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[Music] [Music] [Music] Market clearing order inbound. You're watching TVPN.
4:51
Today is Monday, June 9th, 2025. It's WWDC.
4:55
Today, Apple is having a major event.
4:59
We are live from the TVPN Ultradome, the temple of technology, the fortress of finance, the capital of capital.
5:07
We have an awesome show for you today, folks.
5:08
Just to recap what happened yesterday. Insane week for tech. You got the circle IPO.
5:13
You got Andreal series G. You got cursor series C. Amazon won Nike back.
5:18
OpenAI deep research was improved.
5:21
Nvidia Blackwell ML Perf results dropped.
5:23
Launches from 11 Labs Julius Nucleus.
5:25
What else happened yesterday, John?
5:27
Uh I mean everyone's been pushing us to talk about this and they were like you guys won't talk about this because it's too maybe too controversial. What is that thing?
5:37
He delivered a 50meter super yacht called Orion. Let's give it up.
5:43
Let's give it up for clearing.
5:43
And this is controversial.
5:45
This is controversial because everyone says, "Oh, like aren't you feedip guys?" Oh, yeah.
5:49
Like like they they would never cover this.
5:53
They're in the pocket of feedship. Yeah. But too conflicted. No, no.
5:55
We're here to bring you the news.
5:57
So, we'll talk about both Hees and and Feedship.
5:58
And of course, uh this is from Heen Yachts.
6:03
They announced the delivery of a 49.
6:03
8 8 meter super yacht Orion launched in December 2024.
6:08
Orion is the third yacht in he's FDHF aluminum series with hybrid with hybrid propulsion.
6:14
So let's hear the folks over at Hees.
6:19
We wouldn't cover it, John.
6:19
They said it was too political.
6:21
They said, "Yeah, you will you won't you guys you guys will stay out of this one, but we won't.
6:25
We're we're dipping our toes in."
6:28
Uh Alex Heath has a great uh live blog going on from The Verge all about WWDC. He's live at Apple Park.
6:34
He'll actually be calling into the show later at 2:20.
6:38
Uh, as long as he doesn't get, uh, you know, too tied up with stuff, but we'd love to have him on the show.
6:41
Uh, quickly, let me tell you about ramp. Ramp time is money. Save both.
6:44
Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place.
6:48
Um, we also have timeline posts. We do.
6:52
Um, I think I think we do have to address that we are in the middle of Los Angeles. Yes.
6:55
And the city is is uh in turmoil, but it's not burning down. No, it's not.
7:00
Uh, interesting anecdote. Yes.
7:02
yesterday uh while the Whimos were on fire. Yes.
7:04
Our uh lovely intern Tyler was uh at the symphony. Yes.
7:11
Not not more than a couple blocks away from where the Whimos were burning.
7:15
So while the Whimos were burning, he was uh enjoying some Beethoven list was playing. Yeah.
7:22
And and so anyways, uh sad uh sort of weekend for the city in a lot of ways. Um so we'll cover that.
7:31
We'll go through some of the the timeline post and conversation around the Burning Whimos, of course.
7:34
Um, but Tyler's in the studio today.
7:38
We are going to be assembling the first Americanmade iPhone. First ever. First ever.
7:45
They said it couldn't be done in the USA. Made in the USA.
7:46
We have him set up over there on intern cam.
7:51
Introduce yourself, Tyler. How you doing?
7:53
Coming in from Shenzhen, you know, situation u, you know, place. Um, yeah.
7:59
So, I'm I'm today I'm going to be building an iPhone 4S.
8:00
It's 14 years old, but I have He can't start at the 16. Yeah. Yeah. Yeah.
8:06
We're going to be on the trailing edge for a while, but if he can do a 4S, then tomorrow he gets to the five, maybe the six, maybe the seven, starts working through them.
8:15
Uh C production team, can we show what what he's working with right now? What he has?
8:20
Okay, so he has he has uh the front, the back, the screen, some inards.
8:25
I don't really know what's in there.
8:27
It seemed like the battery might have been made out of rubber plastic.
8:30
Long stream ahead of him. Yes.
8:30
So, we will be checking in on him throughout the show, learning uh what it takes to assemble an iPhone in America.
8:37
They've said it's impossible, but I think today we might just prove them wrong.
8:41
I mean, Tyler's conviction this morning has been insane.
8:45
I asked him, "Are you are you nervous?
8:46
Are you afraid uh are are you you know afraid at the possibility of failing on the on the sort of the the the world stage?" Yeah.
8:52
And he said, "No, I got this. I got this."
8:55
So, let's uh let's see how it plays out.
8:58
We should really set up a linear board for him to track his progress.
9:03
We should have the production team set up.
9:04
Tyler, uh we know you got plenty of um manufacturing to do, but uh try to set up a linear board if you can or because of course Linear is a purpose-built tool for planning and building products.
9:15
Meet the system for modern software development.
9:17
Streamline issues, projects, and product road maps. Go to linear. app.
9:19
Um uh elite obsolete electronics.
9:23
Good good account for this post.
9:26
Our pockets were heavy, but our souls were free.
9:28
Looking at the the iPod, what was this?
9:31
The iPod Video Nano or something.
9:34
They were getting kind of funky there right before the iPhone.
9:36
The Motorola Razer V3, of course, the Sony Cyersshot.
9:38
Did you have any of these products, Jordy? I had the iPod.
9:45
This one specifically because this is the This is a thinner, smaller iPod with a big screen when they were kind of wrestling with the fact that the chunky one. Yeah.
9:52
You had the original chunky. Yeah, those were great.
9:54
Then they started going video.
9:56
Then they realized people wanted bigger screens and so they had to kind of uh compromise the aesthetics.
10:00
I I I don't know if this was the best product they ever made.
10:02
Uh the Shuffle iconic, the Nano, also great.
10:07
The original iPod uh apparently the original iPod is going off of patent.
10:10
Um and you know what that means?
10:14
You know what that means?
10:15
What What does that mean?
10:17
It means that other companies can clone it.
10:19
Well, I know I that's obvious, but but so you could potentially be able to buy a brand new You meant TBPN is gonna have a device, a hardware device purely for the show.
10:28
Well, the thing is that is that if you if you if you take advantage of the patent stuff, you can't actually change um you can't actually change anything about it.
10:36
So, if you think about the the the chromatic retro that like they can't say Game Boy, but they also can't deviate from the design. Yeah.
10:44
because if they deviate from the design, then they're then they're not uh then they're not in the whole idea is that once the patent expires, you can leverage that patent specifically, but you can't uh you can't if you if you go off of it, then you're infringing on their trade dress, which is a lot which has a lot longer time frame.
10:59
Y um so so you have to you have to mimic it perfectly basically. Perfectly.
11:02
Well, Tyler is going to be well Oh, he's working. He's he's slicing.
11:07
Let's go to the slice cam.
11:08
Let's go to the slice cam. What's going on, Tyler?
11:10
He's trying to remove the the pieces from the board because this of course was a uh this was a piece of art that you buy and it comes.
11:20
So he's the first golden retriever mode.
11:24
First you got to get the pieces. Yeah. Yeah.
11:25
You have to get the pieces off the board because it's been stuck there as a as an art object and then he will have to assemble them.
11:31
He told us that he doesn't have any screws which could be a major setback.
11:34
I have I have some glue here. I've got some glue.
11:39
Um, I'm I'm I'm feeling really confident right now, guys. Okay, good. Good.
11:41
This is going to be the most Americanmade iPhone.
11:44
There's just going to be glue everywhere. It's going to be a mess.
11:47
Anyway, let's cover let's cover the burning ways really quickly. Gary Tan post here.
11:51
Gary Tan says, "Legacy Local Media is completely cooked."
11:53
Uh, so this if if uh ideally we would pull up this video somehow.
11:58
We should if we can, but uh it is ABC7 covering the protest yesterday in LA.
12:05
And they say large group of people, it could turn very volatile if you move law enforcement in there in the wrong way and turn what is just a bunch of people um having fun watching cars burn into um a massive confrontation.
12:20
Play that play that section back again.
12:21
I need to hear it again to make sure.
12:23
A large group of people, it could turn very volatile if you move law enforcement in there in the wrong way and turn what is just a bunch of people um having fun watching cars burn into um a massive confrontation.
12:36
and altercation between officers.
12:36
And what a weird choice of words. How fun.
12:42
I'm imagining I'm imagining I'm I'm, you know, 10 years old, you know, being a kid in the backyard lighting stuff on fire a little bit.
12:49
And, you know, my dad comes out and says, and I just say, "Dad, we're just a couple of people watching watching stuff burn." Yeah.
12:58
Hey, let's not get confrontational.
12:59
Let's not get confrontational. All right. Don't send mom out. Don't send mom out.
13:03
It's really It's really odd how people can't just clearly be on the line.
13:07
So, the thing that uh the thing that needs to be said since uh if you haven't spent a bunch of time in LA, you won't understand this.
13:13
I had a bunch of people texting me yesterday being like, "Is it as bad as it looks?" Yeah.
13:16
And I was not in LA proper. I was in LA County.
13:21
Um but I was at home and I uh and so obviously didn't didn't see anything.
13:28
But LA is just such a massive place and so there were just areas of the city that were really hot that had Yeah.
13:35
You see one image of a block and it's like hundreds of people.
13:37
But what you don't realize is you go like one block over and it's basically empty and there are like 10,000 city blocks in Los Angeles.
13:44
So I would not call these like citywide riots.
13:46
It was like pretty like like narrow one focused in a few different places, but obviously very tumultuous, very uh very disappointing.
13:56
And apparently these type of riots start up around 11:00 every day. So 11 a. m. 11:00 a. m. Oh, interesting. Right when we go live. Right when we go live. Interesting. No coincidence. No coincidence.
14:05
Um yes, but uh but yeah, so anyways, uh yesterday, I'm sure a lot of people have already seen this, but uh way a handful of Whimos were called to the protest area.
14:14
you could see them in a line.
14:16
And once they arrived, uh the uh protesters, riers, whatever you want to call them, y decided to vandalize them, uh graffiti all over them.
14:24
Um and then light them on fire.
14:28
Um and uh so very unfortunate uh that you you you know, we we spoke about this offline this morning and and you basically said um if you lit a Whimo on fire yesterday, if you vandalized a Whimo yesterday, uh you are absolutely cooked in the long run.
14:42
You may not experience any consequences immediately, but the Whimo, the AI has you on camera. Yes. Hurting it. Yes.
14:49
And so, what do you think happens in a fast takeoff scenario?
14:55
I mean, it really does get like your image of you approaching and lighting up that car on fire is going to be baked into the weights of all AI models forever. Forever. Forever.
15:04
Like you will be remembered AI abuser. You're an AI disrespect. Yeah, it does.
15:09
It certainly the actions yesterday certainly did not pass the what would your mother think test.
15:15
I think I I I think the mothers the mothers out there particularly disappointed in this behavior. So clean it up folks. Get it together.
15:22
Some mothers that say, you know, these are just some some people that enjoy watching cars burn in the streets. Maybe. Maybe. Anyway. Um yeah. So I mean disappointing.
15:34
Um but hopefully things get uh things calm down over the next few days, few weeks.
15:40
We have some more breaking news from JT uh at Jira tickets.
15:46
Uh growing Dan, apparently the men'sswear guy, if you're on X, you would have seen him attacking people for their garb.
15:54
Uh the men'swear guy just openly admitted on here that he's here illegally.
15:59
And Daniel responded uh by quoting the post and saying, "J Vance, I know you're reading this and you have the opportunity to do the funniest thing ever."
16:07
And uh JD actually replied uh pretty quickly after that with a a gif of him nodding.
16:13
Um and uh so we'll we'll see what what happened here, but um pretty brazen on.
16:20
And Andre says, "In America, niche internet, but micro celebrities give direct orders to the vice presidents who as to who to deport next."
16:29
Absolutely insane timeline.
16:29
This whole weekend was was pretty wild in the timeline.
16:32
It feels like as soon as TVPN stops recording, things get political.
16:37
On the weekends, it's just all politics.
16:38
And then we bring it back to WWDC, baby.
16:41
We're talking about talking tech today.
16:44
Um Atlas says, "If I touch another Whimo, I will become the Kyle Writtenhouse of Big Tech." Little edgy edgy.
16:51
Edgy, but um yeah, big tech needs its defenders as well. Yep.
16:54
Um but uh and uh in happier news, Apple rolled out some sweatshirts. Yeah.
17:02
I mean I think I is there anything else to say about the the Whimos or the the stuff?
17:07
I think I think that's pretty much it.
17:09
We'll we'll certainly have more information right now.
17:12
I think the debate is about like are the are the raids illegal?
17:14
Like what like what what is like we're in like wonky legality territory?
17:19
And I feel like there are probably some really great legal scholars and and and political junkies who will be able to define the conversation.
17:28
Obviously, I'm excited for uh this week's Pirate Wires.
17:32
I was excited for last week's Pirate Wires.
17:34
Uh they have been delivering and showing up.
17:37
Hey, we just got new hats in the studio.
17:39
We just sent one of our um other uh interns to within within a block of the site. Our hats were stacked. Let me see.
17:47
Our hats arrived over the weekend. This is insane.
17:49
Our hats arrived over the weekend and they were uh less than a block from where the Whimos were being burned, but they made it through. So, I love it. Here we go.
17:59
We'll bring these to uh snaps San Francisco this week.
18:02
Yeah, we're going to YC demo day. That'll be fun. There we go. There we go. Wow. Look at that. Here we go.
18:09
These are these are amazing.
18:09
I am absolutely thrilled. Um pretty good.
18:15
Anyways, um yeah, let's move on to WWC.
18:19
Um they are announcing a bunch of different stuff.
18:21
We're going to go through give some of our predictions for what they're announcing.
18:23
Um uh but the Apple Visitor Park Center uh visitor center in Certino now has hoodies.
18:28
So if you're there today for WDC, go pick one up. Great merch. We love merch. We have merch. They have merch.
18:34
Um the Wall Street Journal kind of contextualized what's going on today.
18:38
Apple under pressure for AI progress at today's WWDC event.
18:43
Not unlike Tyler who's over here even arguably under more pressure.
18:45
He doesn't have shareholders to worry about, but uh we're certainly putting the pressure on him.
18:52
But the journal says the iPhone maker plans to release large uh language translation tool and a broad software redesign.
18:59
Some AI upgrades are still delayed.
19:01
Apparently, they also just sherlocked the flighty app. Oh, I didn't know that. Okay.
19:05
Um that just happened a few minutes ago.
19:09
We'll have to get the founder will push through. So, some key points.
19:12
Apple is set to reveal real-time language translation and a visual redesign of its operating system at its worldwide developers conference.
19:20
So the idea is I'm wearing AirPods, you're wearing AirPods, we're speaking different languages, we both hear our native language, speak our native language, and then the other person hears the opposite language.
19:29
So very cool, very magical, very magical experience.
19:33
It seems like something that's maybe uniquely suitable for Apple because it's not it I mean it's been defined so many times as like Google Translate like it's a pretty well-defined AI problem, but it needs deep hardware integration and and just like a very reliable system to to run.
19:53
uh it's not something that's like an entirely new uh AI paradigm or or or or some sort of new application um that no one can imagine how it would play out.
20:02
And so uh I I it seems like they're playing to their strengths with that one, but it it should be received very well if it works. Yep.
20:07
Um so the conference may be more notable for what Apple doesn't announce as it has delayed a Siri reboot and is seeking more AI partnerships.
20:18
And so this is like one of the takes that people have had is that like oh like yeah they're falling behind in like AI search and AI tooling.
20:23
Uh but you know what they fell behind in Google search and they still made $20 billion every year from that.
20:30
And so uh it like the more interesting conversation I think is about their their business positioning and less about their ability to execute at a on a particular application. And it's interesting.
20:42
I I don't feel that they feel very threatened at the hardware layer right now, especially as the Johnny IV Sam thing turned into something that's they even themselves positioned it as a third device. Yeah.
20:57
So even if the third device is a massive hit, Apple will be sitting pretty nicely.
21:03
You know, I was I was thinking about the device more and I was thinking they might just go for the phone. Yeah.
21:10
for the phone. Yeah. Maybe it's a head they might just go for the phone because the like you know like the blue bubbles the iMessage the experience of iMessage was really really strong for a long time but the latest version of iOS updates
21:24
you to a technology called RCS which enables most of those like emoji tapback was a flip phone user until this year and he got an uh for like the last decade uh and he got an Android phone this year and I it now says deliver it says It has it has all the all the core features. The thing that the thing
21:43
The thing that the thing that's interesting is it was never really about the color.
21:47
It was just about you send somebody a message on Android and you're like did this even was this received? Yeah.
21:52
And and all the all the nicities of like I know I can send you a photo album of like 10 photos and they will get delivered and you'll be able to see them all and they'll all be high- res or I can send you a video. I can send you a link.
22:03
It'll hydrate like all of those. FaceTime even works now. There's some version. Yeah.
22:06
much more interoperability.
22:08
And so imagine if you get the chat phone and it comes with gold bubbles and then it's gold if you're talking to another chat user.
22:18
Eric Torrenberg's calling me right now. Eric, pick it up. Eric, I'm live. I can't pick up. Pick it up. Put him on the stream. Callum. That's funny.
22:26
Um, and so, uh, I it would it would be very interesting for Chat GPT to have a phone with a even more premier bubble color.
22:35
So, it's like, yeah, blue if you're texting an iPhone user, green if you're texting an Android user, gold if you're texting a chat GPT phone user.
22:43
I mean, they should they should just have they should have a new premium tier of iMessage that sends your messages in gold. Yes.
22:49
If you're just paying like a,000 or 10 grand a month or something like that. Yes. Yes.
22:56
Well, uh, WWC is happening.
22:56
We have some predictions.
22:59
I was thinking about a bunch of different stuff, but I want them to to launch the wild cards, you know.
23:04
So people have been saying, "Oh, they fell if Apple's fallen behind in the car project, the Apple car. It's not happening.
23:11
How can they really differentiate?"
23:13
As we saw with the Whimo protests, people don't like electric cars anymore.
23:18
That's why they're burning them down.
23:20
Y So you got to go gas powered, but you got to think different. You got to go backwards.
23:24
I think that they should go with a 1964 Chevy Impala.
23:29
Put some hydraulics on that thing. Oh, interesting.
23:32
The Apple car should be a Lolo basically.
23:34
Yeah, I think that would really allow them to stand out.
23:38
Everything else is kind of coalesed around like the Model 3 format, the TYON, they all the Model S, they all look the same.
23:43
In many way, they haven't upgraded.
23:44
They haven't refreshed the 3 or the S.
23:46
Well, they refreshed the 3 and the Y, but they haven't the Y and the X, but it's a very mild refresh.
23:51
It's a very mild refresh.
23:52
So, they're basically signaling this is the final state of the car. Yeah.
23:55
So standing out with something like a 1964 Chevy designwise would be striking. Striking striking.
24:01
I think that that would be something that Apple could do.
24:05
I also I mean we've been talking about the the smart cane the I can pro this could be big for them.
24:10
I think that they could launch a smart cane.
24:13
And if they're listening to Sam le yap on TVPN they may they may have been ahead on that. Yeah.
24:18
I also like the idea for the eye patch.
24:20
idea for the eye patch. uh just you know everyone's going into glasses and vision pro and Zuck has the meta ray band hardware that's fully integrated into our life right well halfway it's halfway integrated so you have one screen on one eye one eye still still keeping you present keeping you present in the world
24:39
so the eye patch you know you still have you still have the o the the the heads up display but just on half your face I think that's really good um anything else stick out to you I mean I you know in many ways Apple has become they're a consumer electronics company, but they're in many ways a luxury brand. And
24:55
And so I thought there's a world where if they just really leaned into being a luxury brand, if they acquired every holy Trinity watch brand and just rolled them up and and kept them as is, don't make any changes like respect, you know, the history. Yeah.
25:11
Uh and the and the sort of significance of the brands, but just say like, you know, we're going to be a permanent holding vehicle. Sure.
25:18
For these, you know, brands.
25:18
They could do some interesting crossovers.
25:20
You could have a You could have a PC Philippe Nautilus on the outside.
25:22
You flip it over on the inside, boom, Apple watch right there.
25:26
Mashed up something there. Yeah. Yeah.
25:29
So, so everyone just sees, oh, he's a respectctor of the higher herology, but also gets notifications and can tweet from the watch. You can do both. I think that's good.
25:38
I could see them announcing, you know, market buying, you know, hundred billion dollars of Bitcoin could be an interesting one. Bitcoin treasury.
25:44
Hey, we're, you know, we're already multi-trillion dollar company.
25:47
How could we um how could we get value not based on our future cash flows but just turn ourselves into a meme stock? Tim is up.
25:57
Tim Tim is up there just basically saying Bitcoin market.
25:59
I'm thrilled to announce that we are turning Apple into a meme stock and we we want this we want to do this together, right?
26:08
We want this to be a sort of collective effort.
26:10
So, we're going to market by Bitcoin.
26:12
Um, but then we expect you to not value us based on our future cash flow.
26:16
They have so much money they could turn Bitcoin into a stable coin.
26:18
They could just be like, we will be buying and selling to keep to price control this asset. Yeah.
26:24
The other thing too is just starting to get into the game of buying sports leagues.
26:28
So, we've seen uh some golf states do this, right, with with the, you know, the whole PE the whole golf thing.
26:36
Uh if Apple were to buy, you know, the NFL and the NBA and not and not focus on, oh, we need to sponsor a team or different athlete, just buy the whole league and then just say it's the Apple NFL league.
26:48
Or they could be in the background kind of cool casual say like we don't need to make this about us.
26:54
They actually should buy F1.
26:57
They should buy I mean I wonder if they could get the rights to drive to survive but they have the F1 movie and then and then the F1 experience makes a ton of sense in Vision Pro. Yeah.
27:05
And so you should be able to go and if you think about the Genoji campaign which was roasted every time they ran a Gemmoji billboard that could have p paid for one set of tires, right?
27:15
Um, and uh, so are the tires really like 100k every time? No, I doubt it.
27:22
Everything on that car is expensive.
27:24
And then they have the tire sponsorship which probably covers a lot of it.
27:26
But um, anyway, um, you were you were saying too they should just acquire um, GFream. Yes.
27:34
And and just give planes away.
27:37
People think, oh, they're going to do the Apple plane.
27:38
No, just just keep the Gulf Streams. Go for the best.
27:40
But give them out like candy to politicians. To politicians.
27:45
any any politician says, "Hey, you know, we saw Tyler, TBPN's intern, make an iPhone in America.
27:49
We think you guys should actually, you know, take this seriously.
27:52
Why don't you take a plane?" He's making progress. Making progress.
27:58
He's got two or three down. Look at him go. That's great.
28:00
I've almost got everything deconstructed.
28:02
Soon I can start putting it back together. There we go. Amazing. Amazing. Doing great.
28:05
We knew you were going to crush it, so we we we we tried to make it a little bit harder.
28:11
force you to deconstruct it first and then put it back together.
28:13
So, uh this is hilarious.
28:16
I mean, Erin Slov coming on the show today actually.
28:18
Um he he highlights a video that just dropped from Smarter Every Day.
28:23
Uh he said four-year experiment to make a product domestically by Smarter Every Day.
28:27
He concludes people who can manufacture things will be even more critical in the coming years.
28:32
He also deeply believes manufacturing ensures your self-reliance, stability, and ultimately your freedom.
28:37
Four years to manufacture.
28:39
I forget exactly what he manufactured, but like this one one device.
28:40
Um, pretty cool to see a YouTuber take on such an ambition.
28:46
Tyler's going to do in a day with scraps with scraps in a cave.
28:50
Anyway, if you're designing the next great product, get on figma. com.
28:53
Think bigger, build faster.
28:56
Figma helps design and development teams build great products together. Do it.
29:01
You actually don't need to be a designer to use Figma.
29:03
I started using Figma um and taught myself design using Figma just by experimenting. So go check it out.
29:11
Oh, the last Apple announcement, the really wild card.
29:14
We've seen Microsoft was working with the military on the hollow lens.
29:17
We now see Meta partnering up with Anderal on on uh VR glasses.
29:24
Uh how could Apple really pivot hard AR-15? AR the Apple rifle 15.
29:30
Yeah, just going straight into small arms.
29:34
It's the one offensive technology.
29:36
It's it's it it it firmly establishes them like, "No, we're not just partnering.
29:41
We're here for the everyday American respecting the Second Amendment rights."
29:45
An Apple designed rifle would unfortunately go extremely hard. Extremely hard. It would be so good. Just all all white.
29:53
Just the the the all-white AR-15. Yeah, I need it.
29:59
I mean, they could probably build a fantastic one. Yeah, they could. They could. We'd love it.
30:04
Anyway, um in other news, uh Scale AI is raising 10 billion dollars potentially from Meta.
30:09
This is uh they're in talks.
30:12
Let's give it up for a scoop from Katie Roof. Katie Roof drop.
30:16
Meta in talks for scale AI investment that could top 10 billion dollars.
30:22
Uh another billion dollars for Lucy Guo. You love to see it. And Alex Wang.
30:27
Absolute dog's been in the game for a long time.
30:29
for a long time. lots of ups and downs with the different eras of reinforcement learning and pre-training and what data do we need to generate you you generate all that data then you have it um but there is a new era coming with reinforcement learning and scale AI is positioning themselves to uh act as a uh
30:48
as a you know a key partner in the next wave which is very exciting um so uh the financing could exceed $10 billion in value some of the people said making it one of the largest private company funding events of all time the terms of the deal are not finalized and could still change according to people um who asked not to be identified for for for leaking. Uh a representative for scale
31:07
Uh a representative for scale did not immediately respond to requests for comments. Meta declined as well.
31:12
Scale AAI whose customers include M uh Microsoft OpenAI uh provide data labeling services to help companies train machine learning models and has become a key beneficiary of the generative AI boom.
31:20
The startup was last valued at about 14 billion last year in a funding round that included backing from Meta and Microsoft.
31:27
I didn't realize that Metad and Microsoft the hyperscalers were already getting in. But it makes sense.
31:31
They're like a key partner uh in the ecosystem.
31:32
Earlier this year, Bloomberg reported that scale was in talks for a tender offer that would value it at 25 billion.
31:38
And so if the if the company's grown even more, you could see that, you know, maybe it's 10 on 30 pre, 10 on 40 pre, where we're getting into like 20% scale territory in the public markets right now is probably would I could see it being a 50 to$100 billion company.
31:58
It's a really really good start.
32:00
People want a pure play AI bet.
32:03
We saw with circle last week that in some of these areas that there's a lot of investor enthusiasm if you have a pure play. Yeah.
32:09
I mean Alex Wang is a fantastic uh founder.
32:11
Um and I I mean there is there is a question about like how indexed like the the question around scale is always like they they have to constantly adapt because they're not the fundament the the foundation model company.
32:24
They're like a data provider to the foundation models.
32:26
Foundation model companies tend to have to adapt pretty quickly. They have to adapt too. Yeah.
32:32
So I don't know but I mean the certainly like the revenues and the financials are fantastic because um there's a big wave and they are able to go and and um and really capture a bunch of that as the as the training bills come due.
32:42
Uh this would be Meta's biggest ever external AI investment.
32:47
A rare move for the company.
32:49
The social media giant has now has before now mostly depended on its in-house research plus a more open development strategy to make improvements in its AI technology.
32:57
Of course, uh we've been hearing news that uh Meta is is revamping the team behind Llama, really trying to double down on that project.
33:05
They're not getting out of the game, but they they might have um kind of like aimed for the wrong target with the particular benchmarks that they were going after.
33:13
And so, uh had struggle wrangling the behemoth, getting it out the door.
33:17
But, uh you know, Zuck's not giving up.
33:19
Of course, he's going to keep keep working, keep uh keep continuing to cook.
33:24
And so, uh, big tech peers have already invested heavily.
33:28
Microsoft put more than 13 billion into OpenAI, while Amazon and Alphabet put billions into rival Anthropic.
33:33
Um, everyone's got a bet there.
33:36
Uh, part of those companies investments have been through credits to use their computing power.
33:41
Meta doesn't have a cloud business, and it's unclear what format Meta's investment will take, and it's unclear if scale really needs cloud credits.
33:48
credits. they more um I mean their cost structure is human labor since they um oftent times take tasks and and find uh experts overseas and increasingly experts in America because a lot of the a lot of the reinforcement learning is now done on like extremely hard math
34:05
problems and so you might need to go to PhD programs to recruit we should offer you know like maybe physical intelligence or another lab the data from Tyler you know making this iPhone uh to to to train on definitely because I wouldn't want potential training data to go to waste. Yeah. Yeah. Yeah. A Yeah. Yeah. Yeah.
34:20
A bodysuit so that he's really able to to track all the mechanics.
34:25
We need every every every digit on his hand tracked so that we can This might be the first time an iPhone has been assembled by somebody wearing a a tailored suit as well.
34:34
We're breaking all sorts of uh records here.
34:40
uh CEO Mark Zuckerberg has made AI AI meta's top priority and said in January that the company would spend as much as 65 billion dollars on related projects this year.
34:50
Um now a lot of that a lot of that capex and a lot of that investment is going into things that are not directly foundation model training of course um they have reality labs and VR efforts and they also have a ton of recommendation algorithms that are running on on large data centers they're scaling up but obviously they're investing tons.
35:08
The company's push would include an effort to make Llama the industry standard worldwide.
35:11
Meta's AI chatbot which is already available on Facebook, Instagram and WhatsApp is used by 1 billion people per month. Wow, that's a lot.
35:19
Scale, co-founded in 2016 by CEO Alexander Wang, has been growing quickly.
35:24
Believe it's a YC company, too.
35:27
Uh, the startup generated revenue of 6 870 million last year and expects sales to more than double two billion in 2025. Let's go.
35:36
Scale plays a key role in making AI data available for companies because AI is only as good as the data that goes into it.
35:43
scale uses scads of contract workers to tidy up and tag images, text, and other data that can be used for AI training.
35:50
Like the original the original scale AI business model was uh labeling and tagging images for self-driving car companies.
35:59
And then at a certain point, I think the self-driving car companies stopped needing so much labeled data and and and everyone was like, "Oh, Scaly is not is not that useful.
36:10
Like, we don't need them anymore."
36:11
And then the LLM boom came and the RLHF boom came and it was like, "Oh, wait.
36:15
We need 10 times more scaling stuff."
36:16
And then the same thing is happening in robotics and the same thing is happening in in reinforcement learning more broadly and and and uh and a ton of different uh you know paradigms to move the AI ball down the down the field.
36:30
Um Scale and Meta share an interest in defense tech.
36:33
Last week, Meta announced a new partnership with defense contractor Anderoll Industries to develop products for the US military, including an AI powered helmet with virtual and augmented reality features.
36:43
Meta has also granted approval for US government agencies and defense contractors to use its AI models. I love Defense Llama. It's great.
36:50
The company's already partnered with Scale on a program called Defense Llama, a version of Meta Llama's Meta's Llama large language model intended for military use.
37:00
uh scale has increasingly been working with the US government to develop AI for defense purposes.
37:04
Earlier this year, the startup said it would want to contract with the DoD to work on AI agent technology.
37:09
The company called the contract a significant milestone in military advancement.
37:13
So um I mean Scalia is such a big company.
37:14
They're doing a lot of different stuff at this point.
37:18
Um and uh and and they're not just doing the business process outsourcing, the the data generation, but they're also doing stuff like uh they create evaluations.
37:28
They have the humanity's last exam, the benchmark for for AI stuff and uh and then they're also fine-tuning llama and working with the DoD and Alex is in is in DC barely often.
37:39
Uh anyway, fantastic report from Bloomberg. Go subscribe.
37:42
Give them give them some love. Give them some love.
37:44
Uh, we have a post from Ply the Liberator getting a little spicy with Apple.
37:50
He says, "I'm not reading a single AI research paper coming out of of that giant stale donut in Certino until Siri can do a little bit more than create calendar events on the fourth try. Shots fired.
38:03
Um, Apple uh they they released a research paper uh last week called the illusion of thinking understanding the strengths and limitations of reasoning models via the lens of problem complexity.
38:16
They basically said that reasoning models are fake and just pattern matching machines. Yes.
38:21
And I I got to defend technology here.
38:24
I'm a bit of a pattern matching machine myself. I try to see patterns. I try to match them. Yeah.
38:32
Not unlike a large, you know, reasoning model. Yeah. Yeah. Yeah.
38:37
Um but anyways, I think this is um sort of interesting timing.
38:39
Uh I'll wait to um you know, pass too much judgment until we see what they release today.
38:47
But uh in some breaking news, Apple just announced uh that they're basically mimicking the the Mac OS experience on iPad.
38:56
So you can now have multiple apps open at once.
38:59
Um, which uh which is interesting. So, very fun.
39:03
What else is new in in WWC World? iPad OS.
39:06
They launched new CarPlay and they demoed it on a Mustang. You'll love to see that. There we go.
39:13
Very funny choice of car, but we love a Mustang. There we go.
39:16
They're connecting with, you know, core America with that one.
39:19
They know people want gas.
39:22
Emily Emily Sunberg is on the ground at WWDC and she says the tech guy in a hoodie stereotype is dead.
39:28
She's seeing uh marine sur.
39:30
I'm actually not familiar.
39:36
Japanese chore coats um and a bunch of other uh items.
39:38
Uh tech has pulled the world down to their dress code and now we've all met in the middle.
39:46
Um so Emily will be on the show later this week research paper that they put out is kind of interesting.
39:51
put out is kind of interesting. there's this there's this constant drum beat of like moving the goalposts when when it's like okay so you know now these models can reason and produce like really really thorough research reports and they can definitely follow these patterns and that's super valuable but then people will move the goalpost and say well well that doesn't count as
40:09
thinking like yes we yes we passed the touring test but it's not it's not really thinking it's not really human and uh and and I understand that and I think that there's something right about that but also like it it all doesn't it doesn't really matter because at the end of the day all that matters is like economic impact and like how valuable are these things and how useful are they? Um at the same time revenue as a
40:27
Um at the same time revenue as a benchmark I I I think that's the only benchmark that matters.
40:31
Um and then and then on the flip side there's this I think the only the only counter to that would be that a lot of useful AI features will be baked into iOS in the long run and won't have be directly sure sure.
40:44
sure. So maybe you need to look at like user time or something but and delay there's a whole bunch of ways but like like the fact of the matter is like like is AI really thinking does it matter who cares really like do we need do we need to discuss this uh there's also this funny pattern I I believe it was like
41:01
either Nal or Wilmanitis or someone posted how like when the steam engine was invented there were all these papers saying like oh the steam engine is just like the human brain and then when like electricity is invented it was like oh like the network of lights in a city is just like the human brain. Like now we
41:14
Like now we understand the brain and and so there's this constant march of like we we create a technology and then we're like oh this is this is a perfect representation of of of how humans work and maybe we keep missing things but the question is like we're clearly knocking down different patterns like even just long-term memory like that has been solved by hard drives for a long time.
41:34
We've been able to have databases and store lots of data and look up facts on the internet like that was something that was uniquely human. We solved it. It's great.
41:42
It's not human, but it's great and helpful.
41:44
And now we can and now we can do, you know, next token generation and prediction and predict the next word in a sentence, which is very helpful.
41:53
And clearly there's something in the human's mind that does that activity.
41:56
But is it everything a human does? No. Based on training data.
42:00
Yeah, based on training data.
42:02
And then and then reasoning is the same thing like following a playbook, working through a problem, planning, like that's clearly part of the human brain, but it's not the entire thing.
42:09
Uh but it's still really useful. And so it's all good. More breaking news.
42:13
Apple now adding your passport to the wallet app that will be accepted at TSA for domestic flights. Okay.
42:20
Which is I guess valuable. Yeah. Yeah.
42:25
Um they just sherlocked Real ID the government.
42:30
This is this is a post of Katie Noto from Nottopolis from Business Insider. So um yeah. Yeah. It's funny.
42:37
I got the uh I got the passport ID, the passport card.
42:45
So, you can have the the the paper passport, which people know for flying internationally.
42:48
And then you have the real ID, the driver's license.
42:52
And the and the passport card is something that you can order.
42:54
And it lets you travel between US, Canada, or US, Mexico, um without bringing the full passport. And I was super excited.
43:01
I was like, "Oh, this is great.
43:02
If I'm going to Canada, I'll just bring this thing."
43:04
One day I was going to Canada.
43:04
And why were you going to Canada? I have no idea. I have no idea.
43:07
But anyway, I was I was going I was going to Canada and I was like, "Let me bring this passport card. This is great."
43:12
As I show up, it says only valid for uh for road and rail crossings.
43:19
You can't fly with it because it's basically it's a product for like truck drivers that are driving back and forth all day long and they don't want to bring a separate passport.
43:27
They just want to throw an ID in their in their uh in their in their wallets, in their Ridge wallets.
43:32
Um and so uh next to their RAM Yeah. next to their RAM cards.
43:37
And so uh uh and so I was I was very disappointed with that product.
43:40
But hopefully this is better, but I imagine that people will get over their skis and be like, "Oh, I have my passport in my phone."
43:46
Then they'll eventually try and fly fly internationally and they'll get caught and then have to send an Uber.
43:50
I actually wound up sending an Uber to my house, getting on the phone with the guy and saying like, "Just break into my house and get my passport and bring it to me at the airport." And it worked.
43:59
It was high trust environment.
44:02
You could have just sent him to some random house. Yeah. Yeah. Yeah. Yeah.
44:06
Somebody Somebody Somebody Dad is going to give you There's going to be a giant Newfoundland dog there. He's friendly. Give him a pat.
44:14
And then And then here's the code word. Here's the code word.
44:18
Tell him tell him good good boy. Make this sound. Yeah. And he'll let you pass. Yeah, I know.
44:24
I really have like a massive dog at still.
44:26
Uh anyway, Vanta automate automate compliance, manage risk, improve trust continuously.
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44:35
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44:40
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44:43
Data drop from Andrea Horowitz.
44:46
Olivia Moore has the data.
44:48
Our team at A6C published benchmarks on revenue growth for AI startups from their proprietary data set.
44:54
The median B2B AI company is going from zero to$2.
44:57
1 million dollars in ARR in year one while the median BTOC company is going from 0ero to 4.
45:03
2 million ARR in year one.
45:06
Yes, consumer companies are growing revenue faster. It's pretty remarkable.
45:11
Even the bottom cortile is doing pretty well.
45:14
Everyone's making money now.
45:16
It's just so much different than the. com boom.
45:18
different than the.com boom. like they're you know obviously wasn't it tons of froth and tests but still these these are serious numbers you know if you if you start a company within 12 months a couple million bucks in revenue and it's like the costs are going to be mostly overhead and employees like you're in a pretty good time has there
45:36
been a period where B2B categorically was growing much faster than consumer because I feel like with consumer sure with B2B you have these you know big contracts which can help grow revenue quickly, but there's also so much friction to get onboarded, whereas consumers can just say, "Yes, I will take this product for $100 and you can do that thousands of times a day." Yeah. Yeah.
46:00
Um and so I feel like that part um isn't necessarily new, but um but still really impressive. Yeah.
46:07
I mean, increasingly there are so many ways to to get to a paid upgrade. There are more.
46:12
It's not just that Stripe exists and that inapp payments exist and there's so many ways to make payments taking payment frictionless on the internet which was not the case in 1999.
46:23
not the case in 1999. Uh but also just psychologically people I think because of chatbt being paid X is has a paid tier people pay for patreons people pay for all sorts of stuff subscriptions for games all sorts of different things for
46:38
subscriptions now well part of it is that AI psychological even existing genai experiences even though they're new are so are often times so magical that people are totally happy to pay because the value is you know the studio Gibli app if they were just monitor monetizing that. Oh yeah. And they had it basically Oh yeah.
46:55
And they had it basically people would have paid $100 a month for that.
47:01
They would have turned immediately.
47:02
I'm pretty sure Facetune is doing like a billion dollars in revenue or like Face App, like one of those like face swapping like iOS apps because they just get you in, give you a free one, they know exactly how to monetize, ask you at the right time, you subscribe.
47:15
Yeah, it's a 14-day free trial and then it rolls over and you get charged $99 for the entire year.
47:18
Like they're very good at this stuff.
47:20
It's very Nikita beer coded.
47:21
Anyway, we have Casey Handmer coming in the studio in the TBP and UltraDome in just a minute.
47:25
I want to read some of his posts first.
47:27
He says, "640 days until China takes the moon.
47:33
China wants the moon so bad they can taste it.
47:34
They obsess over it all day.
47:37
They dream about it all night.
47:37
They fear the consequences of failure viscerally.
47:41
It's affecting their appetite.
47:41
They work 80, 90, 100 hours a week.
47:42
The job isn't done until it's done."
47:45
Casey says, "The last page of our passport is a solemn promise that the USA will guarantee freedom as we lead humanity into an infinite and eternal universe.
47:56
In some desperate corners of the earth, totalitarian dictatorships still stomp on the potential of a billion hearts, but the future belongs to freedom."
48:04
So excited to bring him in and talk to him about that.
48:09
And also about uh solar energy and and uh and manufacturing in America and what's going on with Apple.
48:16
So, uh, welcome to the studio, Casey. How you doing?
48:18
I'm I'm very well, thanks. Thanks for having me.
48:21
Great to have you as always.
48:23
Uh, what what triggered this initial tweet about 1600 1640 days until China takes the moon?
48:29
I imagine that that's, uh, based on a specific mission that they have planned.
48:35
But, uh, break that down because they've done stuff before.
48:37
They've landed on the moon before with autonomous stuff.
48:39
Like, why is this different?
48:41
Why is this date so important?
48:44
Yeah, China set a target of being on the moon officially by 2030 with people, uh, Chinese tyonauts, obviously.
48:49
Um, and they have a a space program already.
48:53
They have a space station, had several space stations.
48:55
They have the ability to fly humans into space and to recover them.
48:58
Um, and uh, and actually the last news we got about a month ago was that they're looking into ways to accelerate that schedule into 2029.
49:04
So, I picked a date in late 2029 and I thought that's uh, 1640 days away.
49:08
It's about um, is that three and a half years or something from now. It's not that long.
49:11
Um, and one thing I can tell you for sure is that the Chinese space program managers fear the consequences of failure in a way that uh, US space program managers have not felt or feared for many a decade.
49:27
What is are are are we should we be comping their efforts to NASA or SpaceX or both or some mix?
49:33
What is the Chinese what's the shape of the Chinese space program right now?
49:39
Well, I mean, I don't I'm not an expert on the Chinese space program by any means.
49:42
Um, but uh it's it's obvious from from the way they work that they're dead serious about it.
49:46
Uh they are in second place behind SpaceX when it comes to launching stuff into space and they haven't got reusability done yet.
49:51
So, they're they're producing significantly more cores.
49:54
Uh and then of course when they're done with them, they drop them on villages because they run things differently.
49:59
Um now, you know, I think that on this show people will understand what I mean when I say the light cone wants to be free.
50:05
Uh the light cone is a place where where humanity needs to needs to expand and experience freedom and um and the reality is that uh laws of physics don't guarantee that freedom will succeed. It it helps us.
50:14
Freedom helps us perhaps but um the challenge we face I think is that is that NASA is the organization whose job it is to make sure that uh that we don't get a 1958 sputnick-l like surprise ever again.
50:23
And uh and there are many many smart people at NASA working hard on this.
50:27
that their efforts are, you know, somewhat circumscribed and and challenged by kind of decades of accumulated craft and and and problems that um are kind of causing major major major problems within the within the organization and and for the US space program as a whole.
50:40
You I think SpaceX has done a really incredible job of upholding US interest in space.
50:44
If it wasn't for SpaceX, we'd obviously be in a deep dark hole by now.
50:47
Um but it's it's a lot to rest on the shoulders of just one company.
50:50
And I think this has been reinforced in the United States just last few days uh with you know people realizing that actually um you know the second place uh US space company or whatever is an awful long way behind SpaceX.
51:02
Uh it's not for a lack of trying and SpaceX is probably the number one place on Earth for training rocket engineers and and and nothing forces them to stay there.
51:08
Many of them leave and start their own companies and good for them but uh they're still a long way behind. Yeah.
51:11
What uh why is the moon so important in your opinion?
51:15
Um, there's arguments about security and defense and putting weapons on the moon. There's also resources.
51:22
Like, what what are the top reasons why we should be going to the moon?
51:25
I kind of just want to go because it seems fun.
51:29
My son seems excited about it.
51:29
I want to go with him one day.
51:31
Uh, but aside from we need to figure out if it's made of cheese or not. We do. We do. Yeah.
51:34
Well, I mean, I don't think it's really a secret that that the moon is the second nicest place out of the Earth and the Moon.
51:42
Um, it's a little bit like Antarctica or something.
51:43
It's not it's not a place that's got resources we really need.
51:46
Um what it what it represents is a it's a symbol symbol of freedom.
51:50
It's a place that that Neil Armstrong and Buzz Aldrin uh first first tro on back in in 1969 and and uh and you know we came in peace for all mankind you know and I think that that you and I and and NASA and much of the western world sees the moon the same way and and the accords and the artist space treaty and so on.
52:05
I don't think that the generals in Beijing see the moon quite the same way.
52:09
You know, and I might not be quite as hawkish as as some of your other guests here.
52:12
Um, but it does not help me sleep well at night thinking that if the Chinese have a have a durable and defendable presence on the moon with humans running around there and the United States does not, at some point they could say, well, you know, this outer space treaty is a nice idea, but no one who is alive had anything to do with writing it and at the end of the day we have nuclear weapons and this is ours.
52:28
And then what do you say, right?
52:32
Like then they basically planted the flag and said, "No, the future of the light cone is going to be uh communism with Chinese characteristics forever." Mhm.
52:40
And uh that's that's not a situation, not a future I want.
52:42
It's not a fu, you know, it's not a future or a situation that my children can can live up to or participate in.
52:47
It's not a future that's open to them.
52:48
future that's open to them. They can they can, you know, hug their stuffy, you know, rocket to to sleep every night dreaming of a future where they get to explore the universe, but it's just not one that that will be protected despite
52:59
the fact that that we spend in the United States 20 billion a year on NASA and and a whole bunch more on other space programs that are less publicized, which is, you know, just NASA's budget is twice the Manhattan Project's budget in inflationadjusted dollars. It's not
53:09
It's not it's not a small amount of money.
53:11
And yet, where's my moon base?
53:13
Yeah, where's our moon base?
53:16
Um, I hope the the the Chinese are are, you know, taking the proper steps to get Salana's permission to go to the moon.
53:23
Considering they got to go through Mike Sal.
53:25
They got to go through Mike Salana.
53:26
Um, what do you hope to see from the uh next NASA administrator now that Isaac men is out, which obviously a lot of people in our corner of the internet were very disappointed by, but uh I'm curious where where what you would like to see uh from them. Yeah.
53:47
So obviously NASA administrator serves at the pleasure of the president and it's his prerogative to to decide you know who wants to to serve there.
53:54
NASA administrator is a super tough job.
53:55
Might be the toughest job in government.
53:57
um because you know it's you have to balance this impossible set of requirements and now we've got this this budget process that's going on and there's no NASA administrator in the chair to be part of that conversation to be advocating on behalf of of you know which things are you know perhaps technically sensible or less sensible for reasons that Congress people cannot be expected to understand or even to
54:15
take an interest in it's a very very esoteric and strange stuff and so you end up in a situation where in 3 months or 6 months or 18 months or something a new NASA administrator will be sitting in the chair with a budget they didn't
54:24
have anything to do with with a bunch of programs that were designed by people for reasons that are, you know, long past their expiry date and um and have to make the best of what they can do. And in the meantime, it is 1,639 days
54:31
And in the meantime, it is 1,639 days until China takes the moon.
54:34
And this is a major major challenge.
54:37
You know, I think it'll it's ultimately reflected extremely poorly on the Biden administration that they um that they put Senate Administrator Bill Nelson in there.
54:44
And he was unable to uh help NASA respond to the existential challenges that face it.
54:48
Uh his his uh intentions no doubt were fine.
54:50
Uh but his his actions and the results of his his work were um mixed at the best.
54:54
uh and and I don't think that uh Trump or anyone who supports him would want a situation like that for NASA looking ahead in four years and if if if China's on the moon in 2029 uh that'll be in the same year that that Trump leaves the White House.
55:07
So that's um there's a very daunting challenge.
55:09
You know, this is this is really a little bit like Sputnik over again that um that we have a situation that that really challenges to our core, you know, and of course Jared Jared's a unique individual.
55:18
Uh he really, you know, he he did he was not under any uh you know confusion there.
55:23
He knew that going into NASA was was a horrible job.
55:28
Like his literally his job is there is to upset a lot of people uh and and get a bunch of programs that are in deep deep trouble turned around quickly.
55:33
Uh and it's going to involve, you know, a lot of people losing their jobs or getting new jobs have been moved or relocated or all kinds of stuff. Just nasty stuff.
55:41
And the the bureaucracy that's entrenched there does not like to change.
55:44
And I know people who have worked there.
55:46
I know people who have tried to change things and who have been rewarded for their efforts with constant harassment and even, you know, legal and extralegal kind of problems and so on in their lives, you know, in constant investigations and and all kinds of stuff, right?
55:57
Uh it's just it's a absolute hornets nest in many ways.
55:59
And Jared knew that and he stepped up because he recognized the United States had given him everything and he wanted to give back.
56:05
Um now, you know, I don't want to prejudice whoever else steps up.
56:09
I mean ultimately someone's going to have to take the job and I wish them the best and I will help them in any way I can but it is a tough tough job and uh and I think that frankly the number of people out there who have the skills to do something useful uh with NASA and
56:21
really turn it around and fix the problems that we've got here and the inclination to actually to try and to to basically blow up their entire life for the rest of their life because that's what's going to result no matter how well you succeed is a very very small number. It's a real challenge. Um, we It's a real challenge.
56:32
Um, we have to wonder why is it that in a country of 340 million people, we only really have a handful that could plausibly go in there and and and solve these problems right now.
56:40
And if we don't, China will take our future. Yeah.
56:45
Uh, talk to me about power generation on the moon and kind of like the buildout if we actually wind up getting there and and and and building like the launch capabilities to get up and back.
56:53
What does the industrialization process of the moon looks like look like?
56:57
Like I know we're going to have to figure out a lot on the on the fly, but uh I looked at a company that that their it was probably a year and a half ago.
57:05
Their pitch was uh we're going to build Chevron on the moon.
57:08
Uh super super bright team that had actually run some pretty meaningful experiments.
57:14
I couldn't quite get there from an investment standpoint because I was like, yeah, there's so many things that need to happen, but I really hope they're, you know, successful.
57:23
But yeah, break break it down for us.
57:24
Well, I think step one is is just establish the ability to move stuff to and from the moon, right?
57:30
And once we have that, then we have the operational freedom to build a base of any size we want there, right?
57:34
And that's that's a question for future voters and future presidents, I think.
57:38
Um, but ultimately, I'd be quite happy to see something there that's a bit like the Antarctic program.
57:40
It could even be run by the NSF, right?
57:41
NASA could be responsible for for setting it up and developing the infrastructure and NSF could run it like the Antarctic program.
57:47
We send scientists up there because they'll go there voluntarily.
57:49
they'll go there voluntarily. um you know it's ultimately there for strategic reasons and you could have 100 people or a thousand people and and you could fly you know chicots for like fly like cosmonauts fly fly Indian astronauts fly astronauts from Japan and the EU and Australia and everyone else and they get
58:02
to go up there and they work in US moon base run by funded by the United States built by you know American sweat and American brilliance companies much like the ISS right uh a little bit like the ISS but maybe with a little bit more kind of down to earth in a way like actually dealing with rocks and and doing real science and stuff like that. Yeah. Um, in terms of energy on the Yeah.
58:17
Um, in terms of energy on the moon, there is one one way of getting energy on the moon that won't cost10 billion dollars to develop, and that's to set up large scale microwave beaming plants on the surface of the earth and beam the power up there. Really? Yeah.
58:30
The moon the moon always faces the same face towards the earth.
58:31
So, so once you've got your your rectum panel up there set up, it it will always receive the power provided the power to be sent from Earth.
58:37
And of course, you could try and send up kind of some kind of nuclear power station or something, but nuclear power plants are extremely expensive to build even on the Earth, let alone on the moon.
58:45
So, I think if you just wanted to get power there quickly, the best way to do it is just to beam it up from What about just throwing out a ton of solar panels?
58:50
That feels like that that was what I was teeing you up for. Yeah.
58:53
Yeah, that's what I was teed up for.
58:54
Solar panels are great on the Earth because um you know, where people live, you never have a night that's longer than about 16 hours. Sure.
58:58
um and um for for the vast majority of the world's population.
59:03
But on the moon, even in the in the parts of the South Pole, which are, you know, ostensibly peaks of eternal light, you can still have uh you know, pitch darkness for five or six days at a time in winter, which is um basically means like if you're flying your entire power system up from the Earth, which ultimately you would have to uh like 99.
59:17
9% of it by mass has to be batteries.
59:21
And um that's that's an interesting question.
59:23
You might be better off just flying over a starship with a bunch of spare fuel and a and a gas turbine generator.
59:26
What about what about uh solar panel on one side of the moon?
59:30
Solar panel on the direct opposite side of the moon.
59:31
Really long extension cord.
59:33
Very long extension cord.
59:33
I don't want to bore your I don't want to bore your your readers with discussion of passions law, but um Okay. Doesn't work.
59:40
When you when you when you when you run the numbers, it it it's no it's no cheaper. It's not good. Okay.
59:43
So, yeah, give me the broad terraform update. How are things going?
59:48
And uh uh how many solar panels do you have?
59:50
where are we in the roll out of of uh solar power dominance across uh across America?
59:57
Well, that's two separate questions.
59:57
So, at Terraform, we're going great.
59:58
We're integrating our first Mark1 system, you know, over the summer right now.
1:00:02
Um it's it's a machine that's designed to produce limitless quantities of carbon neutral, cheap synthetic natural gas from sunlight and air.
1:00:10
You can literally roll up roll out a solar panel in anyone's backyard and and hey, presto, you're on top of an oil well. It's a very neat trick.
1:00:16
Uh really privileged to get to run this with my my friends here uh and with the confidence of our investors. Mhm.
1:00:20
Um, in terms of solar more generally, look, uh, the outcome is not in doubt.
1:00:24
I think Jesse Pelton's been doing a great job on X recently. I've seen him. Yeah.
1:00:27
Talking about solar, look, at the end of the day, and this is actually another thing where I really hope that, uh, that Trump and and his team come in and help solve a problem that was kind of almost caused accidentally and hasn't been fixed since, uh, which is that, um, just by default, deploying solar arrays is unnecessarily complicated and expensive in the United States.
1:00:44
And really if we're we are in a in a geopolitical kind of struggle right now to see who gets the cheapest energy fastest and China is far ahead of us and they're able to produce finished parts for less than the cost of raw materials in the United States it helps that we're much richer than they are in China but at the same time the technology is the same.
1:00:58
The sun signs shines the same actually shines better shines better here.
1:01:01
Why is it so difficult to roll out solar panels?
1:01:03
It feels much easier than oh I don't want a nuclear power plant in my backyard.
1:01:07
The windmills is going to chop up the birds.
1:01:11
There's like so many obvious uh problems with the other environmentalists environmentalist get upset about it understandably you know like um at the end of the day having the the power to say no is is addictive right say no not
1:01:23
in my backyard even if it's just a solar panel that's making it power cheaper but actually the best land for solar in the United States is so hot that no one wanted to live there the United States government couldn't give it away death
1:01:33
valley basically I'm talking about like 90% of Nevada is still federal land and so if you want to do if you want to do work there you have to kind of do it according the Fed's rules, which includes NEA, which includes like you
1:01:43
have to do like four-year environmental impact statements that run to tens of thousands of pages to prove that like putting a solar panel out on a bunch of economically like worthless and biologically lifeless dirt won't harm the environment. At the same time as
1:01:54
At the same time as we're subsidizing like 50 million acres of incredibly intense bioethanol corn production, it doesn't really make a whole lot of sense.
1:02:01
Uh so I'm I'm not asking for that to go away.
1:02:03
What I'm asking is like can we get a categorical exemption for solar deployment with you know maybe some like you can put put some money in an escrow account to like take it down in 30 years if you decide you want to go back to being like empty desert.
1:02:13
Um and uh that would help a lot because then you wouldn't have to spend you know like it's this is the insane thing.
1:02:19
It costs about uh just just the modules itself the fancy part that turns sunlight into power costs about 15 cents a watt and the cost of installing it in the United States about a dollar a watt.
1:02:29
So paying seven times the price of the unoptanium to import from China or whatever to install it which is insane, right?
1:02:34
Like if you talking about the same economics to a corn farmer or something like you are spending how many hundreds of thousands of dollars per acre to install something like how much does it cost to to sew corn?
1:02:42
Like like 20 bucks an acre like almost nothing. That's wild.
1:02:46
Talk to me about the supply chain.
1:02:48
Uh we hear a lot about the vast majority of solar panels being made in China. Is that a risk?
1:02:52
Has it become a political football like everything else like the electric vehicle batteries etc.
1:02:58
Um, some companies, a Apple, Tesla, they've kind of figured it out mostly, gotten around a lot of the tariffs, but uh, what are you seeing in terms of the long-term supply chain uh, dynamics in solar? Yeah.
1:03:10
I mean, I think at the end of the day, there'll be countries that make their own solar and countries that don't, which won't really be countries, right?
1:03:16
If you have energy sovereignty, you have sovereignty, and if you don't, you don't.
1:03:18
Um, and I think it's very encouraging to see both under, you know, even before the Biden administration, there was, uh, strong movements under the Trump one to tariff Chinese solar panels and start the scale up of solar manufacturing in the United States.
1:03:29
And we're seeing like more than a terowatt coming online in the coming years. That's great.
1:03:32
At the same time, China is producing solar panels cheaper than anyone has ever even thought possible.
1:03:37
Uh, and they're trying to dump them on our markets.
1:03:38
And my response to that is someone is if someone is predatorily dumping stuff on you, you should buy as much as you can because we can outbid the Chinese solar producers. Yeah.
1:03:45
uh and we can just stack the solar panels up in a giant warehouse in Nevada and uh until we get around to deploying them.
1:03:53
But if your enemy is literally trying to give you a machine that prints out money, which is what a solar module is, you should just buy them as many of them as you can and uh and deploy them.
1:03:58
Uh and and sure, you can you can prop up the US solar industry how you want.
1:04:03
It's it's good to have solar from all the world's factories coming here in the United States to make energy as cheap as possible here so we can make as many things as possible uh here.
1:04:09
So we can we can do all the, you know, aluminum steels uh producing on shore.
1:04:13
We can make as much fresh water as we possibly want.
1:04:16
can terraform Nevada, right?
1:04:16
The parts that we don't put under solar panels, we can turn into something like Switzerland if we want to.
1:04:20
All this is extremely achievable with cheap solar power.
1:04:23
I like the sound of that. Yeah.
1:04:26
Uh, can you talk a little bit more about what it actually takes to produce a solar panel in America?
1:04:29
It doesn't it doesn't seem as complicated as building an iPhone potentially, but maybe it is. It's much simpler.
1:04:36
I don't think iPhones are are even that complicated. We have our intern here.
1:04:39
I don't know if he can see iPhone in America.
1:04:41
He's making the first USA made iPhone uh this morning. Catch it, Tyler. How's it going, Tyler? Give us the update.
1:04:49
I'm I'm now attaching the volume buttons. Got the front on.
1:04:53
I've got the home button on.
1:04:55
I'm feeling really good right now. Feeling really good.
1:04:56
Okay, we're making progress.
1:04:57
Typically, once you once you're done with that assembly, uh TBPN intern, you need to go back to starting with rocks and then make the iPhone from rocks.
1:05:05
I've got rocks in my backyard, so I'll give you some rocks. I'll mail them to you.
1:05:08
And then you turn that into an iPhone.
1:05:09
Um that's the next that's level two. Next level two. Yeah.
1:05:12
So sol modules start you start with a solar cell and then you laminate it between some glass with a aluminum extrusion around the outside. I mean that's the easy.
1:05:19
We have factories that do that uh you know practically every state in this country right now.
1:05:22
Um if anything's the hard part.
1:05:24
It's it's actually making the the metallological grade silicon.
1:05:26
It's kind of an energy intensive refining process um that you can make the the cells themselves out of.
1:05:30
Um but even that is like it's a well understood process.
1:05:34
People have been doing it for years and years and years.
1:05:35
The real challenge is like it's like the same thing I wrote in that tweet about like China goes to sleep dreaming about the moon and they wake up angry about the fact they're not on the moon and like it's pretty clear that the NASA managers who are running the moon program are not obsessing over it in quite the same way because if they were we would have a moon base by now.
1:05:48
Um uh and it's the same problem here that like the United States domestic solar industry is not yet at the point where like they can taste 8 cents a watt solar modules and they're desperate to produce them, right?
1:06:00
There's not that competition in China.
1:06:01
There's 20 or 30 different companies.
1:06:03
Like ironically, capitalism is working in China to produce the cheapest solar panels ever.
1:06:06
Um, and we can there's no reason we can't do that in the States, right?
1:06:09
We're world experts at automation.
1:06:10
We're world experts at at capital formation.
1:06:12
We're world experts at building factories.
1:06:14
Look at what Tesla's doing.
1:06:14
Tesla's outdated a completely automated. Yeah, it has to be. Yeah.
1:06:27
The the white pill for American manufacturing is that thousands of people are learning how Tesla does it, how Starlink does it, etc.
1:06:36
And we'll eventually go and decide, hey, maybe I should start a factory to make this thing, right?
1:06:41
Anyway, thank you so much for joining. Let's sit on the fence. This is fantastic. Build a factory. Build a factory. You heard it here first.
1:06:47
Thank you so much for joining.
1:06:49
We will talk to you soon, Casey.
1:06:50
Great to have a great one.
1:06:50
Uh, and the white pill on sales tax automation, of course, it's numeralhq. com.
1:06:55
Spend less than 5 minutes.
1:06:57
sales tax compliance uh benchmark series A.
1:07:00
Uh anyway, next up we have Patrick McGee, the author of Apple in China, a uh groundbreaking book on Apple supply chain.
1:07:08
Very excited to have him in the studio.
1:07:10
Welcome to the show, Patrick. How are you doing?
1:07:11
I'm doing great, but I haven't watched WWDC, so I hope you don't have any questions about that.
1:07:16
No, we don't need to talk about that.
1:07:18
Uh the the the timeline is not loving it. I have a post here.
1:07:21
Why does Apple have a whole conference just to show everyone they slightly adjusted the colors on a few icons? Oh no.
1:07:26
So um that is um a little bit dramatic, but but in other news, we have our intern here in the studio assembling an iPhone from scratch.
1:07:37
Uh not really from scratch, but I I don't know if you can see, but he's he's getting it together.
1:07:43
He's assembling the first iPhone in America.
1:07:45
And so I think that's that's more of our focus today.
1:07:47
Oh god, I said iPhone manufacturing would never happen in America.
1:07:51
I think that's what's happening.
1:07:53
This is the first Americanmade device.
1:07:57
You're witnessing history. He's starting.
1:07:59
It's a 4S, so we didn't we couldn't go all the way to, you know, whatever the 16 or the 17, whatever we're on now, but we had to start somewhere.
1:08:06
So, but uh but anyway, thank you so much for joining.
1:08:09
Um would you mind introducing yourself in the book and kind of like what led you to want to dig into this so much?
1:08:16
Because I know you you interviewed like hundreds of people for this.
1:08:18
It was obviously a massive project.
1:08:20
take me through the the journey to actually start investigating the story.
1:08:24
So yeah, Steve Jobs would sometimes say you can't understand your life until you connect the dots backwards, right?
1:08:30
It' be a real trick if we could know where the meaning was going forwards.
1:08:32
That would improve things.
1:08:34
Uh so I've spent 12 years at the Financial Times and it was basically like three years in Hong Kong where I was getting to know China.
1:08:39
Uh three years in Germany where I was covering the automotive industry, but in retrospect really understanding supply chains and manufacturing, industrial policy to some degree.
1:08:48
and then four years covering Apple.
1:08:50
So, you sort of put those three things together and really get my book.
1:08:53
The first three years of covering Apple, I did what most Apple reporters do, which is that I I didn't focus at all on how the sausage gets made, as it were.
1:09:00
I focused on product features.
1:09:02
I focus on the rise of digital advertising and Apple's privacy policies.
1:09:05
I mean, I think I had some decent stories, but it didn't really occur to me to look at what we all know, which is that the products are made in China. Mhm.
1:09:12
And the real like discovery that I made, if you will, is that we had never covered a job within Apple called manufacturing design engineer.
1:09:18
And these are the people who go to over to China, literally by the plane load, to train, audit, supervisor, and mount billions of dollars worth of machinery in the aggregate in hundreds of factories across China.
1:09:31
So, I wasn't really familiar with like what makes Apple most unique in hardware, which is that they don't sit around hoping that component makers in their supply chain come up with more durable materials, cheaper materials, lighter materials, etc.
1:09:42
They go and they train all of the people to come up with those innovations.
1:09:47
So, it's it's it's a co-invention process really.
1:09:50
But the uh amount of people they've trained and the amount of money they've invested in China to make all that happen was staggering to such a degree that I compare it in a way that sounds unhinged if you haven't sort of read the 200 preceding pages in the book to the Marshall plan. Yeah.
1:10:03
Can you can you give us more on the exact scale of the investment and how you actually pulled those numbers?
1:10:10
Are they available in SEC reports?
1:10:12
Uh or did you have to do some digging to actually piece everything together to actually get the full scope of the scale of what's happening? Yeah.
1:10:19
So, the line I have on this is that when Tim Cook goes to Jong Nong Hai, the Citadel of Communist Power, and invests or rather pledges to invest 275 billion dollars into Chinese factories over the next 5 years, if he were to hold a uh press release uh a press conference I should say, from Jangghai, um that would have been corporate suicide.
1:10:37
This was when Donald Trump was campaigning on America First platform.
1:10:41
And so, uh so was that 2016? May 2016. Yeah.
1:10:43
And so basically what happens is that when Xiinping comes into power um particularly when he becomes president in March 2013 Apple fears that its products are going to be blacklisted because there is a 3-week digital blitz creek against the company where um all sorts of state sponsored media are threatening the company and even regulators are saying uh threatening things to Apple and Apple basically doesn't understand.
1:11:07
They're in a state of confusion.
1:11:08
There's not a single senior person living in the country and there never has been at the time and Apple responds by basically hiring or naming a team of people that call themselves the gang of eight and they are to be Certino's eyes and ears on the ground.
1:11:21
Essentially they are tasked with coming up with a way to plate local and federal officials in China without resorting to joint ventures because that is anathema to Certino.
1:11:28
A joint venture is like if the three of us wanted to go make a company in China, 50% of it traditionally needs to be Chinese-owned.
1:11:36
um that's supposed to be illegal after 2001 when China enters the World Trade Organization, but it really just evolves rather than is prohibited.
1:11:41
And so Apple has been operating under the radar to such a degree that even though by 2012 they are the largest producer in China without actually, you know, producing anything themselves.
1:11:51
You could sort of compare it to Uber in that respect.
1:11:53
Um they're also the largest retail seller in the country, uh among foreign countries, foreign companies.
1:11:59
And so they're wildly successful, but they're operating so secretively that the Beijing leadership doesn't understand what contributions they are making.
1:12:07
And so Apple does its own supply chain study to sort of flip this on its head.
1:12:11
And what they realize is that they're investing $55 billion a year into the country.
1:12:17
And so they sort of take this to Jong Nong Hai to basically like say, "Get off of our back.
1:12:22
You have no idea how much we're contributing to your uh companies."
1:12:26
And if I'm just to round this out, I would say if we fast forward to today, 55% market share uh in global smartphones is the Chinese manufacturers like Huawei and Oppo and Vivo and so so forth.
1:12:37
And the reason they're so good is that Apple trained all of their suppliers.
1:12:40
Yes, I remember you making this point about how Apple is essentially like the reason that OPPO and Huawei exist because they trained all of the manufacturing uh houses to build competitors to iPhones essentially.
1:12:55
Um, and and you and and you made the point that uh that Apple didn't kill Nokia with necessarily like product innovation in the United States.
1:13:05
It was the manufacturing and the birth of the Chinese manufacturing supply chain that was taken advantage of by Huawei and OPPO and the other Chinese phone companies.
1:13:14
But is there a reason why Nokia wasn't able to go to China and say, "Hey, we're going to piggyback on the same supply chain.
1:13:19
We we're okay being a year behind on the lagging edge."
1:13:23
Did you ever dig into the the exact dynamics by that?
1:13:25
Was that just a blunder by the by the Nokia team?
1:13:28
Because it seems like if you see this rising manufacturing powerhouse, you might want to go and take advantage of it.
1:13:34
If Apple for Microsoft with the Windows phone, right? Totally. Totally.
1:13:38
The trouble is going to China is not the secret.
1:13:41
If you've watched the Blackberry movie, in fact, this is the final scene where they do have the Blackberry Storm, I think, just made in China.
1:13:46
Um, it's a really simplistic way of thinking about it because it's not just that China has the skills and capabilities of pulling this off.
1:13:54
It's that Apple has this pyramid structure in the company where Johnny IV and the design studio called ID were given like a godlike power to come up with unfathomably in intricate and difficult um designs and then the manufacturing engineers basically had to go make it happen.
1:14:12
Nobody had the skills to go make it happen.
1:14:14
And so like the line that I got from one of these manufacturing design engineers is that the perfect attitude was to say to Johnny Iive, "I have no idea how to build this, but I'm going to like move heaven and earth to go figure out how to do it."
1:14:26
And nobody but the Chinese were willing to sort of put in the investment, the tailor made industrial policies, build factories on a scale that was needed to build iPhones at at the volumes that Apple needed.
1:14:36
Um, so so China emerges as the perfect answer to Apple. Mhm.
1:14:40
Before we get more into into what happens next, can you talk about some of Apple's early experiments?
1:14:48
I know they were trying to do stuff in California, the Czech Republic.
1:14:52
Sounds like they didn't I know.
1:14:54
And um so so yeah, there's this seven-year narrative, and it sounds long, but I trust me, it's fast-paced and it sort of, you know, crosses continents where Apple doesn't just sort of like, you know, abandon making its own computers, right?
1:15:05
Because they used to make them on three continents and turn to China.
1:15:08
That's a seven-year experimentation stage where the translucent iMac alone was built by LG in Korea and then they expanded to building them in Mexico and in Wales. It's a great strategy.
1:15:18
Unfortunately, it's actually a fiasco.
1:15:19
The Mexico factories literally on fire for about a month and so production is halted and the production line in Wales was known as the toaster line for the propensity of the circuit boards to catch fire.
1:15:29
So, they have all these other problems that just like make China begin to look better.
1:15:34
What happens is Foxcon comes on board.
1:15:36
So the my line about this is that Johnny IV and Steve Jobs, the meeting of their minds is what makes Apple products unique, but it's the meeting of the minds between Terry Guo, founder of Foxcon, and Tim Cook that makes Apple products ubiquitous.
1:15:46
So when Foxcon comes on board, this is a Taiwanese company that's Yeah.
1:15:49
And I was going to and I was going to say, did they feel more comfortable partnering with Taiwan?
1:15:56
Like so they begin with Taiwan.
1:15:58
In first five years of Steve Jobs's comeback, Taiwan is the most important country.
1:16:01
It's where a lot of the products are being made, namely the iPod, but also the Power Books and the Eyebook.
1:16:06
If you remember Reese Witherspoon in her little bunny ears, uh, in in Legally Blind, you know, lining up to buy a computer, she definitely buys the little bright orange computer.
1:16:13
I mean, Apple is redefining aesthetics, not just of computers, but later of MP3 players and later, of course, of smartphones.
1:16:20
And so, you know, I like to joke with people like, "What's your favorite Dell computer from the early 2000s, right? Cuz nobody has anything.
1:16:26
You can't even remember any of them."
1:16:28
Nobody was doing the sort of thing that Johnny IV was doing.
1:16:30
But what we've forgotten and what my narrative sort of fills is just like to have that maniacal obsessiveness in design is one thing and that's where a lot of the stories are, but to actually build those in the tens of millions per year and later the hundreds of billions per year like clearly there's a story there, right?
1:16:47
And it's weird that we've omitted it.
1:16:49
Um, but to build at that quality, that quantity, and that cost, China just emerges as the perfect partner.
1:16:54
So, it's it's the combination of Certino's skill and China's scale that makes for the perfect marriage. Yeah.
1:16:59
What's the stat on on the Tim Cook era?
1:17:01
It's something like 20% of smartphone sales, but 80% of profits, something like that. Isn't that insane?
1:17:08
And, you know, I'm only giving like a figure for 2016.
1:17:10
But, it's actually increased since then.
1:17:12
So, the market share for the iPhone has never gone above 20%.
1:17:14
But these days, they reap 85% of industry profits. Wow. And that is just insane.
1:17:19
I mean, find me another sector that comes anywhere close to that. It's remarkable. Yeah.
1:17:24
Give it up for big tech profits. How much uh Yeah.
1:17:27
How much of uh what you're seeing today with uh there's some criticism of Apple for kind of faltering on the AI side, on the product side.
1:17:39
Uh maybe the iPhone's gotten a little bit stale with uh to be clear, Mark German just said they didn't really announce any new AI features. Yeah.
1:17:49
At the same time, uh, while people have been going after Apple for the lack of product innovation, lack of software innovation, it feels like in this particular moment, Tim Cook is the perfect CEO for Apple in the sense that they are facing immense geopolitical challenges.
1:18:06
The supply chain is more complicated than ever.
1:18:08
And Tim Cook seems to be a fantastic leader in terms of the execution of that strategy.
1:18:13
And so we're in this weird I understand that there's a weird dynamic, but it feels like in terms of the challenges that Apple the the size of the challenges they could miss on AI, but if they're able to scale up to a billion iPhones a year, they win. Hard disagree. Okay.
1:18:29
Um I understand the point that you're making and Tim Cook has provided immense value to Apple, but I do think it's sort of a times up moment.
1:18:37
The reason I say that is Apple is so wedded to China that it has basically become an existential risk to the company.
1:18:43
I'm not saying therefore the company's going to downfall, you know, but but if something like their export license from China was canled, it's not like, oh well, thank god we have 25% of iPhones now being made in India.
1:18:54
None of those phones are independently made in India.
1:18:56
They're all reliant on the Chinacentric supply chain.
1:18:59
And if Apple's going to come out of it, I mean, basically, if you agree that that's an untenable situation, it's a 15-year effort, if it can happen at all.
1:19:07
And you can't have the guy who created the current strategy leading the company if that's the goal.
1:19:10
So I would just on the supply chain side that's on the operations side.
1:19:16
That's his wheelhouse if you will.
1:19:17
The AI strategy is probably just as fundamental in the sense that we're now at a stage where people's next phones could very well be based on what AI features they have.
1:19:26
And Siri, to quote Sachadella, is dumb as a rock and they're basically not even allowing you to have chat GPT replace Siri.
1:19:35
I mean Siri GPT is not allowed to go through my emails, not allowed to go through my photos, etc.
1:19:38
It could probably work wonders if it could, but Apple for privacy reasons that may or may not be uh genuine um privacy do that.
1:19:46
And when you get into China, Chad is not allowed in China.
1:19:48
And so AI is really taking off with the likes of Bodu and Alibaba and Deepseek, of course, but Apple's going to be put in this strange position where, you know, my book is about how they've trained up the hardware engineers in China over the last 25 years.
1:20:01
Is the next 25 years the story of how Apple's training up the AI developments in China?
1:20:05
Um, I mean, for starters, I don't know that they're a great teacher just given that their own Siri product and AI isn't all that good.
1:20:12
But that strikes me as an untenable position for them to be in.
1:20:14
And so AI is like another maybe not existential risk, but certainly a large risk for Apple that they certainly are flailing.
1:20:21
And if the buck stops somewhere, it's with Tim Cook.
1:20:24
So I would say there's two reasons that that you'd call for new leadership right now.
1:20:28
So talk about getting out of China, building up manufacturing capacity in India, Vietnam, America, anywhere else.
1:20:35
Tim Cook has done it once in China.
1:20:38
He's not he doesn't have any unique tie to China. He's not Chinese.
1:20:42
He just went over there, figured it out, built it up.
1:20:44
It took immense time and investment. He's done it once.
1:20:46
Can he do it again in a different country? Is that possible?
1:20:50
So you sometimes hear that within Apple.
1:20:51
And I would say that it reeks of hubris.
1:20:53
In other words, China was a once- ina century partner in terms of the tailor made policies in terms of literally having hundreds of millions of people go from the migrant labor pools and into cities like Shenzhen and Sujo to make all this happen.
1:21:07
So, it's not that China was just some blank slate with a lot of people and you could get it working.
1:21:11
It's not just the density of the population, it's the dynamism of the population and the way that they're willing to work and the sort of bonded zones that China has.
1:21:18
zones that China has. I mean there's so many reasons why none of this is going to happen in America cuz even on a philosophical basis we wouldn't want to replicate things like the dual class uh structure of citizenship that you have in China where if you're rural you
1:21:30
really can live in Shenzhen but you can't raise the kids there you can't get the social benefits you certainly can't retire there you know philosophically we don't want to replicate that uh whether India has to go that far if they're going to do so I don't know but they at least are a country of 1.5 billion
1:21:41
5 billion people they have wages that are similar to the early 2000s in China and they do have major policies of wanting to become a manufacture ing powerhouse.
1:21:49
I don't think they're doing enough, but it's not just a matter of Tim Cook sort of copying and pasting the strategy into a new area that doesn't take into account just how different India and China are.
1:22:00
Can you can you tell us more about that difference uh India's democracy, but there's a lot of uh lack of infrastructure I've heard flagged as just like there's not enough scale at the ports, there's not enough industrial manufacturing equipment in the in the country.
1:22:14
Same thing with uh Vietnam.
1:22:17
Although it's it does feel like uh Apple's maybe had a little bit more luck with AirPods in Vietnam, but I don't know if there's more color to that.
1:22:23
And it might be more of one of those like final assembly things that we've been hearing.
1:22:27
On the whole, I would say more is actually happening in Vietnam than people give credit for uh and less is happening to in India than than people think.
1:22:35
Uh the problem with Vietnam is you just hit constraints, right?
1:22:37
I mean, the population in Vietnam is literally 115eenth that of China.
1:22:40
So it is never going to rival China in a way that India could.
1:22:44
India just doesn't have the skill.
1:22:46
I don't know that they have the drive.
1:22:48
They don't have the same nichian will to power.
1:22:50
The epigraph of my book is from a made in China 2025 document from 10 years ago which which says without manufacturing there is no country. There is no nation.
1:22:58
No other country let alone India thinks of manufacturing in that way. Um but China does.
1:23:05
So it's really difficult for India to compete and even though they have a lot of people they don't have the same migratory patterns.
1:23:11
So I studied a study that looked at maybe 80 maybe 84 countries of internal migration and India was at the end of the list.
1:23:17
So you don't have this culture especially of young women 17 18 years old leaving their parents' homes and going to work in a factory in Carnotica as like an equivalent of Shenzhen.
1:23:28
Now maybe you don't need to replicate every facet of how China pulled this off over the last 25 years, but it's not as though I look at India and see a bunch of qualities that would help them in manufacturing that China doesn't have.
1:23:39
It's sort of one way that the advantages that China has.
1:23:43
And as the world moves into automation, it's a little disconcerting that I believe I'm accurate in saying China has more industrial robots than the rest of the world combined.
1:23:51
And they certainly have more than an order of magnitude more than in India.
1:23:54
A lot of the issues around moving Apple's manufacturing around the globe today come down to demographics like you're outlining and just cultural differences.
1:24:05
How does Apple's leadership think about automation?
1:24:08
Because if Tim Cook is willing to invest 50 to hundreds of billions of dollars a year in a country, couldn't is isn't there a world in the future where, you know, Apple's investing a hundred billion dollars into American iPhone manufacturing?
1:24:23
It's the, you know, end to end automated. I know that.
1:24:27
I know that's like extremely difficult.
1:24:29
It kind of gets around the cultural issues, but it gets around the cultural issues and it just becomes a capital formation issue.
1:24:34
And the stat that we that we were toying with was that I think over the last decade, Apple has returned almost a trillion dollars to shareholders via dividends. Yeah.
1:24:43
And so that's that's enough money to do really really big mega projects.
1:24:47
The question is is it is it is it just that's not even that's not enough money, no amount of money can get you there or is there some other factor?
1:24:55
Yeah, because I think when people say like, oh, it's impossible to automate iPhone production, I don't think that the average person genuinely believes that in the fullness of the next 20 years.
1:25:07
There's no way an iPhone could basic you could put the parts in one side of a factory and a finished iPhone would come out the other side.
1:25:12
Uh, so let me say two things.
1:25:14
one, I'm totally in favor of stiffing shareholders and cutting the buyback program in half and spending the other $50 billion a year on building resiliency into the supply chain.
1:25:22
So, I'm not exactly sure that's what you're suggesting, but but I would advocate that.
1:25:27
Um, secondly, even if, let's just say, artificial intelligence on steroids is able to upend the way things are manufactured and you don't need 400,000 people in Jung to do it, nevertheless, China has unfortunately a number of advantages in terms of the refining and the mining of the metals.
1:25:42
Even if the metals are being mind in Africa is Chinese companies that are orchestrating all of these processes.
1:25:47
So even in a state where uh it is as you say sort of lights out factory where you throw in the components and then iPhones come out um that's probably still more likely to happen in China in China than America because they're the ones who have all the expertise sort of end to end in the supply chain and then you know shipping an iPhone even on a flight to US is immaterial in terms of the costs.
1:26:07
So, you really would need the sort of political uh catalyst that we're seeing now in order to make that happen, but it has to sort of be the perfect convergence of everything happening.
1:26:16
And Tim Cook can't just be the only person who's being pressured by the White House to do this because if you're going to have Foxcon and a whole bunch of industrial clusters setting up shop, you know, in Pittsburgh or wherever it is that Trump wants it, they can't just be supplying iPhones, right?
1:26:29
There is no factory in the world that all they do is supply iPhones, right?
1:26:32
Think of a TSMC building chips for any number of company that you can think of. That is what you need.
1:26:38
So, it's not a matter of convincing Tim Cook to open a factory.
1:26:40
There's no such thing as an Apple factory.
1:26:41
You need Tim Cook to convince his underlings in the supply chain to build things, but in order to do so, they need to be building for, I don't know, Sony and Samsung and a whole host of industrial clusters or so.
1:26:50
So, a whole host of companies in an industrial cluster.
1:26:54
Otherwise, the economics and the efficiency don't make any sense. Yeah.
1:26:58
I I remember you mentioning that it sounded like Apple had a mandate that their suppliers would not be overly reliant on Apple to the tune of more than 50% of what they produced being for Apple.
1:27:08
Why did that dictate come from Apple?
1:27:10
You would think it would come the other direction where if I'm a supplier, I don't want to be too dependent on Apple because if they pull out, I lose my entire business.
1:27:17
That's true, but Apple has all the leverage in these relationships.
1:27:21
And so if Apple says jump, the supplier says how high.
1:27:22
And so if Apple's really and just think of how demanding Apple is and particularly how much they scaled, right?
1:27:28
So 5 million iPhones were built in 2007 nearly a quarter billion by 2015.
1:27:32
So if you were a supplier just trying to keep up with that, like that was enough business.
1:27:37
Even if you were making one 1% or 2% margins, the volumes were were making you grow at a level that you had never grown before.
1:27:43
Um but yeah, what happens is that if Apple obiates the need for a certain component and turns direction just as they go from 100 million iPhones to 170 million iPhones, well, you would just go out of business.
1:27:54
And so this would happen and it would it would develop bad will from the supplier community towards Apple.
1:27:58
And so Apple began saying for its own protection, however fast you grow with us, please grow as fast with somebody else.
1:28:03
And that's what sort of gives birth inadvertently to the Chinese smartphone industry.
1:28:09
I don't mean the suppliers, I mean Huawei, Oppo, Evo, etc.
1:28:10
So, speaking of the consumer market in China, how how cooked is Apple in China?
1:28:18
I know sales are down double digits as of at least last year.
1:28:20
It doesn't look good, especially with all these new AI features coming online.
1:28:25
Is that driven by just consumer choice and nationalism or are there actual structural uh policy choices that are that are driving that change?
1:28:35
My question back to you is whether cooked was a pun.
1:28:37
We make tons of tons of I just wasn't sure how intentional that was. Oh yeah, of course. Um, yeah.
1:28:43
I mean, well, let me give the sympathetic view first, which is that after Trump 1.
1:28:48
0 kneecapped Huawei, Huawei was at the time, first of all, outs selling Apple globally in terms of smartphones.
1:28:56
But more importantly, it was the only phone to penetrate the top tier.
1:29:00
Apple doesn't really care if other phones uh other phone makers sell more phones than them, but they do care if they're in the top tier.
1:29:07
And so when when Chinese luxury buyers were purchasing Huawei phones instead of Apple phones, it was a really big deal.
1:29:14
But Trump um you know disallowed Huawei from having access to Google services, which maybe doesn't matter so much in China, but I mean I used to live in Germany and it had a Huawei.
1:29:23
If that thing didn't have YouTube and Gmail anymore, you know, gone.
1:29:26
I'm not going to have it.
1:29:26
Um and they also disallowed them from having 5G technology from from Qualcomm.
1:29:30
So that worked really well at a time.
1:29:33
And China market share for Apple was 9%.
1:29:36
And then when Huawei gets kneecapped, all the luxury buyers in China that need a 5G phone just as 5G was really coming on the scene, they all bought iPhones.
1:29:43
So the market share doubles to 17%.
1:29:45
Um, you could say that as a result of that, as a result of Huawei being on the sidelines, Apple's market share was sort of overly inflated.
1:29:55
So now that Huawei is back, we have had two years and now this is the third year of Apple market share declining in China.
1:30:01
But if I'm to be sympathetic, I would say it might just be that they're sort of right sizing or like refining an equilibrium now that Huawei is back in the game.
1:30:09
Unfortunately, I wouldn't sort of go with the sympathetic view.
1:30:11
with the sympathetic view. I'm more cynical here because now that Huawei is back and you're seeing more nationalist fervor in in China and now that iPhones are going to be built in India which actually diminishes the sense that the
1:30:22
iPhone is an indigenousmade product in um China and now that IIA sorry AI is taking on more preeminence in terms of why you should buy a phone and Apple's having all sorts of problems on their own and the problems are only compounded by the fact that they can't use partners like Chat GPT in China. I would predict
1:30:36
I would predict that by 2030 at the latest, iPhone share in China is going to fall back to single digits. Interesting.
1:30:43
Uh can you talk more about the parallels or differences between Huawei, Xiaomi and and Apple?
1:30:49
Uh Huawei's gone into GPU accelerators.
1:30:55
They're competing with Nvidia on the Ascend side. Uh Xiaomi has a car.
1:31:00
Apple's kind of stumbled in cars or there was rumors that they were working on a car. They didn't.
1:31:04
Um I I I guess my question is uh why hasn't Apple reaped some some of the the the downstream dividends of adjacent product development based on their supply chain dominance because that seems like almost free money for them and and it seems like all the Chinese companies have been like oh yeah we make phones so let's also make hoverboards and cars and everything and there's been a much different culture in terms of product development.
1:31:29
Is it just come down to culture or is there something else strateg? It's a fair question.
1:31:33
I don't really know why Apple uh abandoned the car project.
1:31:37
And I think it could have been a winning product, especially in China, because they have such brand appeal.
1:31:42
On the other hand, I would say the pro the Apple car product probably should have died years earlier.
1:31:47
The reason I say that is because Apple got caught up in the hoopla that Silicon Valley was in in 2015, which is that uh self-driving cars are going to be everywhere, right?
1:31:56
I mean, the the the founder of Lyft had said that quote, "A majority of our rides will be uh self-driving by I think 2021." Yep.
1:32:03
Travis Kalanick had said that they would buy a 100,000 Mercedes self-driving cars by 2020.
1:32:07
Um, and Larry Paige of Google said self-driving cars will be bigger than Google.
1:32:12
I mean, there was a sense that self-driving cars were the next big thing and Apple was not immune and Apple fit into it.
1:32:18
As soon as we realized that the self-driving thing was a bit of a fantasy and it's going to take much much longer to um to develop, I think the project could have died because at that point it's just like is Apple just competing on acceleration with Tesla?
1:32:32
Like what exactly are they going to do?
1:32:34
If you're in a self-driving car and you're using iOS apps on all these like, you know, uh sexy windows and stuff within the car like it makes all kinds of sense.
1:32:41
Once you take the self-driving car element out of it, I don't know that the Apple car makes any sense.
1:32:44
The Chinese are in a different ecosystem where it does make sense for them to have a Xiaomi car, a Huawei car, etc.
1:32:50
And maybe they're self-driving, maybe there's not, but they sort of like having an advance on all this technology and they like market share.
1:32:55
Apple only wants to be in markets where it's going to be a number one or number two player.
1:33:01
It doesn't want to play second, third, fiddle to uh to Tesla and any number of other companies.
1:33:05
That was kind of remarkable that they actually uh went so heavy into Apple TV because they were behind HBO and Hulu and Netflix and they really like carved something out there that worked.
1:33:15
But I know a lot of Hollywood people that were very skeptical about that because uh in film and television the brand standard is so high and you have a couple bad shows, you get a bad reputation, but they they they slaughter.
1:33:26
Can I give you my theory on why they moved into Apple TV Plus, please? Yeah, that'd be great.
1:33:29
Apple has a services division that is largely not what you think it is as the consumer.
1:33:34
In other words, if I said, "What are Apple services?"
1:33:36
you would say, "Oh, it's Apple, you know, it's Apple Music." Random $11 charge. I get I get a couple.
1:33:42
What it really is is 30% fees on App Store and Google paying them $20 billion a year.
1:33:46
So, for the purposes of earnings calls, I think they want to push more into things like talking about Ted Lasso and what Emmy awards they won rather than having to say, "We squeezed more out of Spotify this year, and by the way, Google's now paying us $22 billion a year."
1:33:59
I really think that was the motivation be uh for why they Why do you uh somewhat random, but why do you think they never made a a television? Oh, I don't know.
1:34:09
I mean, I've heard one thing, which is that Steve Jobs demanded, this is obviously, you know, before 2011, that when the phone when the TV was off, that the pixels be white rather than black and that Apple was unable to nail this.
1:34:21
Uh, I'm not saying that's why the project died.
1:34:24
I mean, it's so interesting because I would I would happily never get any Apple media products.
1:34:31
I don't need their shows.
1:34:31
I would much prefer to have an Apple device instead of TV that works.
1:34:35
This buggy Samsung, you know, absolutely.
1:34:37
But it's funny, TVs are good, right?
1:34:40
Like when Apple comes out with the iPod, it's because they're looking at MP3 player on the market in 20201.
1:34:46
And they're saying everything sucks.
1:34:48
The reason why they never made a video cam even though they came out with iMovie is that video camcorders were generally speaking doing fine.
1:34:54
So they needed to break into one market. They decided Yeah.
1:34:56
But I would argue I would argue that TV sucks.
1:34:57
Okay, there's there's all these pre-installed.
1:35:01
I hate every I've I've got it's a mess.
1:35:03
I hate the four TV Samsung frame in the back there.
1:35:05
I think that thing is great. It's okay. I have one too.
1:35:07
I think the software level in my opinion it it wants me to upgrade and subscribe and do all this junk and it's just like not as I guess the question is how much you would pay because TVs aren't a high 10 grand. Yeah.
1:35:18
I mean I I I think it would I I I think it would I think it would be like the Apple Pro Display XDR which is like a $4,000 screen.
1:35:26
basically more than more than anything five to 10 times what so good that designers still demand it and I think that I think that they could pull that out but I but I think you're probably correct overall.
1:35:36
Uh I last question and I want to get you and I want to let you go.
1:35:40
Um I want to hear the story of the mini tien that happened in 2010.
1:35:43
That's a fascinating story.
1:35:43
Oh god, what a terrible story to end on.
1:35:46
Um it is the only bit in the story that I would call salacious and I only have it in there.
1:35:52
I don't like uh salacious stories is that it's just an in an incident that takes place where Apple really realizes they're in over their head and they don't understand the culture.
1:36:02
Uh how many how many seconds do I have to tell the story? Uh a minute or two. Two minutes. It's hard. Okay.
1:36:07
So, it's hard not to like I need to give the backstory which is that the iPhone 4 in 2010 goes absolutely wild in China.
1:36:13
it becomes the most conspicuous thing that you can own.
1:36:17
And it's so conspicuous and there's such a supply demand imbalance that Apple at the time has four stores in a country of 1. 4 billion people.
1:36:24
And so these scalpers known as yellow cows begin sending migrants to the store by the thousands where everybody can each buy two units.
1:36:33
And then these gangsters who are backed by the triads are basically like lining up these people getting all the phones that come out of the store.
1:36:40
Uh, and then going to a city like Chongqing, population 32 million, number of Apple stores zero, and they're able to sell them at 78 $900.
1:36:46
They begin finding ways, illegal, uh, legal and legal, to make more money per iPhone than Apple.
1:36:53
And one of the ways was to go buy a phone in America at T-Mobile on a 24-month contract, and using a fake ID, they could acquire the phone for one month worth of the of the 24-month contract, smuggle it into China, and then sell it for $800 or $900.
1:37:05
I mean, that's just the state of demand at the time.
1:37:08
More than that, they were actually zapping out out the phones.
1:37:10
So, they were like rendering the thing inoperable, but in the process of breaking it, they were masking the fact that it was a stolen phone and then making more money that way as well.
1:37:19
Um, and they were even hollowing out the phone's component, selling off the memory and things like that.
1:37:24
So, if you understand just like through this brief thing that there's this chaotic scenes of of crazy demand of triad gangsters and everything, um, one of the worst things that happens in the book is that Apple runs out of product at the Shanghai Puong store.
1:37:37
So there's 7,000 migrants waiting to buy their product.
1:37:41
And they're more scared of the triads who have hired them to be there than they are of the police.
1:37:45
So when Apple says, "We're out of product. You need to go home."
1:37:49
They don't want to leave.
1:37:49
They feel like they can't leave.
1:37:51
And they literally prevent the glass doors from being shut on them.
1:37:54
And they stage a sitin in the store.
1:37:56
So the police are unable to get them to go.
1:37:57
The mayor of Pudong shows up. They're not able to go.
1:38:01
And eventually after 11 PM 100 black cat black clad police officers that someone compared to like you know the uh the SWAT team or or to what's it called? Steel team six.
1:38:10
Um they those kind of guys show up and when a young woman sort of had having never seen these people takes a photo of them um one of the persons takes her behind the genus bar and beats are so bloody that the blood on the ground cannot be scrubbed out and they have to reimpport granite from Italy to replace the stone tiles. Wow.
1:38:32
Um it's a terrible story.
1:38:32
The person who told me it has been having nightmares about it for the last 14 years.
1:38:35
But it's an example of Apple just not understanding what they were dealing with and it results in the political awakening the following uh couple years when they begin to hire senior people on the ground to understand the politics, the culture and the distribution issues that they're having in the country. Very rough.
1:38:52
Well, uh it's been fantastic talking to you.
1:38:55
I pulling for Apple to reshore manufacturing and um diversify the supply chain.
1:39:01
I'm on the side of Tim Cook. I think he can do it. I think he's cooking.
1:39:05
I'm on the side of friend shoring.
1:39:07
I would love to see more in Mexico and more in India.
1:39:08
I don't know what's going to happen in Pittsburgh.
1:39:11
Yeah, Patrick, thank you for doing the work to tell the story and come back on anytime. This Thanks much. Okay, cheers. Talk to you. Cheers. Bye. Great.
1:39:18
Uh, really quickly, let me tell you about Adio, customer relationship management uh magic.
1:39:24
Adio is the AI native CRM that builds, scales, and grows your company to the next level.
1:39:29
Jordan, power users every day. Power users. We are power users.
1:39:34
Uh, next up we have Aaron Sllo coming in the studio to tell us about Reindustrialized, all the things that are going on in his world. I'll be right back.
1:39:41
And let's check in on the intern cam. See how Tyler's doing.
1:39:43
Uh, Erin, how you doing at the donut? Oh, yeah. Uh, oh, looking good. I I like the background.
1:39:56
Uh, we have our intern We have our intern in the studio today uh making the first iPhone in America. It's happening. It looks like he's done. Give me the update.
1:40:04
I'm getting pretty close.
1:40:06
He's getting pretty close.
1:40:07
Missing most of the kind of, you know, external external things here.
1:40:10
I got the volume buttons, home button.
1:40:11
I got to put in the battery, the main kind of chip, motherboard. Okay.
1:40:15
Um, but feeling pretty good.
1:40:18
I'm probably 80% of the way there. 80% of the way there.
1:40:19
Less than an hour and a half in.
1:40:21
I think this is uh uh this is going fantastically.
1:40:22
I wasn't sure if this is possible, but it looks like it's looks like it's happening.
1:40:27
Anyway, Erin, how how you doing?
1:40:29
What what are you up to these days?
1:40:32
uh doing well and getting ready for uh you know the second annual second re-industrialized conference.
1:40:41
Give me the background on the first one. How'd that go?
1:40:44
When and where is the second one? Yeah.
1:40:46
Um so this is kind of a labor of love of many people, right?
1:40:54
Uh basically, you know, we have we have a nice team of uh co-founders, myself, Austin Bishop, Fallon Donghue, and Greg Bernstein. Cool.
1:41:02
Um and an amazing team of organizers, but yeah, last year the backstory is kind of obviously, you know, hard tech, deep tech, the wave was kind of happening at that point.
1:41:12
Um I put out that article, the techno-industrial manifesto. That's right.
1:41:17
Lots of questions, lots of people talking about this across military, government, finance, whatever.
1:41:23
um wanted to put all these people in the same room together, right?
1:41:25
So the idea behind this was can we actually build a big tent around this idea and um I saw it as a way to really just like convene and who were some of the top top speakers last time?
1:41:38
Um so we had Sham from uh Palunteer, we had Eric Prince, we had the Lieutenant Governor of Michigan, we I mean it was crazy, right?
1:41:48
like this all came together in under 3 months basically.
1:41:51
Um and we were we were all like grinding super hard to you know bring this awesome group of people together.
1:41:58
Um you know Chris gave the keynote uh from Hrien and it was this really really excellent group of people.
1:42:06
Um it was like you were there with you know a thousand of your friends right and everybody's ready to build and um it was just it was wonderful you know in so many ways and people really thought that it was like yeah what yeah what what is the overall state of the
1:42:21
reindustrialization project there's been a lot of thought pieces and conferences um what have we seen on the legislation side on the EO side and what are we waiting for next I mean yeah we could probably spend an entire hour on uh all the things that have rolled out of the admin, you know, since January. Um, but
1:42:38
Um, but it it has been it's been surprising uh to say the least.
1:42:46
Like, wow, that's awesome. What's up, Aaron? Good to see you. Hello. You as well.
1:42:51
Um, so yeah, like following up on last year, right?
1:42:54
Like one of the things that we established at the very end of the summit was we wanted to bring together the new industrial alliance, new American industrial alliance, NIA, right?
1:43:03
So um we Austin has been running that in DC uh for the last year and we've got basically like a mountain of you know uh legislation and policy that has been active and pumped out um through various like EOS we have um reconciliation happening right now.
1:43:21
There's there's going to be a ton, right?
1:43:22
And ship building standalone by itself, right?
1:43:25
Um it's I think we're going to be at a level where um the sovereign wealth fund potentially, right?
1:43:33
Like equipment financing out out the wazoo, like it it will be pretty interesting to kind of like watch and see what happens here.
1:43:40
Um very very excited to see.
1:43:42
What can you tell us about what to expect at this year's Reindustrialize? Are tickets on sale yet?
1:43:49
Where can people go to sign up? Is it invite only?
1:43:51
How is the how is the conference coming together?
1:43:54
Any speakers you can tease? Yeah.
1:43:58
Um so we did we did actually uh you know bring out a little list uh the other day of our top um invites and you can check that out on the the Reindustrialize account which is uh ReendSummit um on X.
1:44:11
But um yeah, basically the way we're doing this right now is that it's mostly um invite only.
1:44:21
Um we're we're balancing, you know, a very interesting community here uh in terms of like bringing the stakeholders together, decision makers, but also all the people that are very enthusiastic about re-industrialization and bringing manufacturing back. So get in Aaron's DMs. That's what I'm hearing. Start start yapping. That's great.
1:44:39
Uh, and I mean big big development since the last re-industrialized.
1:44:44
I've seen the iOS autocorrect keyboard stops correcting re-industrialized to de-industrialize. Total cultural victory. Let's go. Reindustrialize crew. We love it. We love it.
1:44:56
I think that's subtle signaling from Tim that that we're bringing the iPhone back to America. Yeah. Okay.
1:45:01
Give me any any advice, Erin, for for Tyler? I was about to ask. Yeah. Yeah. Yeah.
1:45:07
What what's the advice for our intern who's assembling the iPhone in America for the first time?
1:45:12
Uh what tools does he need?
1:45:15
Uh you know what are the key what are the key steps to really reshore manufacturing lots of pieces that didn't go in that phone? Yeah. Take it take it apart. Not done yet. I'm not take it apart. Put it back together. So he's not done yet. Okay. Yeah. Yeah. Yeah.
1:45:27
Aaron, what does it take to restore the iPhone?
1:45:33
Does he I mean uh are we going to give him a gong ring for this?
1:45:35
cuz I mean it's a lot of it's a lot of grit, right? We're watching history.
1:45:38
So cultural shift is what I'm hearing. Yes.
1:45:41
I mean massive cultural shift which is you know underlied by a lot of other factors too.
1:45:48
So um I think that infusing and transforming the industrial base through technology gives you know a lot of incentive for people to jump back in and join.
1:45:57
We're not we're not trying to go back to the 50s here.
1:45:59
So, um I I really do think that that's, you know, part of the cultural movement, uh right, to like bring the stuff kicking and screaming out of, uh World War II era or the '8s or however you really want to think about it into the 21st century.
1:46:12
And it's not going to be easy, right?
1:46:15
Like listening to Patrick talk about that stuff is it's mindbending honestly, like how how much one company can actually do, right, at scale. Um so, yeah. Yeah.
1:46:28
uh what are you thinking about kind of the the first steps to uh biggest re-industrial what is the rate limiting like in the supply chain right now we've heard about mining and DRA's working on work constructions and Hrien and you are working on different pieces of uh uh
1:46:46
whether it's CNC or injection there's a whole bunch of different pieces of like this the subtle supply chain I talked to one person who was uh working on uh bringing a team internationally to build brushless motors for drones, for small drones. And they were like, "Oh, yeah.
1:47:00
And they were like, "Oh, yeah.
1:47:01
I'm excited to get to America, set up shop here.
1:47:03
I'd love to just set up my company in the brushless motor district in America.
1:47:08
Wherever the brushless motor district is, I'll just set up my business there.
1:47:11
So then if I need a per certain part, I'll just walk across the street to another company."
1:47:14
And the guy had to explain like, "No, no, no.
1:47:16
We don't even have a district.
1:47:17
We don't even have a company. We have nothing." So, uh, so yeah.
1:47:19
What what what are you most excited about?
1:47:22
What's perhaps underrated right now in terms of the supply chain?
1:47:26
So it it's a really good question because this is kind of like can we pull the UNO or verso card on you know China or whatever other supply chains and bring some of the stuff back right like what what does that actually require and
1:47:38
it's more than just you know the raw the raw materials the machines uh it's the way that I think about this stuff it's like trade skill right like these are very very precious um of skill that when you give them away right it empowers somebody else to scale them somewhere. And if you've got
1:47:56
And if you've got hundreds of millions of people to to do that, um that's it's pretty challenging, you know.
1:48:03
Uh we don't necessarily need to outdo them.
1:48:05
We just have to be right like in the arena still.
1:48:08
Um because one of the things that they want is to de-industrialize everybody else, right?
1:48:14
So, uh we can't we just can't let that happen.
1:48:17
Um and that's okay, right?
1:48:17
like we we have to be able to fight back on a fundamental level by preserving, replicating and like scaling this very precious like trade skill.
1:48:27
And if that has to be done through through AI and automation, right, like to compress the stuff that people really shouldn't be doing, right?
1:48:36
Um like these dirty, dark, dangerous types of jobs.
1:48:38
Um we don't we don't really necessarily need to go back to that.
1:48:42
But yeah, there there's there's a lot, right, like underlying this problem.
1:48:47
And I think a lot of people have a challenging time separating the fact that like do we do we actually need to be focused on making t-shirts and toasters in America, but like not necessarily.
1:48:58
But the feeder industries that you need to do all that stuff, you know, grant you the ability to do all these other things, right? Yeah.
1:49:04
This line about like maybe we need to make make happy meal toys in America in order to for to earn the right to make iPhones in America, too.
1:49:12
like like the supply chain is so interlin that even these uh kind of like these silly toys that seem so easy to to offshore.
1:49:18
Uh maybe we need to bring those back too.
1:49:20
Anyway, uh it's been fantastic having you.
1:49:22
I'm sure we'll learn a lot more at reindustrialize.
1:49:25
Where can people go to learn more? What's the website? reindustrialize. com. There we go. That's a great domain.
1:49:31
Let's give it up for a great domain. Thank you, Aaron.
1:49:32
Thanks for hopping on the show.
1:49:34
We will talk to you soon.
1:49:35
Have a great rest of We're excited to cover it. Thanks, Aaron.
1:49:37
Uh before we bring in our next guest, let me tell you about public.
1:49:40
com investing for those who take it seriously.
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1:49:47
Uh our next uh our next guest is from Soligen. Uh Solugen is solen. Oh, we'll ask him. Welcome to the show. How are you doing?
1:49:57
Would you mind introducing yourself so we can get the pronunciation correct so we don't mess it up?
1:50:01
We hate messing up pronunciations on this show. How are you doing? Good. It's It's Solen. Solugen. Okay. Yeah.
1:50:07
You want to know how we got it? Is it? Yeah, please. It's a stupid name.
1:50:10
A hydrogen peroxide soluble hydrogen peroxide generators. There we go.
1:50:18
You know, the port the port manto era in in Silicon Valley deeply underrated.
1:50:24
There was there was a time when everyone would had a port manto name.
1:50:25
Then we went to the ly name.
1:50:27
You could have been bringing it back.
1:50:30
You had Bitly and all these different names.
1:50:33
I think there was a sy like Syrian domain name for a while.
1:50:37
Oh yeah, that was a big one.
1:50:37
A lot of it was driven by like what country is open to selling their TLD. Notion.
1:50:44
Yeah, notion war torn countries. Yeah. Yeah. Yeah.
1:50:47
Notion inspired theso domain. That was a big movement.
1:50:50
Uh and then I remember uh TV was Touvalu which is a tiny tiny island nation of like 5,000 people.
1:50:59
I might be getting that wrong, but I'm pretty sure at one point they were making like half of their GDP off of selling. tv domain names.
1:51:04
Soai domains represent 20% of the government's total revenue for an Ang and Anguila. Wow. There you go.
1:51:13
That's that's fascinating.
1:51:16
Anyway, we're not here to talk domains.
1:51:17
We're here to talk uh industrialization, making massive things, chemicals.
1:51:21
Uh can you give us a a brief overview of the company and the shape of your business?
1:51:26
And then I have a bunch of questions about how you actually like build this stuff. Absolutely.
1:51:30
So solen pronounced solen we got started in 2017 spun out of MIT and then went through Y Combinator um raised a significant amount of capital to basically decentralize chemicals production.
1:51:44
If you look at chemicals production today it's like these massive facilities. I I grew up in Houston.
1:51:49
My backyard was effectively a refinery.
1:51:53
These are the size of islands.
1:51:53
like Galveastston is an island. It's largely a refinery.
1:51:57
What we said was like what if we can marry my background and my co-founder's background, Sean, to basically make a better process. And we did.
1:52:05
Uh we we invented basically I I guess you can call it the world's smallest chemical factories uh is how we think about it.
1:52:12
And the whole point of that is that instead of having these massive centralized facilities, you've got decentralized production where you can put these facilities anywhere in the world and actually have your product be closer to the chemical.
1:52:23
We started the business with hydrogen peroxide.
1:52:25
Um, very dangerous to ship hydrogen peroxide.
1:52:29
So the whole premise of of the company and the name as we discussed is basically creating peroxide uh on demand near the end customer.
1:52:36
We've since expanded quite a bit out of not just peroxide, but added multiple chemicals into our portfolio.
1:52:42
So, yeah, that's that's kind of the background.
1:52:44
Well, I mean, I'm familiar with using hydrogen peroxide.
1:52:47
If I get a little cut on my hand, like I imagine that that's not the vast majority of customers you're selling. Yeah.
1:52:54
No, it's a it's a good question because the when we started, everyone was like, "You mean like the little brown bottles on the shelves?" We're like, "Yes."
1:53:02
And uh there's a huge market for peroxide for water treatment.
1:53:06
So, it's a really good antimicrobial, so it kills bacteria.
1:53:08
Uh, but also for rockets.
1:53:11
So, like if you look at like rocket propellant, a lot of it can contain high concentration peroxide.
1:53:16
It's called HTP peroxide.
1:53:16
Uh, that basically gives you pretty good thrust.
1:53:20
It's like liquid oxygen but more powerful.
1:53:22
Uh, and then the other applications are like in paper and pulp and all the things that no one talks about.
1:53:28
It's like this invisible multi-billion dollar industry that we went after. Wow.
1:53:31
Uh, I mean, you said the the the plants are smaller, like not an entire island, but I imagine that it's not something I can put on my desk. How big are we talking? Yeah.
1:53:40
No, unfortunately, your intern cannot make one of these at his standing desk like the iPhone. Not yet. I don't know. I don't know. Look at him. Look at him.
1:53:50
This guy can do anything American iPhone.
1:53:53
I think he's he's doing well.
1:53:56
He's making He's making the first USA made iPhone. He's doing well.
1:53:58
Well, he had to take it back apart to put the battery in.
1:54:02
Oh, the batter is going in now. It's looking good. The battery's in. He's doing great. Uh, yeah.
1:54:05
So, how how big are these plants? Yes.
1:54:08
It's like 10,000 square feet.
1:54:10
So, basically the size of like a small warehouse, you can say. Great. Yeah.
1:54:14
So, that's that's the idea. Got it.
1:54:15
And then and then, uh, walk me through the chemical supply chain in America.
1:54:19
Are there I mean, we hear a ton about we don't have enough uh tool and die makers in America.
1:54:24
If we're talking about Apple, we don't have enough rare earth mineral extraction.
1:54:27
I I I there's this uh there's this deja vu.
1:54:33
Anytime you find out about a new thing in the supply chain, it's always bad news and America's not leading in it.
1:54:39
Uh maybe give me the bad news and we can end with um I'm not going to shock you guys here.
1:54:45
80% of chemicals that we consume in the US come from China or a different country. Sorry.
1:54:55
Sorry, they're not booing you.
1:54:58
They're just they're just patriots. They're just patriots.
1:54:59
You know, it makes sense though because it's the cheapest cost of capital and the cheapest cost of labor out there.
1:55:03
So, what we're saying is we want to go after chemicals that give the United States an edge that China can't make easily, that are difficult to ship from other countries beyond China and that the United States is uniquely capable because of the technology we're developing to produce.
1:55:18
So if you look at the supply chain today, it's a producer um basically a giant chemical factory, makes the chemical, concentrates it into a dangerous um mix of something that can fit into a tanker truck that then goes to a middleman who then sells that to another middleman and then to another middleman.
1:55:37
There's about five middlemen in this chain.
1:55:39
They're called distributors who then sell that to the end user.
1:55:43
What we've done at Solision is said, "Hey, like what if what if we kind of collapse this whole middleman chain and put one of these units near our sites."
1:55:52
Our I'm actually I'm pointing to my plant.
1:55:54
We have a plant behind me right now.
1:55:55
That plant, our biggest customer is 10 minutes down the road.
1:55:59
They take most of the volume of the plant.
1:56:01
And basically, that's the the premise of what we're trying to go after and the business. Yeah. Yeah.
1:56:04
I mean, talk to me about the early go to sales motion because like selling chemicals does not feel like, oh yeah, you're a YC company.
1:56:13
You're just going to sell to the other companies in your batch.
1:56:14
Like, yeah, we do a lot actually. No, I'm kidding.
1:56:17
We'll buy a million dollars of your CRM.
1:56:19
You buy a million dollars of hydrogen peroxide perox.
1:56:21
We both have a million dollars in ARR.
1:56:24
But you're really you're really breaking the YC narrative.
1:56:28
I mean, now YC obviously does a lot more hard, but you were you were early to that party for sure.
1:56:34
We we were early to that party and the way we went to market um it's kind of a bizarre story.
1:56:37
So we started in um what was called float spas.
1:56:42
Have you guys heard of these?
1:56:43
These are like these isolation things. Yeah.
1:56:44
That are like 25 weight% salt and you float in it and you're completely isolated from from the world.
1:56:49
Turns out they use a lot of peroxide to clean that water. Oh, that makes sense.
1:56:53
But when we started we weren't at scale.
1:56:55
So we couldn't like we couldn't make industrial quantities product.
1:56:58
We can make small artisal batches of peroxide.
1:57:03
is how we kind of pitched it.
1:57:03
But then if you look at the these float spas, they're not using that much, but they were paying a lot per gallon for this product.
1:57:10
So we just said, "Okay, let's just go a little bit cheaper than what everyone else is doing and sell it to the float spas."
1:57:15
We got 80% of the market share uh within two years. Congratulations.
1:57:22
Not a big market, but we we were able to kind of like dominate it. That's a YC. That's a YC thing. That's great.
1:57:26
That's a YC that's a founders fund thing.
1:57:28
You know, that's our kind of uh entree into that world.
1:57:32
And then from there once we had that win uh we of course went to consumer products.
1:57:37
We actually launched a brand which like not many people know the story.
1:57:41
We actually uh launched a brand called Ode to Clean.
1:57:43
So basically we said okay we did this whole float spa thing.
1:57:47
We sold off um basic we had a partner that we just got a contract with and sold on the volume.
1:57:51
Then we said what's the next what's the next highest leverage point we can get as we scale the technology and it was wipes because everybody wipes.
1:57:59
And so if you have these wipes that have just a little bit of peroxide in it, you have a pretty high dollar per per gallon of peroxide.
1:58:08
So we launched this brand, a cleaning wipes brand called O to Clean that got bought out by uh the nation's biggest wipes manufacturer and we got a supply contract out of that and that really kicked off our, you know, our B2B sales motion.
1:58:20
Yeah, that's Yeah, that's amazing.
1:58:22
Um now, uh get me up to speed on the fundraising side.
1:58:24
on the fundraising side. I'm interested to know uh the like the the you raised a lot of capital but this the use of capital has to be different because there's capex in the business um there's R&D but but uh talk to me about the mix of venture and debt and and how you think about uh deploying capital not getting over your skis because you're
1:58:44
raising big rounds probably ahead of of huge profits how are you underwriting these investments as they happen yeah it's a great question I think fundamentally we look at this metric called return on invested capital or ROIC that is like our north star where any asset that we go after has to pass an RO ROIC filter and so we only go after the top two ROIC assets at any given time at Cian. So fundamentally
1:59:04
So fundamentally where we are today we've raised about 700 in growth in venture capital. It's fantastic.
1:59:14
Um and then uh we we've uh also we got a Department of Energy loan program um offer for $214 million um at 6% but that program is in this administration a little bit challenged uh just because it's a Biden era thing. No big deal.
1:59:31
Uh we were going to private banks to for for the debt side of it.
1:59:35
Now that we've proven out commercial scale, we can basically show that these this is the unit economics on one of these assets.
1:59:41
This is how big it can get.
1:59:43
Let's go after multiple ones. Yep.
1:59:45
I've talked to a couple of hard tech investors or industrial industrial founders, hard- techch founders where when they have to build something, there's a whole bunch of different structures.
1:59:55
Like, do they want to own the land?
1:59:56
Do they even want to own the the building that they're building or do they want to set up a a different LLC for that and raise different investors for that?
2:00:04
Have you gotten into that game?
2:00:05
Do you see that that's coming down the pipe?
2:00:07
thing like I a lot of people say if you're doing project financing should put it into a project financing entity. Yep.
2:00:13
What we fundamentally believe is like we can move a lot faster if there's no one else kind of involved at the table that's going to dictate how fast we can move. Got it.
2:00:20
Traditionally like I would even say like even the LPO they wanted us to work with like this white shoe engineering firm that would have taken three years to build our factory when we we did ours in 11 months.
2:00:32
So we said we're not we don't really want to work with those folks.
2:00:35
We're going to do it ourselves.
2:00:35
And so that's why we own everything outright. Got it.
2:00:39
Um, talk to me about automation and uh just getting more value out of the capital assets that you're deploying.
2:00:47
Uh, humanoids are in the news.
2:00:50
That seems pretty far off, but what what else is is is valuable to you right now in terms of uh are there things that you can design to make the uh the plants more efficient?
2:00:58
I wish I could sit here and tell you like the automation piece is going to be big for us.
2:01:04
It's not guys I'm like not for what we're doing.
2:01:07
The fundamentals of chemicals is all about yield and yield comes down to chemistry.
2:01:11
So if you look at a traditional petrochemical process, the yield is about 60% which means 40% of your initial carbon is either a waste product or has to go into the environment as CO2.
2:01:22
What we're saying is let's actually engineer that first before we try to optimize or automate anything because that's the tree bottleneck for the the cycle time of these products.
2:01:34
So that's where we're focusing on the yield side.
2:01:36
I will say there are opportunities for automation that are popping up that are exciting.
2:01:41
Um that's on the defense work that we're doing that is going to be quite important because we are making products that will go boom and it's important to have a lot of automation and control around that. Yeah. Yeah.
2:01:51
Well, uh I imagine that that's more Yeah.
2:01:55
I mean, I'd love to hear more about that to the extent that you can talk about it, but also um in terms of any of the uh any of the advances on technology in terms of uh understanding chemistry, we've seen alpha fold and there's amazing things you can do when you have a lot of data.
2:02:11
Is is that something that's coming down the pipe or is that just uh not really?
2:02:15
We actually just released a paper got published last week called uh our algorithms called badass.
2:02:20
Um, so basically what it does is it basically figures out a sequence for an enzyme.
2:02:24
So we use enzymes as as catalyst.
2:02:26
It figures out a sequence uh that's most likely to have the function that you're going after.
2:02:32
And that paper showed 75% predictability based on the sequence itself.
2:02:36
That in itself is important, but what's more important is really the reactor design itself.
2:02:40
How we think about how the chemicals interacting.
2:02:44
It's a very it's truly an engineering problem versus a science fair problem, I'd say. Yeah. Jordy, anything else?
2:02:48
If you're successful, is there a specific vintage car that you would develop?
2:02:54
Uh, if you know Anos, the Enos Grenadier. Oh, yeah.
2:03:01
Another fourth largest chemical manufacturer.
2:03:03
They've redesigned and rebuilt the Land Rover Defender.
2:03:05
Land Rover Defender is their car.
2:03:07
You would look to a Camry or a Subaru. That's how we start. That's great.
2:03:11
We're rebuilding a 2005 Camry. It was the perfect car. It was the perfect car. That's amazing.
2:03:18
Uh, thank you so much for hopping on. Awesome. This is great. Thanks for jumping on. Cheers.
2:03:24
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Uh, anthropic, if you want to break through, you want to break through the noise, get some consumer downloads on Claude billboards. Every billboard.
2:03:57
Every billboard, by the way, not just a few. Every billboard. Let's do it.
2:04:01
You have the capital, deploy it.
2:04:03
Uh, speaking of capital, we have venture capitalist Sean Lou from Founders Fund in the studio. Welcome to the stream. How you doing, Sean? Doing well. Let's give it up. I'm great. Uh, good to see you.
2:04:14
Um, we just talked to uh Gro from Solen. Uh, is it solen? I keep messing up. Solugen.
2:04:23
I I I I want to hear your side of the story.
2:04:24
How did you initially wind up working there? What did you learn?
2:04:26
Uh, and then we'll go into some of your venture career.
2:04:33
Um, so I'll start with uh how I ended up there.
2:04:35
It was a reference from NAP and uh Oh, cool. Brian Singup.
2:04:37
I'm I'm kind of like a crazy tech guy that likes capital expenditures.
2:04:44
Any company that has tech risk, bring it on. Crazy.
2:04:46
The more dollars the better, right?
2:04:49
Um and uh you know, I was thinking about getting my hands dirty with something early, something fun and solid came up.
2:04:58
Met the guys, love the vision, love the team.
2:05:00
And uh it was a hard job.
2:05:00
We were small in the middle of COVID and needs help and I felt like CFO COO is one of those underappreciated roles.
2:05:07
So, I took a took a chance on myself and the company and it's been a lot of fun. Yeah.
2:05:12
Second question, what did I learn?
2:05:14
Um, I think probably the it's all management theory is Any book you read is complete You you just you go in and you uh it's uh you kind of you learn on the job and uh you know just what whatever those advice they give you is all it's all it's all fake news. So, yeah.
2:05:33
I mean, what what's an example of that?
2:05:37
What was the first moment where you were like, "Oh, this this completely I got to throw out the playbook on this one."
2:05:42
You know, I think there's there's this whole thing about you got to be nice to your employees.
2:05:48
It's just like, "Hey, the HR gurus and the team is going to tell you, you know, you can't work your employees after 5:00 p. m.
2:05:54
You're just like, "Look, we're a startup. Let's go." Right?
2:05:58
Like, you work on Saturdays.
2:05:58
You run you run you run night shifts.
2:06:01
There's there's something called a Dupont schedule for a reason.
2:06:02
you run 247 and uh factories don't go down just because you need to take a break.
2:06:07
because you need to take a break. So yeah and uh I think uh I think I think it's just setting those like cultural guidelines and you know sometimes you when you hire people you hear like people say hey you know you just you got to define your culture as you know where we have all these missions and values which is true and at the end of the day for startup do you have the do you have
2:06:26
the IQ the grit and the grind to uh to to to suffer through a marathon that's a that's a startup so it's it's almost like a different profile how much of the work at that time was focused on fundraising and kind of educating
2:06:39
venture capitalists about underwriting what is kind of a firstofits-kind company to really go through the Silicon Valley pipeline uh versus kind of the operational role of the CFO COO actually deploying the capital. I I would say
2:06:53
I I would say it's it's I mean it's both your your firefighting every day, every minute.
2:07:00
Um, I remember when we joined there was no one no one no one no one in the company to to do finance and um we had a really bad head of FP and I fired him after two weeks.
2:07:10
So I went to count inventory myself and uh you know yeah we you know we're not a SAS company.
2:07:16
We got you got to count inventory.
2:07:17
You got to know what is your warehouse.
2:07:19
So it's it's it's important.
2:07:22
You got to know what every piece of equipment cost.
2:07:24
And on the flip side of that, yes, there's a huge and uh you know, capital makes a difference, right? Cost of capital.
2:07:30
We we haven't had a new chemical startup that scaled in, you know, more than 30 40 years.
2:07:35
There's a reason for that.
2:07:37
Partially is because there's a tech barrier where R&D is centralized amongst these um petrol giants and uh they don't really want to release IP.
2:07:44
And the second piece of this is cost of capital for startups is so high.
2:07:48
You build a factory probably cost you you know 300 million bucks on the low end.
2:07:54
We have a revolutionary technology.
2:07:55
You still got to bridge through the valley of death and you know for hard tech capital intensive business you you have more of them than you typically see in SAS.
2:08:02
So educating them on how to think about risk um and them venture capital um how to think about risk at what point should you see inflection in value and what is that actually transcend into is uh is you know I would say is other half of the battle. Yeah.
2:08:19
On the IP side, uh are you like were you watching for I for patents to expire and then implement them in immediately?
2:08:27
Are there other ways around these problems?
2:08:30
Like like what was the IP landscape at the time?
2:08:35
Are are there still like trade secrets that are just uh important that you could just focus on maybe reverse engineering or finding a different pathway?
2:08:41
Like what what was that like at the at the company at the time?
2:08:44
I mean I think you know there it's really interesting, right?
2:08:48
Like I think patents only get you so far.
2:08:50
That's why you know if we if we have faith in patents, China wouldn't be where it is.
2:08:54
Um but I think uh but I think the the key the key is what I always say if we take a big step back a lot of the formulation though how still sits with the petrol giants.
2:09:06
They have a lock in and they have a lot of resources to continue to be patent trolls.
2:09:11
I remember one of the, you know, probably two months on the job, you know, right about when we were about to close down, one of our competitors sent a assist and you know, cease and desist to us that was like, "Oh, you stole our formulation."
2:09:23
And it's like tiny little variance and something was complete and they they can still sue you out of oblivion, right?
2:09:29
Um, but I think we've kind of learned over time to in some ways you kind of you do have to fight some of the battles similar to what they do.
2:09:37
what they do. you you file all these umbrella patents as general as possible um to protect your core IP and on the other side you you kind of have a lot of trade secret that's very difficult to duplicate um but at the core because how different solen approach is to thinking about chemistry and how to scale this
2:09:53
right it's a generalized enzyatic based platform that you know it makes that that side of it much easier for us to navigate talked about uh talk about the transition to founders fund how' you wind up there and then I want to go into some of the deals that you've underwritten and how you think about uh some of what's going on in the hard tech landscape broadly. Yeah. Um it was it Yeah.
2:10:12
Um it was it was similarly you know I I I was you know my my family is in the Bay Area you know want to start a family and I was thinking about what are the places where I get to work with the smartest people building investing the craziest things and still be able to help solen founders.
2:10:29
So transparently was only choice I couldn't see myself working in any other VC firm.
2:10:32
I don't think I'd fit very well in any other VC firm and you know I'm very grateful that the guys took me under their umbrella.
2:10:38
So uh obviously you've you've looked at a lot of hard tech companies at the same time and uh valuations feel very high like walk me through how you're actually underwriting a growth deal in a somewhat capital intensive business.
2:10:53
How is it different than looking at a software company?
2:10:57
what what are like the major pitfalls or landmines that you need to be looking at when you're building a investment thesis?
2:11:03
Um, and is there anything that's kind of like uh underrated that most uh companies or VCs might be missing when they're underwriting these uh hard techch companies in this like kind of new era? Yeah.
2:11:16
Um, man, it's a it's a broad question you asked and I think it's it's a hard one to answer because within hard and capital intensity, those are two different things, right? Sure.
2:11:25
Last year, you know, NAP and me and I did a did a deal deal in Crusoe and it's more asset intensive.
2:11:31
There's technology involved, but the way we think about something like a Crusoe, which is more of an energy thesis and long-term bet on, you know, the infrastructure shifts that's happening in the US, the energy gaps that we see is is quite different than what you typically see in something like a Neuralink or SpaceX, right?
2:11:48
like a Neuralink or SpaceX, right? where where where if we take a step back if you think about what is the technical risk you feel you face and the first question we always ask is do you need to invent science and if you do then that's a very different question and very transparently you know founder son is is in the business of backing revolutionary
2:12:07
technologies and companies right the end part is important so how does this science transfer into a company is sometimes missing in those discussions you see really brilliant technologists building these cool tech and you realize that, you know, if you believe you need five, six, seven new fields of science to all come together and have that to be true, then then we are probably not the right place to be, right? Um, but then
2:12:30
Um, but then as you kind of progress towards the true like growth stage, are we thinking about scale at risk?
2:12:37
If so, what are we dealing with?
2:12:39
Is it like no unknowns or unknown unknowns?
2:12:41
And what are what are the different ways of thinking about that?
2:12:44
that? Sometimes when you look at let's say a a a new generation technology a lot of the question we say look the science is proven we don't need to invent science let's look at what does it take for this to materialize in such a way that we as investors transparently
2:12:58
can actually generate a return that makes sense in a time frame that makes sense right and a lot of that hinges on do you have the supply chain ready the the upstream fuel sources turbine generators and everything else that's that's associated with building something like a a new generation
2:13:12
technology can can You do you believe that if you you if you you figure this out can the rest of the supply chain also figure this out with you and a lot of the time the answer is no and that makes it that much harder and the last thing is I do feel like in most hard tech spaces founder have a tendency
2:13:30
to oversell the technology and they have a deep founded belief that the moment you know the technology is mature people will come and that is not true right and I think a lot of the questions I think Trey Peter Nap and others ask on the team is right like how are you going to sell this thing? Just because you make
2:13:45
Just because you make it doesn't mean people want to buy it.
2:13:48
Um and I think some of the best investments we made are you know in hard techch are the technology company that doesn't need to invent science.
2:13:54
They're making incremental improvements to scale.
2:13:56
They understand the bottlenecks as a supply chain have a realistic plan to deal with the bottlenecks they see.
2:14:03
And then lastly the market is already there right if you think about SpaceX launches a market.
2:14:06
Yes, it's expanded, but they have a really strong anchor to kind of take very to take market share very quickly.
2:14:13
So, that commercial-mindedness on day one is super important.
2:14:15
Yeah, it's the same thing with Starlink where people are already buying internet and then they just switch their provider or or add on a secondary provider.
2:14:22
Uh Jordy, do you have a question?
2:14:24
Do you see hard techch as a category becoming something that goes the way of maybe the creator economy was in 2020 where a lot of you know maybe there's opportunities but a lot of investors get so burned that um that it that it becomes kind of this flash moment in time uh or is it something that you see the average venture capitalist continuing to invest in consistently over the next 10 years?
2:14:48
How skewed is the power law?
2:14:48
Because I mean, if you look at the the history of like dev tools or like databases, it feels like there's like 10 companies that produce venture returns in most of those categories because a bunch of them got out and IPO, bunch of them hit multi-billion valuations. It felt less. Yeah.
2:15:06
Like there was a point in time where people were saying, I'm going to start investing a lot of money in software as a service.
2:15:10
software as a service. And then those people if they were decent investors 10 years later they still said I'm going to be I'm still a software as a service investor the question I have is like every VC over the last two years decided I'm also a hard tech investor and I I uh
2:15:30
rationalizing it by saying you don't need to be technical to invest in hard tech and and um there's definitely evidence that that that that can be true but I'm curious if you think the average venture capitalist even 3 four years from now will still be deploying into uh broadly hard tech. Um you know history
2:15:48
Um you know history doesn't repeat but it rhymes.
2:15:52
I feel like people don't learn and will continue to do that.
2:15:56
I think you know what's interesting is we probably see a more I would say hard techch as a category is probably is a misnomer.
2:16:03
I think you'll see more finely parsed views of heart techch. Are you symbio?
2:16:09
Are you, you know, biotech pharma? Are you biotech infra? Right?
2:16:12
Like I think that that should that that we shouldn't look at hard as a category in its totality, right?
2:16:20
I think defense tech historically was grouped in as hard tech if you look at this, you know, 10 years ago, right?
2:16:25
Android was hard techch today. It's its own category. Sure.
2:16:27
Um, and I do feel like people continue to to to invest, right?
2:16:34
Like the nature of technology is is hard tech. Very transparent.
2:16:37
All new technology that emerges hard techch.
2:16:38
So you'll continue to see that.
2:16:40
But the moment you create one power lock company, you'll see you know the whole host of siblings and children come out and then it becomes its own category and people invest in it.
2:16:50
You'll continue to see this you know cycle of life and death.
2:16:52
cycle of life and death. Symbio was super hot in 2020 2021 and I feel like that's now a taboo term but at the same time you feel like there's tremendous amount of progress in technology and I feel like a lot of the company we meet on the AI for science side is pretty much I would say the next generation
2:17:07
from a fundamental tech perspective addressing what biology can do right you see a lot of funding going into it um but but but to reframe your your question another way how do you see hard generating returns for venture capitalist I think hardc more than a software is de facto power law, right? There's there's one SpaceX that's, you
2:17:24
There's there's one SpaceX that's, you know, 99% of the market.
2:17:28
I mean, space is not a market.
2:17:30
Space in many ways is SpaceX with a lot of different derivatives that opened up.
2:17:33
Um, you know, Andro today captures most of the mining share for defense and you see that, you know, in in in other parts of the heart ecosystem.
2:17:41
There's very few pharma companies and they're when they're, you know, and they're they're they're massive in in comparison.
2:17:46
Um and I think the reason why I think this is more defensible than than software is because the you know c you do have huge amount of capital advantage and cost of capital is a huge advantage here.
2:17:58
When you're Dupont you have hundreds of billions of dollars of capex on the ground.
2:18:04
The marginal cost to produce is so low that there it's very very hard for an incumbent to come in and displace you.
2:18:09
Um, and that's why we feel like there there there's fewer power law companies here, but if you bet on the right ones and double down on the right ones, you can create massive short term.
2:18:21
Do you have an do do you have a take or like a post-mortem on what happened when venture capitalists went really big into clean tech?
2:18:29
I think this was like the late 2000s, early 2010s.
2:18:30
Uh my kind of naive take on it was that uh it was well-intentioned based on you know environmental concerns in many ways uh but the category definition was too narrow and so they didn't include Tesla as a clean tech company.
2:18:48
Tesla obviously if you had included it in the clean tech bucket would have been the power law winner and driven massive venture returns.
2:18:56
But instead Tesla was seen as a car company and as a result wound up you know uh not being included in that and so all the clean tech funds underperformed just the general software funds.
2:19:06
In terms of like uh in terms of like category definition and just postmortem on the clean tech you know investment thesis that we went through a decade ago.
2:19:16
What what's your take away from that era? Yeah.
2:19:21
Um, you know, Garb had this really good saying where he was like, you know, if you're one step too early, you're a genius.
2:19:28
Two steps too early, you're a martyr.
2:19:29
Um, and I feel like clean tech 1.
2:19:32
0 was the martyr category. Mhm.
2:19:32
Um, it's kind of like building Dropbox in the 1990s.
2:19:37
You didn't have enough, you know, bandwidth wasn't wasn't high enough.
2:19:42
Internet wasn't quite a thing. And in clean techch 1.
2:19:43
0, the industrial base is not quite there, right?
2:19:47
polysilicon processing um capabilities was not there and um and and and and you know the utilities had the utilities ability to manage um non-firm systems ability is also not there.
2:20:01
So there's a whole host of factors that that that kind of made the the cost structure was not competitive, manufacturing scale up was not there.
2:20:09
You need to invent new science to make this work and you also need to then do sales and marketing to convince consumers as it's actually made sense, right?
2:20:16
And you're also coupling that with selling to utilities which has capped ROI.
2:20:20
capped ROI. So fundamentally a bad customers was bad setup all around and and and to your point like I think the the the pitch of a narrower um definition of which is purely focused on generation technology is also I think misplaced right Tesla is not a
2:20:38
generation technology it is a car it's you know you group it with car technology that shifts it um and I think if you think about nuclear today it is clean technology I mean yes we're rebranding it but nuclear is the cleanest of all technologies Mhm. Right. Right.
2:20:51
So, I think I think there's this this whole wave of how do we think about um how do we think about creating and broadening that definition so that you see where the cleanest the clearest commercial pole is coming from is probably more important than the definition of what the technology is or is not.
2:21:07
On the flip side of that too, I think the last generation was highly dependent on government subsidy.
2:21:10
Then no like if you look at the underwriting whether it's from the DOE or others like all of them assumed certain level of government subsidy that lasted for decades on it and it just was not going to work.
2:21:20
And I think that's important to to you know as as we think about investing in hard techch and and you know a lot of these new technologies when does the subsidy go away at what point are you competitive? Yeah.
2:21:30
Uh that that reminds me of the story of Celindra heavily uh like a picked winner by the government and uh it feels like the Celindra example in in 0ero to1 at least is kind of like I don't know I call it like a spreadsheet error.
2:21:45
It's like they built their spreadsheet for the economics of that business and they just missed one variable.
2:21:50
And it feels like in hard techch there's a number of companies uh that are in that category today where uh it sounds really good in a pitch deck but once you actually run the economics there if there if there's one number that's off by you know some small factor you wind up with completely upside down economics.
2:22:07
And so in terms of underwriting hard techch companies like how how important it is is it to go through the long-term economics is are like do you need to bring in like um like experts or run like the first principles analyses on these companies?
2:22:25
I'm just seeing a lot of companies that are like we're going to do this on the moon or this in space and I'm just like oh if if launch costs don't fall by 10x like you've assumed you're completely upside down.
2:22:33
um that seems like an important part of underwriting or is that usually less of a factor because you're focused on the growth stage?
2:22:39
Um it's still very important, right?
2:22:41
Like I think when we think about that the the question we always debate at founders on is what is how many like need to believes do you have to make the thesis work? Yep.
2:22:51
And if you need to believe, you know, if you believe A and B and C by the point like this codependency, Yep.
2:22:59
you multiply them, you get zero, right?
2:23:01
And I think of this very much as like a semiconductor manufacturing process. 7,000 steps. Each step has 0. 1% yield loss.
2:23:07
By the end of it, you get no chips out.
2:23:08
So, so it's it's it's similar like do do you need to believe you know to your point if you let's take like you know some crazy thing like asteroid mining in you know Alpha Centuri.
2:23:19
Do you believe need to create like nuclear fusion engines, launch costs, you know, robotics and then you're like maybe I just back all these company and then wait for that to happen. Right?
2:23:29
So that's that that that that is a very very important thing.
2:23:30
that is a very very important thing. I think the more ant statements there is the worse it is and very transparent we don't like to make those bets right like the cleanest companies are the ones with one or two of these and very much it's you you you don't need to invent science with very little dependencies um you
2:23:46
know when we look at general matter when you look at solen or or or others in our portfolio you do see that neurolink even for that matter it's you you don't see that many and statements a lot of those have been proven out and what we need to understand is really like at what point like what do you need to for that to scale. Um and
2:24:03
scale. Um and um and I think I think to your point on like how do we do due diligence I mean yes I think it's it's we do need to understand the science there is a zero one question like do we do we take on binary risk and where does that exist and then there is a you know going back
2:24:20
to founders roots what's the what's our read on the founder how how do we see them in tackling all the risks coming up yeah and the execution side um well thank you so much for joining this was a fantastic conversation we'd love to have you back enjoy for the rest of your day and thanks for breaking it down for us. Love how cam always fun. Cheers. We'll Love how cam always fun. Cheers. We'll talk to you soon. Bye.
2:24:39
Uh let's check out let's check in on Tyler in the cam. He's got the glasses on.
2:24:44
You know that means he's towards final assembly.
2:24:46
I'm pretty locked in right now.
2:24:48
Come back to me in maybe 15 20 minutes. I'm I'm I'm almost done. Okay. Almost done. Almost done. That's great. He is cooking.
2:24:54
I think he has another maybe hour in the show.
2:24:58
It looks like he's making progress.
2:24:59
We'll check in with him uh at the next break.
2:25:01
Uh, first let me talk to you about eight sleep. Get the Pod 5 Ultra.
2:25:06
How did you sleep last night, Jordy?
2:25:07
Use code TBPN if you're going to get one. They're fantastic.
2:25:09
5-year warranty, 30 night risk-free trial, risk uh free returns, free shipping. I got a 91. How'd you do, Jordy? I'm sick. So, oh.
2:25:19
Oh, excuses, excuses, excuses.
2:25:22
Oh, John beats you one time and all of a sudden the excuses come out. What'd you do? What'd you do? Give us the number.
2:25:27
Sorry, the the Wi-Fi is not working. Yeah. Okay.
2:25:29
The number is horrid 6 63. Let's hear it for me. That's maybe the worst.
2:25:37
I feel like I I come out strong in the beginning of the week.
2:25:40
I usually beat you Monday, Tuesday, but then you catch up and then you just go on a go on a run.
2:25:45
Uh anyway, uh get go toleep.
2:25:49
com/tbpn and we will bring in our next guest G from Panthalosa building a very cool technology.
2:25:54
I'll let him tell you about. How are you doing? What's going on?
2:25:57
Hey guys, great to meet you.
2:25:59
Thanks so much for being on the show. Love the show.
2:26:00
I'm really excited to have you.
2:26:02
Uh I have heard about your company. The background. What's going on here? Is that is that real? Yeah, this is real.
2:26:08
We're in Portland right on the river. Wow, that's beautiful.
2:26:09
It almost looks tropical with how the lighting looks. Yeah. Very cool.
2:26:13
And you have the plant inside the window, so it adds adds to the ambiance. Looking great.
2:26:18
Uh would you mind a quick introduction on you and your and and the company and then we'll go into it. Yeah. Yeah.
2:26:23
So company is called Panalasa.
2:26:25
called Panalasa. based in Portland about 80 people a lot of people out of places like SpaceX uh Blue Origin Virgin Orbit it's it's a deep tech company love the conversation with Sean just now and you know the the premise of the company is to go to the middle of the ocean and capture energy there very cheaply so this was an idea that got started nine years ago um I was at Bridgewater
2:26:49
Associates uh doing investment stuff but before that I had been doing energy stuff at MIT and and working on a startup for energy and my co-founder had been also looking at the ocean and we were saying to ourselves, you know, what if you could find an untapped energy source on the planet uh bigger than many of the ones that people have been going for and uh and maybe more scalable, maybe lower cost of capture. So, the one
2:27:13
So, the one that really stuck out to us was the open ocean, far from shore, uh, where there is wind all the time and the wind makes the waves and so you can be out there, uh, capturing hypothetically what we thought back then was at a very low cost and and then you would, you know, use the energy right on site for things. Mhm.
2:27:37
Um and so this was sort of an era before um Cruso, but maybe a similar idea that you go to where the energy is and and we thought that this was really the best place to go, the middle of the ocean.
2:27:51
And so of course, of course, you need to develop a tech stack for that, but there's lots of interesting properties there that you can talk about.
2:27:58
And and what we thought was that maybe you could build a really simple system like you know a lot of the stuff that's been done in ocean energy before was like pretty complicated and pretty expensive.
2:28:08
Um so we thought that if you could develop a really simple system then you'd start to get a lot of those a lot of those properties.
2:28:13
I'm hearing simple and nine years it sounds like those are some famous last words.
2:28:17
You've been grinding on this for a long time.
2:28:20
Um but it sounds like there's there's actually breakthroughs. I you I saw some photos.
2:28:25
You've actually built one of these things.
2:28:26
Can you explain how big it is, how much energy it captures, what you're deploying, what the rollout schedule is because uh it's been a lot of work to get here to to where you are today and I want to hear about like where we are before we go into where you're going. Yeah. Yeah.
2:28:40
I actually think that that length of time is a really important part of any company that's trying to do deep tech. Totally.
2:28:48
Um you know, you want to stay small and under the radar while you're sorting everything out, right?
2:28:54
I think that a mistake that a lot of companies make is that they go to market with their first idea or their second idea.
2:29:00
And so if you can arrange things so that you can throw things out a lot before you settle on a path because the fact is you are going to get it wrong.
2:29:10
You're going to need to iterate and um particularly when you're trying to do something where the cost is the key consideration or if it's space maybe it's weight.
2:29:19
Um you want to give yourself that time.
2:29:22
So, so when I look back on the first four years of that, which was really the heavy R&D time, I'm extremely glad that we took that time to hone the technology and get it exactly right.
2:29:33
Um, and so by the time we got to year five and six when we were deploying ocean systems, we were right on the money in terms of power.
2:29:40
You know, we were hitting all of our simulations right away.
2:29:44
And uh it comes from the simplicity of the system where what we decided was that you want a system that is no moving parts at all except for one small water turbine.
2:29:53
So these systems we call them nodes.
2:29:55
They're about 10 up to 20 meters across at the top and they go down into the water column about 80 meters maybe 100 meters for full scale ones.
2:30:04
So so big systems um but pretty small in the scale of things like ship building.
2:30:09
So so this is this is sort of the shape of one of them here.
2:30:12
It's a, you know, and it sits in the water like this.
2:30:15
Um, and it goes up and down with the waves and all of the dynamics are coming from the inertia of water within that system.
2:30:23
And as the system goes up and down, it pumps the water into a reservoir, uh, just like a hydroelectric dam.
2:30:29
And then from there, it drives a water turbine.
2:30:31
So, so it's a really simple method of operation and once you have that, you can simulate it effectively and it's really easy to massproduce as well.
2:30:39
So, you keep saying you keep saying simple and I'm looking at your website and it's like the most complicated thing I've ever seen, but I mean it speaks to it speaks to your background and and and how ambitious this project is, but I keep thinking you're you really simple stuff, John. Yeah. Yeah. It's simple.
2:30:55
Just just just weld and build this massive thing.
2:30:58
And there's all this wiring and we're pulling up your website right now and it's fantastic. I mean, congratulations. It's amazing.
2:31:04
Um I I I want to know more about the applications.
2:31:06
about the applications. how much energy are we are we uh generating with one of these and then um and then I want to go into some of the applications because it feels like you could not have possibly predicted the the the reinforcement learning revolution that's happening
2:31:21
right now the ability to do uh distributed AI training and and where like it is the perfect time for this thing and uh maybe you just made your own luck but I want to know about the evolution of the application uh the stranded energy thesis and kind of uh the like like the the scale of what we're thinking about doing here. Yeah. Yeah. Yeah. Great.
2:31:39
So, each one of these systems makes anywhere from 200 kilowatts to a megawatt.
2:31:44
So, you can build anywhere in that scale. Got it.
2:31:48
And um you know, when we got going, it it was interesting because, you know, obviously we were jett jettisoning the cables back to shore and the moorings and all of that stuff.
2:31:58
And we said to ourselves, you know, this was back in 2017 or so.
2:32:01
uh what are the applications for which this can be very effective and we we decided on two platforms.
2:32:08
Uh one is computing and that's the primary and first platform and then the other is making synthetic fuels and getting the fuels back to shore.
2:32:17
Uh but if you look at our patents and everything back from 2017 2018 you know we have we have a whole bunch of them on computing.
2:32:25
Uh and you know every back then we were thinking about AI you know often in the patents we would call things brain simulation so we had AI brain simulation crypto. Sure.
2:32:36
Probably Bitcoin at a certain point.
2:32:38
Crusoe was doing the same thing. Yeah. Exactly.
2:32:40
And you know I had been at Bridgewwater.
2:32:43
I'd been doing AI stuff with Dave Fuchi there.
2:32:44
You could see even at that time where this was going.
2:32:47
You could see it in the exponential growth of energy.
2:32:48
You could see it in the growing power of the models even then.
2:32:52
You know this is when AlphaGo was happening.
2:32:53
So, you know, you could sort of put two and two together.
2:32:57
And, um, what we believe, of course, is that, you know, this is going to 100 gawatt scale, terowatt scale.
2:33:01
Uh, and there's not that many options on the planet for making that go really fast, at least if you're not doing something like coal in China.
2:33:10
Uh, so, so we are positioning ourselves to be an option that can scale really rapidly, much much more rapidly than terrestrial infrastructure.
2:33:20
Um, and and that's that's really the whole play.
2:33:22
We want it to be, you know, more sustainable, more affordable.
2:33:26
It's much cheaper, uh, and be able to scale to much larger levels even than, you know, than most terrestrial infrastructure could. Wow. Got it.
2:33:35
So, uh, one, uh, you said up to one megawatt. Is that right? Yeah. Yes.
2:33:41
The the nominal system might be 400 kilowatts, but you can go larger than that.
2:33:44
So, like how how big of a are you thinking like it's basically a data center inside?
2:33:49
Like you could put a whole bunch of H200s, maybe get up to like a few thousand maybe. Is that roughly correct?
2:33:54
Yeah, ex exactly like a few hundred uh up to a thousand GPU equivalents and there's enough room in that in that device to actually run.
2:34:04
Yeah, I mean that's amazing.
2:34:04
So um what what are you uh what are you tracking in the in the reinforcement learning training market?
2:34:11
Is that important because you're at this point where you're actually going to market?
2:34:15
Um and and will it even like are there specific decisions that you make need to make on the equipment that you load onto these machines or uh or are you trying to serve the GPU capacity or or or data center capacity at like a higher level of abstraction? Exactly.
2:34:35
So so those are those are um those are sort the sort of questions about the go to market.
2:34:39
But as you identified, there's, you know, the the massive push towards test time compute, just tons of longunning inference workflows all the time. Um, combined with Yeah.
2:34:50
I mean, we think it's going to be mostly RL on the training side, you know, and I mean, I'm sure you had people on last week and you saw the semi analysis thing drop. Yep. Was great yesterday.
2:35:00
But yeah, I mean you could sort of put it together even when you had alpha go back in the day of like you put together LLMs with reinforcement learning you get very powerful models.
2:35:10
So the future is largely about who can deploy the most RL and then once people really start to use this you know we think it's going to move to um all kinds of applications beyond text you know this has to move to engineering it has to move to medicine um and you're going
2:35:28
to want to have agents working together around the clock so you have longunning inference and and basically what this all comes down to is you want the cheapest throughput for tokens and so what we're targeting is the that long tail of very massive horizontal scaling of distributed energy units. Um, and
2:35:44
Um, and that's what we that's what we think our platform can be.
2:35:50
How over time would somebody live on one of these systems?
2:35:55
Would they visit it frequently?
2:35:55
We had Dylan Patel on last week and he said one of the challenges with putting data centers in space is that chips are unreliable.
2:36:04
Sometimes you need to like plug, you know, basically unplug a system, plug it back in. It's the meme.
2:36:10
It's the IT meme, you know, unplug and plug it back in.
2:36:12
Basically, you know, even with cheap energy, the IT work will still be necessary.
2:36:17
So, I'm I'm I'm wondering is one person going to be responsible for a number of these systems and they sort of visit them and make sure they're operating efficiently or um there's probably other solutions to Yeah, I can imagine you're building like some type of like gyroscopic tech to kind of keep the system stable when they're, you know, shifting up and down.
2:36:36
Maybe that doesn't even matter. I don't know.
2:36:37
Yeah, but I'm I'm curious.
2:36:37
It it's it's really important.
2:36:40
So, this is part of the tech.
2:36:42
So, you not only need a way to produce the power on board really simply and cheaply, you also need to be able to drive them around.
2:36:48
So, these are these are self-propelled systems.
2:36:50
Um, and they're self-propelled without things like propellers.
2:36:56
So, they create their own thrust just because of their shape.
2:36:59
So, we've done trials where we're driving these things in figure8s out there and it's all happening just because of the shape of the system. Wow.
2:37:06
And what that allows you to do is now this is sort of like SpaceX boosters coming back.
2:37:10
You can deploy the systems relatively close to shore.
2:37:12
They work their way out into the resource.
2:37:14
They hang out for a period of time capturing energy and you know maybe it's three years, maybe it's five years.
2:37:19
When it's time for a payload swap, they bring themselves back in and then you swap the payload. That's remarkable.
2:37:25
So you can configure that.
2:37:26
Yeah, you can configure the payload swap time for whatever you need to get the numbers, you know, for the meantime between failure on your payloads.
2:37:35
Y um and at the beginning, I'm sure we'll start with the most reliable stuff.
2:37:39
Uh and then as we get into worlds of inference AS6 and stuff like that that are you know more reliable than the GPUs then we start deploying those as well. Yeah that makes sense.
2:37:48
Uh are there are there lessons that you're learning from like the the Bitcoin ASIC era uh like like other kind of out ofthebox stranded energy projects.
2:38:01
Crusoe was kind of widely known for the I think it was gas beaker plants initially, but obviously those are are very much terrestrial.
2:38:09
You can just drive the ATV or the the truck out to them to check on them.
2:38:13
Um, what what what have you seen or learned from the uh the more uh the more creative uh energy solutions to the Bitcoin ASIC problem?
2:38:24
Um, well, I mean, I think the big theme of course is everyone shifting towards AI energy.
2:38:30
um just because the the amount of demand that's coming is enormous.
2:38:35
Um Bitcoin is you know Bitcoin is always going to be there as a fallback for anyone who's got very cheap energy on board our systems will have you know between two and three cents per kilowatt hour probably less in the future.
2:38:48
So that's always an option for us.
2:38:50
But um but I I think that you know as as people look at this it becomes clear that the the model layer will become more commoditized.
2:38:59
I think there's a lot of comp comparative advantage there for a long time chip layer too but the fundamental bottleneck is going to be who can scale tens of gigawatts per year or even 50 gigawatts per year.
2:39:11
You know that's that's a really hard thing to do in the west.
2:39:13
Um obviously we've been doing net zero gigawatts per year for a long time.
2:39:17
So if we don't relax that constraint then you get prices going up and that becomes a major impediment to the to the buildout.
2:39:28
I mean so the device already is massive.
2:39:31
If we're adding a gigawatt you're talking about making a thousand of these.
2:39:36
walk me through the actual manufacturing, how you scale that up to to to go from, you know, kind of one exquisite system to making dozens of these every month to every day.
2:39:46
Like the the roll out needs to be uh intense.
2:39:49
Um I'm sure there's a lot that you're learning from from what's going on at SpaceX and how quickly they've made those massive uh Starship rockets.
2:39:56
It always surprises me when there's a new one on the pad because I watched it blow up just a few days ago and they have a new one ready.
2:40:05
Uh, and it really speaks to their ability to manufacture something at scale.
2:40:08
Uh, both in terms of speed and just the size, you know, it's it's it it's one thing when you see the Statue of Liberty.
2:40:15
They built that once, but it's a different thing when you see a new Statue of Liberty come off the manufacturing line every single day.
2:40:20
So, uh, what needs to change at your company in terms of process?
2:40:24
What are what are the requirements to make big things fast and regularly? Yeah.
2:40:29
So, so this comes back to the design of the system.
2:40:32
So, it's the system is just this really simple steel shell.
2:40:36
It's like entirely hollow inside and it's made with mild steel.
2:40:40
It's got this axiymmetric shape so that there's a central axis and all of the whole system is built around that central axis.
2:40:47
So, that allows you to use equipment that lets you make these concentric shapes, put them together, weld them really simply in a lot of ways.
2:40:54
I mean I keep saying simple but in a lot of ways it's actually simpler than a car. Oh interesting.
2:40:57
And uh you know this just comes back to the design of it but what we can go and do because it's that way is we can cost all of the capex that you need in a factory for these things.
2:41:09
We know how many people will be involved.
2:41:10
We know how much land it'll take up.
2:41:12
take up. And so even now we can say that look if we were to go and build a factory of a certain capex investment you know let's say you built a factory at the scale of a gigafactory in terms of cost how many gigawatts would that
2:41:24
spit out and for example we know that if we built factories with the amount of capex that Tesla has put into g gigafactories we'd be spitting out 20 gawatts a year of capacity so the the manufacturing story is really nice these are still small enough to like mass produce. It's not ship It's not ship building.
2:41:44
Um, and it's not people crawling all over them.
2:41:46
It's things that you can to a large extent automate.
2:41:48
So, we're actually building our first uh pilot line here in the Pacific Northwest.
2:41:53
Parts of it will be operational in January.
2:41:56
And the whole thing should be operational later in the spring.
2:41:59
And then once that's going, then we can really start to to carbon copy that elsewhere.
2:42:02
It looks and feels so sci science fiction book.
2:42:06
It really It really does. It's extremely sci-fi.
2:42:09
Um, how do you actually make these shells?
2:42:13
Like I, you know, Tesla has like the Giga Press or something like that that can form aluminum or stainless steel into a particular shape.
2:42:21
Once you get so big, I don't even know.
2:42:23
Is there a bigger machine that just kind of will stamp these things together?
2:42:26
Do they have to be bent or rolled out of some sort of is it is it a mold?
2:42:31
I don't even know how it gets made. Yeah. Yeah. it.
2:42:35
So, so if you're using mild steel, the key thing is to keep the surfaces single curvature as much as possible.
2:42:39
Um, so you get to use just like plate rolls and basically they're like big pasta rolls that make, you know, cylindrical shapes and then conicle shapes.
2:42:48
Um, and and that's just, you know, it's it's just some metal rolls and you push the metal through and it comes out in the right shape.
2:42:57
then you can put that into your jig or put that into your what's called a growing line configuration that that lets you align them and then use an automated welding head to weld them.
2:43:04
Um so so luckily a lot of this stuff has been developed.
2:43:09
It's it's pretty well understood.
2:43:11
They use it for like wind turbine monopiles.
2:43:12
They use it for other axismmetric shapes like that.
2:43:15
So we get to piggyback, you know, sort of piggyback on a lot of the Oh, that makes sense.
2:43:19
Yeah, it does kind of have the same shape as like one of those massive wind turbines.
2:43:22
Uh the the huge windmills that you see.
2:43:25
I mean, it it's a fantastic project.
2:43:27
It's so fascinating to be working in this industry.
2:43:28
Um, I'm sure tons of lessons learned and a lot more good stuff in the future.
2:43:33
But thank you so much for stopping by. This is fantastic.
2:43:35
Yeah, we're going to our our power demands are immense.
2:43:37
Pretty pretty immense doing a lot of reinforcement.
2:43:43
Expect us to fill out the form on the site to to get one of these uh ASAP. Yeah. Awesome. Awesome.
2:43:49
Well, we'll come back on when we're when we're kicking out those first nodes from this from this factory here. We love that. Thank you so much. Awesome. Thanks for joining, G. Have a great one. You too.
2:44:00
Uh we have our next guest in Yeah, it's wild.
2:44:03
Just the imagery of seeing people like, you know, just climbing on top of it.
2:44:07
You don't really realize the the scale. It's simple. It's simple.
2:44:11
It's just it's a small little thing really downplaying the size of massive. I love it.
2:44:16
Uh anyway, uh if you're heading to Antarctica or, you know, anywhere else to travel the world, uh go take advantage of some lowcost energy across the globe. Book a wander. Find your happy place.
2:44:32
Find your find your happy place.
2:44:34
Even gold retrievers joined in. It's fantastic.
2:44:37
Hotel grade amenities, dreamy beds, top tier cleaning, 247 concier service.
2:44:41
It's a vacation home but better, folks.
2:44:42
Use code TBPN when you sign up. Um do it.
2:44:45
Our next guest is coming in to the studio uh from Divergent 3D talking about uh manufacturing plans.
2:44:52
They have a very cool partnership with Palanteer and I wanted to talk to Lucas.
2:44:54
So, welcome to the studio. How are you doing? Doing great. How are you gentlemen? We're great. What's going on?
2:45:00
What do we have uh in front of us?
2:45:02
So, you're looking at the airframe for an autonomous aircraft system.
2:45:07
So, about a 6 foot long fully autonomous 3D printed structure.
2:45:10
And if you look in the tail and on inside you see a little bit about divergent which is full functional integration of these airframes to make them faster, better and cheaper. Wow. Okay. It looks very cool.
2:45:24
And the background is obviously green screen, right? That is our factory.
2:45:28
That is Torrance, Los Angeles for you.
2:45:30
So one of four buildings on this campus.
2:45:33
This is where we manufacture uh at volume for aerospace and defense and the auto industry. Very very cool. Awesome. Um, yeah.
2:45:41
What what who are some of your customers?
2:45:43
I know you have a partnership with Palunteer.
2:45:44
Now, can you explain uh kind of the business in in in kind of basic terms and then we'll kind of work through it. Yeah, absolutely.
2:45:50
Uh customers are really OEMs, so really top automakers like Ferrari, McLaren, Bugatti.
2:45:58
Uh and then primary focus is aerospace and defense.
2:46:01
Uh which are really all the large primes.
2:46:05
Lohee Martin, Rathon, General Atomics and others.
2:46:10
uh and the smaller uh upandcomers and the larger upandcomers like uh the Andres of the world and Castellians are also uh customers of divergent and what we have built over the last decade is a groundup platform for engineering and manufacturing.
2:46:27
So I want to be very clear this was a deep tech startup.
2:46:30
It required over a billion dollars to build uh the system.
2:46:33
We've got over 750 patents on it.
2:46:35
uh it's not just uh uh a quick manufactur and play rollup strategy.
2:46:42
This is really about creating a design differentiation in terms of how quickly you can create performant CAD call it an airframe the CAD for an airframe.
2:46:52
Can you do that in a week instead of a year and a half?
2:46:54
And then how do you manufacture what you've created?
2:46:58
And we've created both the source code for that design engine.
2:47:01
Then we've created a manufacturing process that stitches together our own version of added manufacturing 3D metal printing and robotic fixturous assembly which allows us to do something uh extraordinary which is have a factory which is product agnostic.
2:47:17
So you're looking at a installed factory base that can go from making an airframe for a Loheed Martin to a large unmanned aircraft system for Rathon to a production vehicle chassis for Ferrari backto backto back with no hardware change whatsoever.
2:47:36
And that is a new principle.
2:47:38
That is a new reality where you are combining cost productivity of mass manufacturing, industrial manufacturing with the flexibility of what was first thought of as FRA fast prototyping.
2:47:50
Uh really taking those two principles into one system.
2:47:53
That's a divergent system.
2:47:55
Uh we've now scaled to over 18 uh contracts really all heading towards programs of record.
2:48:02
And to be clear, we're not a prime ourselves.
2:48:04
We are a subcontractor to these primes.
2:48:09
What we are building is the manufacturing layer and the engineering layer that all of these programs really require to hit the scale that the US needs to compete uh with our adversaries and to create the deterrence that we need in terms of our inventories and our capabilities.
2:48:25
Yeah, we've talked to a couple people about this this transition from additive manufacturing from a test environment to actual production.
2:48:32
Uh, does that mean that like traditional subtractive man manufacturing doesn't play a role in the in the parts or or or airframes that you design or do you work with other subcontractors to bring in more traditional workflows to augment what you're actually making so that you're just kind of using the right tool for the job at any moment or or is there some benefit to being like a pure play in in additive manufacturing?
2:48:56
Yeah, I'd say that the realities of additive manufacturing cost have changed dramatically.
2:49:02
uh when we started 8 years ago uh you were not cost productive in the additive space.
2:49:08
Today we're actually cheaper than the caster machined alternative.
2:49:12
So yes, you're able to make these very advanced geometries, but you're actually coming in at a dollar per kilogram point that is more affordable for the prime, the taxpayer, the government uh than the traditional alternative.
2:49:23
Where we see the most value is when we can take design authority for the entire say endtoend missile structure.
2:49:30
Start with the requirements. What is the CFD? What are the load cases?
2:49:34
Where are the hard points to the other subsystems?
2:49:36
Then engineer that from scratch.
2:49:38
That's where we can use high performance computing generative design and essentially optimize across all variables in one cohesive full design package and that then becomes a 100% additive structure that is assembled with that robotic system.
2:49:53
Um, are there other systems that end up in these vehicles? Yes.
2:49:58
But you're talking electronics, you're talking the payload itself, you're talking about the turbo jet or the propulsion source.
2:50:04
Uh, typically when we're looking at structure, we're 100% additive and we're able to outperform anything that would be cast or machined from a performance standpoint.
2:50:14
Say 30% lighter while meeting requirements, but more importantly, in a lot of cases, 30% cheaper while being able to make a,000 or 10,000 per year.
2:50:24
To give you some context, one of our 3D printers can manufacture about 400 large scale munition casings per year.
2:50:32
So imagine a 100 printers running, you're able to do 40,000 munitions per year.
2:50:38
And a 100 printers running is not um a unrealistic installed base.
2:50:45
We're running tens of machines already today.
2:50:47
And that is what the US government also sees as critical for the US.
2:50:52
Can we create a civil reserve manufacturing network, a connected set of next generation facilities that can create these munitions at volume?
2:51:01
Because to cut it very very clear, you look at our legacy programs like Tomahawk, JASM, they're not able to hit the rates that are required by our war fighters, by our leaders, by individuals like Admiral Kapara who are closest to the problem.
2:51:17
And why are they not able to hit those rates?
2:51:19
Partially because they cannot get the structure.
2:51:21
they cannot get the castings at the volumes required at the quality point at the geometry that's required.
2:51:28
We come in and we solve that in a very dramatic way.
2:51:30
Can you talk to me about some of the the history and kind of developmental breakthroughs in additive manufacturing?
2:51:38
I'm sure there's some stuff that's happened just in the industry broadly, maybe even academic papers or different pieces of the supply chain that have kind of unlocked what you're doing at allowed it to scale.
2:51:50
stuff like what what's going on in the alloy space and and uh or or deeper in the supply chain with parts that go into machines or machines that you're able to buy.
2:51:58
Now, uh give me kind of the lay of the land because it feels like we're we're we're in a kind of Moore's law moment for this particular technology.
2:52:06
You've obviously built a huge business around it, but what else is driving that upstream? Oh, absolutely.
2:52:10
Uh added manufacturing, it's no secret now that it's going to be supporting the structures in our programs of record.
2:52:18
And a decade ago it was thought of more as an R&D technology.
2:52:20
So the the industry has moved with us on that.
2:52:22
Uh at the same time divergent is very differentiated in the cost productivity.
2:52:28
Uh we've built our own 3D printer.
2:52:28
So we use our own machine.
2:52:31
We built our own material.
2:52:33
So the aluminum alloys, the refractory alloys that we print with uh those are designed by our material scientists.
2:52:39
The machine is designed uh by our engineers and we actually integrate that machine in house.
2:52:42
So we build it inhouse with a US-based supply chain.
2:52:46
that machine is 10x the cost productivity of its nearest peer.
2:52:50
So even though the industry has moved forward as well, Divergent has led a lot of that movement forward and now it is printing on a machine that is able to be 3x the rate while being a third of the cost.
2:53:02
So a 10x improvement to its near pure in terms of talking about some of the advancements.
2:53:06
When we started we were printing on single laser systems.
2:53:10
So you're talking about powder bed fusion.
2:53:12
You've got a powdered metallic on the bottom of the build chamber. got a laser overhead.
2:53:16
You're going to melt one layer at a time of this part and build it like a layer cake.
2:53:20
We're now at a 12 laser system.
2:53:22
So, we've gone from one laser to 12.
2:53:24
We're under 1 kilowatt uh per laser.
2:53:28
Now, we're north of 2 and a half kilowatts per laser.
2:53:29
So the amount of energy in this system, the size of the build chamber, the layer height, the speed of our recoding, the speed of our gas flow across that chamber, our automated build plate loading and unloading has essentially multiplied the rate uh by more than 20x over the last eight years.
2:53:50
You guys uh developed your own hypercar.
2:53:53
what what would be the right time for us to start exploring de developing a TBPN hyperar given that you just went through the process yourself?
2:54:00
You know, if you have a dream and and you've got the capital, pick up the phone, call us and and we can help with it.
2:54:06
Uh that that's what I'll say.
2:54:08
But uh Zinger Vehicles and in a more serious note, uh really that was about creating a product to create the ultimate tools and then we created a business out of it.
2:54:18
But early on we said if we're going to make the best design software, the best materials, the best 3D printer, a real assembly system, you have to create a product and you have to test that product tens if not hundreds of times.
2:54:31
Uh, and how else are you going to do that?
2:54:33
You're not going to do that with a customer.
2:54:35
You're not going to get your iteration.
2:54:36
You're not going to get uh the feedback loop fast enough.
2:54:38
We had to print thousands of parts and essentially get it wrong for our first two, three years before we really started to get it right.
2:54:46
And then Zinger gave us the systems engineering knowledge, the road data, the branding ability of our own product, taught us about heat exchange, taught us about propulsion.
2:54:54
We developed that V8 engine from scratch.
2:54:56
We print a lot of that V8 engine, California carb emissions compliant, fully crashcertified.
2:55:03
Uh that vehicle is tremendous feedback into the divergent tools and now in its own right, it's become a brand.
2:55:10
It's the only vertically integrated hypercar uh OEM in America.
2:55:15
And we just delivered our first handful of cars.
2:55:18
Uh they're the fastest roadleal car in the world now.
2:55:23
Um and there's a reason for that is because it's built on a new technology.
2:55:27
It is a different chassis that is in that vehicle than any other vehicle on the road.
2:55:31
Did you get any angry calls from some of your customers for just absolutely mogging them?
2:55:35
He's like, "Hey, we've been doing this for coming up on 100 years, and uh we're excited to be a customer, but like we would appreciate if you didn't just outperform us on every possible level and do it with a fraction of the budget and the talent and the time."
2:55:49
Hey, it it's motivation, right?
2:55:52
You take that car to the track and you know who you're running against and the engineers are there and they see that and then they go to their executives and they say, "We got to use Divergent to engineer the chassis and manufacture the parts.
2:56:01
We got to do it or we're not going to be competitive." Yep.
2:56:04
And at the same time, we we love competition and so do they.
2:56:08
You know, our chief commercial officer, George Biggs, used to be the the head of sales and marketing at McLaren, right?
2:56:14
So, people are clearly betting on uh Zinger Vehicles as the upandcomer in the hypercar space that can truly become the performance car company uh in the US.
2:56:25
But to us, competition is a good thing. We're not shy about it.
2:56:27
We like to show our customers what can be done.
2:56:28
And even if they are uh you know see the competition in it, at the end of the day they want to make the best product.
2:56:35
And if you're giving them the best pricing and the best ability to make that great product, they're going to want to be your customer.
2:56:44
You guys might be the most real hard tech company of all time.
2:56:46
Not not like you're being like, oh, we we simultaneously are working with like some of the biggest most important companies in the world from luxury automotive to defense and then we also on the side for fun and just We made a real hyper car that you can actually drive and take on the track.
2:57:05
Um, yeah, the the the car itself looks like it's just like a concept car.
2:57:10
It's it's the kind of thing that other manufacturers will put out as a concept car and then fans will see and they'll be like, "Well, this thing's never going to exist, so I'm not even going to be that excited about it."
2:57:18
I clearly a no render respector. Yeah.
2:57:23
Just just we're we're going to make it.
2:57:24
No, it it's a it's a tremendous design and the truth of that vehicle is it represents those 750 patents.
2:57:29
Everything about it, the way it's packaged, the way it's engineered, its power density, its seating layout, its aero philosophy, um all those differences come from the technology it utilizes uh as well. That's amazing. Amazing.
2:57:43
Thank you so much for coming on.
2:57:45
We would love to have you back.
2:57:46
We could go way deeper here. This was great.
2:57:47
Uh to be clear, we've got a lot of space on the studio.
2:57:51
If you want to park one of those cars, you need a parking spot. We got It's gated. We got security. It'll be safe.
2:57:57
We're happy to keep it here in the background.
2:57:59
Come to sunny Los Angeles and and go for We're here. We're here.
2:58:03
Oh, you're here to come down here. Drive it over.
2:58:06
All right, we will bring it over.
2:58:08
And you got to come see the factory as well.
2:58:09
Come see missiles and and various structures. That sounds fantastic.
2:58:13
Thank you so much for having on, Lucas. This was fantastic. We'll talk to you soon. Bye.
2:58:16
Really quickly, uh, what do you what do you need?
2:58:19
If you got a hyperar, you need a watch. Go to getbzzle. com.
2:58:22
Your bezel concierge is available to source any watch on the planet.
2:58:27
Their next challenge, make a watch that's so with 75 complications. We'll accept it. I want to see it.
2:58:33
Uh, next up, we have uh, Christian from Astronis coming in the studio.
2:58:38
Welcome to the stream, Christian.
2:58:40
You're technically your second appearance. Second appearance.
2:58:44
Cuz he was in the background.
2:58:45
I'm going to hit the gong.
2:58:48
I'm going to hit the gong for Christian just because I like you. Hit the gong. Welcome to the show. Look at that. There we go. There.
2:58:59
The top down shot of the gong is absolutely It's just like top-notch, guys. 1% better every day.
2:59:03
Uh your camera looks fantastic.
2:59:06
The lighting looks fantastic. It's very cinematic.
2:59:11
courtesy of Carmen, the guy who set up the original uh astroning team, got us all hooked up, got us the right gear, uh set us on the right path. Yeah, it's great.
2:59:20
And the green the green screen that you know AI generated backgrounding top notch.
2:59:24
This is actually So this is going to be YC demo day.
2:59:28
So they're setting up right now like in our main area.
2:59:30
They're going to put YC because they're right across the street, you know, and so they're put the the demo day is going to be like right back there.
2:59:36
Set up all day yesterday. Yeah.
2:59:38
We'll we'll we'll see you on Wednesday. We'll be there. Oh, nice. Wednesday. Uh yeah.
2:59:41
So, I mean, we have a lot to talk about.
2:59:44
We'd love to just get the the the intro and update from you and then I want to go into uh the the where we are on the Relentless March to create the ultimate uh hard tech vibe reel at some point.
2:59:55
But first, G give me the little update on your side. How are things going?
2:59:59
Yeah, things are going really good.
3:00:00
It's exciting time for Astronis.
3:00:01
So, we build small satellites for high orbits and it seems like the rest of the world is sort of catching on to this being a thing.
3:00:07
Um, we've been trucking away for 10 years at this idea and over those 10 years, you know, we've built a big commercial business.
3:00:14
We launched four satellites at the end of last year.
3:00:17
Those are getting close, really close to their slot to actually start providing service all over the world.
3:00:22
We have five more that are in the factory.
3:00:23
Um, but then the big I mean the real big update, we have a bunch of government contracts that are really starting to take real flight.
3:00:28
Um, so it's everything from just normal communications for the government mission, you know, like same thing out in geostationary orbit dedicated to one spot on Earth, but then also we have this new mission which is resilient GPS, which is super cool.
3:00:40
I think John talked about that last time he was on just saying, you know, we want to take GPS, break it apart into many smaller satellites to make it more resilient and less able for adversaries to take it down or jam us.
3:00:50
Yeah, because there's a ton of GPS uh denial and jamming that's going on all over the world now since unfortunately there seems to be a battlefield on every continent at this point.
3:00:58
Um, but that's very exciting.
3:00:58
Um, talk to me about uh startup vibrials.
3:01:03
Uh, what's been interesting to you?
3:01:06
What's been your favorite?
3:01:06
Are we in the post vibriel era? Have we peaked? Yeah, we might be, man. Have we peaked? Uh, yeah.
3:01:12
I really like the one from Zipline was cool.
3:01:14
I thought that they did like when like the solar punk vibe felt very different.
3:01:18
But what what are you seeing?
3:01:20
What are you liking these days?
3:01:20
Yeah, it's really interesting because you see these companies that have not raised very much money at all putting like presumably like tens or hundreds of thousands of dollars into a a vibe reel to announce them.
3:01:29
Like I don't I don't disl I kind of love it but at the same time we would never do something like that.
3:01:33
Launching a vibe reel early in our that's ridiculous to our credit to the credit for the first the first the first vibe reel cost us like $2,000. Exactly. Okay.
3:01:44
So this is this is exactly my point.
3:01:46
The you can tell when you look at some of these vibels how much money they cost to produce.
3:01:49
and you can tell they weren't done in house and I think that makes a big difference.
3:01:52
Like if you're a company that's doing your own comps like you guys are just like whatever rent renting a car that was probably your biggest expense. I don't know.
3:01:58
Uh then you make it yourself like an internal thing.
3:02:02
Totally different vibe than like we hired a company.
3:02:04
We paid hundreds of thousands of dollars because we want to impress you.
3:02:07
Like you can just kind of feel that coming off of the screen when it's not made inhouse, not organic.
3:02:10
And that's that's more what I object to than the like, you know, just making things look nice.
3:02:16
There's nothing wrong with making things look nice as long as you're doing it authentically and you're doing it yourself.
3:02:20
So best practices for vibe reels for hard tech companies.
3:02:23
Uh give me uh what is innovative right now?
3:02:29
So I think that so what we are shifting to is just more authenticity more showing less telling.
3:02:33
So we are building we just launched a new astron manufacturing channel.
3:02:37
It's pretty sick actually.
3:02:39
Basically, instead of it being like, you know, two dudes yapping away and just like talking about how great their company is, which is like the majority of startup coms these days.
3:02:46
And like, you know, the founder sits down in the chair and it's like the big dramatic opening shot like you have.
3:02:50
That's one end of the spectrum.
3:02:53
On the other end of the spectrum is an hourong video of just cutting metal.
3:02:56
And that's what we're trying to do with our Astronis manufacturing channel.
3:02:58
So, we just we've launched like two or three videos, long form videos and a bunch of shorts that are more viby and like get people into the channel.
3:03:04
And it's going really well. It's pretty sweet.
3:03:06
We're getting, you know, tens of thousands of views on those first videos on a brand new clean channel, which is exactly what you want to see.
3:03:12
Getting some good traction. Totally.
3:03:13
But I think I do think that we're sort of like beyond the like talking talking head like uh wouldn't like oh wow look the CEO is going to talk to like I don't know that's not that exciting anymore. Yeah. Yeah. Yeah. Yeah.
3:03:24
I mean, there's a lot of companies that will like open- source software packages, but there's something that's almost like higher leverage about just like, hey, we have this engineer who really understands how to use this one machine.
3:03:34
Like, uh, let's just put out a video of them talking about best practices for this.
3:03:38
It's going to be super niche, but like that community and from a talent perspective. Exactly. Uh, so yeah. Yeah. Yeah. Yeah. That's very exciting. Uh, uh, Jordy, anything?
3:03:50
Uh because I want to know uh what what I will say on the on this topic, we just had an event here yesterday or Saturday.
3:03:56
Um that was pretty sweet.
3:03:58
We had a bunch of manufacturing people from San Francisco all come to the office and like meet in person from like a talent perspective. Yeah.
3:04:04
Like selfishly we had a lot of really amazing machinists and manufacturing engineers and stuff like come check us out.
3:04:08
But really it was just to like build a community of these folks in San Francisco.
3:04:11
So I mean people often astronomist they like don't even believe me when I say that we're building satellites in San Francisco.
3:04:18
They're like, they're like, "Okay, but yeah, but like where do you build them?"
3:04:21
Like, like where do you actually like and we're like, "No, it's like literally down the hall from where I'm sitting right now is where we build our satellites."
3:04:26
But, um, you know, it's cool to get that community together of San Francisco people.
3:04:29
There is manufacturing in San Francisco. It is crazy. Yeah.
3:04:32
What are you expecting on the hard uh side from this year's YC batch?
3:04:38
I'm sure you've had a little bit of a of a preview.
3:04:40
Uh, we're headed over there uh uh tomorrow uh for demo day on Wednesday.
3:04:46
No, it's going to be sweet.
3:04:46
I mean, I think that Kugan, didn't you tweet this last time?
3:04:49
You were like, uh, out is Uber for eggs and in is like Ander for dog walking or something. Out is is Yeah. Uber for dog walking.
3:04:56
In is anderol for dog walking. Yeah. Unbelievable.
3:05:00
Uh, precision guided dog walking. Uh, yeah.
3:05:02
It's a Well, you know what's funny is that we talked to somebody about humanoid robots on the on the stream earlier this week.
3:05:07
And he was like, "Oh, well, like in manufacturing context, like it's a lot better to just have a a purpose-built road rod or maybe you want wheels because you're in a manu in a factory and you have smooth floor, so you'll just do wheels."
3:05:17
Uh, and the one example he gave of a really strong use case for humanoids was dog walking. And there we go. I don't know.
3:05:24
What's gonna think if it's not a human walking it? What? I don't know. Yeah. Yeah.
3:05:28
That seems like the one thing you don't want to outsource in your life is like the couple, you know, the 20 minutes you get to walk your dog and just like enjoy a new idea is an a humanoid robot for like patting your child on the back as they're going to sleep. Yeah. Yeah. Yeah.
3:05:42
I remember last demo day people were trying to I mean this this was at a period I feel like uh about a year ago it became popular to kind of dunk on YC. Oh, totally.
3:05:52
It's always been people take cheap shots at them all the time, but uh there were some people critiquing a bunch of YC founders for doing deep tech stuff. Oh yeah.
3:06:03
And it's like well shouldn't isn't that is that not like amazing, right?
3:06:10
Like do we notice damned if they knew, damned if they don't? You know what I mean?
3:06:14
Like they're getting criticized for doing just SAS and they're getting criticized now they move to like defense tech and and hard tech and whatever.
3:06:19
I mean at some point doing what they think is best and that's like the right call.
3:06:22
But I mean as we went through IC like however many years like eight nine years ago and at the time there was like basically no hard tech in the batch except like we were the I think we're actually really one of the first batches.
3:06:32
It was us it was um boom and it was relativity space all in the same and so like that was the first real like hard tech YC foothold.
3:06:42
Then nowadays, of course, it's like if you look at their list of requests for startups, it's like 50 to 75% of the entire list is just hard tech, like tech, that sort of thing. Uh reactions to WWDC?
3:06:54
Are you going to be multitasking on an iPad? Do you care at all?
3:06:59
No, I I don't even Did they actually release the like clear bubble thing everyone's complaining about already or is it just like They basically made it they they made they've launched a feature that's effectively like what you could jailbreak your original iPhone to do where a lot of the functionality is effectively uh and the UI is like see-through over a background.
3:07:18
You can put I don't I'm not tracking it. I don't really care. Bullish bullish. Yeah, totally. man.
3:07:23
Uh, what are you guys using for expense management these days? What a question.
3:07:30
So, we actually recently switched to RAMP. Let's go. Wow. Let's go. I love that. Wow. You put on the hat.
3:07:39
So, I'm uh I'm taking over finance right now. That's one of my jobs.
3:07:43
It's I you know, when when I got in there, there was a different expense management system in place and we had to go the the bestin-class uh ramp. So our dogs are barking.
3:07:54
Actually, I didn't even buy the hat.
3:07:55
Shout out to Py McCormack for sending me a hat value ad.
3:07:58
You're looking at it right here. Yeah.
3:08:01
When we when we partnered with Ramp, we only got one hat.
3:08:04
He said, "You got to work for the second hat, you know." Yeah. So, yeah.
3:08:08
At least we got the jackets, though.
3:08:08
I want I want I want one of those. The jacket's coming. We We'll bring these up.
3:08:12
Uh we'll bring these up to uh the bay.
3:08:14
We're going to have a bunch of them. We have 412 hats.
3:08:15
They're going to go not to be precise or anything.
3:08:22
But you got one with your name on it. Oh yeah.
3:08:24
Anyway, um well this was fantastic.
3:08:26
Thanks so much for hopping on.
3:08:28
Uh we will talk to you soon. Cheers, Christian. Thanks for coming on. Bye. Good to see you.
3:08:32
Uh our next guest is already here in the TVP Ultra Drrome.
3:08:36
We have Vlad from In in Physical.
3:08:38
Am I pronouncing that correctly?
3:08:40
I'm probably pronouncing it wrong, but we'll hear it from him directly.
3:08:42
Welcome to the stream, Vlad. How are you doing? What's going on? Doing great. How are you guys? How do you pronounce it?
3:08:50
The name the name the name Vlad or in physical or Oh, it's in physical. Okay, great. In physical. Give us the intro. What are you guys doing? What are you working on?
3:08:59
It's not the easiest name.
3:09:01
It's it's definitely everyone is asking how to pronounce it and I've heard so many pronunciations and and ways of spelling it.
3:09:07
But what we do is we're an open source secrets management platform.
3:09:11
So we help developers manage secrets across their infrastructure.
3:09:14
And so what secrets are, it's all types of sensitive credentials that basically connect the systems together and uh that run software under the hood and no one else realizes that. Very cool.
3:09:27
You have to brute you have to work work on you have to become so successful that people are forced to figure out how to pronounce the name, right?
3:09:35
It's always it's always a it's always a challenge and then once you know once you hit that hundred million dollar run rate, everybody will will have a good sense of it.
3:09:42
But um yeah, but yeah, talk uh give give us the backstory.
3:09:45
I know you you announced a $60 million series A from Aad Gil on Friday. Very exciting.
3:09:50
Uh not not an easy uh guy to to get on board.
3:09:53
Uh but break down maybe the history of the company and and getting to that point. Yeah. No, absolutely.
3:10:00
We started in a very open-source manner, right?
3:10:02
very open-source manner, right? We launched in physical open source project on Reddit and that's pretty much how it got viral and that's how it got lots of lots of developers on board and that's pretty much how it kept running afterwards and it you know like at first it was a lot of developers and it started transitioning to a lot of enterprises and very large customers and
3:10:19
folks like LG or AI companies like hugging face that are using us um we went through the YC batch so this was kind of like the first stage of the company u this was around two years ago at this point so uh so much has happened ever since and uh yeah since then we've been focusing a lot on trust, a lot on security, a lot on helping companies figuring out how to make it simple and straightforward. Um, yeah. Can you uh Um, yeah.
3:10:40
Can you uh give me a sense of the shape of the problem?
3:10:46
Uh, maybe some anonymized or non-anmized horror stories.
3:10:50
How bad can this go when it goes wrong?
3:10:53
I I mean, it's it's it could be terrible.
3:10:56
Actually most of the over 50% of all the security breaches that happen these days is because of mishandled credentials or some kind of identity issue that was either hard-coded or accidentally leaked by one of the developers or you know there there could be lots and lots of lots of different things.
3:11:10
A lot of the you know news articles that you see on on different media whether it's the crunch or or or whatever right a lot of them happen because of secrets management and the practices that a lot of organizations have you know they they are trying and a lot of organizations are trying to figure it out.
3:11:25
The problem is that the tooling out there is so complex to figure out and the infrastructure of these organizations is also so complex um that they can't really do this and and this is how they use in physical and so the the main benefits of this is first security but also reliability because it's kind of like hard to realize this but secrets basically connect all the different services and databases and and infrastructure and engineers together.
3:11:51
So if you are not able to access secret even for like a second, it could have lots of lots of lots of bad implications because then you're not a able your users not not able to use your products and software um and so on.
3:11:59
Yeah, such an interesting place to sit because I can imagine a bunch of uh knock-on effects aren't being that deeply integrated into like the dev tools chain.
3:12:08
Um are you thinking about that stuff already?
3:12:11
Uh do you have an idea of of of where this goes or what adjacent products might look like?
3:12:18
Um is it is it unreasonable to comp the business to like one password right now in terms of like business model and kind of shape of the product? Not quite.
3:12:28
So one password is very much kind of like personal passwords and does very well and kind of like very kind of like userdriven.
3:12:35
What Invisle does is we power all the infrastructure basically.
3:12:39
So everything that's related to software and infrastructure layer.
3:12:42
infrastructure layer. So it's indeed a very interesting base because we have to integrate with all the infrastructure tools right one password is very much a lot about kind of like the browser extension right oh yeah it doesn't need yeah they don't need to actually integrate with like Google for example but you do like we have to
3:12:55
integrate with all the cloud cloud providers I'm sure GCP even like or railway whatever right but also all the different version control systems like GitHub and so on all the CI/CD systems basically all the infrastructure components that developers are using because otherwise if we can't integrate even with at least a single tool then it doesn't provide the full value. Um so
3:13:14
Um so that's where a lot of complexity or what of what Invisle does um grows and and yeah and really kind of like what we're doing is we're building out a single platform for enterprises to manage access to manage secrets to manage all the sensitive information in one place and provision uh access controls authentication to all of those services.
3:13:36
Talk to me about the the the open source versus uh obviously you're a for-profit company.
3:13:40
At least I think so if you're raising 16 million you never know these days like you don't know.
3:13:45
It used to be a given if you went through YC uh but then one of the biggest companies of all time became a a nonprofit.
3:13:51
Uh but but what is it like and what is that like like give me the deeper level of that of that sales motion? Is it just marketing?
3:14:01
Uh is there a clear kind of upgrade path?
3:14:03
uh who are the best-in-class.
3:14:03
I always go to like Red Hat Linux did really well, but that was kind of a different thing because they were kind of like the company was built after Linux was already created.
3:14:13
They didn't create it themselves.
3:14:14
Uh then you have like a stable diffusion as a company and there's a whole bunch of others like data bricks has taken an open source product and then move moved it so far forward that they have a differentiated product to offer and they make a ton of money.
3:14:25
money. uh what what talk to me about like the open-source business landscape the the pitfalls like how how it works like what what your strategy is it's super interesting question because a lot of open source business are very different so a lot of business like data bricks they basically take existing projects and then build things around
3:14:42
them and typical is in this sense much more similar to folks like gitlab right where are actually building out and we are the owners of the open source project and really kind of like what the open source project is about is we want to make sure that any developer and and this is very interesting for the for the a lot of open source businesses, right? Is that you kind of like have to target
3:14:58
Is that you kind of like have to target the enterprise components, right?
3:15:00
But you also have to make sure that every developer and like a very long tale of developers, not even from enterprise, but also students and and indie developers and, you know, for weekend projects, they're able to use your tool, right?
3:15:11
And and they're able to benefit from it and they are able to do lots of their own tasks with it.
3:15:15
And so this is kind of like a fine balance that you have to navigate.
3:15:19
And so how physical works is that all of the features that are needed by developers.
3:15:23
They are available under MIT license, right?
3:15:25
So arguably the the most free license out there.
3:15:29
Um and so they can use it for any purposes. They can reuse it. They can fork it.
3:15:32
They can they can do whatever they want.
3:15:34
The features that are actually monetizable, they are features that are primarily needed by large enterprises, right?
3:15:39
So it's all the different managerial functionality, different kind of like more much more advanced functionality when your team consists of thousands or or tens of thousands of developers, right?
3:15:48
And then you you actually have um the problems that you're facing are very very different and and um then you can use you can start with physical open source but a lot of organizations end up transitioning to a physical enterprise. Yeah.
3:15:59
Uh I have to ask because I'm sure people asked it during your series A process but uh is there an AI story here on your web on your website you you mentioned AI I think twice.
3:16:10
One with a feature that maybe is AI powered two with hugging face which is obviously a customer.
3:16:18
So, I just asked because, you know, it's interesting.
3:16:20
My my a lot of my kind of um immediate thoughts around what you're building are around like why build this now?
3:16:28
Oftentimes there's great things to be built that nobody got around to building.
3:16:32
Uh but I'm but I'm curious to kind of understand uh the catalyst and and how you're maybe benefiting.
3:16:37
Well, there's actually a few things, right?
3:16:39
So the fact that we are creating this kind of like uniform source of secrets and access and and basically all like a single data set right for all the access within the enterprises.
3:16:50
It it helps us create this type of like AI brain behind it right where we are able to provision access controls and identify different overprovisioned access and loopholes and and everything else that developers are using.
3:17:03
So this kind of like the one part uh that we're they're focusing and will be focusing even more with AI.
3:17:07
be focusing even more with AI. Uh the other part is how do all of the agents and how do all of the other AI workloads are actually able to operate secrets right because you know we are talking about like they're becoming much faster they're becoming much smarter in what they're actually doing but they kind of depend on how fast they're able to
3:17:24
access secrets or databases or other resources that they need to be approved right and and right now a lot of it's provisioned very manually right so this is another area that in physical is really focusing on and how do you actually simplify it and how do you make sure that a lot of these workloads they can be more autonomous um in how they work. Yeah. Yeah, that makes sense. Uh Yeah. Yeah, that makes sense.
3:17:41
Uh what's your guys's internal um AI software engineering stack?
3:17:47
What what tools are you getting the most value from today?
3:17:50
I mean, in terms of engineering, so people use all kinds of things.
3:17:54
I mean, of course, cloud and and like basically like all the LLMs out there uh we are using.
3:17:59
It's kind of like a mix of whatever people feel most comfortable with and what they want to choose. That makes sense. Mhm. Cool. That was great. Well, very exciting.
3:18:08
Uh, congrats on the milestone and, uh, I'm sure you already have people breathing down your neck ready to do the beat now that a lot is, uh, is in.
3:18:16
So, uh, good luck, uh, you know, pushing pushing those people off. Thank you. We'll talk to you soon. Have a great day. Fantastic.
3:18:26
Uh, up next, we have a couple things.
3:18:29
We have Alex Heath from The Verge jumping on at 2:30.
3:18:30
Uh, that's in about 15 minutes.
3:18:33
I want to go through some poly markets about Apple to give us a little bit of a update on what people are expecting Apple to do over the next year.
3:18:42
I also want to check in with our intern Tyler Cosgr, see how he's doing.
3:18:47
But first, the jacket came off. Let me let me walk.
3:18:49
He's rolling up the sleeves.
3:18:50
While uh while he's getting ready for his uh update, I want to run through some of these poly markets.
3:18:54
Uh how much will the iPhone 17 cost? We're down.
3:18:59
Will I drop one of these?
3:18:59
Will you drop one of those?
3:19:00
We uh we're down at 10% now for over $1,000.
3:19:02
It looks like most people are thinking the next iPhone is going to be $799 or $6. 99.
3:19:08
Um not a lot of movement there, but it's moving downwards.
3:19:13
People are getting uh more bearish on the idea of a $1,000 plus iPhone.
3:19:18
Uh there's there's a small poly market out here uh about will Apple release a foldable iPhone in 2025.
3:19:26
Market launched at 12%, it's down at less than 2%.
3:19:29
No indication from WWDC that a folding iPhone's coming.
3:19:32
Uh interesting historical poly market.
3:19:35
Do you want a foldable iPhone? No.
3:19:37
I was I was at the farmers market on Saturday and uh was uh I met another dad and uh he he pulled out his phone and it was a foldable phone and I and he and he just un he pulled the phone out. Yep. Unfolded it.
3:19:55
did what he needed to do and I was like, "Wow, I didn't I've never seen one of these in the wild before."
3:20:00
But, uh, it's kind of cool. Folds up.
3:20:03
You know, it's pretty trying to find trying to find why you really need one.
3:20:09
But I mean I mean uh I I saw I think it was Kais went to China and was looking at a trifold phone.
3:20:15
The latest and greatest from the top Chinese smartphone company, probably Huawei. Trifold. Trifold.
3:20:18
So it So it it looks just like an iPhone.
3:20:22
just like an iPhone in terms of like size and then it unfolds into something that's basically a tablet.
3:20:28
Uh and that is actually pretty pretty interesting and pretty you could imagine that actually catching on in terms of like you know you don't even need to bring the laptop with you on the plane because you're just going to f fold it out and have a much much bigger screen.
3:20:40
You can use it when it's in its Oh yeah. Yeah.
3:20:42
You can use it as a phone and then you can use it as a tablet.
3:20:44
So it's essentially both.
3:20:45
And the hinge technology is getting to the point where it's reliable.
3:20:48
The dust doesn't get in it.
3:20:50
It actually folds completely flat.
3:20:52
The early phones, they would they would fold and there would be like a little gap because you couldn't you couldn't make the hinge fold flat. Imagine break.
3:21:00
You'd see a crease information. It'd be amazing. It'd be amazing.
3:21:04
Feel like they had a print edition. Okay.
3:21:05
Um, other poly markets I want to run through.
3:21:08
Will Apple invest in OpenAI in 2024?
3:21:09
This is a historical poly market.
3:21:12
It was up at 72% at one point.
3:21:14
Small market, but still it has crashed uh it crashed down to two to 0% obviously getting it resolved.
3:21:21
No, but man, maybe they should.
3:21:23
It would have been a wild one.
3:21:25
Uh, the other one that that people are tracking these days is, will Apple announce iPhone assembly in the United States before September?
3:21:34
We beat him to it, but we beat him to it.
3:21:36
Let's go to Tyler and see uh h how is the project going, Tyler? Break it down for us. Well, guys, it's done. It's done.
3:21:43
The first American iPhone manufactured in America assembled in America. Wow.
3:21:48
you know, it's, you know, maybe not the cleanest, maybe not the most perfect.
3:21:52
It's kind of a coin flip whether it would pass the, you know, inspections, but um quality assurance, but you did it.
3:21:57
I I genuinely can't believe you did it.
3:21:59
I was staring looking I was staring looking at the pieces earlier and and I and I was kind of concerned because I thought we've given Tyler an impossible task. Yep.
3:22:07
And we're now 3 hours and 20 minutes into the project and it's successful. Yeah.
3:22:13
I mean, look, I, you know, I'm more of a software guy, machine learning engineer kind of guy. Yep.
3:22:18
Not not big on hardware, but you know, this process I'm incredibly bullish on bringing manufacturing back to the United States.
3:22:26
You think it could be done? Okay.
3:22:26
If I can do it, you know, should not necessarily anyone, but but if you have a college degree, yeah.
3:22:34
Uh, I we got to kind of get into the economics now and understand like, you know, Tyler's market value.
3:22:38
Tyler's market value probably, you know, Yeah. quarter million a year. It took him three hours.
3:22:45
We're getting you run through it.
3:22:47
Potentially some margin problems.
3:22:49
Yeah, we've been talking about the $10,000 iPhone.
3:22:50
I think we might be looking at it.
3:22:52
You get an iPhone 4S handmade by a college educated machine learning engineer.
3:22:57
But imagine, you know, you know, in in in a lot of cars, they'll like the person that made the engine will sort of sign it.
3:23:02
Uh having an iPhone that was sort of signed on the back by Tyler.
3:23:06
Why don't we get why don't we get a Sharpie for Tyler?
3:23:08
He can sign the back of that one hands.
3:23:10
I'm thinking of starting like a kind of boutique, you know, handmade phone company now. I think that's good.
3:23:16
You know, made with love.
3:23:17
Just buy the new iPhone, take it apart, put it back together, sign it. Sign it. Yep. Assembled here. Handmade iPhone. Assembled here. Amazing.
3:23:24
Honestly, genuinely incredible work.
3:23:26
They They said it couldn't be done.
3:23:29
And we proved them wrong.
3:23:31
And you proved them wrong.
3:23:32
Anything is possible in America with enough dynamism. With enough Tylers. Saw it today. With enough Tylers.
3:23:35
With enough Tylers and we can we can accomplish anything.
3:23:38
Uh Poly Market has has it at a 4% chance that Apple announces iPhone assembly in the United States before September.
3:23:44
Not looking good there, but maybe we changed the odds today, folks.
3:23:48
Uh and uh what else is in the poly market here?
3:23:52
Will Apple release a new product line in 2025? That's sitting at 43%.
3:23:57
People are expecting something.
3:24:01
Let's go to the comments and see.
3:24:02
Home pa home pad plus home OS is the rumor.
3:24:06
Um, Apple smart home display.
3:24:10
So something like a like an iPad that would live in your house and act as the as the central as the central hub for all your HomePod devices. Very interesting. So I don't know. We'll be tracking that.
3:24:23
didn't happen today, but we will be getting the full update from our WWDC correspondent Verge uh uh over at the Verge.
3:24:29
Uh Alex Heath coming on the show in just a minute.
3:24:35
Well, we can pull up some bangers from the bangers tab.
3:24:36
We team I think Joe Wisenthal had a good one.
3:24:41
I don't know if you saw this.
3:24:42
There's a startup called Bernie which claims to have built a reputation marketplace so that you can license out someone else's credentials when fundraising or whatever.
3:24:53
They declined to say whether it's ethical and they say is this legal? Yes.
3:24:59
Every engagement on the platform is governed by enforceable licensing contracts.
3:25:03
Identity credentials and usage terms are verified. Is this moral?
3:25:06
So the issue is I'm looking up I just Googled Bernie reputation. Yeah.
3:25:09
and it's just a bunch of stuff on Bernie Sanders.
3:25:13
I can't actually find the startup.
3:25:14
I was seeing this and I was trying to understand it's it's kind of it's kind of a hilarious concept to be, you know, basically say like, oh yeah, you can just use my name to ra fund raise for for your project. Yep.
3:25:27
Like that does not that that's not going to work.
3:25:32
Um, uh, may maybe there's some people that that would agree to that, but uh, sounds social capital now liquid.
3:25:40
Accelerate investor confidence with Bernie's curated marketplace of reputation assets.
3:25:44
Purchase verified team credentials.
3:25:47
I can't find anything about this company. Is this ethical? That's not for us. It says Bernie.
3:25:52
Is the website, but it it could be a prank. Bernie. Let's see.
3:25:56
It It appears to be a real real website. Somebody vibe coded it.
3:26:03
Profile characteristics access elite credibility instantly. Instantly.
3:26:09
I just don't understand who is this ethical.
3:26:11
That's not for us to determine.
3:26:13
Credentials are already used to influence funding, hiring, and trust often informally and without consent.
3:26:17
We bring transparency, consent, and pricing to a dynamic that already exists. Very very interesting.
3:26:24
So I don't I don't quite understand.
3:26:27
So So this is like you want to build a SAS company and you just And you need and you need a Harvard educated you need a Harvard MBA on your deck as like an adviser.
3:26:35
And so you go I mean I guess like the bull cases this for this is like angel investors and advisers are already kind like GLG exists.
3:26:44
You could go to alpha sites or advisers I understand and and but this could this could be kind of a like a rebranding of the advisor marketplace.
3:26:54
So instead of saying like, hey, like we understand the supply chain because we spent, you know, $10,000 of our preede capital on Teus talking to experts and we converted a few of those into ad, you know, advisers and gave them some equity.
3:27:07
Bernie maybe lets you make that go direct to the advisor relationship.
3:27:13
But I don't know, it's it's very oddly marketed, but it's very funny. Anyway, extremely sus. Yes.
3:27:17
Um, I I I would uh that's it.
3:27:23
I would have the founder on just to just to ask how they expect this to work and not create a a um a wake of problems. Yes. Yes. Yes.
3:27:32
I mean uh there are other companies what the founders like well to be honest like I kind of dog food it fooded the product and like I have no tech experience.
3:27:42
I don't have a reputation myself but you know my team has but my 50 years of experience reputation Harvard MIT he just comes off Google stack uh GPS at sequoia benchmark well I mean intro.
3:28:00
com aerospace engineers y you know we actually IMO gold medalist many of the openai researchers are on our team high frequency traders we got some J guys on board.
3:28:13
We got Citadel guys on the team.
3:28:16
Johnny IV Johnny Ives is involved.
3:28:18
He spent one minute replying to like, "Oh, okay. Okay. So, I get it. That makes sense.
3:28:24
I've actually fully, you know, bought in to this project and I would trust you with my credentials for you to just sell to the to the highest bidder." Exactly.
3:28:31
Um anyways, uh we have some more um some breaking news.
3:28:37
Brad Gersonner's Invest America is being included in the reconciliation bill backdated to the beginning of this year.
3:28:46
So if you had a child December 1st, 2025 and beyond, they will get $1,000.
3:28:49
I think it's slated through 2029. That's amazing.
3:28:54
Um so so so is this like happening happening or is it still in the discussion phase?
3:28:59
Well, so the reconciliation bill needs to be passed included and they're being called Trump accounts. Wow. Okay.
3:29:04
That'll be really non-controversial, but congratulations to Brad Gersonner.
3:29:09
That's very exciting that he got it across the finish line.
3:29:11
At least the he got it across the starting line, I suppose. Yeah.
3:29:14
Um the finish line's upcoming, but it seems like it could go through.
3:29:18
I'm going to be calling these Gersonner accounts for forever.
3:29:19
I'm going to tell my uh my next child, yeah, this is you.
3:29:25
You can thank uh Gersner for your college education.
3:29:28
Write him a thank you note.
3:29:30
Um let's pull up this post from Kitsy. Okay.
3:29:35
It says, "Uh, Steve Jobs would have cornered you in a dark alley and beat you with a metal pipe if you even suggested something like this."
3:29:43
This is the This is the new um This is the new uh design, the sort of see-through functionality.
3:29:51
There's another post from Alex.
3:29:53
What's interesting is that X did this for a while and it was not wellreceived like but we ran this experiment.
3:30:00
I remember the bottom bar for a while on on X shortly after Elon took over it was like as you would scroll uh it still does it actually as you scroll the the bottom bar gets transparent and you can still click on it so it still lets you know that it's there and it kind of fades fades away so you can see things under it.
3:30:20
Um but but I think for a while it was like going up and back and it was kind of jarring. It's kind of fun. I don't know.
3:30:25
I I think this could work. Who knows?
3:30:27
some Alex uh taking the same joke or actually he was first.
3:30:33
He said Steve there's another post showing Steve Jobs would have taken you out back and shot out your kneecaps aggressive for pitching something with this contrast ratio.
3:30:44
Another post here seeing how the see-through actually shows up on the home screen.
3:30:48
It's funny because this you could jailbreak your phone a decade ago.
3:30:53
Eric Zed called this out.
3:30:53
You could do this exact same thing.
3:30:55
I remember it was very cool.
3:30:57
Yeah, it would have some areas that it would be disastrous, but security, you know, it would uh it was pretty cool. You know, it happens.
3:31:08
Uh should we go to this news about the doctors?
3:31:11
New paper uh shows a familiar result on LLM and medicine.
3:31:13
Doctors given clinical vignettes produce significantly more accurate diagnoses when using a custom GPT built with obsolete GPT4 than doctors with Google PubMed, but not AI.
3:31:25
So, we are firmly in the Centaur era.
3:31:28
Erin Levy over at Box sums it up well.
3:31:31
He says, "Doctors went from 75% accuracy without AI to 85% accuracy when using AI for a diagnosis.
3:31:40
In the future, it will be malpractice for your doctor not to be using AI.
3:31:41
This is such a clear societal benefit that it alone should cause everyone to be much more pro- AI progress." I completely agree.
3:31:52
It's very good, very exciting.
3:31:54
I want to see my doctor go on chat GPT in real time for sure describing what I'm saying.
3:32:02
Yeah, I mean they probably need like a doctor plan where the data is even more sequestered, right?
3:32:09
So they're not like leaking HIPPA like they need a HIPPA compliant GPT.
3:32:11
Uh but that will be pretty easily doable.
3:32:13
I guess the question is like there's been a couple AI for doctors companies and the question is is that an independent application layer company or is that something that OpenAI rolls out as a function?
3:32:26
Chat GPT is the HIPPA compliant chat GPT kind of thing potentially.
3:32:30
I don't know how there's multiple multi-billion dollar companies focused on the scribe functionality. Yeah. Right. Um or or need. Yeah. Yeah.
3:32:39
I mean, in in in legal, there certainly seems to be some like decent amounts of traction from Harvey.
3:32:44
And so, you know, it it could be enough of a unique use case that it's not just something that you're going to use JP for. Cursor for surgeons. Cursor. We'll probably Yeah. Yeah.
3:32:53
Just just uh cut that out. Clear that out. Grab it. Throw it out.
3:32:56
Put it Put it to the side.
3:33:00
Just vive coding your surgery.
3:33:00
But you know that like uh like the latest Gemini can just take a webcam view of of anything and just be talking to you the whole time about what it's seeing, making recommendations, and you really could do that.
3:33:13
Um so cursor surgeons cursor for vibe surgery. I got vibe surgery. Like Oh yeah.
3:33:21
Like how are you recovering?
3:33:24
Uh it was more of like a vibe surgeon than like a like a hardcore deep deep research surgeon.
3:33:28
It was more of a vibe surgeon. Yeah.
3:33:30
But it was just a college dropout.
3:33:32
My spleen's feeling decent.
3:33:35
There's it works for now. It might be a bit buggy. Yeah. But vibe surgery.
3:33:40
I don't know if we're going to go there, but it's possible.
3:33:45
We're already in the era of vibe legislation. Vibe engineering.
3:33:46
Vibe coding is very real.
3:33:49
Vibe designing is very real. Get on figma. com.
3:33:51
Uh speaking of great art, uh Think Word says, "Great art should comfort the disturbed and disturb the comfortable."
3:33:59
And it's a painting of Halo. Halo.
3:34:02
It genuinely is beautiful. It's beautiful. I want to hang this.
3:34:09
We should get this uh we should get this painted by hand.
3:34:11
Tyler, your next project.
3:34:13
You're painting hand paint this AI. Halo slop.
3:34:15
No, it's funny because I look at this and I don't think slop.
3:34:20
I think I think I think cool. Yeah.
3:34:23
But again, I mean, like like what takes this out of out of the slop world is is how it is funny to recontextualize Halo, this science fiction, this video game into this, you know, uh, painterly style of, I don't know, like Renaissance painting. Um, it's beautiful. It's stunning. It's provocative.
3:34:40
It's this it's this unexpected mashup.
3:34:41
It's the Harry Potter Balenciaga.
3:34:43
Two things that normally don't go together. You put them together. That's funny.
3:34:49
of the ideas, not what's is sloppy, but the ideas is uniquely human.
3:34:51
And so that's why that's why whoever created this came up with a great prompt and that's why we're liking and that's why it has 5k likes.
3:34:58
Anyway, um Dylan Patel, we mentioned this earlier on the show, but semi analysis has a banger post on uh scaling reinforcement learning.
3:35:06
Very very interesting deep dive.
3:35:08
Uh Dylan Patel writes, uh reinforcement learning is very inferenceheavy and shifts infrastructure buildouts heavily.
3:35:16
Scaling well-engineered environments is difficult.
3:35:18
Reward hacking and non-verifiable rewards are key areas of research.
3:35:22
Recursive self-improvement is already playing out.
3:35:24
Major shift in 04 and05 RL training.
3:35:27
And so, uh, what's interesting is that before in the pre-training era, in the scaling of the big big transformer runs, the massive runs, Dylan Patel told us this that that the latest Orion run, the GPT4.
3:35:38
5 run was already maxed out and they couldn't do a bigger single run without bringing Stargate online.
3:35:45
And so the the the industry has simultaneously shifted to reinforcement learning, which of course can be done in a very distributed way.
3:35:52
And so you can be generating training data all over the place when inference is low like chat GPT use is high during uh during the week the the work week.
3:36:03
It's not high during the nights and weekends.
3:36:04
And so during those times they use those GPUs those data centers to generate reinforcement learning training data.
3:36:10
And the particularly important thing is verifiable rewards.
3:36:13
So you have the you have the AI generate a whole bunch of code or write a write write the solution to a complex math problem but then that math problem is verifiable.
3:36:25
You can make sure that the answer is correct.
3:36:27
What's hard is when you have non-verifiable rewards like is this joke funny. Very very difficult.
3:36:32
And so um there's there's a lot of reward hacking going on and a lot of work being done on what do you do in a scenario where there's a non-verifiable reward not like a math problem or some code.
3:36:41
And so right now what they're doing is they're having other LLMs grade the results.
3:36:44
And so you generate a hundred jokes and then another LLM is looking at them and saying which joke is funny.
3:36:52
And hopefully it learns over time, but it's very tricky.
3:36:56
There's also very interesting developments in in engineered environments.
3:36:59
And so when you're doing reinforcement learning, the classic example is like chess or go.
3:37:02
And so you put all the chess pieces on a virtual board, you play the chess out, but it's very easy to simulate chess because it's just it's just a bunch of pieces on a board rules.
3:37:12
It's a lot harder to create an engineering environment that that is simulating code across like a database and a and a web server and a web browser and Python and all and image generation because there are there's lag and delay in all of those.
3:37:27
And so a lot of the research that OpenAI did on reinforcement learning for video games, uh, they were able to run, you know, Super Mario at like a thousand times speed or they they can simulate an entire game of chess in a millisecond.
3:37:41
It's much harder to do that when you have to say, okay, go and interact with all these web servers and run into all the captas and and and you can't really speed up every the environment.
3:37:49
And so how you work through those engineering environments that you're running the test on is very very key.
3:37:55
And so there's a lot of research going in there.
3:37:56
So I'm sure we'll be digging into this more in the future.
3:37:59
Anyway, uh our guest is joining in just a minute.
3:38:02
Um but let's keep moving on.
3:38:05
What should we surrounded by journalists? Hold your position. Can't wait.
3:38:10
Uh there's a there's an obituary for uh Bill Atkinson, one of a kind, the Macintosh pioneer and inventor of HyperCard. He passed away at 74.
3:38:16
Um very sad to hear that.
3:38:20
very uh glad that Wired was able to do an a beautiful obituary.
3:38:25
Uh we'll read from some of this right now.
3:38:27
My first meeting with Bill Atinson was unforgettable.
3:38:29
It was November of 1983 and reporting for Rolling Stone.
3:38:33
I had gained access to the team building the Macintosh computer scheduling to launch early next year.
3:38:39
Everyone kept telling me, "Wait until you meet Bill and Andy."
3:38:41
Referring to Bill Atkinson and Andy Herzfeld, two key writers of the Mac software.
3:38:46
Here's what I wrote about the encounter in my book, Insanely Great.
3:38:50
I met Bill Atinson first, a tall fellow with unruly hair, a poncho via mustache, uh, blazing blue eyes.
3:38:58
He had the unnerving intensity of Bruce Durn in one of his turns as an unhinged Vietnam vet.
3:39:03
Like everyone else in the room, he wore jeans and a t-shirt. "Do you want me to see?
3:39:08
Do you want to see a bug?" he asked me.
3:39:09
He pulled me into his cubicle and pointed at his Macintosh.
3:39:13
Filling the screen was an incredibly detailed drawing of an insect.
3:39:17
It was beautiful, something you might see on an expensive workstation in a research lab, but not on a personal computer.
3:39:23
Atkinson laughed at his joke.
3:39:25
Then he got very serious, taking an intense near whisper that gave his words a reverential weight.
3:39:30
The barrier between words and pictures is broken, he said.
3:39:35
Until now, the word of art has been a sacred club like fine china. Now it is for daily use.
3:39:40
He's so excited about it. Atkinson was right.
3:39:43
His contributions to the Macintosh were critical to that breakthrough he'd whispered to me at the Apple office known as Brandley 3 that day.
3:39:50
A few years later, he would single-handedly make another giant contribution with a program called Hyperard, which press which paged the worldwide web.
3:39:59
Through it all, he retained his energy and devivve and became an inspiration for all who had changed the world through code.
3:40:09
On June 5th, 2025, he died after a long illness. He was 74.
3:40:12
Atkinson hadn't planned on becoming a pioneer in personal computing at a as a graduate student.
3:40:18
He studied computer science and neurobiology at the University of Washington.
3:40:21
But when he encountered the Apple 2 in 1997, he fell in love and went to work for the company that built it a year later.
3:40:26
He was employee number 51.
3:40:28
In 1979, he was among the the small group that Steve Jobs led to the Xerox Park Research Lab and was blown away by the graphic computer interface he saw there, the guey.
3:40:38
It became his job to translate that futuristic technology to the consumer working on Apple's Lisa project.
3:40:44
In the process, he invented many of the conventions that still persist on today's computers like menu bars.
3:40:50
Atkinson, he created the menu bar.
3:40:53
Jordy, this is incredible.
3:40:53
Which they just today added to the iPad. Really?
3:40:58
The menu bar is in the iPad now. So, he's he lives on. He lives on.
3:40:59
What a what what a full circle moment.
3:41:02
Atinson also created QuickDraw, a groundbreaking technology to efficiently draw objects on a screen.
3:41:07
One of those objects was the round rectangle, a box with rounded corners that would become part of everyone's computing experience.
3:41:14
Atinson had resisted the idea until Jobs made him walk around the block and see all the traffic signs and other objects with rounded corners. Wow.
3:41:22
He's like, it's it's probably easier for the computer to draw a circle or a perfect square, but Steve Jobs is like, no, the the corners have to be round. They will be round. And he built it. Remarkable. That's amazing.
3:41:37
Because of Atinson, my first experiences with computers were beautiful and magical. Yeah.
3:41:42
I was uh I was listening to Ben Thompson talk about uh Steve Jobs and AI and uh I think I think he was actually quoting uh who was it?
3:41:53
Signal or someone someone on X uh one of the accounts that we highlight all the time and this account had had said, "What would Steve Jobs think about vibe coding?"
3:42:01
And Ben Thompson's point was like he would have loved it.
3:42:04
was like he would have loved it. he would have loved vibe coding be and his example was that if you go back to one of the first major keynotes for Apple or one of one one of the keynotes I think right before he passed away actually Steve Jobs introduced uh Garage Band and
3:42:21
in it he's talking about all the different like uh like instruments that you can use and and he says like now anyone can be a musician and he was really about like just bringing the ability to create to anyone and that's what vibe coding does and it's like the perfect example of that. And people get
3:42:35
And people get so hung up with uh like the business implications of vibe coding or like what if it hallucinates like well what if Steve Jobs would vibe code for 20 minutes and push it to production. No, he would.
3:42:49
But he would but he would appreciate the sort of just creating software. Totally. Totally. Process of creation.
3:42:56
It's not like he's he made Garage Band being like make the perfect song every time.
3:43:00
And one of the things that Apple's uniquely behind in speaking of WWDC is uh is Xcode does not inter it does not integrate with cursor.
3:43:08
So when you're writing an Apple iOS app and you're writing Objective FC, it's a very difficult language and you can't immediately integrate with cursor.
3:43:16
At least not at least not Apple is working with enthropic.
3:43:19
They're starting to work on it. They are solving it now.
3:43:20
Anyway, uh we have our WWC correspondent Alex coming in the studio. Welcome to the stream. How you doing? What's going on, guys?
3:43:31
I'm uh at the Steve Jobs Theater. This is handheld. Hope that's okay. Oh, it's great. Looks fantastic. Great job.
3:43:38
Can Can you show us what's behind you?
3:43:39
Can you can you give us a little tour? Wow.
3:43:44
And then uh behind me is the is the Steve Jobs Theater.
3:43:46
Well, it's below me technically.
3:43:48
This is the This is the dome above it. That's beautiful. Amazing. Give us your reactions. Uh break it down. What have you seen? What have you liked?
3:43:55
Uh, what what what would you put in the bucket of like needs for everything time in the oven? Let's see. Um, okay. I hear I I hear you now. Perfect. Break it down for us. What's going on? Yeah.
3:44:09
Um, I haven't gotten to obviously catch the show yet, but I'm curious what you guys think.
3:44:13
I mean, to me, the big headline is no new Siri. Yep.
3:44:18
And that means no new Siri for at least a year because that's how Apple works, right?
3:44:23
They're not going to talk about it again.
3:44:25
in a way that's like expansive for developers until WWDC next year.
3:44:30
I think we saw the stock slide literally as WWDC kicked off because people were hoping for that.
3:44:36
I think Apple, you know, having just come out of some meetings that I can't really talk about, but I can just say like I think Apple is wanting people to go, look, we've got all this other stuff.
3:44:45
Uh the iPad is more advanced.
3:44:47
Uh you know, be excited about the new design.
3:44:50
But I think underneath this is this um simmering angst about where Apple is at on AI.
3:44:59
And I don't think they have a good answer yet. Do you guys? No.
3:45:04
It's it's it's I mean the the internet will destroy them for being like, "Hey, don't don't worry about the AI stuff.
3:45:12
We made your icon see-through." Yeah.
3:45:15
I think there's two things going on. And rightfully so. Right.
3:45:18
It's sort of it's it's somewhat I I wouldn't go so far as to say it's unacceptable because chat GPT is still great on an iPhone.
3:45:27
You get a lot of value out of it, but I forget who we had earlier that was like it would be really great if it chat GPT was integrated with photos and iMessage and and all these other things.
3:45:38
And so yes, Apple from from an investor standpoint, I look at Apple and and we've talked about this a lot.
3:45:44
Apple miss search, but they get 20 billion a year from it, so they're fine. They can miss AI. They can Yeah. Yeah. Sure.
3:45:52
And they can miss AI, but it does um you know, we have they might be able to still value capture is what you're saying.
3:46:00
Yeah, I think they can still value capture, but as a consumer, it's easy to be frustrated.
3:46:04
And if they auction off this button, the action button, uh, to the highest bidder, they that could be a multi-billion dollar deal for sure if they act as the front door to AI. Yeah.
3:46:13
I mean, I was thinking about the same day as WWDC open AI hitting 10 billion in ARR, right, which is 3x year-over-year, like on a massive base already of billions a year and a healthy chunk of that is flowing directly into Apple's pockets, right?
3:46:28
Because those are GPT subscriptions that people are paying for through iOS. So, yeah, you're right. They benefit.
3:46:33
I think the question is like what happens if people start to buy phones less because AI makes other devices more interesting.
3:46:42
So like the boogie the boogeyman here on the ground today is Johnny IV, right?
3:46:46
It's like what is he doing with Open AI?
3:46:47
Is Apple scared about it?
3:46:50
You can't get an answer either on or off the record.
3:46:51
But I think that's the real fear and that's probably years out.
3:46:55
So to be like near-term bearish on Apple's probably not correct, but like in 5 years are people buying phones less because we have all these AI wearables that take interactions away from the phone.
3:47:07
Maybe is Apple going to be winning there?
3:47:09
So far doesn't look like it.
3:47:11
So I think that's like that's more like fiveish years out, but that's that's a serious concern. Yeah.
3:47:14
And the China the China question is interesting.
3:47:18
We had uh Patrick uh the author of Apple and China on earlier today and he was just saying Apple is going to be fine in the United States in the near term even if they're kind of miss you know missing missing uh AI functionality but in China if there's phones like Huawei and and
3:47:37
other players that can offer these deeply integrated AI features you're going to fall behind in that market and you have to imagine that the dynamic between Deep Seek and Huawei is going to be radically different than the dynamic between open AI and Apple. Totally Totally different.
3:47:52
Yeah, that's been a big topic here too.
3:47:54
I was running into another member of the press from China who's here and he was saying everyone there is super mad that they don't have Apple intelligence which is like everyone here has it and it's like what does that even mean, right?
3:48:04
Like wait, so they didn't even roll it out? They didn't roll it out? No, it's blocked.
3:48:08
It's blocked by the regulators and now it's caught up in the trade war there.
3:48:11
So the regulator, I was just reading the Financial Times actually had a great report on this, how the local regulator was blocking it because of the trade war.
3:48:18
And so caught in all these geopolitical tensions that are really messing up their AI strategy.
3:48:24
And to not be able to sell the marquee feature of the phone you shipped last year in your second largest market. I don't know.
3:48:31
Maybe China is their first largest.
3:48:32
I don't know about users. It's probably close. That doesn't seem good.
3:48:36
And so that's that's a big question I have. Yeah. Yeah.
3:48:37
I I I think the other interesting thing is that like this is a developers conference, but all the consumers are watching and consumers are the ones that are I feel like they're the noisiest online about various redesigns.
3:48:50
I'm more interested to dig in as we get more details this week into some of the olive branches that Apple could extend to the developer community on the AI side.
3:48:59
Uh because even if they're not going to give up the Siri button to chat GBT, there are a bunch of different um there are a bunch of different small LLMs and different summarization functionality and and different access to parts of the chip that could be used at a lower level by all companies including uh upstarts that just want to build a cool app that maybe needs a little more horsepower on the AI side.
3:49:24
side. and the chips are great and so giving people more access to that at a deeper level that feels like a narrative that could be completely drowned out by oh we didn't get new Siri but if the developers are are increasingly happy and see that there's more opportunity to just build cool things we might we might
3:49:40
just wake up in a couple months and be like oh wow there's this amazing new app that's clearly using the chips more effectively like my phone feels faster it feels more advanced and it's not an Apple product but it's enabled by by the way Apple kind of uh you know opened up the ecosystem just a little bit. Even if
3:49:54
Even if they didn't go full, anyone can build the next Apple. That's right.
3:49:58
I think opening up their models that they announced today to developers could be a big deal, but it remains to be seen if the models are good or not.
3:50:05
I had a developer come up to me who's building this like AI social network and he's doing everything on device because he wants it to be privacycentric and Apple's perfect for that. That's what they do.
3:50:15
It's like their models run locally.
3:50:16
They're probably not the most performant, but they're going to they're free and they run locally. So for him, it's a win.
3:50:22
He's an indie developer trying to build a cool AI thing.
3:50:23
Is that something that huge apps are going to use? I doubt it. Yep.
3:50:27
So, is it going to be enough to shift the narrative on like, yeah, Apple's good at AI now for developers? I'm not sure. I'm kind of skeptical.
3:50:36
What's up with that uh research paper that an Apple intern put out? It was an intern.
3:50:40
I think he was an intern.
3:50:42
Did you any any chatter about that?
3:50:45
They basically said uh RL is on reasoning. Yeah.
3:50:49
Uh well it's like on the test time compute stuff.
3:50:53
So like basically saying like which it kind of makes sense like these are these are fancy parrots at the end of the day right they just repeat things back.
3:51:01
So if you just like layer on a bunch more of that does it actually get to some semblance of intelligence like I'm totally down to the most fancy parrot though. Give me a fancy parrot.
3:51:09
I would buy a fancy parrot today.
3:51:10
I think that's what Apple's discounting is like how much we love fancy parrots. Totally. Yeah.
3:51:16
I don't care if it's actually thinking or actually sentient.
3:51:18
like did it book my flight or not? Did it turn on my alarm?
3:51:22
It's the argument of like the Android user being like the iPhone is not the best phone.
3:51:26
It's it's the camera on the Android is, you know, a little bit better.
3:51:31
It's like, do the pictures look good or not?
3:51:32
When I take a picture of my dog, does it is the exposure like roughly correct? Yeah.
3:51:36
Is a is liquid glass uh hot or is it ass? How do we feel? Is it liquid ass?
3:51:42
Uh John doesn't get I Yeah.
3:51:45
I mean, it it seems like I I I don't know.
3:51:49
Like people were kind of like like ready to chomp at anything and and being very like negative.
3:51:53
Uh I'm I'm I I I I don't think it's as unprecedented as anyone has ever said because uh like like this has been tried in other apps. It does kind of work.
3:52:04
I'll need to kind of play around with it.
3:52:05
Have you Have you had a chance to play with any?
3:52:06
I think it looks I personally personally I think it looks cool.
3:52:08
It I I remember jailbreaking early iPhones, iPod touches to have that functionality and it was cool.
3:52:14
I never once in the last 10 years have been thinking I wish I could go back to that jailbroken UI that I had when I was a kid, you know?
3:52:23
So I don't give them any credit like this is the kind of thing that they should announce at WWDC and move on quickly and not try to be like, "Hey everybody, look at this." Revolutionized it.
3:52:33
I would just be very surprised if Apple whiffed on like a UI design feature because that's like what they're great at.
3:52:39
they're great at. I'm not I'm not like like the the unexpected upside is like can they train a huge foundation model and build a gigascale hypers scale data center like that's kind of out of their wheelhouse new territory but I would imagine that whatever they do on the UI UX side like it might be a little
3:52:56
jarring like when they went from skuorphic to flat design there were a lot of people oh I like the old one but then you get used to it and it's fine so I I would imagine that in the in the fullness of time we all get used to this and it's no big deal um although you know people are still upset about the photos app. I feel like I'm getting used
3:53:10
I feel like I'm getting used to it now.
3:53:11
It's still like pretty rough.
3:53:13
Some people aren't updating, but it it hasn't been as jarring.
3:53:15
I I've gotten used to it.
3:53:18
I don't use any of the new features yet.
3:53:19
Yeah, it's it it feels like like I've retrained myself on a bad what I think is a bad user experience.
3:53:27
It feels very search bu built the photos app.
3:53:29
It feels like it's designed for you to go and just start searching, but the actual categorization of images and videos isn't quite there yet.
3:53:35
So, if you're looking for like, oh yeah, like there was a video of my dog, but there was a newspaper in the video, I should be able to just type in like video of dog and newspaper and the actual AI that's running to tag that stuff isn't the issue.
3:53:49
The AI is not there and people think of your photos are for capturing memories and people think of memories in sort of a Yeah. Yeah.
3:53:54
an order and they're going to kind of go back to the to the moment in time where they capture that moment.
3:54:00
So, I don't I don't think they've nailed that. Yeah. Yeah.
3:54:03
Anyway, yeah, the only the only other thing that stood out to me was Vision Pro.
3:54:07
They're really positioning it as like an enterprise device now. Interesting.
3:54:11
Um, and I think that's because that's who's willing to pay that price point for it right now, right?
3:54:15
And so it's like, you know, some of that stuff's cool, but I didn't sense a lot of energy around the Vision Pro beyond that, right?
3:54:24
Um, and I think that product is still kind of a question mark in terms of like is it going to be a bigger thing or not?
3:54:31
And positioned as like, hey, we just want you to buy these for your employees so they have a bunch of monitors.
3:54:39
How how what was or like Yeah, like you're working on an assembly line or something which is like That's so odd. Oh, interesting.
3:54:44
That's so odd because they apparently they pulled the plug on a focus device.
3:54:48
Tyler, would you have benefited from having an Apple vision today?
3:54:53
Tyler built the first Americanmade iPhone.
3:54:55
Our intern We had our intern build a iPhone.
3:54:57
We assembled it in in under three hours.
3:54:59
Would you have helped you today?
3:55:02
Uh graphical overlays while you're building.
3:55:04
I think it would have helped.
3:55:06
I mean I I didn't have any instructions at all.
3:55:07
So I think kind of the the bar is just any instructions instructions pro, you know, I I think it would it would have been helpful. It could have been good. Okay. long after.
3:55:20
But but my my my my takeaway on Enterprise Vision Pro is that it's odd because I I heard that they were building a uh like a like a version that was specifically for pairing with a desktop setup and multimonitors and that was kind of the the uh like one direction they were going and Ben Thompson was writing like that's what I want.
3:55:38
That's that's the perfect product.
3:55:40
I've always thought that the uh that the the the win like like they have to win in one category before they win in all of them.
3:55:47
Like the iPhone first and foremost was a phone and it replaced a phone and then it earned the right to win everything.
3:55:54
And the Apple Watch first and foremost was a watch and then it became a fitness tracker and everything else.
3:55:58
Uh and so I've always thought that the Apple Vision Pro should have been, hey, we're Apple. We've never built a TV.
3:56:05
This is a replacement for your TV.
3:56:07
It's going to be really, really good at Apple TV, movies, IMAX, 3D.
3:56:13
Like, this is what you buy it for.
3:56:13
It's It comes pre-installed with a ton of movies and and and and TV shows.
3:56:17
We're not even shooting 3D movies or or spatial video.
3:56:22
That's not even relevant.
3:56:23
It's just a device and we're just going to super optimize it for for for watching movies because I got one.
3:56:28
That was my favorite thing to do on it, but it wouldn't work in the dark.
3:56:32
So, I would I would turn off the lights when I'd go to bed and my wife would just be sitting next to me and and I'd be like turning the headset on and off because it would lose the tracking and it would pop up like your Vision Pro is not working right now.
3:56:45
And it would clearly wasn't it never been used in just like dayto-day when people watch movies.
3:56:48
And so I feel like wait, it still doesn't work at night.
3:56:53
It doesn't work in a pitch black room because it has cameras that track the world around you.
3:56:56
And so so you can't even watch a movie lights up. Yeah. Yeah.
3:57:00
And then and then the plane mode was a little iffy, too.
3:57:02
And they had a special they had a special like mode that you could flip it into.
3:57:07
But it just it was trying to do too much.
3:57:08
And I feel like they should have just been like this is a home theater for people that can't afford a home theater.
3:57:13
And that's a lot of people.
3:57:13
And that's a lot of iPhone owners.
3:57:15
A lot of iPhone owners can afford a $2,000 TV, but they can't afford a a whole cinema room in their house because real estate's expensive.
3:57:24
Uh and and and I even heard that one of the one of the leads on the Apple Vision Project was from Dolby.
3:57:29
It was a Dolby executive on Yeah.
3:57:32
Mike Brockwell, the head of it is ex Dolby. That's right.
3:57:33
And so I thought it was like, okay, just lean into that fully.
3:57:37
Think about what the experience is.
3:57:39
You put this on for two hours, you watch a movie.
3:57:41
And but there's a whole bunch of different uh decisions that you make if that's the case.
3:57:44
And they clearly kind of did 90% of that and then 10% of the other stuff, and now they're all over the place.
3:57:50
And uh and and I still just want the home theater on my face.
3:57:54
Uh, did you guys see they showed two people wearing the Vision Pro in the same room on the same couch watching a movie together?
3:58:00
I didn't see that, but something they showed in the keynote.
3:58:04
Everyone hates that, but I actually think that's totally reasonable.
3:58:06
I don't think that that's crazy. I think it's fine. I think it's fine.
3:58:12
We're all just alone together. Yeah. Yeah. No, no, no, no.
3:58:14
Because you look over, you see the person.
3:58:15
It's the same experience as watching a TV on the wall.
3:58:19
It's It's the same thing, but it's just a bigger TV. It's great.
3:58:20
You can still as long as you can you can hold hands.
3:58:24
I'm super bullish on that. Okay. Yeah. I I I I this is weird.
3:58:26
The bull case for that is that somebody can get up to go to the bathroom or get food and they don't have to pause the movie. Yeah. No, no.
3:58:34
I I I think I think it's the future, but they need to make it lighter.
3:58:36
They need to make it cooler.
3:58:38
Like maybe some sort of fan because your face gets hot.
3:58:41
Like there's a lot of there's a lot of industrial design challenges to get it to be like fun to actually watch a 2-hour movie or three-hour movie.
3:58:46
It's still in the demo phase.
3:58:48
You you you you put it on for 15 minutes and then you're done.
3:58:51
Are you going to be moving over to the iPad for everything?
3:58:52
For all my content creation. Yes.
3:58:55
I thought that was actually really interesting that they position the iPad as like the podcaster device instead of the Mac. Um shots fired. Shots fired.
3:59:04
Maybe maybe for weekly weekly podcasts.
3:59:06
I don't think we could run. Man, I like my iPad.
3:59:13
I I just until they invent a way on the iPad to multitask as well as the Mac where I can tab between things fast, like I just Well, so that was a big that was the big focus.
3:59:22
I I haven't seen it entirely either, but the big focus was on multitasking, allowing you to have multiple windows open at once, but I don't I don't know if still um who knows.
3:59:33
Anyway, thank you so much for hopping on. This was fantastic. Uh pleasure. Go get some scoops. Go get some scoops.
3:59:40
That's what I'm here for. Amazing.
3:59:42
I'm out of the spaceship. Scoop lord. Beautiful. Bye, spaceship.
3:59:47
Honestly, the grass is looking amazing. So, there's that. Nice out. Cheers, Alex. Thanks for coming on. Good to see you. We'll talk to you later. Bye.
3:59:52
Um, I am deeply disappointed that they did not launch a mahogany iPhone.
3:59:58
That would have been the best.
4:00:00
The official wood of business.
4:00:02
The official wood of business.
4:00:03
The business class of wood. Yep. Um, liquid glass.
4:00:07
I'm watching the video from Tim Cook here. It looks good. I don't know.
4:00:11
I think it look I think it looks cool.
4:00:12
I think it's going to grow on me. I think it's fine. I think it looks cool.
4:00:14
I just don't think and I'm I'm excited to play around with it.
4:00:17
I The idea that Apple's going to whiff on that is so ridiculous to me. Like that.
4:00:21
This is This is They have all the best people for this.
4:00:23
They whiffed on photos a little bit.
4:00:26
I think you'll get used to it over time.
4:00:27
Anyway, um this is fantastic. Thanks for watching.
4:00:31
Uh leave us five stars on Apple.
4:00:33
And wait, we got to talk about some reviews.
4:00:35
What else do we got some reviews? Oh, we got some reviews. Let's read some review.
4:00:38
I'm pissed if there's no ads in here. Please.
4:00:42
Silicon Valley's Morning Espresso.
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If NPR did CrossFit and binge Red Bull, you'd get TVPN.
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It's the daily show for technocrats hosted by John Kugan and Jordy Hayes.
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Two gentlemen so classy and caffeinated I had to double check they weren't simulations.
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10 out of 10 would recommend even if this review is written by an LLM trained exclusively on Elon tweets and founders fund pitch decks.
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Tune in before your GPUs get repossessed.
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That's fantastic from Vincent.
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Great um new favorite podcast by Mile by Flynn.
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Amazing show, amazing host, amazing guests.
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can't get enough and keep uh wanting new episodes to drop earlier even though it drops every day for 3 hours. We're working on it.
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We might we might change we're on we're in hour four now.
4:01:46
So hooked on TBN by uh TBPN by Harry Campbell.
4:01:48
I've been hooked on TBPN lately and really loved the episode that featured the Whimo Toyota partnership.
4:01:54
That was when we were traveling.
4:01:56
I said you you were like yeah they have a partnership with uh Toyota and I was like oh you get like a Supra that whole thing about like the the Whimo Supra. Yeah, the undering. It was great.
4:02:07
It's like the tech world's version of sports talk radio in the best way possible.
4:02:10
John and Jordy keep things fast-paced, unfiltered, and genuinely fun, but still managed to dig into the serious stuff happening across startups, AI, and venture capital.
4:02:16
You can tell they've actually built stuff themselves, which makes their takes way more insightful than the usual service level chatter.
4:02:23
Whether it's breaking down the latest funding round or grilling a bigname founder, it always feels like a real conversation, not a polished PR piece.
4:02:29
If you're into tech and want to stay sharp without falling asleep, this shows it. Thank you, Harry.
4:02:32
shows it. Thank you, Harry. kind kind words absolute legends of technology and finance I think um from Derson base takes gong hits and vibes of techno capital abundance are a few words I'd use to describe the showing order really enjoy it seriously
4:02:52
and they do a great job curating guests some of which are now in my ex rolodex it's time to accelerate love it um anyways thank you for all the kind words folks we love each and every one of you and uh go leave us a review, but please put an ad in the review for your business or your company. We love ads or
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We love ads or your fund.
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Uh put an ad in the review and we'll read it out here on the show.
4:03:15
Everybody have a fantastic rest of your day.
4:03:17
I'm going to go hit take us on with a gong hit and then we'll check it on Tyler. It's a historic day.
4:03:23
Tyler Cosgrove, intern at TVPN, has assembled the first iPhone in America. He did it, folks. He did it.
4:03:29
There are no pieces left with scraps in a cave with scraps.
4:03:32
He did it in a cave with scraps. Is it signed now? Show us off.
4:03:36
Show show us what you got.
4:03:38
Can we go to the Oh, he's signed it. There we go. Right there. Yeah.
4:03:40
Let us know if you want that. We'll mail it to you.
4:03:46
If you've been listening for four hours, you deserve it.
4:03:47
We knew you were cracked.
4:03:49
We didn't know you were this cracked. This is fantastic. Thanks so much. Uh the show.
4:03:52
We will see you tomorrow.
4:03:54
We have another great lineup. How many?