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Today is Friday, April 25th, 2025.
4:47
We are live from the Temple of Technology, the fortress of finance, the capital of capital.
4:53
Oh, I uh was in a particularly brutal board meeting with a venture capitalist. Got ugly.
5:02
We've talked about uh how board meetings should be more confrontational.
5:06
There should be a threat of physical violence. That's right.
5:07
It brings out the best in people. It really does. It really does.
5:10
Oh, you want me to pull forward my revenue projections?
5:12
Are you willing to die for that? Let's duke it out. Let's go to the test.
5:17
Let's go to a foreign country that allows duels and let's duel to the death.
5:21
Uh this is the future of technology. technology for the week.
5:25
Big big opportunity for practis is enabling duels. Yes. Yes. Yes.
5:27
Many people would like to duel. I completely agree.
5:31
But they don't have the legal framework to really do it.
5:33
Here in America, there are I I have looked this up before.
5:36
There are countries where you can go and duel to the death legally.
5:41
It's a little complicated.
5:41
You got to fly out there.
5:42
Uh you have to get some permits, but you can do it. It does exist.
5:46
And maybe we should bring it back. You never know.
5:48
Uh it would certainly make tech more interesting.
5:50
It would make our job reporting on tech more interesting.
5:54
Uh, but nothing's more interesting than earnings season, baby.
5:58
Can I get a sound effect for earnings season?
6:01
Earnings power holds up in global tur turbulence.
6:04
Google Alphabet reports solid earnings, but tariff impact on second quarter results is still unclear from the Wall Street Journal.
6:11
Google's earnings power held is holding up well. They're making money. They're printing.
6:15
Uh, they reported operating income of 30.
6:17
6 6 billion for the first quarter on Thursday, solidly beating Wall Street forecasts of 28. 7 billion.
6:26
Revenue rose across the company's business units, but was largely in line with analyst estimates.
6:32
Capital expenditures reach a record 17.
6:32
2 billion in the quarter. Let's hear it for Capex.
6:36
We're going to be training bigger models. Manager mode. Manager mode for sure.
6:41
Sundar uh might be goated. He might be goed. He might be goated. He doesn't do a lot. do a lot of media.
6:49
He's starting to go direct a little bit more.
6:51
People were saying if he resigns, does the stock pop?
6:52
Um he did it while staying in place and uh he deserves all the credit for it. So he does.
7:02
So congratulations to everyone at Google, all the shareholders, all the employees, the founders.
7:06
And this was breaking news yesterday.
7:08
We announced that we are joining the war against big tech on the side of big tech.
7:11
Yes, we are joining the war on big tech on the side of big tech.
7:15
Uh and yeah, it must be protected.
7:18
It must big tech must be protected just because we want to turn little technology companies into big tech.
7:24
Yes, we still support big tech.
7:27
Yes, we have a reverence.
7:27
A reverence for be very clear about that.
7:29
Uh so the stronger bottom line showed Google's resilience in a quarter that was marked by fears of an impending trade war and the effect that could have on the global economy.
7:39
Alphabet share price rose 5% in after hours trading.
7:43
Again, this is like a trillion dollar company. That's $50 billion.
7:48
That'll get you 100 of of Sergey Brin's yachts, which cost 500 million.
7:54
So, he could buy a hundred of those if he owned all of all of Alphabet.
7:58
And Alphabet should they should get 500 corporate yachts if in in my opinion, 500 foot yachts.
8:02
Um, but those worries for every VP. Yeah.
8:04
If their VPs are anywhere as good as Ben, Yeah.
8:10
they all deserve half a billion dollar yachts. Yeah.
8:13
Everyone talks about the perks of working at Google.
8:15
You get the sleep pods, you get the nap room, you get the free lunches.
8:17
Like, let's take it up a notch.
8:19
The all that stuff the only perk that matters, which is yaching. The yacht. Yaching. Yes. Really?
8:26
I mean, it's so played out.
8:30
They've they've hit the They've hit what feels like the logical conclusion of perks, right? Yeah. Oh, yeah. Free lunch.
8:36
Oh, we'll walk your dog for you.
8:38
Oh, there's yoga classes.
8:38
Oh, there's a I told you I spent a summer just about Google cafeteria. Yeah.
8:42
Uh, one of my fraternity brothers uh worked at at Google for a summer and he spent the entire summer trading crypto. Fantastic.
8:53
When he would take a break while working for Google to be clear.
8:55
Uh, and oftentimes around dinner he'd say, "Hey, do you want to come have lunch?"
9:00
And I uh enjoyed every I've had lunch there too.
9:05
Every salmon dinner that I had on Google's time.
9:06
You know, people people were people were uh upset about the Google bus that took Google employees from San Francisco down to the Google headquarters in Silicon Valley.
9:16
Should have just cut out the whole issue with the Google yacht that takes you from because it could take you down the bay. That's right.
9:26
The Google yacht would be so much better.
9:27
And the whole thing they were vandalizing the Google buses, but it's so much harder.
9:31
And maybe they could have hit some of their climate goals by using a sailboat. I love this. Yeah.
9:36
500 foot sailboat just sailing to work.
9:39
There are some people that actually sail across the bay uh if they live in Marin which is pretty sweet.
9:45
They ride their bike and then take the boat and it's not a but you know it's nice.
9:48
Anyway, uh people are still worried.
9:50
People don't think Sundar can do it.
9:52
Google doesn't issue financial projections with its quarterly reports, which leaves it unclear how just how just how its business was affected by President Trump's April 2nd announcement of high tariffs, but the turbulence that has followed amid the everchanging status of those tariffs.
10:06
Um, and the company's earnings on uh uh chief business officer uh Google's chief business officer said it's too early to comment on trends for the current quarter.
10:16
Now, Google doesn't manufacture a lot of stuff generally.
10:18
Of course, they have consumer products.
10:19
They have Google Home devices.
10:20
Those might be made in China.
10:22
They have Google Android phones generally, but a merch store too, Andrew Reed. Yeah, merch store.
10:27
The Google has merch, which and so I'm sure they have operations in China, but they are seem much less exposed to Chinese tariffs than Apple, right?
10:37
And so if Apple is hurt and the iPhone does wind up going to $2,000 a phone, $3,000 a phone because of tariffs, well, that will probably drive even more people to buy Android phones, even if the Android phones are more expensive because on a relative basis, they would be cheaper.
10:53
Uh, and also uh the phones seem to have been unaffected.
10:56
Uh Ben Thompson was talking about uh Tim Cook and there's uh kind of dancing around this issue of is Tim Cook the right CEO for Apple?
11:03
He's 64 years old, so he's getting close to reasonable retirement age.
11:08
Um, I was going to say close to hitting his prime. Hitting his prime. I agree.
11:13
Um, and I actually I think I disagree with Ben Thompson on this.
11:17
He uh was very shaken by uh the there's something rotten in Certino report by his co-host um of uh of what what is this other podcast? Yeah, Daring Fireball.
11:31
Uh, and so there's this big question about the big miss on on Apple intelligence, should that be serious cause for concern that if Apple's not getting AI correct?
11:40
Uh, do you need new leadership if AI is the most important thing in the world?
11:46
But I think we learned from the tariff situation that in fact supply chain is maybe the most important thing in the world and Tim Cook is world class at supply chain and so it makes sense that he is at the helm and I think uh any discussion of Tim Cook stepping out of Apple is too is too too premature.
12:03
I think maybe getting new product leaders to Apple intelligence more aggressively makes sense supply chain expert. Yep.
12:11
at a point in time where we're dealing with, you know, really complex, you know, tariff policy and uncertainty, he's the perfect guy. Yep.
12:22
To be in at the helm right now. Yep.
12:25
Maybe not the perfect guy for five years from now, but we can just, you know, and which would which would affect more which would affect Apple worse if they truly lose the AI agent Siri, you know, uh, AI assistant landscape to the point where they need to open it up and they need to say, you can map your Siri button to any any app and we're actually auctioning it off and Google's going to bid just like they did for the default search in Safari.
12:55
Um, and OpenAI is going to bid.
12:58
They'd probably make a ton of money from that.
13:00
Maybe not capture all of it, but they'd capture a lot of value from that.
13:03
And that might be a loss strategically for them that they wouldn't own consumer AI in the future.
13:08
Obviously, consumer AI is something that you want to own.
13:10
Uh, but so if they lost that, it wouldn't be good.
13:13
But compare that to getting the tariff issue wrong, getting the supply chain wrong, not being able to deliver the product, delivering the product at three times the price.
13:22
that is actually catastrophic versus hey there's this massively incremental technology and we have to partner with other big tech companies on it like we did in search.
13:31
I don't think it's that big of a deal and so I'm I'm pro Tim Cook in this case at least for now. We'll see.
13:36
Um but it's fun to watch it unfold.
13:39
So Alphabet's operating income per quarter just a hair off of peak.
13:45
Of course, the Q4 season, I believe, is always strong.
13:48
Um, but they are rocketing towards over 30 billion in operating income every single quarter. You love to see it.
13:58
Uh, their advertising revenue rose 8% to 66 billion while cloud revenue jumped 28% year-over-year to 12. 3 billion. Let's hear it for them.
14:09
Congratulations to everyone at Google.
14:11
Um, both were declarations from the grow uh decelerations from the growth rates seen in the fourth quarter.
14:18
But Google isn't blinking in its plans to invest aggressively in generative AI.
14:22
The company maintained its plan to put $75 billion towards capex this year, more than double its annual average over the past 5 years.
14:31
Of course, there's an acceleration there.
14:32
The business has grown a lot and they are risk on. Correct.
14:36
A+ work on the soundboard today, Jordy.
14:39
The natural the natural evolution of this is that I have a sound board with with thousands of effects and I just don't say any word.
14:49
You just you just move from from front office to back office.
14:51
I'm just wearing an Apple Vision Pro and I'm just like getting the uh great reactions.
14:54
Uh so uh the the Google didn't exactly face a high bar coming into Thursday's results.
15:03
Alphabet's stock has been flat over the past 12 months, lagging most of its med megga cap tech peers on worries about its position in AI and the loss of two federal antitrust cases that could ultimately result in the company's breakup.
15:14
Um, of course, everyone was saying OpenAI is the disruptor to Google search.
15:18
Maybe Perplexity is going to take a run at Google.
15:20
Um, but people are still googling stuff.
15:22
They're googling stuff and then they're doing deep research reports separately and and maybe that's chipping away, but it doesn't seem to be chipping away at earnings.
15:30
uh Google seems to be Lindy in this case.
15:34
So, Alphabet also comp commands the lowest valuation multiple of the multiple of the major tech giants with the stock trading at just 18 times projected earnings for the next four quarters compared to Microsoft at 28 times.
15:46
Uh the company said Thursday that it would boost its quarterly dividend to 5% to 5% to 21 cents a share which comes a year after it initiated the payout.
15:56
This of course was the famous criticism that Peter Teal levied at Eric Schmidt on stage at that Fortune conference years ago. Do you remember this?
16:05
I had another thought jump into my head that's hit me with which is uh Netflix trading at a PE ratio of around 50 50.
16:14
Uh how frustrated do you have to be as Google management when you look at Netflix and you're like intense competition from a bunch of different players? Totally.
16:22
uh obviously, you know, they basically own the entire market or they have everybody signed up and the strategy now is just to just increase prices and and and and uh reduce costs or or keep costs as is.
16:33
Uh but but ultimately when you look at uh the sort of underlying quality yep of these businesses, it just really says that the markets firmly believes that uh Google is at extreme risk of uh you know disruption of the core business model.
16:54
But when we talk to people like Logan, which who we had on the show uh Monday, who runs Google's AI studio, it's hard not to be uh generally bullish on what Google is doing in AI. Yeah. No, I agree.
17:06
Uh it's interesting that the Netflix comparison because by all accounts you would have to assume that YouTube is just a better business.
17:13
It is the final form of, you know, all the best content goes there.
17:19
The algorithm sorts it all out, sifts the wheat from the chaff.
17:24
The really loweffort videos get a couple views.
17:26
They make a couple dollars. But the Mr.
17:28
Beast videos get a 100 million 500 million views and generate millions of dollars in ad revenue and it's all decentralized.
17:36
It doesn't have any oversight.
17:38
So there's no overhead there. There's no negotiation.
17:41
Oh, we lost this particular video.
17:44
The videos go up like like clockwork and they have a subscription plus adbased business model.
17:48
It's the same as the other thing that I think is worth noting on um on Google is yes chat GPT is a threat. Yes.
17:57
there are people that are, you know, chatting with chat GPT as an alternative to, you know, punching something into the Google search bar.
18:06
But I look at it much more in the context of, you know, Tik Tok and Instagram.
18:12
Yes, Tik Tok uh, you know, has taken away um, sort of usage uh, from Instagram and other meta products, but it certainly didn't kill either of them, and they've still been able to find growth there.
18:25
So, well, speaking of Google's ad business, they're making tons of money running ads.
18:30
We're making money running ads, and you can make money running ads on Adquome advertising made easy and measurable. Go to adquick. com.
18:40
Let's kick it over to Intel.
18:44
Uh, Intel cuts outlook says layoffs are in store.
18:47
Um, company posted a quarterly loss on Thursday. They are the old guard.
18:53
I think Intel and Google both raised money from Kleiner Perkins.
18:58
I'm pretty sure um maybe Sequoa's in both of those.
19:01
But similar venture capitalist very different stages of life as big tech companies.
19:04
The company posted quarterly loss on Thursday and gave a weak revenue outlook.
19:08
Said it would lower its operating expense target this year by $500 million and red and would reduce it by a further 1 billion next year.
19:16
Um, this is on the tale of new chief executive officer Lip Bhutan uh beginning a turnaround effort and uh we are excited to see what he does and how many pages he takes out of strategy printouts because uh Ben Thompson has been playing armchair quarterback for the last decade and maybe it's time for Intel to implement some of the Ben Thompson playbook.
19:41
Not a bad idea at this point.
19:43
Tan said to a letter in in a letter to employees that layoffs would start this quarter and continue over several months.
19:48
Although he didn't quantify how many employees would be affected. That's pretty rough. Brutal for the team.
19:53
Some people are Yeah, we're going to be doing layoffs over a few months.
19:56
I mean, I guess it's like no surprises and hey, this is going to happen and maybe you telegraph it early.
20:02
Uh they're also reducing capital spending uh by two billion down to 18 billion in total capex.
20:07
They're getting into uh for this entire year.
20:09
I mean now they're spending less on capex than Google is spending per quarter.
20:14
They spend less in a year than Google spends in a quarter.
20:16
And it's like their whole business should be capex in my opinion.
20:20
They should be a fab mostly.
20:20
Uh uh but of course they also invest in design of semiconductors as well.
20:25
Um and so there's been a slowdown in a gigantic manufacturing expansion undertaken by Tan's predecessor Pat Gellzinger.
20:34
Finance chief said tariffs were affecting the company in two ways.
20:38
Customers rushed to buy electronics in anticipation of the tariffs, contributing to higher than expected revenue for the quarter.
20:43
But looking ahead, he said costs would increase and the market would contract as consumers and businesses face an uncertain economy.
20:50
And Intel's stock dropped by about 7% in after hours trading. Uh the revenue was flat.
20:56
We are so far from the rumors last year that Elon was in the mix to potentially buy Intel.
21:02
That felt like such a great timeline to be on.
21:04
I still think it would have been so cool if if uh the chips act was basically just uh you know structured as a as a you know debt financing for an LBO and takeover take private of of Intel with uh with Elon at the helm.
21:21
uh with Elon at the helm. I think that could have been uh a really really great ending and it would be so much less uh it would be very it'd be very easy for people to rally around America from an American perspective because it's it's
21:34
it's so much less controversial than oh what's going on on X it's the public square is it leftwing is it right-wing like this culture war effort uh is is uh it it regardless of where you stand on the issue it's clearly uh causing friction between Americans. Whereas if
21:51
Whereas if you get Elon and he's just off making semiconductors and the semiconductors are getting cheaper, it's like who is this a leftwing or rightwing issue? We don't even know.
22:01
It's like yeah, he's cutting some jobs there probably making it run more efficiently, but ultimately the goal is cheaper semiconductors.
22:06
I think that's something everyone can get behind.
22:09
Um but he made cheap cars. Yeah.
22:12
And uh and then those got So yeah, maybe anything's possible. Who knows?
22:17
Um anyway, sales rose 8% in the division that sells chips for data centers and AI.
22:21
Obviously, a rare bright spot amid the gloom.
22:24
Sales in its personal consu chip division.
22:26
Its largest segment fell 8% to 7. 6 billion.
22:31
Its contract chipmaking business reported 4.
22:32
7 billion of revenue up 7%.
22:36
Intel also gave a forecast of roughly 11.
22:38
8 billion in revenue for its current quarter, lower than Wall Street's forecast of around 12. 8 billion.
22:41
Um and so lot of uncertainty.
22:44
They are signaling to the market, hey, we're going through a transformation.
22:48
We're going to be cutting costs.
22:50
Revenue might dip, but hopefully we will emerge stronger.
22:53
And we're rooting for you over at Intel.
22:56
We would love to see Intel um become a fantastic tech company as it has been throughout uh it might need a new name.
23:04
The American Superco computer super corp. Super Corp. I like that.
23:07
I think it really needs to, you know, fall into, uh, you know, some of our new hard tech companies.
23:15
Well, we'll see what Lip Bhutan winds up doing.
23:18
Um, maybe he'll need to take out some ads to make the company known again.
23:23
If he does a rebrand, he's going to have to buy a bunch of ads. And we got to do an ad.
23:28
What's our next ad for Bezel? Oh, fantastic.
23:32
We've done some risk checks on various on various semiconductor CEOs.
23:37
We've seen uh Lisa Sue over at AMD rocking a Rolex. She's a collector.
23:43
She's a collector to say the least.
23:43
Uh Lip Bhutan, I know you're I know you're listening. Get on bezel. Pick up a watch. Go to getbzzle. com.
23:50
They got a bezel concier for you. Lip.
23:52
If Lip is not at Hill and Valley. Yeah, that is bearish. Very.
23:57
Yeah, he should get out there to DC. Hopefully he's there. We'll talk to him.
24:01
He should be wearing an FPJ. Yeah. Or Rishard Mill. That's right. A one of one. One of one piece unique.
24:08
Ideally, peace unique with the semiconductor right in there.
24:10
That's what I want to say. That's right. Anyway, uh we're moving.
24:12
I'm surprised nobody did a Blackwell watch yet. I know.
24:17
It's like I don't need the time.
24:18
My phone tells the time, but I just want you to know that I have a you know, I have a Blackwell on my wrist. Blackwell on my wrist. That's really good.
24:24
I mean, uh did you see the uh the Nvidia purse? That was pretty cool. That was cool. That was great.
24:30
Uh, and so someone took a Nvidia GPU and turned it into a purse uh that you can purchase for the for the technology sister for technology girlfriend or wife. Great gift. Um, absolutely.
24:42
Anyway, we're moving on to probably an even more important story in the tech world.
24:47
U story about a man who built a house with room for 21 of his Porsches. Yeah.
24:55
Uh, he actually had one house.
24:58
I can't tell you how many people sent us Yeah. are in this scenario. This is great.
25:02
Well, sent us this article and said, "One, you have to cover this." Yes. Yes. Yes.
25:06
And the show wouldn't be complete without it. That's right.
25:08
It wouldn't be a Friday show without something like this. Exactly. Exactly. Here we are.
25:13
So, uh, he wanted room for 21 of his Porsches.
25:16
So, he built a second house across the street, as one does, uh, near Palm Springs, California.
25:23
Architect Steven Harris spent millions designing a modern house equipped with an underground garage of his sports cars.
25:29
He's a highly successful architect of houses and apartments and his husband Lucien Ree Roberts, a prodigious interior designer, which we'll get into later.
25:37
The interior the interior design game is fascinating.
25:39
There's trade deals happening all over the place. Big deals. Big deals.
25:43
Uh they spend most week nights and and the lifestyle of these two bros is topnotch.
25:49
So they spend most week nights in an elegantly appointed loft in the Manhattan in Manhattan's Tribeca neighborhood.
25:57
For weekends, they have a house called Galloway Hill.
26:01
Always a good sign when your house has a name.
26:03
Uh you should always be naming your house.
26:04
That's in Kinderhook, New York.
26:06
For vacations, there's a compound on an island in Croatia and a restored mid-century modern house in Rancho Mirage, California, eight miles southeast of Palm Springs.
26:15
So they got they got, you know, their fingers in every single pie.
26:19
Croatia is very underrated. Have you been? I haven't been. I've been to Greece.
26:23
I'd like a compound that I feel like Croatia is kind of knock off Greece.
26:26
Is that Is that the case? I don't know.
26:28
Our two Croatian size lords are going to me giving you death threats. I don't know.
26:36
I don't really leave the United States.
26:37
I don't go to any of these like backwater developing nations regardless of how scenic and luxurious they are.
26:43
But uh good luck to them.
26:43
I'm glad they uh built a compound on an island out there.
26:46
there. uh for years they were happy with those options especially Harris says because Rancho Mirage and their part of Croatia have perfectly reciprocal climates that's pretty smart meaning that if it's the wrong time to visit if it's the wrong time of year to visit one it's the right time at the other which
27:02
is really smart um but there was more real estate to come in 2016 a 1acre lot directly across the street from the Rancho Mirage house came up for sale they purchased it for 800K with no plan Harris says other than to prevent someone else from building something hideous is I love it. It's like how bad
27:16
It's like how bad could it have been?
27:19
Like it's probably just going to be a normal house, but they're like, "No, it needs a real beautiful design driven." Yeah.
27:25
I mean, necessarily control your neighbor.
27:29
They're architects and and so they're like, "We're not going to let you build some McMansion up there.
27:31
We're not going to let you put the fake uh fake blinds on the outside."
27:35
So, they found themselves wanting to spend more time in California where their neighbors include theater folks like John Rabin, uh, Robin Bates and Joe Montello and television personalities Kelly Ripa and Mark Consuelos.
27:47
And they had solved one of the logistical problems of being by coastal.
27:52
And this is the art of the deal, folks.
27:55
If you're not doing deals like this, you are going to be left behind in the modern economy.
27:59
This is golden retriever maxing literally taken literally.
28:04
So, so you want to break it down, Jordy?
28:06
Uh, these two guys designed a client's private jet for free.
28:09
Uh, many of our listeners know and have gone through the process.
28:13
You know, when you buy a GFream, you're not going to sort of necessarily take the sort of uh stock uh interior.
28:19
So, they designed a client's jet for free in exchange for a promise to fly their yellow Labrador Retriever Zoey between New York and California for the rest of her life.
28:29
Uh, and one of the two guys always travel with her.
28:35
And so this is why in the modern economy, you don't just want to be golden retriever maxing.
28:39
You actually want to be a Labrador retriever.
28:41
You need to be working out deals that allow your your dog to fly, fly private whenever they want the rest of their life in exchange for a one-time service.
28:51
One time service that really has no cost because it's it's you're just designing it.
28:56
So you're just like picking things.
28:58
It's really just your time. It's just your time. So you swap.
29:00
I think this is potentially one of the greatest investments.
29:03
It's one of the greatest investments based investment.
29:04
Yes, we were talking about this.
29:06
So, uh, with companies like Loyal, Selene, who we've talked about on the show, uh, Loyal is working on life extension for dogs.
29:13
And so, you know, how do you underwrite the price of private flights for a Labrador Retriever for the rest of their life?
29:22
Well, you probably pull out an actuarial table like you're doing life insurance, right?
29:26
You say, "Labrador retriever, how old is Zoe?"
29:27
uh you know, five years old, probably lives to 10, 15.
29:29
But with modern advances in science and artificial intelligence, dogs could be living hundreds of years. Yeah. Thousands of years.
29:37
And so this could add up billions of dollars of value.
29:42
This could be the greatest interior design project ever. Of all time. Of all time.
29:47
From a value capture, from a value capture standpoint, it's genius.
29:50
But it's also going to be incredibly inconvenient for whoever's private jet that is.
29:55
Because imagine that the dog wants to get from New York to California on Tuesday.
29:59
You're trying to take a meeting in DC.
30:01
Now you take off from LaGuardia and you're heading to you're heading to LAX just to get to Reagan International.
30:09
The dog basically runs your life. The dog runs your life.
30:11
I don't know who agreed to this. It's absolutely insane. Yeah.
30:14
Uh, they basically said, "This interior design service that I that I'm a billionaire and I could just pay for is so priceless to me that I'm going to offer up my my jet um to the end of my days.
30:27
I I would expect the dog at this point to outlive um uh the the client himself."
30:33
So, anyways, uh going uh going back to the house situation. Yes. Yes.
30:41
Because the cars are equally important.
30:42
Um, there's 21 of these vintage Porsches.
30:45
Uh, they bought the uh the house they had bought is historically important, so they couldn't modify it.
30:51
And there are the pictures of the Porsches.
30:53
Uh, and I love this because so this garage is specifically designed 21 Porsches in the collection.
31:01
You don't have to move a single car to select any of them.
31:03
None of them are double parked.
31:06
And so if you want to take the 1980s air cooled 911 out, you just grab those keys, you're good to go.
31:15
If you want to take the GC3 RS, you take those keys, you're good to go.
31:19
You don't have to shuffle them around.
31:20
You don't need a your personal valet shuffling. You're all good to go. There's no stacking.
31:25
There's a lot of people Hooie's Garage, if you've ever seen Hoovie on YouTube, uh he has his garage stack three high basically.
31:30
Uh he's clearly not doing it right.
31:33
He should have just built a 21c car garage where you can pull out any of them at any time.
31:39
And so, um, the new house would have two things.
31:43
The old house didn't have a studio complete with skylight.
31:46
Uh, a third generation, uh, Ree Roberts is a third generation painter, and he would be painting in the studio with a skylight and an underground garage where Harris, a serious collector of vintage Porsches, could store 21 of his favorites.
31:58
All 911 RS models made by the company from 1973 to 2024. Wow.
32:05
So it's a it's it's the 911 I guess it's the 911 RS every single year. So Wow. Unreal. Incredible. And such dedication.
32:14
I mean Steve Jobs had the same dedication where he would buy a new 911 every single year, right?
32:17
Uh and there's but I mean I guess he would like rotate that.
32:21
I uh was in the Middle East once and got to see a private collection and the collector had basically around 10 full-scale warehouses on his property.
32:32
Y and he would not just get, you know, a Range Rover every year.
32:37
He would get every color that they made it from the manufacturer in that year.
32:42
So it was literally like a rainbow collection where you'd walk into one of the warehouses and it's just every single Yeah.
32:50
color of car in that year and then you would do it for the next year.
32:53
You do it for Range Rover, you do it for Land Rover, you do it for Ferrari.
33:00
So that's true wealth because the depreciation on a Range Rover is insane unlike some of these Porsches.
33:04
Some of them some of them some of them some of them do pop.
33:07
But uh so in the new house he can slip away to a studio when he wants and Harris is able to keep more of his 50 prized vehicles in California where he likes to take them out for early morning jaunts.
33:17
He said he drives every one of his Porsches.
33:19
We'd love to see a a car collector. Puts miles on the cars.
33:24
Doesn't just keep them in the plastic.
33:25
You got to be dailying your Count, your LM2. It is a funny dynamic.
33:31
Daily your supercars where if you have 50 cars in your collection.
33:35
It's actually hard to put a meaningful amount of miles spreading the love. Of course.
33:39
And I mean it's not like taking them to LA.
33:42
He's probably just driving them around the neighbor. A full-time mechanic.
33:44
Like having a collection once you get into that range and above. Yep.
33:49
Leno has Jay Leno has like a whole team just for registration because there's new registration like every year.
33:53
Well, you have 50 cars that every single week you're doing registration stuff. It's crazy.
33:58
Uh so even just one of his Porsches, 19 the 1984 911 SCRS, uh he's been offered more than $3 million for. He said no. He said I'm dating it. Yep.
34:09
Uh, so they have no plans to live in the Palm Springs area until they helped a couple they had no plans to live there until a couple of friends uh until they helped a couple of friends locate and renovate a house at a country club.
34:18
Uh, and uh then in n in 2015 they heard about a house for sale and decided to buy it after admiring after admiring its mid-century modern forms on Google Earth.
34:32
Uh they later learned it was designed by the prominent Palm Springs architect Donald Wexler.
34:36
When they renovated the 1957 house, they returned it to as closely as possible to the original appearance, a reverence for the classics.
34:46
This guy seems like the man.
34:50
Uh the new house is across the street is more than just luxury for the two men.
34:55
It embodies everything Harris has learned in more than 40 years of designing gracious modern residences.
35:00
Everything Ree Roberts has learned from furnishing them.
35:02
Almost always with a mix of important vintage pieces and items of his own design.
35:07
The two men work together on about threequarters of their projects.
35:10
Each also accepts separate commissions. I love that.
35:13
It's like we'll work together, but you're paying us both.
35:16
It's not not a package deal.
35:18
And also, our dog's going to fly private forever. It's the best.
35:24
I love the journal for for profiling these people.
35:26
just, you know, where else would you find this story?
35:29
Um, from the outside, the house is deliberately unimposing. There's no fence.
35:33
The pool doesn't require one because the whole country club is fenced.
35:37
Uh, Harris explains, Ree Roberts and his landscape design partner, David Kelly, added topography to the previously flat site to match that of the golf course.
35:45
They even gave the pool the shape of one of the courses nearby wer water hazards.
35:49
The result is that the adjoining fairway seems to continue right to their front door.
35:54
The club thinks of it more as a golf course and we think we have more lawn. Interesting. More golf.
36:00
The club thinks of it as more golf.
36:02
We think of it as we have more lawn.
36:04
Just don't do a long, you know, sort of uh uh phone call pacing around the backard. Smacked in the head. Uh I like this.
36:12
Uh he calls it visual borrowing.
36:14
And so when you blend your backyard into the golf course, it just feels like your backyard extends endlessly. Uh very very cool.
36:21
Inside the house is light filled thanks to the oversized windows.
36:27
To complete the landscaping, they splurged on over 100 palm, olive, and fruit trees at the cost of more than 300K. You love to see it.
36:37
Uh 72 years old, and he designed a lot of the furniture himself. Fantastic.
36:42
Cool little backstory here.
36:42
Harris says, "I don't think of myself as rich.
36:44
During his childhood in northeastern Florida, he says it was hard for his parents to scrape together his high school tuition of $700.
36:51
Some nights were spent flounder gigging, a method of fishing that involves waiting in need water with a car battery in a wash tub. This is amazing.
37:03
And you're building a chat GBT rapper and you think you're scrappy.
37:07
This guy, this is different level from flounder gigging to every single Porsche 911. I got to repeat this.
37:17
A method of fishing that involves waiting in knee deep water with a car battery in a wash tub attached to a tractor headlight on a pole.
37:26
Can we get the founder mode sound? Founder mode. That's so good.
37:34
Uh, so he he went to architecture school at Princeton on a full scholarship and then 34 years he lived in a rentstabilized loft on Harrison Street in Tribeca where the rent never went above $300.
37:46
That's so insane to be pulling in like millions of dollars collecting like Oh, yes.
37:50
Every single new Porsche 911 RS I buy and my rent is $300 a month. 300 bucks.
37:58
The landlord eventually asked him to leave but also hired him to convert the building into condos among other things.
38:04
He created a brand new penthouse that sold for over $18 million. Wow.
38:06
Uh Ree Roberts grew up in England and spent summers in the Spanish artist colony uh where he was fascinated by the work of Peter Harnen, an American architect who was modernizing old fisherman college cottages for expats.
38:19
He had undergraduate and graduate degrees from University of Cambridge.
38:23
The two men working together in 1985. They married in 2013.
38:27
Together uh Steven Harris Architects and Ree Roberts and partners have about 40 employees.
38:32
What a small organization to create such a fantastic outcome.
38:37
That's how many can fit in their Manhattan office buildings on Chamber Street, which is right across from the street, uh, right across the street from their loft.
38:45
So, the men don't plan on letting their firms get any bigger.
38:48
Uh, while pouring millions into the new Rancho Mirage House, Harris says, "My biggest fear is that we would like the old house better, but according to both men, that hasn't happened.
38:56
The new house owes a lot to the old one, but it works much better for us. You'll love to see it." Fantastic.
39:02
And uh you know in that house what type of bed should they be sleeping on?
39:08
I think they should be sleeping on an eight nights that fuel your best days.
39:13
Every eight guarantees an overnight success.
39:16
They have an overnight success guarantee. So go to eight. com.
39:19
Clinicallybacked sleep fitness.
39:22
And let me guess, John, you don't even want to look at your sleep.
39:25
Oh, have you seen the new app?
39:25
By the way, they shipped it.
39:26
The new the the new eightle app is actually incredible.
39:31
Uh you should download it if you have an eight sleep.
39:33
Make sure you're updated.
39:34
Uh I think it's a way better design. I got a 91 last night. Not bad. I got a 96. 96.
39:38
And we were just uh texting with Brian Ar uh Brian Johnson.
39:42
He's coming on the show in a little bit.
39:45
And I sent him my sleep score from yesterday and he said great job.
39:49
So uh do you Brian Johnson? Is that the Liver King?
39:51
No, that's the other that's the other Brian Johnson.
39:55
There's two Brian Johnson. Yes. Oh, that's right. That's right.
39:57
Well, we should have them both on.
39:58
I would love to have the I would love to have the Liver on.
40:01
You would you would love to have the liver king on.
40:02
Um but telling uh having Brian Johnson when you posted that I was like this is the most dangerous post you've ever shared because he is normally so critical and I was like he's going to roast you for not being at 100 and you like proof of work. Was it 100? It was 100. Oh it was 100.
40:22
But I I had a feeling for me. Yeah.
40:25
That's like that's not like a I thought I thought he would dig into one of the submetrics and be like secretly you're going to die tomorrow unless you change everything.
40:32
Because he's normally just like so on top of it.
40:34
He can just rip us to shreds once he's on the show, but it'll be entertainment. Good. Yeah.
40:39
Anyway, uh let's move on to another uh story in the mansion section of the Wall Street.
40:44
This is John's favorite section, by the way.
40:45
This is in the highlight of my week.
40:47
Um, Jean Simmons of Kiss lists his Beverly Hills house for $13. 99 million. He's giving it away.
40:53
But this is why it's funny.
40:57
So he says he he listed the house, but he's not going to sell to just anyone.
41:03
He said, "You have such wonderful times there.
41:06
You don't want some schmuck in the place you call home after you sell it." This is his quote. No drugs, no alcoholics.
41:12
I don't want anybody coming in here who's going to destroy the place. Yes.
41:16
I love he's selling it, but he's not letting go of control. Yes. Yes. Yes.
41:21
And I think I think we should enforce the exact same rule.
41:25
If you're an alcoholic, if you're on drugs, do not listen to TVPN. Unsubscribe.
41:30
We That's a little bit harsh.
41:32
If you are any of those things, uh as I chug Celsius, uh get help.
41:35
And uh you're still welcome to listen to the show while you get uh on the right path. Yes. Yes. Yes. We're rooting for you.
41:44
Um, but uh don't try and bid on Jeene Simmons house because uh he wants you to clean it up before you spend $14 million.
41:51
It is hilarious because it could be an awesome arc if you if you are who is in who is who how can you have $14 million to buy a house and also be a schmuck. Like it's very weird.
41:59
You have to be a very very high functioning alcohol.
42:03
I got to push back there.
42:04
There's a lot of high functioning uh drug uh abusers uh in the world.
42:08
I suppose I had to break I hate to break your golden retriever mindset, but it's been said I have the mind of a golden retriever and maybe I got this one wrong.
42:19
Uh anyway, the house is beautiful.
42:21
Four bedrooms, roughly 7,740 square foot home sits on a hill with views of Cold Water Canyon, Century City, and the Pacific Ocean.
42:28
Um and so if you're in the market and you're going to join us in Los Angeles, we are super bullish on Los Angeles.
42:34
We're we think it's the future of media.
42:37
it's the future of media. But we think it's potentially if things go right the Silicon Valley the home of entertainment could be the home of entertainment if when we're done um fantastic Simmons says I'm the most blessed human being on the planet these
42:51
hard times you don't want to say I have too many houses but we have too many properties said Simmons they have a house in Whistler Canada two homes in Malibu two houses for their children and they will be spending more time at their additional properties visiting quote whatever wifey wants certainly Certainly. Happy wife, happy Happy wife, happy life.
43:10
I love Jean Simmons just sending it talking to a Wall Street Journal like just yapping. Tell me an outdoorsy.
43:17
Uh uh amenities include an art gallery space where he hangs his own artwork and a soundproofed home theater where Simmons said he screens movies for his production company, Simmons Hamilton Productions, which released the movie Deep Water in 2022.
43:29
The home is outfitted with high-end smart home devices.
43:33
It's like a 22nd century house, said Simmons.
43:36
was truly living in the future.
43:38
I had to go out and buy a simple microwave so that I could press one button and heat things up because the coffee maker, the cappuccino maker, the time machine, all that stuff was built into the wall.
43:47
Voice activated, I might add. It was so complex. I couldn't make it work.
43:52
He bought He was like, "Yeah, just like get the nicest stuff."
43:54
It was too complicated for him.
43:56
This is what I've been saying about smart homes. We want dumb.
43:59
I would invest in a dumb home startup.
44:01
Just like a bunch of knobs. Knobs all physical. Yeah. Yeah.
44:03
get teenage engineering in there. Yeah.
44:05
I want to be able, you know, like an odometer style thing where you just like Yep.
44:11
Uh outside the halfacre lot.
44:13
It has a solar panled 40ft black lined infinity pool and 1,800 ft of patio space.
44:19
He said he likes sitting outside with his children and significant others.
44:22
They eat popcorn and hot dogs and play the adult card game Cards Against Humanity.
44:26
Of course, we laugh our heads off. He said it's amazing. I love this.
44:29
They they call uh they're describing his career.
44:32
you say the Kiss co-founder.
44:34
He's the co-founder of of Kiss.
44:36
He's not just like in the band.
44:38
Also known as the demon is known for wearing black and white makeup, spitting blood on stage.
44:43
In addition to his work as a musician, he has a restaurant chain, a record label, reality show, and other ventures.
44:48
Uh in the fourth quarter, luxury single family homes beat the allegations that like, you know, a metal rock enthusiast, you know, become soon. the devil. No drugs, no alcohol.
45:02
Yeah, I'm going to go wear some crazy makeup and spit some blood on stage and rock out.
45:06
They call me the demon, but I really just want to play Cards Against Humanity with my kids and eat hot dogs and laugh my freaking head off. It's amazing.
45:13
Anyway, last uh let's do one more ad and then we'll move on to another ad for a Mississippi home in 14 million.
45:21
Uh it's selling for $14 million.
45:23
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45:25
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45:27
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45:33
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45:36
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45:39
I can't recommend it enough.
45:42
We're dog fooding it here. Golden retriever style.
45:47
So anyway, the $14 million home in Mississippi that you probably have your eyes on.
45:51
Uh it's being listed by Brett Favre, the legendary quarterback, Green Bay Packers.
45:57
Uh If you're looking for acorage, this is the spot.
46:00
They have 465 acres for only $14 million. Yeah.
46:04
And uh you know, there's a lot of there's a lot of hubbhub about new cities, new startups, start startup cities across the globe.
46:14
You don't have to go to the across the globe to build your 500 acre compound.
46:21
You can just buy this mango seed million. Yeah.
46:23
Honestly, that's the that's the strategy. Head to Silicon Valley. head to Sand Hill Road. Hey, we need 20 mil.
46:30
We're going to build a new city and then buy this and then just go live in it and be like, "Mission accomplished. We did our job. We built the new town.
46:38
Get residents to come in and pay you, you know, $5,000 a month to be part of the city of citizenship flat tax.
46:47
Oh, so just like throw your No, basically get your ARR up, you know, into well into the seven figures.
46:51
So, and then so it's not a complete fraud. Yeah.
46:56
And then and then I I imagine you could do uh a lot of other things.
46:58
So Brett Favre is 55 years old now.
47:01
He's the star quarterback.
47:03
Played 16 seasons with the Green Bay Packers followed by one with the New York Jets and two with the Minnesota Vikings. Wow. 19 seasons.
47:11
He was definitely sleeping on an aid sleep. Oh yeah, for sure. For sure.
47:14
Early prototype, I would imagine.
47:14
Uh he retired in 2010 with one Super Bowl ring and he joined the Pro Football Hall of Fame in 2016, just shortly after retiring. Pretty great.
47:22
uh he grew up in Mississippi and uh they used this roughly six uh 465 acre property called Black Creek Farm, another named house.
47:33
We love named houses on this show.
47:33
Uh as a primary residence since the late 1990s and there's a little bit of interesting history here about uh how they built this up over the last 20 years.
47:42
And so the parcel was undeveloped when Favre bought it, said Callahan.
47:47
Among the first things they built was the uh was a structure with horse stables.
47:52
We've been seeing a lot of folks in the technology journalism industry get into building horse stables because of all the generational wealth.
47:59
Um, and then a lot of post exit founders also now following in the footsteps of the technology journalists getting into equestrian dr etc.
48:09
And so he built a structure with the horse stables on the first level and guest house on the second level. Yeah.
48:16
This I mean this is this is uh this is topier. This is the playbook. Exactly.
48:19
He's run he's run top tier plays for Green Bay.
48:21
now he's running top tier plays in the real estate market.
48:25
And so, uh, they lived in the guest house while building the gated main home that was 20,000 square feet, a very reasonable number.
48:32
Uh, that was completed in 2002.
48:33
And then they built another house, 5,000 square ft for the mother-in-law.
48:38
You'll love to see it showing love to the rest of the family.
48:41
Do you think this ends up getting a premium?
48:43
I mean, to put this to put the price $14 million for the 465 acre estate, that's only 329 Tesla Model 3s, which just feels very low to, you know, buy the home of a former Hall of Fame, you know, for the same price.
48:58
You could also get the the demon's house.
49:04
You can get the demon's house.
49:04
Can we get the Ashton Hall sound?
49:09
the demon's house is available.
49:09
But also this I mean these are really but also uh Brett Favre's house is uh is somewhere out there somewhere out there somebody's going to like you know basically make a call.
49:20
All right, I have 14 million to spend on a home. Yeah.
49:22
Which one are you going to demon or go to Mississippi? Yeah.
49:26
Uh Brett Favre has a nickname, but uh Pat McAfee got in a lot of trouble for calling him this.
49:31
Do you remember this story?
49:32
He called him the sticky finger bandit uh because of some legal trouble that Brett Favre got into, but Brett Favre denied any uh any wrongdoing. And the case is ongoing.
49:43
So, we will not be calling Brett Favre the sticky finger bandit.
49:47
But I love these nicknames.
49:47
I love that we can say the demon.
49:49
I don't know if I want to call Brett Favre the sticky finger bandit.
49:52
Uh because I don't know anything about the case and I don't know if he's guilty.
49:56
You don't know anything about sports, John.
49:57
You don't know anything about sports, honestly.
50:00
You thought UFC took place in in a circle? I did. I did.
50:02
But I've learned a lot more and I love the United Fisticuff Championship now. I'm a huge fan. I like the punching. I like the kicking.
50:11
I like everything else that's goes on in the hexagon. Anyway, moving on. Property has two pawns.
50:19
Bo Nichols is going to be calling into the show early next week.
50:23
He's got a big fight on May 3rd.
50:26
I can't I I already have my questions ready.
50:27
I'm going to be like, "Which one was better, UFC 375 or UFC 524?"
50:33
You know, I've been doing the deep dives.
50:35
I'm going to get the answer from him.
50:37
I'm going to have him break down the greatest moments of the last thousand UFC's and uh tell us how it all works.
50:45
So, this house has two ponds, one spanning roughly 3.
50:48
5 acres and the other spanning two acres.
50:50
Those are pretty big ponds.
50:51
Um Favre enjoys recreational hunting on the property. That's pretty cool.
50:55
has a array of wildlife, including white-tailed deer, wild turkey, and dove.
50:59
So easy to tell when you get so into a story that that you're like, "Okay, actually, we need to go back."
51:06
Yeah, we got we you can't just leave us talk about this home and not talk about the pond.
51:10
Anyway, speaking of Favre, let's do an ad and then we'll tell you more about the NFL.
51:13
We'll bring it back to Netflix.
51:15
So, Poly Market, get on Poly Market.
51:18
We're going to be doing a Poly Market deep dive later in the show. Stay tuned for that.
51:21
We're reviewing the top eight poly market uh markets that we are tracking in technology.
51:27
Uh anyway, uh the information has a deep dive.
51:30
The big when I think of the information, I think of sports. Sports.
51:35
And so that's why we're going to be talking about this article today. Yeah, I'm very excited.
51:41
Uh the NFL people often call the information like the it's like the tech crunch of sports, right? Yeah.
51:46
The NFL loves Netflix, but does Netflix want to love the NFL?
51:52
The assumption has been that the streamers will need sports as much as the leagues need the streamers.
51:59
The reality is more complicated.
51:59
Uh we talked about F1 uh US, you know, trying to sell the the US television rights to Netflix.
52:06
Netflix kind of bulking at the price and saying not interested. Yep.
52:09
Uh who knows, a deal could still happen.
52:11
Uh but it seems like there's a mismatch between the league's expectation from a um you know pricing standpoint and what the streaming platforms are willing to pay given again that they're sort of at like peak uh sat market saturation.
52:29
there's uh you know babies are being born that will someday sign up for Netflix. Yeah. Yeah.
52:32
We covered this on Netflix earnings like Netflix has great penetration and sports are important but sports historically have been the thing that keeps people from cutting the cord.
52:44
Uh and if you just include it in Netflix it's not that additive.
52:47
And so there's a big question of what is the true value of live sports for Netflix.
52:51
Now Hulu went really big into live sports.
52:53
They have a whole campaign around that.
52:55
Uh of course owned by Disney now.
52:57
Uh, and but Disney also owns ESPN, so there's a whole flywheel there.
53:01
Um, so there was a gathering in at the Breakers Hotel in Palm Beach, Florida, where the NFL was hosting its annual owners meeting.
53:08
The conclave is a big deal for the league.
53:12
An occasion for it to hatch hash out its multi-billion dollar business deals and discuss what the future may hold.
53:17
The latest gathering, which lasted over four days, had a notable firsttime guest, Ted Sarandos, the co-CEO of Netflix. An absolute dog.
53:25
Is there another tech company anywhere near the size of Netflix that has co-CEOs? It's very rare. Very rare. It's very, very rare.
53:32
Public, but they're private. Yeah, exactly.
53:34
But I would put them in the same league as Netflix in terms of just overall amazing market dominance. Exactly.
53:41
uh he came for a panel discussion about sports on streaming video services like Netflix and the league revealed that Netflix would air two Christmas games, two Christmas Day games in 2025, just as it did in 2024.
53:56
Everyone knew Netflix would do at least one Christmas game as part of a three-year deal that began with a pair of Christmas matches last year.
54:01
The the first NFL games ever broadcast on Netflix, but the deal requires Netflix to air one game per year.
54:08
Uh, so now they're doing two, so they're going a little bit deeper.
54:12
The media world saw the decision to have two games as Netflix's an acknowledgement that it's interested in nurturing its nent relationship with the league after decades of resisting live sports.
54:22
For the league's part, it couldn't be happier.
54:25
We're now in a world where there are some platforms that are doing one deal uh that that are doing one deal.
54:30
You tap into global scale.
54:30
The NFL's chief media and business officer said Netflix is one of them.
54:34
Amazon is certainly becoming that.
54:37
And YouTube is certainly becoming that right now.
54:38
Now, the league is trying to find a marquee home for an opening week game on September 15 uh September 5th in Brazil.
54:47
Uh and while it might go to a T TV network, a streamer like Netflix is probably more likely since those companies have greater interest in international audiences.
54:53
We talked about this with Netflix uh adding users internationally and more money to spend.
55:00
And that's uh that is a change in the sport world in the sports world that is upon us and for us it comes at a good time as we think about global distribution.
55:08
And so it'll be interesting to follow what happens with all of these different sports leagues and where they end up.
55:13
I do think that eventually they have to each each each sports league has to find a home on a streamer just because I don't see young people ever going back and uncutting the cord and getting on cable traditional cable. Yeah.
55:28
And so it it will either be the the Gen Z kids never get into sports really or the stream or or the leagues figured out testosterone has been cut by Cali means is really not mincing words the younger generation alpha he was coming for them not so alpha as it stands but yep anyway uh is there anything else you want to cover on the NFL and Netflix?
55:55
No I'm interested to see how this plays out.
55:57
I mean, right now it feels like a pretty bad uh fan experience if you're having to kind of like bounce around, you know.
56:02
Um, but and Netflix has a lot of really cool I mean, Netflix has a lot of really cool technology.
56:08
Did you ever watch what was that called?
56:10
Boulder Dash or something?
56:12
Boulder snatch or something?
56:12
They they had a choose your own adventure video.
56:16
It was kind of Black Mirror, I think it was uh directed by the Black Mirror team or something.
56:19
So, you're saying Netflix should allow uh sort of create AI generated fanfiction of games where you can create a reality where your team wins every time.
56:27
Is that what you're about to say? Yeah. Yeah. Exactly. Exactly.
56:30
Uh no, I mean on a serious note, there are teams just losing and it's like, do you want to see the final five minutes where they win and then Yes.
56:39
that uh maybe that would save a lot of households, you know? It would. It would. Oh, like Yeah.
56:43
Dad, dad's going to be in a bad mood unless unless the Packers win.
56:47
Let's just put on the the good ending. Yeah.
56:49
Uh no, I mean I I I do think Netflix has embraced technology in obviously a very, you know, unique way.
56:57
And there are interesting things that you can do over a streaming platform that you can't do over the air.
57:04
And so that's things like uh letting the user choose the camera angle, letting the user choose uh you know, even subtitles, dubbing, these different things.
57:14
because I I made a I I made a YouTube video a couple years ago about how with the advances in artificial intelligence and wave to lip, which is a uh uh an AI model that remaps the lips of uh to a waveform.
57:27
I think this is what Tyler used to make Delian speak Chinese.
57:31
We got Can we pull that video up? Yeah.
57:33
Can we pull up the the Delian speaking Chinese on TVPN?
57:34
Um and yeah, drop it in the bangers tab.
57:38
Um, but uh I was very bullish on on Netflix in particular being able to redub every single piece of content with matching lip movements because I'd watched uh a German show about time travel called Dark on Netflix and I was just too golden retriever.
57:58
I couldn't get into it because I didn't want to read the subtitles, but the dubs didn't match up with the lips and so it was very jarring.
58:05
And so there's always this big debate about dubs versus subs.
58:06
Dub, are you dubbing the the the words over or are you using subtitles? Let's see.
58:24
Delian really well insane.
58:36
Okay, that's enough of this. That's enough of this.
58:40
It's really funny when he gets to like the chat GPT thing, too, because he keeps like not it doesn't translate those.
58:45
I have to say Deliani pou let the audience figure out what that means. Yeah.
58:52
Um and so I was really bullish on on Netflix basically doing exactly that what Tyler was able to do probably in an hour.
58:59
Um uh I doubt knowing how crack Tyler is.
59:02
It's probably five minutes honestly.
59:04
But uh but doing that for every Netflix show and uh Mr.
59:08
Beast has been doing this with localization of all of his content.
59:12
Netflix is in is in a unique position to do that for all of their content and make it even more accessible internationally.
59:18
That's obviously an incremental um an incremental source of revenue for them.
59:23
And then there's a whole bunch of other things that you could imagine uh Netflix offering unique experiences to NFL fans.
59:29
Uh whether that's you know the ability to switch between different games very quickly like have you ever watched NFL Red Zone?
59:37
This there was like a specific channel that would switch from one game to it's all the channels so it switch from any game that has an exciting moment.
59:43
It would just cut over to that and that's something that they were able to do with just a a team managing all the streams.
59:50
But you can imagine members of the community of that members of the community that are huge NFL fans are going to be like, "Oh, great.
59:56
So John's explaining red zone to me. This is this is great. This is just great.
1:00:01
Anyway, uh why don't we move on to an ad and then we'll move on to explaining how SPVS work.
1:00:08
Uh so before after the SPVS happen, the companies go public.
1:00:11
Oh, I hear the sound of F1. Oh, is that public. com?
1:00:17
The latest sponsor of Aston Martin Aston Martin F1 team. Love to see it. Uh, go to publicub.
1:00:22
com, go to the website, create an account, transfer some money in, get set up, and then start hunting for those Aston Martin cars.
1:00:30
Uh, they're not easy to find, but if you dig around, uh, you can definitely find them, and you can enter to win.
1:00:36
And so, uh, get on public. com.
1:00:39
Anyway, um, before companies go public, they are private and they're doing a lot of SVs.
1:00:43
The Wall Street Journal has a has a little piece about a side hustle for friends of Elon Musk selling access to stakes in his private companies.
1:00:52
Lucrative stock deals have allowed SpaceX to avoid public scrutiny even as it has grown into one of the largest companies in the United States.
1:00:57
And we might have to put this in the truth zone, but let's break it down because there's some interesting things here.
1:01:05
So, Antonio Gracias and Elon Musk go way back.
1:01:07
the Valor Equity Partners founder and family and his family spend their Christmases with Musk and vacation with him in the Bahamas and Jackson Hole, Wyoming for for Graciios.
1:01:15
It has been a lucrative relationship.
1:01:17
He has become a multi-billionaire in part by investing in nearly all of Musk's companies over the years, according to public filings and court documents.
1:01:25
Now, Gracias and his firm have found another way to cash in on his status in Musk's inner circle by selling wealthy outsiders access to tightly controlled shares in Musk's privately held company.
1:01:36
Uh, Jordy, do you want to give us a little 101 on how SPV hustling goes down?
1:01:41
I've heard it's very much like club promotion. Is that an apt analogy?
1:01:45
Yeah, so an the average SPV promoter is similar to a club promoter. Okay.
1:01:52
where uh they hit you up and they say, "Hey, coming around later.
1:01:58
You want a you want a you want a bottle? You want a table? What's going on?"
1:02:00
No, I I think that analogy is accurate um for some uh SPV uh leads, but uh certainly for not all uh not for all.
1:02:11
And yeah, I just thought this uh the the attacks are, you know, continuing to rain down on Elon from all over the internet. Yes.
1:02:20
And I thought the idea that uh you know the the the dynamic that's happening here is a very similar dynamic to what happens at pretty much every single private company. Yep.
1:02:29
In which management teams and CEOs prefer to fund raise from people that they have long-standing uh relationships with oftentimes personal relationships with.
1:02:42
And so um nothing about this article should be surprising.
1:02:45
I mean, I think that uh again uh over time people have joked about the idea of I'm I'm an investor in SpaceX and you're investor in sort of like layers layers SPVS with high fees and ultimately the SpaceX has performed so well that you're still up massively unless you know you were unless you were really really layered. Totally.
1:03:08
Um and so I think investors have done fine in this and I think that in general this is just a function of there being so much demand for SpaceX shares that um that you know these types of fee structures work.
1:03:22
The other thing I the only thing that stood out and that was interesting is that um Valor was sort of bundling SpaceX and XAI shares in a single vehicle. Yep.
1:03:32
uh offering, you know, basically doing a $1 billion raise.
1:03:37
Uh 200 about 25% of that was uh XAI.
1:03:41
So, I think that could be more of a function of there just being outsized demand for SpaceX and less and basically forcing people to say like you don't really have an option buying both.
1:03:50
Um that's at least the way I read it.
1:03:53
Don't have any inside information.
1:03:54
I think there's kind of uh two points on SPVS that are interesting.
1:03:58
One is that um at the ultra growth stage centicorn level, the fundraises are the same size as large venture capital fundraises.
1:04:09
And so you might go raise a $2 billion growth fund and that might be a huge sizeg moment and you deploy that over a number of years.
1:04:20
It's a 10-year fund and you're expected to have a a diverse range of investments across uh the portfolio.
1:04:25
Uh but when you're talking about raising $2 billion, you're talking to LPs that are writing huge checks and those LPs might be fine making effectively a direct investment into a SPV.
1:04:37
And they treat it just like a growth fund and they're just saying, "Yes, I'm I'm I'm writing a billion dollar check, I'm writing a hund00 million check, but instead of going into a growth fund, I'm just going into SpaceX with this." And so that makes sense.
1:04:50
Um, on the flip side, the I think why SPVS get a bad rep sometimes is that they're assigned at the lower level if you're doing a a $1 million SPV into a $10 million raise.
1:05:00
There's just a question about like, wait, there are so many venture capital firms that could just fill out this entire $10 million round.
1:05:07
Like, why do we need an SPV?
1:05:09
Yeah, it makes sense why you need an SPV for SpaceX if they're raising 10 billion or something that, you know, you don't want to suck up an entire growth fun.
1:05:18
And to be clear, uh, Valor and some of the other firms that do this are providing a service in a way to SpaceX because SpaceX doesn't want to have tons of shareholders of individual shareholders that are going to say, "Hey, like what's the update? How are things going?"
1:05:32
It's not just that, it's also legal.
1:05:33
So, one of the ways SpaceX has been able to maintain its private sat status is by limiting its investor base.
1:05:38
Once there are 2,000 record holders of record, not including employees who own shares through stock compensation packages, a company is legally required to disclose financial information similar to a public company.
1:05:52
And so there was always a fear that if you raised money from a VC and then uh they you you you ran your company for 10 years, they distribute the shares out and they have more than 2,000 LPS.
1:06:02
I think this number might have been lower earlier too.
1:06:06
Um, but if they distribute to their LPs and you wind up with 2,000 holders of record because you've done so many different raises and so many different party rounds that you wind up at 2,000 holders of record, you could be running a small company that now has to disclose financial information similar to a public company.
1:06:20
That could be very problematic.
1:06:22
And so SPVS have always been a way to kind of tie a bow around a group of holders and and layer these uh structures.
1:06:30
And I think that it's overall fine and doesn't seem like a big deal, but obviously it's of interest and newsworthy because SpaceX is an interesting company.
1:06:39
Elon Musk is an interesting founder and the journal often don't get exposed. Yeah.
1:06:42
What the journal doesn't mention is that even if these investors were just investing directly, SpaceX can't do general solicitation as a private company. Yep.
1:06:54
and nor nor um and the other factor is you still have to be an accredited investor even to invest in these SPVS.
1:07:01
And in fact, I think these SPVS probably have much more firm uh accreditation checks than y other SPVS that might be investing into figure as an example. Yep. Right.
1:07:12
So, uh yeah, there's some little bit behind the scenes text from the Twitter deal.
1:07:17
uh venture capitalist David Saxs text texted Musk in 2022 uh after Musk asked if he would invest in Twitter.
1:07:26
I am I'm personally in and will raise an SPV2 if that works for you.
1:07:28
Uh and so good good communication there from the investor saying hey I I'm open to doing an SPV.
1:07:37
I would love to do that for you but only if it's helpful.
1:07:38
And then on the flip side of that, uh, Musk accused Twitter investor Jason Calacanis of marketing a SPV to Randos during the first Twitter fund raise.
1:07:48
SPVS are how everyone is doing these deals now.
1:07:51
Calacanis responded, but uh, tensions were flaring at that moment, but it seems like they have resolved.
1:07:58
Um and so um these uh the sale of these uh SPDs generates fees of course and uh and UBS is also getting in on the action because uh UBS uh Swiss bank uh market through much less article if the article was UBS and Valor Equity offer shares in SpaceX to their client base. Yeah.
1:08:20
It's not even tied to a new mark which would be more interesting to hear about.
1:08:25
Oh, well, like, you know, there's new revenue numbers or there's new new on the back of some change in the business, the the company's worth more.
1:08:33
It's more just like, hey, SpaceX does these a couple times a year. Yeah. Right. Yeah.
1:08:39
I mean, Elon's been a master of uh of ensuring fair liquidity to early employees because we've talked to a lot of the early SpaceX employees and investors and they've been in the company for 20 years now. It's 2005 company.
1:08:51
And so even if you're totally bought in on SpaceX and you worked there for a decade from tw 2005 to 2015, you took immense risk.
1:08:59
You got comped for that in in stock.
1:09:02
At some point you're going to want to put your kids through college or buy a house.
1:09:06
And so having some liquidity makes a ton of sense or start a 3D printing company. Yes, I love that.
1:09:14
Let's recycle the capital and let all the SpaceX alumni go build fantastic companies.
1:09:18
Uh they're very very interesting.
1:09:20
They also profile Luke Nosk, SpaceX board member who worked with Musk at PayPal before joining uh Peter Teal's founders fund in 2006.
1:09:27
He and Musk remain close, sometimes attending game nights in Austin where they played Werewolf, which pits villagers against monsters, according to a person who knows them.
1:09:36
Someone leaked to the journal that they're playing essentially board games. Uh very fun.
1:09:39
Uh Nosk founded Gigafund in 2017 and has purchased roughly 1 billion in secondary sales of SpaceX shares.
1:09:46
probably a great fund in that case. It's pretty good.
1:09:52
Gigafund, best name so far.
1:09:53
Gigafund is a great name. It's a great name. Uh this is interesting.
1:09:58
Uh MySpace co-founder Burman is getting in on the action.
1:10:00
Uh you don't hear about the MySpace mafia very often, but uh he frequently gets slugs of shares when SpaceX sells them on behalf of employees and earlier investors.
1:10:10
His firm Troy Capital invested uh part of a $47 million fund in secondary sales in SpaceX stock in 2022 when the company was valued at roughly 127 billion.
1:10:19
And so that investment is probably doing very well.
1:10:24
Uh Fishner Wolson, an early investor in SpaceX and a friend of Founders Fund founder Peter Teal, another close associate Musk al also often gets SpaceX shares for his fund 137 Ventures Management.
1:10:35
And so uh fantastic to see the boys ripping some SPVS.
1:10:38
You love to see it and you love some capital flowing into important companies that are doing great things in space and beyond. Love it.
1:10:48
Uh should we talk about some markets? Yes.
1:10:49
Let's let's go to our poly market analysis for the day and debate some of these.
1:10:54
Uh the first one is the largest company at the end of April and Apple seems to be running away with it. It's April 25th.
1:11:01
Only five more days if Microsoft wants to catch up.
1:11:04
But it was a knockout dragout fight.
1:11:07
Uh mid midmon on April 10th, Microsoft was actually expected to be the number one biggest company.
1:11:17
Um by the end of April, he cooked. He cooked. He cooked.
1:11:20
Uh and so uh everyone else is uh left behind.
1:11:23
The options are Apple, Microsoft, Nvidia, and Amazon.
1:11:29
Uh what would it take for Microsoft, Nvidia or Amazon to flip Apple next month?
1:11:33
I think you got to see crazy tariffs on Apple that actually stick and hurt iPhone prices and sales.
1:11:42
And you need to see increased AI demand for Nvidia to do it. Something with Amazon.
1:11:48
I'm not exactly sure what would what would be the catalyst there.
1:11:50
Um Nvidia is the one that could pop.
1:11:53
I feel like if all of a sudden there's oh a news of a GPT5 we're where the the whole the whole rumor about the pre-training scaling wall and GPT4. 5 not being that great.
1:12:08
It's like if all of a sudden the game's back on scale is all you need.
1:12:12
Bitter lesson comes back in the meme in the meta and all of a sudden it says no you actually do need to build the $500 billion data center.
1:12:19
You need to build a $5 trillion data center.
1:12:21
And everyone is taking it seriously.
1:12:23
Everyone is scale pilled, AGI pilled.
1:12:26
Uh you could see on video maybe pop, but this is not financial advice.
1:12:30
We're just debating the markets. I don't know.
1:12:31
Anyway, the next news the next market is uh what will Michael Sailor say during strategy Q1205 earnings call.
1:12:40
And I like this because there it's not just that he'll say Bitcoin, it's that he will say Bitcoin more than 100 times in a single earnings call.
1:12:52
They know he's gonna say Bitcoin, but will he say Bitcoin 100 times?
1:12:54
And there's a 20% chance according to Poly Market that Michael Sailor will say Bitcoin 100 times more.
1:13:02
Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin.
1:13:07
He's also got a lot of Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin, Bitcoin.
1:13:10
There is a 9% chance that he will say uh billion 50 times or more.
1:13:16
Uh, crypto at seven plus seven to a sailor call strategy. We should call. Oh, wait.
1:13:24
Is it no longer micro strategy?
1:13:26
Is it just renamed the strategy? Drop the micro. Drop the micro. Macro strategy. It's a giga strategy.
1:13:31
China is at 50%, inflation is at 56%. Nvidia is at 34%.
1:13:35
Lots of lots of people getting on the action.
1:13:38
Some of these are very low volume.
1:13:40
Uh interest rate is just $374.
1:13:45
But um like if you go to strategy.
1:13:47
com by the way y it's just a bunch of basically uh it's basically a big ticker that shows their market cap, their share price, their six month or three month.
1:13:59
Um and uh yeah, it is interesting stuck with it in the face of Bitcoin ETFs and wide Bitcoin availability.
1:14:06
There there was a big discussion for a long time of like how do how do the public markets get access to Bitcoin?
1:14:13
Maybe Micro Strategy is just a wrapper around that. It's okay.
1:14:17
Um, but he's he's stuck with it and so it'll be fun to see what happens with uh the uh with uh his earnings call.
1:14:27
Uh the next market is uh asked by us actually TBPN uh will chatt 1 billion monthly active users in 2025.
1:14:37
The volume started small. It's climbing. It's now at $76,000.
1:14:39
you can go on poly market and uh and express your uh your the numbers have been uh kind of all over the board.
1:14:50
Sometimes they talk about weekly activives.
1:14:52
Uh a lot of people like to look at uh similar web and other data sources for information.
1:14:59
But ultimately uh I think this will be such a significant milestone that they will come out and announce. I certainly hope so.
1:15:06
And and I would like to hopefully this market gets uh it matures and then hopefully uh people who interview Sam towards the end of the year will just ask him like hey are you over or under a billion MAUs in 2025?
1:15:21
Did you did you hit this this milestone?
1:15:24
Uh and this does seem like a milestone that might Yeah.
1:15:25
And he said he said uh I think he said recently that somewhere around 10% of the world uses chat GPT on a monthly basis. Yep.
1:15:33
That's 800 million, right? We're getting close. We're in hair's breath.
1:15:37
And this is just such an impossible number almost. Yeah.
1:15:43
But you add another Studio Giblly moment where it onboards a bunch of people.
1:15:45
You you just add more viral loops of sharing.
1:15:49
Maybe they do the social network thing.
1:15:50
Uh and we actually do have uh more OpenAI news that we're tracking here.
1:15:55
Will OpenAI acquire Windurf before August?
1:15:57
It's at a 52% chance now.
1:16:00
Lower than I would have thought. Yeah.
1:16:03
Um but again the the headline that was initially reported was not a confirmed deal.
1:16:09
That was a publication kind of like frontr running something. And this happens before. Yep.
1:16:16
Uh it's very common for uh media outlets to basically get word that a deal is in the works and then just announce it. Yep.
1:16:24
And it's not necessarily a done deal done deal.
1:16:26
Sometimes a term sheet hasn't even been signed.
1:16:28
Um, and so it can actually put a lot of it.
1:16:30
We saw this whiz where where there was rumors of an acquisition that happened earlier and they denied it and it wound up not happening.
1:16:39
And there's been other times when companies have it's feels like they've maybe deliberately leaked news to kick off a fundraising round.
1:16:45
There's a bunch of different things that can go on.
1:16:48
Um, staying in the AI model race, which company has the best AI model by the end of June 30th?
1:16:54
Uh Google is at 45%, OpenAI is at just 25%.
1:16:57
And it's a little bit odd because uh the reviews of of of GPT03 4.
1:17:07
5 have been remarkably good.
1:17:07
Um well, this is June 30th to be not April 30th. So Sure.
1:17:15
Um so so we're two months out and you get a little bit of like a yield curve when you compare these different uh these different time periods.
1:17:23
And so uh a lot of it's driven by when developer conferences happen, when new releases are expected to happen.
1:17:31
So if if Google for example has Google IO in mid June and you know that they're going to drop something then well it might be a new model.
1:17:38
Well they might just blow out the benchmarks.
1:17:40
Meta is sitting at 2% right now and you know that Zuck is just absolutely fuming every single day not having the best model.
1:17:50
Especially since this is based mostly on benchmarks.
1:17:51
I don't think this is based on vibes vibes.
1:17:53
Although some of the benchmarks are kind of vibe based like LM arena seems to be like a measure of vibes kind of um but it's a big market over one and a half almost one and a half million dollars in volume on the poly market for which company has the best AI model on G.
1:18:07
Yeah, it's interesting to just watch the graph and you just see like okay on a longer time horizon it just becomes very unpredictable uh you know who's going to actually be in the best spot.
1:18:18
We have uh uh the CEO of Linear coming in. Let's bring him in.
1:18:23
Is our most recent partner. What's going on? How you doing? Thanks.
1:18:27
Thanks for having me on the show. Of course. Great to have you.
1:18:29
Uh it's great to have you a partner uh on the show as well. It's fantastic.
1:18:36
Yeah, I've been like following you guys along from the very beginning.
1:18:37
I I think like you really have like kind of interesting concept and like I think like some people are going for the third the three-hour podcast but I think like I like you guys are going for the more like shorter content as well. Three hours a day.
1:18:50
There's something for everybody. Yeah, it's fantastic.
1:18:51
Um uh well yeah uh there's tons of stuff to talk about.
1:18:57
I think uh we'll probably see you up in uh in in SF next week potentially.
1:19:02
The week after the week after for uh for Figma's event.
1:19:04
But um but yeah, why don't why don't you uh give a quick introduction for everybody that that's not familiar that maybe hasn't used uh linear in the past like us but uh and then we'll go from there. Sure.
1:19:17
So yeah, I'm Caris Sarnon.
1:19:17
Sure. So yeah, I'm Caris Sarnon. the CEO of Linear and Linear is basically this purpose-built tool for planning and and building software or products and we've been building this the last five years and what we're really doing for the
1:19:32
product organizations and companies is that we are helping them with the end to-end workflow from like going from customer discovery like collecting c customer requests into planning road maps, planning projects, then executing on those projects and and tasks. So we
1:19:44
So we we try to like be this like really understand the customer's workflow here that what it takes for these different people in the organization to do their job well and how can we streamline it or make it make it easier for them.
1:19:58
And today we have about over 10,000 companies as as customers and like these can be anything from like ambitious startups to major enterprises and I think like if you think anyone building something cool today they're probably building it with linear.
1:20:14
Um so open AAI scale your sponsor ramp I think uh Mercury probably the lot of logos that you see at the bottom of the screen there are our customers as well.
1:20:24
Um, so I think like for me it's it or for us it's been really exciting like work from with this very forwardlooking companies and like they're always like thinking like how they can do things better.
1:20:35
And I think like you probably talk about this a lot on the show that I think AI is the topic that like AI is changing the way we do work or how we like how people do it their personal work but also like how the organization should operate and I think like a lot of XX and CEOs and CTOs are now pushing it to their companies that hey we need to use more AI because we do we do believe that it it can make us more productive and and more efficient.
1:21:03
When uh when did you know you wanted to start linear?
1:21:05
Uh you were founding designer at Coinbase and then you were over at uh Airbnb.
1:21:10
I imagine you were pretty frustrated with the tools at the time and and had a kind of concept for what you wanted to build, but I'm curious at what point it really clicked.
1:21:22
Um I I mean in the end it clicked with my my co-founders.
1:21:24
I think we're all kind of frustrated at the same time.
1:21:26
So I think we we had this like a time where we all worked in our companies for like four years or so and we were like well what do we do next?
1:21:36
And I think like we're all so frustrated that each of the companies we ever worked at these tools never felt that good and especially it didn't feel feel good for builders like us like when we like maybe that the tools were okay for the management and and like the some of the other people in the company but but like for designers and engineers. Yeah.
1:21:54
It's very different if you're just kind of like looking at a dashboard as an exact and you're just kind of like monitoring the situation.
1:22:01
But when you you're the person that has to you sort of like use the tool constantly and sort of be generating uh the content in the tool uh is just a dramatically different experience.
1:22:10
I I remember at my last company uh when our um first employee joined this this guy Brandon Jacobe who had been at Cash App and and Square uh and joined to lead design and product uh he literally set up a linear account on the first day because he was just like we're never we're not going to use anything else. It would just be insane.
1:22:30
So uh I'm curious uh we talk a lot about venture markets broadly.
1:22:35
I think you guys have taken a pretty unique approach and in sort of like building, you know, being a sort of default tool and I'm sure over time getting an immense amount of pressure uh from investors to take on uh more and more and more capital yet I feel like you guys have have had kind of like a efficiency ethos from from day one.
1:22:53
Can you talk about uh your kind of just like mindset when it came to when the right moments were to to raise and and what went into that? Yeah.
1:23:04
Um so so I think the ethos of the company is like what we really try to do is like we want to be the best tool for this purpose and this market and I think that's the way we win and that's kind of like the strategy we have.
1:23:19
And for me being a best tool means that you also need to be a quality tool like a high quality tool.
1:23:24
I don't think like you can be the best tool if if it's like the the the quality is kind of low.
1:23:31
So to to do that I think like sometimes companies get themselves or startups get get themselves into this stage where it's like you just have to like work on the growth metrics because you need to raise the next round.
1:23:41
Like we were fortunate that we didn't have to do that.
1:23:45
Like we could hit the we hit the market pretty well and like we got like companies starting to use us like in the first year and and we started getting revenue pretty quickly and then given that we also had this quality mindset like we always saw that we worked at the Airbnb and Uber and Coinbase that that like and the amount of people doesn't necessarily generate the quality.
1:24:05
A lot of times when we actually build trying to build something new or something really like good is it was a small team and so we we took that lesson that like hey can we just build better with the smaller team. So that that's great.
1:24:16
So like situations like our costs are lower but then also like we were able to like start generating revenue so that we actually started we became profitable the the second year and we've been profitable ever since.
1:24:30
So then the last like um four years or so.
1:24:32
like um four years or so. Um, and so what what it what it creates is like we can have a little more control of our destiny of like we don't have to work for the round that the the round all of the rounds have happened because we felt that like there's now like a good moment of bringing someone new in like we are
1:24:51
in this new I think with the with the seed I think obviously there's some like well we should like let's say Sequoia light our seed so I think there's some like a brand aspect of that like hey we are like a real company now and we have like real backers And then some of the other like serious A and B has been about hey we are now like entering this new segment. It's a
1:25:09
It's a little bit uncertain like what's going to happen.
1:25:13
We are getting these larger customers and maybe we need to invest more into the sales.
1:25:16
So like I don't I don't the profitability is not like the number one goal of the company like still the growth is but what it what it allows us is like it gives us a little more like flexibility.
1:25:29
how do we go after it versus like well I'm running out of money like in six months now I have to like go figure out how do we put the numbers up so I can like raise a good round.
1:25:40
Uh one unique part of your company uh in that it feels very core to the culture.
1:25:47
You guys are uh remote only and then you simultaneously I think it probably one of the reasons that works so well you guys focus on hiring very very senior people.
1:25:57
uh do those two things go hand inand or are they sort of separate and and both have their own reasons?
1:26:05
Yeah, I would say like there's some some link there and I I think like it kind of like from the perspective we wanted to have more like kind of like a talent density.
1:26:16
So you have smaller team and like better talent.
1:26:18
Um so I think that that talks about like that kind of goes into this more like senior people.
1:26:23
I think remote it it is a type of mode of working where you have to trust the employees to like figure things out on their own and usually that develops a little bit later in the career.
1:26:35
Um it doesn't mean that like junior people would couldn't have that but it's like just more um just happens more and like as as you get more experience.
1:26:44
Um I think it's it today we are like hiring more more engineers and I think the the in the end like the remote to me is just that there's a lot more focus on the actual work.
1:26:57
Um like I think like when you're in a company and in an office there's all kinds of things going on and people have like crazy ideas all the time.
1:27:04
Some of those ideas maybe are very good, but sometimes people end up or startups might end up kind of tacking a lot like they're like constantly changing the direction versus remote.
1:27:16
It's a little bit the management is a little harder like it's harder to like it's almost like hurting people to the direction.
1:27:22
So you have to do it more like this is the plan and this is the strategy and then you need to let the people to execute on that.
1:27:27
And so you kind of have to trust people's judgment.
1:27:31
So that's what we try to hire for is like hire people in all positions that like if we if we get no instructions from us directly then like could you figure this out and could you like make something good?
1:27:42
About a decade ago I was running an engineering organization.
1:27:44
I think we were using Trello or Asauna.
1:27:49
I'd love to know kind of like what is what what does your battle card look like today?
1:27:53
Uh, and what what was the feature or or pitch to get organizations that maybe already had some sort of product in place to switch over?
1:28:04
Like what was the killer go to market motion?
1:28:09
I think part of it, not to jump in, is that if a if a designer or a product manager moves to a company that doesn't use linear, the first thing they tell the hiring manager, I won't join unless you commit to to switching to linear. But uh Ki go for it. Yeah.
1:28:22
I mean that that's I think that in the end that's kind of like it like it's the word of mouth.
1:28:29
So like and like I think obviously that hap doesn't happen in just automatically. Yeah.
1:28:33
So like it it's it's been like interesting that there hasn't been necessarily like just one thing but there's some some kind of these kind of tools are in some ways simple and some ways complex.
1:28:44
It's there's like a lot of things that people do different things people do in a product different roles use it.
1:28:50
So like a lot of things needs to go right and I think our lessons like going using these tools for a long time is like one is like speed.
1:28:58
It's like it it's really annoying if things are slow.
1:29:01
Like if you're trying to like do a little task and it takes like every time it takes like a minute to do it or you are confused or even how to do it.
1:29:09
That means like you you probably won't use the tool that much.
1:29:12
Like engineer will just well whatever I I'll go there once a week to update my status.
1:29:17
Oh, that's the worst having like dead project management software, product management software that's like, "Hey, we we paid for this. We have it.
1:29:25
It's my dashboard into what's going on and no one's updating and you got to go around be like, "Everyone, you got to update." Yeah. Bad. Um, you got a question.
1:29:31
You guys had a a an agent focused launch recently.
1:29:35
I'm I'm curious to um You guys uh are a company that historically is is less fixated on sort of chasing trends, right?
1:29:46
right? like you know what you're building the best platform to plan and build products and so when a new trend pops up you're not sort of automatically piling into it at the same time so so in that context I think you know uh having this new focus on agents is probably a reaction to what you're seeing from customers what you guys are doing
1:30:05
internally I'm curious how you kind of um to get your thoughts on on where uh agents are today in a sort of workplace environment and kind of how you see them uh evolving over time just because you guys are in a position again where you're not, you know, uh trying to raise uh a billion dollars selling, you know, a dream around agents. You're just
1:30:26
You're just trying to build great products.
1:30:28
And so I I think it's um more real grounded context.
1:30:35
Yeah, I think like we definitely have followed the like AI what what's been happening and experimenting on things but we we like a lot of times we we do ask talk to the customers and that's kind of like what we seeing now that there is a lot more interest and demand for this and and then also I think the in the last couple years the models have gotten better and we're now like
1:30:56
starting to see like this like agent um like companies building agents and like agents I I think people are fighting like what the actual definition is, but I think to me what it means is that this kind of AI model or system can take some kind of form and or like a shape in these tools and or outside of the tools and they you can start delegating things
1:31:19
to them and so like in in our context it could be like obviously there's a bug being reported maybe the agent can see that this is a bug that can they can solve pretty confidently and they could just say like hey I can solve this and then someone some human like approves that or like a as an engineer like an IC contri individual contributor can can just look at their task and say like hey
1:31:42
I'm I'm going to try to delegate some of these tasks to to the agent and then I go work on my own task like whatever is the most complicated one so yeah oh yeah I was wondering if you could talk a little bit about uh the trends in uh management philosophy I remember agile conbon Toyota management, all these different uh terms. There's books written on
1:32:06
There's books written on these.
1:32:07
Uh what's the latest and greatest?
1:32:09
And is there I I remember a lot of companies were kind of aligned with one strategy or the other.
1:32:13
Uh what are you long, what are you short now in terms of like management philosophy?
1:32:21
Um yeah, I I think the I think a lot of this like systems are like agile or safe or some of this like other like frameworks.
1:32:29
I think I I generally short frameworks when it comes to any kind of management like systems.
1:32:33
So I'm I'm more like I I'm long on like the first principles of like I I think like in the end it's like what what any kind of organization is about is like how do you generate the outputs?
1:32:44
generate the outputs? it's like doesn't really matter how do you get there and so with linear I think the idea always been like can we make it simpler and I do see like uh like if you like franchisees and Airbnb they have this founder mode idea and then I think Pre had like a similar shift that like hey
1:33:03
let's try to simplify the system like the framework so I think like that the simplification kind of I think why why it helps is that like it makes the makes the real things more visible like it's easy to like if you have this like very complicated framework or system it's
1:33:19
easy to hide in the corners of like yeah we're kind of like moving things around but nothing is actually happening but I don't know it's interesting questions like what does the agent system does I I think in some ways it's it it's one thing I think like it's like interestingly each individual
1:33:38
contributor kind of like maybe becomes more like a manager because they have this like almost like parallegals working for Um, yeah, you have to imagine that there's more focus on like CI and less like waterfall monolithic monor repos in the age of AI, but I don't know what you think about that. Does that track? Does that track?
1:33:58
I think it could track in a way that it's it's if building things implementing the code becomes a lot cheaper and faster you can I think like today we have this waterfall processes partly because the engineering is expensive.
1:34:12
So you do the thinking and the design before you start building because the building part is kind of like the bottleneck or or expensive.
1:34:18
But if that equation changes, so now we can just start like what we see with a lot of this like like um kind of website builders or something.
1:34:30
It's like you can just try something out and see if it that that's like actually like useful.
1:34:36
So I think that's it does flip the system but I think like you still probably need to go back to the planning a little bit like think why are you doing these things but you can maybe like start experimenting more internally directly with code and and not not like try to have this like very waterfall process.
1:34:55
How are you thinking about uh partnership partnerships in the context of your agent you know support?
1:35:00
Uh I imagine you got you guys have your own sort of agentic workflows.
1:35:05
Uh but then uh over time I imagine some you know coding agent will come to you and say hey can we get sort of plugged in so that uh you know instead of delegating a a specific issue to an engineer you just delegate it to us.
1:35:21
But then that introduces kind of a vector where I feel like linear is about like surgical sort of precision and perfection with product.
1:35:30
And so adding this sort of external agent who's now sort of becoming a part of the product um even though they're sort of in some way mirroring what what an external engineer might look like.
1:35:42
Uh but but I'm curious how you think about that.
1:35:46
Yeah, I mean our view is that there's going to be like hundreds of agents maybe like thousands and I don't think we can we can hold it back and like I don't think we should.
1:35:54
So, so what what we're doing is like we're kind of fully leaning into that hey linear is a platform for for agents.
1:35:59
So this might be like third party companies building agents.
1:36:04
Maybe we build our own agents.
1:36:06
Maybe our customers built their own internal agents and they want to bring them on and our job there is to like figure out like what is the right way to like what is the kind of interaction layer like like how do you actually use these thing like use this agents?
1:36:20
How do you delegate the work? How do you monitor it?
1:36:22
how do you um review the work or how do you as an organization um kind of just generally monitor the the security or the usage or the cost for example. Mhm.
1:36:34
So we we just think that like there will be a lot of at least in the short medium term there will be like a lot of different agents and we should just like support that.
1:36:41
Um and so so that's that's like we already have two at least two um that people are using like Devon and Codegen that they that exist on the platform.
1:36:52
You can assign issues to them today and they will try to fix them.
1:36:56
Um and we actually seeing like a lot of develop like other developers and we're launching something in a couple weeks.
1:37:02
So I think there will be like more launch partners there. That's awesome.
1:37:06
Yeah, it actually I mean it just gets me really excited because historically using linear there's just so many sort of the issues that you create that are assigned to a junior engineer. They take a crack at it.
1:37:16
It's hopefully they get it right.
1:37:19
Sometimes they don't and then you bring in other people to actually get it resolved and so it's just like such a natural uh workflow but it's also exciting because jun even more junior engineers will learn sort of how to manage engineers just by managing agents.
1:37:33
So, I'm excited to run the show on linear project one ticket. Bigger gong. Bigger gong.
1:37:38
Yeah, we're going to need a big more tinfoil hats. More soundboard effects.
1:37:42
Can we get a founder mode sound effect to kick it off?
1:37:46
In talking with your team, I mean, one of the one of the like uh everybody that that watches the show knows this.
1:37:52
We're trying to make the show, you know, one one% better every single day.
1:37:56
That sometimes it's in different ways, but we really do have so many projects.
1:38:00
New studio, new lighting.
1:38:02
like I have 20 projects in my mind and and like they don't perfectly map to different you know a lot of people think of content as like you know it's a camera and a microphone and you're editing but it's more so like the the
1:38:15
show is ever evolving product totally totally so anyways uh excited to hang this fantastic thanks for coming in always welcome and uh yeah we'll talk to you soon yeah thanks for having me by cheers see you and next up we We got Sean Frank coming in the studio. The wallet man himself. The wallet man himself.
1:38:35
But we're going to tell you about Ramp in the meantime. Time is money. Save both. Get on ramp. com.
1:38:38
Switch your business to ramp. com.
1:38:41
Also, find your happy place. Go to wander. com. Book a wander.
1:38:47
Uh with inspiring views, hotel great amenities.
1:38:50
What does Wanderer always say? Find your happy place. Find your happy place. Thank you. Thank you. Thank you.
1:38:58
Well, we got we got Sean Frank in the studio, the wallet salesman here, uh, here to break it down. Talks tariffs.
1:39:07
Uh, great to have you on the show, Sean. How you doing, dude? I'm excited to be here.
1:39:12
You know, I typically watch at 2x speed and I got like two or three screens going, so you know, I feel I feel uh a little bit ahead of the curve here.
1:39:22
I I think I know what you guys are going to say next. Oh, yeah. That's that. Yeah.
1:39:24
What are we going to say next?
1:39:27
I mean, you guys are going to compliment my suit, I assume. It's a fantastic suit. It's a fantastic suit. He's got a suit. He's got a suit. He's got a suit. Let's go. Uh, looking great. Looking great.
1:39:39
I uh I want to run through a bunch of stuff.
1:39:44
Yeah, there's so much to cover. Uh, how are you doing?
1:39:45
First of all, how was the how was the private equity conference at, uh, Jeff?
1:39:49
I thought it was a lit a little derivative of the TBPN format.
1:39:54
You said you spent the day talking to 20 uh to 14 different firms, 30 minute meetings, speed dating style.
1:39:58
We do 30 minute segments on this show. What's going on? Are you copying us? What's what's happening?
1:40:05
Dude, it wasn't me, but uh Venet, the uh senior vice president of Jeff is a huge TBPN fan.
1:40:13
He's like he's like, "Dude, I'm a day one listener. I'm in chat. I stole this from them.
1:40:17
Don't tell them about it." So, okay.
1:40:18
Well, maybe we can have a truce then. That's great.
1:40:19
He can he can borrow from us.
1:40:21
The the the the official creator of the 30 minute segment over here to the end.
1:40:26
Uh but yeah, how how was it? What did you learn? Who' you talk to?
1:40:31
Can you break it down for us? Yeah.
1:40:33
So, it was a mid-market uh consumer conference.
1:40:35
So, to break that down for the audience, I'm sure everyone here knows what that means.
1:40:39
There probably a lot of LPs in funds, but mid-market is like a 100 million to uh like 500 million in revenue.
1:40:45
They're typically deploying checks of like 25 to hundred million dollars.
1:40:50
Um on the equity side, right?
1:40:53
Not obviously not the total round.
1:40:58
Uh so so businesses are doing between 100 and 500 million. Is that right? Yeah.
1:41:04
Typically that's the valuations that they target, right?
1:41:06
And then their their equity checks in are, you know, 25 to 150 million, something like that.
1:41:12
These are smaller private equity funds.
1:41:14
They're typically a billion dollars raised and deployed.
1:41:16
Um, and this is like the first professional layer for private equity, right?
1:41:22
Like small market private equity is very scrappy.
1:41:27
It is like guys who look like us like out there grinding it out trying to find deals where these these people are are professional bankers through and through.
1:41:35
So they're they're going to go to good schools.
1:41:36
They're going to have, you know, 5 to 10 years in the industry.
1:41:40
Um, and yeah, so like this is not your your mega funds.
1:41:43
These people are not deploying $5 billion checks, right?
1:41:45
The the fund size will be under $5 billion.
1:41:50
Um, and they're very targeted on consumer.
1:41:52
So, anything consumer discretionary.
1:41:54
What we've seen is that that segment of the market has been destroyed probably since 2022.
1:41:58
It got really really hot in 2021.
1:42:01
There was a bunch of spaxs in the space, right?
1:42:03
Uh, famously, you have like, you know, Warby Parker, but then you also have Solo stuff that just got delisted on on Monday.
1:42:11
Um, so I mean there's a lot of great smart people and there's people who are on the Solo Stove deal.
1:42:16
So Solo got taken public by Summit, but Summit's like a a little bit bigger than a mid-market fund.
1:42:22
The first check into Summit was Bertrram.
1:42:24
So Bertram Capital, really great firm based in the Bay.
1:42:26
Um, so they found Solo when Solo was doing 60 million in topline, right?
1:42:32
They put a check in at like a hundred million valuation.
1:42:35
They probably owned 40% of the business, maybe more.
1:42:37
and then they sell it to a different fund.
1:42:39
So that's typically how midmarket works.
1:42:41
You're going to be selling to a different fund to take them public.
1:42:44
Um so Bertram made a ton of money.
1:42:47
They sold all of their shares to Summit, right?
1:42:48
Um they maybe they had a little bit more that they sold in the IPO.
1:42:51
Um but then you know a a larger cap fund is going to take a company public.
1:42:56
So what's happened in the space?
1:42:58
They are cold on consumer and the only categories that are interesting for them are services.
1:43:02
So, like talked to a lot of funds who are buying like roofing rollups and uh you know they're trying to buy plumbers like that type of [ __ ] like because it's um non-discretionary spend.
1:43:14
If your roof [ __ ] up like you're going to get a new roof and they're but really into the pet space like pet is still really hot.
1:43:21
I have a friend Bill who just announced today he sold his company to Morgan Stanley in in the pet space and it's on Twitter.
1:43:28
You guys can engage with it. So check out Bill. He he's crushing it. Yeah, I saw that.
1:43:31
He's been grinding for a long time.
1:43:33
So, that was great to see. Yeah. Um, it's funny.
1:43:35
Uh, there's there's a guy, uh, who works in in mid-market uh, PE who knew that I was friends, uh, and and and and associates associates with with Sean and he basically would email me once a week for like three years asking asking for an insurance. It's amazing.
1:43:52
I want to stay I want to stay on on Solo Stove. You broke down. Um, what happened?
1:43:57
Is it a casualty of tariffs? Is it mismanagement?
1:44:01
We've talked about it a little bit before, but can you give us the full postmortem, post NYC suspension, which we hate to see here.
1:44:11
We want to see more IPOs, not more D-listings. Yeah. Yeah.
1:44:13
It's it's a lot market activity in the wrong way.
1:44:16
Um, so what's happening with Solo?
1:44:19
So, there's like the bigger third thing, and actually, I mean, I I'll break some news.
1:44:24
I talked to uh the corporate dev buyer at Yeti who was at the conference yesterday and I asked her I'm like, "Oh, so are you going to buy Solo?"
1:44:32
And she's like, "Even if you gave it to me for free, I don't know what I'd do with it."
1:44:37
She's like, "Why is that?
1:44:37
Isn't it making like 500 million?
1:44:39
We looked in the numbers recently.
1:44:40
It seemed like it was like even if revenues are declining, even if there's tariffs, like there are people buying stoves.
1:44:46
There must be a way to make some money out of that company, right? Am I crazy?"
1:44:48
Yeah, there's there's a lot of debt. Um Okay.
1:44:53
and and people there's there's two main problems.
1:44:55
One, it was like the biggest COVID trend of all time, right?
1:44:57
There was there was a two-year period where all of us were uh stuck inside, couldn't travel, we all discovered the great outdoors.
1:45:04
They sold a lot of stoves and there's a negative flywheel for that business.
1:45:08
If you sell one stove, you're never going to buy a second stove.
1:45:11
Like it actually it removes a buyer from the market.
1:45:14
So now it's harder to sell the second stove.
1:45:16
So it's a horrible problem with that business.
1:45:18
The second is massive tariff risk.
1:45:20
They are 100% sourced in China.
1:45:22
They are very tight with the manufacturer there.
1:45:24
And you just cannot get stoves right now.
1:45:26
So you have a situation where they have their growth solution the past two years has been to go to mass market retail.
1:45:34
They're in Costco, they're in, you know, Home Depot, whatever.
1:45:36
And then those retailers won't let you raise prices.
1:45:38
So you you have a contract to sell it to whatever price.
1:45:42
You're direct importing from China.
1:45:44
You have stuff on the water.
1:45:46
And now your inventory is essentially toxic, right?
1:45:48
Like are you going to they cost 75 bucks to make are you going to give the government $125? Like probably not. So that's rough. Okay.
1:45:55
So uh casualty of tariffs then or mismanagement or I mean we talked about this months ago.
1:46:01
Remember we were we were kind of looking and and it at first it was a debt issue and that issue was looming regardless of tariffs happening or not.
1:46:11
or not. It seemed like it was so it seems like this was predictable from day one if you were really cleareyed about that fly that inverse flywheel you mentioned and then also like the co dynamic going how about chubbies though chubbies has to have some some broader if if positive fly you buy one pair of
1:46:28
shorts you like them you buy more and then you're replacing those shorts every year right yeah look and I love all these guys so uh Kyle the founder of Chubbies is awesome he's building a software product won't plug them they they got to pay for that But um really really smart founder. Uh and Chubbies is
1:46:43
Uh and Chubbies is a good business.
1:46:46
Like Chubbies does $100 million a year topwide.
1:46:48
They do $10 million in IBIDA.
1:46:50
Like that business is worth something to somebody.
1:46:52
But uh John Maris was the CEO of of Solo.
1:46:55
And his idea to solve the negative flywheel was to bolt-on acquisitions.
1:47:00
He's like, I'm going to, you know, I'll I'll fix my companywide LTV by having solo customers buy chubby shorts.
1:47:09
And that just didn't happen, right?
1:47:11
Like they they could never integrate it.
1:47:13
It because somebody likes the outdoors doesn't make them more likely to be a Chubbies customer, right?
1:47:19
Now, it would make more sense if Chubbies, I don't know, started selling beer pong equipment or something, right?
1:47:25
Like there there could be some sort of like, you know, positive flywheel there, but their solution was to broaden uh the overall product offering with just like very distinct businesses that have no cross-sellability. So, yeah.
1:47:37
cross-sellability. So, yeah. Can you talk about uh I I people have this idea that oh I'm gonna like I feel like everybody's in love with the idea of a consumer product holding company because like people just like consumer goods and they're like oh we have we're good at
1:47:52
selling this we'll be good at selling that but then when you when I you know understanding you know the your focus and Connor's focus over the last you know coming up on a decade uh in not too long uh the idea that somebody could compete in the wallet space with you guys while being part-time is just like insane, right? Uh because you guys
1:48:11
Uh because you guys are best in the world at what you do and you're just able to put more time into it than anyone else.
1:48:19
Um is the idea I is the consumer product holding company model just like generally flawed?
1:48:26
Is it is it not something that people should be going after or is it just more about actually having like distinct businesses and ultra competent management in place in in each of them?
1:48:38
So it's just really fallen out of vogue, right?
1:48:41
So very famously in the past two weeks, Hermes became the largest most valuable uh company in the in the consumer space, right?
1:48:50
They're worth 300 whatever billion and they surpassed LVMH.
1:48:51
So LVMH is the hold co model, right?
1:48:54
And that was the like everyone wanted to be a hold co because LVMH was and then curing became a holdco, right?
1:49:02
They have Gucci, they have a bunch of assets.
1:49:03
Well, Gucci just put out their earnings.
1:49:05
They're down 25% year-over-year.
1:49:06
that came out on Monday, right?
1:49:08
So, like the whole co model is just falling out of favor in favor of Hermes, single standalone band, super valuable.
1:49:15
Uh Lululemon set the trend.
1:49:18
Lululemon is worth more than Honda.
1:49:19
So, Lululemon makes awesome leggings that we all love.
1:49:21
They trade more than the best car company or one of the best car companies.
1:49:26
And then on Running is also I broke this trend, right?
1:49:30
So, OnRunning is worth $10 billion today.
1:49:32
Single brand just making shoes.
1:49:35
So right now the markets are valuing beautiful brand, super clean focus, owning a category.
1:49:40
That'll change again, right?
1:49:43
Someone there's really great holds out there.
1:49:45
Um, you know, the people behind uh Crocs, Crocs owns Hey Dude, they're becoming a great hold.
1:49:52
Uh, Deckers is another shoe company.
1:49:56
Um, they're crushing it in the hold space.
1:49:57
crushing it in the hold space. But isn't there something about even the way that LVMH has approached their hold co which is like we we never share kind of creative resources across brands like there's very distinct kind of like firewalls in place uh is there something
1:50:14
to that is that what you think you know is does Decker sort of benefit from scale as just being like a massive shoe manufacturer and then it's like when it when it comes to the kind of individual brand level like let's just make sure that people are ultra focused on on the sort of uh the the purity of the brand and sort of scaling that. What I think
1:50:32
What I think LVMH does beautifully, LVMH calls them houses, right?
1:50:37
So they're houses, but they're in the same neighborhood, right?
1:50:40
Um and what they're able to do is they have El Caterton, which is like they're picking up B like imagine this is like uh basketball.
1:50:47
There's like amazing high school players, right?
1:50:50
El Caterton is signing those high school players.
1:50:51
El Caterton is their private equity arm, very much owned and controlled by the Arno family.
1:50:56
Um So, you know, Chrome Hearts is the the greatest American accessory brand that's in the LCAN portfolio.
1:51:03
At some point, they get called up to the major leagues and then they get integrated into LVMH.
1:51:09
And then LVMH has the spotlight light approach.
1:51:11
So, of course, Louis Vuitton is always going to be the the best branded in the spotlight.
1:51:16
But when there's a challenger like Off-White, they can put that in the spotlight for a little bit and then that becomes their star player and they cycle out to somebody else.
1:51:25
They just got caught flatfooted that they don't have a good star player right now.
1:51:28
So like that's the challenge with LVMH.
1:51:29
Curing tried to do that, right?
1:51:32
Richmont is the other big uh holdco in the European fashion space.
1:51:36
Richmont's crushing it because they own Van Clee and they own Cardier.
1:51:40
Those brands are very very hot right now.
1:51:42
So LVMH is trying to take over Richmont because they want to be in the spotlight.
1:51:45
So that is the inside baseball, the inside basketball if you will of the luxury space.
1:51:50
You need to have recruits and you need to have a star player you can cycle out.
1:51:53
And LVMH just doesn't have a hot brand right now.
1:51:58
I I I I like this idea of the pure play.
1:52:01
You know, it aligns with like the founder mode, the life's work entrepreneur, just not getting too scatterbrained and focusing on one thing.
1:52:07
Um what is the post-mortem on some of the pure play companies in the fashion space that weren't able to reach escape velocity?
1:52:16
I'm thinking of uh All Birds and a few other brands in that space.
1:52:21
Is it is it just uh doing too much too early or or is it just like missing some fundamental insight or is it more of like a market segment and this maybe works in the high-end luxury market but it doesn't work when you're more uh in that $100 range competing directly with Nike?
1:52:38
What what's your take on that?
1:52:40
Well, you can't be cool forever.
1:52:42
So, that's that's like that's the biggest challenge. Mhm.
1:52:44
Allirds was really cool, but San Francisco famously horribly dressed people, right?
1:52:48
They have they have no sense of fashion.
1:52:50
Why do we think they're going to tell us what's cool, right?
1:52:54
Um, and they were betting on a sustainability wave, right?
1:52:59
So, like Nike is able to like they just benefited from people caring about athleticism, right?
1:53:04
That was that took them from a billion dollar stock in the 80s to 180 billion today or whatever, right?
1:53:11
But they were caught flatfooted by wellness, right?
1:53:14
And that and effectively Nike was the brand for sports enthusiasts, everything from fans to athletes.
1:53:22
But then wellness kind of came out of nowhere, took the Alo, you know, the the Aloe crowd went over there on running in many in many ways. Lululemon obviously.
1:53:36
Um, so it seems like Nike missed the wellness trend.
1:53:39
Uh, and that was again probably the biggest miss. Yeah. What's your take?
1:53:46
Well, and their stock suffered for it, right?
1:53:48
I mean, like Nike is down massively from all-time highs.
1:53:53
They're down from their 5year mark and it's because they missed that trend and and they didn't pivot in fast enough.
1:53:59
Uh, the other thing that's happening is that's happening in beauty right now.
1:54:06
So, if you go to Sephora, you're either a celebrity brand or you're a wellness brand.
1:54:09
That's all the newness going into Sephora.
1:54:11
So Sephora and beauty in general is going through this wellness craze right now as well.
1:54:15
Like skinc care is taking over everything.
1:54:17
Um so we're going to watch more of those waves happen.
1:54:21
Consumer trends change over time.
1:54:22
You can't be cool forever.
1:54:25
So the whole thing like and this is the biggest problem with venture capital coming into the consumer space.
1:54:32
Coca-Cola is the most popular drink in America and it doesn't even have 20% market share because people like different drinks right now.
1:54:39
Uber is a service that is just great for everybody.
1:54:44
They'll have 100% of like the the ride healing market, right?
1:54:46
Google, it's just the best.
1:54:48
So, I'm going to Google everything.
1:54:50
There's no second player in consumer taste. Power law outcomes.
1:54:54
There's no monopoly outcomes.
1:54:56
They're just inherently igopolistic markets. Interesting.
1:54:58
So, uh, if you if you go back to the founders who do they focus on the pure plays.
1:55:04
Well, I have a good I have a good example and something you brought up before.
1:55:07
I mean, Chromehearts, uh, I was about to ask needs to be studied and and one of the reasons why, you know, right now it's like they've never been they've never been hotter, but they've gone through periods where they certainly weren't nearly as hot.
1:55:20
Uh, and I'm curious what you think they've done, right?
1:55:24
I think to my knowledge they've stayed mostly familyowned or certainly majority familyowned and is that do you think allowed them to kind of like ride different waves and and not uh if at any point they were overly fixated on just pure scale you know maybe they would have um not been able to kind of come back in the way that they have but I'm curious what your take is. Yeah.
1:55:47
I mean, the creative minds behind Chrome Hearts, they're artists.
1:55:52
They're going to do what they're going to do with or with with or without you.
1:55:54
If you think it's cool, if you don't think it's cool, like Sher was wearing Chrome Hearts in the 90s, bro.
1:55:59
Like, they're owned by the Sinatra family.
1:56:01
Like, they're going to do what they're going to do.
1:56:03
And it it'll come in and out of Oak, but they don't care, right?
1:56:07
So, that that that's true authenticism.
1:56:10
Like, they've never chased revenue.
1:56:12
Like, they'll make pants that are like $112,000 because that's what they want.
1:56:18
That's what they choose to do that day.
1:56:20
And then you know who buys him? Drake.
1:56:21
It's like, well, I've heard they I've heard they they basically mo they'll mog Drake, too.
1:56:25
They'll be like, Drake, like Drake will be like, I want some new pants.
1:56:28
And they'll be like, cool. Like, get in line.
1:56:30
Like other people want the pants, too.
1:56:32
And then Drake has to like, you know, try to cozy up with the, you know, the SA.
1:56:37
Uh, but that's hilarious. Yeah.
1:56:40
So, it's it's just like a commitment to the craft that like I mean this is the reason why the Europeans are so good at fashion is because they will do it for 50 years making no [ __ ] money, right? Or Goryard.
1:56:51
Goryard's another like amazing brand.
1:56:54
They just don't have a website.
1:56:56
You can't buy on their website. Now, it'd be awesome.
1:57:00
They would make way more money and if private equity owned them, they would open a website immediately.
1:57:03
But then they're like, "No, we want you to remember where you bought the bag. That's important to us."
1:57:08
So like you have to go wait in line and you have to you can only buy what we have that day and it just creates like a very personal relationship with the products that is people are longing for in the internet age.
1:57:22
So yeah the Europeans are the best at this.
1:57:24
I talk a lot of [ __ ] about Europe but they do have this figured out. Yeah.
1:57:27
Uh I want to go to tariffs.
1:57:30
Uh I saw a viral thread yesterday by Ramon Vanmir.
1:57:33
Uh, he says, "Everyone says they'd pay more for made in the USA. I tested it.
1:57:39
We make a $129 filtered shower head manufactured in China with tariffs surging to 170%. We explored reshoring. We found a US supplier.
1:57:48
Our costs nearly tripled. I ran a clean AB test. You had two options.
1:57:54
There were 25,000 users that did this.
1:57:56
The exact same landing page.
1:57:58
You can choose made in China for $129 or made in the USA for $239.
1:58:05
And they had zero conversions on the US version.
1:58:08
The add to cart rate for the US version was less than 1% and over 3,500 uh 3,500 people bought the Asiaade version.
1:58:17
What how did you process that news?
1:58:19
There's some community notes on it.
1:58:21
I want to know what you think.
1:58:21
Yeah, I think overall it was flawed experiment but uh it's a good story. But what do you got? viral post.
1:58:28
Yeah, we've seen this play out with sustainability, right?
1:58:32
So people people had two options on their website like sustainable packaging and we'll buy carbon credits versus not and like people won't pay more than 5% for that.
1:58:39
So it ends up being the there's tons of cheap goods in the marketplace and there's tons of substitute goods in the marketplace and what you need you need value props to stand out.
1:58:50
So like Ridge has you know best materials, we have a great warranty, we have a tons of reviews, we have social proof.
1:58:56
These are just value props.
1:58:57
Made in the USA can or cannot be a value prop, right?
1:58:59
And if he ran that experiment with a Japanese audience, what you'd see is the Japanese audience is more willing to pay for made in America goods.
1:59:07
And if you go to Japan, there's entire stores built around made in the USA, right?
1:59:10
If you go to Dubai, it's the same thing.
1:59:15
Let's hear it for the Japanese showing some love for the Americans. Um, yeah. Yeah.
1:59:20
And so, and so paint me a broader picture about how the tariffs are affecting e-commerce. Um, is it a blood bath?
1:59:25
Are people figuring out ways around it?
1:59:28
Is it is it going to put companies out of business?
1:59:32
Are people going to lose jobs?
1:59:32
Uh, with So, without a doubt, it's the most challenging self-imposed regulation we've ever seen, right?
1:59:43
Like we went through COVID, that was hard for a lot of reasons.
1:59:44
That that was external forces, right? We went through iOS 14.
1:59:48
We're we're peeons in that. We have no idea. We can't control that.
1:59:51
Consumer demand has been up and down for [ __ ] years at this point.
1:59:55
Um, I have a lot of friends who will go out of business because of the tariffs, right?
1:59:58
And a lot of people on the internet, you know, are celebrating that.
2:00:02
They're like, well, [ __ ] them for buying from for China. But here's the thing.
2:00:05
A year ago, it was encouraged.
2:00:09
It's like, it's very hard to actually produce things in America. I've tried for years.
2:00:13
I've put millions of dollars into it.
2:00:14
So like the government basically gave you a free pass to to you know buy international goods and then import them and then all of a sudden it's it's became very very difficult to get anything in from China.
2:00:25
And I don't think small independent businesses should suffer for that.
2:00:30
I've publicly appealed to JD Vance.
2:00:32
I'm like look I totally get you want to incentivize made in the USA stuff.
2:00:37
Like don't just steal our money in like a massive tax.
2:00:40
I have [ __ ] on the water.
2:00:42
You're just making me give you money.
2:00:44
like this is the government getting more revenue and getting bigger.
2:00:47
Let's put it into a fund where if if like I owe you that money unless I invest in American business.
2:00:54
Yeah, I thought this I thought this was a really good take and a and a really good kind of concept especially too kind of basically extending out the timelines.
2:01:02
Uh the policy as it stands today is just like pure pain now like you're you're being like you know punished uh versus what you laid out.
2:01:09
So maybe extrapolate on that a little bit.
2:01:14
Yeah, like look, I mean I I understand the goals and this this is hurting China more than America.
2:01:18
Like I think I think people in America are whining and complaining because like TN shipments or or T-Mu shipments are more expensive.
2:01:25
I'm like look, I do business in China.
2:01:25
I talk to Chinese people.
2:01:28
Factories are shutting down and you have youth unemployment of 25% in China.
2:01:31
Like it's going to hurt them way harder, way faster.
2:01:37
We'll feel it in 30, 60, 90 days when [ __ ] in Walmart gets more expensive.
2:01:41
They're feeling it right now, right?
2:01:43
And there is there is ports that are just shut down and and it's it hasn't been good in China for like five years.
2:01:49
Like it's been a very difficult economic uh you know situation over there.
2:01:53
So it will hurt them way more.
2:01:54
But the flip side is we don't want to also bankrupt a bunch of American businesses, right?
2:01:58
Like what we want to do is incentivize them to either nearshore or onshore production capacity.
2:02:05
That takes three to five years and takes millions of dollars.
2:02:07
So look, charge me tariffs, but give me an ounce.
2:02:12
If I take that money and I bring it to American manufacturing and I hire workers and I open factories, I don't have to give you the money, right?
2:02:18
So it's like a onetoone duty deferral to incentivize US investment.
2:02:23
I mean, do you guys want the government to get more money or do you guys want [ __ ] more investment and factories built or whatever? Right.
2:02:31
So that's that's my pitch to everybody. Makes sense.
2:02:33
Um, I want to get your reaction to this Slate Auto launch.
2:02:38
Uh, have you seen this truck?
2:02:40
Uh, TJ Parker was talking about it.
2:02:42
Finally, someone built a simple, cheap, utilitarian truck, 20K, made in the USA, no touchscreen.
2:02:48
Uh, lots of people are talking about it. Did you see the launch? Did you watch the video? Hell yeah, man.
2:02:55
That guy's been working on it for a long time.
2:02:56
I think he's been documenting on YouTube. So, hell yeah, brother. I love to see that.
2:03:00
Uh, and I was in China a year ago and I was at a big like electric vehicle uh, like you know, potentially sales summit.
2:03:09
Like they have 50, 100 brands all competing to sell little tiny electric vehicles and those actually can't pass US safety standards.
2:03:19
So they're only sold to Africa.
2:03:21
So it was me and a bunch of African buyers walking around and like you know they sell for 5 10 15 grand or whatever.
2:03:27
Now, if he can actually hit American safety standards and ship a $25,000 truck, I mean, this guy's I mean, he'll he'll he'll do10 billion dollars the first year, maybe more, right? Like, it's a sales gong. Let's do it. What do we got? Oh.
2:03:41
Oh, the sound effects board is down.
2:03:43
Brutal for a founder in founder mode.
2:03:46
I I I want to talk about the ad.
2:03:49
People were very happy with that.
2:03:51
Dynamic first second, clear initial framing in the first 5 seconds.
2:03:54
Curiosity gap in the first 8 seconds.
2:03:56
seconds. frunk disarming anti-ad humor founder CEO curiosity gap uh in term you you obviously make a lot of ads you buy a lot of ads um what did you think of the actual launch video look people are saying inside that frunk there's actually ridge carryons so I'm not going
2:04:13
to confirm or deny but there could be a cameo from ridge carryons I did see that yep those are trunks I love to see it I love to see it fantastic yeah how do you uh what what would your uh complete guess on what their what their margin profile could look like on a $20,000 made in America truck. I know the
2:04:31
I know the $20,000 is like allegedly due to some EV incentives.
2:04:37
Uh but but ultimately uh what how much are they actually going to make on on something like that? Yeah.
2:04:42
So I think I think they said it's 27,000 and then you get a $7,000 credit if you buy an EV from a new manufacturer.
2:04:50
I think they're going to lose about three grand for the first million of them they make.
2:04:55
And that's just how auto manufacturing works, right?
2:04:57
Like the cost to set them up.
2:04:59
You have all these [ __ ] machines.
2:05:00
You have to depreciate them over time.
2:05:02
Rivian still loses $20,000 on every Rivian they sell.
2:05:04
So it's it's a different model to higher price point, right?
2:05:09
Um they're going to lose three to 10 grand for for each one they sell.
2:05:13
But and and if you guys ever say to the auto market, the amazing thing about Tesla is every car manufacturer loses money on every car they sell.
2:05:23
They only make money off of the the parts and repairs.
2:05:25
Tesla found out a way to not do that, right?
2:05:27
Tesla found out a way to actually turn a profit on on the actual purchase of vehicles.
2:05:33
Ferrari makes $80,000 per car they sell.
2:05:36
Tesla makes I don't know, I think it's like it's like five grand or whatever.
2:05:39
Every other car manufacturer breaks even or loses money on the actual purchase of the vehicle.
2:05:43
It's all about financing. It's all about parts. It's all about service.
2:05:47
So, I it'd be it'd be crazy to think they're making any money on these things, but the demand shows that like they could make money over time.
2:05:55
I think they'll have trouble because if you have $20,000 burning your uh burning a hole in your pocket, you could get 200 Ridge wallets or something, right? That's true.
2:06:04
So, I mean, it's like a trade-off.
2:06:06
200 Ridge wallets or a little truck. Yeah.
2:06:08
You could buy every product on the Ridge website. Uh, for sure. Well, yeah.
2:06:12
It's an interesting dynamic where it's like he has to show so much demand that he can justify, you know, potentially raising lots of money 5 to10 billion dollars over time in order to just like actually get these to scale.
2:06:26
But uh I think the thing looks awesome and uh also interesting is also in Rivian Bzos. I'm surprised.
2:06:36
I'm actually surprised they didn't go with a slightly higher reservation price point just given the history of Tesla charging 100 bucks. What is the reservation? It's 50 bucks. 50 bucks.
2:06:46
Um Tesla charged 100 bucks, you know, had this big demand signal and then obviously not many people showed up for a lot of people didn't show up. It's expensive.
2:06:55
It's a much different price point. Yeah.
2:06:56
And I think this is a car that people would just buy as like I I would just get one and park it outside of my house and maybe do coffee runs in it, go surfing.
2:07:04
I would put the $20,000 deposit down today.
2:07:07
Like if they if they made Skip the Line, give us 20 grand today, I would totally do it.
2:07:11
Well, I would do it if they put a naturally aspirated V8 in it.
2:07:14
I don't know about the electric stuff, but um I would I would be very pro this vehicle.
2:07:18
If it had a really loud exhaust note, it was kind of like a more affordable Raptor.
2:07:25
That's what I'm looking for. Yeah, man.
2:07:27
Well, you know, today I'll publicly announce if you buy a Slate, I'll have a partnership with them.
2:07:31
Free Ridge wallets for every slight customer. We can get one to one. There you go. Let's go.
2:07:37
And thank you for coming on. Hey, I've got this.
2:07:40
It's great to have you, Sean. Awesome. We'll talk to you soon. I love you.
2:07:45
You're looking great in the suit.
2:07:47
Don't take it off after this call.
2:07:47
I'm gonna We're gonna we're gonna have our paparazzi, you know, outside your house confirming, "Oh, Sean Frank just puts on a suit to go on TBPN.
2:07:56
Make it a part of your brand." Okay, dude. It's custom, too.
2:08:01
So, you guys didn't even ask, but this is custom.
2:08:02
All right, see you guys later. Made in USA, too. Bye. Later. Thank you. That was fantastic.
2:08:08
Always a great time having Sean on the show.
2:08:10
Sean is my favorite salesman.
2:08:14
He's one of my favorite wallet salesman.
2:08:15
He's up there with the best wallet in the world.
2:08:17
Next up, we got Seml Shaw coming in from Haystack.
2:08:23
Seml, welcome to the show. Good to have you here. How are you doing? Doing great.
2:08:28
I'm really excited about this because you're uh I've had like a hundred friends tell me that they love this podcast. That's amazing to hear.
2:08:36
Yeah, I'm so glad I'm so glad that we're we're breaking through.
2:08:38
We've been spamming the timeline, spamming everything on X.
2:08:42
We've learned uh that slop is the future and uh and and volume wins, pace wins, speed kills, and we've been trying to do all of the above.
2:08:53
Also, in a in a previous life, you know, I used to work in the podcast industry, and I love the medium.
2:08:56
This is way before it really took off. Yeah.
2:08:58
Um and uh I I I love media and I love TV shows and I always felt like um there should be like a live tech VC segment.
2:09:06
Um you know, so I just pulling crazy idea to do a live daily show for just for technology, but it's been a lot of fun. It's been working out. Um I'd love to start.
2:09:20
Did you ever look at Cheddar back in the day?
2:09:22
Yeah, we actually talked to the CEO earlier this week.
2:09:24
Uh I was I was familiar with it.
2:09:26
Um where they took that business was uh much more I mean they actually wound up owning ratemyprofessor. com. That was interesting.
2:09:35
They also owned uh TVs on college campuses.
2:09:39
And I do think we have a bunch of college uh students in the audience but uh definitely we have focused more on you know insider baseball in Silicon Valley and and stuff that's not quite as uh general audience.
2:09:54
Um, but who knows where it goes.
2:09:54
You know, this is still an early project.
2:09:56
It's evolved a few times and uh, you know, we'll see. Anything's possible. I love it. Well, thank you again. Yeah.
2:10:02
Well, I I actually would love to start with uh your experience in the podcasting industry and and and what you were doing and kind of what lessons you learned just because I'm curious. Uh, yeah.
2:10:10
Just real briefly, it was kind of in the 2012 134 time frame.
2:10:11
And the uh entrepreneur at the time who was a repeat entrepreneur who's a a technologist and a mentor of mine from Stamford and was on the faculty had this idea of like a personalized audio.
2:10:23
So if you you know I don't want to date myself here but imagine you 10 years ago or so you open Pandora on your phone and you're going in the car.
2:10:33
Um what would what would the AM version of Pandora be?
2:10:39
That was kind of the vision.
2:10:39
And so we really spent a lot of time curating the initial set of of things that would come onto the platform.
2:10:46
You know, the big categories for commute were news, um, spirituality or philosophy, comedy was probably the biggest one on the nighttime uh, drive.
2:10:55
And then it was like giving the person the opportunity to skip.
2:11:00
So now if you're in a Spotify playlist, for example, we just take for granted that we can just skip to the next song or in Instagram, we can flip to the next reel.
2:11:08
But users didn't really have that amount of control back then.
2:11:12
But ultimately the cost of acquisition at that time, you know, was really really difficult.
2:11:18
And um there wasn't as much podcast content.
2:11:21
It was mostly um kind of radio or TV content being ported over.
2:11:26
You know, this is pre Joe Rogan and all that kind of stuff.
2:11:28
So eventually it was acquired by Apple primarily for the technology of streaming the ability to stream from server across different um telecom networks. Interesting.
2:11:41
Um I'd love to know uh your kind of venture origin story.
2:11:44
Uh one fun question is like what was the deal that you where you caught the venture bug?
2:11:53
What were some of the early deals that stuck out to you as uh hey maybe I want to turn this into a real career?
2:11:59
Well, um, it it really started because I was working as a consultant for a lot of different firms.
2:12:05
I was working in industry and I was writing a lot online and doing lots of media stuff just for fun and a lot of people who happen to be investors and LPs Reddit and I thought, "Oh, I'd be, you know, I was helping a lot of friends raise capital.
2:12:15
I thought, of course, one of these funds that is employing me as a consultant will give me a job."
2:12:19
Uh, that did not work out.
2:12:21
And so, Haytock was born literally out of uh, desperation of having nothing else to do.
2:12:26
And so it started with a $1 million fund and in the first eight months wrote uh seed checks into InstaKart Envoy Door Dash and Hashi Corp. Wow.
2:12:37
Banger after banger after banger after banger. We love to hear it. Congratulations.
2:12:43
And um I knew in the first the first two funds which took about three years I I knew that I would enjoy it because I had been around it a lot and so it was a lot of fun. Mh.
2:12:54
I I did not realize how much I would love it.
2:12:59
Um and then the other the other component I always call it luck and love.
2:13:03
Like Mike Maples has a great line which is like you got to get hit by the lucky truck, you know, and um I got hit by the lucky truck a bunch in the first three years. It's amazing.
2:13:13
It was um it was very fortunate, you know, but it was um it was a different era.
2:13:17
Like I could never raise as much as I wanted to for for funds and I would have to beg, borrow, and steal to make um sort of ends meet at home.
2:13:26
Uh you know, so for a long time. Yeah.
2:13:29
I imagine you're eating fuagra on the $1 million uh fee structure. Yeah. It's 200k over 10 years. Over 10 years. Pretty brutal.
2:13:38
I didn't take any fees really in the first three funds.
2:13:43
Um and uh yeah, that's great.
2:13:46
Uh are you surprised uh today when you see managers without much of a track?
2:13:52
I mean, you know, you listed off a few of the companies that you invested in the first fund.
2:13:55
You would think that that kind of portfolio would would get you a you know, if you had that today, it would probably get you a $500 million, you know, fund two type of thing.
2:14:05
Are are you uh when you talk to man you know uh uh uh upcoming managers today and they're they're sort of complaining about sort of the challenges of of raising money yet they're still raising you know 50 plus million dollar funds.
2:14:18
Do you I'm assuming you don't have a ton of I mean you have empathy but you're also well it's a it's a very astute question you're asking especially since we don't really know each other because that that is that is a very astute question for two reasons.
2:14:33
one one is that the the rational answer to your question is that it kind of makes sense because you know back when I started people didn't really know how big Uber could be or Palunteer could be.
2:14:45
It was like well I'll just wait to see what happens.
2:14:50
I mean a lot of VCs just passed on Palunteer for rounds and rounds and rounds and rounds and Uber was like you know just kind of blew people's mind of how fast it grew.
2:15:00
Um, so now I think a lot of LPs and a lot of people around the world are like, "Hey, the tech startup ecosystem is a place where I need to have some money at play because you know people who come on your show like I mean Ki I have a great story about Ki by the way.
2:15:16
So we we got to jam that in.
2:15:18
But yeah, people like Ki are like coming here from you know Europe and like doing amazing things and like you find one Kari in a career you know or in a portfolio it's amazing.
2:15:29
So I kind of understand that more LP dollars are coming here.
2:15:33
America is a more attractive the American entrepreneurial ecosystem is an attractive place to park some money and put it in the ground. It totally makes sense.
2:15:41
And when your choices are billion dollar plus funds charging you 30% carry and and they're going in a little bit later.
2:15:49
It's kind of like well okay do I you know which burning building do I want to fall off of?
2:15:55
You know, now the the more micro answer and why I thought that was an question is that a lot of people come to me and ask for advice or help with LP intros or how to like design their fund or do stuff.
2:16:07
And I've learned, you know, from like I had amazing access to people and that cannot be short changed.
2:16:12
Like I was very lucky to have access to like incredible incredible BC people, you know, BC creators and fund creators that you would all know by name.
2:16:22
I had direct access to them and still do.
2:16:24
So I try to pay it forward by helping with LP intros and doing all that stuff.
2:16:28
doing all that stuff. But occasionally I do get that, oh my god, like you know I need to raise a fund of this size to pay myself and I always come back with who who says you need a who's who owes you a salary to deploy the money
2:16:41
and and that's really the line I always come back to which is it's a little bit unfair because you could have a really qualified person who doesn't have access to capital and part of the game of a VC is to aggregate capital for the entrepreneur that's part of the game. Yeah. So if if you have a unfair capital Yeah.
2:16:56
So if if you have a unfair capital relationship or an asymmetric relationship where you can aggregate capital all of a sudden you're in the game but then you have to access the founders.
2:17:05
So it's that you got to aggregate supply on both sides high quality supply on both sides.
2:17:09
Um but this idea that like the fund should start paying you is a luxury in my mind and um of course if you have access willing to pay the fees like you can get paid. Yeah. isn't today though.
2:17:24
I feel like L from from my understanding if you go to LPS and you're trying to raise a small fund let's say 10 20 million bucks and you say I'm not going to have any any fees or or maybe a very small admin fee to cover the costs isn't that given that they're just so used to paying fees everywhere is that even like a selling point or does that send the wrong message to That's a fair that's a fair question.
2:17:50
I think that LPs are happy to have their GPS if they want to work with them pay them in some fees.
2:17:54
I think the point is that when you're starting and you're trying to hit a target or you're spending a year or two trying to fund raise, the idea that like you're owed a salary philosophically to me is kind of bankrupt and and that like you can you can say you're going to do that, but at the same time um it is a market and LPs vote with their feet and sometimes they make smart decisions and sometimes they don't. Yeah.
2:18:21
Um, but yeah, I would say that somebody going into market with that $30 million fund should have a budget for how they want to pay themselves, but also like um sometimes you have to cut deals when you start.
2:18:36
Um, like you know, a lot of people who want to raise an $und00 million fund, maybe the market only gives them six or eight, you know, and it's like that's where you should start, but a lot of people don't want to start there.
2:18:47
And it's it's a little bit unfortunate because Angelist which kind of came up when I was coming up created a whole new pathway for me too like that's available to you now you know and so a lot of people do use it but I think a lot of people want to aggregate more and more capital before the market's ready for it.
2:19:05
What angelist products were you leveraging most aggressively on the come up?
2:19:09
Oh yeah we've heard a lot of this could be its own this could be its own pod deep dive pod. Break it down.
2:19:16
I mean I went uh I mean first of all the all gen genius uh you know and really was helpful to me.
2:19:24
Um but essentially there were a couple of like uh public products and couple of offbook products.
2:19:28
The the public products were that um you could do these kind of like software click and subscribe SPVS. Yep.
2:19:35
you know, um where if you could aggregate from your following or people who were following you and say, "Okay, I have over capacity in a deal.
2:19:44
Um you know, uh there I've got a 50k allocation in a series A that I did a seed in and I I don't even have the money, right?"
2:19:51
Um you could do that and then set the carry.
2:19:53
You could even do little things like portion out the carry based on, you know, people who are helping you on the deal or other people you want to uh give a little gravy to.
2:20:03
Then it turned into like um these rolling funds or angelist funds which are very popular you know 181 19 20 21 and are kind of industry standard today and then the uh I hope Naval doesn't mind but like the offbook thing he he did me a solid for because I had known him for a long time and he he is just incredibly helpful and savvy but he had
2:20:24
raised a private pool of capital and an SMA from a I can't really disclose who but let's just say a large sovereign that wanted to basically pump a lot of money into the ecosystem and he picked four, you know, early managers uh to kind of whitelist and he chose me and told them just do whatever he does. Uh
2:20:43
Uh when you're uh I'm curious, how long should someone wait to get hit by the lucky bus before they before they should, you know, hang up the cleats?
2:20:56
cuz I I really do feel like in in my personal experience if you're in venture seriously and you don't get a true banger in the first five years like this the your your job just becomes infinitely more difficult in every conversation you have from LPs to entrepreneurs to other managers that you might be co-investing with.
2:21:16
But I'm curious how uh if you've seen examples where like you know year eight they finally you know get the banger.
2:21:24
This is um this is a very very good question.
2:21:26
I mean I I should be back on this pod at some point because you guys asking like the right awesome detailed questions.
2:21:32
It kind of depends I think your to answer your question based on what fund you're at and what stage you're investing in.
2:21:39
Um so let's say you're at a larger fund and you're doing kind of like a classic series A where you're joining a board or you're putting 78 million plus in a deal.
2:21:47
Maybe you're doing B's at 2025.
2:21:54
um you you can only do in a in a high quality sense maybe two to four of those per year. Mhm.
2:22:03
And everyone that's your partner or who's around you or the bigger heads in the in the fund.
2:22:10
They'll ask you to report on your portfolio on a monthly quarterly basis and they'll have a sense of an underlying like what's happening there sort of like a few times a year.
2:22:19
They're now obviously the boards are going to be using AI sorry the funds are going to be using AI to like track the board.
2:22:25
So it's not just about the relationship with that investor but like sometimes the investor in the old days could say everything's going fine but underneath the hood it's on fire.
2:22:34
Uh they'll have more of a record of what's happening and so generally the people who are running the funds will watch and see like what are the underlying metrics who's going to follow your deals right as a proxy for quality.
2:22:47
And so all those things are under a microscope.
2:22:49
I think when you're a seed investor like like myself where you're in that early part of the ecosystem where you're not investing $7 million per deal, but it might be 200k, 500k, a million dollars, you can take a lot more shots on gold and people suspect that some of those things are not going to work and you only need a couple to work, right?
2:23:09
So you have more ch you have more surface area to get hit by the lucky truck early.
2:23:13
The trade-off is that you don't own as much as you would if you did a rifle shot later.
2:23:17
But yes, I think five years is actually too long.
2:23:22
And um there's a couple heruristics here like it used to be in venture when you would join like a really good fund.
2:23:28
They would they would hand you a later stage deal that already had a board in place and already had some momentum underneath it so you could learn the ropes and have like a good kind of chip uh to put on the mantle to start.
2:23:43
Um, but if you think back, I don't know if you have come across Matt Kohler, but Matt Kohler was a GP at at Benchmark for 12 years.
2:23:50
And this guy's hit rate at series A was incredible.
2:23:58
Um, and even he doesn't even get credit for certain deals that he sourced, but he just doesn't care, you know.
2:24:01
But, you know, very few people are going to have that rifle shot selection. Yeah. That Matt did.
2:24:10
Um, you know, someone today who I would mention would be like Mimoon at KP.
2:24:15
I mean, you look at the guy's track record, it's absolutely insane to pick off the money round.
2:24:23
Uh, how common is it for you?
2:24:23
Because I I'm I'm assuming you're LP in in a ton of different funds at this point.
2:24:28
How often do you see like a $50 million fund these days that's fully deployed in a lot of winners but just not, you know, kind of a dud of a fund just because of concentration issues, pricing, etc.?
2:24:43
Well, I I do lots of small investments and friends and like other people to support them when they're starting funds.
2:24:50
So, it's relatively small.
2:24:51
the the funds are relatively small and when the funds are a little bit bigger, those managers have already had experience around um portfolio construction. Yeah.
2:25:00
So so so you can get away with kind of shittier um portfolio construction when it's a smaller fund because you're just really chasing the alpha in that.
2:25:10
Um but I would say the the broader point I would make here is that the idea of portfolio construction and the math around it, it's it's no more complicated than basic algebra. Yeah.
2:25:21
Um, and I would say I probably spent a lot of time trying to learn it and around a lot of other investors to deeply understand it.
2:25:29
And it was still probably the hardest topic for me to like grock or or you know, years. Yeah.
2:25:39
for for me to gro and I think that's why a lot of LPs like to fund people who come out of these bigger funds because you're served that every week when when people are doing partner meetings and portfolio reviews and the people running these funds know it.
2:25:51
So it's very hard to learn from scratch. Totally.
2:25:56
Uh I want to follow up on a talk we had with uh Sam Lesson yesterday.
2:26:00
He was saying that the unicorn factory is broken.
2:26:02
And it sounded a little bit like he was complaining that just like the big funds, you know, the crossovers have squeezed the growth investors, the growth investors mess up, all the early stage markets because they're just like, h $10 million series A, it doesn't really matter.
2:26:16
And then the series A investors mess up, the seed markets and the seed markets mess up, the angel investors.
2:26:20
Uh, how real is that dynamic?
2:26:22
Are you feeling pressure? Are you optimistic?
2:26:23
Uh, what's your takeaway on the broken unicorn factor?
2:26:25
I got to watch the Sam episode.
2:26:27
That guy is full of full of amazing thoughts. He's a hot takesman. He is a hot takesman. Very artful.
2:26:34
Um I think Sam's exactly right.
2:26:37
Uh you know, everyone is on everyone else's long, you know.
2:26:39
Um and so yeah, it's definitely a concern.
2:26:43
I still feel at the end of the day and maybe this sounds like polyiana but like the game is can you meet great entrepreneurs every week, every month and you're not bogged down by other BS that your partners throw on you or that you go to stupid conferences.
2:27:03
Like we all have like a ton of time every week. Mhm.
2:27:05
And we should all be meeting awesome founders as much as we can and like can you connect with them?
2:27:15
Can you get to know them?
2:27:15
Can you take a bet on them?
2:27:17
And I still think you can because a lot of investors have ADHD and they go to stupid conferences and they go to stupid meetings.
2:27:23
And so that's my kind of view is that like you're not going to catch everybody.
2:27:28
uh there's no way to meet everybody, but like there's plenty of people here that you can take a bet on.
2:27:34
Um and you can get paid, you know, if you're only chasing hot deals and everything's priced at perfection.
2:27:41
We all know where that goes.
2:27:43
Um so the other thing I will say is I've been seed investing, you know, in this part of the market for 12 years now.
2:27:48
And every single year, with the exception of like a few six-month periods of like COVID or dislocation or something, um, every year people complain there's too many smart people starting companies, there's too much money in the early stage market and the round sizes and the valuations are too high.
2:28:06
Y I hear that every single year.
2:28:09
Y, so I just don't know when that's going to stop.
2:28:12
Like maybe a meteor will hit the earth. I don't know.
2:28:15
No, I I I got to Silicon Valley in 2012 and and uh I got a big sitdown speech.
2:28:20
we are in a bubble and it was like yeah we were for another decade. Yeah.
2:28:24
decade. Yeah. I I mean one of the things that makes me so uh bullish on America is just we spend every single day talking to bright entrepreneurs and at a macro level it's obvious that there's bubbles in different you know kind of sectors and industries right people say
2:28:42
oh manufacturing isn't investable and then you talk to an entrepreneur who's like de spent six years developing like a proprietary method for manufacturing metal and you're like yeah you're going to sell billions of dollars of of of this product. Uh I want to ask you about
2:28:55
Uh I want to ask you about two archetypes of new fund managers.
2:28:57
Uh and I'm and I want to get u maybe the advice that you kind of like give them as they think about raising.
2:29:06
So the first one is the uh angel investor who sort of casually uh lucked into maybe uh investing in a bunch of winners uh while they weren't taking investing seriously.
2:29:19
And I think this is fairly common.
2:29:19
and somebody's like working at a great company or they're a founder and they just happen to invest in let's say they invest in 15 companies.
2:29:26
couple of them end up being unicorns and uh they uh decide they want to become a fund manager.
2:29:33
Uh and then the second archetype is somebody who's at a big fund uh gets hit by the lucky bus maybe uh but doesn't really realize uh the kind of dynamic in which enabled that investment which might have been the funds brand or it might have just you know a variety of factors.
2:29:50
So, I'm I'm curious how you talk to those types of managers, both both of which believe that they deserve a $50 million seed fund and deserve they should be, you know, able to kind of like win deals and and they very possibly can.
2:30:03
Um, but uh it's not necessarily a walk in the park.
2:30:09
The for the angel archetype, I mean, let's not forget like Eli Gil was like a super angel and then turned into like his own growth fund as a brand.
2:30:16
his own growth fund as a brand. I mean it still amazes me to see like the entrepreneurs you know when they create their Coachella banners for their huge fundraisers and horitz okay that's pretty awesome it's awesome uh so you know he was born from that I think that like the the pattern
2:30:35
going back to your question is um you know hey you you've been doing this as a founder or stuff I would think about a couple things one is like when you have a founder especially a founder who's like or operator who's like very very connected and just kind of angel investing for fun. a sophisticated LP. a sophisticated LP.
2:30:53
Now he the the pro the problem is here to do a 20 $50 million fund that person could just call his or her friends you know but let's say if you're going to like a sophisticated family office or institutional investor or fund of funds
2:31:05
and all these managing merging programs or managing man emerging manager programs are popping up um that LP knows that they're trading off access that this person may have that's unique for that portfolio construction and discipline of building in the basket. And so that person I
2:31:22
And so that person I would advise to say like two things to watch out for is how are you going to get smart on the portfolio construction and and build a model that works and kind of stick to it.
2:31:34
You can you can deviate from it a little bit, but you want to show consistency, right?
2:31:38
Because as you build up your track record, literally when we raise funds, you know, we're we may or may not be in the middle of that right now.
2:31:46
um they take your whole bank ledger like every dollar that comes in from an LP and every dollar that's wired to a company it's just in an Excel spreadsheet. Yeah.
2:31:57
And so everything is recorded. Mhm.
2:32:00
And so you know you go too wild by a second or third fund when an LP is really looking at you they may say like love to see this smoothed out a little bit.
2:32:10
You know, the other thing is just what I say network atrophy, which happens to everybody, which is like if you're not constantly replenishing your networks.
2:32:18
Y um not everybody are the Cisonson brothers.
2:32:20
Um I mean the big the big thing the big thing the big red flag for me on the angel side is you know as an angel I have 50 plus companies that I've put various checks in.
2:32:34
uh both of my uh you know true banger unicorns I would not I got 25k into if I tried to do 50k they would have said sorry like you know we have a bunch of people in the round access but not that much access yeah I had access and I was intelligent enough to just give the founder money but and and so and and and so if I if I were to go out and raise a fund I it wouldn't be authentic to say like oh Yeah, that point.
2:33:03
I would have, you know, been co-leading the round or whatever.
2:33:08
Just you're you're talking about like the what happens with check size escalation.
2:33:12
So, like I'll give you a couple of things to noodle on.
2:33:14
So, for me, I had no choice but to crawl, walk, run.
2:33:20
So, I was incrementally increasing my check sizes in the same kind of round.
2:33:23
So, the same rounds I was doing 12 years ago, we're doing today. Mh.
2:33:25
Now, most people will just say, "Oh, I can go a little bit more."
2:33:30
I tend to think if you talk to other seed investors that kind of line is around somewhere between when you're asking for 250 to 500k starts to get tight. Yeah.
2:33:38
So, so you could have an aggre, you know, one one model is you could have an aggressive angel who gets that right away and starts firing the million dollars instead of 25 and they still have a hot hand, they still have a good network.
2:33:51
They still have good judgment and nose. Like that can work.
2:33:52
Um the problem is like you're gonna you're probably going to light a lot of money on fire too because the deals are moving too fast and they don't have like that deal judgment going.
2:34:01
But the the broader point you're making is a very good one which is around like what check size can you really write in the competition set. Yeah.
2:34:10
In the one in the companies that matter. This is fantastic.
2:34:12
We definitely do have to have you back on.
2:34:14
Uh we could talk for another five hours.
2:34:16
I got to ask one more question.
2:34:18
Uh, can you can how how uh how do you think uh X is today in comparison to uh the good old days of Twitter?
2:34:28
I think you were one of the first people I ever followed on on tech Twitter. Same here.
2:34:32
I didn't get I got on like somewhat late. I was in college.
2:34:36
But mean fiveletter username.
2:34:38
It's no four-letter username like um I'll see new people follow me and like usually it's just bots or people with like a you know an animated uh the anime profile pictures there's alpha in those some of those folks are really great AI engineers but like recently a
2:34:55
bunch of people have like followed me and I'll look at like recent followers and they'll be like Barack Obama that's awesome what's so funny yeah if Elon if you're listening I love X I love Twitter I've been on it for I don't know over 15 years. I just want
2:35:09
I just want Tweet Deck back. Interesting.
2:35:13
Because I think Tweet Deck being removed has disrupted my flow and I've never I haven't been able to like find my footing again.
2:35:20
But I think the content on there is great.
2:35:22
It's just it's harder to find. Yeah. Right now.
2:35:28
And I tend to get the best tweets in my social chats in my in my group chats. Yeah.
2:35:33
And to me that's a sign that like um the interface is too much.
2:35:36
Yeah, we talked about this with Eric Torenberg a little bit that a lot of the alpha has shifted to these big group chats and there is a little bit of that that's lost.
2:35:44
I mean Twitter originally was like the global group chat for the world and for tech and you had NFL Twitter and all the different Twitters.
2:35:52
Uh there's still a little bit of that and we're bringing it back with the show.
2:35:55
I think Elon and them can make more money by going back to Tweet Deck, redesigning it, and then in each stream, you can have different ads just at top.
2:36:03
It's like such low hanging fruit. Yeah. Yep. Well, this is awesome. Thank you for coming on. Let's see. You guys, man. Take care. Cheers.
2:36:11
Uh let's bring in Dan from Chain Guard.
2:36:13
Um announcing uh a pretty pretty meaty mediumsized round.
2:36:20
I think it's just in the couple hundred million.
2:36:22
By the way, did our uh our 3:00 meeting get moved to Oh, did it get moved to 2:30?
2:36:28
So, we got even less time. Wow. Okay.
2:36:30
Well, we might have to re uh reconfigure some of the agenda cuz a big meeting just got moved up and it's all the way across town in LA traffic on a Friday.
2:36:40
We are going to be in trouble.
2:36:44
Uh we will figure that out.
2:36:47
But we will first have a chat with Dan from Chain Guard. Welcome to the stream. Thanks for having me on. Yeah.
2:36:54
Thanks so much for joining.
2:36:57
Congratulations on the hefty $356 million series D.
2:37:00
Uh we'd love for you to introduce yourself, break it down, give us the news, tell us what's up.
2:37:04
Oh man, I was just on my roof 10 minutes ago trying to get my Starling to work because my internet was down for two hours and it came back on five minutes before this.
2:37:16
So, I'm so happy to be here. Well, it's a miracle. It's meant to be. Yeah, perfect. Where are you right now? Yeah. Yeah.
2:37:22
I'm in my basement in Rhode Island. Oh, nice. Nice. Very cool.
2:37:27
Um, yeah, we're an all remote company.
2:37:30
Um, yeah, we're about three and a half years old at Chain Guard.
2:37:33
Um, we got started during the pandemic, so there were no offices and we've kept it that way as we've grown.
2:37:38
Uh, but we're building a safe source for open source software.
2:37:40
Um, open source is this kind of like hippie software movement uh that's been around for like 30 or 40 years, but it's like anyone writes code and puts it on the internet for free and people use it and everyone kind of gives back and trusts it and it and it mostly works. Um, it's awesome.
2:37:58
It's like 90 to 98% of the code that people use when they're writing, you know, their own applications.
2:38:03
But when you're using code that's written by anyone on the internet, um, it turns out not everyone on the internet is a nice or responsible person.
2:38:10
And that leads to security issues.
2:38:15
What was the single I was about to say? Yeah.
2:38:17
What's the inciting story? Is it Solar Winds?
2:38:19
What What do you go back to as like the the the foundational uh story that we will be able to prevent in the future?
2:38:25
Yeah, Solar Winds was like one of those eye opening moments.
2:38:28
Um it's something I've been paranoid about for a while though.
2:38:32
There's actually this paper that was like written in the 70s by Ken Thompson called Reflections on Trusting Trust.
2:38:37
And it was like a touring award-winning paper.
2:38:39
Like it was his his paper after he won an award.
2:38:41
Um, and he kind of proved by pranking all of his co-workers at Bell Labs that if like there's a back door in a compiler, a compiler is a thing that turns source code into like, you know, the thing you're actually going to run, then you can't really trust any of the programs that are ever built with that or any of the things that are built with those things.
2:38:58
Um, and it's an awesome paper.
2:39:00
And then everyone just kind of blocked this out for like the next 40 or 50 years.
2:39:03
um until Solar Winds happened basically where somebody actually spent the time and did something like that and then had dramatic consequences as a result to all those kind of downstream customers.
2:39:12
But my co-founders and I have been working on this stuff for a while at Google and Solar Winds was kind of the kickstart to actually get this company going. Got it.
2:39:18
So, uh talk to me about I mean the ramp on this company is inc is crazy.
2:39:22
Uh what was the first customer?
2:39:25
What was the go to market? How did you scale? I want to hear all that.
2:39:30
Yeah, we spent a while in the beginning trying to figure out what we wanted to do from a product side.
2:39:32
Software supply chain security, open source security, it's a whole bunch of problems.
2:39:36
It's not just one problem.
2:39:38
And it took a while to figure out what which one people actually wanted to solve first.
2:39:41
It was this topic everybody knew about after Solar Winds.
2:39:44
There was an executive order from the Biden administration, that kind of thing.
2:39:47
But nobody was really ready to take action yet.
2:39:49
They were all just paying attention to and learning about the space.
2:39:51
So, we tried a bunch of different things.
2:39:52
Um, but this product that we have now, our our chain guard images product, uh, we started on it pretty early and it took a while to get going.
2:40:00
Um, because, you know, there was a lot of software that we had to build to get to this point where people could come to us and get whatever they wanted to run from us.
2:40:06
Um, we first started selling it like Oh, sorry. Go ahead. Oh, yeah.
2:40:11
I I I just wanted to hear just finish that story and then I'll ask the next question about, you know, Yeah, we really first started selling it about halfway through calendar year 2023.
2:40:19
We got the first couple customers on board.
2:40:21
Um, we had a couple sales reps at the time.
2:40:24
They reported directly to me.
2:40:26
Um, after it really started selling though and we we had a feeling it was repeatable, we brought in a VP of sales, really started to scale that, but we've kind of been perpetually behind on, you know, growing our sales team as a result.
2:40:36
The demand has been, you know, more than we can handle.
2:40:39
Think you're doing great.
2:40:39
Um, uh, talk about, uh, I want to ask you, uh, more potentially just, uh, fun question, not so serious.
2:40:48
Uh, talk about the brand.
2:40:50
I think if you said 20 years ago that like a you know security software company would have such a fun uh delightful uh brand they would have kind of laughed at you.
2:41:01
Is it just a is it just an extension of of you know the team and and your guys's internal culture or how did that come together and and what's been the customer response to that?
2:41:12
Because I imagine you like at at this point many of your customers are not just cool exNative uh startups.
2:41:20
They're you know really you know scaled enterprises. Yeah.
2:41:24
I I think you know it's a reflection of in some ways our internal culture right like security is really serious work.
2:41:29
The type of security we do is really tedious work. It can be boring.
2:41:33
It can be hard stuff nobody really wants to do.
2:41:35
And we try to keep it fun.
2:41:36
One of our, you know, core values is we do serious work, but we don't take ourselves too seriously.
2:41:40
Um, and we we spend a lot of time on that one.
2:41:44
Um, we have fun in all hands.
2:41:44
We do crazy stuff summits, that kind of thing.
2:41:48
And it helps keep the culture light.
2:41:48
You know, when when you're about to, you know, go spend eight hours trying to fix some tiny bug somewhere in some piece of software you don't understand.
2:41:54
It helps to laugh every once in a while that you know it keeps everybody engaged, keeps everybody having a good time, especially when things get tough.
2:42:00
Um, and we try to, you know, reflect that in our social media and our branding and the events and all that stuff we do. Yeah.
2:42:04
Um, I get cold called all the time.
2:42:07
There's all these brands out there and like just some personality and authenticity really goes a long way in this. Totally.
2:42:11
uh what what uh what what are the the general risks in in in you know cyber security risks around software that that kind of like keep you up at night that aren't related to chain guard directly and what you guys are doing.
2:42:28
So kind of like more at a macro level.
2:42:30
Um I mean this one's sort of related to us but it it it really is the one that keeps me up at night but we don't have a perfect solution to it either.
2:42:37
So, so I don't feel too unfair, but it's it the XZ utils attack at the start of last year, if you remember that one.
2:42:44
I think that's the one that probably should be keeping the entire industry up at night.
2:42:46
Um, it was this piece of open source software that had been around for like 30 years.
2:42:50
It's this compression library that's used everywhere across the internet.
2:42:53
You know, as you upload download things, it all gets compressed and decompressed just like from Silicon Valley.
2:42:57
Um, you know, the middle app compression kind of thing. Um, uh, it's everywhere.
2:43:00
You don't even think about it.
2:43:03
And it was maintained by just one person like a lot of projects are for, you know, like a decade.
2:43:07
And uh somebody else just showed up and started helping.
2:43:09
And they were like fixing bugs, doing good stuff, cleaning up the old code nobody else got around to for like a year or two.
2:43:15
And then the original person was like, "You know what?
2:43:19
I've been doing this for a long time. You're doing a good job.
2:43:20
Why don't you just take over?"
2:43:21
And the original person just kind of left.
2:43:22
Uh and then 3 months later, this malware gets slipped in that was incredibly sophisticated.
2:43:29
And it turned out it wasn't even a real person.
2:43:31
It was just like a madeup name on an email list.
2:43:32
Uh her name was started showing up. Yeah, Gotan.
2:43:36
That's not even a real person.
2:43:36
Um like there are people with that name and they had a terrible week uh getting harassed, but none of those were that Gotan.
2:43:44
Um and uh it was luckily detected at the last minute and it was a a really close call.
2:43:50
But that's not the first time that's happened.
2:43:53
I'm sure it's just the first time we've noticed and that's definitely not the last time that type of thing is going to happen.
2:43:57
It's about trust in the end.
2:43:59
You have to trust the people that are doing this and you don't know if they're a nice person on the internet.
2:44:04
It's what's that old meme?
2:44:04
You don't know if someone on the internet is a dog, right? Yeah.
2:44:06
On the internet knows you're a dog. Yeah.
2:44:09
A dog, a Russian or North Korean hacker, you know, nobody on the internet knows these things.
2:44:14
So, it's kind of related to what we do.
2:44:16
So, but like it's a hard one.
2:44:18
It's impossible to solve unless you know the identity of every single person and you know their entire life history.
2:44:23
Yeah, this is somewhat related.
2:44:23
I can imagine um there's a world where this is handled by the government and if there's critical software that's identified, it's like we're going to find this person and verify who they are and basically do a background check.
2:44:33
On the other side, the more futuristic Silicon Valley tech approach might be um hey, we have incredible software LLMs. We have AI agents.
2:44:42
What if we just run an LLM over every piece of public code constantly 20 every review every uh every git push or every pull request, right?
2:44:55
Um uh how are AI agents uh effective?
2:44:59
Is it just going to be a uh like a cold war of of both sides using AI to sneak ever ever more complex hacks in and catch them? Is it cat-and- mouse?
2:45:09
Um, how are you seeing AI and AI agents uh helping or hurting in the future?
2:45:12
I'm scanning the internet right now while we're talking.
2:45:16
Yeah, I'm vibe I'm vibe scanning the internet. Um, that's good. Yeah.
2:45:19
No, it's it's an arms race like everything in security. Attackers get better.
2:45:23
They move around, find different ways in um and defenders have to have to keep up.
2:45:27
Right now, I think we're losing that war, right?
2:45:29
We're getting a lot better at finding vulnerabilities and software and finding ways to exploit than we are at keeping up with that. I hope that changes.
2:45:37
Um, you know, AI adoption in security is has been pretty slow.
2:45:42
Um, and for a good reason. It's kind of scary.
2:45:44
Uh, you don't want to just run these things with direct access to all of your systems, but attackers aren't slowed down by that.
2:45:49
They're running this stuff every day and every week as it changes.
2:45:52
Um, so it's going to be a kind of wakeup call and catchup period as the defenders figure out how to use it as well as the attackers are.
2:46:00
What's the what's the vibe in the security community right now?
2:46:03
Um, just I is it uh I I remember I I like accidentally landed in Vegas during Defcon or Black Hat and was kind of out of my element one year.
2:46:13
Um uh but uh what does it take for somebody to break into the industry?
2:46:18
Uh where are the key uh pipelines?
2:46:21
Are people even like are universities relevant here anymore?
2:46:24
I know there's a lot of hackers that just kind of uh do uh CTFs and then become famous.
2:46:31
Um, but what are the typical pipelines into either a career at your company or just the industry broadly?
2:46:38
Yeah, security is both really easy to break into and hard at the same time, right?
2:46:42
Like like you mentioned, universities aren't terribly relevant.
2:46:44
There's no, you know, college that you get a degree in cyber security from.
2:46:46
Um, even programming in general, right?
2:46:49
You can learn this stuff on your own. I learned it on my own.
2:46:51
I did mechanical engineering.
2:46:52
I never took a programming class.
2:46:54
Uh, but it's also hard because there's so much esoteric stuff.
2:46:56
Like there is no curriculum.
2:46:57
you kind of just have to spend all that time on those forums and reading hacker news and reading all these different sources.
2:47:02
So, I'd say there there's not a lot of credentialism.
2:47:05
Um, but there is still this like kind of obscure dark knowledge base that you do kind of have to pick up on on your own, but it is incredibly welcoming.
2:47:13
Hopefully, you had a good experience when you landed there in the desert um at Defcon.
2:47:16
Um, it's always a fun crowd. Yeah, totally.
2:47:19
Um, yeah, it's way more fun than RSA.
2:47:22
You never know what you're going to get in Vegas.
2:47:23
It might be the plumbers, you know, annual conference or an arms dealer conference or it's always different.
2:47:29
Uh but yeah, I remember people were joking like, oh, like like don't even go near the Defcon folks.
2:47:36
Like they'll hack your phone in two seconds while you're not even looking. No one takes a shower. Yeah, that too. That too. Um yeah.
2:47:42
So, uh what what's next for the company?
2:47:45
I mean, you have a new war chest.
2:47:46
Uh you mentioned hiring salespeople, scaling that up.
2:47:51
What are the new challenges?
2:47:51
What are the goals for the coming 12 to 18 months?
2:47:55
Uh, yeah, we're trying to be the safe source for all open source.
2:47:57
You know, up until today, it's been pretty limited with just our container images.
2:48:01
Um, we're adding new products.
2:48:01
We just announced a few a month or two ago.
2:48:03
Um, virtual machines, language level libraries.
2:48:07
Uh, you know, we've really just on the tip of the iceberg when it comes to open source.
2:48:10
So, we're scaling up our investments a lot in R&D, our automation, making this stuff easier for us to do as we continue to grow and scale.
2:48:17
You know, the amount of open source that we have, it's moving even faster.
2:48:20
You asked about this about AI.
2:48:21
Uh, open source is accelerating.
2:48:21
Um, you can crank out code even faster now.
2:48:24
Um, today it's more people writing more code. All code has bugs.
2:48:28
We haven't really made an improvement dramatically that way.
2:48:32
And like, you know, the the number of bugs per line of code written.
2:48:35
In fact, it'll probably go up as more inexperienced people start writing more and more of this.
2:48:38
So, the security gap is getting wider and we have to get even faster at it. Yep, that makes sense.
2:48:42
Uh, one one more question on AI and we'll let you get out of here.
2:48:45
Uh, Daario over at Anthropic uh, just published a piece.
2:48:50
the urgency of interperability.
2:48:50
Uh Jordy and I were talking a few months ago about uh Deepseek and this idea that even if it's open source, uh there could potentially, it's a little sci-fi, but there could potentially be a Manurion candidate buried in the weights of one of those models, uh is that something you're thinking about? Is this pure sci-fi?
2:49:10
Is this a year, two, five, 10 out?
2:49:13
How should we think about uh auditing the output of open-source LLMs?
2:49:18
because that seems like a really valuable target if I'm a hacker.
2:49:24
Yeah, I've seen studies not even just recently, you know, within the last couple years where if you could taint a percentage of the training data going into a model, you can control some of the output.
2:49:32
This stuff is not possible to reverse engineer.
2:49:34
Code is hard enough to reverse engineer and this is that scaled up by like a thousandx.
2:49:38
um open source models, you know, there is an open source definition for models and these weights, but you know, you can read source code. It's hard.
2:49:45
Uh but you can't read these ones and zeros in a, you know, a 40 gigabyte file.
2:49:49
Um it would not shock me if it's in there even not even just DeepSeek in any of these models intentionally or intentionally.
2:49:58
Um we like to think that we can review stuff line by line and catch these bugs, but there's no possible way to do that with LM.
2:50:03
The whole explanability piece is scary. Totally.
2:50:05
Um, well, thank you so much for stopping by.
2:50:08
We we we have to cut it short because we have to run to a meeting.
2:50:11
But, uh, this was fantastic.
2:50:12
We'd love to have you back on the show, uh, whenever.
2:50:14
Hopefully, there's never a big security in uh, incident, but if there is one, we'll be calling you and we'll be playing this sound effect. Oh, no.
2:50:23
You know where to find me. Thank you so much. Thanks for coming on. Good luck. Have a great weekend. Yeah. We'll talk to you later. Bye. See you, Dan. Uh, fantastic.
2:50:32
Well, we have to wrap up. We have one last ad.
2:50:36
Linear, you heard from the CEO directly.
2:50:39
It's the new standard for pro modern product development.
2:50:41
Uh go check out linear build with focus ship with care. linear. app. And thank you. We will wrap up there. We will be back Monday.
2:50:50
Yeah, we're sorry we have to run.
2:50:52
Uh it's going to be a massive week next week.
2:50:55
We're going to be on the ground at Hill Valley in DC.
2:50:58
Uh we have a lot more planned, a lot more timeline, a lot more top stories.
2:51:02
Uh a lot more real estate stories hopefully. That's right.
2:51:05
I'd love to break down some more mansions. We'll see.
2:51:07
Anyway, thank you for watching. We will see you soon. Have a fantastic.