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It is Tuesday, March 25th, 2025.
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I got it right this time.
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We are live from the Temple of Technology, the Fortress of Finance, the Capital of Capital. This show starts now.
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We got a great show for you today, folks.
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We got a bunch of call-ins.
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We got some uh breaking news in the financing world.
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Companies are doing deals.
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We got deals are getting done.
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We got we we we got media announcements. We got VR announcements.
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We got news about China coming on.
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We got a bunch of people calling in.
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But we also got some news.
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I see you're enjoying some uh Lucy Cinnamon.
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It's hot today here in Los Angeles.
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It's feeling like spring, John. It's great.
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Um well um what's your take on Signal?
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Because uh the Trump administration apparently I've heard all these uh defense tech founders complain, oh I got to use Microsoft Teams because my work is so important and like I'm saving the country, but it's such a bummer.
0:56
I wish I could use Slack.
0:56
Turns out they could just use signal.
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I mean, they all use signal.
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I guess that's very common.
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Maybe you should just run the entire organization on signal.
1:05
Seems like you just run the US government on signal and ramp.
1:07
It seems like it already is running on signal.
1:09
Uh that's of course the news of the day. It broke.
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It's just wild that that um I try not to follow any political news.
1:16
I try to keep my head in the sand on that kind of stuff. Yes.
1:20
But I did see their emoji usage the like Oh, really?
1:23
I didn't actually look at the the story or anything.
1:26
Um, I saw this as a tech story and that's the way we're treating it.
1:30
Uh, Trump administration was uh was found using Signal Atlantic's top editor said he was added to a text group in which top US officials discussed detailed plans to bomb Houthy targets in Yemen and with other US officials an extraordinary breach of security from an administration had repeatedly vowed to clamp down on leaks.
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Oh, that's why that's going viral. Yes.
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The it's the fist emoji followed by the American flag emoji followed by the fire emoji.
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Uh very American, very American, not not super tasteful. Atlantic situation.
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Editor and chief Jeffrey Goldberg recounted in a 3,500word story published Monday how he got a connection request on the signal messaging app from someone identified as Michael Waltz.
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Uh he initially believed the request was fake but ra later realized the account belonging to the US national security adviser was genuine after the group discussed detailed plans for an attack on the Houthis a militant group that has carried out numerous attacks on commercial vessels in the Red Sea.
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Goldberg didn't publish the actual plans in the article, but he said defense tech te defense secretary Pete Hegth at one point shared a post that featured operational details of forthcoming strikes in Yemen, including information about targets, weapons the US would be deploying and attack sequencing.
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Hours later, the attack went ahead.
2:51
So, it's kind of um I mean there's a bunch of like bad takes about this.
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One is like, oh, Signal got hacked.
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That's not what happened.
2:56
They literally just accidentally added the wrong person to the group.
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signal was not compromised.
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Uh the this the the encryption still works.
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The other kind of mediocre take or bad take was like the Atlantic shouldn't have posted this.
3:10
It seems the best possible marketing ever for Signal because it's very quick easy to understand.
3:16
Okay, this wasn't a this wasn't a hack. Yeah, it's a fat finger.
3:20
Yeah, it's a fat finger moment. Yep.
3:22
Yet validating the fact that some of the most important people in the world are having the most important conversations on Signal. Yeah.
3:27
So, shout out Moxy Moxy Marlin Spike, founder of Signal, creator of a great NFT as you sew.
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Very fun and uh and a great uh writer as well.
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Moxy is a great uh technologist.
3:40
Um anyway, Ben Thompson took the opportunity to write about this uh Trump administration group chat through the lens of technology.
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And I found his analysis hilarious and both and insightful.
3:54
Uh, it was great because of course he, you know, there's so many ways you could dive into this as a political story and I was like, there's no way Ben Thompson is is gonna write about this.
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It's just like it's so out of his his wheelhouse. There's no way.
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But, uh, you know, here he says, I think this is a fascinating story with a very clear tech angle.
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So, up front, let me get the obvious caveats out of the way.
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Yes, this was very stupid and probably illegal.
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This goes back to the uh the way information is handled, the government, the Hillary email situation.
4:26
Um although the potential illegality itself is an interesting tech story.
4:29
Um he says, "Start with Signal.
4:31
Given that Signal is a consumer app, I saw a lot of commentary decrying the obvious lack of security.
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In fact, I think the opposite is the case.
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Signal is actually the most secure messaging app.
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I summarized the differences between encrypted messaging apps in this update."
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and he goes on to drop a very very detailed analysis of how encryption works in the different apps and it's fascinating.
4:53
So I'm going to I'm going to take you through it because I I really like it.
4:55
And so uh basically there are three kind of patterns for encryption um and and he kind of breaks them down here.
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So iMessage is encrypted.
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Uh Apple and presumably an adversary cannot access your messages.
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But the way it does this is by limiting the maximum group size uh to just 32 people.
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So every message in a group chat is actually sent directly between the sender and every person in the group chat.
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In other words, when you send a message to a 32 person group chat, you're actually sending 32 separate messages and potentially more if some users are using iMessage on multiple devices.
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Of course, messages are very small.
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The internet is a very big pipe and so it doesn't really matter but it's a fascinating idea and this is the concept of of fan out.
5:42
Um this is also the most secure implementation.
5:49
There is both forward secrecy meaning breaking one message like if you if you hack the encryption on a single message it does not give you access to past messages and there's also something called self-healing in in encryption.
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This means that breaking one message gives you access to future messages until you are offline for a single message at which point you have lost the chain.
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So signal uses what is called clientside fan out.
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Uh after an initial back and forth exchange with everyone in the group, including the exchange of send keys, which are the keys that unlock the encrypted messages um for everyone in the group, you send one message that is individually encrypted for everyone in the group.
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This provides forward secrecy but sacrifices self-healing.
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However, because the send keys are themselves encrypted, there is plausible deniability in that you don't know for sure who who sent a particular message.
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Signal does maintain the structure of the group in encrypted form on its servers to maintain a consistent state for all users over time.
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WhatsApp is the most reliant on a central server.
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This is the third type of encryption architecture that's popular these days.
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Uh and they use what's called serverside fan out.
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So encrypted messages are sent to a central server with send keys for everyone in the group and then they are distributed by the server to everyone.
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Part of this process entails maintaining the structure of the group centrally and while there is a degree of plausible deniability, it does not go as far as signal does.
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And so what that means is that is that even though Meta cannot read your messages on WhatsApp, they can basically map the network of who's in what groups and that potentially could be uh could kind of give you a way if you broke one of these messages.
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You say, "Okay, well this person's in this chat and this chat and this chat.
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Okay, we know who this person is and we broke this single message.
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We're we're in basically."
7:39
Yeah, I would just say it's a pretty amazing how well Signal obfuscates the complexity uh of what's kind of happening behind the scenes to deliver this like very very easy to use chat interface. Yeah, it's remarkable.
7:54
Uh it just it feels like every other app I can't you can't tell the difference between WhatsApp, iMessage, and Signal even though they're using pretty different architectures from an encryption perspective.
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And so, uh, Ben writes, "While iMessage design is the most secure and thus the least scalable, you can't go more than 32, uh, participants in a single chat, which is something, oddly I've never actually run into, but I guess whenever there is a big group chat, it's always on signal or I run into this in my neighborhood.
8:23
There's a neighborhood group chat on iMessage and not everybody can be in it really because there's only 30."
8:26
Kind of a Lord the Fly situation. Yeah. Very competitive. Sharp elbows. Yep.
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HOA, you know, it's getting getting heated. It's great.
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But uh uh but the problem with with iMessage, of course, is that it's closed source.
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Signals, apps, and protocol, on the other hand, are open source, and there's no server component that needs to be verified.
8:44
In other words, we have an Andy Warhol Coke scenario here. Oh, yes, of course.
8:49
Of course, what's great about the country is that America started the tradition where the richest consumers buy essentially the same things as the poorest.
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You can be watching TV and see Coca-Cola and you know that the president drinks Coca-Cola or in or in our case diet Coca-Cola.
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Uh Liz Taylor drinks Coca-Cola.
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And just think, you can drink Coca-Cola, too. A Coke is a Coke.
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No matter the amount of money, you can't get a better Coke than the one the bum on the corner is drinking.
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All the Cokes are the same.
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And all the Cokes are good. Liz Taylor knows it. The president knows it. The bum knows it. And you know it, too.
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I do love that philosophy.
9:22
I always thought about um like I've probably seen Jeff Bezos's favorite movie and I think that's just like really cool. That's beautiful. It's beautiful.
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Although Jeff Bezos is listening.
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He's like John has not seen my favorite. I have movies.
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No one has seen I bought I bought them.
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I have hundreds of movies.
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He actually does cuz he owns Amazon Studios.
9:40
Even the individual actors don't haven't seen the movies, right?
9:45
He they were it was filmed in pieces and assembled at the end.
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You have to take out the editors.
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He really relishes that he has his own Netflix that's just entire his own movies. He's like, "Oh, yeah." End to end Inception 2. You ever see it, John? Cuz I made it.
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I spent a billion dollars on.
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It's better than the first. He has his own awards.
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You know, he has Godfather 4. It was amazing. Brought me to tears. It's a classic. It's a classic.
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It's like I rewatch it constantly. Twice a year. Twice a year.
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And John, you're never getting a hold on it.
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Anyway, Jeff, if you have a secret movie album. Yeah, exactly. The Scly album. Um, okay.
10:23
Anyway, Ben Thompson goes on to say, "So, it is with encryption.
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There isn't really a more secure messaging protocol than Signal, even if it were designed by the NSA."
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What is interesting is that the last bullet point in my excerpt.
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One way in which WhatsApp in particular could be compromised is if the server, which orchestrates the chat, were to insert a silent participant in the chat when it was established.
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this silent user which could be obfiscated in the user interface.
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Remember WhatsApp is not open source.
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So the WhatsApp code could say if Mark Zuckerberg joins a chat just don't just don't show that to anyone in theory.
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I'm not there's no there's no allegation this is happening but it's possible.
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Um and so if it's possible it happens.
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When you see that Rogan clip of Anton Antonio Garcia Martinez where Rogan's like, "The phones are listening to us, right?"
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And Antonio has to be like, "Uh, no, like I worked at Meta.
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Like, trust me, like if we were listening to your phones, like the ad targeting would be better."
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And Rogan's like, "But they're definitely listening, right?
11:23
It feels like they're listening."
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But Antonio Garcia paid paid off by great founder, you know, just recently ex You need to put on the tin foil hat for this. Yeah.
11:35
Is he the guy that goes on JRE and and is meant to say the phones aren't listening?
11:39
It's somewhat believable.
11:41
Yeah, somewhat believable. We'll see.
11:42
We'll have to put the screws to him.
11:42
I'm not going to go I'm not going to take it this far.
11:45
Everybody will get clipped.
11:48
Save that for later in the show.
11:48
Anyway, uh the reason I bring this up is because that's kind of what happened here.
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Goldberg was added to the chat, although albeit not silently.
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There was certainly a notification about his addition and he would have been publicly listed as a chat participant.
12:03
However, if you read the story, Goldberg was added at the same time as a bunch of other participants were added, and it seems like no one noticed.
12:09
That means he effectively operated as a silent participant and thus saw all the messages until the time he exited the chat. So fascinating.
12:17
Anyway, what was your takeaway?
12:21
I mean, my takeaway is this would this kind of fat finger move would be ruinous for most most boys group chats, most friend groups, most friend groups in in the entire world. Yeah.
12:32
I guess the message to the listener is uh take a take a scroll through your signal group chats.
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Make sure you don't have any silent participants you accidentally fat fingered into the chat.
12:39
Uh he goes on to talk about transparency versus security.
12:44
What is perhaps the most surprising detail about this episode, however, is that the violation was not about security, but rather transparency.
12:49
In fact, the official policy of the DoD is that officials use less secure means of communication from a Pentagon memo about the use of text messaging effective immediately when conducting government business on of DoD users of government-owned mobile devices and non-government owned devices.
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You have to use Microsoft Teams chat for text messaging as the fully designated managed DoD mobile enterprise system you for use on government-owned mobile devices.
13:18
Microsoft Teams chat will be available as a managed application blah blah blah.
13:21
So basically they want you to use Microsoft Teams.
13:23
Shout out Satcha Nadella for getting that deal done but it's not end to end to end encrypted.
13:29
The DoD's primary concern is not message security but record retention.
13:33
They want to have all the records.
13:35
They don't want it encrypted anyway. Yeah.
13:37
This is one of those things.
13:39
The challenge anytime you're trying to roll out uh roll out new software to a team or get a team to adopt software is the the the the sort of like people by default will flow to the like the the the platform with the least friction which is like what they're already using. Yep.
13:57
So, we see this, we have Slack, we don't use it for the show, right?
13:59
We just iMessage is just still the default.
14:01
And I'm sure at some point we'll move some more.
14:07
I mean, we need to get more secure with all the other podcasts that are attacking us and trying to hack us. Yeah.
14:13
Is security, cyber security.
14:13
I mean, we've been talking about trying to build our own version of Whiz. Yeah.
14:16
Uh hiring some Israeli guys to build that for us, but uh this could be this could be a good move. Yeah. To help you out. Yeah.
14:25
Yeah, we need we need the top guys for sure.
14:27
The top guys for sure to secure the stream secure the stream at all at all costs.
14:30
Anyway, uh he closes by saying there are security considerations.
14:36
Executive branch officials perhaps overstated their case when they wanted official records locked up forever, but are we really sure that we want ongoing conversations to be happening on services that are any less secure than Signal?
14:47
Again, none of this is to dismiss the stupidity of this particular case, but that's why I find the story so interesting.
14:54
There are a lot of there are a lot more ramifications beyond one military operation that raise legitimate systemic questions about how the government should operate in the digital age. And it's interesting. Yeah.
15:05
Uh this relates to that other post we talked about which was that that uh in I believe the UK there was a member of parliament whose chat GPT records or AI queries were maybe like subpoenaed or released. Yeah. Yeah.
15:21
FOYA and there's this question of like of like what is the value of our leaders being able to have private conversations? Yeah.
15:31
Historically it's been very easy.
15:34
you know, Abraham Lincoln walks outside with his top guy and just goes for a stroll and like no one else is listening and they can weigh all the possible options on how they want to win the civil war.
15:43
Well, we don't know at what point they developed robot birds that could sort of fly above political leaders.
15:49
The Nixon tapes was basically the start of all that, right?
15:53
And he was getting wild in the boys group chat in the White House basically saying a lot of crazy stuff.
15:59
Well, so this is interesting too.
16:01
Um, further down in the article, uh, they talk about how there was an incident called the Salt Typhoon hacky in which China had the ability to read pretty much SM every SMS message in America, which is why the US government advised citizens to use endtoend encrypted apps like Signal.
16:19
And that's why if you're on SMS specifically, if you're not on iMessage, like you need to be sharing American propaganda that is convincing to Chinese nationals and the CCP.
16:29
So when they hack you and they get it, they're like, "Wow, capitalism is sick." Yeah.
16:33
China's equivalent of the CIA is reading your messages and you got to turn them. You got to turn them. Exactly.
16:39
You got to be like cuz they're listening. So you got to turn them.
16:42
You got to post, hey, like it's a beautiful day today.
16:44
I I'm going to pick up my kids, you know, take them to football practice and barbecue. What are you doing?
16:51
And it's just like multiple times a day. Yeah, I'm barbecuing. I'm barbecuing.
16:55
It's It's a beautiful day.
16:57
What what was your what was your quote about uh uh MarkX failed to consider how making money with your absolute boys is fantastic? Something like that.
17:06
You send a couple SMSs across the cell typhoon hack and yeah, it's going to be peace all over the world. Yeah, for sure.
17:14
We should actually turn off iMessage on our phones and just text each other. Yeah. SMS.
17:18
It is It is ridiculous that they were just uh like spamming out these uh these government secrets.
17:26
It's almost like I mean they they should have just put it on a billboard like at this point.
17:29
They should have just taken all of the instructions, everything.
17:34
They should have just communicated through a network of billboards.
17:36
They should have just gone to adqu. com. That's right.
17:37
Uh because they have out of home adver advertising made easy and measurable.
17:41
Y they could say goodbye to the headaches of out of home advertising only on adqu which combines technology out of home expertise and data to enable efficiency privacy oriented.
17:51
People are not going to be finding out about your own campaign until you want them to hits the billboard. Exactly. Um so yeah. Yeah.
18:00
Just just something something to keep in mind.
18:02
We'll head over to Washington. We'll let them know. Yeah.
18:05
If you want to, you know, if you want to if you want to if you want to get your DMs to the mainstream media, the right people at the right time.
18:12
Just put them on a billboard. Yeah.
18:14
You could also uh if you wanted to talk with with Goldberg directly, you could just buy all the billboards surrounding his home. Yeah, exactly.
18:23
I'm sure I'm sure it's possible to figure out.
18:25
We're not going to dox him, but more efficient way.
18:29
You don't need to add Goldberg to your secret chat just just to send a message, you know, you can just you can just use a billboard for that, you know, etc. That's great.
18:38
Anyway, should we move on to 11x? Let's do it.
18:40
Uh talk about 10x engineers, 10x spies.
18:43
Now we're talking about 11x a little bit more.
18:46
11x crazy name they took.
18:48
I mean, well, it's the the meme, you know, take it to 11, right? Okay. Is that what it is? What's that? Um, this one goes to 11.
18:54
It's an AISDR company that's embroiled in controversy after allegations from TechCrunch that they claimed that they had customers that they don't have.
19:03
Uh, and there are definitely two sides to the story, so it'll be fun to dig in. Not dead to rights yet.
19:10
Um, some Andre folks came out in support.
19:13
There's some haters on the timeline.
19:15
Uh, interestingly, the the scoop comes from Techrunch.
19:18
The I'm wondering 11, you know, this one goes to 11.
19:23
Do you remember the movie Spinal Tap? Yeah, I remember that.
19:25
That's that's a potentially a deep Spinal Tap reference.
19:31
I always thought that this was just like affiliated with that club in Miami 11.
19:35
That that could be it's probably like a spin because they were they were getting into cryptocurrency.
19:40
If we could employees and we could spend all day at 11 Y and we would never have to work.
19:47
Well, no, I mean it makes sense that 11 the club would incubate something like this because they need to text their highpaying clients, hey, do you want a bottle service tonight?
19:57
What's going on engine CRM?
20:00
Really, really increasing.
20:04
I mean, that's high margin stuff if they get them coming in.
20:06
I mean, they're not paying 250 a bottle for Dom at 11.
20:09
Talk about it's going to be 5K at least. Yeah.
20:11
And so, you got to start using the AI sales reps to just be hitting everyone that comes.
20:17
Pounding the digital pavement. Exactly.
20:18
Pounding the digital pavement.
20:20
Anyway, let's go to Techrunch.
20:22
Last year, AI powered sales automation startup 11X appeared to be on an explosive growth trajectory.
20:30
However, nearly two dozen sources, including investors and current and former employees, told Techrunch the company has experienced financial struggles largely of its own making.
20:38
So, their own investors are talking to Techrunch. Wow.
20:42
Numerous people in the US and UK told Techrunch that the situation has become so tenuous that 11X's leader series B investor Andre Horowitz may even be considering legal action. Ayay.
20:54
However, a spokesperson for Andre emphatically denied such rumblings, telling TechCrunch that A16Z, they ain't suing. Yeah.
21:04
Uh, this story, it's interesting.
21:04
Like, Techrunch got the scoop, but they didn't have a lot of meat here, right?
21:10
It's just sort of like a lot of like he he said, she said, former employee says.
21:14
Y um I think let's read through the meat that is here and then let's dig into the response from the founder some of the support from Andre and then I want to talk about kind of the meta level of where is it you know is sort of like how much should you fake it till you make it basically the contracted arr. Yep.
21:35
That and and then also the logo stuff.
21:40
There's been a classic example of like, oh, a guy from Google signed up for my service.
21:45
Therefore, can I just say Google uses my service?
21:47
You know, always been questionable.
21:50
Uh, so 11X offers a bot for outbound cold sales duties, including identifying prospects, crafting custom messages, and scheduling sales calls.
21:59
All stuff that's like very doable within the current regime of AI tools and foundation models.
22:03
Uh, it's one of a number of AI startups in the hot area known as AI sales development representatives or AI SDRs.
22:10
It was founded in 2022 by Hassan Sukar.
22:12
11X said it approached $10 million in ARR just two years after launch and moved from London to Silicon Valley last July and announced a $24 million series A led by Benchmark in September and then very quickly followed up later that month with a $50 million series B from Andre Horowitz.
22:30
Three current and former 11X workers told Techrunch that most of its early customers took advantage of break clauses in their sales contracts to discontinue using the product.
22:38
Customers faced issues such as the email product not working as expected or hallucinations according to sources. Very standard. Yeah. I'd love to get a sense.
22:48
I don't think we're going to get from this article, but a sense of was this contract at ARR like, hey, we're going to you're going to sign up for, you know, a year or two, but you have a threemonth sort of like non-paid trial that like converts in or were these customers actually paying?
23:03
I think they probably paid.
23:04
And I think I think it's basically what I I mean I think what what the ARR calculation is like the gold standard of ARR is that if it's if you're counting it as ARR it by contract legally has to come in every single month for at least 12 months. Yeah.
23:21
And so it's okay to multiply that number by 12.
23:25
If you I if if you can break out of it at any moment in time. It's annualized revenue. Yeah.
23:31
And it's not necessarily recurring.
23:33
you'd like it to be recurring.
23:36
This is the case with my with Lucy.
23:38
Like we have people on subscription.
23:39
They're not locked in for 12 12 months. Yeah.
23:42
Same with But it's helpful to to kind of look at the subscription revenue, multiply it by 12 and be like, "Yeah, I can probably count on 10 million coming in over the next.
23:52
We have subscribers that are roughly worth, you know, exactly this amount with some a discount return."
23:57
But it's very different from, okay, you have a ironclad contract that would be very difficult The big thing here is companies like 11X and there's been a lot of them.
24:07
They make these sort of really big promises and I believe the potential is there but the issues that you know 11x customers says they're facing issues like the email product not working as expected or the product just hallucinating and there's a company in my portfolio that that builds uh sort of similar agentic products for another vertical and they were able to like get a a V1 that was like magical Mhm.
24:32
like 60% of the time, which is not enough. Yep.
24:36
And so they then had to spend like almost a year kind of rebuilding the product and now it's working really well. Yep.
24:42
But the issue is like you go and you sell like an Air Table or a Zoom info on something like this and if you have an outbound sales agent that's magical 60% of the time, but 40% of the time it hallucinates. Yep.
24:57
That is not a magical product.
24:59
product. like you're going to piss off customers and it's like the fastest thing that somebody's going to turn off because they're you know gonna it's just it's so rough because I mean obviously I think everyone's a believer in the agent paradigm but it we're clearly in the
25:14
centaur era where we've talked about the centaur chess how for a long time a human plus a chess engine would defeat both the best chess AI and the best human and I would just imagine that you know like what Devon and Cursor are doing for programmers where they're not fully replacing the programmer. They're
25:35
They're more just like an extension of the programmer.
25:38
Um, and even the way most people use chat GPT, it's very interactive.
25:42
I I I I send it some bullet points.
25:45
It turns it into a paragraph.
25:45
I edit that, I change that.
25:46
Um, I could imagine a product in the AIS SDR world being super helpful even if it wasn't agentic because 60% of the time it writes me a great email and I can just click send, but I'm still reviewing. I'm still in the loop.
26:00
The reason we've seen so much traction on the engineering developer tooling side is that developers can see the Agentic product make a mistake. Yep.
26:09
They can help correct it. Yep.
26:11
And nobody's impacted other than the developer.
26:13
Devon sends in a GitHub pull request and then a human reviews that most of the time.
26:18
I mean, I'm sure you can just say merge, but you know, most people probably review the code, uh, at least a little bit or or run a test suite against it.
26:25
And if you don't have a test suite or a code review process for the emails that are being sent, it can get very spammy.
26:32
Anyway, this is a funny this is a funny line.
26:36
So, there was some internal drama, too.
26:38
employees described an ar ar ar ar ar ar ar ar ar ar ar ar ar ar ar ar ar ar ar ar ardduous stressful work environment.
26:41
Even for those who embrace hustle culture.
26:44
So even if you love working hard, it's going to be a stressful work environment.
26:49
Uh so anyways, uh I got to got to call that out.
26:52
They're also in hot water for uh maybe fake in customer endorsements is what's left here.
26:57
I I think using logos a little bit.
27:00
Seems like what happens is they had some big companies sign up. Yep.
27:05
do these sort of whatever the deals actually look like. Yep.
27:10
Churn and then they kept repres. Yeah.
27:14
I think where where this got I'm sure annoying for Zoom Info is that Zoom Info I think also has like a competitor.
27:23
They have a competitive product. Yes.
27:26
And so Zoom Info must have signed up at some point or someone from Zoom Info signed up and 11X used the Zoom Info logo along with other multiple companies on their website to to show hey we're a real business.
27:38
We have a lot of great customers and Zoom Info said we did not give them permission to use our logo in any manner and we are not a customer. So rough there.
27:47
And this happens in uh Aden like Ridge.
27:49
There's been a lot of I I don't know if it happened to Ridge, but there's a lot of agencies that will do like one campaign and they'll be like, "Well, we're responsible for all of Ridg's growth.
27:58
Yeah, we scaled this company. We scaled that company."
28:00
And and then the CEO will get on and be like, "Hey, look, like we we're fine working with you, but like give our team some credit here.
28:08
Like, we worked really really hard."
28:09
I I have that happen all the time still.
28:11
People I'll I'll reach have somebody reach out to me and they'll say, "Hey, so and so says they did something the party rounding and I'm like I don't know their I don't actually know who I was I was like a part of every process.
28:27
But yeah, so it sounds like they've been not just putting the logo on the site, they've been claiming it in sales calls and now on its own like AI dialer.
28:35
Well, were those sales calls hallucinated?
28:37
Because it's possible that this is all just one everything is just one hallucination and they're like, "Well, yeah, like we just told our AI to make a landing page and threw some logos on there."
28:47
The website feels like what?
28:49
Like it was entirely AI generated.
28:53
Like if you you've seen it, it's like it's like all AI. Like look at this. Like like wow.
28:59
It does feel like the um again I don't I don't want to dunk I don't want to dunk on them. Um are digital workers.
29:10
So um anyways, if you don't have anything nice to say, don't say.
29:14
Oh, they really like focus on like it's a person. Okay. Yeah. Alice, Julian, Gig. Yeah.
29:19
So, it sounds like this this blew up in their face partly because Zoom Info had been asking them for months to take down their logo to stop using them in marketing materials. Yeah.
29:31
And it sounds like they didn't listen.
29:32
Um, and I mean, Ro is still on here.
29:36
You should uh you should hit them up and ask if they're actually a client. Do some journalism here.
29:39
Uh anyway, uh what I really want from them is an SDR that's just an IFBB pro because Julian looks great, Alex looks great, but I want an absolute mass monster in a tank top who can really sell some supplements for me. That's the goal.
29:54
Apparently the suit apparently the CEO doesn't believe in people taking holidays.
29:59
Okay, which we can't comment on that. Respect it.
30:07
Um, Ben, when what when did you request time off? I'm kidding.
30:11
Um, anyways, I thought this this line was good.
30:14
And then honestly, let's move on.
30:15
Uh, there's a lot more under the hood.
30:17
A current employee said, "Wow, a current employee.
30:21
You should probably leave.
30:23
Yeah, get on with your life."
30:23
Uh, one day there will be a documentary about this guy.
30:26
I do believe that's how scandalous he is.
30:28
So, obviously, Sukar pushed back.
30:30
he sort of went through a bunch of different bullet points outlining how um but yeah o overall uh you don't see benchmark in many companies that that have this kind of story. No totally.
30:44
have this kind of story. No totally. Um but this you know again the the sort of critique of venture in the last year and a half two years has been companies are growing so quickly raising so much capital that they are
31:01
overestimating their traction basically that the idea of ARR is now when everybody's saying oh we got to 10 million ARR in in in six months then the pressure starts building up where founders feel like oh well this my competitor is counting contracted ARR to raise more money. And so that pressure
31:17
And so that pressure just builds up and these rounds are getting done like really quickly.
31:21
And the faster the faster a round gets done, the less time there there is to do totally, you know, real hardcore diligence.
31:30
And and in many ways, I'm sure I'm sure all their investors knew that there were issues with the product, but it was a bet, you know, broadly on the category and the team.
31:37
I mean, a lot of this comes down to the material threshold during due diligence.
31:40
I remember I was using the same lawyer as Zenitz during the whole Zenitz arc and that's rough.
31:48
Um, and we were doing a $20 million series A with Andre and Zenits was doing a $500 million series C or something like that.
32:00
And my deal was taking forever in terms of due diligence.
32:04
It was like such a beast.
32:05
And I was like the lead on it.
32:07
And uh and I was like, "Oh man, I can't imagine what it's like to do a $500 million round."
32:13
Like, that must be brutal.
32:14
Like, ours has taken like months. It's been so much work.
32:16
Like, so so many like checks on like this this employment contract, this deal, this this thing. Get the FDA people. It was a lot.
32:25
Uh and and like from a legal perspective, it's actually easier to do due diligence in a $500 million round because you set the material threshold at like 1% of the funding that's coming in.
32:39
And so you might say, "Hey, we're doing a $20 million raise.
32:40
Let's look at every contract that's over 200k."
32:45
Because look, yeah, if there's some employment contract out there that's a 100k liability and we get it wrong, like we'll just write it off. It's not a big deal.
32:53
But when you're doing a $500 million round, all of a sudden it's like, oh yeah, if there's a $4 million liability on the balance sheet, we don't know about, like, who cares?
33:00
I don't know that those might not be the actual numbers, but um when you're a small company and they raised a in 2023, they raised a $2 million preede, then a $24 million uh round in 2024, and then immediately a $50 million round.
33:14
Like, it's probably still a pretty small company.
33:17
And so if there's a contract out there that's like pretty small, you might just be like, well, like it doesn't really matter.
33:25
Like we're not going to dig into it that much.
33:26
It just doesn't make sense based on the scale of the company.
33:29
But I I do I do like how Andre and Benchmark have both come out in support of Hassan.
33:34
Um I'm sure Hassan, like every founder, has has, you know, made mistakes, but uh hopefully sure he'll learn uh and the team will learn from this crisis.
33:45
But uh Joe had a good point.
33:47
Uh what they've built is remarkable.
33:49
The team product and metrics are world class and they're attacking a market opportunity that rivals any I've ever seen.
33:53
Uh and then Sarah Tavl came out and said uh one of 11X's incredible strengths that I believe will compound for many years to come is the breaket pace at which Hassan and the team move.
34:05
That kind of speed brings both opportunity and challenge especially early on.
34:08
Yeah, this is a cool like going direct addressing the news like clearly people are going to be talking about it.
34:13
He puts out all this information.
34:14
also funny to dig into, they've raised 76 million and he says like we've barely touched our investment capital and have nearly 70 million on the balance sheet.
34:23
Uh, and I mean I guess it's only been a couple months, like less than a year, so they're not burning a lot.
34:28
But it is interesting that like yeah, like even even if the ARR is a little off or something or there's some churn, like they could totally figure this out and like wait they they could wait like what based on their burn probably like a decade for like agents to get better and like LLM to improve.
34:45
Like as long as they can keep the energy in the team and like get through it like it's probably fine.
34:48
The timing of this is fascinating and that TechCrunch just changed hands. Yep.
34:52
And they decide, "Yep, we're going to just like immediately do a like an aggressive hit piece, which is exact opposite of what people have liked about TechCrunch.
35:09
Techrunch, Adam, Adam Ryan talked about this on the show, you know, they they talked about how he he said that they Techrunch was the make your mom proud engine.
35:18
It was a place to launch companies and it's a weird position to be in to try to do like investigative journalism and be a launch platform. Yep. Oh, totally.
35:26
And so again, uh yeah, I'm I'm sure this drives a lot of clicks. Um Yeah.
35:32
But uh but yeah, it's it's kind of Yeah, it's just again it's an awkward uh awkward place to be in.
35:40
Yeah, I mean he does admit uh some amount of fault here saying like we regret not having a better process to remove logos from our website more promptly after customers churn.
35:48
But he's he says they've never put a customer on there who didn't pay.
35:53
Yeah, which is great clarification and that makes sense like you know updating front end it should be easy with AI but sometimes stuff gets slipped and you forget that oh yeah they turned like we should probably remove them.
36:04
Um and then also he says our investors are not suing us.
36:09
They categorically denied this to Techrunch.
36:11
Yet, this rumor was included in the article.
36:12
And so, a wag of the finger to Techrunch on that one.
36:15
They should have been firmer on that. Yeah. But good luck to them.
36:21
Good luck to everyone building AI SDRs.
36:22
and let us know if you're building.
36:25
We are going to have uh I almost said his real name, but we're going to have somebody named uh Carrie Noin Interest on the show later today to just talk about the AI uh sales automation market generally.
36:37
He's been somewhat a critic of SAS, but he also is actively buying and transforming existing SAS companies and is building some stuff in the space himself.
36:46
So excited to have him on um in a couple hours. Yeah.
36:51
And for and for Hassan and the 11X team, I think, you know, they have 70 million on the balance sheet still, something like that.
36:57
They are clearly going through like a tumultuous time with this negative article. They got to rebuild.
37:03
They got to redouble their efforts.
37:05
And I think like the number one thing that they could do to really get through this hard time and accelerate is just keep cost low. Get on ramp. com. Time is money. Save both.
37:14
Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. go to ramp. com and sign up.
37:23
Uh yeah, I mean this the strongest signal that 11x could send to the market right now is getting Squan to to to come in. That would be fantastic.
37:32
Basically, I I thought you were going to say the strongest signal they could send to the market is just putting out a press release saying like, hey, we're on ramp now. Yeah.
37:40
Just, hey, we're taking everything seriously.
37:42
This is serious company and we are on a serious financial platform. Yeah. We don't mess around. We don't mess around.
37:46
But an even stronger signal would be getting Saquon.
37:49
Saquon's to our knowledge has invested in two companies. Yes. Ramp and Andreal. Yes.
37:54
To uh the third company, the trilogy. The third. Yeah.
37:58
The trilogy of Saquon investments.
38:00
If you're a founder in Silicon Valley, like you have to be calling Seaquan right now to be number three. Yeah.
38:06
Give him every other VC firm that invested in and or get Squan to invest in your company.
38:14
Go into debt if you have to. Yes.
38:16
Every other every other Silicon Valley firm that's invested in RAMP and Anderoll has a ton of corpses and bad investments.
38:23
Sequin appears to be just the guy doesn't miss. Doesn't miss. It's great.
38:29
Uh anyway, speaking of uh ramp investor, Thrive Capital and uh AI uh Thrive Capital is leading a new deal in Wall Street AI startup RO.
38:38
Uh is Wall Street ready to work with artificial intelligence?
38:43
writes Natasha Muscerinus over at the information.
38:46
Two of OpenAI's biggest investors think so.
38:49
Thrive Capital is set to lead a $40 million financing into Rogo AI, an artificial intelligence startup selling AI software for investment bankers and Wall Street analysts at a valuation of up to $350 million.
39:01
You know what investment bankers need?
39:03
They need that uh what was Optify.
39:08
That would be the big opportunity in in Wall Street.
39:10
If you want to sell into Wall Street banks, go to the Optify guys and say, "Hey, we're going to put cameras in every cubicle in your investment bank.
39:17
Make sure these guys are really working 80 hours a week."
39:20
They always talk such a big game.
39:20
Oh, investment bankers work 100 hours a week. Show me the data. Yeah, show me the data.
39:26
I I don't know if I buy it.
39:26
It could all just be a LAR. I want to see it. That's right.
39:31
Anyway, uh Kla's already in.
39:33
Thrive is a big OpenAI investor.
39:35
They're participating in the new round.
39:37
Styling itself as Wall Street's first AI analyst, Rogo aims to shorten the time that investment corporate bankers spend on the grunt work of research and preparing client materials.
39:46
Love that three-year-old startup LLM.
39:48
This feels like a a better attack vector for the big slide deck problem, right? Yep.
39:55
A lot of uh a lot of white collar work is making slide decks. Yep.
40:00
A lot of time and energy goes into it.
40:02
But the challenge of making decks is not generating pretty pages. Yep.
40:06
It's what is the content that goes into it. Yep.
40:08
You're going through all this data. You're creating models.
40:11
You're creating charts, graphs, etc.
40:13
And it seems so obvious in the context of Harvey.
40:15
I'm surprised that we haven't seen anyone do this before because uh with Harvey, obviously it's a uh generative AI startup.
40:23
Uh customizes AI models using legal data such as case histories to save lawyers prep time.
40:30
Harvey's ARR topped 50 million in December.
40:32
We've heard that it's a pretty expensive product, but they're selling to law firms and saves them a lot of time, so it's probably worth it.
40:36
Uh, and Harvey is now at a $2. 7 billion valuation.
40:40
And it makes so much sense that there would be a Harvey for investment banking.
40:43
And one of the big things is is if you're an investment banker or a lawyer, you you're going to use Chat GPT deep research if you could, but oftent times you cannot put client materials into OpenAI's models that they'll train on because all of a sudden you have some secret information that's meant to be very private and they get trained on it and then in the next version open AAI GPT 4.
41:07
version open AAI GPT 4.8 and eight comes out and you ask it like how much does this person make at this company and it's just like here we go or like you know what's the what's the intellectual property behind X Y and Z it's like oh yeah like the lawyer who was working on that intellectual property they uploaded it all and we trained on it by accident
41:24
it wouldn't even be open AI trying to do that they just wouldn't they would just be oh it's in the it's in the feed we got the data let's just train on it um and so makes a ton of sense that you would run a sequestered LLM that could that could be adapted to all the data that the bank as but then also not not leak data from one client to another. Yeah. Yeah.
41:44
What were you going to say?
41:44
I'm curious to know what their actual policy is around that they obviously want to use the data that they ingest to improve the product. Yep.
41:55
But are they using it to inform outputs to other users like actual factual outputs? Yeah. I don't know.
42:07
I mean, I think I don't know. I don't know.
42:09
I think Harvey is not doing any of the That's the risk. That's the risk.
42:12
That's the risk, but we don't know if OpenAI is actually doing that.
42:16
I mean, in the in the long term, you could imagine a kind of data sanitization and anonymization strategy that takes in private data and and still allows it to improve the model.
42:30
Um, but it's probably very very tricky because if any of that data leaks in and you ask it, like it's it's very easy to to to figure out what's happening with these models.
42:40
Like for a long time, if you went to OpenAI's whisper and you just had it record some audio and then you didn't say anything and then you clicked, okay, like transcribe that, it would say, thanks for watching. Please subscribe.
42:54
And it's like, okay, that's clearly YouTube data.
42:59
And so you could imagine this data leaking out and already I mean I've I'm sure OpenAI is like trying really really hard not to let personal information leak into the training data because like I noticed that OpenAI has has a series of like personalization features where it tries to learn about you. But I will often lie. Can you imagine?
43:18
Can you imagine if like how bad it would be for an investment bank if if you were able to query like uh about ask OpenAI about something and and it just pulls up, you know, oh yeah, this company like tried to sell itself like three to four different times.
43:37
They ran all these different processes.
43:39
Goldman was lead left in the deal. They pitched all this. They failed. they couldn't.
43:43
Here's the name of the banker that was looking at it internally.
43:46
They said it wasn't that good that they tried to shell it on somebody. Yeah, it' be a disaster.
43:49
So, uh obviously like a a clear need um and a lot of people are swarming in here uh such as Hebia, which we talked to George Sevelka, Model ML, uh prosites going after the task typically handled by overworked analysts and junior bankers.
44:07
And several banks such as City Group and Bank of America say they're also developing AI tools internally for similar purposes.
44:11
for Thrive Capital, which made big headlines for bets on OpenAI and Stripe at relatively high valuations.
44:18
The rogo deal shows the firm also wants to make investments in younger AI companies.
44:22
The New York investment firm is also in talks to invest in the newest financing for popular coding assistant cursor.
44:27
We heard about this earlier at I think a 10 billion valuation.
44:31
And so, uh, Kushner's all over the place.
44:35
He's going down to the $40 million round.
44:37
He'll do a $1 billion round. He's an absolute dog.
44:41
size Lord, but let's ring the size gong for Kushner and the team over at Want to invest in companies that Kushner invested in 10 years ago.
44:49
Why not check out public? Public. com, baby.
44:52
Investing for those who take it seriously.
44:55
They got a knack for investing in stuff before it ends up IPOing. Yep.
45:00
Which is a pretty good business.
45:02
Yeah, pretty good business.
45:04
I I think he described like buy low, sell high.
45:06
Yeah, I think that's the strategy over there. Or just hold forever. Hold to three T's. Yeah, let's let's do it.
45:13
Uh well, they got multiasset investing, industryleading yields.
45:16
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45:19
Thank you to Public for supporting the show. We love you guys. Thank you to Public.
45:22
Uh anyway, speaking of Mag 7, big tech stocks, big market movers, Apple, Meta, Google, they're buying remote controlled robotic arms.
45:30
We talked about this briefly on a previous show, the arm farm at Google. I love this one.
45:36
Wait, by the way, I didn't realize this article is written by someone at the information named Rocket. Cool. I like that name.
45:42
Being called Rocket and then writing about deep tech is just amazing.
45:50
Great nominative determinism. Perfect.
45:52
Your future is bright for Rocket Drew over at the information.
45:53
Uh they write uh during Nvidia's conference for developers last week, Jensen Wong showed off a software that creates computer simulations of robots.
46:02
Those simulations aim to teach robots how to perform tasks from washing dishes to picking up household objects.
46:08
But some robot makers I spoke to say it's better to train robots to do such tasks by having a person control them remotely.
46:16
Also known as telea operation.
46:16
And this has been like the most popular topic but also controversial.
46:22
Oh, Elon did the uh the Optimus event and they were teleaoperated.
46:27
Is this like maybe tea operation is actually the path to robotic AGI?
46:32
And so it's good to be on that path, but then everyone else kind of is like, "Wait, what? It's teleoperation."
46:38
I think we could put each of us put an Optimus in each other's houses and instantly teleport into it. I could come over. You're sleeping. I go, "John, get up. We got to do the show. We got breaking news.
46:48
We got We got breaking news. That'd be great.
46:52
Hey, not too distant future." I hope so.
46:54
Um, in a sign of growing interest in tea operations, scale AI is considering jumping into that market.
47:00
according pe to people who have spoken to the company staff.
47:02
I was talking to Alex Wang about this uh a couple years ago actually.
47:06
He had a great interview on invest like the best and he talked about the data wall in robotics.
47:11
The fact that yes there's a trillion tokens of words on Reddit and the internet broadly that are very easy to crawl and that's why the LLM have advanced so quickly.
47:20
That data set does not exist anywhere for human motion data.
47:26
Well, I'll go out and say I have content of me kick flipping. Nice.
47:33
Surfing, snowboarding, bunch of cool stuff.
47:36
Or were you wearing a mocap suit because we got to know where the joints were going. The video is not enough.
47:40
Now they can do translation from video. Put me in a suit.
47:45
I I would like to train optimist.
47:48
I think that actually might be the future and that might be what Scale's do going to do.
47:50
Scale might have an army of We talked about this with Merkore, too. could get paid to serve. Yeah.
47:57
Right now, right now, knowledge workers globally can just train models by writing code, answering, you know, questions.
48:03
I mean, that's the mercore thing is like hire people to answer math questions.
48:07
The greatest opportunity of the next 5 years is to wear the suit and just do awesome stuff.
48:12
Just do sick extreme sports in a moap.
48:15
Dude, can you can you imagine you're like out snowboarding in this suit and you just just have like terrible like you like are like flailing on some jump and you're like all right we got to like cut that out like Yeah. Yeah.
48:28
pull that from the training data.
48:30
It's real like it should be in the data but like at the same time I don't want to you know Yep.
48:35
I don't want to set set a poor example. Exactly.
48:37
You got to call all those data points.
48:39
No, remember remember I talked about too I want to have you know I think that the real benchmark that matters for all humanoids is the ability to do extreme activities.
48:47
So agree um cliff jumping you know a robot should be able to 900 backflip barrel roll deadlift the thousand pounds.
48:59
Yeah when a robot can just be in the thousand pound clean and jerk for sure. Yeah. Yeah.
49:07
These are important evals.
49:07
Um, uh, scale has an army of human contractors who create data to train AI and evaluate the performance of AI models in difficult tasks.
49:16
The company has discussed using that workforce to handle tea operation for training robots.
49:20
And I think we were talking to a company that was doing tea operation for those small delivery robots which have been uh getting more and more popular.
49:27
And I've long said I mean George H.
49:30
long said I mean George H. thoughts had a had a take that uh Google Whimo was overly teaoperated in the sense that there was a human in the loop too much basically a human in the loop overseeing you know one or four or eight or 16 Whimos at a time and basically there's always a human behind the scenes in
49:50
Whimo that's ready to like hop in if there's a problem um I don't really have a problem with that like let's see how the economics pay like pencil out if if there needs to be a human in the loop loop for most of these robotic things and that's help and that helps us develop the training data to get to really really autonomous systems over time. I'm fine with it. I I I'm not I'm I'm fine with it.
50:07
I I I'm not I'm not I'm not like an AI purist in that regard.
50:12
Um and so large firms such as Tesla, OpenAI, Meta and Google and Apple are trying to develop hardware or software for humanoid or home robots.
50:21
There's also a bunch of startups doing this stuff. Sensei is another rival.
50:24
Says it wants to be scale AI for robotics training data and aims to distribute cheap teleoperated devices to a network of human data collectors. This is your idea.
50:32
Uh who will perform tasks such as folding laundry on behalf of robot developers.
50:36
Yeah, we need sensei for extreme sports.
50:38
We need scale AI for kick flips. Yep. I like it.
50:40
Scale AI is up at 14 billion valuation.
50:44
The kickflip is the final male benchmark.
50:46
You can be in the thousand pound club, but if you can't kick flip flip, what are you doing, dude? Well, dunking.
50:52
I would say you you you handle the kick flips, I'll handle the dunking. Okay.
50:56
Yeah, together we make a good team.
50:57
But until I see an Optimus or a Figure robotic robot dunking, I still got a job. Let's see.
51:06
Yeah, Figure trained their new they trained uh their robots on Joe Biden. Yeah, on Joe Biden. I saw.
51:11
And they were saying today, this is the last time.
51:14
This is the last time it will look like because they're going to train on someone athletic next.
51:17
Yeah, that's interesting. Cool.
51:19
Um, anyway, in the relative world, in the relatively small world of robotics, teleoperation equipment is hot.
51:26
Troen Robotics, a longtime seller of robot parts in recent years began selling Aloha, a tea operated device with four arms that allows a human operator to use two arms to control the other two. Interesting.
51:38
The device's sensors collect information while the arms move, and the robot is trained to repeat the motions.
51:41
There are multiple versions of Aloha, including stationary and mobile, the latter of which was designed at Stanford.
51:46
Uh, Troen is based in Downer's Grove, Illinois.
51:50
Last year sold more than 100 stationary and mobile Aloha devices together, which have a sticker price of more than 3.
51:56
3 million, up from only a handful of sales.
51:59
Um, and so they're doing well.
52:01
There's also, uh, robotics, some roboticists are collecting teleop data using more rudimentary gear, including some game controllers.
52:09
Dexterity, which develops robots that pick and pack pick and stack packages and trucks and other areas, bought Xbox controllers and connected them to robots. Uh, very cool.
52:17
Human staff use the controllers to direct its machines to stack boxes.
52:21
And so maybe in the future you'll just be downloading the latest Xbox game from scale AI and just teleaoperating for, you know, po points in the game.
52:32
Basically, the golden age is going to involve people moving to very inexpensive countries and just getting paid to do fun stuff all the time.
52:42
There was a there was a a performance artist named Ryder Rips who when VR was getting hot built a VR simulation of what it was like to be in a pick and pack facility in like an Amazon workplace. It was very bizarre.
52:56
And so you would have to like pick up the box and it was the only the game was just work. It was just work. That was it. It was very interesting.
53:01
It very like he's like a thought da did he have I mean it was like something that was shown at like fine art museums basically.
53:08
He's like a he's an artist essentially but it's it's it's like thoughtprovoking work.
53:12
I I'm uh he's he's he's a wild guy but uh he's uh he's a character.
53:17
Uh anyway uh you know what I think the final eval will be for these uh humanoid robotics? These robotic arms. I know.
53:28
I I know what you're thinking.
53:29
He'll be flexing with a nice watch on the robotic arm on the robotic arms wrist.
53:34
Of course, we got to get robotic.
53:37
You know, these robots aren't approaching true AGI until they're rocking an Aqua. Yeah.
53:43
I mean, honestly, like if you're spending what is this $3 million on a robotic arm?
53:47
Like, throw a PC on there. Like, why not?
53:50
At least at least put a Daytona on the thing.
53:53
Like, it's an easy way to signal to buyers that you shared values. Exactly. Hey. Yeah. Yeah.
53:59
Uh, you know, th this robot, it's got some class.
54:02
It's not just like automating, not just stealing jobs.
54:03
It's also, you know, like raising the aesthetic, uh, floor in in your office. I love it.
54:10
And so, where should they go to buy watches for their robotic arms, Jordy?
54:16
Uh, they should go to getbbezzle.
54:19
com, download the bezel app, build out your, uh, build out your Bezel should integrate favorite and so you can just you You're doing the training data and then you're immediately cashing out for watches.
54:31
I volunteer to provide the training data for buying watches on bezel.
54:35
And and yeah, training training. Okay.
54:38
How do you how do you properly check check the time on your watch?
54:39
I don't know if uh if a if a robotic arm could do that effectively. That's right.
54:45
And so we need training data for that.
54:46
And of course, we're going to head over to getbzzle. com.
54:48
Shop over 23,500 luxury watches fully authenticated in-house by Bezel's team of experts. Fantastic.
54:56
Anyway, we got five minutes.
54:56
We got some breaking news.
54:58
Taylor Loren just commented on Alex Conrad's post announcing the news coming on TVPN saying powerful collab and she hit it with a repost.
55:08
So, shout out to uh techadjacent journalist uh Taylor Lorent, the one and only. Hm.
55:21
Um, separately, Skrey is saying that Cororeweave is 5X overs subscribed and will IPO.
55:27
He was going back and forth.
55:29
So, we're so we're having Tane on the show from Wing.
55:30
He does a lot of uh a lot of deep dives on S1s and I asked him to prepare something for uh for Cororeweave, which I think will be very interesting.
55:42
But it sounds like we have Christian Garrett in the Temple of Technology.
55:45
Welcome to the show, Christian. There he is. How you doing? You guys, I'm good. I'm good. How's it going, John? It's great. Good. I'm happy.
55:53
It's a It's a beautiful day.
55:54
Where are you calling in from?
55:54
Uh, I'm in San Francisco.
55:56
So, I am uh I'm holding it down.
55:58
And depending who you ask, this is the future or this is Detroit.
56:02
So, I'm enjoying finding out what's going to happen.
56:04
Have you checked your Signal group chats for mainstream media reporters yet? Yeah.
56:09
No, I Man, I I really need to step my Signal group chat game up.
56:14
I can tell you that much. Yeah. Yeah.
56:16
just take a pass at the member list.
56:18
If you see Taylor Loren's in there, maybe create a new chat.
56:20
You know, you don't need to kick her out, but you know, start a new one.
56:25
At least move the important conversations elsewhere.
56:28
Well, thank you for uh joining.
56:31
Uh can you give a little bit of an overview of who you are, what you do, just for the just for the folks on the show who might not be familiar, and then we'll go into to some questions. Yeah.
56:40
Um so, uh I'm a partner at 137 Ventures.
56:44
Um we're a growth stage venture capital firm.
56:45
Um and uh we uh want to invest in uh what we believe are generational category defining companies that can be long compounders and uh have defensible sustainable competitive advantages.
56:57
Um like every firm um we have a differentiated strategy.
57:00
You know a lot of what we focus on is as a liquidity partner to companies.
57:03
Um we do do growth capital.
57:06
We do invest in primary rounds.
57:08
Um but uh you know we saw you know a long time ago really on the heels of Facebook uh and after spinning out a founders fund we saw the opportunity to partner with companies on the liquidity side as a way to invest in them and build positions in them and that's what we've been doing for a while now and that was uh a contrarian bet that companies are going to stay private longer and there would be growing demand for liquidity.
57:26
Um now it's uh you know somewhat consensus and and and and popular and understood.
57:30
Yeah, I think Peter was basically banging the table saying never go public and now you have Elon kind of saying the same thing.
57:36
Hey, Tesla's kind of rough go.
57:38
Obviously did very well, but got kind of, you know, beat up in the courts and whatnot.
57:42
And so, uh, it's great to see that it's at least an option for those founder-led companies to stay private longer.
57:48
And we thank you for your service to the capital markets. It's fantastic.
57:52
You got a question, Jordy? Yeah, I'm curious.
57:57
There's been a meme for a very long time that oh yeah, I'm an early investor in SpaceX, but like maybe there's like a bunch of SPBS separating you and like the actual like actual, you know, certificate, right?
58:08
They certainly don't have the certificate.
58:09
How do you think the average investor has done over the that's like investing into these sort of like which is not what you guys are doing but uh when when these sort of power law companies end up just crushing and growing tremendously does it matter that you're stacked in layers and layers of fees? Uh do you get smoked? Can you come out alive?
58:31
You know what's been um Yeah.
58:35
Well, let let me uh I'll take a step back too and kind of make a broader point.
58:38
I will say it's funny you pick SpaceX.
58:39
I do have a rocket engine right beside me. That's great.
58:41
So, yes, we we do have a SpaceX rocket engine here in the office. That's fantastic. Amazing.
58:47
So, uh like I said, let's take a step back.
58:50
I'd say, you know, for the last two decades, companies have trended towards staying private longer and longer like we just talked about.
58:54
And in order to do that, companies need growth capital and they also need liquidity capital.
58:59
And the secondary market is just a tool for private tech companies that works just like the public markets in that it just provides liquidity to existing shareholders.
59:07
Um there are two distinct segments of that market which is what you're hitting at.
59:10
One segment's done in partnership with companies which is where we at 137 Ventures focus on.
59:14
Uh and another segment operates outside of that.
59:18
Um you don't want to operate outside of that.
59:20
Um you know we've been longtime Android investors and they have tweeted a ton about fake allocations in their primary rounds being marketed to investors, right?
59:26
And so uh yeah, I will say what you're hitting on is is mainly just the really just a proxy for demand.
59:34
Um, and so, uh, you know, investors want to invest in great companies regardless of how.
59:38
And as demand grows, investors look for supply, and there's only so much supply for primary, which I can talk a little bit about why that is.
59:44
Um, and secondary is another way to access a company's equity.
59:47
And so, people will do things to your point on investing in various SPVS or whatever it is a way to access.
59:54
And I think some of that is good and blessed by the company as just another vehicle avenue to put capital in these businesses.
59:59
Uh, and then a lot of that operates outside of that and is kind of a black hole.
1:00:02
and um maybe not the best place to be in because you one don't collaborate with the company and then two you don't have access to information right and so um and the third is potentially like Andrew was tweeting about is there could be fraud as well. Sure.
1:00:15
Uh can you talk a little bit about why like how companies think about doing these tender offers, when they do them, when's the right time, and how how do they go over like culturally?
1:00:27
Obviously, there's some incentive and employee just like reward the employees, but um what other considerations go into a successful tender? Yeah.
1:00:34
So, you know, the the tenders and just the broader market we're talking about has grown dramatically um over the years.
1:00:41
Uh and you know one of the interesting things like a lot of these companies have made the transition to being cash flow positive in the private markets which means that more shares are actually bought in secondary than primary through things like tenders right over the life cycle of the business.
1:00:56
Um you know data bricks just did that massive that massive round right uh to convert and pay the tax bill for a lot of the RSUs.
1:01:04
Um you know SpaceX has raised $10 million in primary over its you know 23 years uh of being around as a company.
1:01:10
they've been running, you know, two tenders annually, um, that, you know, total like more than a billion and a half dollars a year for a long time.
1:01:15
Um, and so, you know, I think a lot of companies are following in the in in SpaceX's footsteps particularly and building liquidity programs like theirs, uh, Stripe mentioned data bricks, applied intuition, open AI, and a lot of them.
1:01:29
Um, what hasn't changed is like it matters who your investors are.
1:01:32
So, great investors like they may not make your business, but terrible investors will definitely ruin it.
1:01:37
Um this is why the best companies want to control their cap table as always and you know work with investors like us uh on implementing their liquidity strategy as they scale and more companies as they stay private longer as they've scaled even as they hit cash flow positive.
1:01:52
Tenders have been a way for them to offer liquidity and kind of postpone going public and it's a way to align incentives.
1:01:58
It's a way for recruiting and retention like you mentioned, right?
1:02:01
If you're recruiting against publicly traded companies, uh if you're recruiting, you know, software engineers against, you know, Google and Meta or you're uh you know, recruiting researchers from Nvidia or Google, um you want to be able to offer not just a compelling package and upside, but being able to offer liquidity also helps bake bake into folks kind of comp decisions.
1:02:20
Um you have people that have you know structurally have to run these tenders uh based on their RSUs like you know is on the single trigger RSUs and so they structurally have to run them for their employees tax bills.
1:02:30
There's a bunch of reasons um you know some people also use them to mark the business up right if you're not raising primary because you're cash flow positive for years then liquidity checks a bunch of other boxes but also allows you to continually show progress in the stock of the business.
1:02:44
Um so I just think you know as the as the capital markets have grown as these companies have grown um the secondary market has obviously grown with it and um and I think a lot of the best companies have had the privilege of working with their investors working with folks like us people they want on their cap table and to grow their cap table to run these programs and control and manage liquidity in a way that's beneficial for the company.
1:03:02
Uh, have you guys looked at any businesses that are basically building like actual like basically software to manage these liquidity programs and did you guys ever think about incubating something there or is every company unique enough that it should just be done by the investors and the company's council and it's just all bespoke. Yeah.
1:03:24
I mean there's like two versions of that.
1:03:26
There's the software to run these programs which exist, right?
1:03:30
Carta, Carter has great software, right, for running this.
1:03:32
And so I I think you know that's just back to like broader cap table software management trend which is awesome.
1:03:38
Um but that's like more of the execution side.
1:03:42
The the other side is more of creating a market right and then using software to facilitate more liquidity and grow liquidity.
1:03:48
And that is basically another version of the same thing we talked about earlier, right?
1:03:53
Which is like the best companies want to control their cap table.
1:03:54
The best companies have unlimited demand, right?
1:03:58
And so in that in that essence, you don't need a broader market to have random buyers and sellers to do price discovery, right?
1:04:03
And so I think the best companies generally like to run their own processes and work with you know their major shareholders and a lot of times you know which includes us and a lot of these a lot of these companies as well um on kind of running these processes very similar how a primary process would run just a different type of transaction and goal. Yeah.
1:04:18
To me, it feels like you guys are in the financial services business in many ways when you're creating these sort of programs and you're an investor as well.
1:04:27
And there's been there's constantly people that see the opportunity, they see how big it is, they try to attack it with sort of software and marketplaces and then time and time again, I feel like we see them sort of flop.
1:04:38
And you saw this with Carta basically kind of apparently giving up on their entire secondary brokerage business at some point.
1:04:45
brokerage business at some point. Um but but again uh people in venture always see a problem and an opportunity and want to like throw software at it and sometimes it's basically you know companies like Andrew saying yeah we
1:04:58
want to work with 137 Ventures because they've done an exceptional job you know with with their relationship with SpaceX and you know we want that kind of partner as well and that just looks more like traditional financial services versus uh you know a a venture business. Uh do you give any attention to every
1:05:14
Uh do you give any attention to every once a month these sort of list pops up around heat around different companies and sometimes I see this list and well they're doing your job for you because you see a list on Twitter you can just go hit the company up right like you know you can just you know you don't usually usually you see 10 companies and you're like all those make sense one of them except for that one.
1:05:38
Uh, so how do you you give any weight to these lists or where where do they actually come from?
1:05:45
Because it doesn't seem like it's put out by 137 Ventures, which I would trust.
1:05:48
To me, to me it could be a single broker who's just basically pumping their own, but you guys you guys nailed it. Yeah.
1:05:54
I mean, it's it I mean, look, it depends where these lists come from. A lot of them are noise.
1:06:01
They're not signal, you know, of transactions.
1:06:03
And a lot of those transactions are uninformed buyers and uninformed sellers. Yeah.
1:06:06
Um, as an institutional firm, we don't pay attention to them and the best companies don't either.
1:06:11
Um, I, you know, it would be amazing if the job was so simple as to look at a list and press a button and buy, but unfortunately, uh, there's a lot more to investing than that.
1:06:20
Um, so, but yeah, I I think you'll see them either like aggregating a bunch of transactions from a platform level, but still a brokerage business, or you'll kind of have brokers who are, you know, sort of trying to create a market and advertise what they may or may not have access to.
1:06:34
Um, so yeah, that that is in that segment of the market that I think the best companies don't particularly like and um and that you don't want to be in as an investor on the secondary side that we talked about earlier. Yeah.
1:06:46
C can you talk a little bit about like how does how do secondary shares work their way into the broker system and how transfer restrictions work a little bit and how those have evolved over time. Yeah.
1:06:57
Um so on the first part I mean it's a broad range right?
1:07:00
I mean this this is uh you you have employees that may not be under transfer restrictions.
1:07:06
You'll have a lot of employees that uh you know may do transactions on a forward basis.
1:07:10
So you know they're actually violating transfer restrictions but you know it's to a different type of construct. Sure.
1:07:15
Um you have a lot of this too are just SPVS right?
1:07:18
So you know uh as investors a lot of institutional firms you know will do co-investment vehicles with their LPs and then those LPs will want liquidity and so you know you in essence have liquidity into the SPV which then allows you access to the underlying um um company.
1:07:33
Um so there's just various forms of supply as companies grow right there is a lot of avenues where there just is supply um and some of it is legitimate some of it's not but you know definitely is there there's a lot of legitimate supply for sure right from employees or SPVS etc.
1:07:46
Um the transfer side actually hits on like this whole dynamic, right?
1:07:52
And this is um this actually all goes back to the Facebook days.
1:07:56
So in the 90s and early 2000s, companies only had a right of first refusal refusal and that was sufficient to discourage random buyers.
1:08:04
Um Facebook was obviously a popular consumer business and the first to go to tens of billions of dollars enterprise value in the private markets and there wasn't as much money in venture back then.
1:08:13
So the company and the company lost control of its cap table because the volume of shares that traded was well beyond what the company or existing investors could purchase.
1:08:22
And so you basically just had a lot of outsiders being able to buy, right?
1:08:26
Because there's a ton of demand.
1:08:27
The existing investors, you know, weren't able to just, you know, just use a roofer as a way to buy it and control it.
1:08:32
And so once other venture companies saw this, they implemented basically blanket transfer restrictions.
1:08:36
And that has been the default ever since.
1:08:40
Um, and so you have to understand like the entire benefit of being private is that companies can choose who they give information to and allow cap table.
1:08:45
No founder wants an activist investor and if you control your cap table, it's kind of no longer your choice and so transfer restrictions have sort of been the default.
1:08:54
Um, even in the case of Facebook like Yahoo could have potentially like built a position or Google built a position in the secondary market and then had rights at some point which would be potentially disastrous.
1:09:06
Didn't happen but you know that's the risk.
1:09:07
So, if there are no transfer restrictions, does that mean like an early employee could just meet a random VC at the Rosewood and say, "Oh, yeah.
1:09:13
I have I'm sitting on $2 million of stock in this company.
1:09:18
Like, you want to take it off my hands and they can just do that over a handshake and some contracts or does it eventually need to bubble up to like the company?
1:09:24
How how does the company actually move to their shareholders?"
1:09:27
There's still a roper, right? So, yeah.
1:09:28
And like I said before with the right first few years, it was enough to discourage this.
1:09:32
enough to discourage this. Uh but then with Facebook the demand overwhelmed the ability for the investors to actually execute exercise that right right um from a capital perspective and so and the roofer is just the roofer is discouraging because if I'm trying to build a position in a company through the secondary markets there's no
1:09:49
transfer restrictions I know that I go to an employee I say hey you have $2 million I'm going to keep running into this problem where we get a handshake deal I'm going to buy 2 million and then the company buys it and then I go to the next employee right and it's just a waste of my time that's the main structure of the company or the other or the other investors. Got it. Correct. Got it. Correct. Exactly. Exactly.
1:10:07
Talk about uh the companies you invest in uh or many of them you you described as having like effectively unlimited demand for for the equity.
1:10:18
And right now we see venture funds that have ballooned and they have more capital than ever to deploy.
1:10:23
It used to be these companies would get to the point where the VCs would be like I remain gigalong your company.
1:10:29
I just like I'm fully tapped.
1:10:31
Like I just got to let it ride.
1:10:33
Now it's less the case with fun with like 30 mil.
1:10:35
Have you seen do do elbows get sharper in some of these later rounds where I I imagine from an AUM standpoint like you guys have ton of AUM, but you're coming to the table with people that might have 10 times as much AUM and these capital bases where they can hit up a sovereign and be like, "Hey, we're doing an SPV into this one.
1:10:57
Do you want do you want to come in?" Five billion. Yeah. Yeah.
1:11:00
Um, so what what's the d the competitive dynamic in the in these sort of later stage good question.
1:11:05
stage good question. Um, you know, I think it's a bit I I'd say like to your point 100% as as these companies really scale um and demand, you know, demand obviously follows suit with the performance of the fundamentals of the business um and the and and how they've executed on the story you uh you do see
1:11:22
obviously a ton of I mean you know SpaceX does a tender and they're 10x over subscribe right that is you know billions and billions of dollars of demand right that is that is unmatch uh and the investors to your point the venture ecosystem has grown so there's a ton you know ton ton a ton more dry powder in the market as well. Um, but
1:11:37
Um, but also I think you know the size of these tenders and primary rounds does scale a bit.
1:11:44
Um, definitely on the tender side.
1:11:46
So I do think like as a company grows the its secondary market does grow and the liquidity programs grow in size.
1:11:51
So that helps meet some of the demand.
1:11:52
that helps meet some of the demand. Um but you 100% run into that like look at I think a certain stage it works but there's a certain stage where like there's more demand for you know SpaceX or Android um than there is supply and that just is the function of it and um I
1:12:09
think you know that's where relationships really matter um but even then right there's still a limit right so I would say like I think relationships are end up being the biggest driver there for your ability to still not just obviously an allocation but also try to continue to size up the position ition and invest more. Um, and
1:12:24
Um, and uh, you know, I think being around being a major shareholder, being around for a long time and having very close relationships, which is what we focus on, uh, gives you, it's a liability. It's a liability.
1:12:34
Allocation and venture is like often comes down to likability.
1:12:38
It's like, does the CEO and the management team like you? If so, cool.
1:12:43
We're going to give you preference. What's that quote?
1:12:44
It's like, you know, you might get your praa, otherwise good luck.
1:12:47
Well, being an SPV promoter is more like being a club promoter than being like a VC or something like that.
1:12:53
Um I have I have a I have a more like yeah venture is unique.
1:12:56
Venture is unique because um you know it's a unique asset asset class given how important access is and you know access and that dynamic there you know leads to like you could be a a you could end up getting access to an incredible company um and uh and maybe even still be a schmuck to your point.
1:13:14
Um however doing that consistently and over a long time frame uh I think is a different story. Um, yeah. Yeah, totally.
1:13:21
Uh, how do you advise founders that, uh, are kind of reaching the territory where you guys are starting to invest?
1:13:28
I'm going to pull out a number.
1:13:29
Let's say they're close to nine figures of ARR.
1:13:31
They're a real business now. It's working.
1:13:34
They're raising a bigger round that's some mix of uh, you know, liquidity for the team as well as, you know, uh, some some growth capital.
1:13:44
do and they're worried about kind of like signaling risk around selling secondary, right?
1:13:50
In the in the public markets, you see this, it's like, okay, this CFO is like selling a huge amount of their position. That's obviously bad.
1:13:57
Same thing on the founder side.
1:13:59
If the founders are selling huge amounts of uh of secondary, it can be a bare signal.
1:14:05
Uh and we saw the worst of this in 2021 and 2022 where founders would be selling like $50 million like pre-product market fit.
1:14:13
uh and that wasn't common.
1:14:16
But how how do you advise founders as they start to get opportunities to get liquidity and they're sort of worried around well I'd like to be able to like buy a house and put my kids through college but uh without stressing about it but I don't want to send the the wrong message. Yeah.
1:14:33
Yeah, I mean I I I think you hit on, you know, the reality of obviously there there are the obvious extremes, right, which is, you know, if a founder is selling 90% of his position while still operating the business, that's obviously uh uh going to going to raise eyebrows and people are going to protest that.
1:14:46
And the founder, you know, sells uh $10 also people probably aren't going to bat an eye, right?
1:14:50
So what number in between is is the magic number depending on stage.
1:14:53
Um and you know, look, I I think one it's usually driven by life needs, right?
1:14:59
And so that de facto backs into a dollar number that makes sense, right?
1:15:03
Pe um and so I think in many times the conversation is around d-risking around a life need.
1:15:07
Someone just had a kid, they're starting a family, they want to buy a house, right?
1:15:12
And so I would say like, you know, you're also investing in in in founders that you trust and are rational and reasonable.
1:15:18
And usually these conversations are fairly easy from that perspective.
1:15:21
Um I don't think there's like a particular dollar amount.
1:15:23
like a particular dollar amount. I think one of the things to think about whether you're a founder or you know on the investor side is you know more so like you want to think about the the two dynamics around percentage of holdings and then total dollar size right and those are interesting right like in some
1:15:38
sense if you sold 5 million bucks but it's half of your holdings right 5 million bucks uh at a certain stage of business is not a lot but you know selling 50% of your position while still operating you know may signal something and it works both ways right you may be able to sell $100 million which is a lot but it could be you know5 5% of your position, right? Which generally people
1:15:55
Which generally people would not view as a lot and that's the conversation.
1:15:58
So, I think it's a bit of like um it depends on the the the circumstances and the context, but for the most part, founders are pretty rational and reasonable.
1:16:06
And you got to remember, most founders are the most bullish in their company, even more so than the investors.
1:16:10
So, the desire to sell is generally pretty tapered and usually driven by life needs. Makes sense.
1:16:16
Well, thanks for stopping by. Great to have you on. Great conversation.
1:16:19
Can we see the rocket again? Can we see?
1:16:21
Show us the rocket one last time.
1:16:22
Let's see the rocket and then we'll get on to the next one.
1:16:24
Okay, that's a beautiful engine.
1:16:25
Uh let's hear for the rocket, folks.
1:16:28
If you uh if you end up with a spare rocket, we'll throw one.
1:16:32
Yeah, send it over if you got an extra one laying around.
1:16:34
Uh I need at least three more appearances on the pod.
1:16:41
I can talk to the rest of my partners and maybe 137 Ventures will send you a rocket. We'll see. Fantastic.
1:16:44
You heard it here first, folks.
1:16:46
It's great having you on.
1:16:47
Have a great rest of your day.
1:16:49
Talk to talk to you soon.
1:16:49
We're going back to back, folks.
1:16:51
We got back to back seven more guests coming into the temple. I think six.
1:16:55
Uh we got Daron from uh Beyond.
1:16:58
He just launched the big screen too. The VR headset.
1:17:00
We discussed this on Monday, I believe.
1:17:02
Maybe maybe maybe Friday actually. Yeah.
1:17:05
And it's a very cool VR headset.
1:17:08
I think we got him in the Temple of Technology. Welcome to the show. How you doing? There he is. Good. Thanks for having me. And congratulations.
1:17:17
Uh can you give us the breakdown? Uh what' you launch? How did it go? Yep.
1:17:20
So, we launched last Thursday.
1:17:23
This is our second generation product, Big Screen Beyond 2.
1:17:25
Uh, we launched our first gen about two years ago.
1:17:28
This one addresses a lot of the things that people really wanted out of the next gen one.
1:17:32
So, for people who probably know this old thing, this is the Apple Vision Pro. Yep.
1:17:35
I had one for exactly two weeks.
1:17:38
Yeah, I've got one on my desk.
1:17:40
That's where it Well, you're in the industry, so I expected you wouldn't return yours, but it's a beautiful It's magical.
1:17:47
It is incredible technology. Yes.
1:17:50
And and I've got some some spicy takes, but uh I don't think anyone wants to wear a brick on their face.
1:17:57
Uh it's just unless you're skiing or something maybe, but even then people don't want to wear a brick on their face.
1:18:03
So we've been working on this company for about 10 years.
1:18:04
We raised some capital from Andre and and Drew and we set out to build the world's smallest VR headset.
1:18:10
So we think that VR is much more like wearables, much more fashion centric actually.
1:18:14
So it needs to be super comfortable.
1:18:16
We're chasing after enthusiasts, not mainstream mass market.
1:18:22
I think we're playing a 30-year game.
1:18:24
People are like kind of in it for let's start a thing, build a whole thing, like flip it in two years, blah blah blah.
1:18:29
Like, we're actually playing a long-term game here.
1:18:30
So, we built Pixar Beyond 2.
1:18:33
It is the world's smallest VR headset.
1:18:35
This weighs so small uh twothirds of your iPhone.
1:18:38
Like, an iPhone is heavy compared to this and it looks pretty freaking cool. I think it looks great. Yeah. Congrats on the launch. Yeah.
1:18:44
When you think about playing 30-year games, how do you think about uh just capital efficiency?
1:18:51
There's the meme that like hardware is really expensive and all these companies like uh I imagine you you run if you're playing those sort of long-term games.
1:18:59
You're like, well, we need to be in business for 30 years.
1:19:00
We need to be able to have big moments where we sell a lot of products and then times where maybe yeah, we're going through dark times.
1:19:07
I'm sure you've been through both already, but but how do you think about durability of the business given that you're selling hardware which will just end up you're going to have fluctuations in in demand? Couple things.
1:19:19
I'm pretty sure I don't know if they would want me to say this publicly, but I'm pretty sure we're the single most capital efficient company in our in our investors portfolios.
1:19:25
Hear it for capital efficiency, folks. Thank you. Hit the gong for that.
1:19:29
It's not typical, but we love some capital efficiency on this show.
1:19:33
We have raised 17 million uh from Andre and True.
1:19:36
And at some point, I think we had like 10 years of runway and now, you know, for a couple years, we've been cash flow positive.
1:19:41
We could be, you know, we could be profitable any minute that we want, but we put all of our revenue into R&D and the team and that's it.
1:19:49
Like zero dollars in acquisition of customers. It's all organic.
1:19:52
Um, hardware is a lot cheaper than people think.
1:19:55
I think Meta is wildly inefficient.
1:19:57
They're spending, you know, tens of billions a year to try to accelerate a market.
1:20:01
They're also playing a different game. They're trying to go.
1:20:04
They need to get a billion users. I don't care.
1:20:07
We can make a massive awesome contribution to the world by focusing on people who really really need what we do and we can do it efficiently.
1:20:16
Like the number of people at Meta that are doing stuff.
1:20:18
They just throw everything at the wall and at no cost, right? It doesn't matter.
1:20:23
And frankly, don't tell the shareholders that it does have a cost.
1:20:26
I think the cost is 20 billion.
1:20:29
But, you know, respect to Zuck.
1:20:32
I I I love a guy who's chasing his dream. Yeah. So, how many Yeah. Sorry. Let's let him continue. Go for it. Yeah. Yeah.
1:20:39
For for us, we're playing a different game because we can stay focused on like real use cases and make a real business out of it.
1:20:45
And uh like just in first day of of our sales, we did 10 times more than we did for our first gen. Wow.
1:20:51
In a couple weeks, we will have done more sales than we did in 2023 or 2024. That's amazing. Congrats. Crazy.
1:21:00
So, how many how many companies that were high-flying, amazing teams, came out and raised more than you?
1:21:05
Like have lot you started in 2014.
1:21:06
There must have been probably 20 companies that you were like you you're pretty viable competitor, flashy raising a lot of money, but then they're just they spend it all in two years.
1:21:17
Is that sort of has that happened like a bunch of times at this point?
1:21:20
You're just There's a bunch of times like waves of capital and then also hype cycles, right?
1:21:24
There was like the AR wave or there's the NFT crypto wave or there's this or that.
1:21:28
There's so many waves every year or two.
1:21:30
Um, we've actually just stayed extremely focused.
1:21:34
We're focused on building an excellent VR headset for consumers, particularly like PC gamers and enthusiasts, as well as in the past year like the businesses that have reached out that are using our stuff.
1:21:43
Like NASA's one of our customers.
1:21:44
We have a bunch of customers in aerospace and aviation, um, education, retail.
1:21:49
There's like a nuclear energy department whose website looks like they're from the '9s and they've been buying our stuff.
1:21:55
We have no idea what they're doing with it, but secret secret operations uh that we I want to ask about.
1:22:02
So I I'm kind of like a VR enthusiast proumer level maybe.
1:22:07
I've had a number of headsets.
1:22:07
I've built custom PCs with Nvidia graphics cards to wire them up.
1:22:10
Had the first Oculus and then like the next seven of them or something.
1:22:14
They've always kind of wound up collecting dust.
1:22:15
Can you walk me through what would you recommend just for the first like magical big screen beyond experience?
1:22:21
what what what's like the basic hardware I should get. Should I get a PC?
1:22:26
Should I, you know, what's the ecosystem look like to knock it out of the park and like what game or what experience am I playing?
1:22:32
It really depends on what floats your boat.
1:22:37
So, I'd suggest like get like a good PC.
1:22:39
If you're going to build one, I've built my own computers. That's all I do. Love it. Great. Do that.
1:22:42
If that floats your boat, otherwise like buy like a good NZXT PC, get like a RTX 4080 or 490.
1:22:45
Get whatever you can afford.
1:22:49
uh buy the Beyond 2 and then it really depends on what you like.
1:22:53
Like racing sims are insane in this.
1:22:55
Just the feeling of like going down like the Nornifa in a car.
1:23:01
Like you could just you cannot get an experience like this in real world because you will probably heal yourself.
1:23:06
We're getting we're getting a new studio.
1:23:09
Yeah, we'll consult with you and uh Yeah, we're going to get the full rig. Yeah, it'll be great. Flight is another one.
1:23:15
Like I've literally flown a 737 out of LA at night. Great. No, I think so.
1:23:21
Here's a challenge for you.
1:23:21
Make a game that's basic.
1:23:24
I'm sure somebody's already made this game, but you know how every guy thinks they can land at 737 if they were asked to, right?
1:23:29
Like that's the challenge.
1:23:30
It's like the big screen 737 challenge.
1:23:32
And it's like you get dropped into a plane, engine down, and you got to land it.
1:23:36
This is one of the craziest stories.
1:23:37
Uh the first time I ever went uh ski shooting, shot like shotgun shooting, I'd never shot a gun before in my life and we were competing and I beat everyone and I and everyone was like, "Is this just beginner's luck?"
1:23:48
And I think the reason was is that I'd been playing VR shooting games for like a year straight.
1:23:52
I've been playing Robo Recall on the Oculus and I was like, "This is second nature to me."
1:23:58
Uh so I really think the VR training thing is real.
1:24:00
Um, one of the use cases that I I really enjoyed with the Apple Vision Pro while I did have it was just sitting there and watching movies in bed at night.
1:24:08
I could uh how close are we to having just like a puck?
1:24:12
Like I'm almost thinking like a little Mac Mini that I just link under my bed that I can just kind of plug this into because I know it's not fully standalone, but the benefit is that it's not going to be heavy on my face.
1:24:22
Um, is is there is there a way that I could kind of get that level of experience at the big screen beyond too? Yeah.
1:24:28
So, the company's named Big Screen for a reason.
1:24:31
This we actually started building hardware because we wanted we made software for a long time and we hit limitations.
1:24:37
Our software is still there on on the MetaQuest and stuff like that.
1:24:40
Uh I've got like I don't know six seven million users in VR.
1:24:42
We actually have a very sizable software platform but the hardware just was such a big limiting factor for the past 5 years.
1:24:48
We couldn't achieve the vision we wanted to under the platform that was given to us.
1:24:53
We had to go build it ourselves.
1:24:55
And it turns out other people wanted it too for all these other use cases in gaming or in in enterprise use cases as well.
1:25:00
So we want to build hardware that you can actually use for movie watching.
1:25:04
But the problem is like I could go right now turn on my TV and watch Netflix in 4K HDR on OLED TV in 10 seconds.
1:25:12
VR has to get to that level.
1:25:16
And I'd say we're halfway there. We're getting closer.
1:25:19
And we had to build incredible hardware for it.
1:25:22
We're building the software for it.
1:25:24
And at some point, our path to going mainstream is basically Meta's path has been like $300 headset.
1:25:29
They're selling like 20 million of them.
1:25:31
It's doing really great with kids.
1:25:33
Uh our path I don't think it's actually it's not about price.
1:25:37
It's about price to utility.
1:25:37
So we want to deliver you like a $2 or $3,000 incredible home movie theater system. I love it.
1:25:45
And yeah, you can play games with it.
1:25:47
You can do all this other stuff with it, too. But it's not of a price.
1:25:48
It's It's really Apple Vision Pro is $3,000, but I'm not going to wear this for actually the battery life limitations, the weight, the ergonomics. It's not right.
1:25:58
It's not the right factor.
1:25:58
What is Apple doing with VR?
1:26:00
Because I' i've posted a few times.
1:26:02
I was like, Apple's like they're sort of giving up on it.
1:26:04
Like you can tell they don't have real conviction.
1:26:07
They're just like they're in this highly commercial phase where they're just going to extract as much value out of the existing technology that they have and and that's, you know, can be good for business.
1:26:17
But I posted a couple times and people get angry. They're not quitting VR. They're not. It's blah blah blah.
1:26:23
But what are they actually doing in in your view?
1:26:25
And are you the next uh CEO of Apple?
1:26:31
Um I think Apple I'm actually surprised that Vision Pro came out.
1:26:36
They've been doing the work for a long time, but I wouldn't have put it out. Not this way.
1:26:40
I mean, it's it's setting the wrong expectations, creating weird hype cycle.
1:26:43
This is not the next iPhone, but I think Apple is patient and is gonna play a 1020-year game as well.
1:26:50
They don't need this to become an overnight success. It's fine.
1:26:52
Um, who cares what the markets say?
1:26:54
Like, they've got the cash for it. They can they can do it.
1:26:57
And they're also doing it in a relatively cashefficient way compared to Meta.
1:27:01
Um, so they're playing a long-term game.
1:27:03
I think they'll stick with it.
1:27:04
I think it's in the hands of developers.
1:27:06
But I think the problem is there isn't really anyone saying no.
1:27:08
In my opinion, I don't know how Apple actually runs on the inside, but in my opinion, no, people aren't saying no enough like. Yeah.
1:27:16
So, on that note, how do you how do you think about focus generally at big screen, right?
1:27:21
I'm sure people are saying, "Hey, build this for factories, build this for the military, build it, you know, and I'm sure you've had to in order to be capital efficient and great create great products, you've had to say no a bunch."
1:27:34
Uh, do you have ambitions outside of entertainment in the long run or are you is this extent?
1:27:42
Yeah, the the nice thing about what we do is that we're laser focused on a set of problems that happens to cater to the needs of a bunch of people.
1:27:49
So the enterprises that are coming to us, they're using VR for real work for many hours a day versus the cycle.
1:27:56
They all have Apple Vision Pro and Quest and all.
1:28:00
They can afford all the devices. They've tried them.
1:28:02
But you'll use it for an hour, you achieve your thing, then you got to go charge it for an hour. Mhm.
1:28:07
That doesn't work for most use cases.
1:28:09
Think of this as Apple and Met are trying to build the next smartphone.
1:28:12
Meanwhile, we're trying to build the next workstation, the next uh TV.
1:28:13
They actually Apple actually canled their workstation focused VR thing.
1:28:18
Uh I I want to I want to ask one more question.
1:28:22
Um uh on the Apple Vision Pro, can you give me like your pros and cons?
1:28:24
Like what did they get right?
1:28:27
I feel like the the external battery and puck was really controversial, but some people say that's really great.
1:28:33
What's your take on Apple Vision Pro?
1:28:37
I think they established that this industry is really not going any like it's not going to go away.
1:28:41
It's this is going to be here.
1:28:43
Spatial computing is going to be a thing.
1:28:44
It might take a long time, but it's going to happen.
1:28:48
Apple and Meta are at it.
1:28:48
They're going to go push it.
1:28:49
Uh that's the best thing that they've done here is is they've made the world really understand what is VR or spatial computing and and it's going to happen.
1:28:57
What they're getting wrong is comfort and ergonomics matters a lot more.
1:29:01
People are trying to build the next iPhone, but again, no one wants to wear an iPhone on their face either.
1:29:05
There's literally a MacBook Pro inside of this thing.
1:29:08
I don't want to wear a MacBook Pro. Yeah, makes sense. Yeah, that makes sense. Uh, last question.
1:29:14
Broad applications of spatial computing in the military.
1:29:18
Andrew was in the news with winning the IVAS program. Is the technology ready?
1:29:23
Is it just about getting the product right and again I imagine that's sort of a 10 20 year kind of vision as well but uh it's not where where you guys are building to my knowledge but uh yeah what's your take on that was it Microsoft just had a good shot but didn't have the the sort of leadership to deliver on it or was the technology just truly never ready for for what they were being uh asked to do.
1:29:52
I think that came out of an older generation, the like 2016 era hype cycle where a lot of products were coming out that were telling a story that they really couldn't meet.
1:30:01
So, Hollow Lens, uh, Magic Leap, etc.
1:30:04
We're we're touting this vision of like, oh, we're going to be able to do all these things.
1:30:07
And what really matters in a nent emerging technology is, yeah, but what can you do with it today?
1:30:12
Like, be honest that when you come out of the gate, what is this going to be amazing at right now?
1:30:16
Like so for us, racing simulators, gaming, entertainment, like really great things that people can do right now today with this and we're honest about that.
1:30:24
Too many companies back in that first generation hype cycle. Yeah.
1:30:28
Like they were putting out a product that the military could not.
1:30:32
It didn't work at all and it was billions of dollars for that.
1:30:36
So now you're having people come out like Andrew World that are putting out devices uh that should be able to actually deliver with, you know, the promise of current generation technology.
1:30:45
What can you actually do with it? That's great.
1:30:46
Well, thanks so much for coming on.
1:30:47
We got to have you back to talk about VR every time there's more news.
1:30:53
You haven't opted in, but you're our official VR correspondent.
1:30:54
There's so much to talk about here.
1:30:56
It's such a fascinating technology, and I think people have kind of like written it off from time to time, but I'm continue to be fascinated by it.
1:31:02
There's so many cool developments.
1:31:03
I'm really happy for you and the team, too.
1:31:05
I'm sure the last week has been massively vindicating, and you guys deserve it.
1:31:09
11 11 years in, here's to the next 11 and look forward to the next conversation. an overnight success. Really? Yeah. Have a good one. Later. Talk to you soon. Thanks.
1:31:21
Well, coming up next, we got Alex Conrad.
1:31:24
But we got some breaking news.
1:31:26
Uh RAMP has partnered with FPJ. Did you see this?
1:31:29
They're having a Padel tournament in Miami.
1:31:31
And the partners are Ramp and FPJ.
1:31:35
You love to see it, folks. Love to see it.
1:31:38
FPJ, of course, maker of fine watches, owned by uh owned by uh none other than Mark Zuckerberg has some FPJs.
1:31:45
France Paul, one of the greatest watch makers in history, still alive, still cooking, and he's using ramp, baby. He's on.
1:31:51
I Yeah, I don't know if this was supposed to be breaking news, but it is now. Okay.
1:31:56
It's pretty a pretty awesome.
1:31:58
I mean, if you text us, I'm going to talk about it. It's amazing.
1:32:03
It's a public website, I think.
1:32:05
I mean, maybe this is I think this is a public website.
1:32:07
Yeah, I think I I think this public extremely tasty. We will share this.
1:32:11
I'm very excited about this.
1:32:13
If you like Pedell, uh we will we'll share the link at some point.
1:32:17
You can go our fantastic.
1:32:17
Anyway, uh we got Alex Conrad coming into the Temple of Technology. Welcome to the show. Congratulations. Uh let us know.
1:32:26
Let us know what you're announcing. What are you doing? Break it down. Yeah. Thank you guys.
1:32:29
I'm so excited to announce my new startup today called Upstarts Media. Cool.
1:32:34
Upsource media is a new tech media publication focused on the startup ecosystem. Fantastic. Uh what's the angle?
1:32:40
What are you doing differently? What are you leveraging?
1:32:45
And will there be a list of the best and more importantly the worst venture capitalists dropping soon?
1:32:52
I know I know that I have a customer in you for that for sure.
1:32:54
But um theor I'll think about that.
1:32:58
You know, I actually did 25 audience calls ahead of time, and I should have I should have asked that specific question.
1:33:04
Should I launch an anti-midas list?
1:33:06
But yeah, um for for your your audience who don't know me, I spent 12 years at Forbes covering venture capital and startups.
1:33:11
I really lived in that world, you know, wrote a bunch of cover stories about folks like Melanie Perkins at Canva, the Collison brothers at Stripe.
1:33:19
Um I wrote one about a soft wrap report at Whiz, which has been in the news a lot.
1:33:23
You know, really enjoyed writing about startups and the VCs who fund them.
1:33:26
And I felt like we were in a moment where so much uh traditional tech media coverage is focused on big tech politics.
1:33:33
You know, we have tech people in the White House.
1:33:36
Um big policy debates, not so much on sort of the startups that I really love writing about.
1:33:41
You know, I just heard from so many people that it was just hard to kind of get those founder journeys, um you know, startup storytelling out there right now.
1:33:48
And so I'm hoping to do my small part to just tell those stories.
1:33:52
How do you think about the the different products that are offered in the media ecosystem?
1:33:56
I mean, most people just think like it's a news article, but once you dive in, you realize like there's investigative journalism, there's breaking news, there's profiles, there's opeds, there's editorial, there's all this different stuff.
1:34:10
How do you think about the landscape and what interests you the most? Yeah.
1:34:14
Well, first off, you know, these these tech bros showed up and they just completely uh created a seismic event for us in media.
1:34:20
No, but but seriously, like jokes aside, you know, I think you guys and a lot of these new brands that have been the most interesting in tech journalism and media right now have kind of come from these adjacent spaces.
1:34:30
They haven't been traditional journalists.
1:34:34
Um, we have seen though some people go independent and try to kind of get more direct.
1:34:39
You know, we keep hearing go direct, you know, from certain founders and and PR folks.
1:34:41
I think that's great for certain people, but my hope is that there's still room for curated storytelling from journalists like me who can help, especially those founders who maybe don't have the platform to go direct and also can just maybe connect the dots in ways that you wouldn't get from some of these awesome podcasts and shows like your own.
1:34:58
I I mean, I really do agree with you.
1:35:00
We were talking about to Lulu about this yesterday, just the idea of like yes, you should go direct and post your own news, but then you should also talk to new media like you and and us and then you should also talk to the Wall Street Journal if they call if they come calling.
1:35:14
And it's really like an ensemble strategy to build this like cinematic universe around you and what you're doing if it's important. Yeah.
1:35:23
How how do you think about you? Funny funny timing.
1:35:25
So, we talked about this last week uh about TechCrunch selling uh it was unclear what they were going to do.
1:35:34
I think TechCrunch had sort of created this the thing they did well was like make people's parents proud, right?
1:35:40
It was like you wanted to get into TechCrunch.
1:35:43
It it was just sort of like this moment in every founders's journey.
1:35:45
You go there to announce a round or for a product launch or whatever and they sell to private equity which people were like, "Oh, great.
1:35:52
like, "Oh, great. like private equity is just gonna come in and you know I I don't you know nobody knew what they were gonna do and then the first Techrunch headline I see is this like hit p you know drive by hit piece on 11x which whether or not it's fair it's like techrunch is in a very weird position around they're I guess trying to do
1:36:10
investigative journalism but then they still want to be the place that maybe you launch your startup are you trying to pick a lane and saying like we are pro-founder we are pro tech we know this is hard but we want to like, you know, tell your story in an authentic way that makes like are you looking to really like develop trust with these founders and cover them across their entire career? Is, you know, what is that? Like
1:36:31
Is, you know, what is that?
1:36:31
Like I'm I'm trying to kind of hone in on on your specific angle because I think the temptation is, you know, uh, somebody starts out writing tech positive and then eventually they get some crazy scoop and they're like, "Oh, this is going to get so many this is going to get so many controversy.
1:36:49
Yeah, I'm just going to publish this fund's returns, you know, whatever.
1:36:54
Um, but I'm curious how you think about it.
1:36:57
I I have like three different responses for that, but I can try to keep them short.
1:37:00
Um, it's really a important important debate.
1:37:02
I think you know, first I would say our ideology is that Upstarts was founded on the belief that startups are at their best when they punch above their weight, challenge the status quo, try to improve the world in some way.
1:37:15
And I think at that core I believe that technology is great for the planet, great for our daily lives and I want to write about that.
1:37:22
Um I think at the same time you know I am going to be a journalist.
1:37:25
I am going to be independent.
1:37:26
So I'm not a cheerleader you know and and just because a lot of my you know Midas VC you know pals might be subscribing today doesn't mean I'm going to suddenly write about their portfolio company or something like that.
1:37:37
You know I I want to keep a really impartial and fair view.
1:37:40
But that's really what I tried to build in the last 15 years writing about startups was that sense of trust that you can expect me to be fair to to have sort of the good of the ecosystem at heart.
1:37:50
So if I do something that doesn't feel super comfortable, um I'd say that's actually a good thing because you can get that from an amazing VC podcast or you can get a beautiful marketing video.
1:37:59
I might ask questions that push you a little bit, but I am in the ecosystem.
1:38:03
I I do consider myself a founder of a startup here and I have that empathy that I'm going to be only punching up really carefully.
1:38:09
I'm not going to be punching down, you know, I never want to get out of bed and be like, what startup am I messing with today? So, no Gawker 2.
1:38:14
0, but uh uh I want to talk about like the instantiation of the work that you do.
1:38:22
Uh obviously, you're a writer first and foremost, right?
1:38:24
And and most people experience your work through Forbes. com essentially.
1:38:29
Um but have you thought about where that lives?
1:38:31
Is it are are you targeting the email inbox?
1:38:33
Will there be a printed version?
1:38:35
I'd love a t coffee table book of the Conrad list maybe this year.
1:38:39
I think that would sell really well.
1:38:41
I think every single VC firm would probably pay $1,000 for the for the Conrad printed coffee table book. Sell a lot of those.
1:38:48
Uh are we going to get videos podcast? What are you thinking? Yeah.
1:38:52
So, it's a little crazy because I am bootstrapping this business at first to kind of control my outcomes and test the product market fit.
1:39:00
But I kind of want to do everything you said.
1:39:02
I mean, maybe not the the coffee table book just yet.
1:39:04
That could be a year two goal.
1:39:05
But I'm going to be launching a live video series um of monthly interviews, very different from what you guys do, but just a quick fun interview with the CEO uh next week and I'm doing that like my newsletter over Substack who have been a great partner. Great.
1:39:18
So um working closely with them and going to be publishing twice a week.
1:39:23
I also got to shout out you know and this this might be controversial on this show but um I am going to be working with uh partners to make sure that one edition of my newsletter is free each week.
1:39:32
I want to be proving this can be a sustainable business but also inclusive to folks who maybe are early career students, you know, founders who are cutting their burn and they want to get high quality news but they don't want to pay yet.
1:39:44
And so I actually signed a launch partner in Brexner, but um always happy to work with others down the road.
1:39:52
Um but yeah, I mean that's basically the way I'm thinking about this is multiple streams, a newsletter.
1:39:58
I'd love to do a podcast eventually.
1:40:00
Um, but I'm gonna be building in public.
1:40:02
I'm gonna be screwing up a lot.
1:40:03
I think that'll be part that'll be authentic with this audience.
1:40:06
You know, you guys you guys will see that. Awesome. Yeah.
1:40:07
Uh, what's the future of the Forbes brand?
1:40:10
Uh, it's been in an interesting spot. Uh, I'm saying this.
1:40:15
You're not saying uh or confirming this, but I know they've been like on the market trying to sell themselves for a long time.
1:40:20
They sold off a bunch of random assets. Russell was circling.
1:40:24
was circling. Forbes Forbes book publishing is not really tied to the parent company any you know it's like very unclear like it's it was an iconic media property you tried to keep it alive uh and you know you and certainly more brand cache than techrunch I think
1:40:40
like the Forbes brand still has a lot of Yeah but it's been diluted over time and and part of you know if you had stayed and said I'm going to recommmit the next decade and sort of bring it back I I'm sure there's a variety of factors that that didn't allow for that. But uh what
1:40:54
But uh what happens with Forbes?
1:40:57
I know you probably can't uh maybe you can give the your your most sort of positive perspective on it.
1:41:03
Upstarts is acquiring Forbes in 2026. Not kidding.
1:41:07
He first scooped but but to answer Jordy to answer Jordy a little more seriously, you know, I started covering startups in 2010.
1:41:15
You know, Techrunch was a giant. Venturebe was a giant.
1:41:19
You know, Forbes, the website was still very siloed. So was Fortunes.
1:41:22
Media has changed a ton in the past decade plus.
1:41:25
I think like people forget that the Midas list was actually started in 2000.
1:41:29
So it way predated me too and it will outlive us all whether VCs like that or not, you know. Yeah. Yeah, that's great. That makes sense.
1:41:36
Uh how what what do you think the uh what what's the future of Substack?
1:41:43
they they they went through this kind of, you know, period of massive hype and then there was a period where every media platform was attacking them and then it seems like they've come out of it and now people are deciding to to go on and build real businesses from day one on the platform.
1:41:58
Uh what's your take on on um are are they having real network effects?
1:42:05
Like do you think they're their sort of existing audiences there are going to help you accelerate your growth faster?
1:42:10
maybe kind of break down the decision to start there versus working, you know, ground up on on a beehive or one of these other products.
1:42:19
You know, I think um there it's good if there are multiple options out there and that they get better and better.
1:42:23
And I think companies like Beehive are pushing Substack to update their their own technology.
1:42:28
You know, from a technical component, I was really impressed with Beehive.
1:42:31
Ultimately, Substack was where a lot of my peers, a lot of the folks I think are startup curious are today.
1:42:36
It is, I think, an effective social network.
1:42:40
And so when I was thinking about who I wanted to partner with, that was really important for me.
1:42:43
You know, other journalists, other um writers who are in the ecosystem who aren't journalists, um I hope that we can collaborate.
1:42:50
They can, you know, send their audiences back and forth.
1:42:51
And I think, you know, what they're doing in video notes, they're trying to kind of adapt and and have new ways to reach audiences.
1:42:58
And that's going to be a huge priority for me. Um I I had a crazy idea.
1:43:04
I pitched a another writer I want to get your take on.
1:43:06
Uh the 30 under 30 list is is uh it's controversial, but I think generally like there's a lot of people that want to be on it.
1:43:13
They're excited and then they they get frustrated when they turn 31 or they're ineligible.
1:43:17
Uh my idea was uh every week for the full year you post here are 20 cracked 20 year olds and then the next week it's here are 21 really great 21 year olds, here's the 22 year olds and you're just chronicling all the great people in tech.
1:43:33
It's an opportunity to get on a list every single week. It's massive viral fuel.
1:43:38
Do you like the idea and can we expect it from your media empire in the near future?
1:43:43
I promise I promise everyone I would wait at least two quarters before I shipped the crazy list.
1:43:49
So I got to add that to the product road map.
1:43:51
But I do want to cover non.
1:43:53
I think there are a lot of cool people in startups.
1:43:54
Totally who we don't ever hear from.
1:43:56
So totally operators, right? Yeah. Yeah. Makes a lot of sense.
1:44:01
Well, I I mean thanks for stopping by.
1:44:01
I congratulations on the launch.
1:44:03
Uh we'll definitely stay tuned and we'll have to have you back when you break a big story or do a wonderful and it'll be my goal to have you guys on my show someday. So fantastic to do it. We're down.
1:44:12
We will also be streaming at the same time.
1:44:16
We will have dual syndication. I love it.
1:44:21
Uh well, thanks so much for stopping by. Good luck. Congrats again. Congrats again. We'll talk to you soon. See you guys. Thank you. Bye. Fantastic.
1:44:26
Well, coming in next, we have Will. This is your buddy. Yes.
1:44:32
You want you want to give a little backstory on who this guy is? Yes.
1:44:34
Uh I mean he should be in the waiting room any second. I will make sure. From terrain. com. Good good domain. Fantastic domain. Fantastic domain. Fantastic word. Nice little logo. Says call your shot.
1:44:48
Terrain is an earlystage investment firm focused on software and technology.
1:44:51
Not giving me a lot to work on there, but we'll hear it from him.
1:44:55
He's here to break it down for us. William, are you there? What is Terrain? Welcome to the show. Guys, what's going on? Look at this.
1:45:01
Just popping in with the art.
1:45:03
What do you got behind you? Yeah.
1:45:05
Bring it down for yourself.
1:45:05
This is actually a piece that my mother made.
1:45:09
Oh, so I'll I'll put a plug out for her her work.
1:45:12
It's uh Katherine Vanlanker.
1:45:14
Shout out to She's a painter.
1:45:14
She's been a painter my whole life. Fantastic.
1:45:16
Uh can you break us down uh what what is Terrain?
1:45:21
Uh what are you working on and what are you announcing most recently? Yeah, absolutely.
1:45:25
And uh thanks for having me here, guys.
1:45:27
It's great to Yeah, it's great to have you. Great to see you both.
1:45:29
Uh, so Terrain is an early stage investment firm that I started last year with Eric Stroberg and we back founders who have specific and ambitious views of the future.
1:45:41
We like to say these are people who call their shot.
1:45:45
These are folks like Zack Dell and Justin Lopez at base power.
1:45:47
Uh, Alex Mather at Eternal. Oh yeah.
1:45:50
Zack Abrams and Shawn Yu at Bridge.
1:45:54
And increasingly we think that this is just going to be very important to build a meaningful and lasting company whether you're attracting capital or building an audience or building a team that um being able to clearly articulate your vision of the future is just going to be the the things that separates uh the good from great. Yeah, definite optimism.
1:46:16
Uh I I want to know about like the whole call your shot your declare your free agency thing.
1:46:22
It feels much earlier than, hey, show up on Sand Hill Road and raise a mango seed round in a weekend.
1:46:30
Um, walk me through the different options that founders are facing these days.
1:46:35
They can go do YC, especially if they're if they have a good track record.
1:46:38
They can even do EIR programs at Founders Fund or that's what I did.
1:46:43
Like I wound up doing this slip, but but at VC funds, they have EIR programs that are like a little bit more flexible uh for folks.
1:46:49
But but where where do you see slotting in?
1:46:52
Because it sounds like you're thinking pretty early stage. Yes.
1:46:55
So, you know, first and foremost, we're an investment firm.
1:46:58
We invest from that really early stage, which I'll talk about shortly, uh through to seed and series A.
1:47:04
So, we're very kind of flexible in kind of where we enter and um you know, work with you know, those companies that existed are you know, raising mango seeds or series A's or whatever you want to call it.
1:47:14
Uh, this most recent program we launched is called free agency.
1:47:18
And what that is is a concentrated 90-day period before you have your idea to go through um a focus exploration to uncover your idea.
1:47:28
And this stems from the belief that um it's kind of a missing thing in the market.
1:47:35
something that I saw while I was at Thrive Capital where we were partnering with people who had an edge or an interest area in a certain technology or a background but were not yet convicted behind what that is.
1:47:46
And you know the venture industrial complex tries to you know give you capital and you know quite frankly perhaps before you're ready and make those commitments and those decisions before you're ready.
1:47:58
And so with free agency, what we're doing is we're unbundling that from selecting your idea and taking capital.
1:48:03
So there's no strings attached, there's no um cohorts, there's no demo day, there's no kind of deal that you have to take.
1:48:10
It is really this period of open exploration.
1:48:13
And our hope is that it results in more thoughtful and uh deeply convicted ideas from the founders we get to work with.
1:48:20
And on the other side of that, if it makes sense to partner with terrain, fantastic, we will be there and waiting.
1:48:26
But we believe that that is just something that is really needed and we're on the last day of applications today and uh quite frankly been really surprised uh and elated by how many people this seem to resonate with.
1:48:38
Do you think most people can figure out if an idea is good or bad without spending money?
1:48:44
Because the typical accelerator is like come in, we're going to give you 200 to 500 grand, maybe a little bit more, and then you're just going to start spending money to like figure out if you if the sort of highlevel idea that you had is good.
1:48:56
Now, I think a lot of really brilliant entrepreneurs do all the work to sort of like make that idea concrete sometimes for years prior without ever spending sort of explicit dollars.
1:49:08
But venture dollars are so available.
1:49:10
So as part of this program to basically say like all you need to do is invest time and energy into exploring your idea, you actually don't need money, but when the time comes to actually hit go, we'll, you know, we we'll be there.
1:49:24
You know, other other funds in your network will be.
1:49:25
Um, so maybe maybe talk about that because like you at Thrive Capital leading incubations, you guys incubated a lot of companies.
1:49:34
I'm sure you also explored potentially thousands of ideas, right?
1:49:38
And so maybe talk about kind of your process and I imagine a lot of free agency is like built built out of and your sort of process internally is like how do you evaluate ideas?
1:49:49
How do you kind of build conviction without having to spend a lot of money? Yeah.
1:49:53
So uh one good feature of today's ecosystem is that we actually have access to a lot of resources that maybe didn't exist you know in decades prior.
1:50:04
Um every person that participates in free agency gets access to over 350 grand in compute resources and service resources that sort of thing.
1:50:14
So there is some capital to deploy you know via technology.
1:50:15
Um that is not you know dilutive or or anything in that regard.
1:50:21
anything in that regard. um you know the the process and I'll kind of go back to to kind of you know zooming out for for for a second um each of these products EIR accelerator incubator um free agency they're products for founders right and so you have to meet the founder kind of
1:50:38
with what they need in that moment free agency is not going to be for every single type of founder and it doesn't need to be you know if you're a young person and you're looking to get access to network and um you know enter entree into Silicon Valley accelerators are phenomenal for you. But what we found
1:50:53
But what we found with the people that we're engaging with is that we don't they don't want to be put onto that track.
1:50:58
They don't want to be kind of put onto that timeline and make those decisions kind of too far upfront.
1:51:06
Instead, what they want is close partnership to dissect an idea, to dissect a market with the perspective of investors and with the perspective of someone who can be that thought partner through the journey.
1:51:18
And you know you guys have both started companies like you know that feeling of being close to something but not quite there.
1:51:24
Like it is not the myth that is often told on stage where you know you're struck by lightning one day or like you know almighty comes down and just drops the idea into your head.
1:51:33
It is a process of iteration of staring into the abyss at times and we just think that there can be some structure placed on that and some shortcuts to uh you know strengthen the business model or strengthen their travel through the idea.
1:51:48
It's what we saw time and time again at Thrive.
1:51:50
And the reason to not attach capital to it is one both for that point of commitment and restriction but the other is I think it makes you make decisions differently.
1:52:03
I think that you either if you have that stipen and you're hanging out in the offices and you're drinking the spa water in the VC office every day, I think you have a different mentality about the burning platform and the company that you need to go and build.
1:52:17
And so we think that you know actually creating a little bit of a pressure cooker during that time is really really important.
1:52:22
Yeah, I completely agree.
1:52:22
YC is I love spa water too.
1:52:26
I mean, yeah, but one of the best benefits of YC is just like the competition of like seeing everyone around you, the pressure and having a deadline. It's great.
1:52:34
having a deadline. It's great. I I I wanted to ask about like archetypes that you're seeing like there's so many different people that I could imagine going into this from the the repeat founder who really wants to make sure that they call their next shot and they
1:52:46
take a big swing in it and they're ready to set up with a lot of capital when they're going versus the employee early stage employee at a growth stage company that wants to move on to something new, leverage something but wants to fully transition out of the previous company versus like the high school college dropout. Uh is is is there a pattern or
1:53:02
Uh is is is there a pattern or are you just widely open to everything?
1:53:07
It's been it's been really open.
1:53:07
So we've had hundreds of applicants already.
1:53:10
Um you know these have been engineers and designers and companies like OpenAI and Data Brick, SpaceX, Ramp like you name it.
1:53:17
Um we have a Gen Z creator who has millions of followers and more research focused people like you know from Deep Mind.
1:53:25
um and then some successful repeat founders uh both in our network and kind of entering you know from uh from the application and I think what it illustrates is that there isn't something really like this and I and I feel you know kind of uh you know you're supposed to keep these things secret for a while but it really feels like we've hit on something to um to meet people in this moment at this stage.
1:53:45
I think with this first batch we're going to experiment and try to take on a real diversity of of people while keeping it focused.
1:53:51
Um, but I imagine over time we'll start to see a kind of a consistency form.
1:53:56
Um, but you know, more than anything I think these are people who are not starting something because someone else told them to.
1:54:04
They're starting something because they believe that this is the almost the last resort, right?
1:54:08
It's like I can't join a great company or I'm at a great company and I have this thing kind of burning in me to go build a company.
1:54:13
Is talk when you're when you're calling your shot, you have a big sort of vision for the world.
1:54:19
is talking to customers overrated.
1:54:22
Like the YC approach is like have a loose idea, iterate quickly, talk to a lot of customers and that clearly works.
1:54:31
But at the same time, we've seen some other like sort of major power law businesses where they clearly just had like a vision for how they imagine the world and yeah, you got to talk to customers along the way because you have to sell to them.
1:54:43
Uh but but you know, it's the Henry Ford thing.
1:54:46
Like if I asked people, they would have said a faster horse.
1:54:49
The ultimate like I didn't talk to customers guy is Henry Ford. Yeah.
1:54:53
Look, I think you know Henry Ford certainly talked to customers along the way, but I think that had the vision of what he wanted to create and that's the case that we see with you know with people like um you know Zack Dell at base.
1:55:06
base. It's like he wants this idea of um you know energy too cheap to meter it right and that's where the starting point is and let's work backwards from that because if we can achieve that view we know we can appeal to customers right or um you know Zach uh a lot of Zach's here Zack at Bridge uh you know started that company not during a time when uh
1:55:28
cryptocurrencies and stable coins were all the rage right it was it was built on internal conviction over many many years and I think that in the environment today where software has eaten the world and you should assume that if you're on to something interesting there are two or three other competent well-funded you know good people going after it as well. It has to
1:55:45
It has to be you know from that kind of internal conviction um not from you know I I pulled 500 people and they told me that you know dogs want this type of you know X right there was an era where I think that worked and I think we're out of that era.
1:56:02
Do you think founders get way too much validation of their ideas from investors?
1:56:06
Because I've fallen into this trap before where if people will invest in your comp, you know, if really smart people will invest in your company, sometimes you can think, well, I I must this must be a good idea, you know, because people were willing to bet on it.
1:56:21
Uh when usually from the investor's point of view, there's tons of scenarios where investors are like, I'm sort of so so on the idea, but this guy's just so great.
1:56:30
Um, so is that some kind of like, you know, I'm curious if like, you know, one of the like you should basically get validation in your idea by spending enough time with it, spending time talking with other intelligent people that aren't just incentivized to deploy capital, but actually want to help you find that, you know, help you get to the point where you can actually call your shot. Totally.
1:56:52
Look, I I think that maybe 15 or 20 years ago, um when CDVC and and early stage venture was more scarce, you could rely on that like you know, you could say, well, you know, there's someone who's willing to stake capital on this and thus I've passed through some barrier.
1:57:10
Now, that didn't mean that it was, you know, the next Google or Facebook, but uh there was some barrier that you passed through.
1:57:15
I don't think that's the case.
1:57:17
And I think that honestly the best founders are not solving for capital at the beginning.
1:57:23
They're um you know there's a there's more options available for them than ever. There's bootstrapping.
1:57:27
There's you know coming in with past success.
1:57:30
There's friends you have around the table.
1:57:31
And so what I think that means is that the moment you put up that flag and say I want to start something and you're, you know, a talented individual with great experience, those offers start rolling in.
1:57:41
And you have to have the internal fortitude and disposition to say, you know, I'm I I need to make sure this is the right thing because that investor or that angel investor is going to place who knows how many bets and you're going to place one during this period of time.
1:57:58
you are an investor of your time and that is one thing that you can do during this period and you have to take that really seriously.
1:58:03
So I think that it's it's much more about finding that for yourself because you can't outsource conviction and you can't outsource that type of diligence.
1:58:12
Um especially when the incentives aren't necessarily fully aligned. I have a question. Go for it.
1:58:19
You used LeBron James in your launch video.
1:58:21
Where do you stand on the goat debate?
1:58:23
Is he a better basketball player than Michael Jordan?
1:58:27
uh as a kid of the 90s, I think it's got to go to uh it's got to go to MJ.
1:58:30
Um that that video, it pained me as a Celtics fan to uh to show him in a Lakers jersey winning uh winning championships.
1:58:38
But look, he's someone that I think, you know, had doubters throughout his career, even does today.
1:58:44
And now Bronnie, you know, after him.
1:58:46
So, and you got to tune it out, you know, and I think that if you're doing something right, then people will throw shade at you.
1:58:52
And I think it's a great thing.
1:58:54
It's still a great metaphor.
1:58:54
Do you have a last question then we'll Yeah, last question.
1:58:57
Uh I'm sure you get hit up by people all the time that are starting venture studios, incubators, etc.
1:59:04
You like ran incubations at Thrive.
1:59:09
Now you're running a traditional venture fund.
1:59:12
I'm sure you could do an incubation, but uh do you think that that model is best done opportunistically versus, you know, systematically?
1:59:22
what what's your takeaway from, you know, doing a bunch of these? Totally.
1:59:25
Uh the, you know, going back to that kind of idea of products, I'm a product person.
1:59:30
Like, you have to be building a product for a great audience.
1:59:34
And I think that you need to be honest with yourself about what value you provide to a founder.
1:59:38
And um you know, incubation is a really appealing tool, right?
1:59:44
And I I think it's like, hey, we can get more ownership and we can kind of, you know, I have all these great ideas and I can create it.
1:59:50
Um, but I see a lot of VCs piling into it, I think, for the wrong reasons and and are going to make some mistakes.
1:59:55
I think there's a real alchemy that it takes to get it right.
1:59:57
Um, and you have to know, just like as a founder, I think you have to know where your edges.
2:00:02
And when I was at Thrive, you know, my focus was on incubations and it was working really closely with founders right from the beginning.
2:00:07
But there was always a humility in the fact that the founders are going to build this company that we need to, you know, put the right environment together to help them, you know, find it.
2:00:17
And also there's a lane of where we can incubate and where we can't.
2:00:22
These are areas that thrive.
2:00:23
It was you know heavily regulated industries or really large markets that perhaps would take deep capital uh availability to succeed within.
2:00:31
Um and it wasn't everything and that I think was the beauty of being able to do both things of of do early stage investing and incubate allows you to have that flexibility and it's something that you know I believe we'll do really well at terrain too. Awesome.
2:00:43
Well congratulations and good luck.
2:00:43
Yeah know you it's open for until the end of today maybe maybe can apply right now. Yeah, people can apply.
2:00:50
It's been open uh for the last few months early.
2:00:52
You got a great domain, too. terrain. com. terrain. com. terrain. com/free agency. Short application.
2:00:59
Hope to uh to see some people that site TVPN as the the source that they got it from. Thank you.
2:01:05
Your next power law winner is coming from our audience. There we go. There we go. Thanks, guys. We'll see you soon. Talk soon. We'll see you. Thanks so much.
2:01:12
We got uh we got Jordan Schneider from uh China Talk coming on next.
2:01:14
I'll let him give the pitch, but uh this is a f fantastic podcast.
2:01:19
It's one of those podcasts that's completely a portal to another world where on most shows it shows up in your RSS feed.
2:01:29
You probably haven't heard of the guest, but you so he's doing he's doing not only the great work of putting together the show, but also curating the guests, bringing you information that you would just never find otherwise.
2:01:42
and it's uh he's been a a really fascinating um uh host. So, I think he's here. Let's bring him on down. Jordan, how you doing? I'm doing amazing.
2:01:53
It is a rare occasion where I get to get actually dressed up for something.
2:01:58
So, this is a real twe treat for me as my camera totally up and we switch to the shittier one.
2:02:04
Oftent times an audio show.
2:02:07
Um but that looks good too. That's great. There we go. Lovely jacket. Lovely jacket.
2:02:12
Great to have you on the show.
2:02:14
Uh can you give us a little bit for my wedding? It's my only look. Nice. Nice.
2:02:18
Uh can you give us a little high level on uh China Talk, what you're building, just introduce yourself to the to to the fans. Well, yeah.
2:02:26
Hello everyone out there.
2:02:26
I guess I just first want to start off by saying, you know, I grew up listening to sports radio and to have like a call-in show be revived on a vertical that I now spend way too much p time of my life thinking about, I just think is great.
2:02:41
So like I'm rooting for you guys.
2:02:41
I think I think I think you're on to something. Um, what is China Talk?
2:02:44
It is a podcast and newsletter about US China and technology that I've been running for the past eight years now.
2:02:52
And John did a really good introduction. I don't know. It's kind of weird.
2:02:57
Like I'm not really trying to like break news or report on news.
2:03:04
It is just the best tagline I've given for myself is daresh for the deep state. Um, I love it.
2:03:09
Just like like the stuff that politicians and intelligence officials listen to on their drive to and from work where um I mean I guess now we're we're bringing cell phones into skiffs and and texting about targeting information.
2:03:27
So maybe my al maybe my my window is gone.
2:03:29
Um you need to get added to the chats. Yeah.
2:03:33
Yeah, they should have added you.
2:03:33
It would have been great.
2:03:36
I can I can neither confirm nor deny that I I I told the missile to be I'm you know 500 me to the right and be released right after the goat ended up uh you know doing its feeding or what?
2:03:51
Well uh I mean speaking of the signal chat thing what what is your take on that and what has the has there been a reaction in China or amongst your sources and friends and people you text with? It's just embarrassing. It's amateur hour.
2:04:03
It's amateur hour. This is the D team and I think this is like the the best like everyone knows that these are not all the sharpest tools in the shed and I think there are different levels of competency that you see across the cabinet level of this administration and
2:04:23
the problem is is like when you look at the discourse of actually the quotes and the arguments that were they were going back and forth to each other like honestly I feel like my high school model UN team might have been able to do a better job weighing the pros and cons and timing of this sort of stuff. So
2:04:39
So that's really what beyond the sort of like obvious like illegality and of like texting about classified information.
2:04:47
I was just kind of bummed that like you know you grow up being like oh man maybe one day I'll be a national security adviser and then it's like oh wait like I I actually did a better job of this when I was 17.
2:05:01
This is what Trey Evans always says.
2:05:03
There's uh you know, you you you you expect that there is a queue in from the James Bond universe with secret gadgets and and an all- knowing eye and a man in the chair and secret agents running around the globe.
2:05:15
But in fact, there is no Q.
2:05:17
You have to build it yourself.
2:05:18
Uh I got a book recommendation for you, John.
2:05:21
So there's this there's this book called The Wizard War by RF Jones who was 28 years old and a PhD physicist uh out of Oxford when in 1939 World War II breaks out and he is like the only scientist in the entire British intelligence community.
2:05:40
And basically he was a complete bull in the China shop telling everyone they were full of And ultimately Churchill, he got into a meeting with Churchill and there are some, you know, 50-year-old people who are saying X and he's like, "No, it is why."
2:05:53
And here are the 20 reasons why it's why.
2:05:56
And then because he impresses, you know, um, the big dog, he ends up really getting to have a big impact doing all this cool stuff around, you know, radar and, uh, targeting systems and whatnot.
2:06:07
And it and it goes to show that like like yes, Trey Stevens is right in that at one level there's no there there, but it also means that like really excellent people at a certain point in history when they get the right level of top cover can like really punch above their weight.
2:06:24
And what is concerning I guess about watching the past few months of this administration is like that bench of extraordinary like like it's great if you have the extraordinary cabinet secretary um which I don't think there are any but like one level down and two levels down like you want at least the cabinet secretary to be able to note the sort of mid-level person who's really great and give them room to run.
2:06:52
And I just I'm I'm worried that's not the timeline we're living in.
2:06:56
But anyways, we can talk about tech, too. I don't know. Let's talk about this.
2:07:00
We never talk about politics on this show ever. No politics.
2:07:02
So, let's move on to tech and geopolitics. Let's talk about China.
2:07:07
You can talk about whatever you want.
2:07:08
Uh yeah, just maybe maybe I'd like to go a little bit uh back in time and talk about what drew you to be interested in China.
2:07:16
In the beginning, I studied Mandarin in college.
2:07:21
Uh I decided instead of going to you know study abroad in Barcelona and just you know party or whatever uh a lot of people do in college I I decided to go to Shanghai and I was working out of a of a Chinese uh startup accelerator that was bringing sort of western startups in which is the most flawed China accelerator in uh in Shanghai. Yeah. Yeah. Sure. Yeah. Yeah.
2:07:44
It's it's like it's it's one of the it's like the most Jord has a ton of experience in China and I had a layover in China once.
2:07:52
I was there for 12 hours in Guanghou.
2:07:52
So you're talking to experts who don't dumb it down for us but some of the listeners might be less familiar.
2:07:59
So why don't you take us through how you got into China?
2:08:02
I'll give you some I had this idea as a kid you know a lot of kids just wanted to be astronauts and things like that.
2:08:06
I wanted to be an international businessman.
2:08:09
And I had this sort of extreme vision of myself with a briefcase, you know, traveling to Asia to do deals.
2:08:15
Like that was like foundational uh memory.
2:08:17
And then I went to China and I realized one I was really frustrated that nobody really wanted to speak Mandarin in Shanghai because they speak Shanghai which is like a completely different dialect.
2:08:27
And so I was like what am I even doing here?
2:08:29
And so and then I very quickly like I I feel like I clashed with the culture.
2:08:33
I had, you know, friends that were, you know, local Chinese, but overall from a from a business culture standpoint, it just didn't work.
2:08:42
I felt like the entire um model of the accelerator that I was working out of was flawed because they were trying to bring Western companies in to build in China and we were just constantly getting blocked on everything.
2:08:55
It was like clearly China didn't want us to thrive there and we've seen this with other big companies.
2:09:00
So anyways, I got a sort of bad taste in my mouth.
2:09:04
Left, decided never to come back, stopped studying Mandarin.
2:09:06
Uh, but I'm still very fascinated with it, but I'm curious, you know, to hear about your kind of journey into all this. Sure. Well, what was that? What was the timeline? What were the years? This was 2016.
2:09:18
So, it was like during the Trump Hillary uh uh election cycle. Yeah. Okay.
2:09:24
So yeah, I mean my my China arc was 2017 to 2020 and I think um I was living in Beijing which is a you know different experience on a for a number of reasons than than Shanghai but I also came to China wanting to work in tech.
2:09:38
I guess like my or I came to China and then very quickly it was clear to me that like the only interest interesting jobs were ultimately going to be um not in like western firms trying to enter China but this was like the hot minute where um Chinese firms were trying to expand around the world and that wasn't like quite as sensitive as it ended up turning out to be.
2:10:00
turning out to be. So um you know working at places like Bite Dance and um you know uh the company that turned out to make Teimu all were the sort of interesting jobs for foreigners because you were totally right like like the alpha of being a foreigner a foreigner
2:10:19
doing business in China is like a 1980s 1990s you know first half of the 2000 story and um then sort of your only alpha as a foreigner in China um was not even like you know working at Microsoft China or whatever what have you but like helping the Chinese firms explore the rest of the world. So um I uh moved
2:10:38
So um I uh moved there in 2017 for um graduate school very quickly was like all right if I'm going to stay here it's going to be working for a Chinese firm cuz like there's no no other interesting jobs.
2:10:48
I did that for uh I guess like nine months I think. I was at Qua Show.
2:10:55
Um which was actually the first company to do short video and got completely blown out of the water by bite dance.
2:11:02
But within two months of being there, I was like, "Oh, this is really silly."
2:11:07
Like they're asking me to expand into Turkey and I don't speak Turkish.
2:11:13
Um and doing my podcast and newsletter when I was at work was more fun.
2:11:17
So I kind of rode that until they realized that and fired me and then co happened and I left.
2:11:20
Um so anyways I mean no good time don't regret it.
2:11:28
Uh but yeah the uh the sort of the the time where there was any edge in being a western business trying to expand into China I think closed um before your or I or ours times.
2:11:38
Well I want to go through some of the big topics that you've covered recently.
2:11:44
Maybe we should start with just the foundation model battle that's going on.
2:11:48
Can you give us a lay of the land over in China?
2:11:51
What's happening on the LLM front? All right.
2:11:53
I got a I got a take for you that I'm paring from Alvin Wong who gave it to me today at breakfast.
2:12:00
America created Deepseek.
2:12:00
America created Deepseek. Um so um there is this window uh in around 2017 or 2018 where the calculus of the top students in China about where they want to go to undergrad and where they want to do uh you know masters and PhDs changes and part of it is a function of opportunities in China where wages are
2:12:27
increasing there's this big exciting startup ecosystem but there's also a big part of it of the Trump administration and just like, you know, the vibes being bad and then the vibes being bad for Asian-Americans, uh, you know, whether that's like realized by the numbers or just amplified by Chinese propaganda. Um, and
2:12:43
Um, and then COVID where, um, sort of like, uh, China was doing fine over the course of 2020, um, and America wasn't.
2:12:52
So the sort of choice and it was also very difficult to go back and forth between the two countries which you know if you're going to be deciding to like go and live halfway across the world like you might want to see your parents every once in a while which was not a straightforward thing during the lockdown years.
2:13:10
lockdown years. So what used to happen um pre20 201617 is the best Chinese students would go to the tier one universities in the US the sort of next rung down would go to the tier 2 universities in the US and then the third rung down would go to the best Chinese the best universities in China and that was kind of a clear hierarchy but once you had these three
2:13:32
factors of China's economic opport you know uh earnings potential in China expanding like bad vibes for Asians in America and co um a lot more of those uh sort of top folks who would have ended up wanting to go to you know uh MIT or Stanford just stayed in uh in China and the core of Deep Seek's engineering base are all under 30 and all from those top Chinese universities in that cohort. So,
2:13:59
So, um, we really messed up our shot to do this whole brain drain thing or we had a great thing going for like 40 years, um, of really getting the best Chinese talent to come to America, get their education here.
2:14:12
And by the way, like 85% of the folks who end up getting PhDs in STEM in the US, like uh, either try to stay or end up staying.
2:14:20
But by sort of screwing that up, we've really undercut ourselves, I think, for the for the long term.
2:14:26
Yeah, that's a good trend.
2:14:26
term. Yeah, that's a good trend. What what's your take now on the true cost of deepseek because it they came out with this like clearly a number that that was just shockingly low and it felt like it was designed to shock the market and then more truth sort of came out over
2:14:41
time but it's it's less you know it's less impactful when it sort of dripped out and saying well we had yeah we did have these chips and well we didn't count our uh R&D costs it was just we you know it just seems like to me it's now unclear, but clearly was more more expensive. Uh do you have a good uh sort
2:14:59
Uh do you have a good uh sort of have you sort of tried to triangulate it?
2:15:04
Yeah, I mean like look, it's not dirt cheap, but they also don't have as many chips as Anthropic or OpenAI or Google.
2:15:13
So, you know, there's some sort of triangulation that that you can do.
2:15:15
I point you guys to Nathan Lambert who kind of did the back of the envelope math.
2:15:22
math. um uh he came up to like a like $300 million a year like annual run rate for Deep Seek something like that right I mean it's a it's a very successful quantitative hedge fund they have money to burn but they are also not Google
2:15:36
right um but I do think the sort of interesting angle or story from this is that um there is an aspect of not necessarily like constraints breeding creativity well there's a part of that but also the sort of constraints lead you down different technological trees. And which is not to say that like the US
2:15:56
And which is not to say that like the US um or western labs can't like explore the more um the things where you're not necessarily pushing capabilities but pushing efficiency which I'm sure they are as they kind of reach the limits of like oh man like I guess we're going to have to do a hundred billion dollar run to make our model better.
2:16:14
But I think Deep Seek kind of came to that earlier, the sort of need to really um push on kind of the the efficiency frontier as opposed to the capability frontier because they ran out of chips before uh the likes of OpenAI and Anthropic.
2:16:28
the likes of OpenAI and Anthropic. Uh will yeah on going off of that when you're trying to understand something related to China how many different sort of data sources do you need to basically triangulate because my experience living in China people were
2:16:48
willing to just basically say nonsense or lies to sort of further a uh one one of their uh ambitions and and so like I came away from that experience being like not having a it wasn't a very like high trust uh dynamic between me and anything coming out of sort of
2:17:08
specifically like uh national security you know sort of like critical critical issues I just sort of like state media anything along those lines uh you know what's the algorithm for finding the truth yeah what what's your truth algorithm what's what's the algorithm for finding
2:17:25
truth in Silicon Valley I mean it's besides besides watch this show right yeah I There's a ton of hype in in western and I and I and obviously obviously every company comes out and saying we're replacing $5 trillion of labor with our AI agents and we're doing this and we're doing that. uh but but uh
2:17:40
this and we're doing that. uh but but uh I do I do think it's yeah I think there I think it's interesting and this there are sort of different heruristics you can apply to different um uh you know to different fields right so for instance Jeffrey Goldberg you know the equivalent of the Chinese Jeffrey Goldberg if they were added to the you know war planning group weChat group would not have
2:18:07
published that right um so like I think you know the closer you get to kind of like you know national security adjacent questions the more yeah you know you're dealing with a with an authoritarian state who has complete control of media and like there there's a whole kind of ecosystem of people who try to like read through the lines of state media and you know PLA uh journals to try to understand what this stuff means. I
2:18:33
understand what this stuff means. I think for the sort of more commercial tech focused stuff um yeah you know these are mostly private sector firms trying to play games and you know uh you know raise their next round right I think the one difference is that there is more money that flows directly from
2:18:53
firms to journalists uh in China so the sort of discount factor that you have to apply um to Chinese technology coverage specifically positive technology coverage or even negative technology coverage because sometimes that's like seated by the you know enemy company or whatever uh tends to be tends to be higher. So you know it's fine and you
2:19:15
So you know it's fine and you you get to know the journalists and you get to know which outlets are are more or less credible.
2:19:21
Um but uh that I think is the is the main difference here.
2:19:24
Can you talk a little bit about humanoid robots?
2:19:27
Uh I keep seeing these incredible videos of unitary robots.
2:19:31
There's a lot of skepticism around the American uh robotics companies being maybe behind or maybe teleaoperating a lot.
2:19:39
Like what's your take right now on humanoid robotics?
2:19:41
Yeah, specifically does the US need to uh pay more attention to Uni Tree running the sort of DJI playbook uh with humanoids?
2:19:53
Um I mean I I don't know about humanoids, man.
2:19:56
humanoids, man. I mean like like like it is I think it is obvious it is pretty like we did two features on uh the Chinese humanoid robotics industry and the Chinese industrial robotics industry and I think the sort of the big markets in the you know threeyear horizon let's say let's say are much more on the industrial robotic side but in general like we don't build robots here um And so from a from a uh yeah I think any
2:20:30
sort of like largecale manufacturing thing whether it's unitry or another um or industrial robots or or cars or what have you like China has a really remarkable advantage in scale and manufacturing scale and the US like it's not just the cost of labor it's the
2:20:49
experience it's the network um and it's the kind of like 25 years of learning that all these firms have been doing to get to the place where they can, you know, manufacture a drone 15 times cheaper than the US can. So, um, yeah, I
2:21:00
So, um, yeah, I think it's I think it's real.
2:21:04
I don't really know how to solve it.
2:21:06
I mean, you're friends with all the Gundo bros.
2:21:08
Like, ask them for the uh for for what they need to to build a billion of these, but uh yeah, I'm challenge.
2:21:16
What's your take on the news out of Ant uh talking about how they they've had some training model breakthroughs through like leveraging what they're saying is entirely Chinese chips.
2:21:28
Do you do you have a good read on on that situation yet?
2:21:33
Is it is it important or is it just uh another headline?
2:21:35
I don't really buy it yet.
2:21:39
I think there's a there's a really interesting wrinkle in the sort of Chinese domestic chip manufacturing arc.
2:21:46
manufacturing arc. So, um, just to back up for all the viewers out there, America in October of 2020 or by the Biden administration in October of 2022 had this big export control push where they were just like, we're going to do
2:22:00
everything on our power to stop well, we're going to start trying to uh restrict uh the China's ability to import semiconductor manufacturing equipment so that they would not be able to to make uh frontier AI chips to train the next generation of models. And kind
2:22:15
And kind of ever since Huawei uh the the China's leading chip designer and Smick the uh kind of analog to TSMC have been trying to push back against that you know fight through loopholes and um make the uh the sort of level of chips um uh and the quantity of sort of the quant the quantity and quality of chips that that Nvidia is able to do at TSMC.
2:22:38
So um you know it is a big open question whether or not they'll get there.
2:22:44
I think the the jury is very much still out.
2:22:45
I would be kind of wary of headlines because the the sort of most important there are two important facts to understand um looking at this over the next three years.
2:22:58
First, Huawei was able to manufacture an enormous amount of chips at TSMC by basically creating a shell company.
2:23:04
TSMC um you know deciding to look the other way about some Chinese firm manufacturing all these AI chips and then the US government catching them and be like what the you can't do this anymore.
2:23:16
So um they have an enormous amount of supply um and so any sort of we train this on only Chinese AI chips is not actually like SMIC chips it's uh sort of like uh you know off-brand uh TSMC chips.
2:23:32
So um the big challenge is going to be whether Smick can do them can do um kind of competitive chips at scale domestically.
2:23:40
And the the challenge there is they are not allowed and have not yet been able to replace um uh electrol tools which is what um ASML makes.
2:23:53
And you can't really sneak it in.
2:23:55
It's incredibly difficult to sort of re-engineer.
2:23:56
And that's really the final frontier for Chinese domestication.
2:23:58
And despite a handful of headlines, I think that uh over the past week, I think that is much more um uh smoke and fire.
2:24:05
So I mean they do have a competitor to ASML in SMEI, correct?
2:24:12
And then they also need to rebuild SKHEX at some point, I imagine, for the for the memory and the flash, right? Yeah.
2:24:17
I mean, they were also able to stockpile an enormous amount of stuff.
2:24:21
It was so awkward because there was literally a Reuters article in like the summer of 2024 like BIS is planning to crack down on memory and then they did it a little bit but like wrong in October and then they finally didn't fix it until like the like like uh a week before the Trump administration came in.
2:24:41
So just fuckups all around.
2:24:43
and uh yeah, at some point, but there's there's there's a whole lot of memory sitting sitting in warehouses and in in China that they'll be good through for at least the next two years. Okay. Uh all right.
2:24:53
So I'm going to massively generalize here and then you can try to piece it apart and and and fig figure out uh if if there's any meaning here.
2:25:01
But uh China had you know decades to sort of embed uh embed Chinese you know either former or uh uh current Chinese nationals in US in US companies which then were able to over time bring bring back sort of important uh information IP in different ways to sort of like catch up on uh you know advanced uh you know basically catch up on developing their own versions of products from everything from like the F-35 to phones and things like that.
2:25:41
Right now China now we're in a position where like China is uh much more advanced in in in sort of manufacturing robotics some of these things that you were saying and we don't have the same benefit of being able to send a bunch of Americans over there for decades to sort of then like help us re-engineer that.
2:25:58
What's the US's like actually viable strategy to kind of like catch up again?
2:26:04
China's c caught up on product development.
2:26:07
Can we then can we catch back up on advanced manufacturing and and what would be uh Yeah. Is it is it possible? Right.
2:26:18
So, um, the thing that I always used to hold my hat on was America attracts the best scientists and funds the most science in the world.
2:26:28
And that is a thing that may just stop happening.
2:26:31
Um, because the Trump administration doesn't care about the National Science Foundation, National Institutes of Health, wants to blow up um, universities for better or for worse from their perspective.
2:26:42
But like this is the thing that won us the cold war is um getting the best immigrants and uh having them like do crazy STEM stuff.
2:26:50
Um and so yeah, I am worried about this cuz that was kind of my ace in the hole is like yes um you know there will be this sort of like uh uh technology flow or sort of like human human talent flow back and forth between the US and China.
2:27:10
I I think it's kind of like inhuman almost to cut that off.
2:27:12
But the sort of hope and expectation is that like America is just a better place to live and folks will want to stay here and more like America will gain more from that exchange in the long run.
2:27:23
Just what I like what I was talking about um in the in the sort of deepseek context.
2:27:27
And when you look at um you know a lot of the founders of these AI firms a lot of found a lot of sort of the top research engineers like an enormous amount an like a I would say over 75% of them were not born in the US.
2:27:41
not born in the US. So that is like our real superpower here is this being a country that is attractive to and like to a certain extent welcomes uh the world's best talent and kind of giving that away just makes it a lot more difficult because you do need to run faster on all these different dimensions
2:28:01
and the way you do that I mean I I I I buy into this sort of Silicon Valley mindset that like like uh sort of like the the there are such things as 10x engineers and you want to be able to like capt capture as much of them and the extraordinary founders or whatever and sort of losing out on that is is is going to be is going to make it a whole lot more tricky. Uh, last question. Uh, last question.
2:28:22
Peter Zhon, very popular in tech.
2:28:22
He likes to talk about how China's, you know, population uh is in freef fall and the Chinese state as we know it is is unsustainable.
2:28:35
Peter Zhon's one of those guys.
2:28:35
The the criticism is that when you hear him talk about something you know nothing about, you're like, "This guy knows everything.
2:28:43
He's like completely brilliant."
2:28:43
And then when you hear him talk about something you actually know about, you're like, "What is this guy talking about?"
2:28:48
I'm sure when you listen to Zhon talk about China, you have some thoughts.
2:28:52
But talk talk about, you know, he basically is writing them off.
2:28:54
He's saying, you know, yes, they're a force, but he's sort of like writing them off long term in many ways due to the demographic issues.
2:29:02
you know, do you have any comments on that?
2:29:05
What what's that madman line?
2:29:07
I don't think about you at all.
2:29:11
I mean, like I think I think in general um sort of there are nuances to everything I've said here which I've you know kind of tuned up for uh for uh our new generation of sports call and radio.
2:29:26
Um I think there are demographic challenges.
2:29:28
China is not 10,000 ft tall.
2:29:31
There are definitely things that it has been really overperforming on and some of the trend lines um you know some of the trend lines I think are very worried worry worrisome to Washington other trend lines are very worrisome if you're
2:29:42
running China um and kind of understanding the nuances of that and and also baking in like different potential futures of like things that America could screw up things that uh China could screw up things that America could screw up not relation in directly
2:29:58
to China but relation to the way that deals with the rest of the world are all I guess I got to make the plug now the sorts of things that we explore on China talk our podcast we love plugs here thanks anyways for for for more on that
2:30:14
that's I guarantee you more thoughtful and engaging than Peter Zhon please search China talk one word and your favorite talk media is the website go subscribe add it to your podcast player the sub you are now our official uh eastern correspondent. We'd love to have
2:30:29
We'd love to have you back on.
2:30:30
I I I have like 25 more questions. Energy.
2:30:32
We could go through chips more.
2:30:34
We There's so much we could do.
2:30:36
We'd love to have you back.
2:30:36
Thanks so much for coming on. This is fantastic. Talk soon, guys. Talk. Thanks for coming on. Cheers. Bye.
2:30:40
And we got some breaking news coming up. A big fundraising round.
2:30:44
Over $20 million pouring into friend of the show, Pavle Osp's new startup.
2:30:50
He should be joining in just a minute.
2:30:53
We're excited to have him on the show to ha to break it down for us.
2:30:57
I as soon as I saw the news break on X, I texted Delian three red alert emojis saying get in this thing. Massive.
2:31:06
Um and uh I think Delian's hopping in as well. No way. That's great.
2:31:14
The big brother to pump the little bro's bags and tell him to clean his camera.
2:31:20
Yeah, clean up the camera. Got it. Good.
2:31:21
But you got the both of Sparrow hops.
2:31:23
This is the first time we're ever making an appearance on anything together, so you know. Fantastic. Not the last.
2:31:27
Welcome to the show, guys. Uh, break it down. What's happening? What's the company? How much you raise?
2:31:34
What are you doing with the money?
2:31:35
So, the company basically the root of it is, uh, health care providers in the United States spend a ton of time just dealing with the paperwork from insurance companies.
2:31:47
And it really both distracts from patient care, so clinicians are just able to serve less patients.
2:31:52
And when something goes wrong clerically, it can actually lead to like a delay in patient care.
2:31:58
So depending on like some of our customers like our autism therapists and it's like that delay in care for some of those kids can really lead to adverse outcomes.
2:32:06
outcomes. So what we built is basically AI that merges basically like moves data from point A to point B because fundamentally it's just it as much as you know maybe other curly hair technologists like to say it's it's it's not it's not as much of a systemic issue
2:32:21
as it is a uh you know technological issue and the we're just really like insurers set up reasonable processes and have an appropriate check and balance in this workflow where you as an employer don't want to be paying like unreasonable premiums. You as a patient
2:32:38
You as a patient don't want to be getting care that's not medically necessary.
2:32:43
But the problem is is like there's a competitive space between all these insurers.
2:32:46
There's like 10 different insurers that a individual clinician might work with.
2:32:50
So there's 10 different processes they have to manage.
2:32:53
So it's really about plugging these two parties, making them just like work together better.
2:32:57
Um, we sort of raised $27 million across our seed and series A, 5 million C, 22 million series A, and where we're taking that capital is we really just want to double down on our core product set.
2:33:09
It's basically like expanding into more specialties and really we want to go a layer deeper into the extent that we help clinical staff today.
2:33:17
we really just help with like the clerical parts of things.
2:33:18
But as we sort of sit between these two parties, we really start to understand insurer guidelines like we understand why often might reject something and we just make sure that the insurers are able to get clean streamlined data that is past all the basic validation.
2:33:34
So that's where we're bringing the capital in hiring engineers sales operations is really trying to scale the machine and expand on our core product set.
2:33:41
So Bane Capital did the deal.
2:33:44
Did the deal get done at Fogo de Chiao? You got to let me know. Did the deal Oh, Delian.
2:33:48
Oh, that was a Dian question. Go ahead.
2:33:51
No, no, that's for you cuz I saw you posting about it like two years ago. To cow.
2:33:55
No, the uh you know, I it it was part of the close more so than anything else.
2:34:00
That's what put you over the over the finish line. That's great.
2:34:05
Yeah, right at the finish line. No deal.
2:34:06
Uh we were fortunate enough where uh this actually this deal didn't hit the market.
2:34:11
Uh we were for able to close it from our New York office. So fantastic. Fantastic.
2:34:17
Say which, you know, probably kind of covered, but I think for the broader audience, you know, that are maybe not super familiar with healthcare, the way the providers have gotten paid has just kind of fundamentally changed over the past like 10 years where basically 10 years ago provider provided care and then went to insurance companies and said, "Hey, here's basically, you know, sort of what I did.
2:34:36
I'd like to get paid, etc."
2:34:36
And sometimes the insurance companies would look and be like, "Whoa, this is like really out of whack."
2:34:40
like this is not what I wanted to pay for and so you have these kind of like you know sort of misaligned incentives and so polo companies focused on this like new workflow on basically prior authorization.
2:34:49
So it's basically like now you have to go to the insurance company first but because this sort of like new workflow and it slows down care right because before you just go to the doctor they would give you the care and then you you deal payments.
2:35:00
Now the insurance company is set up in the pre-work but then because that if that takes too long now all of a sudden you're like slowing down the patient experience which is also directionally like good.
2:35:09
You don't want to be hit with like an unexpected medical bill, right?
2:35:12
Like that's a lot of the times when you hear some of these like unexpected medical bills happening, it's because you don't want the check happening after the fact.
2:35:18
You do want it happening up front, but like with our technology, you're able to do that upfront check without necessarily delaying the patient getting care. Yeah.
2:35:24
If it takes like 30 days and this person needs like some cancer treatment, right?
2:35:27
Like you want to be able to like, you know, get this stuff like approved quickly.
2:35:30
And so there have been like with the roll out of this new process, there's definitely been some patient backlash being like, "What the hell?
2:35:35
Like the doctor gave me my care plan.
2:35:37
I would like to proceed."
2:35:39
and I'm like waiting on my insurer to approve my ability to even go get, you know, care in the first place, you know, before the bill.
2:35:44
And so it being fast is like super critical.
2:35:45
The other thing that I wanted to mention is, you know, so Pavle co-founded with these two guys, Sagar, who was previously at True Work, but then the CEO is this guy Jeff Morelli.
2:35:53
It was actually my high school buddy that, you know, has known Pavle since he was, you know, sort of 14 years old.
2:35:58
Um, you know, the, you know, sort of first time they met, I think, was like up on the ski slopes in, you know, sort of Utah where I peer pressure smoking some weed for the first time when he was way too young to smoking weed.
2:36:07
Um but allegedly allegedly allegedly allegedly allegedly uh you know officially according to regulators Pavl has never smoked marijuana.
2:36:14
Um, but you know, I think that provided a good bonding moment.
2:36:17
And then Jeff actually came and worked with me on my first company, which was not in the prior authorization space or like financial services, but it was actually in the healthcare space. That's right.
2:36:23
Software for autism therapist.
2:36:26
And so he this pre-existing understanding of like the field, you know, autism therapists, what their workflows were and we were more focused on like clinical workflow software.
2:36:34
But it all kind of ties together of like, you know, Jeff and I used to work together and, you know, had been friends with high school.
2:36:39
He had known Pavle since he was, you know, sort of 14.
2:36:41
of 14. Paul crushed it at ramp and like you know being in the first 25 employees and helping build out their like you know sort of build pay product which has been phenomenally successful for them and so actually both were in like this
2:36:51
like co-founder dating process like whatever it was like you know sort of two years ago and I was like guys like you guys should 100% consider you know sort of you know working together given the overlap of interest and so in some
2:37:00
ways what they're working on today is like the perfect marrying of those two backgrounds of like you know financial you know sort of services and what Pavl has done and then Jeff's background in like you know sort of go to market in
2:37:10
healthcare marry the two prior is like this crazy background trend and you know the Asperero magic can you know make space factories and it can you know uh you know make patients lives and clinicians lives way easier. Uh part two
2:37:20
Uh part two hopefully Sila ends up way better than Night and Gale ever was. I love it.
2:37:24
Uh you got talk about uh so we had Lulu on yesterday.
2:37:29
She was talking about the golden ratio ship to YAP.
2:37:31
I think it was a had to have been a pretty uh intentional decision to wait and announce the company and two separate financings at the same time.
2:37:40
Uh Pavle, you're a generational poster, you know, uh you know, potentially poster of the year if you really get back into the game. Yeah.
2:37:49
Uh maybe talk about that decision to not, you know, be posting 10 times a day about the company when there's probably an argument that maybe that would have helped in different ways, but clearly you made an intentional decision to just keep quiet and and focus on building.
2:38:01
Yeah, I think if it had meaningfully blocked the business anyway to not be talking about it, then we absolutely would have launched.
2:38:10
But I was just like, you know, early hiring is predominantly a network and doctors aren't on Twitter.
2:38:14
So, it wasn't necessarily that we weren't like talking about what we were doing, but it was we weren't talking about it in front of like a tech audience.
2:38:21
I think also just there's a degree of focus that can come from downstream of not being in the public eye.
2:38:28
I think it's limiting in a lot of capacities.
2:38:30
it's limiting in a lot of capacities. I think as we're scaling that was sort of the decision now and I think part of it is just you know I think we had sort of an opportunity when we closed the A earlier than we anticipated to really just come out and like you know I'd say like a
2:38:46
bunch of things get lost in especially in like AI hype cycles a lot of things get lost in the noise where it's like even like healthcare AI it's like is this even real what's going on here but it was I think it was really compelling to us to be able to come out of the door and be like hey we operate in like 45 plus states. We work with hundreds of
2:39:01
We work with hundreds of insurers.
2:39:02
We have tens of thousands of patients.
2:39:04
It felt like that was more powerful.
2:39:07
And I think it's sort of like I I think it's really important to me that like I work on something very tangible with like less I I I didn't want I don't want to be a hype guy.
2:39:19
I'll hype my stuff up, but I want to hype it off the back of something like very real.
2:39:22
And I think we're coming today with very real business progress to show the world.
2:39:29
Uh, has your hiring criteria changed?
2:39:32
You're on record saying that you have two hiring criteria.
2:39:34
Uh, you need to have that dog in you and you need to be nice with it.
2:39:38
How has that evolved recently?
2:39:40
It's a perfect framework.
2:39:40
I don't know why you why why why would Can you unpack it a little bit for us? Break it down.
2:39:46
What does it mean to have that dog? Sort of.
2:39:47
We we we sort of sit someone down.
2:39:50
We we we just dig through every life decision they've ever made.
2:39:54
And then after that, we we sit all in a room and we go through the two avenues of like, okay, let's all start. Everyone go around.
2:40:00
Do you think they have the dog in them?
2:40:02
What's the what's what did we learn about them that show that they have the dog in them?
2:40:05
And then um are they nice with it?
2:40:08
That's just, you know, we sit down, you know, we hire everyone that they're supposed to be nice with some thing.
2:40:13
We don't hire like a ton of like, you know, we don't have a lot of generalist strategists around.
2:40:18
It's like very we have specific skill sets.
2:40:21
And so just making sure the process sort of shows like I think it goes back to like that tangibility is like don't get me wrong we do have generalist work to be done but we always hire someone like on the back of some specific tangible skill set that we can track for. That's great. That makes sense.
2:40:34
Talk about the moment you were working on integrating GPT3 into like what you were working on at RAMP was like was that like like mind-blowing at the time?
2:40:44
Did you feel like you had discovered something that uh you know discovered a broader opportunity and you just said I need to dedicate my life to creating business efficiency using artificial intelligence?
2:40:56
I guess just like talk about that talk about that moment.
2:40:58
I I think it was a few things.
2:41:00
I think like it was Jeff my co-founder his just like family is on like his mom's a nurse, his uncle's the CO of a hospital system.
2:41:07
So just had this like really native understanding of what the problem space was I think at the time.
2:41:13
We were basically deploying LLMs in the context of like pulling out vendor contract data.
2:41:18
And I think what I found in my time ramp is like top tier company, best of the best.
2:41:22
I I I think when I was sort of looking at my domain and like just the area of fintech, if you go if you go talk to like a finance person about their like technology stack, they're pretty happy with it.
2:41:34
And and so part of what it was I wanted to be able to operate in a space where the technology we were delivering was truly like revolutionary in nature.
2:41:43
Something like 10x better not 10% better.
2:41:44
So I think healthcare was this like awesome moment where it was like hey healthcare data is fundamentally textural in nature.
2:41:51
Like you can't tell me what's wrong with your knee with a bunch of like codes.
2:41:54
You need to just like verbally explain to me what's wrong with your knee.
2:41:57
And so the sort of combination of all these things is like actually LLMs are basically able to unlock that 10x experience.
2:42:03
And there's the funny thing that happened is that like the last big techn technological wave like web apps which is sort of like web apps and like SAS tools and APIs which is was what a lot of the successful successful startups of like the late 2010s were.
2:42:16
Um it didn't hit healthcare in the same way because frankly like a web app isn't like for a physical therapist a web app isn't like 10x better than like a filing cabinet because you're already in person.
2:42:26
and there's already these physical like notes and what you're finding with LLM is you're able to really drive like both technological waves in so you're able to do like we're delivering a ton of value with the same sort of technical skills that I learned in developer ramp on top of just like this AI blend is really able like you can see some of the quotes on the silahalth.
2:42:45
com of like we've just become like immediately this art artery and like game changer for a lot of our customers which for me is just like really engaging gets me excited to get up and work on the problem every Okay.
2:42:57
One of the frameworks for looking at these startup ideas is find a industry that's highly fragmented and low NPS.
2:43:04
Can you talk about the previous structure of the industry uh prior to you launching? Yeah.
2:43:09
Well, what I'll say is that's a great structure if you're an analytical guy and not a vibes guy.
2:43:13
So, we just like kind of like the problem and people would talk to us for a long time about it.
2:43:18
So, that's how we land on it. Yeah, totally.
2:43:20
It is like a real uh it is a real fragmented market where frankly there was not meaningful solutions on the market that could solve this in a holistic way.
2:43:29
There were little tools here and there that you basically had to in this the fragmentation maybe is a little different in that the tools were all fragmented and you would still have to basically employ someone to go through and use those tools and run the workflows.
2:43:44
Where we operate is we're just like an end toend solution.
2:43:45
You plug us in there's no tangential tools. your able to get it.
2:43:49
So like patient comes in, you give us their insurance card, we tell you exactly what clinical documentation we need and tell you like, hey, you have patient cleared for care, get them scheduled without having anyone on their end necessarily there to manage the process.
2:44:02
So I think that's how we think about a lot of the consolidation that we're able to do.
2:44:05
Do you have any advice for founders out there that are seeing your announcement today, all the money you've raised and and want to copy? Go ahead. post more on Twitter.
2:44:21
Generic advice is that like not generic advice, my advice if I had to give the world is uh uh I think Keith has said it, but I'll sort of reiterate as someone that's lived it is like work at a great company before starting your own.
2:44:32
I think that has been like massively helpful from like basically like inception we had like seed funding.
2:44:38
It allowed us just to take a longer time horizon how you're thinking about it.
2:44:40
It just really shifts the model when you're talking to candidates.
2:44:43
You're able I'm able to point like hey here's the track record.
2:44:46
And I think that's something I reflect on a lot is like that Keith advice.
2:44:49
Go work at a ramp was a great company.
2:44:51
Had an opportunity to work there and I think it's just made the first like year and a half of entrepreneurship a lot easier than it would have been otherwise.
2:44:57
Well, hopefully you provide that for the younger versions of you out there.
2:45:00
We got we got some young we got new ples. Fantastic.
2:45:05
Uh last last question for you.
2:45:07
Uh is there a certain milestone that you want to hit before you cut your hair? Is it 100 million ARR? Is it 500? Is it a billion?
2:45:15
You just It might just be the look forever.
2:45:17
Growing it down to your waist and beyond.
2:45:19
I think it aligns like look it aligns with whenever I can start tweeting whatever I want. Okay, there we go. There we go.
2:45:26
I want to see the hardcore buzzcut P.
2:45:27
That's going to be It's a It's primarily like you want something pretty quickly when they see me be like, "Ah, that guy that guy works with computers."
2:45:39
Yeah, everything's computer now.
2:45:39
Uh it's great it's great having you on.
2:45:42
You're our new healthcare expert. Fantastic.
2:45:47
We'll have you back soon. Thank you for having me. Congratulations.
2:45:48
No, it's been it's been uh I remember I remember I came over to Will's office.
2:45:54
It was just you sitting there by yourself.
2:45:56
Uh you told me roughly what you were working on.
2:46:00
It's fantastic to see all the progress and I'm Yeah. Thank you. Thank you guys.
2:46:05
As Joe As Rogan would say, it's an honor to uh you know cover uh your fundraising announcement. Yeah, exactly.
2:46:12
Thanks for having me on, guys. Really appreciate. Cheers. Bye.
2:46:14
See, and see you, Delian. Later.
2:46:17
Couldn't get a word in edgewise, but it's so funny to be like, "Yeah, little bro.
2:46:22
I'm coming on your fundraising announcement. I'm going live." I love it.
2:46:26
That That's the nature of the call-in show.
2:46:28
He's just in the text message group.
2:46:30
Can I hop in just to hype up Pavle? Pavle find.
2:46:32
No, I mean I can't I can't uh Pavvel's smart enough to know that he should leverage every single advantage that you have in life in having a big brother like Delian who can be your hype man who can help you avoid pitfalls, help you make sure you're actually focused on help you avoid bad investors, etc.
2:46:50
I mean, there's another thing that that he's really good at leveraging and that's eight nights that fuel your best days.
2:46:57
Turn any bed into the ultimate sleeping experience.
2:46:59
Go to t go to eightsleep.
2:47:00
com/tbpnb $350 off your pod. Uh that fuels your day.
2:47:06
I saw Andrew posted a hundred sleep score. Oh no. Devastating.
2:47:08
I don't think I'm anywhere near there. I woke up at like 4 a. m. unintentionally.
2:47:13
I actually I actually did put up a 100 last night. You did? Which is crazy.
2:47:17
Oh, you prepped this, didn't you?
2:47:19
Okay, so uh we have somebody joining the show. We have Exactly.
2:47:24
And don't don't say any names.
2:47:26
So this is somebody named carried no interest.
2:47:28
They are a prolific poster on X.
2:47:32
You're going to hear their voice.
2:47:32
You won't see their face. Quite the following.
2:47:36
And uh he's going to come on and talk about the the situation with all these AI SDRs, all these companies saying they're going to automate outbound.
2:47:44
And then very exciting, he's going to dox himself in like two weeks live on the show. Live on the show.
2:47:50
So I'm very excited for that. But let's bring him in. Space reveal. Let's bring him in. He's coming down.
2:47:55
Well, in the meantime, we can talk about Wander. Find your happy place. Find your happy place.
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2:48:14
We've taken you on a whirlwind tour of the world today.
2:48:18
We've taken you to China. We've got East Coast. We got carried.
2:48:20
No better place than wander.
2:48:23
Welcome to the show, Carrie. Great picture. I've arrived.
2:48:32
By the way, my hair is wonderful right now, too.
2:48:34
I want to show it off so bad.
2:48:37
But you sound I mean, are you doing a Danny DeVito impression right now?
2:48:38
You sound kind of like him. You like that? No.
2:48:42
Just a lot of just a lot of smokes, boys. That's all.
2:48:44
Uh I've almost said your name 20 times already.
2:48:47
Uh but uh but anyways uh for everybody this is this is no interest.
2:48:52
He is a private equity investor skewing towards software former head of AI at a billion dollar PE fund uh and doing a bunch of interesting stuff in SAS and uh looking at businesses as well that are using AI to sort of reinvent themselves.
2:49:09
But uh you were chirping on the timeline earlier today about 11X.
2:49:14
Wanted to just have you on.
2:49:18
I I don't want to pile on 11x too hard.
2:49:21
Uh but I do want to talk about the broader sort of like sales automation space.
2:49:27
Uh what's going on with AI SDRs?
2:49:30
So here's my hot take, right?
2:49:30
Like some some software companies will be AI first and succeed massively.
2:49:36
I think that the notion of the AI SDR is flawed permanently, whether it's 11X, whether it's some of the ones from Y Combinator.
2:49:45
And there's a few different reasons.
2:49:47
Like the first reason to me is that cold email is functionally like an alpha game.
2:49:51
You are constantly trying to take advantage of a bunch of different quirks about cold email so that you can send 5 to 10,000 a day.
2:49:58
And when you abstract all of these quirks away, I know there's a bunch of cold email wizards that will agree with me.
2:50:04
You actually lose some of that alpha when you just say, "Hey, here's this tech company.
2:50:10
I'm going to let you run large scale cold email." Very tricky, right? Very hard.
2:50:13
That's the first piece that I just don't love.
2:50:18
The other piece is like when you think about when you think about it to me there's five reasons that make it tricky.
2:50:24
The first reason with these AISDRs, you're relying on someone else's cold email data.
2:50:30
You can guess what happens to your gross margin when that occurs, right?
2:50:36
So, if you're an AISDR company, you have this big database of emails, you're mooching off somebody, you're going to take a hit on gross margin just there, right away, right?
2:50:44
The second issue is that in my opinion, you have a high probability of potentially being embarrassed.
2:50:51
So, and embarrassing the end customer, right? Both, right?
2:50:54
You have this AI that is sending out emails.
2:51:00
Who knows who it targets?
2:51:00
You know, that's a tricky situation, right?
2:51:02
When you think about the AI utility relative to the magnitude of mistake, Kugan's law, I have to find a way to coin this. I really do. Let's do it.
2:51:11
When you think about that ratio, let's think about uh cursor really quickly, right?
2:51:15
You get all of this instant efficiency from cursor.
2:51:19
You get more code written.
2:51:19
If you know anything about developer environments, if you push bad code, it should get caught in testing.
2:51:26
The magnitude of the mistake relative to the efficiency gain of the AI is very low. You get all this output.
2:51:32
The mistake is caught before it goes to prod.
2:51:34
Win-win for everybody, right?
2:51:36
On the AISDR front, no such thing, right? Mhm. We're doing it live.
2:51:43
Yeah, we talked about this. It's a good point.
2:51:44
Like there's an opportunity for a high degree of embarrassment.
2:51:48
Y and I think that that that is actually leading to a lot of churn.
2:51:52
So I've seen like behind the scenes on a few of these businesses, the churn does not resemble like top enterprise software companies. It simply doesn't. Well, yeah.
2:52:00
And one of the issues is you wouldn't want to use an AISDR on a very important account because let's say you're trying to close an account that could be worth $2 million a year.
2:52:10
Well, is it worth any potential embarrassment to just spam them with a bunch of emails where it's like, "Hey, I saw you live in New York.
2:52:19
Have you checked out Central Park?
2:52:19
You should see a Broadway show." Right?
2:52:21
Like it's like it's just not worth it.
2:52:22
It's like, "Hey, this could be, you know, hugely creative."
2:52:26
Or at least keep a human in the loop. Yeah. Yeah.
2:52:28
And I don't think it's an 11x problem by the way, right?
2:52:32
I think it's a entire notion of the idea problem.
2:52:34
Here's another tricky part.
2:52:36
Let's talk about and I you us three have talked about this privately but like you only grow to $100 million in ARR the way Cursor did by being self-s serve. Mhm. Right.
2:52:45
The and and some of these AI first companies are incredibly self-s served meaning your CAC is extremely low.
2:52:52
Your onboarding time is very low.
2:52:54
You can grow really quickly.
2:52:56
That's a double double-edged sword for a bunch of different reasons, right?
2:52:59
But now let's think about the AISDR.
2:53:02
Not only do you have this high potential for mistake, the onboarding is a whole thing.
2:53:09
You need like a full customer success team.
2:53:11
You need constant check-ins.
2:53:13
The amount of opex you're dedicating to maintaining an existing customer with a bad churn rate, that is not the profile of an excellent software business. Does that make sense? Yeah. Yeah.
2:53:23
Yeah. I mean overall I feel like um the the risk to what AI is doing to these high growth startups is that we're seeing conversion rates go up a ars skyrocket but churn rate also goes up and that's the real uh underlying question here because we have so few months of churn data on this new
2:53:44
generation of companies that look very different and have different switching costs and different installation costs and and there's a new hot model every two weeks and so people are bouncing around a And so there's like three buckets to me as like a very boring software investor. You have your very high self-s serve,
2:53:59
You have your very high self-s serve, very sticky, low ACV, and a low CAC. Mhm.
2:54:05
At his cursor, if I remember correctly, I don't know if they spent a dime on marketing, right?
2:54:09
Their ACV couple weeks ago, they said they they'd never sp spent a dime on marketing, but I'm at some point that will change, I'm sure. But yes. Yeah. And so think about that.
2:54:18
You're high self-s serve.
2:54:18
You have no customer success. You're very sticky.
2:54:22
Your your contract sizes aren't big, but it doesn't matter because your CAC is low. Yep.
2:54:25
That's 100 million of ARR in two years. Yeah.
2:54:28
Right now, let's think about a business like sales like Salesforce.
2:54:33
Non-selferve, extremely high ACV, and very sticky.
2:54:36
Also a good software business.
2:54:38
Now, let's think about an AISDR software company.
2:54:41
No self-s serve, many touch points, worse gross margin because you have LLM calls and you're depending on somebody else's email and contact database, high CAC because again, you don't have this amazing self-s serve option.
2:54:56
And as we all know now, bad churn.
2:55:01
That's what is what is in your view the future of enterprise sales broadly?
2:55:03
Is it is it just back to basics, golf courses, car clubs, you know, you're just uh you know, broing down and you you know, you meet you you're you just become boys with the buyer. Yeah.
2:55:18
Le Man, the best deals in software will be done at lemon and F1 and all these different places.
2:55:24
I think there's no substitute for that, Jordy, for a million dollar contract. There's no substitute.
2:55:30
What I do want to highlight is on the notion of the AISDR, the idea of LLMs automatically market mapping and targeting your personas but not sending the emails is obviously high utility, right?
2:55:45
Like that is a good thing.
2:55:45
So I think that the future of like really high ticket software sales is probably LLM assisted market mapping and like persona identification, right?
2:55:55
And then the golf course, right? I love it.
2:55:58
The only problem is that first step, that's not a venture backable company, gentlemen.
2:56:04
That's just a really good feature of Zoom Info or Apollo or any new market entrant, right?
2:56:10
What do you think about the cursor model for SDRs and so it's something I remember there was a company called Streak that was a CRM that plugged into Gmail and it was very self-s served and it was the idea was you're a small company, maybe you've just been tasked with sales.
2:56:28
You don't even have budget from your boss.
2:56:29
You just want to speed things up.
2:56:32
You plug into streak in your Gmail account and all of a sudden you can do some mail merge and some automation.
2:56:38
Cursor for SDRs might look like some email generation functionality, but it's very much that centaur model where the humans working alongside the AI.
2:56:49
Could that be the next 100 million ARR company in the next few months? Well, yeah.
2:56:54
And to be clear that the sort of like AI sales co-pilot probably has 50 companies coming at it, but I'm curious.
2:57:01
No, I think we I think we're actually the first ones to ever think of that. Yes.
2:57:06
Uh let's incorporate right now.
2:57:06
You know, I like to think about I liked about I I like to think about this Kugan's law.
2:57:12
This also needs to be coined.
2:57:13
I don't know what to call it yet.
2:57:15
For an AI product, how many times per day does it call an LLM and derive utility?
2:57:21
So let's think about cursor.
2:57:24
You're constantly coding, maybe three hours of deep coding work a day.
2:57:26
You're hitting an LLM API constantly or at least once per 10 minutes.
2:57:31
Let's just say great AI first software sticky.
2:57:36
Let's go back to what you said with the notion of an AI SDR self-s serve.
2:57:38
To me, the utility is how many times are you really hitting an LLM per hour, right? I don't know. Right.
2:57:46
And so to me, I I think that there is going to be a self-s serve AI SDR feature that is nice.
2:57:55
Happen stance from why combinator did catch my eye.
2:57:56
I don't know if you guys saw that.
2:57:58
No, great tweet about it. It caught my eye.
2:58:00
Doesn't seem like a $100 million AR business to me yet. Right. We'll see. Good luck to him.
2:58:05
You know, I think Happy Stance is very cool.
2:58:07
I don't see it being $100 million of ARR uh this year or next year. Right.
2:58:12
So, gauntlet's been thrown. Lap stance. You got to do it.
2:58:16
You got to hit 100 million and come on the show to prove carried no interest wrong. Prove me wrong. Last question.
2:58:20
Uh our mutual friend Jeremy Gon likes to talk about the sort of iron law of the business universe which is like if you grow revenue just shockingly quickly eventually you know you might fall back to earth or uh you you could potentially lose it just as quickly.
2:58:38
So what's your take on you know generally on some of these uh various the the cursors the wind surfs etc.
2:58:46
Um do you think that revenue do you think they can get to a point where they sort of have a durable uh moat or uh are they going to just be uh forever uh relegated to you know extreme competition?
2:59:01
I get a lot of I I have a lot of VCs who I I talk to in my network that ask me that all the time. Right.
2:59:08
Um, you know, here's the real question, and I think let's just cut straight to it.
2:59:12
If Cursor hits 300 or $400 million of revenue, could they IPO?
2:59:17
And with the share price be supported, right?
2:59:18
Let's cut all the way through it, right?
2:59:20
And and and and I think that the answer is it could go the way of Slack, right?
2:59:26
It's a double-edged sword.
2:59:26
The and I think Jeremy's right, whom I love, shout out to Jeremy.
2:59:30
Uh I think he's completely right.
2:59:32
It's a double-edged sword.
2:59:33
There's no way around it, right?
2:59:35
that as soon as you gain that that person as a customer, you could just as easily lose them.
2:59:39
You know, I think that that there could be a Slack Teams situation that plays out with Cursor, right?
2:59:47
That classic Slack is amazing.
2:59:50
You know, Slack is is is the trailblazer and all of a sudden everybody realizes Teams is just fine, right? Yeah.
2:59:53
And and Microsoft just decides, you know, it's time to come for them.
2:59:58
I think the same issue could happen with Cursor on a variety of dimensions. Um Yeah.
3:00:01
I I can't say with any confidence that Kurser is going to IPO.
3:00:05
I do think it could get acquired for a like gang busters deal like insane, right?
3:00:10
I don't think it's an IPO worthy company given the churn rate and the the the potential for Microsoft or any any of the big kind of like tech distribution companies to to go at them.
3:00:23
I think that it's a double-edged sword.
3:00:25
I could eat all those words.
3:00:26
They could get IBO next year. What do I know? Right. We'll see.
3:00:29
Uh we got to get on with Taipei.
3:00:29
It's been fantastic having you.
3:00:31
close out the show with us.
3:00:33
Let uh let the audience know to go give us five stars on uh iTunes and Spotify or not iTunes, Apple Podcast. Apple podcasts. Five stars.
3:00:43
Five stars for these guys. Five stars. Carrie said it.
3:00:45
Thank you for joining the show. This is fantastic.
3:00:46
We'll see you tomorrow everybody. Hey. Bye. You're the man. Almost said his name