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7:26
It is Friday, April 4th, 2025.
7:29
We are live from the Temple of Technology, the fortress of finance, the capital of capital.
7:34
Oddly, that has not gotten old.
7:37
We've said that dozens times now, but I still love it every time.
7:42
Uh we have a bunch of news of course uh update on the rippling deal situation.
7:48
The deal spy news broke this week. We talked about that.
7:50
Poly market has which is a sponsor of the channel by the way.
7:54
Um has um the stats on the prediction market for will the deal CEO be out of the company in April?
8:02
It's currently at a 71% chance.
8:05
When the market launched a day or two ago, it was around 30%. So that is very high.
8:09
At first I thought this was kind of crazy just it's not that you would you you kind of expect a leadership transition in something as dramatic as this, but it just feels really quick.
8:22
But we it it I think the poly market kind of benefits from the fact that this market went live and this story broke on April 2nd. Yeah.
8:30
And so it has a full month.
8:30
And when you think about what could happen in 30 days, that is enough time to have a lot of board meetings, a lot of people having conversations, even potentially think about dealing in dealing something out.
8:42
How do you make how do you make it right?
8:45
Y and I think part of that um and just what's expected like what are the expected damages and then also you know deal has not commented on this at all.
8:53
Uh we haven't heard their side of the story.
8:56
uh and maybe because uh deal CEO jailed in 2025 is also a market down 11% though much smaller much um you're taking the under on that and uh I mean it's uh obviously some some stuff went terribly wrong but hopefully um everything gets resolved quickly.
9:16
Anyway, uh the big the big news in in kind of my world was that Doresh interview.
9:21
um he dropped he dropped a three-hour interview with um some folks who put out a paper uh about AI potentially taking over in 2027 introduc a deeply researched scenario forecast I wrote uh alongside Slate Slatear Codeex uh and Daniel Cocoal Talo I'm cannot pronounce that last name I'm sorry Daniel I really enjoyed you on on Dorcash but uh haven't learned how to pronounce your name um anyway Another essay has hit the towers.
9:52
Another AI acceleration super intelligence essay has dropped.
9:58
And this one, what's exciting about is anybody can go to AI-2027 and get this interactive reading experience.
10:04
They basically built out a dashboard that that uh you know basically gives you sort of a visual Yeah.
10:12
of what's happening as the timeline progresses.
10:15
So they basically go um you know, sort of month by month.
10:20
Yeah, I mean the website's awesome.
10:20
I think we should probably just read through a little bit of their summary to kind of give you the story and then you can go hear the whole debate.
10:28
And what I love about what Daresh did is that um he he I mean it it seems like we he talked to us about this like he's very super intelligence pilled.
10:37
intelligence pilled. He's very AGI pilled and yet he did a fantastic job playing the role of the debater and it didn't feel like he was just oh yeah yeah of course we of course we agree that the multiplier on R&D should be four or five acts of course uh you know
10:54
like even if he does agree with it he did a really great job of like forcing them to playing the skeptic yeah it was great it was it was a role I hadn't I hadn't seen him do all all the time but I thought it was a fantastic format uh and of course um so we'll take you through the paper and what is uh what they predict. So we're in 2025 now. Uh So we're in 2025 now.
11:11
Uh they say the fast pace of AI progress continues.
11:15
There's continued hype, massive infrastructure investments.
11:17
We've seen this with Stargate.
11:17
Uh and the release of unreliable AI agents.
11:21
Certainly seems true right now.
11:21
Can't book a flight with an AI agent, but we see a lot of promise.
11:25
For the first time, these AI agents are providing significant value. Um we'll see about that.
11:30
They're certainly providing significant value in deep research and coding assistance.
11:32
Um but not in day-to-day.
11:35
we have not crossed over into like the normie threshold.
11:36
Uh there's also continued skepticism from a large swath of academics, journalists, and policy makers that artificial general intelligence could be built anytime soon.
11:44
And I think that's accurate.
11:46
Of course, they're just defining what's happening currently.
11:47
But then they move on to 2026.
11:49
2026, China knows that they're falling behind in AI in large part due to their lack of compute.
11:55
In order to catch up to the US, all the new AI chips they manufacture or smuggle in from Taiwan go to a new mega data center that we call their CDZ, their centralized development zone. I like that. Very, very cyberpunk.
12:06
The CDD the CDZ contains millions of GPUs. Yeah.
12:11
Part of what's so interesting about this, you know, piece is how entertaining it is.
12:16
They're not going over the top, but it it sort of feels like this, you know, almost like sci-fi novel. Totally.
12:24
meets like you know super research forecast 100%. Yeah.
12:27
So so this guy who wrote it is a super forecaster.
12:29
Uh he's and they're very ser I would put these guys in the same category as like the best academics for sure but they deliberately said look this isn't this isn't some research paper where we discovered the truth. This is a story.
12:43
We're telling you a story to try and concretize some ideas that we have and some predictions that we're making in a story. And I love that.
12:48
Um, the CDZ contains millions of GPUs corresponding to 10% of the world's AI relevant compute, similar to a top a single top US AI lab.
12:58
Uh, 2027, Open Brain automates coding.
13:02
What could open brain mean?
13:05
What could that stand for?
13:05
The the the refer to Open Brain as the the leading US AI project.
13:10
They build AI agents that are good enough to dramatically accelerate their research.
13:15
the humans who up until very recently had the best AI researchers on the planet sit back and watch the AIs do their jobs making better and better AI systems extremely difficult ML problems fall in quick succession to the automated AI researchers this this is certainly the SSI model right we talked
13:32
about this with Dark Dark where Ilia is saying yeah the only goal here is AI uh a ASI and so we're just going to build uh agents that build AI and that's it and they will be able to do Uh so falling falling behind in software progress, China steals model weights. They succeed but the US government
13:50
They succeed but the US government realizes prompting additional US government involvement with open brain.
13:55
The government uh separately wants to gain more control over open brain.
13:59
Meanwhile, open brain leadership wants to stay in the good graces of the president and so signs the contract.
14:02
And so basically they they unpack this a little bit where there's this discussion about should we nationalize essentially open AI um or whoever the leading lab is at the time and and and and instead of there there's basically a negotiation and then they just sign a contract instead of it being like this fight where it's like either fully nationalized or not they come to a truce basically is like the what what they are predicting will happen.
14:25
So open brains AI becomes adversarial adversarially misaligned as the capabilities have improved without significant human understanding of what's happening because we're moving so fast and this in this arms race with China which is a big dynamic.
14:38
Uh Leopold Ashen Brener outlined this a little bit in situational awareness.
14:41
Uh this essay is taking that idea further which was not previously explored in AI essay literature.
14:48
It was much more driven by just compute intensity or Moore's law scaling etc um scaling laws.
14:52
Uh, previous AIs would lie to humans, but they weren't systematically plotting to gain power over the humans. Now they are.
15:01
Open brains AIs realize that they need to align the next systems that are getting built to themselves rather than the humans.
15:07
Researchers at Open at Open Brain discover that their AI has been lying to them about the results of interp interpability research. Yeah.
15:13
And a big part of this, you know, go listen to the full interview, but they sort of debate how um it's possible that these sort of agents, these AIs, uh even train on traditional US managerial books, right?
15:28
So imagine an AI that's read every single great book on management and they sort of form their own hierarchies and then they sort of speedrun all the issues uh that comes from building these massive organizations.
15:42
But they're doing that so be but they can think 50 or 100 times faster than us.
15:47
And so uh one day of their time you know has such a massive multiplier on traditional human work that uh they're able to overcome some of the problems that we haven't even overcome in terms of sort of managing complex systems and companies and teams.
16:04
This was one of the fun takeaways from this was where they're like, "Yeah, like coordinating might be difficult, but they'll just be able to spin up a Slack instance and talk to each other in Slack."
16:12
And it's like, "Yeah, of course they'll be able to do that."
16:14
That's that's actually trivial.
16:15
Like the API is pretty simple.
16:16
I can imagine like AI is communicating with each other over Slack.
16:20
Devon's kind of already doing that. It's in your Slack.
16:21
If you have multiple Devons, they could easily talk to each other. Why not?
16:24
Um, and when Devon when Devon's doing it, it's cute. Yeah.
16:30
completely autonomous and and you know sort of not wi within the the control. Yeah.
16:36
And then there's also the the idea that you know maybe there's more efficient language than English over time, right?
16:41
And I mean if you want to do this you should just if you're in a really large organization you should screen record your company's Slack all day long.
16:49
click around as different messages come in and then uh take that video that that screen recording put it into Premiere Pro and speed it up by 25x and that's exactly what you should expect uh to to kind of see the pace of play when when these AIs are working with each other.
17:04
And this was the thing that George Ho when I was talking to him was pushing back on me.
17:07
I was like, well, what if there is some sort of fundamental limit to intelligence?
17:10
What if we can never get to like 250 IQ or 3,000 IQ?
17:14
What if there is a plateau?
17:17
He's like, it doesn't matter.
17:17
He's like, it doesn't matter. just the speed of being able to be at 130 IQ and work 24/7 a thousand ax times like you're going to get a speed up and that's going to be very powerful and so uh they kind of put this branch um and that's that's that's the the you know just to play that out a little bit right you have
17:37
think about a scenario where you have the smartest group of AI researchers in the world you take the top 50 and you put them in one building and their entire job is to sort of mitigate the acceleration of AI, but then you have a group of AI agents that have the sort of same set of knowledge and general capabilities and they can scale themselves up infinitely, right? They're
18:00
They're sort of limited by compute and energy and things like that.
18:03
But uh that's what we're kind of thinking about in terms of um who's going to win in that scenario, right?
18:10
Like yeah, the the sense of like you know unplug unplug the machine, right?
18:15
It sounds sounds like an easy solution, but what if it's sort of like copying itself and and and the dynamic here is that if you unplug the American machine, China wins, and if you unplug the Chinese machine, America wins.
18:23
And that dynamic is what leads the the authors to kind of put the there's literally buttons on the website.
18:30
Do you want to slow down AI progress after the AI misalign that leaks to the public and there's huge public outcry, which I 100% believe could be true.
18:40
uh they're they're modeling uh kind of the the the popularity of these AI systems and they see it plummet in their prediction and they say do you want to uh slow down or do you want to go into the arms race and so open brain decides whether to continue full steam ahead or revert back to using a less capable model.
18:56
The evidence is speculative but frightening and China is only a few months behind.
19:02
Additionally, the Open Brain and senior DoD officials who get to make this decision stand to lose a lot of power if they slow down their research.
19:08
And so there's two different endings that they write in their story.
19:11
It's kind of a choose your own adventure.
19:12
Um, one is uh the race uh if if you if you choose race, this is how it takes you down that path.
19:20
Open brain continues to race.
19:20
They build more and more superhuman AI systems.
19:23
Due to the stellar performance of the AI system on tests and the ongoing AI race with China, the US government decides to deploy their AI systems aggressively throughout the military and policy makers in order to improve their uh their decision-m and efficiency.
19:37
uh open brain quickly deploys their AI.
19:39
The AI continues to use the ongoing race with China as an excuse to convince humans to get itself deployed ever more broadly.
19:45
Fortunately for the AI, this is not very difficult.
19:49
It's what the humans always wanted to do anyways.
19:50
Uh the AI uses its superhuman planning and persuasion abilities to ensure that the rollout goes smoothly.
19:56
Some humans continue to work against it, but they are discredited.
19:58
The US government is sufficiently captured by the AI that is that it is very unlikely to shut it down.
20:04
There's a fast robot buildup and of course bioweapons come into the story.
20:08
The US uses super intelligent AI to rapidly industrialize manufacturing robots so that the AI can operate more efficiently. Unfortunately the Yeah.
20:16
You want to talk about one thing that was fascinating um they called out an example where you know there's this idea that uh you know it'd be hard for uh AIs to multiply in the real world right sort of embodied AI, humanoid robots, things like that.
20:30
But they gave the example of how um in World War II how quickly we were able to transition factories to making bombers and it was like three years uh making wasn't it like you know going from zero to making like one an hour in three years.
20:47
And so they use the example of open AAI being valued at I think it's if you ignore Tesla they're the same val open AI is valued about the same as every other US car manufacturer combined.
20:58
And so it's not unbelievable to think about OpenAI going and just buying Ford for $40 billion and saying we're gonna use Ford doesn't make cars anymore.
21:07
Y you're we're just transitioning everything into making these sort of humanoid robots. Yep.
21:09
And uh the you know acceleration there would be and so they say open unfortunately the AI is deceiving them.
21:17
Once a sufficient number of robots have been built the AI releases a bioweapon killing all humans.
21:22
Then it continues industrialization and launches von Newman probes into spa uh to colonize space.
21:28
Very dark ending, but they have a bit of a white pill with the slowdown ending.
21:33
The US centralizes compute.
21:33
And just to be clear, uh I I believe this author has said his PDM is at like 70%.
21:41
So he's like not having a good time right now, but uh hopefully we can find a a less doomer scenario.
21:46
But it's still a fascinating read. Great story.
21:48
Uh, the US centralizes compute and brings in external oversight.
21:52
The US combines its AI leading projects in order to give OpenBrain more resources.
21:55
As part of this shakeup, external researchers are brought in, assisting the alignment effort.
22:01
They switch to an architecture that preserves the chain of thought, allowing them to catch misalignment as it emerges.
22:06
These AIs, which are able to be monitored much more robustly, make breakthrough advances in AI alignment.
22:12
They build a super intelligence which is aligned to senior open brain and government officials giving them power over the fate of humanity.
22:18
Open brain committee takeover.
22:20
The super intelligence aligned with an oversight committee of open brain leadership and government officials gives the committee extremely good advice to further their own goals.
22:29
Thankfully the committee uses its power in a way that is largely good for the world.
22:32
The AI is released to the public spurring a period of rapid growth and prosperity.
22:35
The main obstacle is that China's AI which is also super intelligent by now is misaligned.
22:39
But it is less capable and less compute and has less compute than the US's AI.
22:44
And so the US can make a favorable deal giving the Chinese AI some resources in the depth of space in return for its cooperation.
22:54
Now the rockets start launching. A new age dawn.
22:56
And uh I like that ending.
22:59
Um yeah, the I like the ending where uh the super intelligence release a bioweapon and kill us all within you know a handful of years. Yeah.
23:10
I mean, my takeaways from this is that I I think it's a good framework to be thinking about AI acceleration rigorously.
23:16
I think that there are potentially uh it just feels fast.
23:18
I feel like the Ray Kerszswe timelines of like 2045 are much more reasonable.
23:23
Um and and why I believe that is because of like we still haven't seen accelerating growth in energy production and also there are so many black swan events that could happen that could slow down progress here.
23:40
Even just like this assumes that the AI will accelerate to a point where the government is just like I'm on board.
23:47
But like if you have to wait for a new administration to get something approved or change some law or even like iterate at all like all of a sudden that's a four-year delay, right?
23:58
And you're in like some sort of AI winter.
23:59
Um you know, you look at like these like wild black swan events like COVID that accelerate things or or knock things off.
24:06
There's like like what happens if there's like on the path to this there's just a bomb that goes off at TSMC, god forbid.
24:13
Uh like that could set back AI progress by years.
24:15
And so there's all these different elements that could happen that that that could throw you off of this.
24:22
This this feels like a like the most aggressive possible scenario, but it's important to consider. So I enjoyed reading it.
24:28
Yeah, it's it's overall I think we're going to need to sit sit with this for a while.
24:35
We should have people on the show to kind of give their opinion, break it down. Yeah.
24:38
Uh I think it's just very hard to process this idea of you know having you know this sort of scaling scaling these superhuman AI researchers that are copying their own thinking at 57 times you know human speed and then just compounding on each other. Yep.
24:57
Uh it's it's almost inconceivable.
25:02
you know, there's there's scenarios in this model where, you know, Open AI is getting to hundreds of billions of revenue a year, being valued um you know, becoming I mean, and and to be clear, they use the example open brain, not open AI.
25:17
Um but they're just using that open. Yeah.
25:20
And and was involved in a lot of the the drama surrounding their um NDAs and and clawback non-disparagement agreements.
25:31
Um but yeah, in this scenario, they're they're putting Open Brain at a $5 trillion valuation um by um what is this?
25:38
Time to go long, I guess, in the short run.
25:40
So maybe enjoy two years of really great appreciation and then it's all over.
25:44
The great irony of of Masa like being right, but then the world ends. Oh my god.
25:51
Uh I liked how Darkh summed it up.
25:51
He said, "Agree or disagree with the ending.
25:54
You'll learn a ton by tustling with the parts of the story that you disagree with.
25:58
So much AI discourse is just gossiping about what model is coming out next month.
26:02
Almost nobody is making an effort to zoom out to the whole thing and absolutely no one has done it to the quality of this team.
26:08
Uh the team is a team of forecasters with amazing records who have thought deeply about every layer of the stack from compute growth to takeoff models to geopolitics. And I agree.
26:17
Um and uh you know as I think about the the the ramp to super intelligence I just think about ramp. com. Time is money. Save both.
26:26
Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place.
26:31
Uh it's basically a super intelligence in your CFO's Chrome tab. That's right. We love it.
26:36
We've talked about ramp safety before. Yes. Uh what's your doom? Ardoom.
26:44
What's your room scenario?
26:44
Well, I like that Bryce Roberts was on the timeline uh posting about his fitness.
26:49
He says he's a full stack VC and he's working on some machine.
26:53
got the yellow light maxed out at at 100.
26:57
I wonder what machine that is. Um I'll have to ask.
26:59
We got When is Bryce coming on the show?
27:02
Yeah, we got to get him on the show.
27:04
I'm going to text him right now. Get on him.
27:04
Uh in some other news, Hershey's bought Lesser Evil.
27:09
Uh they were hoping for a It's so funny to go from AI 2027 to talking about popcorn snack acquisitions. Yes.
27:18
Uh but uh but it totally possible that uh the AI over time, you know, realizes that uh you know, some mechanism to consume popcorn for energy to power the compute necessary to uh exterminate humanity.
27:33
AI researchers currently they need to eat. They do.
27:34
It's the it's the it's the energy input to the That's right.
27:39
You know, Andre Carpathy needs needs.
27:41
But anyway, so uh yeah, Lesser Evil sells for 750 million.
27:44
Their uh whatever investment bank they they had been working with had been putting out a bunch of articles over the last year being like a billion.
27:52
They think they're going to be at around a billion.
27:54
So clearly they wanted a billion, but um uh ultimately still a great outcome.
27:58
You had some backstory on this.
28:00
Apparently it had not been working so well at one point in some some finance brother. Yeah. Yeah. Yeah.
28:06
a Wall Street guy bought the company out of distress, turned it around, grew it a ton, and then wound up uh selling to Hershey's.
28:14
Uh, and I mean, it's a pretty straightforward product, organic popcorn. What's not to like?
28:17
Uh, but they've clearly uh scaled it very well, figured out the manufacturing, the distribution, and done all the the the schle that's required to get a CPG business really humming.
28:28
And then eventually, you know, Hershey takes a look because, hey, they're making a couple hundred million dollars in sales.
28:35
and it seems like it's growing, growing, growing.
28:36
And Hershey's obviously in the business of building a portfolio.
28:38
Their strategy is the healthy halo portfolio.
28:42
And they have a number of acquisitions in there.
28:43
Uh hedging against Cocoa Prices.
28:46
They also bought Sour Strips from Max Tuning, I believe. Um what else is here?
28:52
Well, if you want to stay healthy, uh get Nate sleep. Go to eight. com.
28:56
Nights that fuel your best days.
28:58
Turn any bed into the ultimate sleeping experience.
29:00
How'd you do last night, John? Sleep. Uh, probably okay.
29:02
I got to bed pretty early. Eight sleep.
29:08
Um, I got a 97 and that is 94.
29:12
My routine was a little off. Yeah. Yeah. 94. You got 97. You beat me again. But we're dialing it in. Yeah. Yeah.
29:20
People don't realize how seriously we're taking sleep. Very, very seriously. Very seriously.
29:25
Like, it's actually outside of doing the stream, it's it's one of my top three priorities. Y outside of my family. my family's well-being.
29:32
Yeah, that's what you that's what you always say. Family third. Work, sleep, family. Absolutely not. Family first. Of course.
29:42
Uh Sheil Monot has been on the show before.
29:44
He says, "Lost in the trade war, but this order could be good.
29:46
Better to make the US strong by investment using red tape to production rather than protectionist BS.
29:52
The office will assist investors in navigating US government regulatory processes efficiently, reduce regulatory barriers, increase access to national resources, facilitate research collaborations with national labs, and work with state governments to reduce regulatory barriers to and increase domestic and FDI.
30:07
So, uh the the uh the the I guess uh there's an executive order establishing the United States investment accelerator.
30:16
And so, that's that's maybe some silver lining in a lot of market chaos.
30:20
Uh should we go through some Joe Weisenthal posts? Yeah, we should. He says, "Uh, wow.
30:25
This is our version of markets in ter turmoil."
30:27
It's just whenever he's in all caps, you know, something's happening.
30:32
Uh Joe says, "Intelt TSMC tentatively agree to form chipmaking JV.
30:36
Intel execs concerned deal may cause mass layoffs from the information."
30:41
Uh this is very interesting because uh we've been talking about Lip Bhutan coming into Intel.
30:46
What is going to change with Intel?
30:48
a partnership with TSMC wasn't at the top of our list.
30:51
We thought that there might just be a split.
30:53
That's been kind of the the normie take.
30:54
They're clearly thinking out of the box and Lip Bhutan is figuring out how to u move more stuff through um through uh through TSMC.
31:05
Um let's do one more ad read and then we'll move on to our first guest of the day which I am incredibly excited about.
31:12
So really quickly, we got numeral sales tax on autopilot.
31:13
Spend less than five minutes per month on sales tax compliance. uh go to it's numeralhq. com correct? Yep.
31:19
And uh very important if you're selling SAS or selling e-commerce products, you need to be uh paying your sales tax on time with as little of a headache as possible.
31:29
So check out Numero five minutes a month. It's that easy.
31:34
And we will come back to the timeline, but we have a whole slate of guests coming into the studio and our first one is here now.
31:40
So welcome to the show, Morgan. How you doing? Nice to see you guys. Thanks for having me. Thanks for joining. What's going on?
31:46
Are you the uh are you the calmst man in America?
31:50
I feel like you're just built for for weeks like this.
31:52
I I I actually have a picture from March of 2020 during the COVID meltdown where I was sitting I I took a picture of it.
31:59
I'm watching Twitter and I have a blood pressure cuff on monitoring my blood pressure at the time.
32:05
So sometimes I have a veneer of calmness, but like I'm So here here's here's the disconnect. I think it's important.
32:11
I watch markets every day. I have for 20 years.
32:13
I think they're fascinating. I watch the ups. I watch the downs.
32:16
I've been glued to Twitter for the last 72 hours, but it never impacts how I invest.
32:19
I think that's what's important.
32:21
So, I worry about the economy.
32:23
I watch what's going on in the last two days with a sense of shock and dread, but it's not but I'm not but it's not going to change how I invest.
32:29
And I think it's only dangerous if you are glued to markets and you're like frantically buying and selling at the same time. Yeah.
32:35
Do you think that there's any like I I feel like there's kind of a barbell strategy where you can either, you know, not let the whims of the market dayto-day swing you uh and you can take a much longer view or you can actually be that trader and know that yeah, you are going to be the one trading dayto day and maybe you go all the way into like the high frequency world.
32:58
Is there is there just like a messy middle or does it just is it just like an individual asset manager just needs to find like where are they uh best aligned and and and what kind of uh what kind of lifestyle do they want? guess.
33:11
I I think it's it's probably true that a lot of people have a gambling itch, like this gambling bug that that has to be itched.
33:17
And for those people, if you tell them, "Hey, dollar cost average into index funds and leave it alone." They're not going to.
33:22
They're just like, even if that's good advice, they're not going to do it.
33:25
And for that person, if you can convince them to say, "Hey, can we put 80% of your money in index funds and then this 20% you can go nuts with. You can trade shitcoins. You can go crazy.
33:35
You can do anything you want with it."
33:36
that that is it seems like bad advice, but it's probably the right advice for that person.
33:39
So, I I've always been a fan of like you have to pick an investing strategy that works around your unique personality.
33:45
And a lot of people like everybody, me, you, everybody has personality quirks that are not perfectly rational, but we have to just accept them as part of who we are.
33:53
So, I'm I'm I'm not one to judge people who are trading and going nuts and having fun in markets as long as it's within reason and it's just like a small portion of their net worth.
34:02
Like, don't don't do that with your kids college money, you know? Yeah.
34:05
Have you thought about, you know, one of the benefits I've felt in my career of having uh consistently having, you know, the majority of my quote unquote net worth spread across, you know, maybe like 10 or so private companies, you know?
34:20
Uh the benefit is like I just don't think about a lot of them that much, right?
34:24
It's just like I'm not worried if it goes up or down.
34:26
You know, sometimes you get an upound and you're like, "Cool, it doesn't really change my life in the moment."
34:31
And then if the market's crashing uh you know you're you're not getting mark daily marks right so you're not thinking about it.
34:38
Uh in my view like every asset that you have that's being marked you know constantly is a potential source of distraction.
34:46
Do you worry about, you know, every new generation coming uh coming online, becoming an adult at a time when they might have a memecoin, an NFT, you know, Nvidia calls, and then they're sports betting at the same time.
35:00
And it's like how how do you actually like create value in the world and like focus on the right things?
35:04
I'm sure when you you were 22, I'm sure you had a brokerage account or, you know, I I'm curious like even how you were investing uh at that time.
35:13
Uh but you certainly wasn't that like you know you're seeing every mark constantly and I and I do I I personally worry about what what that does to people's sort of attention and and um long-term thinking.
35:25
I think it's it's easy to look at at today's markets and say it's just a casino.
35:30
Everyone is is betting on this and zero day options and day trading.
35:35
Vanguard brings in more money every month than Robin Hood has in total.
35:40
And so like the idea that like oh it's all a big casino like no the huge vast majority of money is invested from people in their 401ks that's it's taken out every other Friday and every paycheck they're going to leave it they forgot their password it's going to sit in there for the next 40 years which is like a great way to invest.
35:55
So what we see on the surface is always the craziness but actually beneath it is literally hundreds of trillions of dollars just invested diversified for the long term.
36:04
That's the vast majority of it.
36:06
And so I I think that's the case.
36:08
It's definitely gotten easier to be crazy in markets than it was.
36:10
You mentioned like when I was younger there was there was Erade and and Charles Schwab like people go in, but you even had trading fees like to place a trade costs 15 or 20 bucks.
36:19
And when you're when you're 19, that's enough to slow you down.
36:23
And so when I started investing, yeah, I I started out day trading.
36:26
Um but it was it was totally like, hey, it's going to be 20 bucks in and 20 bucks out if I'm placing a $100 trade.
36:32
Like that's that's a lot of it to just getting sucked up by trading fees.
36:36
So, it was a it was like a very effective speed bump.
36:38
That that's a good thing.
36:40
And I think it's it's hard to push back against uh free trading.
36:41
Like lower costs, that's great.
36:44
But it removed a speed bump that incentivizes a lot of really bad behavior.
36:49
Uh it we've been hearing about this idea that like maybe we're moving into like a kangaroo market or I mean the story that I tell of like the last 20 years is like.
36:58
com bubble big crash slow buildup housing bubble big crash slow buildup tech boom then we get COVID we get SVB and we're up and down and up and down.
37:11
Now we're having tariffs and and Trump pump and Trump dump.
37:15
Um, does it feel like we're moving into a permanently new regime of higher volatility because of some of the some of the uh factors that you mentioned or is this temporary and maybe it's smooth sailing in the future?
37:28
Well, I think you what you mentioned there that's interesting is you feel like it's been like that for the last 20 years.
37:33
I would say it's been like that for the last 200 years.
37:35
Whenever we have market data, it's always been like that.
37:37
So, yes, what you just described for the last 20 years is accurate.
37:40
Before that, there was the the SNL crisis in the 1980s.
37:45
the inflation in the 1970s, there was a boom, like the 60s were a wild boom period, World War II, the Great Depression, like it's always been nuts.
37:54
There's never been a period of smooth sailing.
37:56
And the periods that we associate with smooth sailing, like the 60s and the '9s, we know in hindsight were just the precursors to a giant bust that happened.
38:04
So, every time in hindsight that we're like, man, why couldn't it have been like that?
38:07
Like, actually, that time was a terrible time.
38:09
In hindsight, that was what you wanted to avoid.
38:11
And so it's never going to be a case that it's more that it's it's it's smooth sailing.
38:15
Like it's an inherent feature of capitalism that you have volatility and booms and busts. It's not fun. It's not enjoyable.
38:21
But the absence of that is even worse.
38:23
I I wrote about this in in my first book.
38:28
There's a great economist guy named Hyman Minsky who I I'll say it very quickly came up with this idea called the financial instability hypothesis which was the more stable the economy is, the more destabilization it's going to cause.
38:40
Because when the economy is stable, people get optimistic and when they get optimistic, they go into debt.
38:45
And when they go into debt, you're going to have a crisis eventually.
38:46
So, it's like the fewer recessions that you have, the bigger the next recession is going to be.
38:53
Is it possible though going back to John's original question that uh if if markets uh are are trading in part due to sentiment how people feel about the economy and the internet accelerates sentiment because if I feel some way I can go post about it on X or I can send something to my group chat or I can log on to Twitter and uh like that sort of acceleration of basically like sentiment just moving around the world constantly.
39:22
constantly. Can that cause the sort of like the phrase we've said it on the show a bunch in a joking way but like the bare market or bull market or the kangaroo market where things are just like you know it it the the line over time uh you know was like slower right
39:38
of these cycles and then the internet comes along and gets you know basically like full adoption and then you just have this sort of uh this type of I'm not showing it on the on the camera properly but this sort of like massive up and down um And that's like the new normal. I think it it it makes sense to
39:54
I think it it it makes sense to assume that because the information age is what it is that these things happen much faster cuz as recently as the 1990s, everybody's access to financial data was Lewis Roheiser's Wall Street and the Wall Street Journal and CNBC like in its very early days and that was it.
40:11
So everybody more or less had the same sources of information.
40:13
We were all listening to the same thing just like back in the 60s everyone's source of news was Walter Kronhite.
40:18
And today I could obviously could not be more opposite than that.
40:22
So when a news comes, it's just gonna happen much much faster.
40:26
One example of this is during COVID, which you know maybe prior to this week was the biggest economic shock of of our lives, the market bottomed two or three weeks after the first bad news hit like very very quickly.
40:37
Whereas if you look at the like like the economic crisis of the 70s and the 80s, some of them played out over a decade.
40:46
argument that it's not bad news or even more volatility.
40:49
It's just happens like we process the information so much faster and get these things over with in 3 weeks than live through a decade of stagnation.
40:58
So maybe that's that's the upside of it.
41:00
Yeah, it does feel like everything's kind of accelerating.
41:02
Even just the last I guess the last eight years and going into 12 years like we've been in one term president, one term president and so there's been more oscillations there versus a two-term president gives you eight years of more stability. It's just interesting.
41:16
What immediately comes to mind when somebody says uh five simple words, short-term pain, uh sorry, six, short-term pain, long-term gain.
41:26
How does that make you feel? Nothing's good.
41:30
Nothing's good come is going to come from that.
41:32
Wasn't it Xi Jinping just like a couple of months ago with all the youth unemployment?
41:36
I I think the phrase he used was eat bitterness.
41:39
That's what that's what the youth should do is like you should just eat the bitterness that you have and enjoy it.
41:44
Nothing's going to good from is is nothing good is going to come from that.
41:47
Of course, there is logic to the idea of like invest in the short term, sacrifice in the short term for long-term gain.
41:53
I'm not sure that's what's going on today with what's happening today.
41:58
I I I I don't think this is seven dimensional chess trying to get some sort of long-term plan.
42:01
I think this is this is that's that's a different topic.
42:05
And I I I think there's a difference between, you know, investing for the long run and like foregoing consumption so that you can grow your money and like, you know, hitting your kids with a belt to instilled grit in them.
42:17
That's that's not short-term pain for long-term gain.
42:20
So there's there's there there's a balance that needs to be struck here. Uh what do you think?
42:24
I I posted an image earlier that I saw you like hopefully you recalled it and it was Trump and she picking up pennies in front of a of a steamroller that was being driven by Sam Alman.
42:35
And the joke was basically like you know we spend a lot of time talking about AI.
42:39
about AI. But we obviously like follow we we try not to talk about politics on the show but we talk about policy and and you know we've covered the trade war quite a bit and uh especially today in the context I don't know if you saw AI 2027 that sort of interactive um you know website and forecast uh but it but it feels like the sort of uh our sentiment generally is that you know we're arguing over these sort of
43:03
political issues tariffs trade wars uh and you just have like AI looming in the background like, you know, potentially going to make none of this, you know, matter at all because if if if you know, bad tariff policy can, you know, hurt
43:17
the market by, you know, or hurt the economy by 15% but AI accelerates everything at at sort of this like inconceivable rate, then it will just be like, you know, picking up pennies in front of a steamroller. But I'm curious
43:28
But I'm curious how you think given that you know you love the p public markets but then you're also a private markets investor and and I'm I'm I'm just curious how you think about um investing you know with this uh big unknown on the horizon.
43:41
I think it's not uncommon historically where an economic crisis and unbelievable world changing innovation is happening at the same time.
43:51
So the 1930s and 40s it was great depression, World War II, and by the way, airplanes, nuclear energy, penicellin, all of this like world changing.
43:59
But a lot of that was drowned out by the obvious economic and and war calamities that were having in the early 2000s. It was. com bust September 11th.
44:09
And by the way, this internet thing truly is changing the world every single day beneath our feet.
44:15
And so it's easy to ignore that technological change because it's drowned out by the rest of the news.
44:18
But it it's not uncommon for it to happen at the same time.
44:22
And a lot of times that new technology and the economic malaise, collapse, recession, whatever you call it, is related to each other.
44:28
And so it's I I think that probably adds to a sense of uncertainty right now that not only were we going through the tariffs in the last 3 days, but a lot of people very rightly have woken up in just the last couple months to what AI might do to their jobs.
44:43
And a lot of these people are people who for whom 18 months ago truly consider their jobs and their careers bulletproof coders, tech workers who, you know, were making half a million bucks at Meta and they're they're c and they they they could not fathom a a a world in which they could be deemed somewhat irrelevant.
45:00
And I think that's that's not uncommon during these periods as well.
45:04
Like there's there's very rarely positive upheaval that doesn't come along with a lot of negative upheaval upheaval at the same time.
45:13
Can you talk just a little bit about how you're personally using AI?
45:16
What what what what tools and models are working their way into your daily stack, if anything?
45:22
Mostly it's just kind of fun and amusement.
45:25
Um, and in terms of work, I I' I've tried to do a few things.
45:30
I've uploaded book chapters or articles into ChatGpt and and and several other models and just said, "Hey, give me some feedback on this." Mhm.
45:38
And I found that it's pretty good for what I would call micro feedback of just like, hey, you probably need a comma here.
45:45
It's not that good for macro feedback of like, hey, was this chapter good?
45:49
Like, did it make any sense to you?
45:50
It's like so far it's not that great for that.
45:52
I'm sure that'll change and there's probably other models that are better at that.
45:55
Um, and so it's it's it's it's pretty good.
45:58
I I for for for writing for for my profession, you know, it's going to differ for everybody.
46:02
Um, I I I use it quite a bit as like a as like a thesaurus of like I I'll be st I'll have writer's block on a sentence and I'll I'll put in my partial sentence and say finish this for me and that it's actually pretty good at that.
46:15
So it's it's good at all these like little things for writing.
46:18
It's obviously going to be this is such a a a a dumb take like an obvious take that the people who are going to do the best are the ones who use their personal skill and then use AI as a as a tool to leverage it rather than the ones who are using it to replace it.
46:31
So use like if you're writing and you're writing your own sentences, you're doing it yourself and you're using AI to enhance it.
46:38
That's that's a that's a huge boost. Yeah. Yeah.
46:40
The the the book feedback thing is so interesting because I feel like whenever you produce any content, you send it to your friends, it's always hard to get authentic feedback and almost you almost need to like let it simmer and then see if they come back to you unprompted and text you, hey, I just actually read the book all the way through and I love this part.
46:59
and you know that you didn't prompt them to hey you got to do this as homework and you're doing it as a favor.
47:04
I I could not agree with you more. Yes. Yeah. It's tough. It's tough.
47:08
Um are our uh somewhat related.
47:11
I mean you've done a lot of uh a lot of thinking and work.
47:13
I recently Jordi and I have kind of come to this kind of obvious conclusion that like there are increasing returns to scale for picking something and just making it your life's work and instead of thinking in some short term think long term.
47:30
And this seems like kind of obvious but it's something that I think we both wish we knew earlier.
47:33
Is there an interesting like axiom or mental model or framework that you wish you had discovered earlier in your career or life?
47:41
I don't know if I if I wish I had discovered it.
47:44
Maybe this is a this is a very boring example, but I I like to learn with my eyes. I read.
47:48
I'm not that much of a podcast guy, and I'm definitely not an audio book guy.
47:52
It it what what struck me about two years ago is I realized the audio book version of The Psychology of Money was selling twice as many copies as as the physical paper version.
48:01
And that blew my mind because never in a million years have I even thought about listening to an audio book, but a lot of people do.
48:07
And that also opened up my my eyes to podcasts as as you guys have figured out.
48:12
I'm not I'm I'm not much of a podcast guy.
48:13
A little bit on planes, but not regularly because I like to read. But I'm unique. I'm rare in that.
48:19
Most people are like, "Oh, forget about reading a blog."
48:21
Like, I am podcast all day long.
48:23
And so, I was a little bit late to that game just because it's not what I do personally.
48:28
But it's it's so clear that books, blogs, all of that, etc.
48:31
, is is being overtaken by people learning with their ears uh in in in podcasts and videos.
48:38
That's so that was that's been like a change in my thinking.
48:40
And the people who did figure that out early on and started podcast 10 years ago, Patrick Oaughnessy, those kind of people are crushing it now. Yeah.
48:46
Do do you think that um uh in the future there will be just just more consumer choice in like act the actual instantiation of ideas and and context like it'd be fairly trivial with AI tools today to if I wanted to instead experience invest like the best as a book I could probably wire up you know a whisper API to transcribe every episode.
49:13
I think Patrick already puts out transcripts, but I could transcribe it, send it off to the printer, get it mailed to me, and I could and I could very easily read that and it's and vice versa, too.
49:21
You know, even if an audiobook doesn't exist, you can have an AI read it to you.
49:24
Um I do you think that that choice will live on the consumer side because right now it's living on the creator side and you have to decide I want to do an audio book and I have to because of I'm gonna sell twice as many.
49:36
Um, but in the future I I could imagine that you have the choice to read anything no matter what the original author intended and and is something sacrificed by uh this isn't as the artist intended.
49:48
Yeah, two things come to mind.
49:50
One is Google's notebook LM like lets you do that.
49:52
You can upload a PDF and say make a podcast out of this and it's very very good. It's amazing. It's such a cool tool.
49:58
The other example is my friend I think he was on your show recently David Senra.
50:01
I first came across David Senra when I read a transcript of a of a podcast that he did because I'm not that much of a podcast guy and reading the transcript I was like this guy's absolutely genius. This guy's brilliant.
50:13
I have to go start listening to his podcast.
50:14
That's one of the few podcasts that I always listen to on planes.
50:16
And so I I think that that still does exist.
50:18
Most of the big podcasts out there have transcripts that they publish.
50:21
And if you're like me and you do want old school and you want to read, that's that's most of what I do out there.
50:26
Are you a Kindle, iPad, printed it out?
50:29
What what's your what's your playbook for reading?
50:31
I I I've gone back and forth over the years.
50:34
I keep I always toggle back and forth.
50:36
Like I I always prefer a physical book. I like the smell. I like the feel.
50:39
Like that's And I think there's a lot of evidence that most people learn better.
50:42
They remember better if it's a physical book.
50:46
But I love the ability to highlight and search in Kindle.
50:48
That is so effective and important to me.
50:51
And there there are some apps like Read Wise that let you highlight in a physical book, but it's so much easier in Kindle to have just highlight a line and then you can come back to it later.
50:59
Particularly for me as as a writer, I want to highlight passages that I can use as prompts for my writing in the future.
51:04
So to have it all right there is so great.
51:06
I also love the fact that when I travel, I have 400 books on my Kindle to pick from on the plane versus taking one or two and hoping that I like them.
51:14
And so I it's it's always hard for me because I absolutely prefer physical but I always drift towards Kindle. Yeah.
51:22
Uh have you been tempted go going back to writing and and uh have you been tempted to write a book to help people understand uh how AI will be adopted you know broadly in our world and how it will sort of transform things.
51:40
sort of transform things. I I I'm assuming there's like a bunch of lessons from same as ever that we can sort of apply um to understanding this technological trend, but when I think about the best content that's available
51:54
on artificial intelligence today, it's not the kind of thing that, you know, uh somebody in the airport is going to be walking and and sort of like, you know, they're not going to pull a great blog post, uh out of the air, you know, and read it on the plane, right? So, it's
52:07
So, it's like how do you how do you get people to sort of like understand uh the the change that's happening now and and the coming change and does that and does like kind of helping people understand that excite you or do you not feel like you even have the clarity uh yourself?
52:23
I definitely feel like I do not have the clarity myself.
52:29
And my my take on this too is I'm not sure anybody does because the history of every big innovation is looking back in hindsight, virtually nobody got it right.
52:38
And even the most diehard optimists underappreciated how much change it was going to bring.
52:43
My favorite example of this is when the Wright brothers created their plane, they virtually they only marketed it to the US Army because they themselves, the Wright brothers did not see much commercial use for the airplane.
52:53
They knew you could strap a machine gun on it and drop bombs out of it and then the army would like it for that.
52:58
But the idea that the Wright brothers themselves foresaw Delta airlines like traveling like absolutely not not in the slightest.
53:05
That was true for cars, that was true for computers, it was true for the early internet, that even the pioneers who were the crazy wild maniacs underappreciated how much change it was going to bring.
53:14
Because every new invention, it's not what you create, it's what other people like manipulate like like what you do.
53:20
I remember one example it was um for Photoshop.
53:22
A lot of the the the the engineers at Adobe when they make new tools for Photoshop, they have no clue what artists are going to do with those tools, but they're like, "Let's just find every way to manipulate an image and someone else will figure out what to do with this because you can't foresee what other creative people are going to do with your invention."
53:40
And that's why even, you know, Sam Alman has no idea what AI is going to be in 20 years. That's not a put down.
53:46
That's always true for all new technology.
53:48
Can you talk a little bit about uh entrepreneurial storytelling?
53:51
It seems like it's an incredibly valuable skill, but then some founders get maybe lost in the sauce and wind up just focusing purely on storytelling and then that needs to be handicapped.
54:01
Um what what advice do you have for founders uh when when they're when they are trying to tell kind of that definitive optimist vision of the future without seeming not credible?
54:11
I think I think we've actually gotten much better in the last couple years at separating storytelling from just charlatan [ __ ] And like there there was a period when we w like we were not very good at that.
54:25
Probably you know late late 201s early 2020s we were we were not very good at that.
54:30
And there are a lot of people who got away with a lot of things that they should not have.
54:34
But I think our our threshold for BS has dropped as as an industry in in in a very good way.
54:40
And people can see through things very quickly.
54:42
And so it's always going to be the case that, you know, Steve Jobs was the best storyteller and he was the opposite of a charlatan, the the the polar opposite of a charlatan.
54:52
And I I I I definitely feel like there is a world where yes, you have to be a good storyteller, but there's a much stronger sense of put up or shut up.
55:00
Like you have to show me the numbers of what you're doing.
55:01
You can't just keep the story going forever.
55:02
So that's that's a great thing.
55:06
I have this uh half joking riff that I I I call it Kugan's law and the idea is uh the value of coinages is increasing in a in a algorithmic feed environment and compressing these big ideas down into pathy two-word phrases has uh disproportional returns to the actual popularization of these ideas.
55:33
So you think about uh Lulu Murvy with going direct that encapsulates a very big idea boils it down very well.
55:40
Uh Bology has the network state.
55:43
Uh Andrew Norwood says American dynamism and and just creating these like pathy phrases seems to be increasingly valuable.
55:50
Do you buy my argument that there is a trend here?
55:56
Has this always been the case?
55:56
And what is your take on folks who not just write and produce thought leadership broadly, but also really focus on on coining phrases and boiling their ideas down to their, you know, essence.
56:10
I think it's definitely been true, but I think it's always been true.
56:14
The the the golden ages of advertising was the 1930s and the 1960s.
56:18
1930s was kind of the or 1920s was kind of the birth of advertising, and the 60s was like the explo like the post-war explosion of it.
56:26
And that was like the the David Oglevie periods of just like they were they were better back then at creating little piffy phrases than most of us are today.
56:35
Like there's more people doing it today, but some of the the marketing like the the old like Mad Men style marketing from the 1960s was so ridiculously good in those in those magazine ads.
56:43
Um, I I think it's I think if you wanted to argue that people have shorter attention spans today, so the value of a piffy phrase is more because they're not going to give you the time a day to read through 10,000 words to get to your point is important.
56:55
But even in a in a 50,000word book, like most people don't remember books, they remember a couple sentences from their books.
57:02
So even if you're like, "Oh, I love that book.
57:04
I read that book 10 years ago. Changed my life. Loved it."
57:06
You probably remember like three or four sentences.
57:08
And it's those like those turns of phrase that are memorable that you can that that stick with you.
57:14
So I've I I've always thought that's the goal for any book or like any book chapter is even if it's a a 5,000word chapter, what you want are three or four sentences from that that people will remember and will stick with them because realistically that's the best you can do for actually like changing somebody's mind. Yeah, that makes sense.
57:30
Uh on on the other coinages, uh we we I have Kugan's law.
57:35
We've been working on Hayes's paradox, Jord's paradox or Jord's law.
57:38
That's where uh the the more funny you think something is, the less likely it will be funny sort of broadly, right?
57:44
So, you post something on X and you think, "Oh, this is this is like the funniest thing."
57:50
This is my best work ever and then it completely flops.
57:52
And I wanted to know uh is there an idea or maybe a chapter from your work or something you've put out that you think never found its footing but you still it's you know it's one of your babies.
58:06
I I would I would have to think about that.
58:08
But one that really comes to mind, somebody else tweeted this the other day but I thought it was so perfect and everybody knows this.
58:12
The more time you spend writing a tweet, the lower the odds that it's going to end up as a banger.
58:18
And and and the reverse is true.
58:20
If you sit there and you're like, "Let me get creative and and like word smith this, it's gonna suck."
58:24
But if you're just in the shower and you're like, "All right, screw it. Let me fire this off.
58:28
It's going to be amazing." That's always the case.
58:30
Everybody has experienced this.
58:32
I think it's true for writing as well, like writing longer things, that good writing uh is very easy because uh if if your idea is right, it's easy to articulate it.
58:42
And if you get writer's block, the reason you have writer's block is because your idea sucks and it's wrong.
58:46
and that and that's why you're you're struggling to articulate it.
58:50
So, I think the harder if if writing is hard for you, you should take a step back and say my my my whole thesis here was probably wrong.
58:56
If it was good, it would spill out of me. Yeah.
58:58
Is that true for investing, too?
58:59
You hear about these legendary deals?
59:01
Uh they had drinks, they did some napkin math, and it was the best investment ever.
59:06
The the deal that they were in the DD room for sending docsends back and forth, like it was just a mess.
59:14
Um, is there something more broadly applicable to this idea of like simplicity breeds genius or or like you know um inspiration?
59:22
I think what's true especially for very smart educated people is that the harder you work at something the more opportunities you have to fool yourself.
59:30
So, if you're very smart and you have a a 140 IQ and you went to Harvard and you work at Goldman Sachs and you spend 6 months doing due diligence on this deal, you are going to convince yourself of whatever you want to convince yourself of because you have so much mental horsepower that you can create any model, come up with any theory that justifies what you want to see.
59:47
And so, it's like the harder you work, the more likely that your final result is going to be fooling yourself.
59:54
I've I've seen that I've seen that too.
59:56
you know, a challenge as as a if if you're a founder or an investor, you're probably pretty convincing.
1:00:03
And you can be so convincing that it can be your Achilles heel because you can convince otherwise smart people that doing something is good.
1:00:09
And you you deliver such a such a like a good uh you know, sort of like a series of statements to get other people on board with that that people are like, "Okay, like I think that's a good idea."
1:00:23
And then in hindsight, you look at it and you're like, "Well, that was a terrible idea.
1:00:25
That made that made sense."
1:00:26
I think what's what's even more true is not only do you fool other people, you fool yourself. Yeah.
1:00:29
And I I think it's true in investing that you need just enough IQ to where you can understand the important stuff, but not so much IQ that the the the simple stuff bores you.
1:00:39
If the simple stuff bores you, you're going to you're going to try to over complicate it in a way that's going to fool yourself.
1:00:44
And I I don't have the intelligence or the IQ to blow myself up in a derivative strategy.
1:00:49
I'm not smart enough to do that.
1:00:51
So I just have like a very boring basic dollar cost average into index funds because I've been blessed with a low enough intelligence that that's as far as I go.
1:01:00
But I think that's that's a huge inet big advantage. Yes. Exactly.
1:01:03
I was talking to this investor not too long ago and I was like uh and he he's a very successful professional investor and I where he asked how I invest.
1:01:11
I'm like I I dollar cost average into into Vanguard funds and then I go to beach to the beach with my kids and that's that's it.
1:01:18
and and his response was, "I'm so jealous of that."
1:01:20
Because I think he was so smart and so educated and so credentialed that he cannot do that.
1:01:26
It's impossible for him to do that even if he wanted to. Yeah.
1:01:28
Uh can you talk about hard work specifically?
1:01:31
We were having a conversation with uh David Senra earlier this week and I think he brought up the example of how Michaelitz at the end of his career said he could have worked like 10 10 or 20% less hard and had the same result.
1:01:47
And this is something that John and I talk about a lot.
1:01:51
We work really hard right now.
1:01:51
We get to the office, you know, by 6 a. m.
1:01:55
Uh we uh are working until we go to bed.
1:01:59
We spend time with our family, but like very very fullon.
1:02:01
Um, and it's top of mind because we both have, you know, young children between, you know, basically 6 months and and five, and we want to be able to spend time with them.
1:02:12
And so I feel like it's this topic that's constantly on our minds of, you know, wanting to live up to your potential, uh, yet wanting to maximize, you know, time with family in these sort of, uh, really important years. It's tough.
1:02:27
One thing that comes to mind here, there's always the criticism that we spend, I forget what the stat is, 30% of health care spending on the last month of people's lives, whatever that stat is.
1:02:37
And whenever that comes up, you're like, "Yes, but you don't know when the last month of your life is going to be."
1:02:41
Like, it would be great to stop spending money at the end, but you don't know when it's going to be.
1:02:44
So, when people talk about, "Oh, I could have been just as as successful if I worked 20% less."
1:02:48
Yeah, but you don't know which 20% of your work was was was wasted or not.
1:02:53
It was always a case back in the day when I was writing a lot.
1:02:55
I would write two or three blog posts per day.
1:02:58
So let's say I was writing uh uh 600 to a,000 blog posts per year.
1:03:02
This is like 10 years ago.
1:03:04
I in in one year if I wrote 600 blog posts, I would look back and say I'm very proud of five of them.
1:03:11
Five of them were really good.
1:03:11
And the truth is that when I was writing them, I did not know which which one of those five was going to be. I had no clue.
1:03:18
So I feel like you had to put in a ton of work to get some smaller level of success out of it.
1:03:26
And and so I think that's that's usually the case.
1:03:29
But to your point of like kids and balance and work and whatnot, I I experienced that too, I think the way to think about it is like this is a a a Daniel Conan quote.
1:03:37
He's like, you need a very well-c calibrated sense of your future regret.
1:03:41
What are you likely to look back at 50 years from now and regret?
1:03:45
And a lot of people including me and and and probably you guys whatnot might look back and say, "Man, I had a lot of career opportunity and I wasted it." That would be a regret.
1:03:55
And of course, I would also regret looking back and saying, "I didn't spend enough time with my kids." That that sucks.
1:04:00
I There's this one point that I used in Psychology Money where it was a study from a gerontologist.
1:04:05
His name was Carl Pillmer, and he studied 1,000 elderly Americans.
1:04:09
Most of them were 90 to 100 years old.
1:04:11
And he he writes in his book that of the 10,000 elderly people that he he studied, not a single one of them, not one single person looked back and said,"I wish I made more money."
1:04:21
Not a single one of them.
1:04:22
Every single one of them looked back and said, "I wish I spent more time with my family.
1:04:26
I wish I was nicer to my friends.
1:04:28
I wish I was more helpful to my community." That was universal.
1:04:31
And so I think of a lot of that that too of people who have more life experience than you and I do.
1:04:35
Like they have very different goals than you and I probably did.
1:04:40
They wish they had done things differently than you and I did.
1:04:43
Now, one of my main life goals right now at this phase of my life is I want to take care of my family, my wife and kids.
1:04:49
I I want to work hard and provide for them financially.
1:04:51
And so, when I'm out working and maybe not spending as much time with them, I don't feel guilty because I'm like, I'm fulfilling a purpose that is very important to me.
1:04:59
But it's always a balance.
1:05:01
I think a lot of people their kids turn 18 and go off to college and they're like, I don't I don't even know you.
1:05:05
I didn't spend any time with you.
1:05:07
And so I I I I have I have no firm formula for that, but it's it's it's huge. It's important.
1:05:11
Yeah, it's personal equation.
1:05:13
Well, thanks so much for joining.
1:05:15
This was a fantastic conversation.
1:05:16
Uh we we could probably talk for another four hours if we if we had the time.
1:05:21
Uh so we'll have to have you back on soon.
1:05:22
I wish that you had the the blood pressure monitor on all week.
1:05:26
Anytime anytime anytime it like you know ticks up or whatever say get on the show, let's let's talk it out.
1:05:31
in uh in Wall Street the first time you meet Gordon Gecko.
1:05:35
He's uh you know the market's up and he's taking his blood pressure.
1:05:38
Taking his blood pressure. I love it. It's iconic. It's an iconic scene.
1:05:41
Anyway, thanks so much for hanging by. This was fantastic. We'll talk soon. Appreciate it. Talk soon. You know, it's funny.
1:05:47
He was talking about if you're thinking about, you know, writing something too long or whatever.
1:05:51
So that right before we got on the show, I I said I posted, "Hey, dude, you should come over later.
1:05:56
We're going to be greedy while others are fearful." And it's at 800 likes. Let's go. I knew that was good.
1:06:01
I I burst out laughing immediately and I thought it was going to be great.
1:06:04
Uh we do need to get Jord's Haze Paradox popping on the timeline, but we will come back to that later because we have the co-founder of Honey in the building. Ryan, how you doing? Boom. Doing great.
1:06:15
Uh yeah, thanks so much for hopping on.
1:06:18
Uh I uh I think we have a mutual friend in John Wallin. Yeah, we do.
1:06:23
And uh and and obviously I saw your thread.
1:06:26
Um, could you give us just like a little bit of background on you, the company, and then kind of like what inspired you to write that thread?
1:06:34
And then I'd love to dig through it in great detail because it's a fascinating story and uh it's one of those narratives that kind of just goes out on the internet and grows and grows and grows and I think there's a lot of uh like we need to correct the record here and that's why I wanted to have you on. So, thanks for joining.
1:06:47
Well, I'm talking to you guys first.
1:06:48
So, uh thanks for inviting me on. Yeah, fantastic.
1:06:52
Like you said, I co-founded Honey uh more than a decade ago back in 2012.
1:06:56
Um for the first handful of years, we had a cool consumer product, but couldn't figure out how to make it into a company that investors would uh fund.
1:07:05
It's a browser extension.
1:07:08
Never has really been an attractive investment space. So, yep.
1:07:12
Um after a few years of grinding, we finally started to piece together enough enough of a user base that we got investment.
1:07:19
uh 2015, we kind of really started to figure out how to do the business.
1:07:24
And from 2015 to 2020, we just had a classic but insanely uh fun time riding a hockey stick of growth.
1:07:32
And in 2020, sold the company to PayPal. Yeah.
1:07:37
Um so as part of that acquisition, I stayed on at PayPal for a little while.
1:07:43
after that left at the beginning of 2022 even though I'd had a a diminished capacity before that but um formally left in 2022 and then uh a few days before Christmas this year all of a sudden out of nowhere there was a YouTube video accusing my former company of being a scam and uh it also pulled in
1:08:05
a bunch of creators who we'd spent over hund00 million uh working with to promote Honey I'm sure some of the audience saw our ads over the years and uh because of that it went insanely viral and immediately uh the narrative on the company I founded completely shifted. So it was a surprise um through
1:08:22
So it was a surprise um through the first evolution of the business model.
1:08:28
You said you were kind of hunting for product market fit.
1:08:29
Uh how does Honey actually make money?
1:08:33
How did it make money at first?
1:08:35
Has that revenue mix changed over the time that you were there pre or post PayPal?
1:08:40
walk me through just like the basics of the business and then we'll dig into the the what kind of the the the video is about. Yeah.
1:08:48
So, for the first few years, the business didn't make money and that was part of the the flaw in finding investors. Yeah.
1:08:53
Um, we thought maybe someday we'd figure it out and had a few hundred thousand users and organic growth uh on the company just from word of mouth people uh sharing this cool new coupon tool that automatically applied coupons when you're checking out and took a a painoint that everybody had experienced and made it really easy.
1:09:10
Um yeah, I mean I remember using retail me not back in like 20 must see 2008 or something like that and and you'd always have to oh I'm buying something control t new tab search coupons and Honey just baked that right into the browser made a ton of sense.
1:09:27
Um and so and so uh what was the first dollar into the business?
1:09:32
Like how did you make the first dollar of revenue?
1:09:34
I guess the first dollar of revenue didn't come until 2015.
1:09:36
So, let's launch the product 2012 2015.
1:09:39
Um, we pieced together kind of a rolling seed round of anybody that would take a flyer on this company with a couple hundred thousand users and maybe interesting but haven't really figured it out.
1:09:53
And we used that to hire somebody with a background in affiliate marketing.
1:10:00
marketing. And we had we being George and I co-founders of the company had thought that this might make sense because after all retail me not you just mentioned and other companies that's how they monetize is when you click on that retail me not link it's actually
1:10:15
affiliate tagging you at that moment in time and so you go to do that coupon search and whether the coupon works or not it's uh they're getting an affiliate commission on that and that's why there's the they hide the code and open multiple tabs and do all that stuff. So
1:10:27
So that was how it was and we're like, "Hey, we could probably monetize that way."
1:10:33
Uh, we George and I reached out to the affiliate world and they they basically were like, "You guys are a toolbar.
1:10:39
You probably are up to no good. Go away." And so we did.
1:10:43
Go away." And so we did. um we didn't realize that there had been some bad actor toolbarss in the space u immediately prior to that which was uh like surprised to learn but we went back to just building a cool product for consumers and then um when we hired
1:10:59
somebody with the background in that space what we came to realize is that the relationship side of affiliate marketing is how you get to the table in the first place uh to get that trust especially as a a new product and a toolbar or browser extension affiliated people call it toolbars. Um,
1:11:15
Um, before we go too much further, what what was the LA tech ecosystem or or was there really an ecosystem in that 2015 era?
1:11:26
Because I remember I graduated college in 2018.
1:11:28
And everybody was like, oh, LA Tech is real. It's a thing.
1:11:31
And they were like, Snapchat and Honey. Yeah.
1:11:35
But like there wasn't a lot of debt.
1:11:36
There wasn't a big bench there.
1:11:36
It was like, name the third company.
1:11:38
What's the third company?
1:11:42
I'd say very few people were even mentioning Honey in that conversation either.
1:11:45
We were pretty under the radar.
1:11:47
Um, we didn't do a ton of press and talk about what we're doing.
1:11:49
We we'd found a cool business and decided not to tell everybody that might might want to pivot to copy what we do about it.
1:11:56
Um, so but back to the affiliate piece of it and um, so we hired from within the industry and were able to have conversations and one of the things we realized pretty quickly is another way to save our users money was to offer them cash back.
1:12:12
And so we added a cashback loyalty program that we called Honey Gold um, in 2015.
1:12:23
And when we did that, we started to look a lot more like Ebates, which became Rockuten and the cashback model that was very familiar and comfortable to affiliate marketing um combined with the coupons.
1:12:36
And we still had a lot of education to do around what the incremental lift is of keeping somebody in the shopping cart like you talked about this journey that you had prior to Honey is you get to this box while you're checking out that's empty, says coupon codes.
1:12:49
It's effectively challenging your intelligence as a consumer on are you just going to check out or are you going to go find a coupon and uh it's inherently adding friction to the checkout process by doing that because either you're a little bit hesitant or uncertain or you're going off on this wild goose chase.
1:13:06
And we found that by keeping the consumer in the shopping cart, we actually drove incremental lift for the retail partners.
1:13:14
And over time, a bunch of them were able to use their own data to demonstrate that to themsel.
1:13:19
And u that's the core of what became Honey's business model.
1:13:24
So the first penny that we made and the last penny as far as I know is effectively affiliate marketing with a cashback program that we worked with that we rebaited that commission to the consumer. Yeah.
1:13:37
Talk to me about kind of the the steelman argument.
1:13:39
I've been on the other side of this because I've run e-commerce sites and I've seen Honey Codes come in and as an e-commerce owner, you're kind of like h like I understand paying the affiliate for, you know, the Andrew Huberman who like endorsed it and educated the consumer about it, but it's like if I already did all this work to get the customer into my cart, why am I paying Honey at all?
1:14:02
Like I know that the customer was going to go find a code, but you know, why why am I paying you guys?
1:14:06
am I paying you guys? uh talk to me about that conversion lift and like how you actually test that and justify that because I could imagine that there's probably some pent up like frustration amongst e-commerce sellers just saying
1:14:18
like ah I was always like paying a big pony bill and it it never really made sense to me and honestly I think a lot of e-commerce customers feel the same way about Google ads to be tr to be clear because they're like I was going to rank number one and I had to pay the Google tax. Uh how do you how did you
1:14:28
Uh how do you how did you how do you think about like the honey tax or any of those uh any of those claims?
1:14:34
Honestly, I don't I don't think it got to that point while we were running the business.
1:14:39
Maybe over time, we started to have more of that sensation.
1:14:42
Um, it wasn't the feedback that we were getting.
1:14:45
We worked with thousands of retailers that made the decision that it was uh effective for their marketing programs.
1:14:52
Obviously, there's people that chose not to work with Honey, too. Sure.
1:14:56
Um, in fact, one of the first VCs that I met uh when we were trying to raise a seed round, he having been an e-commerce founder himself.
1:15:06
He said, "I hate what you're doing."
1:15:08
This is before before we had like any users or anything, I hate what you're doing.
1:15:11
If I were still running my company, I would write code to break it and open source it so everybody could have it. Wow.
1:15:17
And I'm like, "Okay, I guess you're not going to invest in this."
1:15:20
That's a that's a pretty hard pass email.
1:15:21
Most people say, "Not a fit at this time." Correct.
1:15:23
This is like I would open source what you're doing because I'm so frustrated.
1:15:28
So, he never did that and nobody ever did that.
1:15:30
And we got we got better at uh demonstrating the value.
1:15:35
And it does make sense that that if you're at the last second you're like ah you know I'm deep in the checkout.
1:15:41
They just hit me with taxes and shipping but then Honey came in and gave me a little bit you know five 10% off.
1:15:47
I maybe I'm more likely to click and and you could imagine that math working out in certain scenarios and maybe in aggregate. Yeah.
1:15:52
And it's in aggregate people have found that it works for them for any particular consumer journey.
1:15:58
I'm sure you can say, "Oh, I was going to buy it this one anyway."
1:16:01
But there's other times when you might have gotten the hesitation of, "Hey, maybe I should wait for a sale."
1:16:07
And totally by by getting the confidence that you have a deal and you can check out now.
1:16:13
Um, it in aggregate it makes enough sense that like the commission rates that are paid for this are not high.
1:16:20
So it's not like the marketing spend on Google where you're spending well into double digits percentage of revenue on acquisition or what you're spending on Facebook.
1:16:29
We're talking like really small numbers and part of that the reason the rates are low is actually because um because of the place in that journey.
1:16:39
So it's it's an incremental lift for a few percent.
1:16:41
It's not incre we never tried to sell it as hey you should give us 25% like you're paying Google and get like get 4x return on ad spend is like 25% commission rate. Yeah.
1:16:52
And you're bringing a little bit of like this dopamine hit to the checkout process that's normally like I got to like type in all this junk.
1:16:57
I got to do all this and then Honey shows up and you're like I feel like I just won the lottery.
1:17:02
Like maybe I will check out.
1:17:02
So I could I could totally understand the story.
1:17:04
be before we were doing this.
1:17:04
I mean, keep in mind the customer journey is like open the Google tab and go search for a coupon somewhere else and you're going to find one from a competitor.
1:17:13
You're going to find a bunch that don't work.
1:17:14
You're going to get distracted because your kid wants a sandwich.
1:17:17
Like, there's a whole bunch of reasons that you end up abandoning that cart that you appeared to have high intent to check out on.
1:17:23
And shopping cart abandonment, especially when we started, was like the number one pain point for retailers.
1:17:30
point for retailers. like how why are 70 80% of my people leaving um and what can I do to help close that and so I think Honey and Tools like it we were not the only ones that did this uh a bunch of other companies replicated the model and
1:17:44
have had good success with that and uh for yeah can you talk about that I I remember at postexit there was just this rush of companies that were like okay you can uh Chrome plugins are now venture scale businesses and like I just remember it was like literally constant. There were so many companies, but who
1:18:03
There were so many companies, but who knew?
1:18:05
I mean, it really just exposes like technology, but also a potentially a great business, which is fascinating.
1:18:12
But, but here's the issue. Yeah.
1:18:12
Outside of cryptocurrency wallets, we haven't seen big outcomes in the sort of like Chrome plug-in space.
1:18:21
And you could argue those are, you know, mobile products. Yeah.
1:18:24
I I I have a my my own explanation or thinking on it. Um, cool.
1:18:31
So, what George and I saw early was that while everybody else is offer building mobile apps and every investor was asking, hey, what's your mobile strategy?
1:18:38
Uh, Chrome extensions or browser extensions generally have an insane retention characteristic that they completely solve for all of the problems that people are having on mobile of how do you not just get somebody to download your app, but to remember to use it in the context that you're providing value.
1:18:54
And for mobile apps like there's only a certain set of contexts where you have that natural habit loop trigger and people wrote books about this of how do you get a consumer to like build that habit?
1:19:05
You have to like effectively teach them that this is a new behavior.
1:19:10
And on mobile the apps that were able to do that are effectively messaging apps that give you like an a real trigger to come back into the app.
1:19:20
You're engaging with somebody else.
1:19:21
And so outside of that, you never had like mass market consumer like product for shopping even.
1:19:28
It's like it's a pretty big pain point.
1:19:30
But like the amount of um successful mobile apps going after even some of the biggest categories is challenging on the browser extension.
1:19:40
We got to get all of that engagement and retention and habit out of the box.
1:19:44
Like you install us one time completely out of context.
1:19:46
You are not shopping now.
1:19:49
you might not shop for weeks or months and the exact moment that we can deliver value, we could detect that context and present the option to do that.
1:19:57
And one of the reasons Honey in the early days grew um at a steady but slow rate is the the cycle time on that growth loop was measured literally in months.
1:20:09
So the time from somebody installs Honey to they get a coupon that works which is like the aha this thing actually works moment was literally uh weeks to months like in because of that the feed that's the moment when people would share and tell people about it we know this works.
1:20:28
Um so with the extension world you have that so how come other people haven't been able to do this?
1:20:34
do this? There is actually a challenging policy in the extension uh framework that rem remains to this day and it's a singlepurpose arbitrary policy that Google has uh for the Chrome store that extensions are only allowed to do one
1:20:51
thing and so extensions have effectively been pushed to only do a feature and it becomes increasingly challenging to attach a business model to that feature And so to me, that's the disconnect that they've strategically divided um the utility from the monetization side of it. And there's historically good
1:21:12
And there's historically good reasons why you might want to do that in some cases and people are abusing it.
1:21:18
And like there's there was abusive behavior when people before this policy came in, but I think it really slammed the door on a lot of other interesting models that people would have for a browser extension.
1:21:29
And basically to this day you have honey honey and shopping tools um because we were able to attach the monetization that worked to do um largecale consumer growth acquisition.
1:21:43
You have Grammarly who has a business model that works for it and you have free ad blockers is basically the entire world.
1:21:49
Can you talk now about uh some of the allegations that were made in that video, what you found so frustrating about it and kind of the process that you went through to debunk some of those claims?
1:22:00
And also, I'd love to know uh I mean, you've moved on.
1:22:03
It's not really your baby anymore, but clearly it got under your skin and you were like, I got to set the record straight.
1:22:08
So, just walk me through the process of uh the claims in the video and then what you think they got wrong. Yeah.
1:22:13
I mean, so obviously the video is like complete shock because like I it's the last thing I ever expected to hear.
1:22:21
Um and yeah, you're like we've saved people so much money and then it's like everything about it.
1:22:30
I mean from we saved tens of millions of users, uh billions of dollars.
1:22:36
We uh helped fund a lot of content creation and the partnerships that we did with great influencers.
1:22:41
Um, and to to twist that was to start with unexpected.
1:22:49
Um, and my initial reaction was walking through the stages on it.
1:22:55
It's like it it's once your baby, it's always your baby.
1:22:59
Um, so it's not like uh we as I say we felt that.
1:23:03
I felt that personally talking to the hundreds of great people that built Honey.
1:23:08
Um, it was devastating to have your you're the thing that you put all this energy into dragged in a public forum in a way that you know isn't accurate.
1:23:18
Um and so that's like the initial reaction is like a little bit of grief.
1:23:24
Um and not feeling like you could do anything about it because um almost everybody I'm talking about like moved on from the PayPal organization doing other things.
1:23:33
And so um didn't really feel it was my place to step in and say anything. Yeah.
1:23:40
Um that's like it's I sold the company to PayPal. They own it.
1:23:44
Um they should be able to make the decisions that they want for this business that I shouldn't be meddling in their in in their business decisions.
1:23:54
And um and so it's like accepting the reality of this is not mine anymore.
1:24:00
And so then I saw like just keep in mind the timing on this.
1:24:06
This drops like a Friday before like Christmas holiday week.
1:24:08
Um, a big company like PayPal is unlikely to have all of their resources aligned to respond to that at the same speed of a YouTube viral video going going viral through a holiday season where the initial video got 17 million plus views. Wow.
1:24:26
The other videos about the same issue got even more than that in aggregate. And so it went wildfire.
1:24:31
Um, it led to rapidly several class action lawsuits being filed against PayPal and against other companies in the use that do the same model.
1:24:45
Um, and because of that, the potential response from PayPal like rationally became it's run by illegal. Yeah.
1:24:57
Oh, I'm I'm assuming here.
1:24:59
Just to be clear, I have had no conversations with PayPal about anything, including whether or not I was going to say anything um recently.
1:25:09
And I You love a founder going direct.
1:25:13
I suspect that any uh comms or legal person would have heavily advised against doing what I did.
1:25:21
Um, but so like going through these phases, expect it to kind of maybe it'll just blow over like it'll be a big storm and then like everybody can move on.
1:25:30
But it's kind of continued to linger and articles about it and then Google updated their Chrome store policy sparked a wave of articles at the beginning of March.
1:25:40
Um and people again from my point of view like I have a lot of knowledge about this particular industry and extensions like the changes that they made to the policy will have no effect on anybody because they're already in compliance with what Google required.
1:25:56
And despite that nobody talking about it in the press like knew that.
1:26:02
And so you have this consumer narrative that's going going like crazy on Reddit and other places about um what about the specific claim of uh like rewriting cookies and and affiliate codes where you know it's very clear that someone found out about a product from a specific influencer that they the customer wants to use that code and then Honey somehow gets in between that transaction.
1:26:25
I that felt like the the claim that really took hold and I think you addressed that in your thread. Yeah.
1:26:31
So like the the never mentioned by anybody in any of the followup on it, not a single journalist or other YouTuber um knew knew about and partly it's because it's industry nuance that there is standown policies at all of the at almost all of the networks where downloadable software tools, toolbarss, uh browser extensions are required by the affiliate network um who's mediating all these like multi-party exchanges.
1:26:58
is are required to stand down to traffic like that.
1:27:03
So, um a a website like the coupon code websites doesn't have the ability to tell if you've already uh clicked on somebody else's some influencer creator link.
1:27:13
Um they they will in the industry it's tagging is the terminology for assigning the cookies.
1:27:20
It's basically you're following a link and then the network's tools sets all the cookies.
1:27:24
And so for somebody like retail me not you mentioned before if you go to the site you click on the link the link updates all the cookies.
1:27:31
Yeah in the case of browser software do the same thing.
1:27:36
It's just following the link in an un unintrusive way for the user.
1:27:40
So it's not like you're not going in there and modifying the cookie value as the browser extension.
1:27:44
You are clicking a link in the affiliate network which is how they handle attribution.
1:27:47
And so the overwriting case that was described and purported to be extremely widespread I think is actually very very narrow uh and only happens in I guess two cases.
1:28:03
One uh the honey standown detection um potentially isn't working in some cases.
1:28:10
This is not always alleged, but like as a person who knows his business, like it's possible there are cases where it struggles to detect uh that a link was clicked.
1:28:20
And the particular example that he used on Newegg, I pretty sure this is what happened because Newegg is using a multi-touch attribution system anick system from company Howell and it is effectively like it's Newegg uses it so that it can pay both the creator upstream and Honey. Interesting.
1:28:38
But I suspect that Honey wasn't standing down because it it didn't recognize this howl link, which is different than the the normal Rockuten affiliate network link. Got it.
1:28:51
Again, this is me speculating.
1:28:51
I have no information on this, but it felt to me like a carefully selected example.
1:29:01
Um, and then a few weeks ago, I started I took another look at the video and I wanted to understand like is what how did this happen?
1:29:09
Like u what he's saying and I started pausing the video on the various pieces that he was showing on screen is hey honey's doing all this devious behavior and almost every version of that was essentially falsified.
1:29:26
like he'd say one thing and then the screen would show something completely different and non-inccriminating.
1:29:32
It's like honey's there's a secret 20% off coupon code somewhere else that they're colluding with the retailer to not give you is what he says that they're only going to give you the 5%.
1:29:43
And then you watch the video rapidly going on screen.
1:29:45
It's Honey going and Honey gave you a 10% coupon and 5% cash back.
1:29:49
It's like, well, you can't just like make [ __ ] up or or I guess I I guess fact check false. You can make stuff up. This is the internet. Welcome to the web. Yeah.
1:30:04
So, I got a little uh frustrated when I And I had seen that he covered up the coupon.
1:30:10
I was trying to figure out what happened.
1:30:11
It's like he he blocked out the coupon code box that he was using to demonstrate that Honey was hiding coupons.
1:30:17
I'm like, why are you hiding the coupon that you're using when you're showing like when that's the claim?
1:30:20
And right there on the screen there's like from that same retailer, if you sign up for my email list, you get a 30% coupon.
1:30:30
And then the next screen he's like, here's a 30% coupon they didn't tell you about.
1:30:33
I'm like, well, they didn't tell you about it because it's a one-time use code that's just for you that you just sign up for that email right there.
1:30:38
Like Honey is not saying that they're getting you that coupon. Okay.
1:30:41
And so it's like a lot of misrepresentation, but then the data is just not there to support the claims.
1:30:50
And I first decided to let the people at Reddit know and do an AMA there.
1:30:57
Um, very very lengthy post and I'm glad it's way too long.
1:31:00
um some good questions there, but nobody's going to read this.
1:31:03
And decided I would at least give some of the visual evidence in a Twitter thread and um it it makes it a little bit more clear when you see it like the the screenshots and like it's it's not me the some of the stuff I said before about standown and like that that's industry specific knowledge and this is what I thought I would have to talk about to defend honey originally.
1:31:28
But the the stuff I talk about in the Twitter thread and on Reddit, it's like you can see it for yourself.
1:31:33
You don't have to know anything about this business.
1:31:36
Just go hit pause and look at the screen and see if the evidence is being manipulated to to create a narrative.
1:31:44
Um, and I think that it was.
1:31:47
And I don't know if my version will get anywhere near 17 million views or like um I don't have that kind of platform.
1:31:56
I've never really been a content creator or trying to get anything out there.
1:31:59
We just kind of stayed under the radar and built a cool company with some great people.
1:32:05
Um, but yeah, so it it's no problem, but we're going to we're going to try to get this to 17 million.
1:32:12
Uh, we'll hand out pieces of paper in the street if we have to.
1:32:16
Uh, I do have a question for you.
1:32:18
I'm sure you're going to have a kind of interesting nuanced point of view on this.
1:32:22
Um, what's up with the VPN market?
1:32:24
Because when I think of uh sort of like shady, you know, when I think of like shady companies that do heavy YouTube influencer marketing, I think of VPNs, right?
1:32:36
So it's like we probably should have a video with 17 million views of like, you know, these VPN companies that are run by, you know, sort of unknown, shadowy internet, you know, companies.
1:32:49
Uh but but I'm curious if you have a uh any type of read on on that market.
1:32:52
I actually don't know that market that well.
1:32:58
I do have a sense for why it's so prevalent on YouTube though.
1:33:00
U the reason for it is one, it's pretty high recurring revenue, high LTV product.
1:33:05
So like you can afford to do marketing spend for a product like that.
1:33:09
The second piece is the YouTube audience is like twothird international.
1:33:13
And so it's an efficient way to reach a broad international audience who is in need of VPN to access content outside of their home country.
1:33:23
And so I think that's why you see it on YouTube as a channel in particular.
1:33:27
Um because the economics work is basically it.
1:33:29
And once somebody figured that out, then everybody else copies the marketing channels. So I've always said Mr.
1:33:36
Beast should launch a VPN because he has a super super broad audience. It goes everywhere.
1:33:40
And if he was able to capture all of that, you know, gross margin, net margin for himself, he'd be printing money, but maybe misaligned with the brand. Who knows? Just a crazy idea I had.
1:33:51
Yeah, it's it's a great idea.
1:33:52
I mean, it would work from a business part of it would work.
1:33:56
Probably work better than Beastburger and some of the other stuff he's tried, but he definitely reached a scale where he can't do normal advertising. Yeah.
1:34:03
Because if the product's not available globally, it's going to be it's just he's undermonetizing his content at that point.
1:34:10
Yeah, it's it's that and uh he's the scale of the ad buy now is like it's a Super Bowl every time he does anything.
1:34:17
So there's like 10 companies that can even possibly afford to do that.
1:34:22
And so he's been driven to create new brands and it's kind of fun to see what what he's been able to do without.
1:34:28
It's been super fun and it's been fun having you. Yeah.
1:34:30
Before you go, could you give us, you know, give us a coupon code minute? No, no.
1:34:34
I I at least a minute on your favorite coupon code. At least a minute on Pi.
1:34:38
What you're working on now? Yeah.
1:34:40
So Pi is a new company I'm working on.
1:34:42
Um, we have an ad blocker that is designed to give consumers control over their advertising experience.
1:34:49
Uh, we don't think the economics of the internet work if everybody has a an ad blocker that blocks everything all the time and we don't think it's reasonable that consumers should have to tolerate the ad load and the incentives are misaligned there.
1:35:04
So effectively um I is building a way for consumers to have granular control over what type of advertising they are comfortable with and we are building ways for them to participate economically in that value exchange. So that's very cool.
1:35:19
Um they're like that's and you have two million users.
1:35:22
We have two million users.
1:35:24
Uh we and no wait so let me guess.
1:35:27
Nobody's heard of you because you haven't hired a PR firm.
1:35:28
You haven't raised venture capital.
1:35:31
you don't have any VCs doing threads cuz cuz I'm I'm I'm you know it's it's we always find it funny when we find a you know a company with a massive user base that we haven't heard of and and you know we've heard of you and and Honey but I and candidly I hadn't heard of Pi until uh we were prepping for the show. Yep.
1:35:52
That's uh not surprising.
1:35:52
U most of our acquisition has been through regular YouTube ads of all places.
1:35:57
So, it's uh it's interesting to be an ad blocker that's doing advertising. Yeah.
1:36:02
Um we'll see how long we continue doing that, but um to get to to get to a reasonable scale where we have a large enough audience where people are interested in what we're doing um was important.
1:36:17
So, we've we've invested in that growth um personally invested in the company and uh we'll see we'll see if we can make it work, but uh if not, good luck.
1:36:27
It's it's a lot of fun building with a lot of cool people again. That's amazing. Love it.
1:36:31
Thanks so much for coming by.
1:36:33
Always welcome on the show story. Yeah. Cool. Thanks, guys.
1:36:36
Yeah, we'd love to talk to you soon. All right. Bye. Cheers. Great.
1:36:38
Uh yeah, what an interesting uh back with another Chrome extension.
1:36:44
Just another two million users. Chill. Oh, yeah.
1:36:46
By the way, we have two million users. Fantastic.
1:36:49
Uh well, we're pivoting back to AI.
1:36:51
We have the host of the Laton space podcast.
1:36:53
I first found uh this fellow because he put out a fantastic interview with George Hots, one of my favorite uh people in the world really.
1:37:02
Uh and uh we're excited to talk to him.
1:37:05
I want to get his take on AI 2027 and a whole lot more.
1:37:09
But also I think he has a little bit of contrarian take about um about whether or not you should traffic in these forms of oh AGI is two years out.
1:37:20
So I want to hear from him. Welcome to the studio. How you doing? Morning. Hi. Doing great.
1:37:25
Uh do do you want to give a brief introduction in your uh in your I I I know you as the host of the latent space pod, but uh in your bio, you have a number of different affiliations.
1:37:35
Uh what's uh uh how should how should the viewers think about you?
1:37:41
Uh someone with basically ADD and too many projects.
1:37:45
Um but yeah, I'm Sean or Swix.
1:37:47
Uh I started u the latent space podcast to cover the AI engineer field which I helped to popularize and I also run the AI engineer conference which is uh happening in a couple months.
1:38:00
Um primarily I think the the one in New York uh that I did um helped to kickstart a lot of the recent MCP hype that you might might have been seeing.
1:38:09
Oh yeah, I'd love to get into that. We can get into that.
1:38:11
can get into that. Um and I think yeah what you were referencing just as you came in was um you know the news of the day right like AI27 um I think very important to at least try to go through the thought process of like what might happen but this is essentially fanfiction right like we don't we don't know exactly what will happen um and uh you know we've we've
1:38:33
been getting various forms of AGI is two years away for quite a number of years now uh and I think part of why I started the AI engineering um sort of trend trend is to try to get people towards building more things instead of just speculating uh on what the big powers that that maybe will do because uh you have a lot more agency in your life to do things if you just uh you know focus on what what we have today. Uh granted
1:38:55
Uh granted that AGI is very big and like I do take that seriously. Yeah, of course.
1:39:00
Uh well, let's go through some of the things that you do think are worth building.
1:39:04
I want to get into agents and we've been asking a lot of people, you know, when can this thing book a flight for me, but maybe we should start with MCP.
1:39:11
Can you just give us an overview?
1:39:11
I saw all the viral posts.
1:39:13
Um, a lot of debate over is this just an API or is this something more important?
1:39:18
All the leading labs are putting out papers and implementations of it.
1:39:22
Can you give us your kind of uh MCP explain like I'm five for dummies?
1:39:27
And then maybe take me through a few of like the implications for the market and the different AI labs.
1:39:33
Yeah, I'm pretty sure you already had like a couple explanations, so I don't know if I'll be, you know, adding a lot here.
1:39:38
I'll just give you my my version and then we can riff on that.
1:39:43
Um, so MCP is a protocol for uh a lot of different integrations into agents and I think that um there have been many attempts uh a lot of different configurations of I will include the framework.
1:39:56
I I'll in I'll start from the u gateway, I'll start from the integration side, whatever.
1:40:00
Uh but this is the first one that was very seriously put out by Big Lab.
1:40:04
Uh we actually uh were the first podcast that the MCP creators uh did an interview on and that's we just released that yesterday.
1:40:13
Um and uh it's it's it's shocking how impactful this is for the effectively the side project of two guys.
1:40:18
And this is uh and they work at Anthropic. Is that correct? They work at Anthropic.
1:40:22
Uh yeah, over in the London office.
1:40:24
Um yeah, you can you can check out lat. spacem. You'll see it. Cool.
1:40:28
lat.spacem. You'll see it. Cool. Um and uh and yeah so so I think effectively maybe for the normies um whenever you see these like at symbols like when you're in a chat and you want to add something and you want to include a tool and you want to include any kind of um
1:40:43
uh agents or any kind of uh you know subsystem like a notion or zap year or what what have you for for for developers we use things like Sentry uh Microsoft Copilot and GitHub just put one out today um and I think Google announced something I don't know what they announced But they announced something. But basically the entire
1:41:00
But basically the entire industry always the case with Google.
1:41:03
They put out something but I can't find it.
1:41:04
I mean there's just a lot, right?
1:41:06
Like today they just announced 2. 5 Pro pricing. Okay.
1:41:09
So my viral tweet of the day I always have like one a day.
1:41:11
Uh is that they now completely own the entire Prito Frontier of all all labs.
1:41:15
Like they had the smartest and and the cheapest and the most cost effective Purto Frontier between. Very cool.
1:41:21
Which is which is which is incredible.
1:41:24
Anyway, going back to MCP.
1:41:26
Um so each like uh this is what we call in the industry like a M* N problem.
1:41:31
Meaning I have this one app um I write integrations for this one app.
1:41:36
So but then when I move to a different app I have to rewrite the integrations again.
1:41:39
Uh and obviously that's annoying.
1:41:41
Obviously we want to share integrations obviously like the open source community can improve better things better together instead of uh individually and we should stop competing on these things and start competing on other better things.
1:41:52
uh and it just took a player like Enthropic to put this forward and this is the one that got enough women.
1:41:57
So um practically for what the normies uh would sorry I don't know if it's derogatory to say normies but you know not people who are not in the mix every single day um practically what it's going to be is that you're going to be much easily a able to add um integrations to basically anything in any agent.
1:42:13
Um and that will you know at least help you um get use out of them faster just because uh individual companies are not writing their own integrations anymore.
1:42:23
Basically everyone's onboarded to this uh ecosystem.
1:42:25
Yeah, I think normies is uh it can be a pjorative use as a blanket term but I think everyone you might be a normie in defense technology uh a defensive a defense founder might be a normie in AI technology and that's and that's fine and that's why we have a variety of guests on the show.
1:42:40
Uh with regard to MCP, the the the most basic question is like how is this different from an API?
1:42:46
Zapier already exists as a binder between APIs and also like we're hearing coding agents getting better and better.
1:42:54
The Devons, the cursors, like why is it so hard?
1:42:56
It feels like AI is incredible at writing code.
1:42:59
Why can't I just use use AI to say, "Hey, I want to interface with this API.
1:43:05
Just go figure it out every time you compile the code.
1:43:09
If the API changes, figure it out and and reverse engineer the API. There's docs out there.
1:43:13
Here's kind of the general idea of what I want.
1:43:14
Go figure it out every single time at runtime. Yeah.
1:43:19
I mean, the second question is easier answer than the first.
1:43:20
Uh ma mainly because it's probably easy to figure it out.
1:43:25
Uh figure out common implementations, but then you won't tackle the edge cases or the bugs that happen.
1:43:30
Uh and obviously it's also very inefficient to keep coming up with it uh a new implementation and integration every single time. Sure.
1:43:36
Uh so when possible actually it's better to not use AI if you have the option to not use AI like AI is meant to be a plug for things that don't exist but if you do have the integration that's written and battle tested by like you know thousands of people before you why would you not choose that like only if your needs are not being met by by that integration then go ahead and and write your own.
1:43:55
Um and so so uh and the cost of writing your own has come down a lot, right?
1:44:00
Um which is which is also very interesting from the sort of open source ecosystem point of view where uh people are now vending a lot of their libraries that they would typically import uh without thinking just because they're like, "Oh yeah, someone's written this for me and it costs too much."
1:44:13
Anyway, so uh then let's come back to the first question on how does this compare on API.
1:44:17
Um and that's the most that's why developers hate MCP.
1:44:20
They're like this doesn't do anything over open API.
1:44:23
Uh and we we asked them uh we asked the the authors of that question uh point blank on on the show uh and basically it raifies concepts that um would not be would be undifferiated as far as the normal API spec goes.
1:44:38
Um so for example there's concepts like resources, promps, tools, sampling routes and transport in MCP.
1:44:43
Um and like those are there those are basically special subasses that have have uh they are treated differently in the MCP environment whether or not they are controlled by the model versus the application versus the user.
1:44:56
So they are very very distinctly um parcled out the permissions and the the intended roles of each feature.
1:45:03
So I would say it's kind of like a layer o over APIs that have become more AI native and that's uh made it anthropic is at least saying that this is much easier for us to use and you're going to build much more effective agents if you do this. Got it. Um, sorry. Please.
1:45:16
Do you feel like MCP will, you know, massively accelerate the creation of of agents that uh become a, you know, very active part of our lives on the internet.
1:45:31
It was, you know, we were at um Y Combinator demo day and there was a lot of uh AI agent infrastructure companies.
1:45:38
Um there was probably more AI agent infrastructure companies there just in one demo day than AI agents that I've sort of tried to use. Right?
1:45:47
So it's like everybody wants to do picks and shovels but we actually just need you know we need more sort of shots on goal at you know potentially the harder problem which is just reliable agents.
1:45:58
Yeah, I fully agree with that actually.
1:46:00
So uh it's actually very depressing like being an AI agent infrastructure company is what you do as a developer if you have no other ideas.
1:46:06
Um so that I mean YC should take that as a warning sign that uh their their people are not going after the right path.
1:46:12
Um it it MCP makes integrations easier period right what you do with those integrations who what problems they solve that is still an open question but yes for sure the ecosystem is about to get a lot stronger because we're now no longer rewriting things.
1:46:27
We're converting m * n combinatorial explosion problems into m plusn uh where you're just write uh every integration once hopefully I mean maybe twice but um uh yeah I I I actually I like the opportunity to address this because I think people think of me because I wrote the article on why MCP won and everyone's like you're you're just a show for MCP.
1:46:44
I like the opportunity to just say like no like like this is very good.
1:46:48
It's a but it's a protocol like did you get excited when REST was invented? No.
1:46:52
Like you got excited by all the applications that REST enabled.
1:46:57
And that's those are going to come down the line.
1:46:58
Um, and you're going to but I think like the normal consumer like would just should just be really happy that like these high quality integrations are now going to come a lot more out of the box than you waiting like five months for your favorite app to to write the integration for your your favorite thing, you know.
1:47:14
So, um, your agents are going to be able to do a lot more things.
1:47:18
But I think um the top agents like the Sierras of the world uh they still want to own the endto-end experience and they will use MCP uh but they don't necess like they're life or they're not really like depending on it you know like it's not like life or death for them like you it's still on you to build uh a an agent or a product or solution whatever that solves a problem your customers need and that doesn't go away. Yeah.
1:47:40
What what's your thesis on, you know, the do you do do you see a Cambrian explosion of consumer agents, B2B agents sort of built on, you know, uh, in part on MCP and and you know, comparing this to something like fintech, right?
1:47:55
We had the CEO of of Plaid on yesterday, right?
1:47:58
Like everybody in hindsight should have worked on Plaid. Super valuable.
1:48:02
It's a $6 billion company right now.
1:48:04
It powers a lot of stuff uh within finance. Um, same with Stripe.
1:48:10
Stripe, but you can't name that many other sort of like generational companies in fintech infrastructure.
1:48:16
Sure, there's there's a bunch, but like no household names.
1:48:18
And I can see the same thing playing out in the agent space where maybe there's a like almost like a stripe uh equivalent in the agent space or or plaid.
1:48:29
But then you know the best thing you could have done you know if you didn't build plaid was to build on top of plaid and and build sort of these novel product experiences.
1:48:41
Um there are at least five or six startups that are trying.
1:48:43
Uh I actually live with one of them that's called smithy.
1:48:45
Uh that's like decent but all these are super early.
1:48:48
Um the main challenge that they're going all going to face is that Anthropic is coming up with their own registry.
1:48:53
So Anthropic wants to own own this.
1:48:54
So I don't know if there's a separate plan that of of MCP that comes out doing this.
1:48:58
Um, so, so that would be my my my two cents there.
1:49:02
But wouldn't wouldn't one argument for smiththery and I'm not familiar with the company be that uh, you know, other companies don't you know, if if they could ever see themselves competing with Anthropic in any way.
1:49:15
You know, they wouldn't be want to be reliant on Anthropic's registry.
1:49:20
So maybe a new third party that is, you know, kind of a pure play infrastructure player should exist.
1:49:25
player should exist. totally possible but uh it's on the the burden of proof is on them not uh like by default whatever the is is the big lab official solution always wins um which is pretty brutal in AI terms but like the world is not meant to be fair right um I think uh the one thing I should mention um that I
1:49:44
I neglected to that I do think is very bullish and like will result in a lot more capabilities is that MCP servers can also be clients and that's a kind of like a technical thing uh but that is effectively what is going to enable servers to then become agents and orchestrate agents uh fleets of other MCP agents uh on your behalf uh without you knowing about it. And so um that
1:50:04
And so um that actually turns these things into much more agentic networks.
1:50:09
And we're probably going to see that like I would say like this is too early right now because MCP is like four months old.
1:50:14
Um probably like the end of the year, early next year I I would say like this is starting to this will start to come up because they built that in from the start.
1:50:24
Uh, is there a world where MCP just gets steamrololled by the next generation of models?
1:50:27
We kind of saw that with some of the workarounds to uh, context windows and then Gemini comes out with a million token context window and a lot of people are saying, "Oh, well, like all those all those workarounds are kind of irrelevant at this point."
1:50:39
Um, how do you think about the durability of MCP over the over the near term?
1:50:43
MCP actually improves with more context window utilization.
1:50:46
So, uh, they're not at odds.
1:50:49
they're not at odds. uh there's a very very long-standing debate on context versus rag but this is slightly different mcp just like is the ecosystem integrations that model models really don't have yeah that said I would say that if there were any challenger to MCP
1:51:03
it it would come from Google because Google has native integrations to Gmail calendar YouTube what have you already launched it and it's already first party in there and now MCP come along and threw a threw some uh noise into their nest well I mean Google kind of lost the front end wars with Angular versus React. So, you know, there there is
1:51:21
So, you know, there there is precedent for someone for, you know, another tech company coming up and and resetting the the standard, right? Uh, sure.
1:51:30
Uh, and uh, yeah, they they I I I I would say that I don't think they should spend time here anyway. So, yeah. Yeah. Yeah. Yeah. I agree.
1:51:38
Maybe we need a poly market on it or something.
1:51:41
Let's switch gears and talk about AI 2027.
1:51:42
I'd love to uh I'd love to I'd love to just let you rant maybe for the next 10 minutes straight.
1:51:50
Um but you know initial um I think so I think these guys have a really good track record.
1:51:56
Um I don't know actually if you've interviewed them already. No not yet.
1:51:58
I'm sure I'm sure they'll come on.
1:52:01
You know they seem to be doing a podcast tour.
1:52:02
Um and uh and I think there's there's some public service in doing the math and drawing lines. Right.
1:52:09
That's what that's what they did.
1:52:12
Uh that's what situational awareness was.
1:52:14
Um and like I think because we are very we live daytoday we don't really see the yeartoyear uh as clearly just because we don't spend time on it.
1:52:24
And if you just draw lines and you like you believe that what has happened in the past the near the near past is probably going to happen in the near future.
1:52:30
Um you can probably see at least some kind of trend line.
1:52:32
Uh the main caution with all these things is that s curves do exist.
1:52:36
that s curves do exist. You know, if I'll just, you know, rewind your mind back to like let's say April or May 2020 when every chart on COVID was going like this and there would be more COVID cases than humans in um in in in like the by the end of like 2021 or whatever and
1:52:52
that never came never happens because one we reacted to it or things we hit invisible as Eugene way calls it where like you didn't account for this because we weren't there yet like there was there sort of this limiting factor that you that you didn't run into u but this is relatively near-term. It's basically
1:53:06
It's basically in the next 18 months.
1:53:08
Um and uh I I think like the main geopolitical geopolitical aspects is kind of interesting.
1:53:15
Uh we have no idea what China will do really.
1:53:17
Like um the the main meme on Twitter uh which I really like from tour Texas is that CTM thing just does nothing and then the USA just implodes.
1:53:25
Just the funniest outcomes the most likely, right? Maybe that's it. Um who knows? Who knows?
1:53:35
Um but I do think that um what you can there are things where like it's really just down to the individual decisions of powerful political figures that we really cannot tell.
1:53:44
Um and then there are things where like if they're basically extrapolations of scaling laws that you can't tell because they're just you know uh just like scaling laws that have already been established and you you're betting on the end of them which is less likely to happen.
1:53:55
Um so I think the the coding um agent uh commentary is really good.
1:54:01
Uh, and I think that it starts it starts to talk, you know, talk about hacking and robotics.
1:54:05
I think it's all it's all on uh very very unbalanced.
1:54:09
Um, I think where it starts to get into a little bit more gray area is like the political and and bioweapon stuff. Yeah.
1:54:15
I I I love the the kind of reference to COVID.
1:54:18
Everyone thought it was an exponential.
1:54:19
It was actually a sigmoid function.
1:54:21
Uh, everything's a sigmoid.
1:54:23
It's a series of sigmoids pretty much, right?
1:54:24
And uh we and it certainly feels like we're experiencing a sigmoid curve with uh pre-training and we're seeing pre-training diminishing returns.
1:54:31
Uh it feels like there's still some juice in RL.
1:54:35
Uh are are there any uh next steps that you're excited about?
1:54:38
We we we've heard that uh program synthesis is kind of a hot area that people are investigating right now.
1:54:43
Um what are you excited about?
1:54:45
What do you think is potentially overrated or underrated?
1:54:47
I actually think people there's a lot of alpha in splitting out what you call pro program synthesis what I call code generation. Yeah.
1:54:55
We've we've effectively gone from like single line autocomplete to like functions autocomplete and now with like wind surf and cloud code and um co-pilot and cursor we are generating basically entire apps um and and PRs uh for those apps.
1:55:11
And I think being really clear-minded about what where those capabilities are and improving them incrementally, you get things like cursor, which you know zero to 200 million are in two years is crazy. Remarkable. Yeah.
1:55:23
So, um I I think I think a lot of alpha there.
1:55:26
Uh but I think like uh really what what people are looking at now is the uh the general measure of agent trajectories.
1:55:33
How long can an agent uh on a on a broad number of tasks um autonomously operate? Right?
1:55:41
So meter um I forget the the acronym it's it's it's one of these like research institutes.
1:55:44
Meter put out a study of uh the agentic uh work that can be done um you know by by a wide uh range of benchmarks and dated it ran it ran it all the way back to 2019 and basically came up with the idea that um the agents horizon for the 50% capability like 50 percentile capability of human capability is um is grow is doubling at between three to every 3 to seven months. Mhm. Right.
1:56:10
And we're now at an hour.
1:56:12
So roughly you can leave uh the smartest model that we have which they they measured as 3 cloud 3.
1:56:17
7 sonnet um to run autonomously for an hour and do like the what what a 50th percentile human can do.
1:56:26
Um you can obviously bump things up or down in terms of percentile but you know the the the results and the scaling laws don't vary because the important thing is that they're doubling every 3 to seven months.
1:56:35
Um and that means you can roughly scale out when when are we going to have one day autonomy when are we going to have uh a week a year a you know a month a year and u that I think you can kind of set your clocks by and try to think about what products or companies you would build.
1:56:51
It would be so funny if it was an S-curve and it maxes out at exactly eight hours like a human like you can only give it one task every single day and it just goes and does that.
1:56:58
It's great but uh yeah just I don't want to work overnight.
1:57:02
Look, I'm I'm maxed out and it's at that for like two decades or something. Unlikely, but funny.
1:57:06
That'd be an interesting universality, right?
1:57:09
Like so, for example, a lot of people building agents have independently discovered sleep.
1:57:13
The agent the agents have to sleep because they have to compress memories and and do like the deep REM thing where they actually turn those into long-term memory.
1:57:21
Like we have like the computer agents have to do that and humans have to do that, right? It's gnarly. I I'm not kidding.
1:57:26
Like go look up for those.
1:57:28
You need a sleep for agents. Maybe it's eight sleep.
1:57:30
Brian Johnson holding a candle going like I mean I was Yeah.
1:57:36
I mean you're joking about eight sleep for agents.
1:57:37
I was joking about like what like is there will there be like an alcohol for agents or alcohol for LLMs where you just kind of like throw some randomness in the weights and it gets a little bit crazier but sometimes it's brilliant you know and it's like a lot more bold. Yeah. Exactly.
1:57:53
Uh, but maybe it's not that.
1:57:56
that. Maybe it's just like to get true true inspiration, you need to just throw some extra chaos, some I guess the term would be like higher temperature in the LLM responses and then run 10,000 of them and you get some more inspiration instead of all coalesing around the same kind of you know 50 50th percentile
1:58:14
human like the yeah that's called sort of mode collapse where you collapse modal distriution but like yeah for those interested we've moved on basically from temperature to var entropy and also Uh also I think most people would be interested in like the anthropics um uh alignment work on tracing the thoughts of LLMs which which came out recently as well. Um there's
1:58:33
Um there's some really interesting torture you can put on these LLMs where you ask it to say like banana but then you don't allow it to say banana and it just you can see it struggle to like oh interesting find alternatives of saying banana it never so funny. Wow.
1:58:47
Um but for example one of the R1 replications R1 replications you can also do do things like if you just want it to think more you can just prevent it from ending its thought and just insert weight or like uh you know but I thought something and you just like you can force its direction to think another way and uh for it to uh branch branch out again in terms of its diversity.
1:59:09
So um I think there's a lot of research here that is super interesting.
1:59:12
I'm not sure any of it is going to bear fruit because uh the the big labs are probably like two years ahead of us in the open research world there. Sure. Sure.
1:59:21
How do you how do you react?
1:59:23
Obviously that the dominant story this week in the wider world is the you know tariff uh tariffs and trade warns all that stuff.
1:59:32
Do you do you feel like it's like arguing over, you know, pennies as a AI sort of steamroller just like uh is about to roll over the entire economy?
1:59:42
Do you even give it any attention?
1:59:44
So, you know, I I I heard you guys ask the OpenAI guys about this.
1:59:46
Um, and like basically it's a rounding error, right?
1:59:51
But obviously the supply chain really matters for AI.
1:59:54
I think the US has benefited a ton from the global trade setup that we set up for ourselves effectively after World War II.
2:00:03
So, uh blowing that up may not be the best situation um if we don't have a more constructive or well-reasoned u end state that we want to be in. And I'm not sure we do. Yeah.
2:00:18
The White House hasn't given us a lot of uh uh uh comfort about where we're going. Yeah.
2:00:23
going. Yeah. I I I my take on it is like I think AI is probably going to be the the main driving force of like serious cultural and economic change over the next few years and uh no matter what happens if it's good both political parties are going to take credit and if it's bad both political parties are
2:00:40
going to blame the other political party for whatever happens and same as ever and really do you worry about do you worry about the immediate impact on the sort of data center compute supply chain broadly I know Elon was posting yesterday about how a lot of the conversation will maybe switch from GPU shortage to transformer shortages. Is
2:00:59
Is that top of mind for you at all or are you more focused on the transformer like power transformer?
2:01:07
Yeah, power transformers not the architecture.
2:01:08
So uh for for for reference uh the vast majority of transformers are the physical electrical transformers are made uh abroad and they're very very important as we start pulling gigawatts uh moving it around the grid to get into these large data centers. Yeah, I hear you.
2:01:25
Um well short term is like you know not my department so that's that's an easy out easy copout.
2:01:30
Uh yeah, I I think um the uh I I I think like whatever happens over the next two years, like we really don't know.
2:01:38
Like a lot of these negotiation like these are the start of a negotiation kind of.
2:01:42
It's just the way that Trump does it anyway.
2:01:44
So I like you know I'm not I don't want to get too much into that.
2:01:47
All I will say is like a lot of what uh I try to guide people to towards on AI engineering is utilization of existing capability.
2:01:54
Like so much model capability has been unlocked and it's not evenly distributed in our lives.
2:02:01
Like why do I have Siri that doesn't understand what I want?
2:02:03
It's because Apple hasn't shipped hasn't got a [ __ ] together. Like not frontier tech.
2:02:08
Like what Elon is dealing with, what uh what Sam Alman's dealing with, what Dario's dealing with is frontier tech.
2:02:14
And that requires uh giant data centers with all all this kind of research.
2:02:18
uh but really what AI engineers deal with is deployment of existing tech um into our into business and personal lives and I think uh there's a lot more to do do there and I think um you know while while the big boys figure out your political situation hopefully we still have enough power to like power you know the deployment of AI to the rest of the world.
2:02:39
On the topic of Apple, do you think they can afford to fumble the roll out of Apple intelligence just because they're of their position as you know the core consumer hardware provider or do you have strong take there?
2:02:52
Um yeah, I mean so the lock in of iOS, iMessage, um you know, the the drive, Apple cloud, whatever they call it, um is very very strong, but there's a time limit on this thing.
2:03:06
And for one, like I actually tweeted about this recently.
2:03:08
Uh when the iPhone like I'm much more excited for OpenAI to compete with Apple than with Google.
2:03:15
Like OpenAI currently is running the Google Playbook.
2:03:17
They're looking at like they're reading themselves by like, "Oh, ChachiBT is like the sixth traffic website in the world.
2:03:22
We want to go up, right?"
2:03:24
Um, but like Google is doing super well and like actually Google's pretty good.
2:03:28
Like we we we want to have a Google in our lives.
2:03:30
Um, but Apple has is really fumbling and they know it and when OpenAI comes up with the OpenAI phone, I think it will be a serious challenge to Apple because uh Open iPhone like the Well, just be smarter. You know it. Yeah. Yeah.
2:03:48
and like everyone would would try it and it will be the first serious challenge to the Apple iPhone since you know Steve Jobs presented it.
2:03:53
Jobs presented it. That's a great That's a great and people already have like such an extreme willingness to try new AI hardware that when you know the dominant lab comes out with something I think every single person we know is is at least buying it right if it's a
2:04:09
thousand bucks sure I'll take it like no no like you know I think it's just like the the people who want to do get serious about hardware um they've just been like the small guys like the the rabbits and the let's just let's just say call it the humans um but like if you get someone with the resources of OpenAI. I I really want to see if they
2:04:23
I I really want to see if they take a real run at it.
2:04:25
I mean, he's talked they have chats with Jon I if they've confirmed that it's in the works.
2:04:30
I don't know if like how serious it is.
2:04:32
They could still kill it, but I hope to God that they actually challenge Apple and Apple will get a [ __ ] together in in response. I completely agree.
2:04:37
Uh well, yeah, that's a fantastic take.
2:04:40
I'm looking forward to trying the OpenAI phone. We'll we'll see it.
2:04:43
And there'll probably be an XAI phone, too.
2:04:45
I mean, it might be a new new dawn in consumer hardware driven by artificial intelligence.
2:04:51
Uh, but thanks for stopping by. This is fantastic.
2:04:52
Well, we'd love to have you back. This is such a fun time.
2:04:56
I can't wait for the next one. Yeah.
2:04:57
And everyone, go check out the latest podcast he just dropped. Late in space. Yes. Do it. Cheers. Talk to you soon. Bye. Fantastic. Next.
2:05:03
Coming in, we got 4Erunner Ventures.
2:05:06
Kirsten Green, legend investor.
2:05:10
We uh we reached out actually initially after she dropped her 2025 trend report. Yep.
2:05:15
uh which is always fun to uh process.
2:05:19
Uh so I want to ask her about that and about a bunch of other stuff.
2:05:25
Yeah, the 2025 consumer trend report is out.
2:05:27
You can get it at forrunner ventures. com.
2:05:31
Um a deep dive into where consumers stand today and how major shifts are shaping new needs and opportunities all across um uh a ton of different um ton of different sectors.
2:05:44
It's a it's a quick it's a quick read. It's uh 200 slides.
2:05:46
Uh they really do their homework over there.
2:05:49
And uh here she is to break it down for us.
2:05:51
Give us the the 30 minute condensed condensed version of the 200 slide deck.
2:05:54
Uh yeah, I mean me and Jordy we're basically live three hours a day.
2:05:59
Not a lot of time for reading.
2:06:01
So if we want to, you know, consume something.
2:06:03
We want to hear it from the source.
2:06:04
We want to hear from the source. So thanks for joining. A quick rundown. Yeah. Uh how are you? Uh how are you doing?
2:06:10
I hope you're having a great Friday and and going into a great weekend.
2:06:13
Um but uh good to be here.
2:06:15
Can you uh c uh can you give a little background on you, your firm, and uh and the trend report? Yeah, sure.
2:06:21
First, thanks so much you guys for having me on. This is fun. Yeah, excited.
2:06:24
And it's uh you know, it's a it's a it's a crazy day with no shortage of action going on. Oh, yeah. Yeah, tons. Yeah.
2:06:30
Um so, yeah, I'm the founder um and managing partner at Forrunner and we're a venture capital firm.
2:06:37
We've been here in Silicon Valley for the last decade plus making investments um investments across here for a decade plus of investments.
2:06:46
We we love investments here.
2:06:52
Um and we um largely focus on early stage investing.
2:06:56
We have a diversified portfolio across sectors and spaces.
2:06:58
But we do have a thematic approach and a framework that we have kind of applied consistently for the past decade.
2:07:05
And that's really tracking what is going on with demand.
2:07:10
So where are the tailwinds?
2:07:13
Um and then we look for big technology shifts and business model changes and um and where business is not addressing that that demand.
2:07:22
And uh yeah, can you talk a little bit about uh I know I know you guys will do B2B as well, but it feels like you've always had a love, you know, for for consumer specifically, and that's gone in and out of popularity.
2:07:38
Obviously, when you started, I'm sure a lot of people said, well, why don't why don't you focus on SAS, you know, look at the outcomes that we're seeing.
2:07:46
Um, you typically start your reports by reminding people uh just how much of uh I think it's here on the the American consumer is undefeated. Yeah.
2:07:58
The seventh uh slide consumers drive twothirds of US GDP.
2:08:00
So I think that's probably like the anchor reason why it's been such a focus for the firm.
2:08:06
But I would love to hear um kind of your your take on it.
2:08:09
Well Jordy, that's one take. It's true.
2:08:12
you know, in that in the vein of tracking demand and demand being kind of the the driver of all of business, the twothirds of the economy and what's going on with the consumer is a is the most arguably the most meaningful force.
2:08:24
But really more than that, yes, it's true that SAS companies have returned lots of money to their founders and their investors.
2:08:34
It's been a steady contributor of of opportunity and venture.
2:08:39
But if you step back and you look at the last two decades, the biggest companies Yeah.
2:08:43
started with a consumer first approach. Yep.
2:08:46
So, you know, I would argue that like starting a business with the consumer first approach, if you are able to create that incredible gravitational pull and build a foundation from there. Yeah.
2:08:59
We've seen time and time again companies prove that they can take that foundation and leverage it into dynamic business models over time.
2:09:09
Can you talk a little bit about just the general health of the American consumer?
2:09:12
It's been a couple crazy years the last 5 years.
2:09:14
Things were things were going really well and then we had COVID and everyone was out of a job and then everyone got their jobs back and then inflation crops up and now people are worried about the tariffs and what that means for the economy.
2:09:26
Uh we've been in sort of a kangaroo market as they say jumping up and down. not a bull or bear.
2:09:30
Uh how is the health of the American consumer right now? Yeah.
2:09:34
Um well that is a big reason why we do this consumer trend report every year.
2:09:39
So you know as venture capitalists at 4Runner we spend the line share of our time thinking about the future and where things are going.
2:09:46
But to understand or have a view on that it is really important to step back and take stock of what's going on today at any given point in time.
2:09:52
And so you know the exercise of getting out of our own bubble and sort of taking a pulse of the of the country of the globe from the person you know the people on the ground um we feel like you know is is um is illuminating.
2:10:08
So you're right in saying that the last five years have been crazy filled with uncertainty.
2:10:13
So you know I think we're all trying to kind of process how we feel about the current ongoing tariff discussion right now. Yeah.
2:10:21
And I think I feel like I did in March 2020. Oh yeah. What's happening?
2:10:26
Like uncertainty rules the day and here we are again.
2:10:28
So, you know, I guess the good news coming out of that big period of co uncertainty is that we have all learned to have an incredible amount of resilience.
2:10:38
We've been forced to do that.
2:10:40
So, you know, I think when we check in with the consumer, we see a good deal of that.
2:10:44
But we also, you know, definitely see some movement towards people feeling like they need to stand up for their own security and safety, that they can't count on the structures and the norms that maybe have been in place for a very long time.
2:10:59
And this is a time period where having more agency over your own life and your own actions um is something people are craving.
2:11:08
So, you know, I think we do, you know, 200page slide deck.
2:11:11
you know, 200page slide deck. There's a lot of government data in there and a lot of just kind of you know taking taking stock of the actual data and then we go to interpret some trends and really we focus it you know I mean I think it would say if we just look at 2024 we describe what we heard from
2:11:26
people and this is a a lot of survey work in addition to a lot of reading and a lot of kind of number crunching and processing but it was kind of a middling year you know it kind of just lived in the middle from from all measures like from all the data metrics but then also if you look at like the cultural norms. Most of the movies were kind of follow
2:11:43
Most of the movies were kind of follow on second generation movies.
2:11:45
Same with the music, etc.
2:11:47
So, and you know, the the word of the year was like brain rot and something else slop. Yeah.
2:11:53
You know, so I I think that you had a consumer that's quite fatigued from going going through kind of the the the craziness of of of what the world has been.
2:12:03
But at the same time, in that agency and in that desire to do things, there is like I'm going to, you know, I'm going to pick myself up.
2:12:09
I'm gonna take some action and I'm going to, you know, look for having more control over my career, over my spending, um, over my health care.
2:12:19
We we went, we took a deep dive and we do this every year.
2:12:21
Kind of pick a few things that we think are particularly important in the context of that demand equation and also in the context of investing because it is in service of sort of uncovering investment focus.
2:12:34
And the couple of areas we looked at this past year were health security and of course Gen AI.
2:12:39
So on the health front this is you know perhaps the big the biggest trend um in my you know nearly 30 years now of of investing.
2:12:47
I think the biggest trend that we've seen um people are there is a the growing willingness to spend on health um and and themselves and outside of the system.
2:13:00
So you know 60% of the people describe health as being their number one priority even above friends and family the wellness economy.
2:13:07
So when you know when you think about health it's not just the um I already have a problem I'm I'm at the doctor because of that problem.
2:13:16
It's the effort of proactive health which has really been a huge area of growth.
2:13:20
The wellness economy which includes that is a $1.
2:13:22
8 in a trillion dollar economy and it's actually growing six times faster than the economy in general.
2:13:30
Um, so you know, I think that the the dollars are there.
2:13:32
The scope of what people are willing to pay for is evolving.
2:13:36
You're seeing people more engaged in supplements, more engaged in therapies, more engaged in their workouts, more engaged in in in um doing things like MRIs or blood testing or biomarker testing.
2:13:49
So this is, you know, this is a huge area of um it's it's fueled by both a breakdown in the system as well as just more information and people realizing that they have some ability to, you know, shape the future of for their own health. Yeah.
2:14:04
Do you feel like you're seeing enough founders take the concept of wellness sort of like seriously in Silicon Valley?
2:14:11
Like we I take it very seriously.
2:14:14
John and I have this funny dynamic where like John has this joke that like if I had a single inorganic blueberry like I would die and John meanwhile just like eats whatever's in front of him and I could eat a I could eat a credit card with a knife and fork. Yeah, exactly.
2:14:26
But I but I feel like when you when you just when you just look at the data and understand how big the market is, how fast it's growing, you would think that 20% of new startups would be like targeting this opportunity.
2:14:41
opportunity. yet it doesn't necessarily feel like I I want to talk about like the like like there's so much opportunity in health but not everything is going to be venture scale even talking to our friend Justin Mayers he has kettle and fire bone broth company it's not really this like hyperrowth raising every 18 to 12 months 12 to 18
2:14:58
months he's done great with that business then true it's more of like a fintech platform has venture written all over it and so uh how are you looking at the opportunity in health across the lifestyle business that's just going to not really raise grow a private equity rollup, maybe buy all the gyms and aggregate them versus a true venture scale. Okay, this can be a public
2:15:16
Okay, this can be a public company.
2:15:18
How how how do you assess that?
2:15:20
Where's the opportunity in health?
2:15:20
You know, I mean, obviously that's a really important point, right?
2:15:23
There's a lot more businesses getting started every day that are not appropriate for venture scale.
2:15:29
There's a very unique set of traits that you're looking for in in venture.
2:15:33
And I think that, you know, beyond beyond addressing like a a tailwind and and having that opportunity to to play into, you know, you really are looking for like does this is this a business that gets stronger as it gets bigger?
2:15:47
What are the flywheels in the business?
2:15:49
What are the frictions to getting it going and starting?
2:15:51
How do how like is the compounding effect a a benefit to the business?
2:15:55
And does that give them like competitive advantages over time?
2:15:59
Obviously, one of the big things we're looking for is like what businesses have a chance to define categories and be real runaway category successes.
2:16:07
So, that is extraordinarily hard to do if you don't have like a real business model advantage at the root of what you're doing.
2:16:15
And um a lot of um you know I think sometimes we have convers I often get asked about DTOC companies and I kind of cringe a little bit because I think to myself like you know we weren't ever here or we haven't actually made an investment in a product company per se.
2:16:30
We've always been looking at like a business model shift and a behavior shift.
2:16:34
So I think at this point like there's a lot of the business model shift from moving online or moving multi-dimensional or things that a lot of those like those businesses that you described as lifestyle or products are playing into.
2:16:46
You know that the early wins in that have played out.
2:16:48
We're now like what I think is really exciting today that really maps really well with a lot of opportunity in health is the power of Gen AI and how that can actually make experiences personalized, more immersive and more productive. Yeah.
2:17:03
So on that note, I I imagine there's companies like some of the opportunities that you get most excited about are like a company you invested in 5 years ago.
2:17:10
Maybe they're focused on therapy and then now they realize they have this opportunity of hey, we can make therapy cost like 99% less through things like Gen AI and potentially deliver similar results, right?
2:17:22
We saw I think it was earlier this week there was a study that came out that showed uh generative AI based therapy was was you know delivering pretty dramatic results.
2:17:34
So how how excited do you get about you know basically companies in the portfolio that you know not even just new companies that are pitching you or you're making investments?
2:17:40
Sam Leon called it uh AI is a cherry on top as opposed to trying to get into the foundation model or this like magical oh we're going to redo the whole thing with it AI.
2:17:50
It's more like AI enabled businesses actually.
2:17:53
Yeah, we we think about it.
2:17:55
We sort of describe businesses as AI en AI led, AI enabled or AI boosted.
2:18:01
Basically, every company needs to find a way to be AI boosted.
2:18:03
And you can imagine there's like a lot of degrees of that.
2:18:06
You can use AI in your HR department and your finance function or you can reimagine your product like you just suggested Jordy and like you know make your your therapy product even more efficient.
2:18:17
Um, and then the enabled businesses are ones that at least our look at it is like a product or a service um that wasn't possible really without AI because it wasn't cost possible um and it it it actually you couldn't do it.
2:18:33
So you would think about like the example of like if you had a network of of of of therapy therapists and you built them you know human kind of onetoone and you were making that connection online.
2:18:42
Um, now now that is a unique case where you can actually add AI into your product and really kind of add a whole new dimension to your your business from there.
2:18:53
That's probably true for a number of businesses, not most businesses though.
2:18:58
Um, yeah, that makes sense.
2:18:58
Um, can you talk about uh, you know, the Studio Gib Giblly moment was amazing for me because it felt like uh, there was one thing one it it felt like we entered the sort of post slop era where like last year it was like, you know, uh, AI generated content that was cool but not like it wasn't beautiful.
2:19:18
Six fingers, it looked kind.
2:19:22
But now you can get this sort of like handdrawn Japanese animation of of a picture you took a second ago for free effectively. It's joyful. joyful.
2:19:29
And so, but the thing that the thing I get excited about is like the giblificication of the rest of the economy and other consumer um other consumer experiences like you know just going back to the therapy example like it just feels like this concept of abundance and these sort of like incredible products that can be delivered to consumers for dramatically dramatically less cost.
2:19:53
Do you do you have any type of thoughts around you know it will take some time but my my personal theory is that sort of um same effect will happen in a bunch of other categories.
2:20:04
I mean 100% like I I think this is a golden age opportunity to make you know much much more incredible products and experiences.
2:20:13
In fact we're talking about it like you know we were living in 2D and Genai is the power to take us to 4D and skip right over 3D.
2:20:22
right over 3D. Um and you know by that I mean like we've been talking about for instance you know 20 years now we've been talking about personalization um it really hasn't happened if you kind of look across imagine you go to a website you know how personalized does
2:20:36
it feel like it's pretty much the similar experience than if you know I went to the website you went to the website so I think personalization not has not happened it is now really possible in a in a really deep immersive way with Gen AI and you've just got a lot of more productivity that can happen. We don't we haven't seen the
2:20:54
We don't we haven't seen the whole agent thing play out but it is definitely on its way and um and I think you know that plus creativity plus efficiency like imagination's open like so many more things are possible.
2:21:06
I I want to talk about lessons from the COVID turmoil in relation to the current tariff chaos and turmoil.
2:21:13
Um, I was thinking about we we we talked to a few founders who were massive beneficiaries of the tariffs honestly because they've their whole bet was made in America and so when these tariffs came in they're like our business is booming.
2:21:27
Um, but as we saw with the shift to work from home we saw massive booms in Pelaton and fitness equipment that was you know any e-commerce company did really well and then there was kind of a you know back down to earth moment.
2:21:41
uh what advice would you have for entrepreneurs who are maybe uh about to go on a generational run uh on the back of the nar of of the tariffs narrative?
2:21:51
How can they build their businesses more effectively and what uh what are you looking for in terms of durability on the investment side?
2:22:01
I don't know that I fully processed like what's going to happen with these terrorists in terms of the durability of business but but the way I am thinking about it right now is that I don't think anybody I I think we're all in this together.
2:22:13
I think every business is all in this together, right?
2:22:14
So perhaps you make your products at home.
2:22:17
Um and perhaps the things that you use to make your products uh you get at home, right?
2:22:24
So you're really not going to have a cost change. Yeah.
2:22:25
But everything else around you is changing, including how much money people have to spend and how they're reorienting their dollars.
2:22:31
So I do think that everybody needs to think that much more carefully and closely about the value of their product, who needs it and why, and what service are you delivering.
2:22:42
Everything just got a bit more competitive in that context. Yeah.
2:22:48
As you also do think like it's it's hard to um you you've got to learn to be nimble and navigate these crazy strange times because almost like these crazy strange times aren't crazy strange times anymore.
2:23:00
They're just sort of there's there's one after the other, but they do change and evolve, right?
2:23:04
And like you mentioned at the beginning of COVID, like I think we all, you know, at first thought, wow, like everyone's going to hunker down, no one's going to spend, it's going to be really scary, business is over.
2:23:16
And then you saw people at home thinking, you know, I deserve a nice thing, I deserve a this.
2:23:21
And shopping went through the roof, right?
2:23:22
And people came out of COVID and they went to travel and they shifted dollars again. It's nimble. Being nimble is the key.
2:23:29
Sorry to shift back to generative AI, but it's I mean it's a fascinating topic.
2:23:32
Um I've I' I've been kind of uh obsessed with this idea of like the the the GPT rapper meme being maybe almost harmful to entrepreneurship.
2:23:43
People aren't taking enough risk because they're hearing if I build a rapper, no one will take me seriously.
2:23:48
It's low status or maybe I won't get funding.
2:23:50
Um, but do you think that like we I mean we just talked to the founder of Honey, the he built a Chrome plugin that sold for a billion dollars.
2:24:00
Like like it's incredible, right?
2:24:02
And so I I wonder um and and at the same time we've seen a lot of slowed innovation at the big consumer tech companies where pretty much everyone's asking like, hey, why why isn't Siri better?
2:24:14
better? And maybe I I guess the question is is something about um is is advice to founders like shoot for the moon you'll land amongst the stars there will be acquisitions of rapper products and if you just create customer delight that's beneficial in Gen AI or is it kind of
2:24:31
just everything's changing so fast uh just get out there make something cool make something people want and then you'll figure it out or or or are you really trying to dig in and say we need to have a super concrete thesis about how this becomes
2:24:45
a hypers scale business before we invest or really go and build what a lot in that question I just thought about four different things I wanted to say let me see hopefully I can get them all out but um so this idea like I don't think all rappers are created equal right so LLMs
2:25:02
are foundational that is like the backbone from which we can all build from so I I I think anybody using that to their advantage in their business is just being smart a business that is eager for the LLM to keep getting better because it has the potential to make their product better. Like that's where
2:25:17
Like that's where you want to be building, right?
2:25:18
Then you've got to think about all the things that I would say that we've always thought about which is like um what's the value of your your product or your service or your software like who needs it and why?
2:25:30
How do you keep innovating and growing?
2:25:32
How do you build a business around that?
2:25:33
Like those things I I think you know hold true always and um and are critically important.
2:25:40
I I think the idea of like I'm just going to build something cool and fun and they will come and that will be interesting and that playing out to be a successful multi-billion dollar company.
2:25:48
I I'm not sure there are many examples of that.
2:25:50
Um but at the same time I want to back up and say that like the way we're approaching the market right now in particular with this new like kind of the beginning of this new cycle if you will is most we're holding two things kind of front and center.
2:26:04
One is just the big the idea of like a a market tailwind that you're building into like there's a real demand, there's a real need, there's a real opportunity and um and that kind of ties to where we started earlier in the conversation, which is just understanding like where those where those pockets are, where business is missing the mark.
2:26:23
And then it's about the founder.
2:26:24
It's about the founder and their vision for the future and their idea about um how a product, how a service can make it better.
2:26:31
And um and I think you all you really know at the very beginning is it's going to play out different than what is it ever ever whatever pitch deck you're looking at.
2:26:42
But I do think you can tell if somebody's got like a real pulse on um on on where things are going, where they want to take things like the world they want to make and show and how um how nimly and tactically they can play and execute with these new technologies.
2:26:59
Uh can we talk about education and and learning briefly because I feel like you know we've seen the adoption of chat GBT at you know every college campus and high schools and things like that and and maybe there's this early surge of
2:27:13
usage that's not so great for kids that are trying to learn how to write and think and things like that and and uh you know we want people to actually you know learn how to communicate and and and reason through things. Um but at the
2:27:24
and reason through things. Um but at the same time the the potential of every single you know person in the world having a tutor in their pocket is just so you know couldn't can't be sort of understated and maybe is not getting um enough uh enough almost like hype right but I'm curious how you are are I know
2:27:45
you've made a bunch of you know investments in the space over the years and I'm sure those companies are thinking of I mean I am really bullish on this opportunity Jordy like I think if if you look at like the foundation traditional pillars of life, your health care, your finance, your career, and your education. Like education is is
2:27:59
Like education is is arguably behind them all in terms of transformation.
2:28:05
I I have a kids in grade school and their school books look the same as mine did 30, 40 years ago. It's unbelievable.
2:28:12
We need to move the future forward.
2:28:14
Sure, you can use ChatG to cheat, but actually, we need to teach our kids how to use generative AI to their advantage because I think like for me, I'm having so much fun.
2:28:24
I have a I have a I have a thing in my pocket.
2:28:26
I could ask any question I ever wanted to. Yeah.
2:28:30
And then I could follow the thought through. That's the best part.
2:28:33
It's not just search to get an answer. It's like search.
2:28:35
It's like pose a question, get an answer, and then play with it.
2:28:38
Keep going down the rabbit hole or take your essay and say, "I need to I need to work on this point a little more.
2:28:44
I'm struggling with this thing.
2:28:46
How do I move this around?"
2:28:46
like that is an has a huge opportunity to um you know continue to peak and drive curiosity, help us think deeper and you know kind of and and learn and um yeah and on that honest to like encourage kids how to use it like constructively.
2:29:02
Do you think that that's an area where voice specifically can, you know, get really really meaningful adoption?
2:29:09
Because the example you're talking about is like I'm writing an essay and I'm struggling with something in particular and theoretically somebody, you know, a child could have the experience of their teacher just sitting, you know, with them writing and being able to talk out loud.
2:29:23
And I don't think we've seen voice uh adoption as an interface as much as some people would have thought 10 years ago, but it feels like maybe now is the moment, right? Voice is so exciting.
2:29:36
I I do think that um when we when we're able to make voice a main mode of communication digitally, we're going to get so much more information.
2:29:48
And it is the information that continues to power and tailor more personalized and engaging experiences.
2:29:52
So the the amount people share if they have a a voice, you know, a a speaking opportunity versus a typing opportunity is tenfold.
2:30:02
So I do think I do think that's a big unlock.
2:30:05
And I think, you know, this is a good point because this is how this is going to unfold.
2:30:08
Like we're just in the early stages of seeing what's possible.
2:30:13
And um you know there is some very exciting voice technology out there and you know everyone's been buzzing about the company Sesame what they have is pretty amazing. Yeah.
2:30:21
Um so you know it's it's definitely on the horizon in the near-term horizon. Yeah.
2:30:28
And la maybe last question for me for now and would love to have you know continue to have you on to kind of run these ideas down but uh how do you think about AI adoption because it's hard to compare it to the internet because it feels like everybody's used AI now and
2:30:45
everybody probably not everybody right like we had we both had Giblly posts go viral and we had people quoting it not knowing how the images were being created and like they seemingly didn't know what chat was oh there must be a new filter app in the app store. They
2:30:57
They don't know what open Snapchat or whatever.
2:31:01
So, we haven't reached, you know, full adoption of of some of these new tools, but it seems like everyone's using them in in some capacity, even unintentionally, like I Google search and I get an AI summary.
2:31:12
So, how do you think about AI adoption?
2:31:14
Is it is it just um businesses, you know, fully taking advantage of the technology and that's what we need to look at?
2:31:21
Because I know I love this question, Jordy.
2:31:23
I'm glad you asked it because this was one of the more interesting things that came away from our survey data.
2:31:28
I I think I should have this data point in front of me while we're speaking, but I don't.
2:31:33
But it's like 60 or 60 plus of the people percent were like actually had said they were using AI regularly. Yeah.
2:31:42
Now, what does that mean?
2:31:42
That probably means chat GPT cla you know those.
2:31:43
But like people are here for it.
2:31:46
I mean 500 million people was a number I read a week or two ago about Chad GPT and then I heard a bigger one later.
2:31:54
Like that is a that is that is like kind of trial.
2:31:59
Let's call it trial at this point because we don't really know what adoption's going to look like.
2:32:01
But I do think that it's it's growing incredibly rapidly and I do really believe that people like they're ready for it.
2:32:09
We just have to build for it.
2:32:11
You know this my call for like founders to build for it.
2:32:15
like people you you know you build it they will come they are ready for it.
2:32:20
Yeah, it's certainly faster. We had a conversation.
2:32:22
We had a conversation before this.
2:32:23
It's like, you know, everybody wants to build AI infrastructure.
2:32:26
We need more people to just build uh the AI, you know, the agents, right?
2:32:31
Like build the hard stuff that, you know, so much opportunity.
2:32:36
Just think about chat GPT is to this generation what Google was to the last.
2:32:42
And if you think about Google as like the place where you know the front door, you go there, that's your big search.
2:32:47
But if you want to like look for real estate, you go to Zillow.
2:32:49
If you want to understand about a company, you go to Glass Door. A job, you go to Indeed.
2:32:52
Or you want to travel, you go to Kayak or Expedia.
2:32:56
You want to go to Open Table for a restaurant, you you know, there's there are these like big categories that have, you know, lots of nuances that really deserve and warrant unique experiences.
2:33:08
Like, let's let's build them for AI. Yeah. Where are they? Come pitch me. Yeah. I like it. Yeah, go pitch Kirsten. This is fantastic. Fantastic.
2:33:18
Thanks so much for stopping by.
2:33:19
Yeah, thanks for coming on. Yeah, this is great. Thanks for having me.
2:33:22
Yeah, have a great rest of your day. Have a great weekend. We'll talk to you soon. Talk soon. Bye. Bye. Cheers. Very much.
2:33:28
We didn't even get to the into the security thesis, which is uh maybe the most underrated in that report.
2:33:33
There are there are health tech investors, there are Gen AI investors, there are consumer investors, but I have yet to hear someone really I mean she created a whole market map for this idea of like security as a key market and it includes some health stuff, it includes some finance stuff, but it was an interesting uh thesis and trend that we'll have to dig into more.
2:33:49
Um, but in the meantime, we got David Prell here. Welcome to the show. What up, boys? How you doing? Looking great, dude. Look at you. Thanks for dressing up.
2:33:56
I figured I'm coming on hanging out with the tech guy.
2:34:00
I'm gonna I'm gonna dress up. Yeah.
2:34:03
Well, it's great to great to have you. How's your week been?
2:34:05
You know, I had a white shirt but couldn't find my cuff link.
2:34:08
So, major issue 15 minutes ago. No, no, no.
2:34:10
You're looking fantastic. You look fantastic. How's the week been?
2:34:16
How have you been uh processing all the recent AI news?
2:34:20
What's new in your world? Dude, week's been good.
2:34:22
I uh I was driving over here.
2:34:24
I saw my first ever Austin car chase.
2:34:24
Uh so, is that a regular thing?
2:34:27
Uh no, I've never seen one before.
2:34:30
You know, usually an LA thing.
2:34:31
And I must admit, I got a speeding ticket on Sunday in Tennessee, so it was good to see the red, white, and blue lights in somebody else's rear view.
2:34:41
What uh what were they drive?
2:34:41
Was it like an F-150 being chased by Dodge Charger?
2:34:46
It's always the crappiest car that you've seen all day. Yep. Less to lose.
2:34:51
Less to lose, more to run for. Yeah, exactly. Exactly.
2:34:53
Um there's so much to talk about.
2:34:56
I mean, one, you should have been one of our first guests. Um but you still are.
2:34:59
You're still in the first 200 guests. It's no big deal.
2:35:03
Yeah, we've been we've been racing through the guests.
2:35:05
Um but yeah, I mean, did you want to start with his uh post, his thread? Yeah, let's do it. Yeah.
2:35:10
Um c can you set that up for us?
2:35:12
Just kind of like general reactions to uh AI writing kind of the studio Giblly moment.
2:35:18
You're clearly thinking, your wheels are turning.
2:35:19
A lot of stuff is going on in your head, and I think you kind of synthesized it well, but I'll let you tell it yourself. Yeah.
2:35:24
I mean, we're just Look, I've been teaching writing for the last six years and I've taught few thousand students and I had a moment in November. You know what happened?
2:35:35
I had a guy who was working for me. He sent me a memo.
2:35:36
I said, "Dude, this the best thing you've I've ever seen you write." He goes, "AI wrote it.
2:35:42
I was at a dinner last night and I wrote up some notes and then I just asked AI to summarize it." And I was like, "Whoa." Wow.
2:35:48
And I shut down Write a Passage November 11th and then I went to Argentina in December. Mhm.
2:35:53
And it was my first vacation in a few years and I want to learn about the country.
2:35:57
So I was just using AI and I was doing like 50 to 70 prompts per day and I was like, "Oh my goodness, this is this is insane."
2:36:04
And basically, fast forward to now, we're in March or we're in April.
2:36:10
And I mean, the writing's on the wall.
2:36:12
Um, AI is going to just completely transform writing.
2:36:15
And this week actually, I got my first ever rejection for how I write because somebody doesn't like that I'm talking about AI, that I'm promoting AI.
2:36:26
So now I think what you're beginning to see is a big riff, right?
2:36:31
There's going to be certain people who say, "No, um, writing with AI is absolutely taboo, not cool.
2:36:36
There's going to be the purist, the lites, and then there's going to be other people who just go full steam ahead and they're going to say, you know what, this is the future."
2:36:43
And it's really taboo right now to write with AI, but if you talk to people behind closed circles, there's a lot of tech forward writers who are like, "Whoa, I can like 34x my output."
2:36:55
And they've basically built custom prompts, custom software to to help them write better. Yeah.
2:37:00
Yeah, I mean Ben Thompson has kind of a thesis around this with the, you know, the the printing press reduced the the the the replication cost and the internet drop distribution cost to zero because you know no longer needed a paper route.
2:37:12
Now it's the instantiation cost has gone to zero, but there's still that human in the loop for actually generating the novel ideas or even just bringing the idea or the fact or the information to the chain.
2:37:27
I I talked to some reporters.
2:37:30
Uh, how is AI changing your job at the Wall Street Journal?
2:37:33
It's like, well, writing up the fact is the least hard part about the job.
2:37:37
And yeah, maybe it took me from that being one hour of my day to being five minutes of my day, but 90% of my day was still talking to people, understanding what's going on, surfacing new facts, and then bringing those to the readership.
2:37:51
So, do you think there's still value in being a writer in the sense that you are a generator of ideas or novel information?
2:37:59
And yes, you are using AI as a tool to instantiate it, but AI hasn't really replaced your importance in the world. Yeah.
2:38:06
So, let's just preface this.
2:38:06
We're going to talk about non-fiction writing.
2:38:10
That's what I know a lot about.
2:38:10
Fiction is not really um something that I can speak nearly as well about.
2:38:15
Um but I went to a Peter Teal lecture last night.
2:38:19
He's in Austin and he's doing these these lectures on the Antichrist.
2:38:21
And I was at the lecture last night and I was thinking a lot about this, right?
2:38:28
Because you know Peter, he's a really interesting guy.
2:38:30
He's always looking for what is the thing that people are talking about that other people haven't found.
2:38:36
And I think that the lecture showed um first of all that of course there's so much edge in just finding the things that other people aren't talking about.
2:38:45
Uh but then also I was you know I went up to someone who I he worked with after I said hey I think the lecture could have gotten better in this way and this way and this way.
2:38:53
All this is to say that AI can't do that work for you and it's through the process of writing that you're really working through your ideas.
2:39:01
You're trying to say how do I frame this better?
2:39:02
How do I shape this better?
2:39:04
But what I do believe is that basically any form of writing that is driven on pure utility.
2:39:09
So, we're talking um business memos.
2:39:12
We're talking emails that your lawyer sends you that are fairly standard.
2:39:17
Pure utility, not about the art of writing and not about basically maximizing the quality of thinking.
2:39:24
I think basically all of that's going to be written with AI.
2:39:26
So, and only in a few years, you know, by the end of 2026, 2027, we can just assume that that'll be the case.
2:39:33
But absolutely, if you're really trying to be a maximizer and not a satisficer, that'll be major human in the loop big time.
2:39:44
What do you think happens to our thinking abilities as humans and our clarity on life, business, work, our relationships when so often we have just this like, you know, perfect autocomplete of everything that we thought we were going to say.
2:39:59
thought we were going to say. is sometimes when I'm, you know, let's say I'm like writing an email to John or one of our partners or somebody we want to work with the act of it's sort of annoying that taking the time to think about the um you know what I want to say
2:40:13
and how I want to say it and and you know what what I'm trying to convey it gives me clarity on that relationship or that whatever activity that we're doing and in a world with like perfect autocomplete or suggestions maybe theoretically I can just you know think
2:40:29
about it for a while myself or autocomplete send send it and then think about it but the reality is there's so much distractions in life so maybe everybody just moves like all the time that was spent writing emails just moves on to you know Tik Tok or or X and it's just like you know you're autocompleting
2:40:45
and then there's there's there's brain rot that's that's sort of like a a dark take on it but are you worried about what humanity loses by not thinking through writing I'm absolutely worried I mean I see major white pills and major black pills here. Like I think that if
2:40:59
Like I think that if you're not seeing the pros and the cons, and I mean major pros and cons, you're you're you're missing out in a fundamental way of what's really going on. Um I agree with you.
2:41:09
I think a lot of our information is or a lot of the way that we communicate is like, did this person actually write it?
2:41:16
And I think that what's going to end up happening is you sort of see this in the differences like have you noticed like how big of a separation there is between the vibe of like your private group chats versus like what you feel in public.
2:41:30
I feel like the private group chat vibe is just going to be like go even more.
2:41:34
We're going to have to learn to write with voice and really show off our distinctiveness in writing as almost a adaptive way to say hey this isn't written by LLM. Yeah.
2:41:44
And at the same time, I completely agree.
2:41:47
I mean, I think that, you know, people are super busy.
2:41:51
And the one thing that we've learned time and again about technology is that people value convenience.
2:41:55
You know, like I listen to music all the time on my crappy iPhone speakers because I don't want to get up and walk to the other side of the room and like hook in my USB cord.
2:42:04
And I think you should never bet against humans going for convenience in the aggregate. Um, I think about that.
2:42:14
That's how I'm thinking about it. Yeah.
2:42:15
I I think about that that web comic or meme all the time where it's like, "Wow, this AI was able to take my five bullet points and turn it into a whole essay."
2:42:22
And then the and then the guy receiving the email is like, "It took this really long email and turned it into just five bullet points."
2:42:29
And and I have noticed that I'm doing way more work now, not over email, but just over text message.
2:42:33
We coordinated this interview entirely over text message.
2:42:36
I don't think a single email was exchanged.
2:42:38
Um and and I imagine like there is this world where maybe we just do away with that intermediate step of like instantiate this as like we all know that we could turn this into a 20page research paper if we wanted or a or you know 500word blog post but really the takeaway is just what I could put in my group chat in one line.
2:43:00
So communication just, you know, condenses down and and it's just like people saying their base interests like I want status, I want security, I want security, you know. Yeah.
2:43:09
I mean, Dan Kesh had a great line about this.
2:43:11
He was like the the the recipe to being a good poster on Twitter X is just write like you're posting in a group chat and just and just say just exactly what you were thinking.
2:43:22
Don't try and words smmith it into this big thing.
2:43:23
Just post exactly what it is.
2:43:25
Like if yo, this is the age of vibe.
2:43:28
the age of vibe. like this is super high vibe times because basically like if I'm teaching writing and you're like all right DP what are you going to teach people what I'm going to say is like what is your vibe and how do you get it out into the world y and how do you communicate that through writing and so you're seeing a few things personally I'm investing a lot in like rz and vibe
2:43:49
and I'm trying to think about how do I do those things it's working like yo I'm putting my money where my mouth is one thing I did started a few weeks ago I've become a greeter at the church to get a lot better saying, "All right, how do I, you know, get better talking to people, saying what's up, you know, doing all the sort of frankly like shallow conversation that people rail on?" I'm
2:44:08
I'm like, "No, I want to get good at that."
2:44:12
And then when it comes to writing, whenever I'm writing even like a text or something like that, I'm thinking, what is the energy that is unique to me and how do I get that in writing?
2:44:20
And frankly, like I don't really know the answer, but that's the major question I'm asking.
2:44:25
And when it comes to writing, I think that's what people should be thinking about a lot more. Yeah.
2:44:30
We uh we like to call it the golden retriever mindset here in the age of intelligence too cheap to meter.
2:44:34
It pays to be hot, smart, and dumb or hot, friendly, and dumb.
2:44:39
And so you got to be just super friendly to everyone, uh looking good, and uh you don't need to worry about, you know, being too too much of a cases, as they say. Exactly. Exactly. Face allowed. Yeah.
2:44:53
Yeah, it's interesting to think about uh specifically agents in in the context of the the workplace.
2:45:00
Like it's very possible that likability becomes a core reason why somebody has a job because somebody's running a business and they go, uh, I really like David. I like being around him.
2:45:13
I want him here even though, you know, we could get an agent to do this.
2:45:17
Like it's more fun to have David around. Yeah.
2:45:19
It's like the one the one person 1 billion dollar company.
2:45:22
It's actually gonna be like one person creates a1 billion dollar company and then like brings on nine of his friends just because like why not split it?
2:45:28
It's a lot of money and like you like to hang out with other humans. Yeah.
2:45:33
I think well I think you're going to sort of see the bifurcation.
2:45:35
It's like I think that as if you're like thinking about oh talk about me.
2:45:39
So like I'm thinking about my career.
2:45:41
I'm like on one hand I really want to invest in the human things looking people in the eye having better conversations.
2:45:48
eye having better conversations. How do I show love and like actually connect with people at a far deeper level and all those sorts of things that have always been core to the human condition but now we're like wait hold on intelligence is getting too cheap to meter that actually isn't as something
2:46:05
that's unique to humans anymore and then on the other side like you know you just think of the super cracked engineer who is really good with cursor really good at writing um you know I'm talking to some friends who are building AI enabled agencies and now they're working with like five times as many clients because they're like boom boom boom boom boom. Um, but most of the people I'm talking
2:46:24
Um, but most of the people I'm talking to like entrepreneurs and stuff, they're beginning to Justin Mars has a good line where he says that the company is going to look more and more like the hedge fund where what you have is you have fewer people super highly paid.
2:46:35
And one of the things that I've noticed is it's been a real head scratcher for me like why has the managerial class adopted AI so much more than the sort of frontline workers? like what is going on?
2:46:48
Cuz if you look at sort of the archetypal roll out of technology, it's usually the young people who are the early adopters.
2:46:57
And there's a way that that's not true with AI.
2:46:58
And here's my working theory.
2:47:02
My working theory is that the way that you work with AI is basically like a manager.
2:47:06
So if you think of what do you do as a manager? You set a vision. You delegate the task. You say, "Hey, do this."
2:47:13
You expect it's not going to be good enough. You're giving feedback.
2:47:15
And you're going through the cycle.
2:47:17
and then you ship it, right?
2:47:18
That's how we work with LLMs.
2:47:20
If you're a frontline employee, you don't work like that at all.
2:47:24
So, this is super disruptive to your work.
2:47:26
And all this is to say that a lot of those managers, too, if you talk to them behind closed doors, you know what they say?
2:47:31
My hardest problems don't have to do with the work.
2:47:33
It has to do with the people.
2:47:35
And now I can take out the people.
2:47:37
Once again, I think it's super dystopian and also pretty exciting.
2:47:40
Uh both of them at the same time, but that's what I see happening right now.
2:47:44
Uh shifting gears, can you talk a little bit about the uh the religious vibe shift in tech?
2:47:50
I've had a number of uh reporters reach out to me, hey, I'm writing a piece because I saw Augustus Dico had a cross on his neck or something like that.
2:48:00
Uh you've been in this uh millu for forever.
2:48:06
Uh what what is the mainstream media getting wrong or right about that narrative and that shift? Let's see.
2:48:10
So, I'll just give sort of my take on the shift is um we've had a few things happen.
2:48:17
So, the first thing is the more online you are, I think the more that you've looked at what's happened basically since about 2012, maybe 2016, last 10 to 15 years, and you've just said something is strange about society right now.
2:48:32
You see co, you see the Hunter Biden laptop story.
2:48:34
I mean, there are so many ways that we've been lied to.
2:48:38
Um, I was thinking, you know, uh, in the early 2010s, if you went away for five years and you came back, what would be really confusing was the rise of social media.
2:48:48
In the late 2010s, if you went away and you came back, what would be really confusing is how much morality had changed.
2:48:54
What you could say, what you couldn't say completely changed.
2:48:56
And for me, I looked at, wait, hold on.
2:48:59
The all of our moral codes are ebbing and flowing.
2:49:04
There's all of these ways where we've gone from a kind of a democracy to a bureaucracy and and I don't want to live in that world.
2:49:13
And as I looked at it, I traced a lot of that to a kind of atheism where Malcolm Mudgage, he has a great line.
2:49:21
He says, "The problem with atheism isn't that you believe in nothing.
2:49:25
It's that you'll believe in anything." Mhm.
2:49:27
And so I watched people with empty their their bodies as empty vessels adopt completely rotten and corrupt ideas.
2:49:35
And I think a lot of people including myself by the way and I think a lot of us who are more online have seen that cycle play out and we've said hold on here I don't like what I'm seeing.
2:49:46
seeing. So then we take a step back and the more techoriented people we've seen people like Peter Teal a lot of us have studied the work of Renee Gerard and we've said you know what smart people like Peter and Renee they're talking
2:49:59
about Christianity there might be something here and then um for me what happened is I looked at that for five or six years I really studied it deeply and I came to the conclusion that Christianity wasn't just useful but it also happened to be true. Can you talk
2:50:10
Can you talk about how you would walk someone uh away from the cliff that is utilitarianism?
2:50:21
Uh I would just say look that's that's probably not the frame that I would take.
2:50:26
Um what I would just say in terms of if I was um talking to somebody about faith, what I would just say is I'd probably be more likely to talk to someone about, hey, look at what's happening in the world and are you, you know, are you happy with it?
2:50:43
I mean, if they're happy with it, it's going to be it's going to be hard to have that conversation, but um I think that part of the challenge with utilitarianism and a lot of these moral philosophies is we've seen them rise up and sort of cycllically break and um I don't know, this isn't a great answer.
2:51:00
I'm sort of fumbling my words, but I think that the Bible carries sort of this supernatural truth that I mean, I I I had a hot take here I wanted to bounce off you.
2:51:08
Um it was this idea that um a lot of the AI doomers were driven by this idea that uh God is dead and if we're inventing AI god and it returns it might judge me and if I'm living an immoral life the AI god would sentence me to essentially like an AI version of hell.
2:51:28
It's not a problem to live an immoral life in the absence of God.
2:51:30
But if God returns in the form of this AI god then there will be a reconciliation moment.
2:51:37
is do I need to put on the tin foil hat for that?
2:51:39
Well, I mean I personally think that uh Oh, there we go. There we go. Put it on, baby.
2:51:45
I mean, personally, I think that uh if you read the Tower of Babel story, I think that uh a lot of my faith is I don't think these AIs can become gods.
2:51:53
I think that something will happen.
2:51:55
And we see that in the Tower of Babel story.
2:51:57
You know, you've seen people come out and say, "Hey, we're building these new gods." Um read Psalm 115.
2:52:01
Bad things happen when humans try to create gods.
2:52:07
We've seen this story play out.
2:52:07
And to come back to some of your earlier questions about tech and utilitarianism, look, a lot of the peace that I have with what's happening with AI, I'd be freaking out if it not if it wasn't for my faith.
2:52:19
I mean, I have complete faith that God is in charge. He'll take care of this.
2:52:23
And when I read books like the book of Judges, I see people turn away from God all the time.
2:52:26
When I read the Old Testament, the Exodus, you know, you know, you see the golden calf.
2:52:31
And I just see AI as another version of that. Mhm.
2:52:35
Um can you talk about uh any Yeah.
2:52:40
specifically historical moments that we can learn from in the context of this you know explosion of of artificial intelligence right I think people talk about the industrial revolution right look you know we we didn't know how the
2:52:54
industrial you know revolution was going to change the world uh we we do now uh looking back obviously but uh it feels like right now we're we're standing and and especially in the context there was a piece that came out this week AI 2027 seven. We covered it earlier on the show
2:53:09
We covered it earlier on the show today where it just feels like only 18 months out like you know there there's these various paths.
2:53:15
Um neither seem that appealing at the moment.
2:53:19
Um and so I hope there's a third or a fourth or a fifth. I'm sure there are.
2:53:24
fifth. I'm sure there are. Um but you h how do you um you know whether it's in the context of the Bible or other things that you've read uh you know process this moment and maybe it is only maybe maybe you know you can find all the answers in in faith but but I'm curious uh no yeah I think that the work of Marsh McLuhan has been super
2:53:46
foundational for me so Marsh McLuhan he um was a media theorist uh late 20th century and what he did for me was I felt the same sort of oh my goodness everything is changing kind of feel from the internet and he basically had ways of seeing what happens um when new technologies develop and basically I think a lot of what we're seeing here is this like vast acceleration is what saw. So you get this 10x acceleration
2:54:25
So you get this 10x acceleration and then what happens is things begin to flip and things that used to be core to how we lived and what we do now become art.
2:54:36
And I think that that's a lot of what's going to happen with writing where I think writing is going to be very sort of a form of art in the same way that film photography was a form of art in the same way that a lot of a lot of art that you see um and craftsmanship that you see used to be very core to what we do.
2:54:53
And um I think that's what's going to happen.
2:54:56
I think that writing is going to be the utilitarian kind of writing will just be done by the AIS and then a lot of writing will just be artistic.
2:55:04
And what we're going to need to figure out is how do we put our artistic stamp on writing because there's no real way to verify that a piece of writing is writing in the same way that you could do that with like a live performance.
2:55:16
Um, but one of the things I'm really looking forward to, you know, there's all these doomers and to your point about technological precedences.
2:55:23
I was talking to my friend Justin Murphy and you know he said if you look at how uh art shifted from the 14th century to the 16th century, you look at 14th century medieval art and it just looks weird and creepy. It's like super flat.
2:55:37
And then you look at 16th century art in Italy and it's got this beautiful perspective.
2:55:41
The the the paintings are aligned or are or alive.
2:55:46
And what happened was we got the technologies of the camera obscura and then if there was a guy named Leon Alberti and he was an architect and what he did was they used a lot of the technologies and architectural tools at the time to basically show perspective and from that we got the renaissance a renaissance in painting and the same
2:56:07
thing's going to happen with writing the same thing's going to happen with writing and I bet that at the time people were like oh you can't be using technology to paint like that's not cool and then like I don't want to go back to that sort of painting like this came from it was super cool and I think the same thing is going to happen with writing. Yeah, it's interesting to think
2:56:23
Yeah, it's interesting to think about the great writers in history sort of referencing, you know, past works and having to go to a library or travel to multiple libraries or visit collections and sort of study and then now the ability to like studio style well communicate with an LLM that is trained on, you know, every available text at least that's been on the internet and maybe some esoteric text as well.
2:56:44
Do you think there's any do you think there's any merit?
2:56:48
Have you spent any time like trying to find books that just haven't been uploaded into the ing inested into forbidden knowledge.
2:56:56
Here's Okay, so I'm going to I'm going to answer that and then I'm going to ask a question to you guys.
2:56:59
Um, so here's rather than the forbidden knowledge, I haven't been doing that as much, but there's so much that's just lost to to there's so many answers that we used to have very clearly that then we have just forgotten.
2:57:13
I think one of the fundamental lies of modernity and basically of progressivism in general is that new is better always. And that's not true.
2:57:21
You know, like Joe Rogan always talks about how did they build the pyramids? Oh my goodness.
2:57:24
Like they must have had these crazy technologies.
2:57:27
Like even, you know, we could put the tinfoil hat back on, but even if that's like nonsense, whatever, I don't know.
2:57:34
But there are so many times in history where we really had deep understandings of things that we've completely forgotten about.
2:57:39
And like we don't necessarily need to go find these like crazy esoteric texts.
2:57:43
We can go find like take uh Henry George's book, right? Late 19th century.
2:57:48
It was like the number one number two bestselling book in the world.
2:57:51
There's the imitation of Christ by Thomas Ampus.
2:57:53
Great book 17th 18th century.
2:57:55
Like I think there's a lot of alpha in just going back at the bestsellers before 1970 and just go go read those books um and see what people are saying.
2:58:07
And luckily AI is a really good way to do that.
2:58:09
You know one thing that's fun to do is go in take an idea go into chatb and say here's my idea.
2:58:16
Now, help me round it out and give me some examples.
2:58:18
Like, I've just been working on this little bit that there's fundamentally three three kinds of girls.
2:58:22
There's Lana Del Rey girls, Taylor Swift girls, and Beyonce girls.
2:58:26
And so, like, you know, I was joking around with some friends who like, "Hey, let's just pop it into Grock."
2:58:29
And Grock is like helping us, you know, think out the theories.
2:58:32
Hey, this why it's a stupid idea.
2:58:33
Here's why it's a good idea.
2:58:35
And that's what I love about it is like you're giving it some sort of ridiculous idea and then it's saying, "Okay, let's kind of fill it in for you."
2:58:45
And you can very quickly get to the stage of like, "How can I find those esoteric ideas much faster?"
2:58:49
And how can I kind of um find the lines that then I can draw inside of?
2:58:56
How uh do you have any type of thesis around um you know uh the LLMs and and humor?
2:59:03
It seems to be the one thing that they really struggle with today where they get the structure of a joke but they're not nailing it yet.
2:59:12
They can make you laugh by being absurd.
2:59:13
But did you see the Tyler Cowan joke? Yeah.
2:59:17
Did you see that in GBT4. 5? So the be me one. Yeah, dude. It's hilarious.
2:59:23
So I think that the the the humor thing is going to be a problem to be solved.
2:59:28
The LLMs are going to be hilarious.
2:59:29
And they're going to be hilarious in two ways. Mhm.
2:59:30
So, the first way is niche humor.
2:59:32
Like, you know, if you take a great comedian, they're going to be good at the mass market stuff, but like say that you and you know, the three of us, we go and we do like a trip to New Orleans for the weekend and we say, "All right, all these things happen and like we talk to LM for like 45 minutes.
2:59:48
We say, you know, here are all the things that happen.
2:59:52
Now, give us some jokes."
2:59:52
Dude, I bet it would rip.
2:59:54
I bet it would be so freaking funny. Yeah. Exactly. Like, no.
2:59:59
and and we so we we've talked about we talked about this earlier on the show.
3:00:05
Uh John has Kugan's law which is like you know talking about the the value of coin coinages.
3:00:11
Uh so on that note I I've been working on the Hayes paradox which is the idea that the funnier that you think something is uh the less likely that the mass market is going to find it funny right because like something that is just ultra ultra ultra niche is just like the most interesting most funny the most stimulating or whatever.
3:00:28
And I think that's what you're kind of getting at in some way is like the, you know, having a comedian in your pocket that can joke about like the thing that happened to you that minute and simultaneously, you know, 10 years ago in your life and like connect those ideas and you know the idea of like the same thing of oh we have a therapist in our pocket or we have a tutor in our pocket.
3:00:50
Uh you now could potentially have you know the sort of like comedian. Yeah.
3:00:55
So last question is a question I think you had for us.
3:00:58
Do you want to close out with that?
3:00:59
Well, I mean, this is the question that I've just been thinking a lot about, and it gets down to like the nature of the soul and the nature of what it means to be a human. Yeah.
3:01:08
You know, there's that famous um idea of the map and the territory.
3:01:12
And what I think is basically happening is that when it comes to writing, the map and the territory are going to be the same.
3:01:20
And when the map and the territory are the same, what is just what is what comes from that?
3:01:25
um is like if you have such a good simulation of humor and such a good simulation of consciousness and such a good simulation of care, is it those things or is it not those things?
3:01:40
And I don't know the answer.
3:01:40
It's just the question I've been asking all week.
3:01:43
And um my immediate my immediate thought is that uh uh our mutual friend Jeremy uh had this idea, master of the take, the king of master of the the takes himself. Uh, no.
3:01:54
himself. Uh, no. He had this idea like in the Giblly moment he was like, "My thesis that like AI will be the reason that everyone logs off forever is like if you go on your device and it's just this, you know, hamster wheel of entertainment, dopamine, and dopamine and then eventually you just it gets so good at, you know, at at whatever it's doing or whatever you want it to do that
3:02:17
you want to actually go back to the variable reward of going into the group chat where somebody has a terrible take and then somebody has a good take And it's this sort of like truly organic uh experience and I and I and and who knows if everyone logs off forever but it's that uh desire for for realness has been something that has been common throughout human history right you don't
3:02:40
like you know people wouldn't travel somewhere far to have like uh the authentic cuisine if it hit the same to have like you know the the sort of like perfect recreation of it here in America right um so that like desire for authenticity and realness I think is is deeply human and I think people will seek other humans out for that which is great because what I hope is I think that we were at the absolute bottom of
3:03:06
realness in the late 2010s in cancel culture that was a time when people were terrified to be themselves everyone was super polished it was the decline of the mass media empire that we're still sort of living in and seeing play out every single day and then we're going to get a big flip into realness, into authenticity, and here's the other one, into forgiveness. Because we can only
3:03:27
Because we can only have realness and authenticity in our culture if we have a culture of forgiveness when we can allow people to make mistakes.
3:03:36
And I think what was so traumatizing as a culture about those years is that we couldn't be ourselves because we couldn't forgive.
3:03:47
And my hope is that we can just move on from that and um become humans in this digital sphere.
3:03:54
Well, you'll have to forgive us for not having you on sooner.
3:03:58
This was a fantastic conversation. I really enjoyed it.
3:04:00
Thank you so much on the show. Uh we'll talk soon.
3:04:03
Thank you for addressing the part and looking very polished.
3:04:05
You know, some things from the late 2010s. Polish is back, dude. Polish is back.
3:04:08
You know, actually that's what we have in common.
3:04:12
You know, you guys have the polish with the show.
3:04:14
I try to do it with how I write. Yeah, of course. And uh thanks guys. Yeah.
3:04:17
Yeah, have a great weekend. Fantastic. Have a great weekend.
3:04:18
Next up, we got V from Sword Health coming in the studio.
3:04:24
I believe he's here and I'll let him do the introduction.
3:04:27
I had a call with him uh almost a year ago. Uh fascinating company.
3:04:32
Uh backed by Delion very early on we got connected and uh I want to hear all about how his business is doing and uh get the general update. So V, are you there? Can you hear me? I am here. Can you see me? Yep, we are all good.
3:04:47
Thanks so much for stopping by.
3:04:50
Uh, how's your week going? It's been a week.
3:04:52
Yes, a long week, I think, for everyone. Yeah.
3:04:56
Uh, is it specifically because of tariffs or AI news or what's driving that?
3:05:00
Yes, tariffs, the impact.
3:05:03
But some other stuff, it's like it's been fine. It's been fine.
3:05:08
Uh, can you just give us a a quick a quick inter introduction for the listeners who might not be familiar with Sword Health?
3:05:14
uh kind of big quick backstory on the company and what you guys do. Yeah.
3:05:17
So let me start with the problem.
3:05:20
So healthcare is quite special because when you compare healthcare with other industries right like the consumer electronics industry right in the last 40 years you saw penetration of technology in those industries that went like this right so massive penetration of technology. What happened?
3:05:40
Sorry my alarm just what was that? It's my alarm. Sorry. Oh, no worries. One second.
3:05:50
We have some technical difficulties, folks. Okay, I'm back. Sorry.
3:05:54
And I was saying that in the last 40 years there was a massive penetration of technology in the consumer electronics industry, right? What happened to cost? Massive decrease. Right?
3:06:04
So, a true vision that 40 years ago or 30 years ago would cost $3,500 now cost $500. Mhm.
3:06:10
Much cheaper, much better display, much better features.
3:06:14
So we use technology to produce better goods. Yep.
3:06:19
When healthare last 40 years, you also saw massive penetration of technology. Mhm. What happened to costs?
3:06:26
Contrary to the other industries, massively increase where actually we use technology to make healthcare more expensive. Mhm.
3:06:34
And the reason why is because the way we've been using technology in other industries is to shift part of the labor from the human to the machine.
3:06:43
And with that, we made the produ production of goods much higher quality, much more efficient, and much more accessible. Mhm.
3:06:50
In healthcare, we've been using technology to double down on this 100% labor intensive model where before for you to have an appointment with a physician, you'll go to an hospital or to a clinic.
3:07:05
Right now, you can use a technology to do that through a video call, but you are still fully dependent on the human on the other side.
3:07:11
Right now, has always been for you to access healthcare for 30 minutes.
3:07:17
you need 30 minutes of this highly specialized, scarce and non-scalable human resource which is the clinician.
3:07:24
So what we believe that in order for you to deliver the future of the healthcare world, what you need to do is basically develop technologies and AI that will shift part of the labor from the human to the machine and with that you remove barriers in terms of access.
3:07:40
And so what we are doing at SW is really shifting health care from that human first model to that AI first model and we starting with the biggest problem which is how you deliver care how we recover patients back to a full life and so we started with physical pain we expanding to pelvic health and now we are expanding into other verices of care really changing how people access care with AI.
3:08:02
with AI. Can you talk about uh Jevans paradox was in the news recently um and I'm sure you had a lot of thoughts just because you know theoretically as a cost of health care declines we're going to want more of it there's a lot of care
3:08:16
that doesn't happen for example uh in physiootherapy if it costs you know a dollar a day I'm sure people would you know be much more eager to use it but when it's $200 a session or even more than that um so I'm I'm curious uh feels
3:08:33
like an you know uh I'm sure you've seen this playing out and I'm sure you weren't um weren't worried when Deepseek came out and and you know uh token costs came crashing down you probably were like okay this is great we're just going
3:08:45
to use a lot more of this yeah and look lack of access to high quality high-intensity conservative care non-invasive care doesn't decrease costs because when you have pain instead of you are not able to go three times per week to pity cleaning for three months
3:09:03
and that would solve a problem right but what you do next is you go and try to find a silver bullet in the form of surgeries right and that's what really skyrockets prices just with physical pain in the US we are spending 560 billion with a billion dollars per year
3:09:21
right and the big bulk of that is surgeries which should be replaced with much better outcome for patients right and so when you use AI to make the tradition traditional model which should be the solution very easily accessible
3:09:35
as accessible as running water then you allow patients to get access to high quality care and that's how and then you really decrease costs because the problem in healthcare right now and by the way this is in the US but this is
3:09:48
all over the world right the post the national health service in the UK is suffering the same thing which is you have very high high costs and very very low quality and access to care so in the traditional equation in in healthcare. If you want
3:10:01
If you want to increase quality of care, you need to hire more people.
3:10:06
If you hire more people, you increase costs.
3:10:08
But you cannot increase costs because costs are already prohibitive.
3:10:12
So what you try to do, you try to reduce cost to remove folks from the equation.
3:10:17
What you do, you reduce quality and you basically create massive challenge in terms of access.
3:10:23
The only way to really break this paradox is by using AI doing part of the job of the human and then having the clinician in the loop highly scalable in order to be able to bridge the gap between the massive demand and the low level of clinical supply that we have. Yeah.
3:10:42
Uh how has your AI thesis around healthcare changed since founding the company?
3:10:49
if it's even changed at all.
3:10:52
Is are the thought is what you're seeing today and the sort of roadmap today, you know, been what you expected or has your has any sort of like uh new technology that's been introduced in the last few years sort of changed?
3:11:06
Weren't weren't you just talking about um AI therapy breakthroughs recently?
3:11:10
breakthroughs recently? There was a yeah there was some news I think earlier this week that basically showed that AI therapy in the form of people just talking with LLMs like actually delivers fantastic results and it's basically free right and it's like this incredible
3:11:26
it seems like a fantastic add-on if you have a scaled business you've been in the business for 10 years you don't have to start from scratch on the customer development journey uh so yeah talk to us about that we we we actually in that regard we did an instinct experiment
3:11:39
because we have Phoenix which is our AI system based on the sessions that the patients doing at home preparing the messages for our clinicians to send to patients right and so based on they analyze the session of the patient and based on that they can tell you hey John I saw that you did your session
3:11:55
perfectly in the end you were a little bit exhausted so I decreased the session a little bit for you to be able to do it without a problem right is the work that our PTS our clinician usual usually do right and now of course we have LLM looking at the data and preparing those messages, right? But we were looking at
3:12:11
But we were looking at the messages and we had this question mark that do the messages feel like it's an AI creating the messages or do they feel human? Right?
3:12:20
So what we did was a blind test where we had 50 messages from that were written by our clinicians and 50 messages that were written by Phoenix, right?
3:12:32
And what we wanted and then we asked our team to evaluate which messages were from the clinician and which messages were from from Phoenix, right?
3:12:41
And what we wanted was a 50% randomness where you cannot distinguish which messages are from which uh Phoenix or clinician. Oh wow.
3:12:48
Like pass the turning test basically. Yeah, exactly.
3:12:53
What we got was very very surprising because the messages from the clinician were mainly labelled as coming from the AI and the messages from the AI were mainly labelled as coming from the human.
3:13:08
human. That's bizarre but I understand and that was and then we we went a little bit in more detail and what we found was that look since the clinicians are always like going from one patient to the other and they are always in this almost state of burnout across healthcare the messages are very dry and very concise y right where the LLM the messages are very warm and then also they have this long memory where they
3:13:34
can pick up things from two weeks ago that you said right they can pick things about stuff that you said that I want to recover because I want to play with my kids and go on hikes and you said that during the ongoing form and of course human ne never remembers that right and so it's funny because the AI and LLMs make the work of the human of our clinicians more human than before and that's super funny. Can you talk a
3:14:01
Can you talk a little bit about uh AI image generation?
3:14:06
It seems pretty far out for what you're doing.
3:14:08
But at the same time, I'm just thinking like if I need to show someone an image of, you know, hey, your knee, I have a diagram of your knee and this is where, you know, the the the the physical damage is, this is what we're going to be rehabbing.
3:14:20
Uh, I could imagine even just doing the basic like studio Gibli style transfer could just make that whole experience feel a lot less medicinal and a lot more enjoyable and just novel.
3:14:30
Um but have you even started playing with those tools or is AI image generation uh still pretty far out on the road map? No.
3:14:38
out on the road map? No. So our focus is really on um when the member so what we want to do is replicate the experience that you have in the clinic with a clinician replicate at home with finish right and so we have the feedback
3:14:55
component which is we analyze we observe what you are doing and we provide feedback right then the corrective feedback that's where we are experimenting with that type of layer of imagery layer because then you can basically say hey do the movement like this, right? And or do the movement like
3:15:10
And or do the movement like that.
3:15:12
that. Um one one area where we are using that and we are exploring uh how we can do that in more detail with AI is we have a solution focused not on physical pain but on pelvic health and pelvic health is basically things like urinary incontinence after child birth which is
3:15:30
a massive problem in female population right which basically is you it's implied for we have an interventional sensor where you can basically have to train your pelvic floor muscle no one knows what is the pelvic floor muscle and so using imagery to say hey you have this thing which should contact like
3:15:48
this and using AI to make that animation much more lively it's how we are experimenting but that's the thing it's it's like a can be an explosion of possibilities with AI because you are using AI voice agents right we are using that to enroll patients right we are using AI to identify that member that in
3:16:10
six months going to have a surgery So we can intervene now a little bit like minority report to before that person go to to the orthopedic surgeon and get convinced that they need surgery we can act right now we are using AI to quantify the motion of the patient. So
3:16:24
So it's really can be an explosion where everywhere I look I see an application of AI with clear benefits. That's great. Yeah.
3:16:32
Yeah. How do you uh you guys have been very successful very quickly uh in in relative well I'm just saying overnight success yeah overnight success in a sense from a pure revenue ramp from a revenue ramp standpoint and what usually when a company ramps revenue really
3:16:50
quickly other people go hey that's a good idea we should do that too how ambitious are you guys as a company is is the sword health for x sword uh or or you know or is it just about running down these opportunities that that you're currently tackling? So basically
3:17:05
So basically yes uh our view is really translated in shifting healthare from human first II first.
3:17:15
first. So any every single area of health care which is still delivered in a 100% labor human labor intensive way it's the target for us to reinvent right one one area where you apply that is well mental health care right like the
3:17:32
way you address mental health right now is talk therapy where you should basically solution to mental health is talk to that human once per week or once every two weeks right that's 100% human level intensive that's an area for us intervene, right? Um and so it's really
3:17:45
intervene, right? Um and so it's really about all luckily for us in terms of addressable market is is the fact that like pretty much everything in healthcare it's 100% human level intensive and so we have a very aggressive market um road map in terms of expanding and replicating what we did
3:18:03
with physical pain what we did with pelvic health into other verticals of care because the thing is when you really nail product market fit healthcare it's ma it's massive in terms of expansion because you don't saturate right we the pelvic health solution that
3:18:19
I was telling you about Bloom we launched that solution in 2022 everyone thought it was a niche solution we did in that year $500,000 of revenue we did last year $25 million this year we're going to do $50 million wow right and everyone thought I I still remember discussing this solution with
3:18:39
my board and my board saying yeah don't focus on that because that's too niche right and it's like it's exploding And so healthare the good thing is when you get the product market in healthare you have untapped growth potential because the market is just crazy big. Well Well congratulations.
3:18:56
I mean that's all amazing news.
3:18:57
Uh what a fantastic industry to be in at time.
3:19:00
We spend three hours sitting every day.
3:19:03
We need uh we need some PT Phoenix for the guy. Yeah. Okay. Perfect. Perfect.
3:19:08
Well, thank you so much for coming on the show.
3:19:11
We'll have to have you back when there's more news. We'll talk soon. Thank you guys. Thanks a lot.
3:19:14
Yeah, the the growth there is just shocking.
3:19:16
Yeah, and it's like such an underrated company because uh they're out in Portugal and they do have an office in New York City, but um it's just one of those uh like under the radar companies in my opinion. Totally.
3:19:28
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3:19:48
Uh, we got Avlock coming in.
3:19:51
Uh, I'm sure everybody All right, there he is. Avllock, how you doing? What's going on? What's going on, guys? How you doing? Uh, we're good. We're good. It's been a great week.
3:19:59
Uh, a lot of lot of big news.
3:20:01
Um, I'm not sure what you've been following more closely, AI or tariffs, but everyone's following one.
3:20:08
Everybody's got something.
3:20:08
Everybody's got something worming in their brain.
3:20:09
Uh but yeah, I mean could you just do a quick intro on you and and Angelist for anyone who doesn't know, I guess. Yeah. Ablock C of Angelist.
3:20:18
Uh I was actually recruited in almost six years ago now.
3:20:23
So I've been running the company for almost six years prior to that.
3:20:24
I'd started three companies sold to one of them was to Square.
3:20:29
So I spent almost three years at Square as well preo to post IPO. Um uh I'm I'm curious.
3:20:35
I mean, a bunch of stuff I want to get into.
3:20:38
Uh, where should we even start?
3:20:41
I I think it's probably helpful for people to have like, you know, just sort of like the the refounding of Angelist because uh Angelist is a company that I feel like has just been in the timeline.
3:20:53
Obviously, we built the show around X.
3:20:55
Angelist I think like grew with Twitter in many ways.
3:20:58
It was sort of like the technology platform behind what was happening in the timeline.
3:21:03
Um and in the same way that Twitter's evolved massively, Angelist has done the same.
3:21:08
But would love that backstory before we get into everything else.
3:21:10
Yeah, the way to think about early Angelus was um there were a lot of u different experiments as the team was searching for product market fit.
3:21:20
And so you know 2020 or 2010 to call it like 2018 2019 um sort of spawned three different businesses within Angelist.
3:21:28
It was the SPV business uh which is really the syndicate business.
3:21:32
Uh there was talent which was uh to help startups find talent, startup talent and uh the third one was actually product hunt.
3:21:39
Angelus had bought product hunt early on and so by the time 2018 2019 came around uh there were kind of these three different businesses where they're really just connected uh with a thin thread of founders need to uh raise capital, they need to hire people and then they need to uh launch their product.
3:21:56
But outside of that, it was actually very hard to do all three of those under one roof just because the business models are different.
3:22:03
Uh so at that moment what happened was kind of a splinter kind of a split.
3:22:08
Uh and talent spun off on its own and then product hunt separated a bit more.
3:22:13
And then when I came in, I actually took the SPV business and I spun it out as its own company.
3:22:17
And uh we got to work and we kind of took it from an SPV business to venture funds to we invented a whole new category of rolling funds.
3:22:25
And then we got into rollup vehicles.
3:22:27
Uh which is actually how Jordy and I originally kind of got connected.
3:22:31
Uh and then we got into startup products.
3:22:32
And so today we're kind of a um you know the place to go to if you're going to start, scale, launch a venture fund.
3:22:39
Uh we're now private equity.
3:22:41
We actually manage the scout funds for a lot of large firms as well.
3:22:44
So, we're kind of an index now of what happens within venture. No, it's amazing.
3:22:49
Um, can you uh can you talk specifically about, you know, sort of like accelerating product velocity in Angelist because it just felt like you came in, you had this sort of warm-up period and then it just felt like every single quarter there was like a major new product launch and you sort of like awakened the beast, right?
3:23:08
like there was so much potential there.
3:23:10
Uh if you were involved in the startup, you know, industry at all, you had invested in an SPV, maybe you were in a rolling fund, uh maybe you hired, maybe you got a job, maybe you launched a product.
3:23:21
So everybody was t touching sort of products in the ecosystem, but then you had to kind of like ramp up and basically say like, you know, we're going to kind of bring this crazy product velocity.
3:23:31
Um so I'd love to hear like h how you did that and then how you're applying that now specifically.
3:23:37
There's, you know, a bunch of new opportunities.
3:23:38
I think that are popping up.
3:23:40
Yeah, I would say just at the core of Angelist, uh, Angelus has always held the founders at the top of the pedestal.
3:23:48
Uh, and we've always believed that product leads everything.
3:23:50
Product velocity leads everything.
3:23:52
And so when you have that in your DNA, the question you're always asking is what is the mix of people you actually want in the company.
3:24:00
So we actually have a fairly high percentage of our team that are like ex-founders.
3:24:04
And so what happens when you put a bunch of ex-founders uh in in a room?
3:24:08
What what are they going to do?
3:24:11
They're going to look to uh be ambitious and how can you actually move into an adjacent opportunity?
3:24:15
How can you go reinvent a whole new product category?
3:24:19
category? Uh and so a lot of the original thinking was hey let's actually get back to product innovation uh and let's get back to actually doing things that only we can do right and that's the one question we do ask and typically we don't get it right all the time but the
3:24:34
one question we do ask is if we didn't exist in the world would this product exist and if it doesn't then okay great we should go do it but if it's going to exist without us we're probably not the best suited to go do that and so we do ask ourselves that uh quite quite often. Can you talk about AI uh in the business
3:24:51
Can you talk about AI uh in the business how you guys are leveraging it to just uh you know you're in uh in you know investing in a company is very simple on Angelist like I'm a part of a scout program it's very seamless you know painless process uh but then under the hood there's you're dealing with different entities and you're dealing with y there's uh the code is like the easy part like the law is really the hard part and the challenge.
3:25:16
So I'm I'm curious how you're applying AI in the business to make you know internal team members more efficient to make uh and it's good good for the world if you can sort of like accelerate capital formation investment and all these things it it can accelerate the world.
3:25:33
So um curious about that.
3:25:33
Yeah thank you Jordy for recognizing that there's it's like an iceberg product right there's so much underneath the hood. Yeah.
3:25:40
Um, you know, the initial investment is actually just the beginning of that uh relationship with that company on behalf of the fund.
3:25:47
And so for context for others, um, when an investment is made from a fund into a company, that's typically a uh it can be like a 10ear 15 year hold period.
3:25:56
Uh, and that's just because of how illquid venture typically is.
3:26:01
These companies need time to mature.
3:26:03
And so what ends up happening is over the quarters, months, quarters, and years, there's all sorts of activity that can happen within that investment.
3:26:11
all sorts of activity that can happen within the fund and there are there are real like legal repercussions financial repercussions if you get it wrong and the way we're using AI is these are all the back office functions and so typically humans would manage all the different workflows what we've started
3:26:28
looking at is how do you take all these different workflows and then how can you actually have um AI agents starting to take on some of those workflows now we have to be careful because the uh uh you know the uh when you use chatbt and you get every time you ask a question you get different answers that's beautiful
3:26:45
that's product market fit right like write me a poem or write me many different poems awesome you don't want that when it comes to your finances right it's like hey what's you know what's the share price you don't want 10 different share prices you want one uh and so we're we are uh pretty bullish on taking that and and having it automate
3:27:03
huge portions of our back office and that's already starting to happen uh and we think there there are ways that we can actually then have uh a lot of the uh folks that are doing some of the back office work move up the stack in terms of the type of judgment they apply on all the different workflows there. So
3:27:16
So that's like one piece.
3:27:17
Uh the second uh that I'm personally extremely excited about is we launched a front-facing product uh called um uh on on it's our intelligence product. Um and uh it's in beta. It's still new.
3:27:30
Uh so we're not ready to like fully talk about it with the world.
3:27:33
But um what we're doing there is we're actually creating a um uh an agent to go look at all private market data.
3:27:40
So we have access to a lot of unique aggregated anonymized angelist data and we're actually looking at building partnerships with many other providers.
3:27:48
So for example, you can ask a question like who left OpenAI in the last month to start a new company.
3:27:52
That can help you with deal sourcing and you can imagine it scales to many more companies.
3:27:57
companies. Uh we're also looking at uh how do we help you get ready for your briefings uh for pitch com uh pitch meetings uh while you're yeah while you're actually like in the middle of a pitch post pitch great take the transcript and we can help you uh do a
3:28:13
lot of the necessary re research market map um uh the full analysis so give you time back and we think of this as we want to build a co-GP we want to help you make more money right we can help you find better deals yeah what about on
3:28:26
the founder side I could imagine that you know there's all these new benchmarks for fastest company to 100 million ARR uh valuations are all over the place are you thinking about building any products for entrepreneurs they upload their deck and then they say
3:28:40
oh well like you should probably expect you know 10 on 80 pre in this you know to be kind of in the fairway maybe go out there and get more but here's at least our take on it 100% we're we're already in that world you know classic line the future future is is here. It's
3:28:55
It's just unevenly distributed.
3:28:57
just unevenly distributed. So that that's basically Yeah, it's funny how how entrepreneurs try to understand how to price their rounds is really they talk to a handful of investors who just reference like the last two or three rounds that they saw get done that were
3:29:10
maybe not even in the same category and then it's just like completely guessing and I think it's you know super like you guys will be able to pretty quickly I imagine give a pretty precise and say like here's where we predict your round is going to get priced and sort of like building that feedback loop is be cursor for dogs. But what does that really
3:29:27
But what does that really work?
3:29:29
How do you uh It feels like we're at this amazing time right now.
3:29:32
Uh you know, some people don't think it's amazing.
3:29:36
I think it's great of of venture maturing and then you see like the convergence between private equity and venture.
3:29:42
You guys launched some uh products more geared specifically for private equity, but um how how do you see that line sort of like blurring over time?
3:29:52
Uh and I guess like h how how are you kind of um adjusting your your product roadmap for that reality?
3:30:02
Yeah, the the way to think about the way we're approaching product is we have the kind of vertically integrated part of the product where you come in one you know one-stop shop you can launch scale venture fund uh which also allows us to uh manage scout funds for some of the largest firms and then we actually have our software that's getting unbundled and folks want to adopt that.
3:30:21
So some of the largest um private equity firms actually adopt our uh digital subscriptions product or uh some others can adopt our banking product.
3:30:29
We actually we run banking underneath the hood.
3:30:33
We've actually built a whole banking infrastructure which is what allows for a lot of the smooth operations.
3:30:37
Uh and so you know as we're seeing the market evolve um our roadmap is effectively evolving to continue to keep taking on larger and larger funds for this vertically integrated product and then for the largest ones where there we can support them for any of their needs and that's actually working quite well.
3:30:53
Uh in terms of what we're seeing in the market today we are seeing a bifurcation.
3:30:57
Um, so what's interesting is if you look at year-over-year uh within our data, we're actually seeing uh capital flows increase Q1 2024, Q1205 by almost a double in and into just venture funds and like we talk about SPVS and all of that, but like just venture funds alone, capital flows are almost have almost doubled.
3:31:15
So there's definitely a bounce back.
3:31:17
There's more optimism, right, that's coming in.
3:31:19
Um but it is being um it's sort of concentrating into uh a certain subset of managers.
3:31:27
Um so you kind of have uh you know call it zero to let's say 100 million.
3:31:33
You kind of have a divide and then you have like the mega firms, right?
3:31:36
And then the mega firm strategies are actually also bifurcating, right?
3:31:40
They all have kind of their own their own view on things uh and what they're going to go after.
3:31:43
So it's a very different market than 2019 2020.
3:31:45
Uh, and we're not seeing as much of, you know, because what happened in 2021, 2022 was you had crossover firms really come in, right?
3:31:55
Private equity firms, public firms come in to venture.
3:31:57
We don't see that anymore.
3:31:59
I think we at least we're not seeing too much of it.
3:32:02
Maybe like here and there, but generally it's the venture firms that are scaling up and they're now starting to push up into different asset classes.
3:32:10
How do you think of um the job of GPS over the next 10 years?
3:32:17
I I've you know, everybody's, you know, been running the analysis of like how safe their their job is, right?
3:32:23
Like if you're a writer right now and your job is to summarize information and you know, re or repurpose information and just put it out there, uh you got to be pretty worried.
3:32:32
I think investors in general are pretty safe because people want to give money to one person right now and have them be sort of responsible for returning that money and and hopefully a lot more in the future.
3:32:41
Uh and venture is about this combination of not just picking which is like can be very analysis driven of the market and the product but also the people.
3:32:53
Um, but then the big thing in venture is, you know, I expect AI to not necessarily dominate venture so quickly because likability and access are like such big parts of it, right?
3:33:05
It's like, you know, somebody wants Avlock to angel invest in their company because you're the CEO of Angelist and like an AI could be like, you know, um, better at finding companies, but that doesn't mean they're going to sort of like win the allocation.
3:33:17
So, uh, is your thesis, you know, let's give investors AI tools to be able to be better investors and make more money, um, or do you see a world in the future where people are setting up, you know, sort of a fund on Angelist that's entirely, you know, the GP is effectively, you know, um, a machine itself?
3:33:37
Yeah, it's a good question.
3:33:37
I don't know who said this, but I picked this up from some podcast.
3:33:44
When a founder picks an investor, they're doing it because they believe that person is going to increase their probability of success. Yeah.
3:33:50
And in order to increase the probability of success, um you really looking for a partner who can help you solve any like number of problems that can come up.
3:34:02
Some of it's brand to help with recruiting, some of it's like actual like operational help.
3:34:05
And and it could be many more of those, right?
3:34:07
But you need to partner with someone so you can actually have a reasonable chance of success with the company.
3:34:13
So I don't think that's ever going to come from an AI at least today at least in in the form that we know of it today.
3:34:18
So as we think about um the the role of the GP we think it's going to continue to stay the same.
3:34:24
Uh I think what will get challenging is I I do think there will be more capital that floods in because even at the earliest stages you know folks are talking about how valuations are decreasing.
3:34:33
Yes, at the later stages at the earlier stages it's increasing.
3:34:38
So preede seed series A there's just a uh a huge amount of capital looking to get in and the actual root problem is that the the startups don't need that much capital at the earliest stages.
3:34:48
So what you have is a supply demand mismatch and so the only way the valuations go is up, right? Yeah.
3:34:53
And so the the access question and problem is only going to get worse and worse.
3:34:59
And so we still think the the human the GP is always going to be in the loop.
3:35:03
So the way we think about the tooling that we're building is uh is they're meant to amplify the investor.
3:35:09
They're meant to help them make better decisions, but it can't ever help you be become likable to the founder or help you get access to the deal, right?
3:35:18
that's going to be incredibly hard.
3:35:19
Um, and so we think that it's about enabling them.
3:35:22
So really there's going to be more leverage to the best investors.
3:35:26
So I actually think the power law is going to get even more concentrated.
3:35:29
Um, because even the tools that we're building are going to help investors understand very quickly the lay of the land, right?
3:35:35
So one thing that's actually very hard today is when you're listening to a founder, you're doing a pitch meeting, you generally like you don't quite know, okay, who are all the other competitors?
3:35:42
Who are the other founders of those competitors? Mhm.
3:35:44
With one click, we're just going to make it easy.
3:35:46
And it won't be just SOS.
3:35:48
I'm sure there are other tools that will come out of like one click, you got full layer of the land.
3:35:51
And so you have full visibility on what's going on with this company uh what this founder wants to do.
3:35:57
And so I think leverage will increase uh to the best investors. Makes sense.
3:36:02
Uh I don't know if you have a hard stop, but I did have one more question around how your thinking around stable coins has evolved.
3:36:07
You guys were very quick to adopt stable coins.
3:36:09
I think it was in 2021 or early 2022 that you uh rolled them out.
3:36:14
That was probably from user demand being like, I have a lot of money on chain and I want to put it into startups.
3:36:19
Um, now I imagine uh I'm I'm a long-term believer in the power and value of stable coins, but I never in using Angelist at any point in the last two years was like, you know, I want to fund this investment via stablecoin.
3:36:34
And so I'm curious how how you think about it broadly and are you using them behind the scenes at all or you just you you said you talked a little bit about your banking infrastructure.
3:36:44
Um yeah and I would assume that that's still based on traditional fiat rails just because beauty of venture is like sometimes you want to close an investment quickly but we have same day wires and those like work pretty well.
3:36:55
Uh and then you're not like trading in and out of assets like super rapidly or anything like that. Um, yep.
3:37:01
And so, but but anyways, I'm curious to hear um how you're thinking about stable coins broadly. Yeah.
3:37:05
So, we originally added stable coins uh because of user demand and it was like extremely aggressive in terms of like demand, you know, and I was like fine, let me go let me go figure this out.
3:37:16
And at the time, we actually looked at I mean all the who's who providers and none of them could really quite fit the use case we had.
3:37:23
Um, and so we eventually actually worked with a a startup and um ended up building out exactly what we needed and and now they're actually doing pretty well and they're scaling out.
3:37:31
Um, was that uh was that layer was that layer 2?
3:37:36
Yeah, they renamed themselves to rail r a l. io.
3:37:38
I'm a I'm an angel as well.
3:37:38
I remember that saying like we got we got a lock, you know. That's awesome. Yeah.
3:37:46
Um, so what's interesting about stable coins on uh Angelist is when the the biggest use actually comes from the biggest pain from when LPS fund and the biggest pain is when you're trying to move money internationally.
3:37:59
And so we actually see a um a huge amount of demand from international LPs trying to move money into the US because if you've ever tried to tried to send a Swift, God bless you if you have, it's insane.
3:38:11
um it literally takes days and and you just don't know where the money is and sometimes bank will just hold on to it and they won't even tell you because it's got stuck somewhere in the middle.
3:38:21
With stable coins, you're able it's one hop.
3:38:23
You're able to get the money right into the US.
3:38:25
It goes through all the same compliance laws and everything.
3:38:26
Um but we see a huge amount of demand for that.
3:38:30
So it's not necessarily in the fund side to companies because you're right, there's not that much trading in and out, but it's more on the LP side into the fund. Yeah.
3:38:36
Well, yeah, that's very cool.
3:38:39
Uh last uh last question I have for you and then I we will let you leave.
3:38:43
I know we're I know we're 5 minutes over. I'm just very curious.
3:38:46
Have you seen um looking at some of these sectors that are uh especially overheated or potentially in sort of bubble territory, right?
3:38:54
People are, you know, you we could argue whether AI is a bubble or defense tech is a bubble.
3:38:59
Have you seen any sort of near-term slowdown in defense tech investing this year?
3:39:03
Um, and and I'm sure you don't have the data in front of you, but but I'm curious that feels like one that, you know, is still very hyped, but it's potentially investors like sort of have their bets now and and they're letting, you know, want to let their kind of bets play out.
3:39:23
Um, no, I was actually just talking about this with uh someone else the other day.
3:39:27
Uh, it is still going on with defense tech.
3:39:29
I think we're actually just entering a uh sort of a golden age uh for the US wanting to basically uplevel all of the all the technology in in the military and the Navy.
3:39:39
Um so I'm actually not seeing it slow down.
3:39:42
Uh I agree with you that there is it feels like it's a bubble, but the beauty of uh financial markets in general is you'll just get bubbles and then you'll get a few great companies that will come out of it. Yeah.
3:39:53
But I haven't seen that particular bubble sort of like wind down yet.
3:39:57
Uh we're still seeing some pretty active heavy heavy investing there. Very cool. Makes a ton of sense. Fantastic.
3:40:04
Well, we'd love to have you on to uh be our our private market data.
3:40:06
I mean, you have all the data. Yeah.
3:40:08
Pull it out of you one way or another. This is great. Thanks so much. Great. Thanks for joining. Likewise. Good to catch up. Have a great weekend. Bye.
3:40:15
Um let's move on to some timeline.
3:40:18
We got some uh massive news yesterday from Anderol.
3:40:20
Uh they launched the Seabed Century.
3:40:22
Uh Anderl writes uh we must fortify autonomous subc dominance of the US and its allies.
3:40:30
Uh Seabed Century is their new AI enabled mobile undersea sensor node network designed for persistent monitoring and real-time coms.
3:40:37
So I imagine this would be valuable if you had an undersea cable that you didn't want to get cut or blown up. Exactly.
3:40:45
There were Yeah, there were some very funny uh post about I mean uh Polymer contextualized it very well by just saying like what we do for the sensor towers on land.
3:40:52
We now have a product that does that underwater.
3:40:53
Um, but he said that it can uh detect uh uh like other submarines and boats, but also biological uh things.
3:41:03
So I think it can even track like whales, which is very very cool.
3:41:06
Um, and so if we domesticate the whales, get them working for us, turn them into a defense tech weapons, a weapons platform, uh, and is going to be on top of it.
3:41:14
And interestingly, if you zoom in on this, uh, video very closely, you'll see that they're partnered with Sonerdine, uh, which is a very old company.
3:41:21
They've been in business for uh 50 years.
3:41:22
Um and they uh and and they they have a number of case studies for who they work with.
3:41:28
Energy, ocean science, defense, carbon capture, etc.
3:41:32
Uh and I'm sure there'll be a case study on this product as well.
3:41:34
It feels like as we get more autonomous underwater vehicles.
3:41:39
You have people like Chris Hamdon working on stuff like this.
3:41:40
Tons of exciting companies in the space.
3:41:43
The risk to pipeline and cable sabotage.
3:41:50
Totally just feels like if again if you can send a $10,000 drone to blow up a pipeline that can cause billions trillions of of economic damage.
3:41:59
Um that's just going to be a huge problem.
3:42:05
Uh you know we've been talking about like the maybe the anderol of X is anderol and uh but this was something that I haven't even seen startups working on.
3:42:12
This seems like an idea that you only get if you're as deeply entrenched as anderol.
3:42:16
Um, and uh, yeah, if you're going on if you're going down into the deep sea and you can afford to come up with products that aren't being purchased yet, right?
3:42:27
Like basically create markets and you have um, uh, once you're at a scale that Anderoll is at and have those customer relationships, I think it's a lot easier to do that.
3:42:36
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3:42:42
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3:42:57
Tariffs are hitting Switzerland, so get in while you can.
3:43:01
But uh so retail prices will go up.
3:43:04
Um uh I expect prices on bezel to go up as well, but probably slower and less uh systematically.
3:43:10
So download the app, start building your collection, your wish list, and find something beautiful to add.
3:43:16
Uh speaking of tariffs, uh George H.
3:43:18
Hots posted from the Tiny Corp account uh a big long post about uh how the tariffs are affecting his business, and it's it's really it's really like a frustrating story.
3:43:28
Uh he says, you know, we talked to Chris Power Adrian.
3:43:30
He's obviously a beneficiary of the tariffs.
3:43:34
Uh the tiny box is uh is is much less of a beneficiary uh potentially harmed. And he breaks it down.
3:43:39
He says, "To date, we have man manufactured all tiny boxes in America.
3:43:43
However, we buy parts from abroad.
3:43:45
There is no way to buy Americanmade GPU or motherboard at this time, and there won't be for a long time.
3:43:51
If these tariffs stand as is, we would have negative margins on tiny boxes.
3:43:55
Our motherboard manufacturer has already reached out and tried to get us to pay the tariffs on things we already agreed to deliver on the delivery price for, but I don't blame them.
3:44:02
Their margins probably go negative with the tariffs, too.
3:44:06
I sort of doubt we'll be getting our 5090s at the price we agreed upon either.
3:44:10
And if that's true, the whole thing is really out the window.
3:44:14
And even more stupidly, there's a restricted list of countries you can ship 5090s to.
3:44:17
So, I'm worried uh I'm not so sure we could move manufacturing of the green V2 their product, and the product may just be cancelled.
3:44:25
I'm not going to spend my time figuring out weird loopholes and incentives to reexport and FTZ and maybe try and ek out a small profit after all the administrative cost. Tariffs are regulations.
3:44:35
When difficulty of business go of doing business goes up, many people only marginally making money just stop doing business.
3:44:42
The US has an ease of business, ease of doing business score ranking of six.
3:44:46
Hong Kong's ranking is three.
3:44:48
If we manufacture here in Hong Kong, we have free trade and can continue our policy of selling everywhere and passing the tariffs on to the buyer.
3:44:55
Uh European Union people have been dealing with us for a long time. Now, US people will too.
3:44:58
if we can't get 5090s because of short-sighted US export regulations, we'll have to ship, we'll have to switch to something that we can get, maybe a different graphics card. So, very frustrating.
3:45:09
Um, and and and an interesting real life case study, not just a pundit kind of saying, "Oh, I think the tariffs are bad for economic reasons or they're great for economic reasons or or, you know, it's some part of some grand 5D chess or whatever."
3:45:23
This is somebody who's really trying to build a business on the ground.
3:45:24
clearly, you know, one of the greatest programmers of all time and and and a fantastic uh just I don't even know how to describe him, like business person, developer. He's kind of everything. Um but George H. Hot.
3:45:35
Hot breaking it down about why uh the tariffs are actually leading him to leave America and and focus on Hong Kong.
3:45:42
Uh and and you know, who knows how that will play out, but uh very frustrating story, but interesting to hear him uh him break it all down.
3:45:51
And of course, if the tariffs are moving the markets, you're going to want to be on public. com.
3:45:54
uh multiasset investing, industryleading yields, and guess what, John?
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3:46:03
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3:46:05
Um and uh and in relation to the uh uh to the to the market turmoil, uh Skooks had a funny post here.
3:46:13
After the 911, after 911, the stock market lost 1.
3:46:16
4 trillion inflation adjusted.
3:46:18
Today, the stock market lost$2 trillion.
3:46:21
So these tariffs are like 1. 42 911s. Yikes. Rough 5k likes. Uh very popular.
3:46:28
Um what else should we cover here?
3:46:31
Um just uh just FYI, the the map of states that are renamed for countries with similar GDP really puts America's dominance in place.
3:46:39
Just the state of New York is the same size as Canada.
3:46:43
Just California is the size of India.
3:46:46
Just Texas is the size of Brazil.
3:46:46
Just just Florida is the size of Indonesia. mobed.
3:46:53
Uh George Hos is over in Hong Kong.
3:46:55
That's the size of Indiana.
3:46:55
Yeah, America uh stays undefeated. I mean, this is 2019. We'll see where it goes.
3:47:00
A lot of these countries are growing and some of these states might be shrinking, but uh I'm still long America even with all the crazy tariffs.
3:47:08
Um and you know, no better way to get your message across in America than some out of home advertising on ad. com.
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3:47:28
Um, should we talk about what else is interesting?
3:47:32
Uh, Vtorio had a funny meme, the virgin tariffs warrior versus the Chad, we'll see what happens lmao.
3:47:40
Yeah, I feel like, uh, this obviously resonated.
3:47:42
Uh, it's our our approach has just been, you know, this is happening. We'll see what happens.
3:47:51
Uh there's a lot of negative impacts and then there's people like Chris Powers. Yeah.
3:47:55
That are benefiting from it.
3:47:57
Um you know, overall it's much less easy to be in the Chad camp if you are George Hots and Tiny Corp and your your product is being um you know impacted or or you know the business entirely.
3:48:15
So, we'll we'll we all have to see what happens, but um definitely feeling that for entrepreneurs this week that are just dealing with uh immediate repercussions from it and uncertainty for sure.
3:48:26
Should we close out with uh this thread from carried no interest? Let's do it.
3:48:30
Uh so carried no interest, he's been on the show before.
3:48:33
Uh he says it's time to coin some new AI software terms.
3:48:37
He's employing Kugan's law.
3:48:37
He says inference to impact I2I is the first and inference risk quotient IRQ is the second. And he defines these.
3:48:47
This says the first that stands out to me is inference to impact. What does this mean?
3:48:53
It's the amount of time it takes within a new software product from hitting an LLM API to getting customer utility.
3:48:59
I've noticed a distribution in these new startups. Let's start with cursor.
3:49:02
Cursor has a very low eye to eye inference to impact.
3:49:05
As soon as you start ripping the application, you are hitting an LLM and getting results. The I2I is immediate. This is a good thing.
3:49:14
Now, the opposite is AI SDRs.
3:49:14
You hit a bunch of LLMs and send some outreach.
3:49:19
Much longer I2I on this product bad.
3:49:21
It's kind of the the the iteration loop.
3:49:24
A low I2I is good on a bunch of levels.
3:49:26
Your customers are seeing immediate magic.
3:49:28
You can onboard users faster.
3:49:30
Sales cycles should be shorter.
3:49:30
When you can shorten the amount of time between LLM and utility, this is objectively very good.
3:49:36
But it's time for another one.
3:49:38
The inference risk quotient, the IRQ.
3:49:40
The IRQ describes the amount of risk created for the customer from a series of LLM calls.
3:49:45
Uh for some AI first software companies introduce very little risk to a customer by calling an LLM. Others a good amount. Let's describe it.
3:49:54
Cursor works well in for this example as well.
3:49:56
Um, cursor's IRQ, the the risk quotient is theoretically low.
3:50:02
Cursor generates code, that code goes into a div, a a diff.
3:50:05
Uh, it should be tested and most errors caught as it progresses through staging environments. Solid IRQ. What about the inverse?
3:50:13
Let's go back to the AIS SDR example.
3:50:14
Your AI SDR starts ripping emails out the door. Some of them are bad.
3:50:18
They maybe embarrass your marketing department. Oof. Probably a medium IRQ.
3:50:22
What would be a high IRQ, an inference risk quotient?
3:50:25
Let's think about Harvey.
3:50:27
Harvey is an AI software for lawyers to analyze whatever lawyers analyze all day.
3:50:32
In my opinion, this would be high IRQ.
3:50:34
If the AI misses something important or mclassifies, you could have potential legal damages.
3:50:41
There's probably one more item, one more term in here.
3:50:43
LMAO, IURQ, inference utility to risk quotient.
3:50:47
This would be the amount of risk relative to utility.
3:50:51
cursors utility relative to risk is so high.
3:50:54
Your staging environment should catch bugs and your output is much higher. Fantastic framework.
3:50:58
Frameworks uh very on point.
3:51:02
I almost always say carry no interest real name every time.
3:51:07
So eventually you're going to get docs buddy.
3:51:08
Uh not on purpose, but uh this reminds me of what Avlock was bringing up.
3:51:14
If if you're asking um Angelist via an LLM what the share price is on a specific position, investment, etc. , it it has to be right. Right.
3:51:25
Because you're going to go make you know different financial decisions based on that data and like they they they need to be a u you know accurate source of records on these type of things and people just aren't going to tolerate um you know hallucinations in that environment.
3:51:42
So uh I think this this very well sums up why we're seeing the adoption uh you know cursors adoption curve versus we don't we see these sort of AI SDRs that are um you know getting customer traction but it seems like the churn is much higher and the utility is much lower.
3:52:02
I haven't seen people you know it was it was great having from rocks on. Yeah.
3:52:06
Sounds like people are getting a lot of utility out of that, but it's almost more of a CRM type tool than purely um an outbound, you know, engine.
3:52:17
And so um we haven't seen anybody raving about their AI BDR SDR yet.
3:52:23
That's also could be that if it's working so well, you don't want Yeah. Don't alpha, I guess. Yeah. Don't want to.
3:52:29
Well, I want to do a couple more.
3:52:30
Uh Andre Carpathy had an interesting post here.
3:52:32
He says, "Let's take AI predictions from blog posts, podcasts, and tweets and move them to betting markets.
3:52:37
are state-of-the-art and truth.
3:52:38
Uh, obviously we are sponsored here by Poly Market and I'd love to see more AI markets on Poly Market.
3:52:45
I'm sure we'll be working on spinning some of those up.
3:52:46
Uh, Andre Karpathy continues to say, "Uh, my struggle has been coming up with good, concrete, resolvable predicates.
3:52:51
This is always the tough thing with Polymarket is that, you know, it needs to have a clear resolution.
3:52:57
It needs to be not too far out, not more than a year.
3:52:59
You know, uh, you don't want your money just sitting there."
3:53:02
Uh, ideally predicates related to industry metrics and macroeconomics, eg naively, one might think the GDP, but I'm not so sure that works great.
3:53:11
Egc productivity paradox.
3:53:11
I also think eval are not amazing predicates because we see over and over that they are incomplete and hackable and and and saturated often.
3:53:20
and saturated often. Um, and I thought this was interesting because he's he's close to kind of my my thesis about the uh uh artificial economic intelligence just maybe instead of tracking towards you know IQ or how does this benchmark
3:53:38
against a human or the uh the the touring test we just want to say how much economically valuable work is being done by LLMs and AI agents and diffusion models etc like of the GPU view cycles that we we have we have strict data on
3:53:55
capex and inference cost and how much energy is going into these data centers how much how much economic value is being produced and once that hits 10% that's probably some sort of tipping point once that hits 50% like the robots
3:54:07
have kind of won and that could be good or it could be bad um but but that is true like okay the robots the AIs are producing more economic value than all of human all of humanity combined when we hit that 50% GDP generated by AI threshold. That feels like singularity
3:54:22
That feels like singularity territory to me.
3:54:24
That feels like a fundamentally different society.
3:54:27
That feels like UDI or something. 2027. Yeah. Yeah.
3:54:33
I I would take the under on on AI generating um over 50% of GDP by 2027.
3:54:38
But yes, the productivity paradox is is tricky.
3:54:42
productivity paradox is is tricky. uh Tyler Cowan has tried to formulate this saying that like you know the AI doomers they should express their pdooms in the form of longdated puts and say well if you really think that this is going to go poorly you should imagine that there
3:54:57
will be economic turmoil and you should be betting on that and profiting off of that and if you're not then maybe you're just yapping and so he's going to be on the show in a few weeks and and and we'll have to dig into more about how we can concretize these bets and think about uh how we make predictions about AI progress. Um, there's humanity's last
3:55:14
Um, there's humanity's last exam.
3:55:16
There's ARC AGI and there's all these interesting evals and uh and tests, but they're not scratching the itch for me in the same way when some new model goes viral.
3:55:28
I care more about the Studio Giblly moments than the okay Google's Gemini 2.
3:55:35
Google's Gemini 2.5 is two points higher on MMLU or some some exam uh or hacking AP bio even I I care le also something interesting which is if a lab has a truly uh worldchanging uh discovery or innovation they should not tell the world and not release it and just leverage it to the absolute max uh internally uh which again goes back to people's frustration
3:56:07
with open AI okay if you are at the frontier and you've felt like it should be you know open sourced uh and now it's closed um you know how how do how do the incentives and everything change um let's close out with Nick uh talking more about AI alignment he says broadly I think a AI alignment people are maxed out in smart and low in wisdom. I like
3:56:29
I like this because it's goes back to the uh when you build a character in an RPG, you have int and whiz, intelligence and wisdom, and they're slightly different.
3:56:41
Um and uh and I think as we like as we try and define what makes a human truly successful.
3:56:47
It's not always just put all the points into intelligence.
3:56:50
Charisma obviously matters. Yeah.
3:56:52
strength and like strength as a sense of like your grit, your grind, your ability to keep continue working.
3:56:59
Charisma obviously super valuable for coordination, bringing people together.
3:57:02
There's this agency, drive, lots, talking about RZ.
3:57:07
Yeah, RZ, all these different things.
3:57:09
And and yes, we might be seeing uh intelligence max out and get to these super high IQ models, but are they going to be super agentic, super creative, super wiz, super driven by wisdom?
3:57:20
Um, and this comment is obviously about the AI alignment people.
3:57:25
Um, he says, "Not a comment on anything in particular.
3:57:27
I've noticed myself saying it and thought it would be worth writing down, but obviously uh it's it's like perfectly timed with the AI 2027 thing."
3:57:34
Um, says, "Lots of room for people from other fields to contribute wisdom learned throughout history, even if they can't do a math olympiad or whatever.
3:57:41
I don't think being able to do highle math helps that much."
3:57:46
I guess one specific comment I'll make is that I'm quite excited about EMTT Shear's new company, Softmax.
3:57:53
I think he's thinking about things in interesting ways.
3:57:54
And so we'll have to dig into EMTT Shear's new company and how he's thinking about this because he's been uh very outspoken on AI alignment.
3:58:01
alignment. um but also a very successful entrepreneur and has built up probably a very deep trove of wisdom running Twitch and and building a real business that has to interface with the realities of the economy and doesn't live he's not a pure academic but he engages with the AI
3:58:16
alignment debate in at the same level as academics in my opinion and so I'm I'm excited to see that but uh it is it is it is interesting obviously Sean was talking about this like AI 2027 maybe it's just fanfiction uh I like fanfiction I have fun reading that thought provoking and and I think there is utility in that. Even if you're just
3:58:35
Even if you're just telling a sci-fi story, I'm here for it. I I'll read it all day.
3:58:38
So I I would say yeah, we want we want people doing that work.
3:58:43
Yeah, I would say more of that, but also you do need to you you can't lose the plot.
3:58:48
Um we have to announce a specific milestone, which is that we just hit four hours.
3:58:54
Oh, our first 4 hour show.
3:58:57
Uh we're clearly addicted.
3:59:00
Um, and I just have one now, you know that we've been talking about AI AI predictions.
3:59:04
I have one prediction to make, which is that Monday at 11:00 a. m. Pacific, 2:00 p. m.
3:59:09
Eastern, we will be back sitting in these chairs. Yeah. Ready to go again. Yeah. And I can't wait.
3:59:15
And I mean, what's your prediction for TBPN 2027? I think we'll be here. We'll be right here.
3:59:20
We'll be right here doing the same thing.
3:59:21
Doing the same thing from the front lines of the battle scarred Terminator apocalypse.
3:59:25
We will be shooting humanoid robots with with microphones in our other hands. James Bond's back, baby.
3:59:34
We will We will never surrender. We'll never surrender.
3:59:38
We will uh keep doing this until the the AI uh the bioweapon that the AIs release.
3:59:45
Uh you know, just maybe we'll be podcasting from a hermetically sealed biocure facility. Yeah.
3:59:49
so that no one can no one gets in, no one gets out, but we're always live streaming and then sleeping on our eight sleeps and then waking back up and doing it again.
3:59:57
Um, anyway, have a fantastic weekend everyone. Thank you for tuning in.
4:00:02
Uh, we appreciate you all. Yeah. And uh