothing better. >> Yeah.

2:06:59

>> Glasses, you can wear them and use them throughout your day really no matter what you're doing.

2:07:03

That's that's the big difference.

2:07:05

So there's nothing wrong with VR.

2:07:06

It's just the use cases uh and the people who could use them is just quite a bit more limited. >> Last last question.

2:07:12

I know we're over time, but uh >> do you think Apple thinks about OpenAI and their hardware ambitions a lot?

2:07:20

Sam was pressed pretty hard on on his uh spend commitments on Friday and one of the justifications that he gave for why like basically like how they were going to be able to spend that kind of dollars was something to the effect of like we have a consumer device coming up and we need a lot of compute for that.

2:07:40

I'm kind of botching the the exact um uh language that he used, but he was seeming to imply like we have a hit consumer device coming and just kind of be right like I can't say more, but he's he certainly is telling the market that they're really cooking.

2:07:59

But I wonder what Apple's read on it is based on what he's saying.

2:08:04

This device has to be so amazing that he's confident that they're really going to need that compute.

2:08:10

And to date, we have not seen a single AI device that has either not been a failure or has needed the kind of compute that these dollar numbers are talking about.

2:08:20

>> That's what exactly what I said.

2:08:20

That's exactly what I said earlier.

2:08:22

exactly what I said earlier. I'm like, every single crack like you can have the >> every single crack at this so far has not managed to be remotely as >> yes >> good of an experience as like an iPhone with even a a physical headset like a like I use wired earphones

2:08:41

>> like >> all right that's ridiculous but um the Meta the Meta glasses are far and away the most successful AI device brought to market in this era over the last two or three years >> and In terms of the users, probably is using what 1% of of the amount of compute that Sam Alman is talking about here. >> Uh so we will see. In terms of Apple >> Uh so we will see.

2:09:00

In terms of Apple worried, I think Apple looks at this as something where they can be a fast follower.

2:09:07

I don't I think there are hardware products that OpenAI can bring to market that are innovative before Apple, but I don't think there's a product out there that if Apple wanted to copy that it can't copy. So let's see. >> It's fascinating.

2:09:21

Well, well, this has been a fantastic conversation.

2:09:22

Thank you so much for taking the time.

2:09:24

We would love to have your show soon. >> Anytime.

2:09:28

>> Uh, we could have spent another 25 hours talking about this. This is fascinating.

2:09:33

Uh, I hope you have a great rest of your day.

2:09:34

>> Yeah, I really enjoyed it, Mark.

2:09:34

And thank you for Thank you.

2:09:36

Thank you for all your hard work. >> Tireless work. Thank you. >> Yeah.

2:09:40

Do you guys do in person?

2:09:40

If you do in person, maybe we can >> Are you Are you in LA? >> I'm in LA. >> Come by. Yeah.

2:09:45

Let's get Where you guys are in LA? >> We're in LA. We're in Hollywood. >> Yeah. >> Oh, great. Okay. Next time. >> Come by next time.

2:09:52

We have a seat here ready for you. >> Center seat. >> Yeah. Yeah. >> Can't wait. >> All right. >> Okay. Mark German. >> All right. See you guys. >> Equivalent yappers. We love it. >> Thank you. >> Talk soon.

2:10:04

>> We'll talk to you soon.

2:10:05

>> Uh let me tell you about numeralhq. com. Sales tax on autopilot.

2:10:08

Spend less than five minutes per month on sales tax compliance.

2:10:12

Uh you can get started for free.

2:10:14

Uh up next we have Erica from Redpoint Ventures. Very excited for this.

2:10:20

Welcome to the show, Erica. How are you doing? >> Welcome. >> Hey, happy Monday.

2:10:25

>> You guys, >> same to you.

2:10:26

I have to tell you, I was watching the show from Friday this morning and I can't and see your costumes.

2:10:31

They were [laughter] >> rocking like very impressive.

2:10:34

>> Having the hairline back is uh >> What was your read?

2:10:36

Did you think that John looked much more like Ilia than I look like Mark? Cuz that was our read. I kept >> I think so. I think so.

2:10:43

But I saw it start to crinkle up over time and I'm like [laughter] starting to >> after surprised it wasn't just falling off.

2:10:51

>> It's a very weird thing to be under like 10 layers of just stuff. >> Crazy.

2:10:56

>> And just be inside this.

2:10:58

>> Think about wearing makeup every day as a woman.

2:11:00

What must that feel like now?

2:11:02

>> No, this is a level this is a level beyond that.

2:11:03

We were in the chair for like three and three hours.

2:11:06

>> Three and a half hours where they applied lay it was like they basically had spray paint.

2:11:10

They were spraying doing a layer doing another layer.

2:11:13

>> Literally spray painting.

2:11:13

Uh anyway, thank you so much for hopping on the show.

2:11:16

uh could you could you give us a little bit of an uh little bit of backstory on on how you wound up at Redpoint and then I have a bunch of particular questions about about Redpoint and and and the current markets.

2:11:28

>> I uh I call myself an accidental VC.

2:11:28

Um I do think venture is the best job in the world but I actually had no interest in being a venture capitalist.

2:11:34

I met my partner Satish Darrage like 17 years ago.

2:11:39

He was building this company called Zimbra.

2:11:41

I had a startup that was trying to sell we're trying to close him as a customer.

2:11:45

It was like our first year of sales and he was the only customer we didn't close which really pissed me [laughter] off and we became friends, stayed in touch, funny enough like he introduced me to Sati Nadella who I know you had on last week who was awesome too.

2:12:01

And uh that like changed the trajectory of my company years and years ago. Wow.

2:12:06

>> And then he called me and said, "Hey, I want you to to come to Redpoint."

2:12:08

And I was like, "No, no, no.

2:12:11

That seems like a terrible idea."

2:12:13

and uh he'd done so much for me.

2:12:16

He like convinced me to come and hang out with the team. I fell in love. I left GitHub.

2:12:19

I was COO there for a couple years and uh never looked back.

2:12:25

>> Uh you were COO at at GitHub like right around co-pilot launching right before you saw glimmers of of co-pilot.

2:12:32

>> Oh yeah, I was there when we launched.

2:12:34

Yeah, I um so I came in following the Microsoft acquisition.

2:12:38

when I was there was there um through launching co-pilot and then list specifically to to join Redpoint and had had a couple >> saw what was happening internally and you were like the big tech approach is doomed to fail.

2:12:50

I got to go fund startups instead.

2:12:52

Is [laughter] that what happened?

2:12:55

>> It was amazing to be part of >> everything here is a zero.

2:12:57

I'm going out into the private markets.

2:13:01

>> Startups are so much more fun early notoriously easy too.

2:13:05

[laughter] Yeah, I was saying I I I still I mean I I still think Copilot is so I was saying this on the show it's it's it's underhyped because they're not announcing a >> fun round. Yeah. Yeah.

2:13:19

You don't realize how big the business is because >> so people have no idea of like you know that was you know when when Carpathy was on Dwar and like saying like this isn't the year of agents like one argument against that point was that you see this explosive growth of of products like co-pilot and in many ways agents are working even if it's like primarily in a >> in a coding capacity. >> Yeah. >> Yeah.

2:13:45

it probably doesn't get the the credit it really deserves for the reason that you mentioned, but I also think there's just been so much innovation in the ecosystem since then.

2:13:52

Lot of changes on the on the GitHub side, too.

2:13:54

But it was a pretty remarkable thing to be a part of.

2:13:58

And honestly, after we shipped it, I went through like a little bit of a a darkness.

2:14:02

I have a son who's 12 who's like super into coding, and I'm like, what is my son gonna do?

2:14:07

Like, what is what are his jobs going to look like in the future?

2:14:12

>> Um, it's been really transformative.

2:14:12

It was it was very cool to get to be a part of like the early days. >> Yeah.

2:14:18

Uh we were we were spending the early part of the show reflecting on Sam Alman and Satcha on Brad Gersonner's show.

2:14:25

Uh and just this question of the 1.

2:14:28

4 trillion in spending commitments versus 14 billion.

2:14:30

And I'm wondering >> what did you think of Sam's answer?

2:14:34

>> Yeah, I mean that's a great place to start, but I do have more questions about impact for startups. But yes. >> Yeah. Not to not >> Yeah.

2:14:39

Do you want to I was looking for just one person besides Brad and the altimeter team to defend Sam.

2:14:45

>> What are you talking about?

2:14:46

>> John John defended it.

2:14:46

He put the >> Steelman helmet. >> Yeah.

2:14:50

I mean [laughter] >> I have a Steelman helmet. I can defend anything.

2:14:55

>> Look, we are going through such an extraordinary period in human history.

2:14:57

I think with every other shift we've ever seen, we tend to like overestimate how quickly it will change things and then underestimate the long-term impact that it will have on society.

2:15:09

I think there's a bunch we don't understand.

2:15:11

I'm certainly not betting against Sam right now as being one of the major players in the space.

2:15:18

And I guarantee you there's so much detail in these contracts about like, you know, outs and rolling things back and everything.

2:15:27

I've seen what these things look like. >> Yeah.

2:15:29

I just thought the question was not you could ask that question without being bearish on open AI and like I look at that as >> I if I'm an investor in any of the compan any of the counterparties to open AAI. >> Yeah.

2:15:43

>> I want to know like how how are you how are you going to do how are you going to do this?

2:15:48

>> Let me reformulate this.

2:15:48

So if if if the if there is like risk of OpenAI not hitting 1. 4 4 trillion.

2:15:54

Uh there's tactics that you could do if you're a hyperscaler who's on the other end, right?

2:16:01

Like like the outs of the contracts, maybe you don't build as aggressively, if you don't think that the demand's actually going to materialize even though you have a contract.

2:16:08

There's a bunch of strategies that you could do if you're running those companies.

2:16:10

What's less clear to me is what are you talking to folks in your portfolio about?

2:16:16

What what advice do you have for founders where you say, "Hey, the future's a little hard to predict what how this compute buildout.

2:16:22

There might be this big glut like you don't want to get caught in front of the steamroller.

2:16:29

You want to be drafting and riding the big wave and catching the wave at the right time."

2:16:34

How do you how are you thinking about that with founders in the portfolio?

2:16:36

Because we've interviewed some folks that you've backed. Uh Lorra came on. It's incredible.

2:16:41

The the the growth rates are so fast. >> Yeah. Yeah.

2:16:44

Look, I I don't believe there's going to be any time kind of material glut.

2:16:49

I think there's just too much happening.

2:16:51

I mean, look at what Poolside's doing, right?

2:16:53

Building out their own data center.

2:16:55

This was like a plan from the day zero.

2:16:57

You know, a lot of people think those guys just like got caught off guard.

2:17:02

Oh, we need to go build this to get, you know, control over our own destiny. That's totally not true.

2:17:08

Like, they have seen this coming for a long time.

2:17:10

I think, you know, if you're at the model layer, the smartest thing to do is to have control over the full stack.

2:17:18

And the reason I believe that's to be that's true is because people uh there's going to be so much demand and it's so hard to get access to not just the chips, but the power that you need.

2:17:30

Like I I'm just not worried that we're going to run into any kind of a glut.

2:17:34

And at the application layer, what we're telling people generally is like, I know this is such a VC cliche.

2:17:40

I don't care about margins at all right now.

2:17:44

Like I care about winning in the market.

2:17:48

>> Let's give it up for not caring.

2:17:50

>> Let's give it up for growth, for burn.

2:17:52

Let's give it up for aggression. >> I know.

2:17:53

I never I never I never thought I would be that person, but I I I genuinely believe that.

2:17:58

I think like it's very clear that we're at like day zero at figuring out how to wield [clears throat] these super powerful instruments.

2:18:06

The costs of inference are going to come way down.

2:18:08

We're getting better at building more efficient uh models for like task specific models.

2:18:13

Um I think what you need to do is figure out like what is the UX like how are humans going to get work done?

2:18:20

What does that look like?

2:18:23

How can you build some kind of defensive ability into your product?

2:18:27

And I think we're seeing a lot of kingmaking happening across the market in different categories where companies are just getting out in front of the market, raising a bunch of money, building their brand, and being seen as the winner, even if the product is really early.

2:18:39

And you know, I know there's a lot of folks that are talking about the recklessness that's happening across VC.

2:18:46

And on the one hand, I get it, but on the other hand, I think in a market shift like this, you got to play to win.

2:18:51

And like, you know, you some of these are going to flame out, but if you get one or two that really makes it, all of your crazy wild bets are going to >> going to have paid off.

2:19:00

And >> yeah, the CEO the CEO of Fireworks AI came on the show last week and and said she was worried some people were going to scale into bankruptcy.

2:19:09

>> Scaling into bankruptcy was the quote, which is hilarious.

2:19:13

>> It's probably a skill issue. >> Yeah.

2:19:14

Uh I mean, yeah, let's keep it focused on on on the advice for founders.

2:19:18

founders. Uh, I've been interested in this in this question of like in the previous era of Silicon Valley like the the the founders the founder archetype that you were looking for was somebody who could who could find a problem,

2:19:30

build a solution, learn to code and it feels like increasingly one of the skills, maybe not the only skill, but one of the skills that we need to add to the portfolio of great founders is dealmaker, is deal guy, be deal girl, like becoming really good at aligning incentives. We see this with Sam Alman,

2:19:46

We see this with Sam Alman, but we see this up and down the stack.

2:19:50

Are you seeing that in your portfolio in the founders that are seeing breakout success?

2:19:54

Just the ability for them to walk into a much bigger company or much bigger uh you know financeier and marshall capital or resources get people around a table and get everyone to say yes to whatever the plan is.

2:20:09

>> I mean yes to some degree.

2:20:09

I think it depends on the category.

2:20:11

I think go to market muscle and just sheer velocity matters a lot.

2:20:18

Um and so from that perspective the folks that can go out and start closing customers and like the storytelling behind it and the trust building I think is super important.

2:20:27

building I think is super important. um for most people above the model layer like I don't know that like deal making in the at least in the altman sense of like hey we have to go secure data centers and chips and and like control our own supply chain I think that's less important for most people but I will

2:20:47

tell you we're more likely to back like really young just insanely like high velocity founders that we think will like run through walls to win that just have such dogged determination >> um and and and are willing to go at it so hard um that they might not even have like the founder market fit that we we used to look for pretty consistently in founders. And we're seeing these crazy,

2:21:11

And we're seeing these crazy, you know, 20some founders who have never really had a job before that are building these companies that are scaling like crazy just because they're in at the right time, they can tell the right story, and they just um they just ship so fast. >> Yeah.

2:21:27

And it's always uh you guys I've always enjoyed Red Point's reporting on >> on SAS specifically and and multiples and at at times a disconnect between multiples in in the public markets versus the private markets.

2:21:42

versus the private markets. How are you uh how are you what's your view on that with with uh like how much do you guys read into uh you know traditional SAS companies in the public markets being I think it's like the average right now is like a 7x revenue multiple versus private markets obviously if you're an

2:22:02

AI native company you're getting you know some some you know massive multiple on top of that >> um does that does that is that is that nerve-wracking is that uh does that makes me but I mean [laughter] I'm on the early side and so we're not looking at multiples as much as perhaps the growth folks that are coming in at later rounds. But I think the the really key

2:22:21

But I think the the really key difference here is most of the companies that we're investing in are doing like direct labor replacement, right?

2:22:29

This is no longer just like SAS software that's going to make people x times more efficient.

2:22:36

It's literally, you know, replacing an entire chunk of your workforce.

2:22:41

And I think that uh those companies are able to grow so much more quickly because of the value that they can capture that um that like the velocity of the businesses ends up priced into the rounds and they're just growing to your earlier point so much faster than a traditional SAS company.

2:22:58

I think that's justified.

2:23:01

You know, we try to be like very first principal thinkers and just in terms of like how big can this business get and how quickly do we think it can get there and you know, we value companies based on that, not based on what's happening right now in the private markets with like legacy SAS companies.

2:23:21

>> We have to ask Redpoint has been accused of manning the anonymous X account for Rock. Is it true? Are you behind?

2:23:29

Are you personally behind the R for Rock account?

2:23:33

[laughter] >> Maybe we're all R for Rock.

2:23:36

No, >> not it is not somebody at Redpoint.

2:23:39

I we would uh it's not someone.

2:23:43

>> We would not take kindly to that, but yeah, the uh the conspiracy theories.

2:23:48

>> Yeah, I I would I would appreciate >> I think it's a compliment to be accused of having that much insight into the whole market.

2:23:53

I I I could be a shared account, right?

2:23:56

It's like a handful handful of >> it's it's got to be junior folks.

2:24:01

It has to be associates cuz nobody's senior would be that stupid and reckless.

2:24:05

And I will tell you one thing that has shocked me getting into venture from, you know, the the builder side is like >> there's almost perfect information spread like everybody knows everything instantaneously. It's absolutely wild.

2:24:19

I don't I don't know if we've ever been surprised by something that ended up on R for Rock, but we have been quite irritated when things have been leaked when they weren't supposed to be.

2:24:30

>> Yeah, it it does feel like it's a little bit of a hassle if you're a founder and you're planning planning to do like a specific PR push.

2:24:36

Um but also there's this weird dynamic where it kind of takes some of the energy or some of the leverage out of the existing scoopers in the tech ecosystem.

2:24:50

because they're they're losing scoops to R for Rock, then they don't have as much uh cache or power, soft power in the ecosystem.

2:24:57

>> It might inspire it might inspire some media companies to try to basically plant spies, >> like plant plant a spy at each tier one and then you can just leak every single round. >> Yes. I I don't know.

2:25:08

That might be that might be against like >> probably extremely illegal.

2:25:12

>> I think you'd be better off like hosting a party and a punch or whatever. >> Yeah. [laughter] Yeah.

2:25:17

Just ju just grab some drinks with some people, get them to open up and uh you'll have scoop in no time. >> Something else flip. Yeah.

2:25:25

>> Well, thank you so much for hopping on the show. Great. >> Fantastic.

2:25:28

We'd love to talk to you again soon.

2:25:30

>> And uh yeah, we'll talk soon. >> Have a great Monday.

2:25:32

>> Wait, wait, before you leave, uh before you leave, you haven't hung up yet.

2:25:33

What are are you in like a tower in a castle?

2:25:37

Like what what is [laughter] >> Yeah, what this is awesome. What is this?

2:25:42

>> This is my home office. >> Home office.

2:25:44

>> It is not a turret, though.

2:25:44

I people think it's a yurt or a touret. It is. It is neither.

2:25:49

>> It's just the corner of a castle. I just live in a castle.

2:25:50

[laughter] >> I am a venture capitalist. I've done very well.

2:25:54

And you know, it's somewhat of an it's somewhat of a dome, so it makes sense to call it.

2:26:00

>> Oh, it's a great sign of respect.

2:26:00

We also we also record the show from a dome. The Ultra Dome. >> There you go.

2:26:05

I did this in reference to you guys. >> Yes. Yes. That makes sense.

2:26:09

>> Been waiting for this moment. >> Fantastic. >> Amazing.

2:26:11

Well, so so great to loves the background. Come back on again soon.

2:26:16

>> We'll talk to you soon.

2:26:16

Have a good >> seeing you guys. >> Bye.

2:26:18

>> Let me tell you about Finn.

2:26:18

AI, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake offs, number one ranking on G2. Don't get in a bake.

2:26:28

>> We have Benjamin Witty from Recess coming in the studio. How you doing? Good to see you. >> What's happening? >> Welcome to the show.

2:26:35

Uh we don't have audio from your side.

2:26:37

Let's check in with the production team. >> Let's check in. >> Could be.

2:26:42

tell you about Adio, customer relationship magic.

2:26:44

Adio is the AI native CRM that builds, scales, and grows your company to the next level.

2:26:49

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2:26:52

>> Good opportunity to tell Ben about.

2:26:54

>> Yes, we got to tell him.

2:26:54

He's got a $30 million series B. He needs a CRM. Let's get him on that.

2:26:58

Maybe he needs an eight, too.

2:27:02

>> Another beverage company uses audio. >> Wait, really? That's awesome. Okay.

2:27:06

[laughter and gasps] >> 8. com. Yes, we can.

2:27:09

>> How'd you sleep last night? You sleep well.

2:27:11

I slept well, but I could sleep better with an eight sleep. So, >> thank you. There we go.

2:27:16

>> Uh, great to great to finally meet.

2:27:16

Uh, we we uh share uh the day job guys.

2:27:22

>> Fun fact, this is our second podcast together. Your first time on TVPN.

2:27:26

Didn't we do a podcast together?

2:27:26

Like 10 years ago, >> I Yes. But I forgot what.

2:27:30

But what >> it was like it was like Lucy like me and David hung out with you.

2:27:34

We did like five episodes of this thing. It was a total flop. >> That's right. Now what?

2:27:38

But I was I was really neoccorporate media strategy.

2:27:43

>> Never stop podcasting. >> Didn't work.

2:27:44

But yes, we should never stop. >> Great. Great.

2:27:46

Uh great to hang on the show.

2:27:48

Uh why don't why don't you give a quick intro on kind of yourself and the company if anybody's been living under living under a rock. >> Yeah.

2:27:55

So you know I'll start myself.

2:27:55

So I didn't come from the you know food or beverage industry.

2:27:59

Actually started my career in Silicon Valley.

2:28:00

So I was in San Francisco in the early stage tech world from 2010 to 2016.

2:28:04

[clears throat] But I kind of knew I wanted to start a company in the consumer space and so I went out on my own in around that time and kind of was led to the the origin of recess and kind of my observation in that 2016 era was you know we were entering this new period in history driven by technology and was going to leave us all kind of stressed out and anxious.

2:28:24

>> And so I had this thesis that kind of led to to recess that you know in the future that we were entering kind of people would be prioritizing their mental wellness and looking for healthier ways to reduce stress and relax.

2:28:34

And I kind of saw the, you know, the rise of these new types of functional ingredients such as, you know, magnesium, adaptogenic herbs, CBD at the time, you know, even THC.

2:28:42

And kind of my conclusion was that they were going to kind of, you know, serve as the inputs into this fundamentally new space, you know, of, you know, products that would emerge on the other side of kind of caffeinated beverages and alcohol focused on relaxation.

2:28:59

And um you know I didn't know a sing and so the kind of the light bulb moment was like Red Bull for relaxation but it took a much more expansive view of the space that would emerge and the different kind of subcategories that you know the I could create a brand that could ultimately kind of extend into.

2:29:12

ultimately kind of extend into. I remember hearing you on a podcast back, it must have been in the kind of 2018 era where you talked about how Red Bull, I believe you talked about how Red Bull like distinctly they didn't necessarily

2:29:27

want to make a drink that just tasted the best, but they wanted it to have like this specific sorry specific flavor that just was like extremely identifiable and like made you feel something and how you leveraged that with with recess, which I think you you did well from from the very beginning. Um, but yeah, I feel like, you know,

2:29:45

Um, but yeah, I feel like, you know, looking back, uh, it's interesting that there were so many there were so many brands created during that that that initial boom, uh, whatever 2016 to 2020 kind of I look as like the heyday when you had uh, uh, everyone was like reading Lean Lux and uh, 2 p. m.

2:30:04

, you know, and and there was just like this this so much investment in the category.

2:30:12

And to me, uh, Recess stands out because it's the only the only brand in that era that like was kind of riding the same wave but didn't look like everything else at the time. >> Yeah.

2:30:24

Um, and yeah, just uh obviously um yeah, like even even the fact that like whatever popup you did in in New York during that era like still sticks out in my mind when I can't remember a single I can't remember any of the other kind of marketing that was happening >> during [snorts] that period.

2:30:44

>> Yeah, the Instagram sticks out to me like crazy.

2:30:46

I remember the the the Instagram. Did that ever grow?

2:30:48

Like is that like the corner of the cornerstone of like the community?

2:30:53

Is is that still a because I remember like the the Instagram just popped up so quickly and grew so fast.

2:31:01

Was was there like did that turn into like a whole flywheel of the business.

2:31:06

>> So what the twist in the business was like our first product line included CBD in it.

2:31:10

Um and so we got off to this you know I never thought of the brand as like a CBD brand.

2:31:14

like a CBD brand. I I thought I always thought of brand as like a relaxation brand and we did a lot of like I'd say kind of groundbreaking kind of marketing you know activities in that first year in 2019 you know from our content strategy you know which we can talk more about the popup in New York you know brand collaborations but what happened

2:31:31

was you know I saw the writing on the wall that the regulatory clarity for you know CBD was going to take a lot longer than everyone thought and so I'd never so I basically accelerated the vision of becoming a brand platform and bet on magnesium as this ingredient that we could use that could deliver the same effect, you know, in a fully compliant way, which was this incredible bet. Um,

2:31:48

Um, our recess mood line, which is what, you know, leverages that ingredient, is kind of seeing velocities, you know, on par with Poppy.

2:31:56

Um, and so that lines, you know, National, Target, Kroger, etc. , Yeah, you were early.

2:32:01

You were uh CBD was an interesting category because there was so the growth of the category was so insane that even though you guys were early in terms of like a CBD beverage, I'm sure you just like I remember you guys >> so noisy.

2:32:16

It was >> Yeah, it was so noisy.

2:32:17

You guys did such a good job marketing that a bunch like something about CBG is fascinating because >> people just think like you make a drink and sell it and it's just going to work and you just put it on a shelf and people buy it and obviously like the actual logistics of scaling a beverage brand are so much harder than that that like so so few of the companies ever >> ever really you know even crack like a couple million of of um revenue.

2:32:38

But um but yeah, the timing on magnesium as well.

2:32:44

I thought I was supplementing magnesium like in that sort of 2016 >> beyond era >> and then it was only like a few years ago that people started talking and saying like hey did you know that the average like you know 70% of Americans are deficient in magnesium and to me that had been just like I I knew that because of our food system and there's way less magnesium content in in even vegetables and stuff today than there were you know decades ago.

2:33:10

Um, but you feels like nice and early to that and that's an ingredient like a hero ingredient that was quite a bit more durable in my opinion than this like initial CBD boom and I don't you know I could call it a bust maybe because there's I know a lot of people that have built brands saw great revenue growth and then didn't figure out a way to kind of like center themselves on a more durable kind of hero ingredient. >> Yeah.

2:33:35

I mean I just just to double click on that a bit like I think beyond the mark the the smart marketing that we did in the early days that were about to you know reacelerate in a big way.

2:33:42

I think I had the right kind of category view of the how the space was going to emerge and you know just a simple insight I'd always say like I've never heard anyone call Red Bull a caffeine company.

2:33:51

It was an energy company just like we weren't a CBD company or not a magnesium company or or not even a mocktail company.

2:33:57

I mean the other amazing bet we made was uh on the RTD mocktail opportunity and so we launched no mocktail line in 2023.

2:34:07

Kind of what I saw there was you know when the when kind of athletic brewing was reatalyzing the non-al beer space you know my observation was like beer was flat to declining right in alcohol.

2:34:17

So was kind of fighting for share of a shrinking pie.

2:34:19

What was growing it was RTD cocktails and hard seltzer.

2:34:21

So my thesis was there's going to be like an RT mocktail category, you know, on the other side of RT cocktails, just like, you know, non-aler existed on the other side of alcoholic beer.

2:34:31

And >> you want to bet on a feeling that humans are going to want for a long period of time versus a single >> ingredient, right? >> Yes.

2:34:41

And so I had this on one framework I had is stimulation, intoxication, relaxation that this really represented the emergence of this fundamentally new kind of value proposition kind of in feeling that people would be seeking.

2:34:53

And you know when I had the light bulb moment for you know what became recess you know Red Bull was started in 1987 right like you know Red Bull, Monster, Starbucks all wrote this kind of secular tailwind of kind of consumers seeking stimulation.

2:35:06

And again, my thesis was in the future that we were entering, you know, people would be basically figuring how to relax in the crazy world that we were living in.

2:35:15

And that, you know, all these trends, whether it's, you know, focus on alcohol moderation, stress relief, enhancing sleep, you know, focus are all kind of connected and a part of kind of consumers prioritizing their overall kind of mental well-being.

2:35:29

And that's kind of why the recess platform strategy has been kind of successful.

2:35:35

And I think there's a lot more kind of we can do, you know, beyond this in the in the in the next phase of the business.

2:35:40

>> What do you uh how do you think about marketing and brand building going forward?

2:35:45

It feel I I don't know if I have this correct but it feels like over the over the last few years the focus has been like distribution getting the right assortment of products like laying the foundation so that you are in have the ability to scale because one of the challenges as a beverage brand if you're doing >> people like to buy beverages in stores.

2:36:05

So, if you're doing like viral internet marketing, that doesn't necessarily translate to the sales growth that you want, unless you have the distribution.

2:36:13

And, you know, my the the grocery store closest to my house uh has like recess.

2:36:18

So, I'll I'll I'll I'll grab uh some from there, but uh I'm I'm assuming it took a while to get the kind of saturation from a distribution standpoint so that you guys can have the confidence to like do a big celebrity partnership or do a TV campaign and start doing these things that uh just are kind of a waste of money uh unless you have that distribution. >> That's right.

2:36:40

like and I think that's one actually the best parts of the recess story as I've been kind of transitioning the business beyond the original CBD line with the addition of mood and mocktails.

2:36:47

I've been focused on, you know, basically performance marketing to drive the Amazon business and we're still 50% ecom and then we just get so much organic kind of word of mouth, you know, via, you know, basically testimonials.

2:36:59

So, we probably get, >> you know, 100 to 150 organic tag posts a day across, you know, Instagram and Tik Tok of primarily women, which is our kind of core kind of consumer spreading um, you know, the the the word on recess.

2:37:14

And that is super powerful.

2:37:14

And so I look at this round, this next phase is fundamentally about, you know, scaling the team, scaling distribution and, you know, really re catalyzing brand marketing because, you know, John, what you guys were alluding to earlier, you know, the kind of groundbreaking content, the pop-up, stuff like that, I really >> have turned off.

2:37:31

And again, if you compare, you know, what we've where we are comp, you know, compared to where Poppy, Liquid Death, brands like that, we've done really no levers on brand marketing yet.

2:37:41

And so you're going to start to see, you know, a lot more of that in this next phase.

2:37:43

And you know, just to talk about Red Bull a little bit, like I always kind of thought of Red Bull as like a media company that monetizes through selling cans.

2:37:51

>> Y >> um and I do think beverage is this very kind of underappreciated category.

2:37:55

Um you know, especially it has some similarities to even, you know, tech companies like when I, you know, when I had the idea for recess, I discovered this amazing fact which was, you know, Monster Energy was the best performing stock of the past 20 years, right?

2:38:07

It was >> Celsius did incredibly well too.

2:38:09

It's happened like four times in beverage and and energy specifically >> like great outcomes. >> Yeah. >> Exactly.

2:38:18

>> Exactly. And so it does have this like you know if you bet on especially if you're creating a category and riding like a very large secular tailwind >> like has this compounding you know effect to it and you know obviously brand marketing plays a critical role in

2:38:31

that and I think there's some you know a lot of new you know opportunities to do stuff in in news new ways in this era with you know the role of you know Amazon and digital experiences even I think there's a lot of cool stuff we can do in the next phase of recess so I'm excited to you know turn that back on. >> Yeah. >> Yeah. >> Yeah.

2:38:46

You got a I don't know I don't know how much you you still work with day job but if uh if you sat down for an hour uh brainstorm with uh with Ryan and Spencer you could probably come up with like at least a hundred ideas that would uh >> that would unlock that that next stage of growth.

2:39:03

>> Yeah, they'll be back in the mix for sure.

2:39:05

>> Uh we got to talk about the fund raise.

2:39:07

We got a gong here that we would love to to hit on your behalf.

2:39:09

Uh how' the round come together? Who who participated?

2:39:14

>> Yeah, so the round was led by Kavu.

2:39:14

It's a $30 million series B.

2:39:16

Kau's >> voice drowned out by the gong.

2:39:21

Uh you said you you were getting into Kavu. >> Yeah.

2:39:27

So Kau was the main investor in Poppy which they just sold to Pepsi for about $2 billion earlier this year and kind of where their next >> It's Rohan Oza, right? >> Yeah. >> Yeah. He's a legend.

2:39:36

He he was like top guy at Vitamin Water.

2:39:39

Sold that to Coke for 4 billion.

2:39:42

like truly the crowning achievement of the CPG beverage industry uh at at the time and still today.

2:39:48

One of the greatest bev deals ever.

2:39:50

And then uh he's been on Shark Tank.

2:39:52

He's just like a legendary consumer package goods investor.

2:39:57

>> Uh yeah, >> quick lightning round of questions.

2:39:58

Uh I'm assuming that Kau is not uh underwriting this uh underwriting the business from with any type of AI lens, but are you getting are you getting any leverage out of AI?

2:40:10

Uh I would say like we we at this show uh unfortunately get very little.

2:40:16

I would say it helps with with some research and we build software internally that's that's helpful.

2:40:21

Um but I'm curious if uh the the chat was wondering if if it's been uh >> help help move the needle at all.

2:40:31

>> Not not yet, but I'm starting to have conversations with different groups kind of building kind of AI driven kind of content production and I'm very excited to figure out how we can leverage that.

2:40:40

I mean, you have to pump out a lot of a lot of content, you know, running a beverage business or any consumer brand today.

2:40:46

>> And I think there's an interesting way for us to use it in a kind of a tongue-in-cheek way.

2:40:49

I mean, the whole recess story and antidote to modern times is kind of, >> you know, was in response to the implications that AI would have, right?

2:40:58

And I think so to like incorporate it into the content strategy.

2:41:00

Um, you know, >> I feel like you could do something really fun with AI customer service where >> Yeah.

2:41:07

the AI like you need some customer service.

2:41:09

People are going to have questions about the product generally.

2:41:12

There's going to be a lot of back and forth, but you could probably do some crazy stuff with like fine-tuning the LLM, bringing a unique brand voice in and kind of like go that just feels like recess day job.

2:41:22

It's also I I can imagine like I I I would imagine a lot of the your distributor relationships today are still like somebody has to call somebody on another line and a grocery store has to call the distributor when they're you know and it's still like kind of analog so I can imagine some opportunities there.

2:41:40

Another question from the chat uh >> uh they're asking about the potent like are you excited about drone deliveries?

2:41:47

I can imagine like beverage is something that people >> like when people want a drink they you've built a big ecom business but when people want a drink they don't typically think let me go on my computer and order a drink and we saw there was uh I don't know if this company is still

2:42:02

around but there was a company that was started in the same era as recess that tried to go really all in on on ecom and I I I don't uh I think they they partner with Coke at some point and I don't I don't know that they're still around names escaping. Is it lemon something? Is it lemon something? Lemon. Lemon per. No, not lemon perfect.

2:42:19

Lemon perfect was like lemon. Dirty lemon. >> Dirty lemon. Yeah. They text messaging.

2:42:23

They were like insanely good at e-commerce.

2:42:25

>> But yeah, theor theoretically if you can just, you know, say like I want a six-pack of recess mood and hit a button on your phone and a drone just drops it into your backyard.

2:42:33

That should increase velocity. But I'm curious.

2:42:37

>> Yeah, I mean I'm a big believer in just omni channel.

2:42:39

I mean Instacart's a huge channel for us.

2:42:41

Do Puff, Door Dash, increasingly kind of anywhere where kind of consumer products are sold, you know, we want to be.

2:42:47

Um, and so, you know, when that becomes a real a real channel, I think we'll we'll explore it for sure, but it's not it's not something I spent a huge amount of time thinking about. >> Got to stay focused. Awesome.

2:42:59

>> Walmart and Costco next before >> Yeah.

2:43:02

I mean, you get those and it's just like, okay, you've kind of won and then the like you you'll just be in the place to take advantage of whatever thing comes next. So >> yeah.

2:43:11

>> Yeah, lots of opportunity.

2:43:11

Thank you so much for stopping by the show. Great to find. Thank you for coming on.

2:43:17

>> We'll talk to you soon.

2:43:18

>> Congrats to the team as well. Cheers.

2:43:19

>> Have a great rest of your day.

2:43:19

Let me tell you about public.

2:43:21

com investing for those that take it seriously.

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Multiasset investing industry yields trusted by millions. Uh let's go. >> Palanteer.

2:43:28

Speaking of stocks, Palunteer earnings Palanteer according to CNBC tops estimates boost fourth quarter guidance on AI adoption.

2:43:39

uh they issued a strong guidance attributing growth to adoption of its AI uh government sales which have been central to Palunteer's ascent grew 52% from a year ago.

2:43:48

Uh and again stock is not up a ton after hours.

2:43:53

Um but uh we can uh dig into this more uh probably tomorrow.

2:44:02

Uh, did we want to try to Yeah, we got to go through a little bit of this.

2:44:08

>> We got to do a little bit of a a >> I mean, we're just gonna go through sort of like random segments, I guess.

2:44:11

But basically uh a the uh Ilia Sitzker, who I dressed up as coincidentally uh for Halloween uh last Friday.

2:44:21

Uh he's the co-founder of OpenAI.

2:44:23

He they have shared new details on the internal conflicts that led Sam led to Sam Alman's initial firing including a memo uh alleging that Alman exhibited a consistent p pattern of lying.

2:44:37

There's a uh there's a deposition transcript that is going around that is now public uh from the Ilia deposition.

2:44:45

Toucan kind of summarizes here.

2:44:47

Ilia plotted for over a year with Meera to remove Sam.

2:44:50

Daario wanted Greg Brockman fired and himself in charge of all research.

2:44:55

That's Dario Amade I believe from Enthropic.

2:44:57

Uh Meera Moratti told Ilia Sutzkver, that's Sam Alman pitted her against Daniela Amade.

2:45:08

Uh Ilia wrote a 52-page memo to get Sam fired and a separate dock on Greg.

2:45:10

Um and there are some there are some clips here that are uh absolutely crazy.

2:45:16

Um the witness I believe the witness is Ilia. Correct. >> Correct.

2:45:23

>> And the witness says one thing I can say is that the process was rushed.

2:45:25

And the attorney says why it was rushed.

2:45:27

And Ilia says I think it was rushed because the board was inexperienced.

2:45:32

And the attorney asks inexperienced in what?

2:45:34

And Ilia says in board matters.

2:45:38

[laughter] >> We should let's go through let's go through a little table reading here.

2:45:43

I'm on page 17 of the deposition. >> Yep.

2:45:49

>> Tyler is going to be playing the attorney Agnucci >> and I will be attorney Moolo.

2:45:55

>> And what's the number in the top right? >> Uh 168. Okay. So, let's pull this up. Uh Tyler, kick it off.

2:46:02

>> You're the attorney, Agnui, >> correct? >> Okay. Okay. >> And I'm Ilia. >> You're Ilia.

2:46:07

I don't even know if you're going to be. >> And you're Molo. >> I'm Molo. >> Okay. Let's go.

2:46:10

But first, let me tell you about adquick.

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com out of home advertising. Easy measure.

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Only add quick combines technology out of home expertise and data to enable efficiency miss buying across the globe. Okay, Tyler, go.

2:46:21

>> Okay, Jordy, I think you should actually start because it starts a little bit down the page. So, start at line five. >> Okay. >> Uh, line five.

2:46:26

It certainly does matter how much. >> Keep going.

2:46:32

>> What do you think the value of your equity at OpenAI was at the time Sam Alman was fired?

2:46:37

>> And I have the same objection and I'm instructing him not to put a number on it.

2:46:42

What did you think the value was?

2:46:42

You can answer the question that he is saying is relevant here, which is whether you thought you were going to lose value. It isn't my question.

2:46:49

I have the right to ask a question.

2:46:52

You can object to the question.

2:46:57

My question is, what did you think the value of your equity in OpenAI was at the time of Sam Alman's firing?

2:47:03

>> And I'm instructing the witness not to answer as to the money money value.

2:47:08

>> Are you going to not answer?

2:47:08

I mean, >> what is this, >> John? That's you. >> Oh, I I'm answering. Okay.

2:47:14

So, so you say, "Are you are you not >> Are you gonna Are you Are you going to not answer?

2:47:21

>> I mean, I have to obey my attorney." >> Okay.

2:47:24

So, you're not going to answer.

2:47:26

>> I'll do what my attorney tells me to. >> Okay.

2:47:28

Were you concerned about possibly losing your equity at the time that I withdraw the question?

2:47:34

[laughter] Eventually, keep going.

2:47:39

>> Eventually, the board agreed to resign and restore Sam Alman, didn't it? >> Yes. >> When was that? >> Later in the week.

2:47:45

>> And why did they do that, >> Tyler? >> Objective four.

2:47:49

[laughter] >> There was a question of why the board did it? >> Correct.

2:47:56

>> Or is this a question of why I supported this?

2:47:59

>> First, I'm asking you, why did the board decide to resign and reinstate Sam Alman?

2:48:06

Uh right now my view is that with very few exceptions most likely a person who is going to be in charge is going to be very good with the way of power and it will be a lot like choosing between different politicians.

2:48:21

>> The person in charge of what >> agi and why do you say that objective form >> that's how the world seems to work.

2:48:28

I think it's very I think it's not impossible, but I think it's very hard for someone who would be described as a saint to make it.

2:48:38

I think it's worth trying.

2:48:40

I just think it's it's like [music] choosing between different politicians who is going to be the head of state.

2:48:49

>> Looking back at the process that that preceded the removal of Sam and Greg from the board, what's your assessment of that process? >> Objection vague. calls for speculation.

2:49:01

>> Okay, that that's the end of that scene, I think. End scene.

2:49:04

>> We need we should have rehearsed this. Uh, okay.

2:49:08

>> This is a this is a table reading.

2:49:08

We're we're we're riffing it out.

2:49:11

>> Okay, should we go uh to 26?

2:49:11

Cuz we already did the board experience. Okay, let's go to 26. Where's 26?

2:49:15

26 starts um the witness.

2:49:20

At least at one point I expressed support >> after Sam was removed.

2:49:24

Do you recall Helen Toner telling employees that allowing the company to be destroyed would be consistent with the mission? >> I do recall.

2:49:34

>> And what was the context of that comment?

2:49:37

>> The executives it was a meeting why we have we need to be southern.

2:49:40

Every [laughter] every law is southern when it's in southern twang.

2:49:46

Uh the executives it was a meeting with the board members and the executive team.

2:49:51

[laughter] The executives told the board that if Sam does not return, then OpenAI will be destroyed.

2:49:58

And that's inconsistent with OpenAI's mission.

2:50:01

And Helen Toner said something to the effect of that it is consistent.

2:50:06

But I think she said it even more directly than that.

2:50:10

>> More directly than you've related here. >> Yes. >> Okay.

2:50:13

And what was your reaction to that?

2:50:16

>> I don't remember my reaction at the time.

2:50:20

Did you >> Did you think that would be consistent with the mission? >> Objective form. >> Objective form.

2:50:24

[laughter] >> Objective form. >> Objective form.

2:50:26

[gasps] >> I could imagine hypothetical extreme circumstances that answer would be yes.

2:50:33

But at the time, but that that point in time, the answer was definitely no.

2:50:34

For me, it would not be inconsistent with OpenAI's mission to destroy the the the the business.

2:50:42

Is that what he's saying?

2:50:45

I'm kind of I'm kind of lost on what his actual stance here is. What is he saying?

2:50:50

He says, "Do you think that was uh so what was the original criticism?" >> Let's go to 28. >> Do you know Tyler?

2:51:01

Do you know what he's saying? Is he pro destroying?

2:51:02

So the executives meeting with the board members thought, okay, the the executives told the board that if Sam does not return, then OpenAI will be destroyed.

2:51:11

And that's inconsistent with OpenAI's mission.

2:51:14

And Helen Toner said something to the effect of that it is consistent, but I think she said it even more directly than that.

2:51:20

So >> yeah, so that it it doesn't have anything to do with Ilia's position on whether the company being destroyed is consistent with the with the mission.

2:51:31

>> And you say here there's reason to believe that Sam was removed from YC in the past for reasons similar to the one that you identify in this document.

2:51:43

Um, who else has summarized this?

2:51:45

I I'm completely lost on the actual deposition.

2:51:48

Uh, let's go back to the timeline.

2:51:49

Typed female has a uh screenshot here says this is some social network type stuff.

2:51:56

>> This movie the movie is going to be incredible.

2:51:59

>> We can we can go back into reading these because they're a little bit more uh digestible.

2:52:03

Uh, and what was your response to that?

2:52:05

Ilia says, I was very unhappy about it.

2:52:07

And the question for the long why why >> uh because I did not I really did not want open AI to merge with anthropic. >> Why not?

2:52:18

>> I just didn't want to what that doesn't it's actually not this is creating more questions than answers.

2:52:23

Um GDP calls it the worst coup ever planned for a year without any PR strategy.

2:52:29

As they say if you go for the king better get his head.

2:52:35

uh first and foremost skill that any leader needs is to be able to survive.

2:52:39

No feel-good management book will tell you that Ilia is a great scientist and great human being, but not a practical leader.

2:52:45

Ilia didn't have the skill to plot and survive and come out on top.

2:52:50

Samma is the right leader from OpenAI employee perspective.

2:52:52

You couldn't go this big without Sam or I guess he typed uh it it's so bad in so many ways, says Rune.

2:53:02

I really hope one day Sam gets the credit he deserves.

2:53:05

So, they're saying that like >> if you can't pull off the coup, you probably can't pull off the act two of the company.

2:53:12

And so, it's that's a pretty reasonable uh that's a pretty reasonable uh stance. Um what else?

2:53:16

We talked about the Amazon deal.

2:53:20

We didn't get a chance to talk about Wander. Find your happy place.

2:53:24

Book a wander with inspiring views, hotel, great amenities, dream beds, top tier cleaning, and 24/7 uh concier service.

2:53:29

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2:53:31

I like this post from Bach.

2:53:32

We almost kicked off the show with it.

2:53:34

Open AAI, the compute purchase order press release company.

2:53:39

>> I think I think startups should start just announcing their their planned cloud spend >> just you know startups always need like the more the more times you can launch the better.

2:53:50

Definitely go through YC, get $100,000 in credits, and then project out spend spend 10,000 of those credits the first month, then spend 20,000 the next month, then spend 40,000 the next month.

2:54:03

You're almost out of credits.

2:54:05

You've spent 90,000 of your 100,000 credits, right?

2:54:08

But you have exponential growth in your credit spending.

2:54:13

You project that out a decade and then you announce that based on the trend we will be spending a quadrillion dollars with AWS if the trend continues and then just share the data.

2:54:24

Hey, we had 10K one month, 20K the next month, 40K in the third month. Do the math folks. It's exponential growth. That is a good hack.

2:54:33

I have another hack uh because uh Sar is in the timeline.

2:54:35

put the timeline in turmoil over whether he is a $40 million gigachad or a popper at 17 million.

2:54:46

That's the debate basically, right?

2:54:49

Uh someone he he has said that he sold the hustle for 40 million.

2:54:52

Someone quote tweeted him and said it was actually only 17 million.

2:54:55

Uh and everyone was debating the nature of his acquisition.

2:55:00

I thought it'd be interesting to to dive into uh some of the claims.

2:55:03

I don't really care that much about whether it's 17 or 40. Both are big numbers. Congrats to him.

2:55:07

Uh the interesting thing is just the nature of aqua hires, acquisitions, how these different things can play out and how funky they can get.

2:55:17

And you know, he's in a unique position because he kind of has to talk about his business credentials for his business, right?

2:55:23

Um but uh but the more the more interesting thing is like if you're negotiating with to sell a business, what are all the levers you can pull?

2:55:33

Because there's a ton of them.

2:55:35

So the headline number I believe was >> strangely like the hustle acquisition was kind of it was like two deals rolled into one.

2:55:42

There's like the core hustle seven deals. There's so many deals. >> Yeah.

2:55:46

There there's the core hustle business.

2:55:47

There's the podcast which was imagine a decent chunk of the revenue. Then there's the talent.

2:55:52

Like the the podcast is not really valuable without the talent. Totally.

2:55:56

So there's a talent deal.

2:55:58

And I think he was adding up a like adding up a bunch of those numbers, rolling them into one. Yeah.

2:56:04

>> And talking about that headline number. Yeah.

2:56:06

Uh and he broke it all down and explained it.

2:56:08

But >> yeah, there's no there's no real like established way to calculate like there's no real norms around how headline numbers and acquisitions are accounted for.

2:56:18

Like if you get acquired for, you know, $100 million, but half of it's on an earnout and you don't hit that earnout, like you probably should go back and say like, "Hey guys, I know I sold my company for 100 billion 100 million, but it's actually it was only 50 million because we didn't hit the earnout." Or or vice versa.

2:56:34

And what it feels like happened was he sold the company for 17, but grew my first million so much that he kept making a lot of money from it.

2:56:46

So the thing that he built wound up generating >> talent he was getting a lot of >> stock and the stock went he was counting some of the appreciation of that stock to get to the headline number >> and I can yeah he he has he created a podcast that is entirely focused on talking about wealth. Exactly.

2:57:05

So I think he got >> Oh show. >> Yeah.

2:57:08

He got a little carried away. >> The Hampton show. You Yeah.

2:57:10

You have to you have to show the number.

2:57:11

Uh it is I mean it's like headline grabbing like uh if you want to go viral especially on like YouTube um saying like I sold my company that there's this guy whose like whole shtick is he sold his company for or he's like a hundred million dollar entrepreneur uh Alex Hermoszi is like really big into like the hundred million dollar branding.

2:57:32

I think he has like a patent on it or a trademark on hundred million uh just because like that's a round number and so he he will throw out I have $100 million.

2:57:39

I sold my companies for $100 million collectively.

2:57:41

I have a $100 million this or that and and that really it really works to get clicks.

2:57:48

Like it really works to get attention.

2:57:50

Um if you want to sell your company for$4 million, 17 million, I have a hack for you. So this is what you do.

2:57:56

>> You Oh, Tyler's Tyler's locked in. He's ready.

2:57:59

This is this is the number one resume builder right here. Okay.

2:58:00

So >> Tyler's not just listening. He's studying.

2:58:05

>> You you you work maybe at some sort of podcast or something.

2:58:08

uh you get together like $5,000 or something.

2:58:10

Then you lever up to get to like you need to get to like $400,000.

2:58:20

I think once you get to like $400,000 in in in debt, it doesn't really matter.

2:58:25

You go and you sell your company, but you don't sell it.

2:58:28

If you sell it for USD, the value of your bank account is only $400,000.

2:58:31

And that's not going to be like, oh, turning heads.

2:58:33

So, what you have to do is you have to sell.

2:58:36

You have to, you know where I'm going with this.

2:58:39

You got to sell your company in a different currency.

2:58:43

>> In a different currency.

2:58:44

>> Maybe like Guian dollar. >> Yes. The Guian dollar.

2:58:46

So the guese dollar trades at $210 to one US dollar.

2:58:53

So if you have $400,000 US dollars, if you've created $400,000 of assets here and you can sell that in Guanese dollars, >> it's an amazing multiple.

2:59:07

>> So 400 * 210 >> is uh it's $84 million in Guian dollars.

2:59:15

So $400,000 in cash in US dollars is $84 million in Guian dollars.

2:59:19

And so what you do is you is you build your business to the point where you can sell it for $400 maybe with a bunch of leverage that'll have to get paid out.

2:59:26

But >> you you sell it the press release.

2:59:29

We sold it for $84 million.

2:59:34

>> No, but you can put in the fine print at the bottom of the press release. Super super fine print. >> Guan dollars.

2:59:40

>> The transaction occurred. >> Yeah.

2:59:43

>> Using the guanu guan dollar.

2:59:46

>> This is actually just a hack for everything.

2:59:48

If you if you want to become like >> Open AI should start doing that. >> Oh [laughter] my god.

2:59:51

>> They should start announcing all their deals in Guian.

2:59:53

Wait, >> maybe they have been this.

2:59:56

>> What is What is What is 1. 4?

2:59:58

>> Maybe that was the answer that Sam needed is he's just he >> he's he's pushing up on 300 trillion Guian dollars.

3:00:05

>> Yeah, maybe maybe he should. How is Sam?

3:00:07

How is a company with only 14 billion in US dollars of revenue going to spend spend [laughter] 294 trillion in guanese dollars 294 trillion in guanese dollars is his is his liabilities.

3:00:24

>> Reg says Zimbabwin dollars are the real unlock.

3:00:27

[laughter] That's how you get in the quadrillions. >> Yeah.

3:00:30

Oh, the the other thing you should be like, "Oh, how am I gonna pay for [laughter] how am I gonna pay for 1. 4 trillion?" 1. 4 trillion.

3:00:37

How am I gonna pay for it? Well, guess what? I got 2.

3:00:39

9 trillion in revenue coming in right now, buddy. >> 2. 9 trillion right now.

3:00:43

That's my revenue right now. Dollars.

3:00:50

[laughter] >> But OpenAI will cross three trillion in dollars.

3:00:54

Three trillion revenue dollars this year for sure. For sure.

3:00:57

70 Guan Guillion [laughter] Guines dollars.

3:01:04

Uh the Guines you can't get on any other such good alpha because you can go do a press release and just take whatever you whatever you did whatever you achieved.

3:01:16

Maybe you're making six figures for the first time in your life.

3:01:18

Convert it to Guian dollars.

3:01:19

Now you're making$2 million a year, you know. Oh. Oh, you cashed out.

3:01:24

You made a million dollars.

3:01:26

How'd you make your first million?

3:01:26

How'd you make your first 210 million startups?

3:01:29

I I like to like to, you know, flex how quickly they got to a hund00 million run rate.

3:01:33

Huge opportunity to get there with the >> gu times easier. >> Yeah.

3:01:39

>> With the guines [laughter] dollar.

3:01:41

>> We should acquire some guines dollars and just have a have a stack.

3:01:45

>> We should we should have >> the exchange rate will work in your favor. In your favor.

3:01:51

>> Uh anyway, there's a bunch of other posts in the timeline.

3:01:53

We'll have to get to them tomorrow.

3:01:54

Uh, we're on the road tomorrow, but we're still doing a show 11 am Pacific. We'll see you there.

3:01:57

Uh, I don't think we'll be doing any guests. We'll see.

3:02:02

It might be a little bit of a shorter show, but don't worry, a bunch of time planned.

3:02:05

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3:02:15

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3:02:18

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3:02:27

>> Thanks for tuning in today, folks.

3:02:28

>> We'll see you tomorrow.

3:02:28

We'll >> see you tomorrow. Goodbye. We love you.