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Today is Thursday, May 8th, 2025.
5:01
We are live back in the temple of technology, the fortress of finance, the capital of capital.
5:06
Uh we have an amazing lineup today.
5:09
Absolutely stacked roster.
5:12
Uh we have our diversity.
5:14
Yeah, we have uh the secretary of the army, the chief of staff of the army coming on.
5:17
We're doing uh a post game on Ander's acquisition in the private markets and then we're doing a post game on Shopify's earnings in the public markets.
5:27
And then we got V uh venture capitalist coming on from Founders Fund, Alt Capital, Andre Horowits.
5:32
We got Gary Veaynerchuk coming on from Gary Vayner Media himself.
5:34
Super excited about that.
5:37
We had a conversation We had a conversation with Gary off uh stream uh a little while back and excited to make that one happen.
5:45
Yeah, very excited for it.
5:45
But we do have to take you through the news and of course we have to take you through some ads.
5:51
So switch your business to ramp. com. Time is money. Save both. Easy.
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use corporate cards, bill payments, accounting, and a whole lot more all in one place.
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I love that sound effect.
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It's It's really It's really I turned on the sound effect when John turned up his Oh, yeah.
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I turned it up cuz I want to hear it more.
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I'm so locked in with it. Anyway, go to ramp. com. Switch your business.
6:09
Uh but uh the big news shaking up the tech industry today is of course the CEO of Instacart, Figimo, is going to join OpenAI as the CEO of applications.
6:19
So now they have maxed out contract separate CEOs within as if it couldn't get more complicated over at OpenAI.
6:30
They heard us talk Tuesday.
6:30
They said, "We've got got people confused.
6:32
Let's make them even more confused." Yeah. Let's keep it guessing. Keep you guessing. Yeah.
6:38
I mean, there's so many It's funny.
6:39
There's a lot of different entities.
6:40
You could have y CEOs at at at different entities. Yep.
6:43
Um that's certainly it's very clear they're not calling it a co-CEO role. No.
6:47
But she is a she's an absolute legend.
6:50
Uh she was one of the top executives at Facebook.
6:54
Uh she founded the Midora Institute Health Clinic.
6:57
Uh she's been she's on the board of directors of Shopify who of course we're talking to today.
7:01
Uh and she's also she's also been on the board of OpenAI for a while but now she's stepping into an executive role.
7:06
She worked at eBay as well as uh Facebook and Instacart.
7:10
And uh if you pull up this her post, it's very interesting because May 6th she was posting about working at Instacart saying this is Fizz, our new group ordering app for drinks and snacks launching today. Very cute.
7:24
Probably a great product.
7:24
Uh but doesn't quite have the weight as we're building machine God and intelligence is too cheap to meter, you know.
7:31
Well, she's going to be focused on products, right?
7:34
Look, I saw the Fizz launch and I was like, "This is a cool fun consumer product built on totally on Instacart and it also has a particle integration so everyone can kind of say what they want as they're as they're, you know, planning their party."
7:46
Um, and then uh and then things got real as she moved over to OpenAI which I just feel like, you know, obviously it's a fun company.
7:53
I I was noodling on OpenAI chat all yesterday making charts and last night making images and stuff. I have it's a fun app.
8:00
You spent but it has weight.
8:02
You were sleepd deprived and spent like 45 minutes working on one chart. It was so fun. Vibe uh vibe creating. Yeah, basically a chart. Yeah, it was great.
8:12
Anyway, um uh Dan Primac has a big question.
8:15
When is the last time the CEO of a very successful company quit to join another company in a nonCEO role? Well, I can't name one.
8:22
Uh I bet open I bet 03 can if you search that.
8:25
Unusual on so many dimensions.
8:27
And this is an unusual move, but And yeah, it's interesting because the narrative with open AAI for a long time has been the the old open AI was this insane lineup, right?
8:39
Because you had uh Ilia, you had Andre Carpathy, you had Greg obviously who's still there, but then you also had Daario and uh and uh everyone who's gone on to found a foundation model company at one point seemed to have worked at OpenAI and there was this question of like brain drain almost like is it just Sam now?
8:58
but he's put together a new team of founders and executives that are kind of in the same realm as the previous team.
9:06
And so when you think about bringing over Kevin Wheel to work on product, like he is a founder CEO that took a company public like he's a very accomplished business person.
9:14
And so uh yeah, it's been interesting to see how this works.
9:17
But uh I mean it makes sense like it it is like what the most the most exciting technology in since fire or electricity or something like that. Like it's a big deal. It's a lot of fun.
9:28
Uh, and you're at the center of something very important and I'm sure there's a lot of amazing work to be done.
9:33
And so, um, OpenAI Sam CEO Sam Alman said he would continue in his role overseeing verticals like research, computes, and applications.
9:39
Simo will report directly to Altman, which is very interesting because you would think you would just do like chief applications officer, but CEO of applications is a new term that we haven't seen before. Yeah, it's interesting.
9:50
As Matt Turk shared earlier, if OpenAI is mostly staying out of the application layer, a promise made to AI application developers as long as they don't compete on what core models can do natively, why do they need a CEO of applications?
10:03
Um, interesting question.
10:06
But but you know, OpenAI already has applications, right?
10:11
um of course and uh they're buying they have several I mean like yes yes they try and centralize everything in chat GPT but they also have uh uh uh what's what's the video model Sora Sora is its own application like it's a web app but it is its own application and now uh
10:29
wind surf will be its own application and you could imagine many of those also the real interesting thing is is there some 4D chess tinfoil hat conspiracy that Instacart rolls into opening AI at some point, you know, that's very interesting. I don't know. I mean, I I I I don't know.
10:43
I mean, I I I think that's a crazy idea, but um it is it is kind of interesting to I think it's a very fascinating idea, John. Yes. Yes.
10:51
It's all a plan for Sam to control delivery, maybe. Well, but I don't know.
10:56
Uh, I mean you you you could imagine some world where you know you want you want to instantiate something in the real world and you need a human to do that until there's humanoid robots and Instacart has a huge workforce of humans that can do things and so you're on operator and you say I need somebody to go do something for me and they use the Instacart workforce.
11:14
I don't know AI you know that the sort of consumer agent the AI assistant that can do everything is has been uh you know one of the most exciting promises. Yeah.
11:23
And yet there's still a lot of things that, you know, 03 is amazing at some things.
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Hey, put together a reporter and an analysis on, you know, this new law. Great. It can do that.
11:36
Well, if you wanted to pick up your laundry or something like that, not so good.
11:40
I think more more likely she's just an amazing operator and they're scaling up and that uh that conspiracy theory is just what I said it is.
11:47
Uh but she has years of experience in product management and monetization.
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little uh been on a bit of a generational run.
11:54
She spent more than a decade at Meta leading the launch of ads on the news feed, heading monetization for the Facebook app, overseeing product development for Facebook video. That was huge.
12:04
And then helping build its advertising business, of course, like all the foundational stuff that they do.
12:11
That to me feels like it's not getting enough attention. Yeah. Yeah. Yeah.
12:15
And and then she took Instacart public, too, right? It's amazing.
12:19
So yeah, so she's going to stay on as chair of the Instacart board.
12:20
In a letter to Instacart employees, she said a current member of the company's management would replace her as CEO and an announcement would be made soon.
12:28
And so congratulations to OpenAI and to uh you know, everyone involved in this deal.
12:35
I'm sure uh it's maxed out contract, Jordy. What do you think?
12:39
Maxed out probably probably, you know, four year best, one-year cliff.
12:42
You know, it's don't want to speculate too much.
12:47
I would go out on a limit and you know make that uh guess. Yeah.
12:49
Um we uh we got another um uh the I mean the other story that's basically in the news is uh the death of the Google search Google traded down showing that there are a decline in in actual search volume.
13:08
This has been predicted for probably like two years now.
13:10
I remember using the very first GPT3 playground and thinking like, oh, this is a search engine because that was the thing that it could do kind of well.
13:19
You had to kind of massage it and write the query in a particular way because it wasn't it wasn't RLHDF in the way to be like a friendly helpful thing.
13:28
It would just kind of continue.
13:29
But what you could do is you could say um you know, let's say you're you're searching for headphones or something.
13:35
You could say uh list of best headphones, one Apple AirPods, two Bose, three space, and then it would continue writing and it would just guess and fill it in.
13:48
So you had to do a little bit to like set it up to thinking in that way.
13:52
It was a lot of prompt engineering.
13:54
Um but but I could see even from that very early stage that that search was going to be a thing.
13:59
But these trends take a long time and and I mean the the the fall in the share price yesterday was extremely dramatic.
14:09
It was kicked off by uh Apple's VP of services who came out and said that for the first time uh it was specifically in Safari, right?
14:20
So it's important to note that that doesn't necessarily count what's happening over on you know people using the Chrome browser on iPhone which is obviously quite a lot of people.
14:28
I think the Safari browser has always been, you know, relatively underwhelming even though it's the default.
14:35
Uh, and and it's interesting.
14:37
I mean the the the the brutal irony and the in of the of the situation that Google's in in that they have leading AI models yet those that technology set and it's a technology that that they have played a massive role in um you know creating is the same technology that is you know going to slaughter their golden goose. Yeah.
15:00
And um you know it's like yes of course LLMs can drive a massive amount of revenue across the Google ecosystem over time but they have a you know $200 billion cash cow in search and uh you know there's going to be a wide gap between the question is how quickly how fast is that revenue shrink versus how fast does sort of um generative AI revenue grow and there could be a very rocky middle period.
15:34
I think it's it's hard not to be bullish on big tech broadly, right?
15:36
They have so many advantages with this new transformer after all.
15:40
This new sort of techrenale, but yeah, still uh but yeah, it might mean a slight uh change for the for their strategy overall.
15:47
Uh I have a take, but first let me tell you about public.
15:50
com investing for those who take it seriously.
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They got multiasset investing, industryleading yields, they're trusted by millions.
15:55
Hit that soundboard, Jordy. John never hit.
15:58
Yeah, I was expecting national. Expect the unexpected.
16:02
Uh anyway, uh thank you to public for supporting the show. Yeah.
16:04
So I I there's I wonder how real this dynamic is, but I feel like there's a little bit of Google where you start using Google for research and to find answers and you use it as this answer engine.
16:16
And then when you go to buy insurance, you wind up googling that too out of habit.
16:20
Whereas right now what's going on is that a lot of those knowledge queries, those non-shopping queries that are probably less valuable to Google because I would normally just land on a Wikipedia page or some sort of blog post explaining the concept that I'm asking about.
16:36
Instead of instead of taking that to Google, I wind up on chatbt.
16:41
Um, and then I'm still doing my shopping queries.
16:44
shopping queries. Like I bet my my arpoo at Google is still similar because I'm still clicking the ads when I do go and buy something, but the fear is that once JGBT launches shopping and I have that more it's more the default behavior then
17:01
they really do lose me as a customer and so so maybe like user monetization is a lagging indicator for Google which would be yeah it was worrisome interesting I mean it these are sort of different business models thing that's disorded around LLMs right now is people are paying for them, right? People are
17:17
People are paying $200 a year to use Perplexity.
17:21
They can get the same information from Google.
17:23
They can get a lot of the same information from free LLMs.
17:26
The question becomes, is are are um you know, chat GPT and chat GPT like products going to monetize as well as search? I don't know. Right. They'll monetize better.
17:39
You think they'll you think they'll monetize better? Almost certainly.
17:41
Uh the question is uh it will have to get to a blend of SAS and ads I imagine right totally for you% so Google search right now I I was talking to Daniel but not not even just that also also um essentially like affiliate fees.
17:57
Yeah because you could imagine that if they cut out an affiliate and they and you just go to Chachi Pit and you say order me the best shoes possible and it just does it. Yeah.
18:06
Like you've cut out seven different steps and so they're going to be able to advertise there.
18:10
There's a whole bunch of ways that um that they could capture value.
18:14
I just think it's going to take a while, but I don't see a reason why.
18:17
More data, more knowledge on the on the interaction.
18:20
Like even the ChachiPT memory thing, I was working on like uh an image poster and I had said the name of the title of like the movie poster.
18:30
I was like take the Pulp Fiction poster and replace it with a different name.
18:34
Um and and then I was like I was not really getting what I wanted.
18:37
So, I started an entirely new chat and then randomly it was like, "Hey, would you do you want to use a different name?"
18:44
Because it remembered from the other chat that I was working on the same thing and it was like, "Okay, yeah, you open a new chat, but you didn't really open like a new instance of me."
18:50
Um, and so like you could imagine so many different ways to have just way way more contextaware search totally will monetize in terms of ads and everything else.
19:03
Um, first let me tell you about Linear.
19:04
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It is the tool that we use to run TVPN.
19:16
And you should use it too. Thank you to linear.
19:19
And I believe we have our first guest is here. Welcome to the stream. Hello. Welcome. Can you hear me? Okay. Hey, can you hear me? Yes, we can hear you. Welcome to the show.
19:34
Thanks so much for taking the time.
19:35
Uh I'd love to start with kind of an introduction and an overview of uh what modernization is, what this project is, and what you've been um just talking about in the media most recently. What happened to you?
19:46
So, um the United States Army is 250 years old.
19:51
It's older than our country.
19:51
We're celebrating our birthday this upcoming June.
19:55
And um the last 30 or 40 years, one of the problems is that the Pentagon has contorted decisionmaking in on itself.
20:04
And it's optimized for all sorts of crazy things that have nothing to do with soldiers in war fighting.
20:08
It's optimized for proial interests around the country.
20:11
Um lobbyistled um donor driven um nonw warfighting outcomes have driven what we've done for a couple of decades.
20:24
And so what we tried to do in the last kind of 75 days is work with Army leadership under the leadership of President Trump and Secretary Hexath and put together a plan that is just rational.
20:33
And so the plan essentially does four things. The first one is cut.
20:38
And a lot of these will seem so preposterous to you that this is even a big thing, but it is.
20:41
And so the first bucket was just to cut obsolete systems that we don't even want anymore and soldiers haven't wanted.
20:48
And this is the part that would should kill your soul for decades sometimes.
20:52
I mean we we have been buying these things because there just lacked political will to stop.
20:56
So mechanistically what would occur is we this the the army would say hey we want this and then Congress would come in on top of it and say you have to keep buying these things for these other reasons.
21:07
So it's to cut that is to then take the dollars that have been saved and fund the things that we actually do want.
21:13
So if you thought about what modern warfare will look like you need drones, you need autonomous systems. You need a data layer.
21:18
we have to pay for that with something so we're going to use the dollars to do that.
21:21
There's a third bucket of actions which was basically we the army have been a terrible customer to ourselves oftentimes and so we've given away the right to repair our own equipment.
21:31
So, as General George the fourstar in charge of the army and I would tour bases, you'd see this exquisite these exquisite platforms sitting on the sidelines for 9 or 12 months at a time where we we could 3D print a$2 to $20 part and we weren't able to do that for ourselves. And so, we banned that.
21:49
And the fourth thing is essentially we just allowed this u this preposterous amount of leadership to grow in our own formations.
21:56
And so soldiers join the army because they want to wear a helmet.
22:00
They want to get out there and they want to fight.
22:01
and we put them in headquarters passing around paper.
22:04
And so we said, "We've got to start with ourselves.
22:06
We're going to push a thousand people back out.
22:08
We're going to get rid of the jobs and then we're going to repeat these four sets of exercises again and again and again till we get closer to right."
22:14
What have you learned from history and kind of the root causes of these problems?
22:18
Is it just the end of the cold war?
22:21
Is there something about technology and the digital transition?
22:25
digital transition? like what should we take from the past to inform the future as we look to you know it's not enough to modernize now we want to stay modern right I think one of the things um we the army have have not gotten right historically at least in the last couple of decades
22:42
is looking to the private sector but Silicon Valley does and our ventureback startups and just our small and medium businesses around the country what they do incredibly well is they go find product market fit they have an innovative feedback loop where they take their uh minimum viable product. They
22:56
They get in the hand of customers and they small and medium businesses in the the heartlands might not call it this but they practically do it and then they learn from it and they iterate and they change.
23:06
What the army has historically done the last couple of decades is we lay out these big grand schemes.
23:11
We put a wish list together of all the things we could possibly want and then we go out to the market and we say hey build us this and we may buy it.
23:19
The problem with that model, as you might guess, is only a couple of incredibly well-funded companies can do it, which we call the primes. Yeah.
23:27
And then they end up doing it terribly, and they've done it terribly for a long time, but we held ourselves hostage with our bad processes.
23:34
And so, I think one of the lessons we're learning is the army does best when it is synced with American enterprise and when it's synced with American ingenuity and we are trying to return to those roots.
23:44
Can you talk a little bit about the breakdown of modernization um strategies across hardware, software, people, there's so many different I mean it's a massive organization.
23:54
How are you thinking about decomposing the problem?
23:58
Uh and and where can Silicon Valley fit in?
24:00
So um the optimistically a lot of the things we need are very basic tools that already exist in medium and largesiz businesses in the country.
24:10
largesiz businesses in the country. I think Silicon Valley um the chief of staff and I did a one of the first things we did is we went to the west coast and we hit Microsoft in Seattle and we went to Silicon Valley and did open AAI and Meta and Google and then we went down to Los Angeles and did
24:24
Palunteer and Anderoll and some other um autonomous uh software companies and it's incredible what they've built and so when we are trying to build something to compete on a hardware side especially it's generally going to be a bad outcome for us but I think what we are trying to do is we're defining our current short-term goal for modernization. The
24:44
The number one thing we have to do is create a data layer.
24:48
So, we need our people to be able to sync with each other over the horizon and then sync with our things and our sensors.
24:54
And all of this has to happen in near real time and it has to be able to be updated constantly with new software as we've received inbound attacks.
25:02
But what that what that data layer will do is it will allow us to start to do things like apply generative AI to our targeting.
25:09
It will allow us to start to think of our vehicles and these exquisite tools that we build as really just the the manifestation of software in the world through this hardware.
25:19
But that's how wars are going to be fought going forward.
25:23
I mean, it's hard to uh understate or excuse me, overstate war and the way humans have fought for the last couple millennia has changed in the last three years.
25:31
This is an inflection point and if we don't move quickly, we're going to be left behind. Yeah.
25:37
Jordy, can you can you talk about the force itself?
25:39
I was talking with uh Katherine Bole uh over at Andre, friend of the show, and and she was saying that the force today is just so much more technical, right?
25:48
This is a a generation that has grown up, you know, online, you know, very sort of internet native.
25:53
uh how do you look at you know you know kind of upskilling within the force today and taking somebody from good to great or you know technical to you know truly an expert.
26:08
This is going to sound sickantic and so uh I commit to you that when I hear people say these kinds of comments I always think they're full of I actually believe what I'm about to say, which is the most remarkable part of these last 75 days of returning back to to the army and getting to spend time with soldiers is in the intervening 15 years when I since I've been gone, I went to an Ivy League law school.
26:30
I've worked in VC back companies and I've fed a fund.
26:34
I've worked in PE back companies.
26:36
companies. I've seen big amazing law firms and consultants and u I I would put the average American soldier against any of those people as far as their intellectual curiosity um their ability to problem solve their ability to to get to an end state of success like the
26:54
American soldier is incredible and especially what you're pointing at our younger ones when we hand them this technology when we hand them these new drones when when when we empower them with tools I mean they figure it out in two or three days. It's it's It's it's mind-blowing.
27:08
They don't need a manual.
27:09
They just get it, they put in their hands, they put it up in the air, and they they they've started to innovate on it.
27:13
And what we're trying to do is like, if we look at basic training, I was at Fort Jackson last week, which is one of the bases we put through a lot of our new soldiers.
27:21
These soldiers were civilians five weeks ago, and we're running them through drills where we're putting up drones.
27:28
They're learning how to think about top cover and then when they finish this exercise, they go and review the drone footage to see what could a drone see.
27:35
And I mean, it has been amazing the kind of lessons and um what what we're taking away from somebody who has five weeks of experience, much less the other one million soldiers that we have.
27:47
Um it is it is a group of people that are just um ready for the challenges ahead.
27:52
How how are things changing on the recruiting side?
27:56
side? The army has obviously you know struggled over the you know past call it I don't know five 10 years around around recruiting and I can imagine you know showing how how you guys are modernizing is a great first step to be like there's changes happening we're innovating this
28:12
is a place to come and be part of an organization with real positive momentum that's adopting technology I mean it's such a such a massive change uh is that an an intentional part of revitalizing uh you know and and strengthening the recruiting process. Absolutely. And so there's a couple ways Absolutely.
28:31
And so there's a couple ways I would I would talk about recruiting and we and we talk about retention too.
28:37
So how many soldiers decide to stay in?
28:39
So the first thing I would say and again very sincerely the leadership of President Trump and Secretary Hegsth has created a culture that is a return to excellence and a return to lethality that was kind of the vast majority of the army's experience or existence and people want to be part of that.
28:54
They want it to be harder like it's not about the stuff that they get for joining the army.
29:00
It's about what the army can make them.
29:01
But then quant so that's qualitative remark.
29:03
Quantitatively, what we've seen is kind of on the front end demand to join. We are killing it.
29:07
We are up in nearly every category and nearly every geography across the country.
29:13
Male and female were up this year.
29:16
Um and so we're really excited and we think a lot of that to your point is the storytelling, but our retention is incredibly helpful for us to look at too because to us that's the trailing indicator of how we're doing and it is the the soldiers that actually see us and are part of this and are reading what we're doing and are living this life. how are we doing there?
29:32
And we're excited to announce we hit our 12 month goals six months into this year.
29:37
And so all of that makes us pretty optimistic.
29:43
Uh on on the topic of kind of the actual fighting force, uh are is progress in technology or artificial intelligence playing into how you think about the scale and size of the actual humans in the army over the next few I don't know years or decades because in Silicon Valley we're hearing stuff about job displacement or uh you know a single company run by one person because they're they're so augmented by artificial intelligence.
30:10
Um I imagine that a lot of folks in the army are just excited to use these tools to be able to do more faster, but what has the response been on the ground?
30:18
So um I I think about the army, we think about it, General George and I and the rest of the leadership team is two two kind of fundamentally different things.
30:26
One is a large enterprise system.
30:28
It's a large enterprise business.
30:32
The other is a a war fighting killing machine.
30:33
On the on the large business side, one of the things we've been able to do is like our recruiting command.
30:40
This may seem very basic to you, but it's hard to overstate how important this is for us.
30:45
Instead of building proprietary software, hiring some developers, creating a a a new tool for how we, the army, existed in the past, and then having to maintain that in the future with a bunch of other siloed tools.
30:58
What our recruiting command did is they moved on to Salesforce and then they changed how we recruit people to match what Salesforce already had in its out of the box solution.
31:07
And so and then we've tweaked it a bit but we're seeing just these incredible leaps forward as how we manage the army as a business.
31:15
And then to to your question about like the war fighting function, I think what ends up happening a lot of times is people are trying to be um intellectually weak, let's say, in answering that type of question.
31:29
And so what they focus on is things like uh end strength and then so they'll say we're going to go to battle for the number of soldiers that you have and the army will say we need more and Congress may say we need less and the navy might say we need more and that's not actually the right way to think about it.
31:44
The right way to think about it is how many soldiers do we have with helmets on that can go be the the fighting force that we as a nation need.
31:52
And so one of the things we focus on a lot is what what can we outsource to technology once we create this data layer?
31:59
What can be done by generative AI?
32:01
And then what can we do with those soldiers to push them forward?
32:03
And then how many of those soldiers do we actually need that can squeeze triggers or push buttons and kill on our behalf?
32:12
And so the the long-winded answer is I think what General George would echo too is don't know what the exact number is.
32:19
We think we're at about the right where we probably wouldn't cut a lot, but our goal is to push more people from doing kind of like the the useless in the office and push them back out into the field. Makes sense.
32:29
Um h how would you grade uh just you know a lot of our listeners are in the technology and venture capital community, Silicon Valley broadly.
32:38
Uh how are we doing as an organization as a as a community?
32:41
Um are we stepping up enough?
32:43
Obviously there has been this massive vibe shift and part of that pan palunteer part of that.
32:50
American dynamism and injuries and horitz part of that.
32:51
But uh are you seeing what you want to see from uh the technologists in Silicon Valley?
32:56
Is there more that we could be doing?
32:58
If so, what I I think what what you should see is by uh General George and I coming on your show, we want you and need you.
33:07
We we we are inviting you in.
33:11
We are inviting that community to come help us.
33:13
One of the things that we've seen with Doge, aside from just the cuts and the headlines and everything um that kind of people want to write about more often, what's actually really valuable about having Elon and his team here is they push us to think, is that a first principle problem?
33:28
Is that a problem of gravity or is that a human created problem?
33:31
A and taking that lens to a lot of these what you realize is I the secretary of the army my penstroke can fix a lot of things.
33:38
Secretary of defense he says penstroke can fix a lot of things.
33:42
We need the right mindset and it um and General George and his leadership team have been waiting for us to come in and give them the top cover to do what they know is right.
33:51
And so I guess to grade Silicon Valley right now I would say we can't give a score.
33:54
Um, I think a lot of the talenters and the Andrew roles had to take a a a beating over a number of years just to get in.
34:04
We are trying to open the door up to get more in.
34:06
And what what I would say is what we need from Silicon Valley and the VC world and private equity if it's already starting to scale.
34:12
We need you to look at what we need in our future wars and we need you to help us build it.
34:18
And it's got to be cheap and it's got to be scalable and it's got to be not exquisite in nearly every instance.
34:24
And despite our tendency, what we're going to need is we're going to need push back every time we put another requirement in.
34:29
We need that community to say, "Well, wait a second. Why are you doing this?"
34:32
Like, it we created this RCV, so it's a robotic combat vehicle. It's awesome.
34:36
The thing is cool as can be, but it's $3 million per copy and an $800 drone to take it out.
34:41
We're one of the wealthiest nations in the history of the world.
34:45
That the math doesn't work. Yeah.
34:47
How how much uh do you feel like uh you know the the west coast and you know in general the defense tech community broadly takes feedback?
34:59
Well, a lot of people get fixated on a single solution or an idea to a problem and you know, maybe they'll go they'll they'll head over to Washington, start talking about it and get push back and and sometimes founders can get so much conviction in an idea and they think they they think exa exactly what they're doing is right.
35:19
Have you found um have you found the the the defense tech community to be as receptive to kind of feedback as they should be?
35:27
Or are some of us a little too hard-headed still?
35:31
I I think if you take the most hard-headed founder you've ever met and the person who's most entrenched in their belief set and then you compare that person to the defense industrial complex and the primes, your vision of entrenchment wouldn't even get you into the game with how these primes have thought and acted in the systems that they've created.
35:51
Um, one one of the things I say very often now is I will measure it as success if in the next two years.
35:58
Um, one of the primes is no longer in business and the rest of them have all gotten stronger.
36:02
We we desperately need the thinking from middle America, small and medium businesses, innovators in garages, ventureback businesses and not to come into the Pentagon with us and push us on everything because that's where American ingenuity thrives the best.
36:19
And so, um, again, the reason we're here is we are welcoming you in. Yeah, that's fantastic. That's fantastic.
36:26
Um, I mean, I have I have one last question, then we'll switch over.
36:29
Um, are you seeing enough from the parts of the financial market outside of Silicon Valley for a long time?
36:35
Uh, certain large pension funds nec couldn't invest in defense technology.
36:41
Um, obviously we're very excited about the venture-backed uh defense tech ecosystem, but there are transformations that should happen maybe in the public markets.
36:50
Uh, maybe uh the even though I'm rooting for the the the startups here, uh let's make our primes great also.
36:57
Um are you seeing movement there?
37:00
Is there the same type of energy uh in the public markets with the really big companies that maybe you're seeing in Silicon Valley?
37:08
Um I I would say that uh they they will be slower followers is my guess.
37:11
Um I think that they have typically been able to uh withstand these little bursts of energy that happen at the transition of an administration. Sure.
37:21
Their incentive structure I think has been in these moments when you have General George on. Yes.
37:26
We just testified yesterday at the House and we get yelled at by whomever the the congress man or woman is about whatever the proal interest is.
37:33
I think the the the primes have had the tendency to double down on lobbyists.
37:37
They've had the tendency to pull down the hatches and basically say, "We're going to weather the storm."
37:43
And so, um, what I think they're misunderstanding about this moment in time is President Trump's and and Secretary Hex's tolerance for pain to do the right thing on behalf of the American soldier, I I truly believe is different and unique.
37:56
Um a and my best guess is that they will start to realize in the coming days, weeks and months that they are going to have to adapt and change or die.
38:05
Um and we are not going to come bail them out again as a nation.
38:10
And we we want them to succeed.
38:12
Th those remaining ones that can sell to the army in a couple of years, they're going to be incredible because we won't buy it unless they are.
38:20
Um, and so I think what it is going to take to change them is the realization that the the the ways that they have delivered value to their shareholders for the last couple of decades are no longer going to work in the new security environment with the leadership of the president.
38:34
Well, Secretary Dill, thank you so much for joining.
38:37
This was a fantastic conversation. I learned a ton.
38:40
Uh, really appreciate you helping. This was fantastic. Come back on. Yeah.
38:43
Whenever you have more news, we'd love to have you. Love to have you. I appreciate it.
38:45
Hey, thank you for having us.
38:46
And thank you for what you're doing.
38:48
Um, and General George should be joining in just a second.
38:50
Um, I'm excited to go deeper on this topic and then hopefully carry these conversations into some of the other folks we have on the show.
38:55
Uh, Michael, I don't know if you want to pull up the guest list as well while we're bringing in General George.
39:01
Um, but we can give you the rundown of the show.
39:04
Uh, we have General George coming in now and then we're going to jump over to Adam Porter Price at Anal.
39:08
and then uh Delian at Varta can also give some uh some context on what's happening in defense tech on the smaller side of things.
39:17
Um but uh the the I I I still think the the the proof is in the speed of execution to go from a tweet that I posted that was uh you know almost half joking. Hey TVPN.
39:31
Uh, hey Army, do you want to come on TVPN?
39:33
Uh, to actually making it happen in two days is just is just speed of execution.
39:38
And you can tell that um I mean there are some there are some startups that can't get a CEO on our show in two days because they're like, "Oh, we got to talk about what they're going to talk about or a solo GP that needs to schedule a month out." Yeah.
39:50
Like how many are you going on four vacations in a row? Yeah. It's crazy.
39:54
No, but but just the the mindset, the focus, uh the sort of urgency, uh the commitment, uh is amazing to see. Yeah, totally.
40:04
Um anyway, uh let's take a second to tell you about numeral sales tax on autopilot.
40:09
Spend less than five minutes per month on sales tax compliance.
40:13
Um it it is AGI for your sales tax.
40:17
Sales tax on autopilot numeralhq. com. Go check it out.
40:21
We we we should also build benchmark series.
40:23
We should also build some poly markets around uh army transformation.
40:28
I wonder if there's a market for uh for recruitment goals.
40:29
Uh well anyway, we have our next guest.
40:34
Thank you so much for hopping on.
40:36
General George, welcome to the stream. Thank you. Uh great.
40:38
So we were just talking about modernization.
40:41
I'd love to hear a little bit more about what that means for you, what your goals are and uh how would you uh describe the overall process to our our audience which is mostly folks in Silicon Valley venture capital and technology companies.
40:55
Yeah, I think uh you know we're seeing we're watching what's changing around the world on the modern battlefield.
41:01
I think a lot of people are seeing it and um reading about it and you know what you get with a lot of this dualuse technology is changing.
41:08
drones, for example, autonomous systems.
41:11
Um, what we have been doing over the last uh year or so is actually transforming our units.
41:19
We're going to have to change how we train and operate.
41:20
Um, the big thing, and I think uh our secretary was just talking about that, talk about how we buy things, how we get products that we know are going to work into our soldiers hands and doing it quickly.
41:30
And I think the biggest change that we're trying to do is actually getting, you know, the engineers that that you guys are familiar with out inside of our formations, talking seeing the problems that we're trying to solve and help us solve those problems directly.
41:45
So, we're trying to get rid of all the middlemen that we have normally have had um in our process.
41:51
I was reading Mike Gallagher's uh Wall Street Journal op-ed, bringing warriors back to the US military.
41:55
He advocated for something he called shifting tail to tooth, talking about urging the Pentagon to redirect money and manpower from headquarters bureaucracy to actual combat units.
42:06
Uh is that an important uh shift and and what does that actually look like empowering the war fighter to make a a decision to buy something that that that seems like antithetical to the way we've been operating? Yeah.
42:19
Well, you know, we I we always put things in terms of, you know, we have a budget.
42:23
It's our job to get the biggest value out of that. Yep.
42:27
Um head headquarters aren't going to win.
42:29
You know, it's our soldiers that are out there, you know, fighting and we need to put every resource that we can into those.
42:34
So, we're cutting um higher headquarters.
42:37
Uh we're cutting go positions.
42:40
We're um you know, closing some of that down so that we can really focus and I know our secretary and I talk a lot about um getting helmets back out inside of our formations and that's what we're really focused on.
42:51
So, we're cutting our headquarters here in DC.
42:52
um you know, whatever we can do to thicken our formations, make sure that we're growing the capability that we know we need.
43:01
Can you talk about how you're thinking around planning and urgency as you guys have a sort of monumental task to modernize uh the force uh and you guys are making great progress against that, but at the same time, you know, this is a multi- multi-year project.
43:18
How how do you think around kind of pacing and and pushing um pushing uh your your leadership as well as um you know the force to to move as quickly as possible. Yeah.
43:33
Well, the biggest uh you know, our soldiers have no problem moving at speed.
43:37
We've shown that you get that out there, you know, they can adopt this technology, they can do it quick quickly.
43:42
Um you know, the problem we have is the closer you get to DC, that's where the challenge is.
43:47
And so again, I think cutting some of that out.
43:49
Um, you know, the secretary talked about, I'm sure, about being data centric and what we're doing, you know, to understand, you know, what's happening inside of our formations, automating our business systems.
44:02
There's just a lot of things we can do.
44:03
We can go fast and um there's a lot of things that we can do to adopt commercial tech out there.
44:09
Um, we're buying things that are modular, open system architecture that work with us.
44:15
um the we have bought drones for the most recent brigade that were updated from the very first um unit that we fielded some of the drones.
44:23
So I think we have to buy things differently and I think we can go faster and that's our focus.
44:29
Can you talk a little bit more about that digital backbone?
44:31
I'm sure there's incredibly advanced things that you can do with artificial intelligence once data is in one kind of centralized location.
44:40
Um, but are there still systems that we're moving off of paper and and uh just like can you talk about the balance of working on the the latest and greatest while still, you know, tackling the the nuts and bolts of just a a version one of a digital transformation?
44:58
So, one of one of the things um for us is we're calling it next uh next generation command and control.
45:02
And you can envision we have a bunch of these disparit systems.
45:06
Each of them have a vehicle.
45:08
There are several different radios.
45:10
Um, and we're collapsing all of that to you're you're basically, you know, leaders are going to be out there with a tablet and apps.
45:16
So, you got an application that does airspace management.
45:21
You got an application that can help you with lethal targeting.
45:22
And that's that's where we're moving towards.
45:26
That's on the tactical side.
45:28
We're doing the same the same thing on our business side.
45:30
Um, and really we need to collapse all that together.
45:32
I mean, I don't ask for, you know, the days I think of asking for information, papers, and asking for information are over.
45:41
I mean, I have a Smartboard in my office.
45:42
I have every, you know, I just don't do that anymore.
45:44
I can go click on anything that I need to know um inside the army and have that, you know, I have that data at my fingertips.
45:51
And we just got to train all of our leaders.
45:53
Like I said, that has to be business from top to bottom.
45:57
Our soldiers have no issue.
45:59
That's, you know, that's how they've grown up.
46:01
um and they are very comfortable in that space and we got to make sure the whole process from top to bottom is operating like that.
46:06
Is this modernization effort um I imagine that will it will have knock-on effects in recruitment but what what are the other messages that you're sending going forward around recruitment uh specifically?
46:23
Well, we we're doing great.
46:23
I think we're um we're closing in on like 95% of our recruiting mission.
46:28
We have some of our biggest months that are coming up.
46:32
You know what I I enlisted in the army right out of high school.
46:34
Um you know what people come into the army, they want to come in and do their jobs.
46:38
And again, that gets to, you know, cutting out the excess and uh you know, folks at at headquarters and doing those things.
46:47
And so we're trying to eliminate anything that doesn't allow them to completely focus on their jobs.
46:50
You the other thing that I consistently hear from soldiers when I'm out there is that they know we need to transform.
46:56
uh they want to transform faster and so I think we owe them that and um that will make a difference too.
47:04
They want to come in um to a modern transformed army and uh and we can do that quickly. I'm confident of that.
47:13
uh what what kind of uh you know his historically people you know on the west coast in in San Francisco or working in the tech industry generally think about you know serving the country by maybe joining a defense tech company and if they're an engineer particularly they they want to oftentimes work on you know technology in in the private markets.
47:34
What kind of uh opportunities do you guys have in the force that you're really excited about recruiting for that maybe people within the tech community aren't aren't thinking about as opportunities today?
47:45
So, we are reaching out and I hope here next month we got a bunch of of folks that we want to bring in.
47:52
You know, there's so much talent out there, you know, that they have an opportunity to serve.
47:55
Um we have some of them that on the Army birthday we're going to swear them in.
47:59
um that are engineers, uh technologists that can um serve in the Army Reserve.
48:04
They can help us um and still be a part of their companies.
48:09
Um on the other on the other side, you know, we want to be very open.
48:13
I mentioned the transforming in contact.
48:15
We're having engineers that are coming out with our units, seeing how our, you know, seeing the problems that our soldiers are trying to solve in the conditions are trying to solve it.
48:24
whether that's, you know, the heat um out in the Indo-Pacific, you know, we had engineers with us over in Europe.
48:31
Um, and I just think we need to be more open and inviting and getting those folks in because we got a lot of innovation out there and we need to just make sure that we're tapping into all of it.
48:41
Um, last question and we'll let you go.
48:44
Um uh a lot of early stage uh defense tech companies they don't always have the opportunity to go run a large-scale pilot with the defense department of defense or the US army on day one.
48:56
Some of them are getting uh experience in Ukraine for example.
48:58
uh has that been is that an effective path to pull some data from uh a Ukraine experience as a startup and then uh use that as a case study to make the case that the US Army should at least demo uh what they're building.
49:15
Yeah, I mean that has we've we've taken a lot of that.
49:19
We're collecting a lot of that.
49:19
And again, we we are creating our own environments.
49:22
If you go to any of our combat training centers, Sure.
49:24
Um we have that out there where we have uh jamming.
49:29
you know, they're going to have to face, you know, the electromagnetic environment um that we can replicate to do that.
49:35
So, we're doing that at our combat training centers.
49:36
We're doing that at home station training.
49:38
Um so, again, just getting these companies and that's what we want to do.
49:42
We want to invite them in and we're doing that.
49:45
Next week, I'll be down at uh our joint readiness training center and we got a whole bunch of new companies that are coming in there um showing us the systems that we have.
49:54
And again, this gets back to being agile in our funding.
49:59
Um, and the secretary and I talk a lot about we want these uh small companies that are very innovative um involved in what we're doing and and building products for our soldiers. That's fantastic. Fantastic. No, this was great.
50:12
Thank you so much for taking time. Really appreciate it.
50:13
And thank you for what you do. Yep. Thanks for having us on.
50:18
Appreciate the rest of your day. Cheers. Talk soon.
50:21
Um, super helpful perspective. Yeah, very interesting.
50:24
Um, and honestly, uh, it's makes I mean, it's always a bull signal to me when, uh, people in any type of leadership position are willing to go out and be, uh, on the media, you know, the front lines of the media telling their story.
50:40
Um, you know, we've seen, you know, want to go ask every drone company we've talked to like, hey, have you actually taken the army up on their offer?
50:49
They have electronic warfare test sites.
50:51
Are you there or are you just uh are you just building CGI renders? What's going on?
50:57
Are you actually out there on the test sites getting shot down by the US Army?
51:00
I imagine you build something, you raise some money and the VCs are like, "Yeah, this sounds great."
51:06
And then you take it out there and the army just destroys you.
51:08
It's like this is 1% of the way the way there.
51:11
Nervous people are nervous to do the partner meeting. Yeah. No, no, no.
51:16
People are nervous to go, you know, do a demo for VCs, but for doing it for a the one customer that you need to make your business a reality. Yeah.
51:24
Uh well, uh we have we have Adam Porter Price from uh Ander joining next and I'm sure we can ask him about these demos because uh they've been on an absolute tear launching different missions, different programmers record.
51:37
Uh they just made an acquisition that we'll ask him about.
51:38
So welcome to the stream, Adam.
51:40
Uh great to have you here. Great to have you. Very excited to be here. Thanks so much.
51:43
uh can you uh introduce yourself and then uh give us the breakdown of the news from this week?
51:49
Yeah, so I'm Adam Porter Price.
51:51
I'm the head of M&A at Anderol.
51:53
Um I also look after some of our strategic partnerships as well.
51:54
Um and this week we announced that we acquired uh class which is a ruggedized computer company.
52:01
Um they're based all over the world.
52:03
Uh they got locations in um in the US as well as Ireland and they've been making sales, you know, to to US and allied governments.
52:09
So what's important about regulariz regardized computing in the modern warfare context?
52:17
So every robot every Andal robot has a computer in it.
52:21
Um and it turns out that like actually making a computer that can go into places that is hot, dirty, it's going to get dropped a lot, things like that is actually kind of hard.
52:30
Um and we have tested we have tested other people's computers.
52:34
people's computers. Like we have we have taken computers out into the desert and like tried to make them work on the back of a JLTV and run program run Lattis our operating system and like basically nothing works right like it's it is a
52:47
difficult and very demanding environment and the only computer that we've seen consistently work when you're out in that environment where a war fighter has to be able to do something when they're out in the field is the class is the class computer. Soing we we we we use a
52:58
Soing we we we we use a lot of their computers today, but we have visions for what we want to do with them in the future.
53:05
Um, and like the number one thing that is extremely likely to happen is that there are going to be more computers out in the world.
53:12
Um, and they need to make decisions like our our AI needs to be able to do stuff without being able to phone home um, and ask for permission.
53:19
Like there's decisions that have to be made um, and literally can't happen fast enough over the internet or over over whatever networks, right?
53:26
the speed of light is not fast enough.
53:28
Um, and so like you actually have to make these decisions on the device. Yeah.
53:31
I imagine like the device gets hot, you want a fan to blow that up. Now water flows in.
53:36
Like there's just like a constant trade-offs, right?
53:39
I was uh I was thinking uh you know maybe another bidder in the process would have been Sonos cuz I can't even get I can't even get my Sonos speakers to work in my Don't get Jordy started on Sonos. I'm with you guys.
53:49
I I I love my Sonos and then they messed up the app and like it's it's so so bad.
53:54
Uh anyway, uh quickly can you benchmark uh what one of these computers feels like relative to, you know, a phone, a laptop, a desktop versus like server rack of H100s?
54:08
Like how powerful does the system roughly need to be if that's not classified?
54:13
So the reason why we we we acquired this company is because the team can actually make lots of different types of computers.
54:18
When we buy a company, we're really they they often have a product that we like a lot, but really what we're doing is we're getting an amazing team. Sure.
54:25
And what we love about this company is that already they were sprinting with us on building a new product that we did.
54:32
I think we announced this week, Menace T, right?
54:33
Y um but like we have we have a lot of grand designs for different types of computers that we think need to exist in the world.
54:40
And so they have they they have a very popular uh computer called Voyager.
54:45
Um and it's like it's about this big.
54:47
like it's it's probably the the size of a really thick hard cover book, but the team is extremely capable of building lots of different types of computers.
54:56
And then the other thing that they do, which is for for some people like a little bit boring, but actually extremely valuable, is that they will build the chassis that that's ruggedized, like you can drop it off of a C130 and like it's going to hit the ground and like it's going to be fine.
55:10
It's still going to work, right?
55:10
It has all of the cooling in it that you need.
55:13
It can carry a lot of different radios, right?
55:15
So you can plug in a syll and a persistent systems and a whatever radio into it.
55:19
And so like you actually can go do the stuff you need to do out in the field. You can run lattice.
55:22
You can talk to lots of different people that are using lots of different radios.
55:26
And this is just like an absolutely invaluable capability that we have to have. Okay.
55:32
Um talk to me about the anatomy of the deal.
55:34
Uh is there like an investment banker involved? When did you guys meet?
55:38
I've heard this story like, oh, if you're going to get acquired, you'll meet your acquirer a decade before the deal happens.
55:43
you know, just cold call and say, "Hey, I'm ready to get out and take my stock off me."
55:46
I mean, if you're if you're a good if you're a good acquirer, you are out in the market and you are talking to two to 300 companies a year and you just like you know everybody, right?
55:56
Like there's not that many companies in the world and there's not that many good companies and so the chances are pretty good that in fact like every single company that we've bought, we've known them for a while, right?
56:06
We've watched them, we've talked to them for years in advance and like we've been buying class computers for for years.
56:11
We knew that they were really really talented.
56:13
Um and uh we we realized last year that not only is our demand for computers just insatiable, but the things that we would like we would never be able to do, right?
56:24
It would just be too hard to make the incentives work.
56:27
Um and we like we never buy a company that's for sale.
56:30
Like we always make them for sale.
56:32
We go find them and we ask them like will you we we think that there's there's two paths, right?
56:37
right? there's a path where we're separate companies and we do things arms length or there's a path where we are one company and we are able to move much faster together and and and in every company we've bought that's that's the route that they've chosen right and so we've been working on this for since
56:53
last July or August um and uh yeah this this how long it takes it takes 9 to 12 months to buy a company like this uh the the line that that stood out is that we don't buy companies that are for sale and I wanted to highlight that because I I believe there's a sentiment in the defense tech community that's you know
57:12
it's I I'll kind of butcher who cares if I raise $200 million will buy me no it's like yeah shoot to be a new prime and even if I miss someone will buy me I'll just run a process and I'm so talented or you know so I want to know yeah what is the state of of like the market the M&A market and the the thing I wanted to
57:30
specifically highlight was a lot of teams look talented on paper but if you've And if you've raised and been working on products, even if you don't care that much about the products they built in the past, you're still going to be hyperritical because your the real resume is like, well, what have you built with $10 million? What have you
57:47
What have you built with $50 million? What have you done?
57:52
And and because that that says a lot more than who your investors were or, you know, anything else.
57:57
We we often it's really hard to buy a company that has raised venture capital u because the prep stack is I mean you guys know this right the prep stack is really really high.
58:08
So and our expectations when we buy a company is that we can like 5 to 10x revenue in 3 to four years right?
58:15
So, you really have to have conviction that when you're paying when you're paying what we would pay for a company and we pay in market multiples, like we we can lean in on some things.
58:22
We can we can we can be flexible in a way that I wasn't able to do when I was doing this in in in more traditional companies, but like we still we're not crazy, right?
58:29
We pay like what you would what what a fair value is for a good company.
58:33
Um, and so, uh, we we can lean in a bit, but if somebody goes out and raises a couple hundred million dollars, like the the outcome that they have to have in order for their investors to be happy and for the common to have a good outcome is really really high.
58:47
And I actually think that the ceiling on like a YOLO, like let's just do this and be legends acquisition is like three or $400 million.
58:55
Like when when Boeing acquired Liquid Robotics a couple years ago, that was a company that they had invested in.
59:01
they were a little bit bailing out the venture capital arm because the VC arm had had invested in it.
59:05
And so like big Boeing was like, "All right, well, we're gonna we yeah, we want to own this."
59:08
And I'm I'm certain that they I think they paid about $300 million for it.
59:12
I'm certain that that was 10x forward revenue.
59:15
I I don't believe that they ever hit that 10x forward revenue number, but like I actually think that that is basically the ceiling that a a a traditional buyer can be like, "Yeah, let's just rip it."
59:25
Right above that, the board gets involved.
59:27
there's actual valuation math.
59:29
Like people start to look pretty critical at it.
59:31
And so for like a traditional buyer, I actually think that that's the ceiling.
59:35
And like we're not stupid, right?
59:36
We don't make dumb decisions about acquisitions.
59:38
We don't just like rip it because it's it it would be cool.
59:41
Uh and we're we're helping somebody out, right?
59:43
Like we are we're we're pretty careful with how we value companies. Yeah.
59:46
So So you've talked to, you know, two or 300 companies in the defense tech space.
59:50
I'm sure some of those venture capital every year.
59:54
H how are these companies being built without venture capital?
59:56
That seems very uh counter to the narrative.
1:00:01
Everyone says, "Oh, I need to raise so much money because everything's so expensive.
1:00:03
I got to hire all the engineers and pay for all the drones I'm going to blow up."
1:00:06
But yet companies are doing it so something must be uh you know unspoken.
1:00:10
It takes them it takes them longer time, right?
1:00:12
And and and but what you'll find is though that they just make decisions that you make when you are when when you you have to be cheap and cheerful, right?
1:00:21
You have to like hustle and you have to figure out a way to do it.
1:00:25
And so like a lot of times when we find companies, they've just found a really clever way of doing something that allows them to get their product out.
1:00:31
Um, and like all of these guys are hustlers too.
1:00:34
All these men and women who run these companies, like they move, they're hustlers.
1:00:37
Um, they uh they they are good at at running their companies and and like that's why we want to own them. That's awesome.
1:00:43
Uh, do you expect more competition from primes on the M&A side in call it two, three years?
1:00:52
years? like it seems like right now they're they're asleep at the wheel and and to be honest I don't think a lot of talent would be like oh I want to be the talented team to go join the non-talented team and then you know it's not that fun you know to be like the
1:01:08
best team at a company right and you know in many ways you all a players in some ways that's what the money is for right like uh if if if you pay enough right uh that that's what the money is for but yeah I'm with you well yeah and so that's what I'm that's what I'm kind of getting at. Do you expect you guys
1:01:23
Do you expect you guys come in three years from now and say this is a you know we believe this is a fair price and then you know some other prime comes over the top and like we're going to pay double just cuz we're we're getting killed over here and they'll ever pay double.
1:01:37
I don't think they'll ever do that.
1:01:38
ever do that. I I often am in deals and like there are other people in this ecosystem that are smart like other more traditional but not super traditional but other other acquirers and the problem is that like they are just you
1:01:51
have to do like a hundred things right to buy a company like this um and and to and to win right and if you do some of those things wrong and like a traditional incumbent is just is just they have so many impediments in their way of keeping them from doing this. It's not just like finding a good
1:02:07
It's not just like finding a good company.
1:02:08
It's not just showing up and saying like we want to pay a lot for you.
1:02:11
There's so many other things that you have to do right in terms of taking care of the team, committing to investing in additional products in the future.
1:02:18
And so like I I I think it's actually pretty hard for them to do.
1:02:21
And I used to work in a more traditional acquisition environment like M&A environment.
1:02:26
I know what this is like.
1:02:27
It's really hard for them to do. Yeah. Well, this is awesome.
1:02:29
I know you have to get out of here. Uh it's 11:29.
1:02:30
We will talk to you soon.
1:02:32
I'd love to have you back. We could go way deeper.
1:02:34
I'm sure uh there's tons of people that would learn a lot from what you have to say.
1:02:38
So, thank you so much for joining. Thanks, guys. We'll talk soon. Bye.
1:02:40
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1:03:10
Uh anyway, we got Delion coming in to the studio. Uh Delta V with Delion.
1:03:16
Uh he's not here yet, so let's do an ad for one of his companies in his portfolio.
1:03:20
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1:03:23
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1:03:27
How'd you sleep last night, Jordy? I put up an 89. Only 6 hours 15. Did I beat you? Did I beat you?
1:03:35
The app, the new app so good. That would be three 73. I got roasted. Six.
1:03:42
So, your new milestone, John, is How did I get so little sleep? Two nights in a row. Better sleep.
1:03:46
We thought we were going to have a real like battle back and forth and Jordy just ran away with it in the first quarter. I take it seriously.
1:03:53
Anyway, take it seriously.
1:03:54
Um, oh, and we're having uh we're having Matteo from Eight Sleep on. Oh, fantastic. We're having Sleep Day.
1:04:01
We're going to get a bunch of sleep people. Bunch of join. Yes.
1:04:03
We should have the Whoop CEO back as well. Talk about that. Sleep tracking.
1:04:07
Uh, anyway, uh, until Delian gets here. He's almost here.
1:04:12
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And I'm excited to bring Delion into the studio.
1:04:26
We have a yellow light, which I think means like he's kind of here.
1:04:30
I don't actually know what that means. He's green. He's here. Welcome.
1:04:32
Welcome to the stream, Delian. How you doing? Yo, what's up?
1:04:36
You guys are getting real commercial. I like it. Oh, yeah. Yeah. Yeah. The ads never stop. The ads never stop.
1:04:42
Thank you to the sponsors.
1:04:42
You see, you see the ticker down there. Best companies.
1:04:46
We do ad read constantly.
1:04:46
We just didn't need sleepread. I know. So, you're welcome.
1:04:50
You should have, by the way, like, you know, come up on stage when I was uh, you know, interviewing senators last week at Hill Valley Forum.
1:04:56
You should have said, "Senator, we sell ads." Yeah. Senator, we sell.
1:04:58
So, you remember we ran we ran a we did a talk at Hereticon. Oh, yeah.
1:05:04
We ran a ramp ad during a ramp ad during the talk. Wow. Yeah.
1:05:09
I think they paid us a couple hundred bucks, which uh was the highest CPM ever paid for any ad ever, I think, because there were like 50 people in the room.
1:05:18
But, you know, it's like a $2,000, $10,000 CPM, but it's a lot of fun.
1:05:23
Anyway, uh let's talk about modernization, army modernization.
1:05:24
Um what are you reading into what's being put out from the army, from the DoD, from the government?
1:05:32
And uh are there any companies that are taking advantage of this?
1:05:35
It seems like they're very much welcoming Silicon Valley.
1:05:37
I mean, they're on the stream two days after we tweeted. Uh it's crazy.
1:05:40
Uh but uh what's your take?
1:05:43
your take? Yeah, I mean huge cultural shift if you look at the you know sort of various branches and um how they're known for you know sort of adopting next generation technologies at like the typiest tippius of the spear is basically like the space force you know sort of subp part of the air force then next you're traditionally you know sort
1:06:01
of thought of as the air force then navy and then typically army is more of a you know thought of I guess as like you sort of lagard in terms of you know you know really you know sort of pushing the fold on tech um and so you know sort of clearly they're starting to you know sort of shift that culture from within
1:06:15
and like I I do think it's like a very bullish signal that SE army goes from you know you know seeing that you know you guys you know are relevant to the tech ecosystem and the Kathern Bole thing and obviously the coms team there being like sir like you have to you should go get on this and like to do that in 48 hours is like very not
1:06:30
trivial like I don't even know how they got my email like I tweeted US Army come on TVPN and they just emailed me in five minutes later it was crazy no way it was wild they emailed me directly yeah I mean look I think there's you know sort of a lot of um you sort of changes and chaos from the new admin you
1:06:48
know you know like like I'm seeing this at a very tactical level with like sort of portfolio companies where it's like you know they're going from um you know we talked about this plenty of times but like continuing resolution reduce budgets to okay there's now this reconciliation bill that's you know sort
1:07:01
of coming in but then like Congress has to go vote and there's already talk of like well maybe they're not going to be super pleased with that reconciliation package in Congress and pass it all and they're maybe already talking about a fiscal year 26 continuing resolution so extend extend the you know sort of current budgetary environment and so
1:07:17
you're seeing that you know sort of volatility you know show up within individual program offices where there is a little bit of like you know sort of retreat to safety of the you know sort of pre-existing you know sort of programs pre-existing you know sort of contractors etc and so to have you know sort of US army talking about hey you
1:07:32
know even in this budgetary environment even with all this volatility that we're you know sort of leaning in you know sort of on you know sort of net new you know sort of players and net new technologies I think it's a real you know sort of bull bull signal for the cultural shift that's happening you know sort of within the army. Um you're
1:07:45
Um you're seeing that you know sort of some amount um within other you know sort of branches but like there's sometimes push back too.
1:07:52
I'll give an an example that I thought was really interesting yesterday.
1:07:56
Um I'm forgetting the um exact official I think he was like a major general I want to say within the um you know sort of space force.
1:08:02
I have to you know sort of look up the headline.
1:08:03
Uh but he basically you know sort of went on stage at um a space conference not space symposium but another one.
1:08:09
was like two days ago and basically was like look I have a lot of people that keep pitching me on like orbital refueling.
1:08:15
We've even funded some orbital refueling companies.
1:08:19
I don't think that this gives gives us any significant advantage anytime soon.
1:08:23
The you know time where this will be relevant for the war fighter is when there's probably a significantly larger number of you know sort of uh Space Force satellites up in orbit to justify this.
1:08:31
But that's not going to be anytime soon and is probably a decade away.
1:08:33
Um and so you know it's kind of interesting you see these like in some ways like counter to what you'd expect.
1:08:39
counter to what you'd expect. You think space force like bleeding edge adopting the you know new technologies and you have like a major general saying like we don't think refueling technologies are particular you know sort of relevant and so indicating hey maybe the tech
1:08:51
ecosystem is like pushing too hard on next generation capabilities before it's relevant and then you have the army which is thought of as being a little being like we want next generation capabilities people aren't pitching us enough on you know sort of this type of stuff. Um, so yeah, those are two I feel
1:09:02
Um, so yeah, those are two I feel like you know sort of you know people are reversing seats. Yeah.
1:09:05
I mean at the same time I feel like the the story with the army was interesting because it wasn't just like IVAS which is obviously this like debacle that took 30 years never really got anywhere.
1:09:16
Now it's in the hand of Anderl.
1:09:17
You could you can imagine that when Anderl shows up and is like hey we're ready for you to buy this.
1:09:21
It's going to be pretty good because it's in Palmer Luckyy's DNA.
1:09:22
And I think he's just like you know the ego of messing that up would not allow he would never ship something that doesn't work right.
1:09:29
Um but but then we also heard that he was like, "Oh yeah, one of the tech companies we visited was just Microsoft because of course we need databases, we need email, we need Excel sheets, probably all these things."
1:09:39
And I'm wondering if there will be a next uh like a next generation OpenAI was one that that that he called out uh as hey, we get all this data, we can drop LLMs on top of it.
1:09:48
And I wonder if there will be kind of a second wave of defense tech where enterprise SAS companies, as much as we like to joke about like let's put the government on ramp, like it really might happen and there's all the there's going to be all the Salesforce for recruiting.
1:10:00
Yeah, that was something I wanted to ask, but we didn't get a chance because we only we we only had it like 10 minutes or so with each.
1:10:06
But is there is there not enough uh founders in defense tech doing non-kinetic, non-cifi sort of boring, you know, just like effectively, you know, the modern CRM for XYZ, you know, the founder we had on that was doing supply chain logistics management. Rune. Rune. Rune. Yeah. That's one. Yeah.
1:10:27
So Delian, what what are you seeing in terms of non-defense tech startups uh start exploring working with the government in one way or another?
1:10:34
I imagine that it's very it's easy to like slap that on as like, oh yeah, we're cool.
1:10:39
We have an American flag on the wall.
1:10:41
At the same time, there is a real need and it does seem like there's been some neglect here.
1:10:44
Um I'm going to do the classic media thing where you ask me a question and I'm going to answer what I want to answer.
1:10:48
Just do whatever all blend together of a ramp ad.
1:10:51
Um today uh uh Stripe and Ramp announced that they're going to be partnering together to issue stable coinbacked cardamom um in Latin America. Yeah.
1:11:03
Now it's interesting you think about okay so why Latam aren't they launching this you know necessarily US Europe etc.
1:11:10
know necessarily US Europe etc. You can make arguments on like hey we have more currency stability here so it's not as relevant there the value proposition is a lot stronger but I think it's always interesting study if you look at you know um let's say next generation sort of payment systems how much is done be
1:11:24
like mobile QR codes tap to pay etc you actually see that uh some of the more modern infrastructure is actually in more of the laggered countries because they don't have the sort of pre-existing let's say a wire systems etc that have been built up over the course of a century so it makes it harder to fully
1:11:41
adopt and switch over versus like in Africa if you look at like mobile payments you know QR codes etc the like speed of transaction it's actually like faster and better and lower fee there but but it's because there was no sort of pre-existing you know sort of infrastructure or innovation there they sort of leaprogged us you know you can
1:11:58
kind of make the green field you know sort of China too is like it was more of a green field that's why they have the like super apps like wehat because like they didn't have all these individual apps that existed before and so one can come onto the scene with this super app. And so to tie this, you know, sort of
1:12:11
And so to tie this, you know, sort of into DoD, it's interesting to think about perhaps the places that are going to in general gov, let's say not DoD alone, perhaps the places that are going to be able to, you know, sort of leaprog
1:12:22
are going to be some of the places that have been the least innovative over the past 20 or 30 years because they don't have any pre-existing infrastructure concepts for how do we adopt next generation technologies, right? Within
1:12:32
generation technologies, right? Within the air force there is the like air force research laboratory AF works which is meant to basically you know sort of um uh be one of the early funding mechanisms for these next generation technologies in the army you kind of have like army futures command but it's much less built out of an infrastructure of like how do we adopt next generation
1:12:50
you use technologies there isn't like a pre-existing pattern and so maybe it can be a bit of a leaprog in you sort of green field and then the equivalent on the like OM smart card etc side of things like no I don't think there's been like an RF I for you know uh next generation payment systems for like the Fed and like the corporate card system in the United States in like 30 years. And so in some ways they don't have any
1:13:11
And so in some ways they don't have any like pre-existing buys infrastructure.
1:13:15
They can be like yeah we're just going to like completely radically rethink you know the entire way that we do it um and adopting stuff from scratch.
1:13:20
Um on like the VC side am I seeing tons of people working on this? I don't think so.
1:13:25
Like it still feels like it's a little bit of an underexplored trend.
1:13:29
I think the biggest thing is more like some of these incumbent companies realizing that there is a real, you know, sort of gov opportunity.
1:13:36
So I don't think that you're going to see like nextgen corporate card companies start that are focused on the gov.
1:13:41
I think what you're see is like ramping like oh I didn't even think about the idea totally that the government could be an adopter of my technology because the whole point of commercial offtheshelf is that it's commercial offtheshelf.
1:13:51
Like if you build it just for the government, yeah, you have one buyer and that's a problem, but also it's not going to be as good of a solution as if like yeah, also every Fortune 500 company uses it and you're under immense pressure to deliver the best possible product anyway.
1:14:02
best possible product anyway. Totally like yeah the the you know the reason that ramp is most relevant for them is because it also has all these commercial customers where you can adopt the like best-in-class basically like you know sort of patterns and like you know I think they talked about you know I forget if we talked about this when I
1:14:17
went on TVPN during you know HVF I think it was before this panel um but just like the you know Senator Ernst and you know you know Eric panel was phenomenal just from the perspective of Eric talking about the like cost savings and efficiencies they were a able to improve with an Android it's like Yeah, ATB, you know, they just was on the show. Brian
1:14:34
Brian Shimpet are all super super brilliant people.
1:14:37
These are like the best technologists that have like tackled this field and even for them, RAMP was able to, you know, sort of create significant efficiencies.
1:14:43
Imagine what that happens when you get, you know, get it adopted into the government. Yeah.
1:14:48
Well, speaking of Adam Porter Price, he just came on the show.
1:14:49
He was breaking down their acquisition of class.
1:14:51
Gave us some interesting anecdotes about how uh the M&A markets work in defense tech.
1:14:59
He's not buying a lot of companies that are for sale.
1:15:01
He's also not buying a lot of ventureback companies.
1:15:03
Uh what do you think uh what are you reading into Andrew's M&A strategy uh as far as a venture capitalist perspective?
1:15:10
Yeah, I mean look I think you know ABB is a very intelligent acquirer right when you know I was listening into the last you sort of five 10 minutes of his you sort of talk and it's like look he goes out and buys things where like there's a clear ability to like go 5 10x their revenues.
1:15:24
There's a 1 plus 1 equals 3 and that like they can build products together within androll that the two companies weren't able to apart.
1:15:29
and it's somebody that he's like known for years, not something that like when there's a fire sale because the VCs are starting to run out of money like you know then he finally starts to take them seriously.
1:15:39
And so yeah, I don't know.
1:15:39
I I I do think um there's a subset of um uh investors that are investing into these defense tech outcomes that think that there is a potential, you know, sort of acquisition M&A option at the end of it.
1:15:52
And I don't think there is the equivalent of like I you know there's definitely these like massive mergers that happen you know within you know sort of the primes but you don't see the equivalent of the like I don't know like Adobe B Figma offer the Google you know
1:16:06
sort of Wix you know offer like there's not the equivalent of WhatsApp yeah all of these yeah no like looking at it there was there was like roughly three billion of defense tech funding in 2024 like there has to be a bunch of other exit paths it's not like Ander is going going to be like, "Oh, yeah. You
1:16:22
You know, we know your fund's coming to a close in 10 years.
1:16:25
We're going to we're going to acquire $9 billion worth of venture companies that are at the end of it."
1:16:32
Just say, "We want you guys to get a nice 3x." Yeah. Yeah.
1:16:33
And I mean, the other thing is that like I think that it's easy to look at a headline number on some sort of acquisition that happened and think like, oh well, like they were acquired for 3x revenue, so you know, we could probably that that's probably our base case.
1:16:45
But when he actually dug into it, he was like, "Oh, there was this deal, but it was because like Boeing Ventures had invested in this company and then Boeing bought it."
1:16:54
And so there was like total like cyclicality of the deal and like all these special things going on and it wasn't necessarily just like an open fair price, all financial investors really setting a price in the market.
1:17:06
And so uh there seems to be a lot of distortions in the M&A markets. Yeah.
1:17:10
Yeah, I mean I'll give an example that was just announced today in the like aerospace field.
1:17:12
It sort of matches the um negative pattern that APB was suggesting.
1:17:16
So it's a company you capel space.
1:17:18
Um it was one of the leaders in the synthetic aperture radar satellite.
1:17:22
Think of this as basically like a different spectrum than like planet labs that you know larely focuses on like visual spectrum.
1:17:26
This is more like radar based so you can see through clouds etc. Clouds. Yeah.
1:17:30
They raised like you know $320 million total.
1:17:32
right in that you know ballpark where APB was saying once you've raised hundreds of millions it's really hard to you know sort of you know go to an M&A outcome.
1:17:38
Um the company was around for like 12 you know sort of 13 years in 2022 or 23 suffered a handful of setbacks both like they had um propulsion issues that made some of their satellites end up de-orbiting a little more quickly.
1:17:50
They uh unfortunately went on a rocket lab rocket that ended up having a launch failure and so that basically satellite went down.
1:17:56
went down. founding CEO ends up having to you know sort of resign and company just sold for what looks like you know sort of 320 million even though the basically you know sort of preferred stack was 315 um and it sold to this like I forget the name of it but it's like um quantum fund or quant it was like some quantum related hedge fund that is going to start using their data
1:18:14
for you know sort of hedge fund trading and then try and develop some solutions on it and so it's like interesting look that basically turns into effectively like a you know sort of 1x outcome for all the investors if you're selling for your you know sort of prep stack and that's sort of like truly the best best case outcome that you can you know sort of get um when you're you know call you
1:18:31
seven years in probably I assume flatlining in revenue still significant you know sort of burn there aren't any obvious like large DoD programs that they were you know sort of scaling into and then you have this like counter example that one of their competitors in the you know Los Angeles area Umbra that um has you know sort of raised less but I think has taken this much more yeah I
1:18:50
don't know deeply the company's numbers etc but my just sense is like they've just been way more you know sort of capital efficient and they're taking, you know, a longer time to, you know, sort of build up, but they're doing it in the way that, you know, sort of gives them an outcome on the other side where I do think if, you know, need be, they could get acquired. And if not, I think
1:19:03
And if not, I think they can probably run it for a pretty long period of time just on, you revenues and cash flows.
1:19:08
And so I look at like the defense tech ecosystem, I'm like, man, people are raising large amounts of money and they think like, oh, if I take the Silicon Valley approach of like burn fast, grow fast, etc.
1:19:18
, there will be like a whiz-like outcome on the other side potentially.
1:19:22
And it's like no, like the, you know, M&A space here is like way way way way more constrained because unlike Google or like let's say like, you know, Facebook acquiring Instagram back in the day, there's much less of this like competitive threat by next generation players that grow really really fast.
1:19:36
There's just like not that equivalent dynamic where like you're going to get, you know, sort of bought out even with like relatively limited progress.
1:19:40
You're only going to get bought by like these very very, you know, sort of rational buyers.
1:19:45
Not to say that like Facebook's Facebook's um you know sort of acquisition of Instagram was irrational in the long term but in that moment it looked very irrational right like it was a deeply deeply irrational purchase according to like traditional purchasing you know frameworks.
1:19:57
I don't think like APB said there's going to be that in like the defense you sort of tech ecosystem they're only going to be very rational purchasers. Yeah.
1:20:04
Staying on uh uh I don't know cameras in space.
1:20:07
I was talking to Kevin Wheel from OpenAI, formerly Planet Labs, uh about uh observation in V Leo and he was saying one of the challenges is that orbital refueling and maybe the fact that it's farther away than we think. Um what is your take?
1:20:22
I mean obviously you're one of the new LEO uh you know beneficiaries.
1:20:26
What's your take on timelines for doing interesting stuff in very low Earth orbit?
1:20:33
Um, yeah, I do think there's a, you know, sort of real challenge of, you know, if your business case is predicated on, um, a certain mission timeline of like how long you're up there to take photos and generate, you know, sort of revenue.
1:20:44
You know, there's definitely some interesting folks.
1:20:45
you know, albido space is trying to build these very like dense and somewhat aerodynamic, you know, sort of satellites where they're trying to, you know, sort of close this gap between like, hey, if we're lower, we like have slightly better, you know, sort of imaging quality.
1:20:58
Um, and if we make this thing somewhat aerodynamic, then we don't, you know, have as bad of like a, you know, sort of de-orbit timeline.
1:21:03
Um it just feels like it's you there's so many technical risks and hurdles where you're trying to like you know you know the way that I feel like Trey sometimes talks about it is like companies typically should only really rely on like one miracle to get to success these like multi miracle companies are somewhat difficult.
1:21:20
Now I saying that like also you know maybe Varta is also a multi miracle company.
1:21:24
It's you know non-trivial.
1:21:25
Um but you know maybe maybe you're allowed to take a you know sort of multi miracle stab if you're we have an American pope now. So yeah. Exactly. Exactly.
1:21:34
Gonna you know bless all of us.
1:21:36
Uh what's your thesis around you know Fury is super exciting.
1:21:40
You can imagine they scale it up to be bigger, carry bigger payloads, faster, more competitive with, you know, something like an F-35 or an F-47.
1:21:49
But does Ander advance so quickly from an autonomy standpoint that they're that they never have to do a sort of humanrated, human enabled platform?
1:22:03
Is that is that is that you know, just from your personal standpoint, does that feel like a possibility?
1:22:08
They just make them for Tom Cruz and the next the Top Gun and that's it.
1:22:12
They make exactly one plane.
1:22:14
It has the IMAX cameras already baked into it.
1:22:17
baked into it. It feels like there's just a such a strong religion within you know sort of the air force around you know human pilots and yes you know CCA was like a you know sort of significant step towards getting them comfortable with like autonomous wingman but like fully fully you know sort of decoupling for some of these like larger more
1:22:36
capable more expensive platforms from having like a human operator that again I think what happens is like the ratio of autonomous jets to human jets just significantly you know sort of increases I guess over time where it's you right now they talk about is like 3 to four to one and then over time I think that gets
1:22:51
to like 100 to one but I think they're still going to want this like human orchestrator that literally just probably has like a literal ball of furies that are like you know operating around the like you know sort of fighter you know jet pilot but I would probably bet on you know sort of five to one odds that it's more likely than not you know
1:23:08
and again hard to you sort of gauge whether or not they win it you know I think you know Trey and others have talked about you know how recently some of the feedback that they get from the department is like they're winning too much and so you know maybe they're not able win because they're such big winners. Um but you know I put like five
1:23:19
Um but you know I put like five to one odds that they definitely like you know sort of bid or you know architect some human rated you know sort of fighter jet system you know in the next you know call it five years. Yeah. Yeah.
1:23:29
This is a personal perspective.
1:23:30
This is not you know general internal information or speaking on behalf of founders.
1:23:34
Well well we're on FF portfolio companies uh in the news today Fijiimo going to join OpenAI from Instacart.
1:23:42
uh CEO of applications, the CE now they have two CEOs and and running different divisions.
1:23:48
Um do you do you have a take about that? CEOs, not co-CEOs.
1:23:53
Are you worried that Will Brew is going to be poached at some point since Sam just seems to steal the CEOs from all over the market? Uh head of space. Head of space. No CEO planet. No CPO there. Yeah, exactly.
1:24:07
I mean underrated, right?
1:24:07
that like the old OpenAI team was was incredible and they all kind of scattered to the wind and started 25 different foundation model companies, but now he's putting together the Avengers again. It's great.
1:24:16
You know, I uh you know, not to be rude to the prior, you know, V1 Avengers, but I think the V2 Avengers are a little more sane, commercially focused, and a little more stable.
1:24:28
You know, I think the the V1 was probably right for like the research lab days be a little crazy.
1:24:31
You know, that's a commercial company, probably a little different. I don't know.
1:24:37
I mean uh you know there's so much news that I feel like has come out of OpenAI over the past week that I do I do think fundamentally changes how you should like underwrite the company over the next you know sort of 5 years where you know it seems like you know they're sort of abandoning the full forprofit conversion.
1:24:51
It seems like Microsoft is not necessarily fully willing to give up their like rev share and percent of you know uh you know the the revenue they get at these like larger scales that they originally promised.
1:24:59
And so that negotiation is clearly not done.
1:25:01
And then in Sam's announcement, you know, sort of tweet, he was like, "By the way, I am staying on as CEO of OpenAI even though this person is CEO of applications."
1:25:11
It's like, well, nobody was asking that question, but like given that you're clarifying, maybe we should be asking that, you know, good question.
1:25:17
Well, well, it made me think, is it I mean, we we had 03 explain chat GPT's entity structure the other day, like Yeah.
1:25:26
Open AI and and it and it could not it was like explain it and it was it was extremely botched.
1:25:31
you came away even more confused.
1:25:32
So we don't we don't have we haven't passed that real AGI is when explain the structure of being able to explain your own corporate structure but but I just read into that as like maybe Sam is CEO of one entity in the stack and then you know OpenAI Global LLC is has you know because they're not like co-CEOs at no point did it say that.
1:25:55
Yeah, I mean you've been you've been a little bit uh negative on on rappers on companies building on top of uh on foundation models and yet uh another FF portfolio company Windsurf acquired by OpenAI $3 billion outcome.
1:26:09
Uh it seems like uh it it I think Windsurf is a portfolio company by the way. Maybe it is looked up. It's publicly reported.
1:26:16
I don't know how that would be the case.
1:26:18
We we missed that when we saw that.
1:26:19
I found it on three different Maybe it's fake news. Who knows? Could be fake news.
1:26:23
knows? Could be fake news. But but the big thing is is like is it game on for application layer companies now given that you can go and raise a very traditional venture path and the narrative of like oh you're just going to get steamrolled might not be there because $3 billion is $3 billion it's pretty good outcome right I mean look this is the you know perfect example of
1:26:42
you the delta between you defense tech companies and AI tech you know sort of companies like one there is the like hey I'm the big company with lots of cash I feel slightly threatened the like exponential growth of these things can sometimes be inescapable And then there explicitly like meters your progress where they want you to see you accomplish XYZ thing on a smaller program as a lily pad to the larger program larger program etc. So it's like
1:27:10
So it's like yes, you know, uh uh and has done super well, but if you compare them to the like exponential revenue growths of the like open AIS, the ramps etc of the world, I don't think it's that it still is like super linear, but you know there is some like you know natural cap on like you know true, you know, sort of growth rate.
1:27:29
Um and so I do think it then makes it more rational for investors to be piling into some of these AI application companies.
1:27:35
Like look, I still, you know, I'm probably not a, you know, uh, you know, bull on things like Harvey as an example, not to overly pick on them.
1:27:42
Um, but when I think about like a, you know, again, not to pick overly on another company, but if I were to think about like the irrationality of some of the like, you know, Harvey um, you know, prices versus the Seronic prices, at least Harvey, you can rationalize, hey, there are these like multi-billion dollar acquisition outcomes that are, you know, almost certainly going to happen quite regularly.
1:28:01
I don't know like who buys Seronic, right?
1:28:03
Seronic, right? Like I don't think that like you know electric boat you know the general atomic subsidiary etc is buying you know suric for their shipyards for $3 billion like yeah yeah yeah it's totally possible that the winds surf thing causes this cascade of like every hyperscaler needs an IDE company and it's just like boom boom boom and they
1:28:20
all have $10 billion to spend so you know oh is 10 billion too much maybe two billion happens but like multi-billion dollar outcomes we could see a whole bunch of those same thing with uh you know image generation same thing with uh you know different agent models like there's there's a way that like a lot of these could be baked into things. Anyway, I think the other question I'd
1:28:34
Anyway, I think the other question I'd be interested to get your point of view on, so we were at config yesterday.
1:28:39
Figma came out with uh make sites, buzz, like a bunch of like very, you know, things that could be by themselves their own kind of businesses, right?
1:28:49
And I saw some commentary online that was uh basically saying that like every app is just like basically converging on the same feature set right now.
1:29:01
same feature set right now. It feels like in some ways where it's just like make anything, you know, and and so like what h like in your point of view obviously you you went you very clearly took a a you shifted away from looking at a lot of software pure software
1:29:17
opportunities but how do you think VCs will change in kind of underwriting some of these opportunities where it for some businesses that have been started in the last year they're moving towards a place where everyone is weirdly competing over the same kind of like core use case at the end end the day. Make an app, make
1:29:34
Make an app, make you know XYZ, you know, thing.
1:29:37
Yeah, I I I'll use a like example uh from more like backend, you know, sort of cloud infrastructure that was related to AI.
1:29:47
there was all this hype in like 21 and 22 around um and I I may butcher this because again not my field but I believe is you know the term was basically these vector you know sort of databases that were a way of basically storing a lot of the you sort of model weights uh the sort of pre-training you know sort of data that you were you know sort of
1:30:01
working with um and you know your fine-tuned basically models on top of the you know sort of base foundation models um there was a whole set of investors that plowed like hundreds of millions of dollars into these companies they had crazy revenue growth and then like within 12 months AWS made it a feature Google cloud cloud made it a feature. Azure made it a feature and the
1:30:17
Azure made it a feature and the basically you should dropped off to zero because it was like yeah this is just a natural cloud feature.
1:30:22
Thanks so much for pointing it out.
1:30:24
Thank you VCs for like funding hundreds of millions of dollars to like you know make you know our customers very aware that this was necessary.
1:30:30
But it turns out like people just like having things in a single platform that they already have a relationship with.
1:30:35
And so yeah I think like you know if I were you know sort of you Dylan the CEO of Figma, I would just be like studying what all these VCs are funding and then being like great I don't even need to buy this.
1:30:43
don't even need to buy this. this is so easy for my internal team to build that I will just go build the best applications and then it turns out the CFO is like well why would we have two design software contracts you know we already use Figma it's already rolled out to everybody everybody knows how to do it let's just kill this AI thing and
1:30:57
just like you know use the AI up within Figma and so I think that like you know I don't know if you guys remember this term sherlocking um it was you this is for the you know sort of viewers on the show that are you know uh below the age of 30 um back in the day there was this app on the Mac app store called Sherlock um that you know was very popular VCs funded it. It was getting to like
1:31:14
It was getting to like millions of years of revenue.
1:31:15
Um, all that it did was if you hit command space, it pulled up a little search bar um and allowed you to search all your applications, etc. on your Mac app.
1:31:22
Uh, and then one day and then one day at WWDC, Apple was like, "Hey, that's a cool idea.
1:31:30
We're just making it like an OS feature."
1:31:32
And so then on uh it was known as getting sherlocked when a big tech company just releases your entire company as a free feature in the like software that they already have all the distribution on.
1:31:44
Yeah, I mean I always I always looked at uh a lot of these generate an app companies and you know looking at their revenue ramps it's just it's always it's always it's it should be nerve-wracking if your revenue is ramping that quickly and there are founder mode incumbents that are in the same category because usually means you can build said thing very quickly.
1:32:06
But anyways, this is fantastic.
1:32:08
Thank you so much for coming on. We'll talk to you soon. Delta V. That's the end of that.
1:32:12
Uh, next up we have Harley coming in from Shopify.
1:32:15
We need a bunch of size gong because it's earnings day.
1:32:20
And we're pleased to report that Shopify delivered.
1:32:23
Uh, Q1 2025 revenue rose 27% year-over-year, 2.
1:32:29
36 billion, edging past the 2. 33 billion consensus.
1:32:32
They beat the analyst estimates.
1:32:34
And we're excited to have Harley here in the studio.
1:32:38
Welcome to the show, Harley. I'm so glad to be here. Can you guys hear me? Okay. Yeah. Oh yeah. You sound great. Loud and clear. Uh so run us through it.
1:32:45
Uh give us the breakdown.
1:32:47
How are you processing today?
1:32:47
Uh how how are things going?
1:32:50
Things are going really well.
1:32:52
I mean I think Q1 I mean remember obviously Shopify is a bit of a seasonal business meaning Q4 is always like we're ultimately retail.
1:32:58
So Q4 is always a big quarter for us. But Q1 was amazing. Revenue was up 27%. We 2. 4 billion.
1:33:04
Uh free cash flow margin hit 15%. So about 30 363 million.
1:33:06
And then it was our seventh consecutive quarter of GMV growth above 20%.
1:33:13
It was about 70 almost 75 billion which GMV is always important because it speaks to how well merchants are doing on the platform.
1:33:19
Um so I'm I'm you know I'm when when Shopify does well I'm obviously very proud.
1:33:25
I'm especially proud now because I think this is uh you know just to say the thing this is a very unpredictable market and I think Shopify's superpower of agility really comes into play here.
1:33:37
Um, I actually mentioned something on the call that didn't really get picked up, but because you guys are uh interesting people, I'll share with you.
1:33:44
Uh, we've been public now for almost 10 years to the day.
1:33:46
We did we we had our IPO May 21st, 2015.
1:33:52
And if you look back uh on the last uh 39 quarters, so 39 cohorts of merchants that have come on, 38 out of 39 cohorts of merchants on Shopify have outperformed the greater e-commerce market.
1:34:06
So, um, one of the things I'm I I'm I'm very very proud of is that Merchants on Shop I seem to be doing, uh, really really well.
1:34:11
Um, but and I'm excited to be on your show.
1:34:14
I mean, this is Yeah, thank you. Thank you for this.
1:34:17
I canceled mainstream media to do this because like we are the mainstream now.
1:34:21
We are the corporate funed media.
1:34:26
That has certain connotations.
1:34:26
I think this is better than mainstream because it's we want to be mainstream. Yeah. Yeah. No, no, we love it.
1:34:30
Uh, so yeah, I mean you talked about the the tumultuous market.
1:34:34
There's a lot of headlines.
1:34:34
At the same time, stock market went way down.
1:34:37
Stock markets kind of back up.
1:34:37
Um, what should people be reading into new business formations, just broader entrepreneurship trends and the data from Shopify about the health of the American entrepreneur? Yeah.
1:34:48
I mean, look, let me talk about macro a little bit first.
1:34:51
Um, we were around in 2008.
1:34:55
Uh, we were a tiny little company, but um, I've spent I've spent, you know, almost a third of my life snowboard shop originally.
1:35:00
Well, we were a snowboard shop in 200 like four, but Okay.
1:35:02
Yeah, like we started a snowboard shop and then actually uh when I was in law school, I don't know if you guys know the story, but I uh when I was in law school, I I was born in Canada, grew up in South Florida, ended ended up in in college in Montreal at McGill.
1:35:13
Uh and then I went to law school in Ottawa and I became one of the first merchants to use Shopify. Cool.
1:35:18
Um that's when I met Toby.
1:35:20
But um 2008 happened and actually one of the things we saw during the great financial crisis was that a lot of people turned to entrepreneurship either as a way to replace their job their income or as a way to supplement their income if they had a reduced you know had had a reduced um hours if they were working at you know restaurant or or a retail shop.
1:35:37
Um during the pandemic as well we sort of saw that during the pandemic all these physical retailers that some of them were lagards that had not really you know moved online yet began to move online this amazing clip.
1:35:49
So in many ways this is sort of you know Shopify kind of does well in these periods of of of uncertainty.
1:35:54
Um but from our merchant perspective we're not you know we're not seeing any change in our merchants so far.
1:36:00
Our data actually through April so beyond just the quarter uh but through April does not suggest any slowdown.
1:36:06
Uh it's still obviously fairly early to assess some of these impacts.
1:36:10
But you know I think from a consumer perspective one of the things that also happens in times of disruption it does feel like consumers and retailers um they kind of lean into brands that they know and they trust and you think about your favorite brands you know I don't know for me it's like Viori and Alo Yoga and James Purse like all those brands are all on Shopify so things have been really good for us and uh and I think that'll continue.
1:36:32
uh talk about uh I want you to talk about for a second the power of shop shop pay just because as a consumer I'm I I'm probably uh a dau at this point.
1:36:44
It it it's truly truly I mean it's truly life-changing.
1:36:48
I I I want to I would love to get your sense of kind of the like what what is making Shopify so dominant today?
1:36:56
I mean we talked to a lot of entrepreneurs and obviously like the core platform but can you talk about how kind of the the sort of like flywheel that that you know Shopay is is kind of creating in the ecosystem.
1:37:10
Yeah I mean Shopay is really interesting for two reasons.
1:37:13
One is historically we've we've really been a merchantf facing product merchantf facing brand.
1:37:19
So people kind of knew Shopify if you were a merchant, an entrepreneur, but for most people like we were the brand behind the brand.
1:37:25
You didn't really know us.
1:37:27
And both the Shop app and and more specifically to your point, Shopay is really the first time that I think people are seeing the Shopify brand in the wild.
1:37:34
Um and actually for the quarter, Shopay facilitated like $22 billion of GMV.
1:37:40
That was up 57% year-on-year.
1:37:40
If you look at the entirety of cumulative GM, we launched Shopee in 2017 and we've done about 225 billion dollars on Shop so far.
1:37:50
Um, part of it is that I think companies I mean Amazon has done a really good job of this actually.
1:37:57
They've sort of reset consumer expectations for how commerce is done and I think for a lot of consumers because of that they want you know they want their products either shipped fast or they want it you know shipped cheap to them um or they want to be able to do oneclick checkout.
1:38:10
And so this idea of, you know, we are not obviously a retailer, we're a platform.
1:38:15
But if you were to pretend for a moment that Shopify was a single retailer, we would be the second largest online retailer in America after Amazon.
1:38:22
Um, we have millions of stores.
1:38:24
We're about 12% market share in terms of all ecom in the US.
1:38:29
Um, I think Amazon somewhere in the, you know, 40s or something like that.
1:38:33
Um, so one of the things that we're able to do is even though everyone on Shopify is an individual merchant with an independent business and and and independent brand, we're able to give them economies of scale as if they were the second largest retailer in America.
1:38:46
And one of those obviously is Shopay, but Shopay has done incredibly well.
1:38:48
And not just that, but we're also seeing that brands are now coming to Shopify specifically for Shopay.
1:38:54
So we have something called Shopay commerce components, which is um which is which allows merchants just to use Shopay.
1:39:00
And the way we kind of think about it is that if you're a a big, you know, a coach is actually a good example of this. Kate Spade as well.
1:39:07
If you're these brands that have, you know, your own platform, maybe you're using a legacy platform or you have your own your own inome in, you know, homegrown system, you can actually use that component and we sort of look at that as our way of starting a relationship with these very very large brands.
1:39:21
Um, but Shopay has been been incredible in terms of the the flywheel question.
1:39:25
If you think, you know, historically about how Shopify started 20 years ago, really the focus for us was just e-commerce for SMBs and then some of those SMBs got really, really big.
1:39:37
I mean, Gym Shark got big.
1:39:39
Um, you know, Vori got big.
1:39:39
Uh, Fashion Nova got big, Bombis, uh, Allirds, these stores that started their mom's kitchen table bea became billiondollar companies.
1:39:48
And so one of the first changes was we sort of moved from just focusing only on SMBs to focusing on larger merchants as well.
1:39:55
Um and and especially those that sort of grew up on us and that that allowed you know established brands Hunter Douglas, Mattel on running that had their own systems to come and migrate entirely to Shopify.
1:40:08
But the second thing that also happened was we began to think about like you know what what is the future retail?
1:40:13
Where's this thing going?
1:40:13
And it became really obvious that the future of retail was not just going to be this like false dichotomy of online versus offline.
1:40:20
It's going to be retail everywhere.
1:40:22
And that if you were going to be the entrepreneurship company, the retail operating system uh for the most important brands, you have to make it easy to sell on every surface area.
1:40:31
And so we began to introduce things like point of sale and B2B and you know embedding our checkout into places like Instagram and you know X and uh you know every social media platform.
1:40:43
Um obviously uh YouTube is another one.
1:40:45
We have a we have an integration to Roblox now.
1:40:49
So if you have a toy company on Shopify or a company where your consumer spending time in Roblox now you can actually transact directly in Roblox powered by Shopify.
1:40:57
So the way that we kind of think about it is more of like a Oh, bunch of these different, you know, channels where commerce happens.
1:41:06
AI shopping on, you know, AI shopping will likely be one of the, you know, Yeah.
1:41:10
So, that's an area that I that's an area I wanted to to get to next is um basically LLMs.
1:41:15
I think you guys have made some early meaningful moves here.
1:41:21
Uh how how excited did you get about the intersection of shopping and LLM as you started, you know, using some of these products just as a consumer, right?
1:41:28
I think a lot of people just early on start using it maybe as an alternative to a Google search and it was more for information.
1:41:36
It wasn't purchase driven.
1:41:38
And then we've had we even had an employee from from OpenAI on the show and he was like, "Oh, every time I want to buy a product now, I just get a deep research even if it's for something like bathroom towels or something like that because he's like, why wouldn't I want, you know, the equivalent of three hours of research on the the right product to buy?" Yeah.
1:41:56
It it feels a little bit like where um social commerce sort of started where it starts with discovery doing research, finding new brands.
1:42:04
You get to serve some like I don't know uh I think actually so one of my favorite stores on Shopify is Ember. You guys know Oh yeah.
1:42:11
I actually know the founder. Great company. Um he's he's on Shopify.
1:42:16
Please tell the founder that I'm incredibly I use it every single day uh here in Montreal in my office.
1:42:19
Um but you know we start with Discover.
1:42:22
I think I was I think I saw an ad or I saw some sort of reel for Ember a couple years ago.
1:42:28
I was like, "My coffee or my tea can stay warm longer.
1:42:29
That sounds really good."
1:42:31
But I didn't necessarily go to complete the purchase on Instagram.
1:42:32
I then went to, you know, I went to probably Google, typed in Ember, found the website, went on Shopify store and bought it.
1:42:39
So, I think sort of the the trajectory of these new commerce channels starts with discovery and research first and then eventually migrates into like full-on checkout.
1:42:47
Um, so I think this idea that more people are going to discover and shop on these AI tools, whether it's a rapper or it's it's like open AI or or Perplexity, I think that is an amazing thing.
1:43:01
Um, what the way that we kind of think about it is anywhere where commerce is taking place, Shopify has the great the greatest product catalog in the world because we have the best stores in the world.
1:43:12
We want to power those as well.
1:43:14
Um, so I'm not going to, you know, front front run uh product roadmap, but you should expect to see Shopify merchants selling wherever their customers are.
1:43:22
And if their customers are spending time on places uh on on AI tools and and LI modeling models, uh you should expect that that we'll be there as well.
1:43:29
Um, but what's really interesting I think about that is that it it means that all these like uh what's a good example?
1:43:35
Let me let me use Spotify for example.
1:43:37
Like weird thing to say out loud, but like Shopify has an integration for Spotify.
1:43:44
I don't have that because most merchants don't have Spotify artist profiles, but if you're Beyonce and you who own Sacred, which is a a great uh cosmetic company on Shopify, you have a huge art artist profile, it makes so much sense for you to also have an embedded store inside your artist profile.
1:44:01
In the same way that if you're Jim, if you're Mr.
1:44:04
Beast and you have a huge Shopify store with Fastables, you should also sell directly on your YouTube channel like right there embedded checkout.
1:44:10
So that's kind of how we think about the future of retail that like where are these surface areas new or old that transactions should be taking place that they're not.
1:44:21
And then what we do is we go to these companies and say look let us help power that both discovery of great products but also checkout and in some cases even shop pay. Yep that makes sense.
1:44:28
I I want to do a little bit of a deep dive on AI. It's such a big topic.
1:44:32
I'd like to break it up and understand uh how is Shopify thinking about uh using AI tools internally as a company and then I'd like to go through some of the different technologies uh from diffusion to to text generation to agents on how the merchants can benefit from those.
1:44:50
But maybe let's start with just culturally uh what is the average Shopify employee using in their day-to-day now? Yeah.
1:44:56
Um so I don't know if you've seen you saw Toby's now leaked email. Oh yeah.
1:45:01
Um, which uh at the at the time having it leaked I wasn't sure it was I mean I think now actually there's probably more benefits downside to it because it does it feel I I feel like it's getting referenced a lot and I think it also I don't know from an employee brand employer brand perspective it's kind of nice to know that like that's how we think about things. Totally.
1:45:19
But this idea of like I think every technology company has AI um you know they'll say that it's being utilized inside their company.
1:45:27
I think there's a big difference between utilization and it being reflexive.
1:45:30
And part of the reason why, you know, this email was really important was we want to make this reflexive.
1:45:37
We want to push the boundaries of of how our our our our team thinks about it.
1:45:41
So this idea that even a simple friction point that before you go and ask uh hey, I want to I want to add some headcount to my team. Okay.
1:45:50
Well, like substantiate why AI cannot do that.
1:45:53
That small friction point may seem annoying, but actually what it really provides for is a much more reflexive process of like, you're right, I actually don't need this person. I can go do it.
1:46:03
Then we also built roughly about a dozen MCP servers that make pretty much every corner of Shopify's work legible.
1:46:10
So now any everyone can now find out about kind of everything else happening in the company.
1:46:14
I'll give you the best example because I'm in kind of in earnings mode right now.
1:46:16
It's our earnings day was today as you guys know why I'm here.
1:46:20
why I'm here. Um I often will go to different teams and different product leaders or technology leaders and say hey I I want to talk more about you know I don't know B2B in Europe and they'll be like okay well here's what's going on and they'll give me you know they'll give me the brief whereas I felt for
1:46:36
this particular earning cycle relative to previous ones again we've had 40 now or 39 we 40 coming up I I didn't have to do them nearly as much I was able to go into the vault which is sort of our internal wiki and I was able to pull far more information on my own even to the extent that I can at what stage different projects are are at. So I
1:46:52
So I think that is um making company operations legible I think is I don't know to me that's like the gold standard.
1:47:02
It means that I'm not bothering anyone.
1:47:04
I also you know if I'm working at six o'clock in the morning and like I need to get this one thing on B2B I don't need to wait till someone is at their on Slack to ask them.
1:47:12
I can just figure it on on my own.
1:47:14
And I think the other the other piece of it that I think is is on the developer side which maybe is less maybe is more obvious but we actually launch uh MCP server for what we call dev assistance.
1:47:25
So effectively it allows developers to like use cursor chat windsurf uh claw desktop in in a very in a very simple way.
1:47:34
It's just part of their daily workflow. So that's part of it.
1:47:39
The other part of it maybe is less sexy but it's on the support side.
1:47:41
um we think about like our support organization, how they deal with these millions of merchants, how they work with our merchants.
1:47:47
In many cases, there's two types of conversations.
1:47:50
One conversation is really more like um like more of a lowquality conversation.
1:47:57
Things like configuration of a domain name um you know conf like username and password um picking a theme or how do I pick a theme?
1:48:05
Then there's like high quality conversations which almost looks like more like business coaching and that's like hey um I'm noticing that I'm getting traffic from Pinterest. What should I do next?
1:48:14
Well, you should activate the Pinterest channel or I'm not getting any sales at all. What should I do?
1:48:18
Or this theme I'm not able to configure it properly.
1:48:20
Maybe I have the wrong theme.
1:48:21
So one of the other things we're able to do is by giving our support organization the the a lot more of these tools now they're able to just simply focus more on these highquality conversations versus low quality conversations.
1:48:32
and and it just means that when you're speaking to, you know, if you're speaking to a human at Shopify, you you like we're able to ensure that you're having high quality conversations and you're not taking up time from them because you're, you know, you need a pass password reset.
1:48:44
So, what I'm hearing is like barely using AI at all.
1:48:50
It seems like you're stuck everywhere. Yeah.
1:48:52
We're using three different coding agents.
1:48:54
We have agents everywhere.
1:48:54
Well, I I like I like the I like how deep you guys are going because we've seen we've seen other kind of like leaks, which is clearly just a CEO wanting to signal it's purely purely PR.
1:49:05
You should map that against again this is why it's fun to go on the show I can't talk.
1:49:10
to go on the show I can't talk. Okay, you should map that against technical founder companies because I bet you you know I bet you uh you know dinner uh like a dinner somewhere that if you map that you will see that generally technical founder companies at scale so
1:49:28
there's not that many of them you won't hear these sort of you know superficial kind of statements you will see actual building and you know I mean Toby's our CEO and male uh from Microsoft is our CTO there's there's no room for that superficiality of Shopify. It is like
1:49:43
It is like like this is the way to go.
1:49:45
And and there's a whole topic about the sort of era of founder companies at scale which I think is like the best era.
1:49:50
The other thing it just means very different if it's coming from a founder technical CEO.
1:49:55
If they're saying we need to be AI native that means we're going to leverage AI and actually use it to develop workflows and processes and all these things.
1:50:05
And then the other side is we're going to be AI native means we're going to buy a hund00 million dollars of AI tool pilots return in six months.
1:50:16
It's like very difficult.
1:50:16
A lot of decks from McKenzie. Yeah.
1:50:17
You guys were at the uh Figma conference, right? Yesterday. Yeah. Yesterday, right?
1:50:20
So like I mean I I've known Dyl like you know like there's a group of people like Dylan and Toby and Patrick and Zuck like they're just operating at a different level. Totally.
1:50:30
and and the fact that like we're in an era now where these incredible people, these incredible leaders can lead over a long period of time because that wasn't the case. Go back 20 years ago. You didn't see that.
1:50:43
No, we need the gray hairs in. Yeah, that's right.
1:50:44
And and and even the fact that they called the grey hairs or adult supervision was almost porative. Yeah, totally. Totally.
1:50:50
This is a better era with better run companies.
1:50:51
Um and there's no better person on the planet to run Shop than Toby.
1:50:54
to run Shop than Toby. Um I I just on the AI I just before we get off the I think one thing I I do want to say also on the merchant side one thing that I think people miss is like yeah like all these great tools that all of our companies are building you know uh I saw some of the stuff that Figma rolled out yesterday around you know like effectively you know you can
1:51:12
fire your agency because Figma can and ironically there's all these agencies in the room probably thinking like uh our our our like unique value proposition is now going to be somewhat disrupted uh by the stuff that I'm watching on on on at the keynote but um it's actually small businesses that I think actually will benefit far more from a lot of these these this this tooling. Um yeah, big
1:51:30
Um yeah, big business can can as well.
1:51:32
I I um this is a bit of an aside, but I'm not a sports guy, but on on weekends I have this small podcast called Big Shot.
1:51:38
I'm creating an archive of the greatest Jewish entrepreneurs of the last 50 years.
1:51:43
So people like Izzy Sharp, who created the Four Seasons, and uh Linda Resnik, who created Fiji Water, I just did Bobby Kodic and Michael Milin.
1:51:50
Um, but I interviewed this guy, uh, Mickey Drexler a couple weeks ago.
1:51:54
Um, and Mickey Drexler is about as close as you get to retail royalty. He ran the Gap.
1:52:00
He was CE of the Gap for 20 years on the board of Apple. He created Old Navy.
1:52:02
He quas created uh, J Crew, at least made J Crew what it is, which a household brand.
1:52:10
But he talked about in the old days of of the Gap, sort of the heyday of the Gap in San Francisco, they have hundreds of people doing merchandising, product photography, product descriptions, you know, layouts.
1:52:20
Um, and as he's sort of saying this to me, I didn't want to obviously say this to him on the on the podcast, but I can say it here.
1:52:28
I was like, Mickey, like today, like literally like the thing you get from Shopify for $39 for free with all Shopify magic can do a better job of your 300 people at the gap.
1:52:37
And I'm I I'm I I think actually like people talk about this term like democratization of entrepreneurship and leveling the playing field.
1:52:45
It's all just these like random, you know, platitudes.
1:52:46
But actually what we're talking about here is is that very thing that 20 years ago a team of 300 people were able to produce merchandising results that today for $39 a month on Shopify you get for free.
1:52:59
Like you you get included in your subscription.
1:53:01
And I think when you think about like product descriptions and product, that's part of it.
1:53:05
But even things like, you know, like we have something called Shopify inbox or an email marketing tool, like the idea of automatic, like automatic responses to every customer you have with highly contextualized replies.
1:53:16
You used to have a team that would do that.
1:53:19
And if you were a big company, you had a team.
1:53:20
If you were a small business, you did not.
1:53:24
Or even even downstream even downstream of that though, right?
1:53:26
before somebody's signing up for Shopify, you know, a lot of them need to get uh some type of entity, right, to like, you know, house their business.
1:53:33
And before now that somebody that that doesn't have any business expertise can go and even asking a simple question like should I set up an LLC or a CC Corp, right?
1:53:43
Which is like a classic thing.
1:53:45
A lot of people botch it.
1:53:46
And it is insane to for a lot of if somebody's getting on their entrepreneurial journey and they're going and you you should get advice on it.
1:53:55
Yeah, it's not even that complicated of advice, right?
1:53:57
A lawyer is just going to regurgitate, well, like here's the benefits of this and like here's the benefits of that and like given where you want to take the business, maybe you should use this.
1:54:05
And the fact that you can now get that advice like contextualized for free from an LLM and yeah, in many ways you shouldn't get legal advice from an LLM.
1:54:12
It might hallucinate, but for a decision like that, it's certainly better than just guessing.
1:54:18
And then the other stuff that I'm the other stuff I'm excited about is, you know, specifically I can imagine a world in the future where an entrepreneur makes a product and the product's like, you know, maybe it's a physical product and it's slow to change something like that.
1:54:29
Maybe you're making it overseas, you're making it here, but it's a slow process.
1:54:32
But I can imagine a world in the future where Shopify lets you generate an entirely new kind of brand web world around that product.
1:54:38
and you might see a conversion rate go up by 15% for something like that for like a one-time action.
1:54:47
And in in that world, it's like the the incremental benefit of like a change that could happen almost instantly is insane.
1:54:54
So, I think the the implications of shopping in LLM is exciting, but at the actual business level, the impact of Genai, I just think is is really underpriced right now. Yeah.
1:55:07
I also think one of the things that is missing is a little bit like this like we sort of think about um our AI tools as very practical like goal oriented meaning like what like how they operate their business um rather than simply just rolling out random sort of features like what actually is this going to do?
1:55:24
Is this particular tool going to help them pick a better theme? Well, great. But why?
1:55:28
Like what does that even matter?
1:55:29
Well, a better theme may mean better navigation, maybe higher checkout rates, maybe more customers end up buying.
1:55:34
Um, and when you sort of think about that in contrast to, you know, the cost of failure in entrepreneurship now is about as low as it's ever been in the history of the world truly.
1:55:43
I mean, you think about like Ben Francis creating Gym Shark.
1:55:45
I think he's the youngest billionaire ever in in UK history.
1:55:49
Um, the fact that he was able to create this thing from his college dorm room and and turn this into a multi-billion dollar company and he himself is now a billionaire, the the prerequisite for that type of journey years ago would have been capital. It's not anymore.
1:56:04
The other thing is if he failed, he could have like it didn't really matter because he wasn't leveraging his house and and taking out loans and stuff.
1:56:10
So when you layer on all these new tech pieces of technology plus this, you know, um this this idea that the cost of failure is treading so close to zero, what you end up with is more people trying their head at entrepreneurship.
1:56:22
And that's obviously good for Shopify, but it's also just it's it's a great I mean, look what you guys have done, right?
1:56:27
what you've built, you've built a modern media, you know, giant um out of out of sheer will and hustle and and and incredible insights around what's wrong with traditional media.
1:56:37
Having more of these things, I think actually makes everything better. Yeah, 100%.
1:56:45
Um, how do you think about messaging to the Shopify developer ecosystem?
1:56:48
I can imagine, uh, LLMs could write new liquid templates.
1:56:54
Uh, you can generate text, you can generate images.
1:56:56
There's agentic workflows.
1:56:58
There's so many things that could be the domain of plugins.
1:56:59
Uh you want to message that to create a really really vibrant plug-in ecosystem, but also there's certain things that you want to do internally because you have a unique position or advantage there.
1:57:10
Uh is it just about communication?
1:57:12
Um how do you think about that trade-off and and keeping everyone happy while you know you're responsible to customers, shareholders, and the developer community?
1:57:23
Well, look, um, it's the, uh, I think it's called the Bill Gates line, like a real platform is when you create more value for others than you capture for yourself.
1:57:31
And that obviously is the case for us, for for our our merchants, but also for for our our developers.
1:57:34
And we there's currently 16,000 apps in the Shopify app store.
1:57:38
In 2024, we paid out a billion dollars uh, with a B uh, in Revshare.
1:57:43
So, like a huge part of Shopi success is our developer ecosystem.
1:57:46
So, that's the first thing.
1:57:48
The second thing though is that the we I think communication is part of it.
1:57:53
Frankly, I think communication is often just a proxy for trust, a lack thereof or or like the trust battery, right?
1:57:59
When you say like there's there's been a lack of communication issue, it's obviously it's usually a trust issue.
1:58:03
We've been really clear um with the developer community for the last I don't know 15 years or so that okay, here's what you can expect.
1:58:14
Shopify's core offering thing we build ourselves will be what for most people need most of the time on the platform and that that definition that philosophy is dynamic meaning it's going to change.
1:58:24
So years ago 2012 there were apps in the app store that would take your desktop Shopify store and make it mobile optimized.
1:58:31
It was like I don't know how many there were.
1:58:33
There's probably five of them maybe more.
1:58:34
Um, at some point it was obvious that okay, this is not like this is something that Shopify's core offering should do because this is what like most merchants most of the time need will expect that they're paying us to do.
1:58:46
Like how would you like how are you even thinking about building a desktop store or or a web-based browser store on a desktop that's not mobile optimized.
1:58:54
So eventually we basically went to those developers and said, "Hey, look, this is something we're going to do, but here's here are sort of the bounds.
1:59:00
Here are the limits of what we're doing.
1:59:01
You can build everything beyond that."
1:59:03
And you can look at companies for example like Clavio. We have Shopify email.
1:59:07
Clavio has built you know Andrew A has built a multi- a billion dollar company um on Shopify which is now publicly traded doing email marketing because we are just clear about here's the bounds of what Shopify email will do.
1:59:21
Beyond that we're not going to touch same you can you can continue to roll across pretty much every product category.
1:59:26
every product category. So one is to your point good communication but the other point is like we have you know we have 15 years of of reps of building with this community to the extent that now if you are building an app or a piece of product for the commerce and retail space Shopify's app store and our
1:59:44
APIs are probably the best go to market you know way to get access to millions of businesses um and and that that trust relationship that ecosystem of reciprocity is not something that we take it's actually the first thing I did when I got to Shopify 16 years ago is help to build that that ecosystem. Um,
1:59:59
Um, and I I we cherish it.
2:00:01
Um, but we're we're also very clear of what's coming and what's not. 16 years.
2:00:05
We love an overnight success on this show.
2:00:08
Thank you so much for joining.
2:00:10
This is so many questions.
2:00:12
We can talk for another hour, but uh we'll have to have you back.
2:00:15
We'll have you back next quarter.
2:00:15
I'd like I'd like to come back.
2:00:16
I one day I'd like we can bring some Shopify merchants. Absolutely. Let's do it.
2:00:21
We'll do a whole Shopify day. Shopify day.
2:00:23
We'll get 12 hour 12 hour stream back to back. Let's do it. You know what?
2:00:27
We could do something black BF.
2:00:27
We can do BFCM like Black Friday, Cyber Monday. We did We did 11. 5 billion in 4 days.
2:00:34
We can actually stream and then bring different merchants on to say that be fantastic.
2:00:38
Tell us what's happening. QVC QVC mode.
2:00:40
Let's turn Let's turn TVPN into QVC on. I'm excited for that.
2:00:42
You guys are already going for the affiliate model. It always happens. Yeah, it's great. Well, thank you so much. Great talking. We'll talk to you soon.
2:00:49
Uh, we're going to bring in Jack Alman.
2:00:51
But first, let me tell you about getbzzle. com.
2:00:54
Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch.
2:00:58
I noticed Harley wasn't wearing a watch.
2:01:03
We got to send him to bezel. Get him a hitter.
2:01:05
An absolute to Yeah, just send him one to commemorate 16 years in the game.
2:01:09
He needs 225 billion on shop.
2:01:14
Yeah, I mean you should always invest 1% of your AUM or one.
2:01:16
1% of your GMV into your watch for sure.
2:01:20
Let people know e-commerce.
2:01:23
Anyway, we we got Jack Alman coming in the studio. Welcome to the stream. Jack, how you doing? What's up, guys? Very happy to be here.
2:01:29
Thanks so much for joining.
2:01:33
Yeah, I hope you can hear the soundboard because having a lot of fun with it.
2:01:35
Uh anyway, uh what's uh what's latest with you?
2:01:40
Would you mind introducing yourself a little bit for the stream? Yeah. Um I'm Jack.
2:01:44
I um I'm a longtime listener of your show.
2:01:47
You guys are doing amazing.
2:01:48
Um I've been I've been waiting for somebody to do something like this and you guys are just crushing it. Fantastic. Thank you.
2:01:53
Your Kyrod right now says rival podcaster squashes beef because yesterday you tweeted that that you can either be collaborative or competitive.
2:02:03
And just to be clear, we see this as direct competition.
2:02:04
And so you're on this is not a collaboration.
2:02:08
I'm super angry every time I see you. Exactly.
2:02:10
Every time I see you pop up with another cinematic interview, I'm like, "Oh, that person."
2:02:16
I love uh I I love how how strong you've come out specifically where the a it seems like the average net worth of a an alman guest is like $2 billion, something like that. Absolute hitters. No, it's great.
2:02:28
It's great to have you on.
2:02:29
Um so yeah, uh I mean obviously the the podcast is is something that you're working on, but also you're running this fund. Tell me about the fund.
2:02:36
How did it come together?
2:02:37
What are you excited to invest in?
2:02:38
Do you have any bounds on it or is it just anything that interests you on a day-to-day?
2:02:43
Yes, I've been doing the fund for like 15 months.
2:02:44
I had been doing a lot of investing before.
2:02:47
I was like a I was running Lattis which I started in 2015 up through the beginning of last year and I did a bunch of angel investing.
2:02:55
I did some institutional investing.
2:02:56
I sort of fell in love with it, realized it was what I wanted to do and then um started this fund 15 months ago.
2:03:01
It's like an early stage pretty generalist fund.
2:03:04
So it's $150 million fund when you see in series A.
2:03:06
We're like pretty concentrated and there's no technical bounds on it, but we've mostly been doing like B2B, a little bit of hard tech, just kind of trying to do stuff that we either know or think can be hugely impactful to the future.
2:03:18
Are you worried about your brother poaching your best CEOs?
2:03:22
I mean, he hired Fiji Simo, he hired Kevin Wild from Planet Labs.
2:03:27
He's, excuse me, hoovering up entrepreneurial talent. It's unbelievable.
2:03:30
That was a that was an incredible G. I mean, Fiji is amazing.
2:03:34
Yeah, it's really really good.
2:03:36
So yeah, probably that'd be a good outcome. Amazing.
2:03:37
Uh well, uh what else are you taking away from the current AI market?
2:03:42
We've been talking to a lot of folks about uh this like don't build a rapper meme now when Surf is going into OpenAI and it seems like it might be a best time, better time than ever to build in the application layer.
2:03:54
Is it too late or uh what are you seeing that's exciting you on kind of the the AI front since most of the it seems like most of the foundation models have left the harbor but there's still obviously a ton of opportunity.
2:04:06
Yeah, I mean first caveat is like what do I know?
2:04:08
But um I've always thought that like the rapper thing is like a bit of like a you know it's a slightly cheaper market to me I think like most companies are always built on the shoulders of technology that came before.
2:04:22
there's a bunch of stuff to do with the underlying intelligence just like there was stuff to do with like cloud infrastructure.
2:04:27
So I don't think of it that way.
2:04:29
I think there are probably cases where you're flying close to the sun in a way where like what you do is just going to be obiated by like the you know sort of big labs directly.
2:04:39
But I think in a lot of these cases like the difference between a a thin wrapper and then something that becomes like a specialized workflow.
2:04:45
I think you know there's there's a real gap there.
2:04:50
And so I'm much more in the camp of like thousands of blooming flowers and the underlying intelligence is going to create a bunch of specialized things that like OpenAI is not going to go do everything.
2:05:00
And so I think you have to be thoughtful about it as a founder, but I don't I've never thought the thin wrapper thing is, you know, it it's it's a concept that is worth knowing, but it doesn't like discredit the whole idea of application software. Mhm.
2:05:12
Switching gears slightly, uh how do you think about opportunities to build companies in categories that that are um established but potentially stale and I want to bring up an example which is fill out.
2:05:28
I I we recently used fill out which is a portfolio company of yours.
2:05:32
Y and when I used the product, I was so relieved to be using a form product that was beautiful, easy to use, and uh I looked back at their founding date, which was in uh 2022, right?
2:05:45
Not not very long ago, right?
2:05:50
And I think that most of the time I think a lot of VCs would would sort of look at a category like that maybe they get a pitch and they're just thinking like okay forms like we've had these for you know forever now.
2:06:01
Uh there's Type form and Google forms and and all the all these different players.
2:06:07
How did you kind of how do you underwrite opportunities where it's clearly a big you know market but it feels like you know there's no obvious why now other than in my view typically it's like a super talented team that's just committed to like craft and just building this exceptional product. Yeah, totally.
2:06:28
And so I guess maybe two answers to that.
2:06:31
First is, you know, I think you can always bet on Jirro, like Jirro dreams of sushi style approaches where really great teams are building important products that a lot of people need even without a why.
2:06:42
Now, I always believe that you can bet on teams particularly at the early stages and like that that can work out.
2:06:49
But I actually think that there is for this particular example and then I can share a couple others.
2:06:54
a couple others. I think there is potential for there to be a really important why now around AI which is and they just released this new product called Zeite which is like still in beta but basically you can take all of this user data and then you can build things around it and so now they have also like an application builder and so you can release these forms you can like get all
2:07:14
this data in a seamless way but then that can become like the baseline for a bunch of internal applications or other things that you'd want to do with that with that user data and so to me I think a lot of times times, particularly when you're betting behind great teams, there's a lot of adjacencies that come up over time and great teams figure those out and like find the next thing. But to me, you know, it looked, you
2:07:32
But to me, you know, it looked, you know, you it's a big enough market that for me betting on a great team always is is a is a good thing to do.
2:07:39
You should has anyone else coined the the Jurro method because like super superhum is like another example of like Jurro in many ways where it's like email everybody was like this is a finished market.
2:07:52
Everybody has an email product. Most of them are free.
2:07:54
And then you just come in with sort of like craft and there's there's an entire list of of you know really successful companies.
2:08:00
I mean speak just speaking of like uh talented teams.
2:08:05
Um are are uh where are you seeing new pockets of uh kind of young talent emerge?
2:08:11
There used to be like the Stanford industrial complex.
2:08:13
Now it feels like you go to Stanford, you just walk on to San Hill Road, you get a term sheet.
2:08:18
Uh then there was like the Waterlue.
2:08:19
We've talked to Sequoia partners who are pulling people from Talpo now in Israel.
2:08:22
Um where where are you seeing interesting groups of entrepreneurial talent emerge these days?
2:08:30
I mean there's a lot of good pockets and also now is a bunch of these companies start to block.
2:08:33
I mean you know there's obvious ones like you could talk about like an open AI or something like that or of course Stripe previously. Yeah, Stripe of course.
2:08:40
I mean I think Palunteer has some incredible talent.
2:08:44
I think outside of AI, one of the most interesting to me areas is like hard tech, defense.
2:08:51
There's a lot more appetite for people to fund harder problems.
2:08:52
Like I had Sean Magcguire on, you know, our podcast and he's talking a ton about like why that matters so much.
2:08:59
And I think people who have seen those kinds of companies, someone who's been at a Palunteer or an Anderell or a SpaceX, I think those are really interesting pockets for that.
2:09:06
So, you know, I think there's a lot of these companies now that have gotten to such scale so quickly that you have people who have seen what greatness looks like from the inside.
2:09:14
And I think like I always think there's like more ways to fail than there are to really succeed.
2:09:19
And so people who have seen a big success, I think those create obvious pockets.
2:09:23
Um, so there there's a bunch. Yeah.
2:09:26
Have you felt any of the the squeeze from the mega funds and the crossover funds kind of pushing downwards?
2:09:32
We talked to Sam Lesson at slow about this where you get the the hedge funds cross over into growth and then the growth funds cross over to venture.
2:09:39
The venture guys are like yeah I can do a seed check it doesn't really matter and then the seed guys are doing the angel stuff and they and at each stage they take the previous round like less seriously because it's like free money for them and but it puts pressure on the people where like that's my business.
2:09:52
Uh what's your experience been?
2:09:55
So here's my perspective.
2:09:55
In 2021 in Zerp, the the the big funds at the latest stages, which I was a customer of, were the crossovers and it was dominated at that point by all these crossover funds coming into venture with humongous amounts of money, but they were like always going to leave, you know, like that group was always going to come and go.
2:10:15
That's just they weren't designed for it.
2:10:17
Now you have really smart money doing really big funds.
2:10:23
There are like brilliant managers.
2:10:25
There's like Josh at Thrive.
2:10:25
There's obviously Founders Fund is exceptional.
2:10:29
Like there's just like really good groups out there with large funds.
2:10:32
And this group is not going to go away.
2:10:34
And they do have different incentives at the early stage.
2:10:38
And they're, you know, extremely clever about how they're positioning themselves.
2:10:42
And, you know, they're they're they're making very intelligent moves.
2:10:45
And that does include in many cases coming down to seed and like you said, they don't need to make the same economic decisions at a seed as a $50 million seed fund because they don't have to make most of their money from the seeds.
2:10:56
So, the rules of the game do change.
2:10:59
Um, and I think it has a huge impact.
2:11:03
your well your reaction your reaction to that I imagine is take much more concentrated positions but and use that as a lever I imagine with entrepreneur to be like I'm going to put a meaningful amount of my fund into you and I'm going to you know this is not like doesn't in a $150 million fund if you're
2:11:21
participating in any cedar a today it's not a flyer for you with the kind of concentration that you have how much has that resonated with with entrepreneurs on on their side knowing that yeah, Jack's not just kind of tossing a check in and and maybe he'll respond to every third investor update. You're like going
2:11:37
You're like going to do everything in your power to help the the company win.
2:11:41
The way I think about this is in order to do well in any competitive environment, you basically just have to have like an incredible amount of self-awareness and know what you are, what you're not, what things you can provide, what things you can't provide.
2:11:57
There are a lot of shapes where I couldn't look somebody in the eye and say it makes more sense to do a deal that makes sense for me than a deal that's going to make sense for another firm.
2:12:05
And by the way, there's like you think about the things that a VC can provide to a founder.
2:12:09
Not all of them require blood, sweat, and tears.
2:12:12
Having a great brand and then not doing anything else might be a lot more valuable to a founder than having no brand and doing a lot.
2:12:20
It just like depends on the situation. Yeah.
2:12:22
And so I think um I don't think that there is like a tweet length answer to sort of figuring out where you can play in what situations you look at.
2:12:32
You have to look at each of these differently and then you have to find the situations where what you can offer and what you think can be meaningful to you as a fund manager matches what's going to be valuable to the founder and like good deals happen when it's an actually correct transaction for both sides.
2:12:47
So that's how I think about it, which is a bit of like a it depends kind of answer, but I think it's the truth.
2:12:53
Can you talk about your personal AI stack?
2:12:54
What are you daily driving?
2:12:57
What has been helpful in your job either with the show or with the fund, you know, deep rearch, there's all these different tools.
2:13:07
I was always interested to know like how people are get most out of the Twitter available.
2:13:12
I feel like everyone feels like uh like I'm not doing enough with AI.
2:13:15
Like I know it's powerful, but I just need to know that one secret prompt or something.
2:13:19
But what No, I mean I think I could use it more, but I mean I've moved most of my searching to chatt and I like instead of texting like my group of friends sometimes I'll just like say the same question to like chatt and so I kind of am like this is like an always on friend that I can like ask stuff to.
2:13:37
Um and like my usage just kind of goes up over time now.
2:13:40
Um I think I don't consume like that many software products for it.
2:13:45
Um so that's also you know the nature of what I'm doing.
2:13:51
I think like the companies that I'm investing in are consuming a lot of AI, but I think it depends on the area.
2:13:57
Like I will say that outside of maybe we can you know talk about companies when specifically but like outside of prompting there are certain specific domains where it's proven to be incredibly valuable and there's some where it's not there yet and so like I don't think it's working in every category yet. Yeah, totally.
2:14:14
you invested in uh Rogo, which Anise recently announced a pretty big up round.
2:14:21
Uh have you have have you seen any products like that in applied more specifically to venture?
2:14:29
I mean, I'm sure you could potentially leverage what they're doing, but venture is such a small, you know, market in comparison to potentially kind of rogo's core market. Maybe it's not.
2:14:41
And for reference, Rogo is a analyst secure AI for finance professionals.
2:14:45
So working at a hedge fund or a Tiger Global, you know, yeah, this to me is a I think there is a market, but um it's easy to forget in San Francisco what little fish we are compared to like New York and like real finance and hedge funds and private equity and the big banks and the numbers are like super different.
2:15:05
Um and you know for all the talk which I think is accurate talk about how there's too many dollars in venture it's like still kind of pales in comparison.
2:15:14
So the total spent and you know you look at things like you know a Bloomberg or something like like there's not an equivalently big business to Bloomberg for venture and I don't think that's because the products aren't useful.
2:15:25
It's because like the market is a lot smaller in my opinion. How do you Yeah. Yeah. Yeah.
2:15:32
How do you think about the difference between going after these like the mag seven companies that maybe have lost a step?
2:15:38
We're seeing uh you know little little cracks start to show whether it's Apple intelligence or the co-pilot roll out versus taking AI into these niche markets that haven't even maybe seen the the SAS transformation yet and maybe AI is the one that unlocks it.
2:15:56
Is there one area that excites you more?
2:15:57
How do you think about each one?
2:15:59
Is there a certain type of founder that needs to kind of fit with a specific market?
2:16:03
How do you think about those different areas?
2:16:05
I think for the most part, it's a lot easier to take on the niches which are still not so niche.
2:16:13
You know, like some of these niches that we're going after, you know, in, you know, when we're talking about in application companies, the the leading company in the niche is 10 or 20 or$40 billion.
2:16:22
Might not be two trillion, but they're they're big niches.
2:16:25
But, um, I think this is there's there's two reasons.
2:16:29
One, I think it's much easier to just win a small market and expand from there.
2:16:32
That's like a, you know, a Peter Teal point is like monopolize something, expand, and that's much easier to do and small, less competitive markets than going up against Amazon or something like that.
2:16:44
The other reason is what I've seen a lot of is companies are able to crack old industries with AI in a way that hasn't happened in the last software wave.
2:16:54
And so you're seeing in education and health care and legal and accounting and like finance and all these places where they were kind of hesitant before are suddenly buying things without even knowing for sure what it is.
2:17:09
They just know that they want to buy AI and that's like a completely new paradigm.
2:17:12
And it's not even, you know, that's professional services I just mentioned, but you could even go to restaurants or, you know, like home services companies or yeah, you know, mom and pop accounting and you're like leapfrogging and you show them AI and it's much easier to use than last generation of software.
2:17:29
And so the value that they're getting is actually much steeper relative to what stack they were on than a tech company.
2:17:34
Yeah, that the examples you gave it seems like there's obviously huge opportunity to go after that those those small markets whether it's mom and pop accounting firms or uh home services any of those markets with uh essentially a SAS product.
2:17:51
Uh there's also been a recent boom in uh folks in venture crossing over into kind of the private equity rollup strategy.
2:17:57
Have you looked at any of those deals?
2:18:00
Do you have are you cautiously optimistic?
2:18:01
There's some people that have been saying like every time venture steps into that it it can't go well. But what is your take?
2:18:08
You're not the fund's probably not really set up for that, but you could probably participate in some way. Yeah.
2:18:12
I I think all of that is right.
2:18:15
Well, I I'm I'm directionally optimistic about it and like you said, like we're not an appropriate size for that to be the right strategy. Yeah.
2:18:23
Um but I think it's a very good idea.
2:18:25
I mean like the sort of you know one um one lens on this is at some point it is too hard to sell you know a great product into an industry that doesn't want to receive it and so just become that industry and then receive this great product.
2:18:41
The other lens is if it's so valuable why are you going to give that away?
2:18:45
I think that's a point that like Keith Raway has made before is like if you've got this thing that's transformative for a, you know, an accounting firm or, you know, a law firm or whatever, why should you sell them some software for 200k that they're going to go make $100 million off of?
2:19:02
Like, is that the right part of the value just get a hundred times more customers, you know? Yeah, exactly.
2:19:07
No, that makes a lot of sense.
2:19:09
Do you think uh the jobs finished with the founder friendly uh meme in venture?
2:19:13
Uh it was it was controversial 20 years ago, but now it feels like it's baked into most venture brands and it seems like it's more real than ever.
2:19:23
I talked to founders that are set up from day one with super voting and seven board seats and stuff.
2:19:28
Uh is is that still an issue in VC or is it still a differentiator for venture brands as new managers build their firms?
2:19:39
I think it is here to stay.
2:19:39
I think it is uh basically it's it is table stakes in at least positioning and then I think it is maybe more than table stakes in actuality and I think people can sort of like go through and do the real work to see who's positioning it versus who's really doing it.
2:19:56
I think in most cases it's the right thing to do by the way.
2:20:00
So I think the like industry can verge to the right place where most of the time it's the right thing.
2:20:04
time it's the right thing. But I guess a new thought so I'm not positive if this is right but it feels on some level like um over time it is becoming a bet like it's a better and better proposition to be a founder as like the decades go on and sort of the um the
2:20:26
margin in this whole ecosystem has kind of probably moved from LPS to GPS to founders where like I think that is the directional flow of where like extra sort of leverage is moving and so I think that's probably just going to continue rather than recede. Do you
2:20:40
Do you think any of that's due to the work of Y Combinator?
2:20:45
I've often thought of YC almost as like a union for founders in the sense that like if you're a VC and you screw over one YC founder, then it goes out to the entire network and you maybe lose access to the entire community potentially.
2:20:58
Uh, is that is that a reasonable narrative or is it more like just the writing and the memes of of all the folks in in tech broadly?
2:21:07
No, I think it is reasonable.
2:21:07
I think there's probably a constellation of inputs and I think that's probably a big one and I don't underweight how important YC's footprint is and it's so founder friendly and it's so dominant that going against that is hugely expensive.
2:21:23
expensive. I also just think that there's um there's an extent to which everything about tech has become public and like to a to a crazy degree we know all the you know we know all these stories and the ins and outs and people have a good feel for how hard it is to
2:21:39
be a founder and I think even on that note it's like you know all of the you know in the sto in the narrative of who do you want to win between the founder or the VC it's like obvious and so you know I think even that kind of thing
2:21:52
it's just like that's rightly the champion and you know having gone through it I'm like it is it's real like in order like part of what makes this whole industry work is that there is so much respect and support for founders because it is so hard and so I actually
2:22:08
think part of why Silicon Valley works is because the whole industry supports people in a way that otherwise you don't sort of get that and I think that is actually critical where do you go to get uh perspective uh and get out of the bubble, right? If
2:22:23
If you walk outside of your house, you see billboards for companies that you've invested in or competing portfolio companies or you run into another and then you go to Thanksgiving and you're not you're not you know uh that that doesn't work either.
2:22:37
I'm I'm curious how you try to um you know kind of break out of of the bubble and and get perspective on on our industry and and the work that you do. It's a problem.
2:22:48
I'm steeped in it and like all my best friends are also in tech and so I don't have a lot.
2:22:53
Um, but the obvious thing I have is like my family.
2:22:59
Like I have three kids, my wife's in medicine and so I do have that in a huge way and I think that that's that's that's the only reprieve but it's enough I think.
2:23:09
Can you talk about lessons from Lattis?
2:23:11
Uh, how did you kind of grow as an executive? What and a founder?
2:23:16
What skills did you pick up?
2:23:19
And um what did you develop like kind of I don't know like top tier talents in?
2:23:26
Well, I think you know on this point I was just making about how like it's good that the industry supports founders so much because it's so hard. Yeah. Which is true.
2:23:32
Like the flip side of it is that I think like one one of the things that is um that you just like can't believe to is like how much you get to grow as a person being a just getting constantly just like bashed every day for years by a million things.
2:23:47
It's like the things from the early days that stress you out.
2:23:52
It's like the you still are equally stressed the whole way through.
2:23:54
It's just like the 2x4s that hit you have like gotten stronger and so the little stuff doesn't get you as much.
2:23:59
And so I think there's a lot of of that growth um that happens.
2:24:04
But I think you know people one of the um criticisms of consultants which is the far other end of the spectrum from being a founder is when you're a consultant you are not actually um you're not tethered to the results of your recommendations.
2:24:21
You have you're you know the the criticism is you're fully dissociated.
2:24:24
You make a recommendation, you get paid, you're out.
2:24:27
Who cares what happens five years later? You're like long gone.
2:24:31
versus as a founder, every decision you make, you're living with forever and you're just completely connected to it.
2:24:37
And so I do think that that experience of everything I everything I do is like making the bed for, you know, years to come.
2:24:44
I think that creates a that creates like a sense of autonomy, personal responsibility, everything's my fault.
2:24:51
Like all of those kinds of characteristics I think are things that you build and then you never let go of.
2:24:56
And I think this is a big part of why people like love hiring other founders.
2:25:00
Like you know so many founders I talk to are constantly trying to recruit other founders to join their company because they have that DNA that gets built into them that just like doesn't go away.
2:25:09
So I think that's that's the biggest thing that's like you know an intangible.
2:25:15
What do you have to say to uh pro-atalists in tech that don't have kids? You've got three.
2:25:20
You're you've crossed the the the replacement rate.
2:25:22
We always we always joke Palmer lucky number.
2:25:27
He wants everyone to have 2. 1 kids at least. It's the best.
2:25:31
It's the best. I love I mean honestly it's like you know with all this stuff with so much of tech stuff it's so easy to get lost in like the sauce of you know deals and new markets and AI's going crazy and it's all just it's all it's all awesome but it is so far from the most important thing and like you
2:25:51
know the you know the the the most important things in life are relationships and like kids are the best relationship you ever get to have and so it's like a really awesome special thing and so Yeah, I'm like, you know, there's there's trade-off to everything, but it's been the best. Yeah. Uh I I I have Yeah.
2:26:04
Uh I I I have one last question, we'll let you go. Um I want to know Yeah.
2:26:09
I mean, you mentioned that idea of like founders hiring other founders, and there's a bit of a debate in Silicon Valley, I think, broadly about, you know, first job out of college.
2:26:20
Should you try and go work for a a a really successful scale up series B product market fit company?
2:26:25
go work with the best founders, be on that hyperrowth trajectory, experience growth, feel it, and then go start your company versus, hey, you know, some people see YC now as like a summer internship almost like, oh yeah, I'll go maybe I'll drop out, maybe I'll go raise a little bit of money, uh, try something, have one startup under my belt, and then go do the next thing.
2:26:46
Um, how how do you counsel kind of the next generation between not necessarily like there's a one-sizefits-all answer, but how do they know which one's right for them?
2:26:58
For me, I so I I worked at a startup before doing Lattice and I was there for a couple years and it grew a ton and that was really helpful to me because like when you start a company there's like 30 things you have to like be reasonably good at which is ridiculous and at least you learned like 14 of them by like working at a fast growing
2:27:15
startup so you only got to learn 16 you know it's like it's that kind of thing and it does help a lot but you know there's a lot of great examples we could name of people who just went right from college to building iconic companies and in fact the very most iconic companies were built by people who dropped out of college or did it right out of college. And so it's
2:27:30
And so it's like, you know, your mileage may vary and I don't think that there's like one story and it's easy to over rotate.
2:27:37
I think yeah, um for most people getting experience helps not hurts and it's not like by the time you're 26 instead of 21 you're too old to do it.
2:27:46
But you know there's a lot of great people who have not needed it and so yeah. Yeah.
2:27:50
Yeah, it's kind of like that that that uh quote uh Mozart didn't go around asking people how to write symphonies.
2:27:58
Like the folks who are destined to go start power law companies in their in their teens, you can't stop them, right?
2:28:04
Uh but but if you're asking yourself the question, maybe you know, you should go build up the skills first.
2:28:10
Anyway, this has been fantastic.
2:28:12
Thank you so much for stopping by. This is great.
2:28:13
Thank you guys for having me.
2:28:14
Yeah, we'll talk to you soon. Bye. Cheers, Jack.
2:28:16
Have a great rest of your day.
2:28:17
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We are having John Andrew, uh, the founder CEO of Wander on the show very soon. Finally, long overdue. It's been grinding.
2:28:45
They've been putting up crazy numbers as everyone knows, adding multiple homes a day it seems to the platform which is just wild.
2:28:52
Um but uh very congrats to Wander.
2:28:55
They're growing super fast.
2:28:57
Um growing so fast by the way we're adding so we are a new American pope and uh we are going to be adding Alex. That's great.
2:29:06
From Hollow to get to invite him.
2:29:10
I'm really glad we got 1:30. So the timing is good.
2:29:12
Shout out to Katherine Bole for suggesting that. That's fantastic.
2:29:17
And uh uh um right now we have David Habber from Andre and Horowitz coming into the studio.
2:29:23
I believe he was at Goldman Sachs previously um where he was uh he was the head of firmwide strategy, which I always thought was an interesting description um because it it it feels like the CEO would be the one to do the uh the the firm strategy.
2:29:40
I'm excited to talk to him about his career and then what he's doing at Andre.
2:29:44
So, welcome to the show, David. How are you doing? Boom. Hey guys. Great. Great to be here. Big big fan of the show. Thanks for having me. Thank you so much. Wonderful background. Look at that.
2:29:52
I was channeling the army earlier and you know, Captain Bole, you know, on the other day. So, it's fantastic. That's fantastic. Yeah, that's awesome. Uh, yeah.
2:30:01
I mean, I'd love to start with just kind of like your background introduction and kind of how you your path to Andre.
2:30:06
Um because I I I've been following you for like over a decade on Twitter and I think this is the first time we ever met in person or on you had to be you had to be in one of my first hundred followers back when I was in college just being like this this guy looks like a Chad.
2:30:20
Let's throw him a follow.
2:30:24
Still still chat I guess.
2:30:24
Um no yeah it's it's been cut. I um let's see.
2:30:27
I well I studied biochemistry as an undergrad so I actually thought I was going to be a doctor.
2:30:33
um uh worked for a super successful serial entrepreneur out of school, a guy named Rory Riggs who um had started a bunch of biotech companies, ran a railroad and started a giant private equity firm called Royalty Pharma um which we can get into.
2:30:47
It's a fascinating business.
2:30:49
Um and then I joined uh Spark actually back in 2011 um up in Boston essentially as like the one nonGP at the firm.
2:30:57
I was like a 23-year-old, you know, analyst associate.
2:31:00
Um and it was an amazing experience.
2:31:03
We were investing out of fund three at the time.
2:31:04
You know, the firm had already been uh pretty successful at that point.
2:31:07
You know, they had seated Tumblr and put a bunch of money into Twitter when there were 10 people.
2:31:12
We wrote wrote the first check in Oculus when I was there. Um wow.
2:31:13
So, you know, great pickers.
2:31:16
It's kind of where I learned I would say like the, you know, the craft of venture.
2:31:20
Um you know, ended up going deep into fintech at the time and um you know, in some ways getting getting lucky.
2:31:26
I helped you know, source and seed Plaid back in 2013 and a bunch of other companies when I was there.
2:31:33
Um, I always thought of myself more as a founder than an than an investor.
2:31:35
And so I ended up um leaving and starting a fintech company in 2013 called Bond Street.
2:31:41
Um, with a good friend of mine named Payton Sherwood who had been uh running engineering at Venmo.
2:31:45
Um, they ended up getting acquired by Brainree and PayPal in 2013.
2:31:49
I pulled him out to go start that business.
2:31:51
Um, which was in the small business lending space, which was uh, challenging.
2:31:55
Um, but we built a great team, which is what I'm most proud of.
2:32:00
um and ended up selling business to Goldman.
2:32:02
That's kind of how I ended up joining the firm.
2:32:04
We came in kind of through the side door. Yeah. Yeah.
2:32:06
You know, uh and got merged ultimately to what became Marcus, which was their consumer business. Oh, that's right.
2:32:12
You know, Peyton ended up inheriting. He had a real job.
2:32:16
He had like 70 engineers to manage.
2:32:17
I had a more amorphous offart. Yeah.
2:32:20
I remember when I when I when I was following you, it said uh firmwide strategy.
2:32:25
And that sounds like something that would normally be like the CEO's job.
2:32:28
the CEO's job. So can you actually explain like that sounds extremely important firmware strategy but yeah what I mean what what decisions were you making what what was the culture like at Goldman back then it it was f you know it was fascinating you know I thought I was going to go there candidly and get like suffocated and micromanaged because that's what my friends did you know 10 years before in
2:32:48
banking and yeah yeah you know fortunately that wasn't my experience I think in part because um you know I had no fear this DCF yesterday working not not working on Sundays that's good Um, you know, I, yeah, I just started firing off emails when I got there, honestly, to like, you know, Marty Chavez, who was the CFO and the heads of banking and asset management, just kind of running around. Cool. And Cool.
2:33:07
And trying to be helpful to people and and really just like mapping the place, you know, you realize that even people had been there for for a decade or longer didn't know kind of what all the different component parts of that firm did. Yeah.
2:33:19
And and it was fascinating because it's not a normal kind of operating business like I don't know, an American Express that has a big consumer commercial business. Mhm.
2:33:26
It's really a confederation of a lot of little businesses who sort of fight for collective resources under these common kind of divisional umbrellas.
2:33:34
But it's also really fascinating because if there's something interesting to do on the outside world, there's probably somewhere to put it.
2:33:40
Meaning you could be an equity investor, a debt investor, an adviser, a customer, an acquirer.
2:33:43
So it's fascinating to kind of bridge, you know, the world that I primarily lived in, like the tech ecosystem, you know, and then try to help, you know, Goldman navigate that, too.
2:33:53
I was, to be clear, I wasn't the head of firmwide strategy.
2:33:55
I worked for a woman uh named Stephanie Cohen who reported to David Solomon, but sure, but I was the weird kind of startup entrepreneur guy kind of running around and trying to help her frankly, you know, get connected in the tech world and she's now at Cloudflare and doing a great job there.
2:34:08
Yeah, it's still a really cool role.
2:34:09
How much of uh Goldman's structure is a function of either like legal firewalls between different teams or just the idea that if you have a specific desk, you need to be able to manage their own P&L and kind of account for their business independently and then align incentives towards how that team is doing.
2:34:28
Um or is it more just like sclerotic because it's an old company?
2:34:32
I think it's a little bit of both.
2:34:34
both. I mean there's definitely some you know kind of regulatory bridge between like the public and private side and and what can be shared um legally but I think the more interesting history and there's a great book called the partnership um which I think is a great kind of business history book even if you didn't work at Goldman Sachs um it w I think for 140 years it was one of the
2:34:53
most entrepreneurial places in the world right it was it was not it was it was a firm that had to scrap you know it was started like by Jewish immigrants basically it was not sort of JP Morgan a lot of these other, you know, kind of white white shoe firms and they they started basically like the factoring business and then, you know, entrepreneurial people would raise their hand. It was a partnership. They'd give It was a partnership.
2:35:12
They'd give them a little bit of money and they'd say, "We I want to go build a new business."
2:35:16
So, somebody started the merchant bank.
2:35:18
Somebody started the wealth management division.
2:35:19
Somebody started, you know, Europe.
2:35:20
And it was not a business built through M&A.
2:35:23
It was a business really built organically brick by brick by enterprising people.
2:35:29
And I think it's just such a fascinating history.
2:35:31
And so part of that is the culture, right?
2:35:32
culture, right? It really was a partnership and I think that confederation is is kind of the evolution of that which was like you know you want to feel like a CEO right of your own kind of individual business even that is like a trading business within you know a much larger you know
2:35:48
division I think the last like 1015 years has been has required an evolution from that in some ways right I think you know the firm went public then you had you know the tech bubble the financial crisis the financial crisis I think was like a terrible experience for Goldman Sachs. If you remember the vampire squid and
2:36:05
If you remember the vampire squid and like the blood funnel, like that was the brand unfortunately for a long time.
2:36:10
Um um yeah, they actually did pretty well during the financial crisis.
2:36:14
They like the the the best of the worst performers which was like somehow terrible even more because then all the negative attention came on the firm. It did it did amazing.
2:36:26
It did amazing and um part of that was they had really talented people.
2:36:29
Part of that was they was actually technology.
2:36:31
They built their own kind of unified core risk system.
2:36:32
So they understood across every division kind of what their exposure was to the housing market and they were able to to hedge basically that exposure and they didn't lose money and then they made a ton of money, you know, kind of coming out of that um crisis which again didn't hurt the brand to your point or didn't didn't help uh you know the perception of the market unfortunately.
2:36:51
But but I think ultimately like more recently and you know we can I I just find the their history fascinating.
2:37:00
Yeah, it is it's so you know I think they've become more of a of a company than a partnership, right?
2:37:05
And I think to do that you kind of need operating leverage and and therefore kind of it's a bit tighter kind of at the top and I I think it's my perception is that it's made it a less entrepreneurial place over time, right?
2:37:18
Instead of sort of giving an individual person the agency to make their own individual decisions, especially from a technology perspective, you need more centrality. You need more leverage.
2:37:28
You need more kind of command and control.
2:37:29
And I think you've seen that actually benefit their share price, right?
2:37:33
If you look at stock, you know, Goldman's market cap even in the past few years, it's it's actually done really well.
2:37:38
I think a lot of that is through that kind of centralization to some degree, but I think it does come at the expense to some degree of the entrepreneurial dynamism that that existed, you know, for again 140 years.
2:37:50
It used to be one of the, you know, most lucrative places in the world to work and nobody's crying for Goldman Sachs employees to be clear.
2:37:59
Um, but I think it just it's a different culture and um it's going to look more in my opinion like a normal bank than Yeah.
2:38:06
than it was previously, which was a broker dealer and a partnership.
2:38:08
I mean responsible shareholders partnership when you catch up with old uh you know peers, colleagues etc.
2:38:13
Uh how do you feel like Goldman and and other firms of that caliber are reacting?
2:38:21
How would you rate their kind of reaction to AI specifically?
2:38:25
uh are they just buying a lot of it so that they can kind of say like look we're doing AI or is it like you know truly organic sort of groundup movement or or some of both.
2:38:40
I think it's changing very quickly, you know, and I think um again, not to pick on them, but historically like uh there there and I think in a lot of banks there was this culture of like if it wasn't built here, we're not interested.
2:38:52
I think that was like the wrong decision for a very long period of time because the world, you know, kind of changed, you know, around them in a lot of ways.
2:39:00
Um but I I think actually Marcus, you know, despite its challenges, was actually a good cultural kind of catalyst in this point.
2:39:06
catalyst in this point. it it they they leverage a lot of thirdparty technology because the consumer business you know hadn't existed you know previously and I think many the CIOS and the CTOs at these firms are just understanding that like there are some things that we should build internally if it's core to our competitive advantage fine we should
2:39:25
own it ourselves but almost everything else we should outsource to to third parties and and leverage the best of what exists right and it's actually informed a lot of how I spend my time here in part because You know, as a founder, it was very challenging navigating these big institutions to understand, you know, who is the decision maker. And then you get inside
2:39:41
And then you get inside these firms and you realize that if you're a division head running, you know, a 10,000 person, 20,000 person organization, it's not your job to know what's happening on the frontier, right?
2:39:53
Uh, you know, certainly not at the seed in series A stage.
2:39:55
And and I think one of the things we've done explicitly and part of what what's been useful to do, you know, from New York City, you know, where I sit, um, is be a bridge between those those ecosystems, right?
2:40:06
And and kind of convene the CEOs and the leadership teams of every kind of major financial institution in America and then curate, you know, a group of 20 30, you know, portfolio companies, non-portfolio companies that align with whatever their strategic priorities are.
2:40:23
And, you know, it's kind of a win-win-win.
2:40:24
can accelerate, you know, the go to market for the seed stage business.
2:40:27
You help the sort of incumbent, you know, understand what's coming and it's helped us come to conviction, you know, on on investments and and just feel like everybody's sort of winning in that dynamic, but the rate of adoption is happening very quickly.
2:40:39
Just to answer your question more specifically and I think this is true in financial services.
2:40:42
financial services. I think it's true broadly in enterprise both because there's bottoms up adoption like engineers are you know using whether it's GitHub copilot or cursor you know big investors obviously um uh but then there's top down pressure
2:40:57
right I think any CEO any board member can plug a prompt into any of these models and understand intuitively the impact that it's going to have on their business and I think financial services in particular is so human capital
2:41:08
intensive you know at Goldman they call the basically the back office the Federation and it's largely it's kind of a star you know Star Wars I guess reference but um you know it's it's still humans sitting in Excel not even using enterprise
2:41:24
software necessarily right and across legal compliance risk vendor on boarding and so much of that should be AI and I think they're recognizing that and beginning to adopt it a lot more aggressively than I've ever seen um which uh is exciting. Do you get a sense
2:41:38
Do you get a sense that there's been um innovation happening in some of these more traditional financial firms or even hedge funds and things like that that is potentially groundbreaking but not being released as products, right?
2:41:53
Like Jim Simmons didn't, you know, discover an algorithm that could, you know, make 60% a year forever.
2:42:00
Uh and then he he was like, "Yeah, we shouldn't just like productize this and let anyone use it."
2:42:06
Jane Street's had GPT6 for like a decade. we should just use it.
2:42:08
So, so yeah, how do you um I'm curious if you have any kind of insight there.
2:42:13
Uh because if you discover something like, you know, if you discover a machine that just makes money, you should just, you know, Well, I mean, there was a rumor a while ago that that Google's uh just their treasury management system was so advanced, they were like, we could just become a hedge fund, but that wouldn't align with our mission. Totally.
2:42:34
I mean, look, I there are a bunch of like, you know, uh, you know, quant hedge funds that I'm sure have, I mean, they have to have had, you know, great kind of proprietary technology that have given them an edge, whether it's Renaissance, as you mentioned, or, you know, Two Sigma or or Jane Street.
2:42:47
I It's hard to know exactly what's in there.
2:42:50
I think they purposely keep it. Yeah. So, secret. Yeah.
2:42:53
And I I was listening to your conversation with Jack earlier.
2:42:57
I forget if it was him or you guys who had said it, like if you found something that is actually money printing, like don't go sell it to a bunch of other people.
2:43:02
just like raise a giant fund and do it yourself. Yeah.
2:43:04
Uh well, can you talk about the transition to Andre? How did that happen?
2:43:08
You know, you see people cross over from Goldman into venture every once in a while, but it does seem like you had a somewhat unconventional path.
2:43:16
So, how did that uh conversation start first spin up and then um what's the experience been like over the last couple years as the fund has scaled?
2:43:23
Yeah, it's been it's been awesome.
2:43:26
I mean, I um I've known actually Alex Rampel.
2:43:28
So, um he was the one who kind of recruited me to the firm back in in 2021, but I've known him for over a decade.
2:43:35
So, I met him, I think, originally through through Plaid.
2:43:37
You know, we we had done the seat at Spark. He let it laid around.
2:43:40
Um I pitched him Bond Street uh when he first joined the firm in like 2015, 2016. He passed. We stayed friends. Any such cases?
2:43:50
Uh, and then when I was at Goldman, I, you know, um, ended up helping them put a bunch of money to Carta, uh, alongside Merit and alongside Andrea.
2:43:58
Um, and he and Mark had worked on that investment.
2:44:01
And then in PPP, uh, like during COVID, I was trying to figure out ways to help the firm plug our balance sheet into the economy, right?
2:44:07
I had run a small business lender and I was afraid that, you know, small businesses weren't going to be able to get the capital they needed to actually survive and we could pledge unlimited assets to the Fed window and and yet tech I thought technology and and fintech in particular was the kind of the right distribution channel.
2:44:23
So he and I were chatting a bunch in that moment as well.
2:44:26
Um I actually left Goldman in October 2020, went to go do this kind of weird thing with a hedge fun guy to buy a steak in Sabies we can come back to. Very cool. That's amazing. I love that.
2:44:38
Uh, and he pinged me in he um he pinged me in March of 21.
2:44:46
He's like, you know, how's how's Goldman?
2:44:47
I'm like, wouldn't know haven't been there for six months.
2:44:49
He's like, what are you talking about?
2:44:50
Like, yeah, I never updated my LinkedIn.
2:44:52
Here's this kind of weird thing I'm doing uh with SE.
2:44:55
Um, and he's like, can I put you in front of Mark?
2:44:58
And I'm like, well, twist my arm.
2:45:00
I've never met Mark and Dre.
2:45:00
And and that sort of precipitated a bunch of conversations.
2:45:04
And you know fortunately they wanted to open up a New York office and um it was just a I mean I had always admired you know Adre from a distance really is a firm kind of run by by entrepreneurs and yeah it was a unique opportunity to kind of plant the flag here in New York City and um you know that was almost four years ago where 100 people full-time in New York now. Wow. Yeah.
2:45:23
Can can you map Andre a little bit for us?
2:45:26
Andre a little bit for us? uh maybe compared to Goldman obviously a lot of entrepreneurial energy but then you know there's specific funds there's specific offices it is a unique firm in so many ways uh how has it changed uh how would you describe it now Eric Torenberg was on the show and said it's very
2:45:43
specialized and I think I I think a lot of people in the audience were like what are you talking about they do everything and it's like well they're specialized within the firm and there are specialists at the firm and so what's that been like and what's the how have you experienced the last couple years as Andre has scaled Yeah, it's it's it's fun. I mean, I I
2:45:58
I mean, I I think actually, you know, before Goldman, you know, Bond Street had been the biggest business that I ever worked at, which was, you know, several dozen people.
2:46:06
Goldman was 40,000 people.
2:46:06
So, I think that scale has actually helped because Andre doesn't feel that big to me. Yeah.
2:46:12
I think in venture it's still big, but it's it's not.
2:46:15
Um, yeah, just to give you a sense for kind of how the firm is organized today.
2:46:18
So, um, you know, we last year we split the early stage venture business into three.
2:46:23
We raised three separate funds.
2:46:25
So there's an infrastructure fund which uh you know my partner Martin Casado leads with with an Jennifer and Zayn.
2:46:31
We have American Dynamism obviously which David Yulovich, Katherine and Aaron help lead.
2:46:36
Y we have an AI apps fund which uh Rampel myself and a niche help run which is basically anything consumer anything B2B.
2:46:43
Fintech kind of being a horizontal across either. Sure.
2:46:46
And then there's a separate bio and healthcare business a business obviously a large crypto business. Yeah.
2:46:51
and then a growth fund that kind of sits across all of it and will invest in you know things that are kind of inflecting.
2:46:56
kind of inflecting. Um and then you know uniquely I think you know the firm is 600 people the vast majority of our headcount is a is a large operating platform right across a bunch of functional different you know kind of areas whether it's go to market or you know marketing or people practices um uh you know an internal kind of capital
2:47:15
network team and and these are resources that we you know help make available to our entrepreneurs and really to try to tilt the board in their favors right to help them build great businesses and that was kind of the ethos of the firm from the very beginning, you know, I think Mark and Ben were sort of customers of the bench best venture firms as entrepreneurs. Yeah. And it was Yeah.
2:47:32
And it was like, you know, five people in a checkbook and their view was like, we're going to take no salary.
2:47:37
We're going to reinvest 100% of our management fees back into building this operating platform and that sort of benefited from economies of scale, you know, over time.
2:47:47
That makes a lot of sense.
2:47:47
That makes a lot of sense. Can you talk about how the kind of platform teams have evolved over uh the last I mean as long as you know uh I was actually in the portfolio back in like 2012 and they did these like seminars for B2B sales
2:48:00
and uh marketing and PR but now uh you're seeing new value ad pieces of the platform whether it's introductions on Capitol Hill now uh almost like a like a lobbying light uh version but how has that evolved and how are you thinking about that going forward? Yeah, I think part of part of what has
2:48:18
Yeah, I think part of part of what has happened is kind of it has further decentralized in some ways.
2:48:22
So, you know, in in some ways it does kind of remind me of Goldman where each fund is almost it its own, you know, division that can kind of allocate, you know, management fees and talent at at will.
2:48:33
Um, you know, to some degree um and and as a result ultimately like we think about each fund almost as a product to serve the entrepreneur.
2:48:39
And so, you know, I suspect that, you know, as David and Katherine are thinking about the American Dynamism business, it's how do I leverage these management fees to build the right capabilities that are unique for that, you know, specific customer, right?
2:48:50
which might be you know more of a presence in DC for example.
2:48:54
Martine might think about it differently on the infra side than than on the app side.
2:48:57
side. Same thing in the bio and healthcare business like having a deep relationship with all the you know payers and the big hospital systems you know to help again accelerate the go to market of the bio and healthcare you know portfolio companies super valuable and so it has sort of further decentralized further specialized over
2:49:13
time but but I think the the same ethos is the same it's you know how do we you know come with capital but also help you know help these businesses grow and scale and um you know take what often was a first-time founder and give them all the kind of superpowers and capabilities being like a scaled CEO. Like that was sort of the the mental
2:49:29
Like that was sort of the the mental model I think that that Mark and Ben started with.
2:49:32
I wanted to switch gears for a second and ask you about uh uh something that I feel like is kind of uh potentially on the horizon.
2:49:41
So I've been hearing various teams are working on um putting uh secondaries on chain which I think is going to be potentially uh hilarious and and potentially a disaster. We'll see. We'll see.
2:49:54
I I'm I'm cautiously optimistic.
2:49:56
But on the uh on the topic of secondaries in you know just just just companies liquidity and in the private markets it feels like the this has been this like perpetual like promise like the whole industry is very excited about it and I don't feel like at any point despite so much the this sort of broad growth of the private market over the last 10 years.
2:50:22
it doesn't feel like we've made that much sort of meaningful progress.
2:50:26
Can Silicon Valley learn at all from you know Wall Street is notorious for creating new financial products that can actually be you know successful and and scale and become big markets in the in in of themselves.
2:50:39
Do you expect secondaries to get there at any point in venture?
2:50:45
Do you spend time thinking about that at all?
2:50:48
It it feels somewhat inevitable, but then at the same time, we've all seen how ill liquidity can be, you know, such a feature and and not just a bug like like some people would have us believe and and are you talking specifically about like kind of employee secondaries or just like broadly like just bringing like Well, there's a public fund right now.
2:51:10
there's a public own number of SPVS and look through exposure into various Yeah, it's more so bringing bringing at the same time exposure uh liquidity.
2:51:22
I'm just I'm I'm interested to see if you have any type of thesis here.
2:51:26
The other thing we saw recently was CO2 coming out with a new fund that's a smaller fund with like a $50,000 minimum check size.
2:51:33
I I didn't fully understand that move outside of wanting to create a product for maybe the next generation of you know family offices and and things like that.
2:51:42
offices and and things like that. But um I'm I'm curious if you have kind of any type of vision on on the next 10 years of I don't you know it's it's interesting like um I think there's been yeah I think there's a couple of big secular trends that are sort of
2:51:58
happening like one certainly companies are staying private longer and I think that's driven the scale of the venture business right you can put more dollars into your winners over over long periods of time so it kind of makes sense to be able to capture the economics there. Yeah, I think the other kind of secular
2:52:11
Yeah, I think the other kind of secular trend has been bringing and we're still early I think in that kind of wave bringing alternative investments to wealth like to to the kind of mass affluent kind of wealth wealth management channels which it you know
2:52:24
historically have largely been funded by kind of institutional investors and uh and they're like and I think you know the big private equity firms with REIT structures and credit products have done that much more aggressively. venture is
2:52:35
venture is still relatively speaking a small asset class and a small business and historically hasn't I think needed in large part to tap the kind of wealth ecosystem and you know time will tell how you know how aggressively you can scale a venture business.
2:52:50
I don't know that that's sort of the that's not the goal necessarily, right?
2:52:53
Um but I think if you're Apollo or Blackstone, you know, trying to raise hundreds of billions of dollars, you know, in a in, you know, real estate funds, wrapping it in a re product and and distributing it to retail makes sense.
2:53:06
And and to do that, you need liquidity, right?
2:53:08
Because an individual investor doesn't have the same sort of like time horizon time horizon.
2:53:14
They need access to cash for for various reasons.
2:53:15
So, you need to give them outs.
2:53:16
And so the CO2 fund I think was a crossover kind of public and private fund with some liquidity gates.
2:53:23
You know, more power to them.
2:53:23
We we we haven't, you know, done done something like that.
2:53:27
Can you talk about the application layer in artificial intelligence?
2:53:30
Um there was this meme for a while, every rapper is going to get steamrolled by the foundation models.
2:53:34
I imagine you've been investing throughout that process, but has your thinking evolved and have any of the recent milestones that we've seen uh you know wind surf going into OpenAI that feels like okay maybe it opens the floodgates to every foundation model needs some dance partners here and maybe that's an opportunity for liquidity at the early stage investing side.
2:53:54
Um how are you how have you evolved your thinking on the application layer and the opportunity there whether in B2B or consumer? Yeah, I know.
2:54:03
I mean, I think you're right.
2:54:05
Like, you know, I don't know, 18 months ago, I feel like the pjorative was everything's a GPT rapper and the fear was every, you know, state-of-the-art model company was going to eat every workflow.
2:54:13
I think that hasn't been the case.
2:54:15
And I think the you know like declining cost basically of like intelligence has benefited the application layer and not not just in like text and reasoning but across kind of every modality whether it's voice or video or image and um so you know both I think you're um the quality of entrepreneurs has has kind of um you know I would say increased dramatically even in the past year.
2:54:36
I think people building specific products for you know with a deep understanding of the industry and and the specific workflow that they're targeting uh you know has has changed you know uh again in the last like six months.
2:54:48
Um, and I think what you're seeing now is also not not the sort of bottoms up.
2:54:53
You're also seeing top down.
2:54:54
You're seeing companies sort of own the end customer, own the end workflow and then begin to build their own models, right?
2:54:59
Um, and I think the fear was sort of the inverse for a long period of time.
2:55:03
But it's been easier to kind of route, you know, prompts to different models and maybe capture, you know, the highest margin, you know, queries in your own model, right?
2:55:11
Or, uh, you know, improve your own economics by by owning some of that, you know, that workflow internally. Yeah.
2:55:17
Yeah. And I guess like my hot take is that um you know both still matter and uh and there a lot of them are largely the same at least in my mind right like I think AI is an incredible tool for differentiation right the idea that a voice agent can do the workflow you know in in some cases a
2:55:35
thousand times better than the human is amazing but the technology I think is an ephemeral advantage I think it's an amazing tool for differentiation not necessarily the source of defensibility and I think a lot of the defensibility in my mind resides in the things that have kind of always been true, right? Owning the workflow end, deeply
2:55:50
Owning the workflow end, deeply embedding yourselves within your customers, right?
2:55:53
Becoming a system bracket, having a network effect, being a platform.
2:55:56
And I think these were all the heristics you would always kind of look for when evaluating software companies historically.
2:56:01
I don't I don't know that this time is that different.
2:56:03
I think the impact and the idea that the software can actually do the work is radically different.
2:56:09
And if you can capture labor budgets more than just IT spend, the TAM is radically different. you know, much larger.
2:56:16
But, um, that's at least been kind of my own, you know, mental model, uh, you know, over the past, you know, several months.
2:56:22
How are you thinking about open source?
2:56:24
Uh, Mark's obviously been very outspoken about open source.
2:56:28
I've always wondered is will there be a red hat of this generation with AI?
2:56:33
Stable diffusion was kind of thinking about that.
2:56:34
Um, and you could imagine that some company crops up that's like a for-profit very successful company, but built on top of open source. Are you looking at that?
2:56:44
Are you optimistic about that or is it more just like philosophically open source is a good thing for the ecosystem more broadly?
2:56:53
Yeah, honestly it's a better question for Martin because um you know they spend more more of their time on the infra side you know in that community but you know we are big believers and and investors behind open source I mean we're big investors in Mstral for example.
2:57:04
Yeah you know in Europe which is you know one of the leading open source players um Mark's obviously on the board of Facebook and I think what they're doing with Llama is amazing.
2:57:11
Um so uh I think there's opportunity for both and it you know I think in many ways open source is a great kind of um you know competitive force which is also kind of drive down the cost of a lot of the you know intelligence which again it can be great in its own business and I think is also benefiting the application layer. Jordy last question. Last question.
2:57:33
How much do you expect uh the adoption to a of of AI to mirror what we've seen in fintech? Right.
2:57:40
It feels like fintech's, you know, uh, been so transformative over the last decade plus, yet at the same time, every once in a while, I still need to you, you know, write a check or, you know, any use any number of different things.
2:57:55
Does that provide any type of mental model for you on how to think about, you know, uh, how people and companies and countries adopt AI?
2:58:08
Haven't thought, it's an interesting question.
2:58:09
I haven't thought about kind of the through line there.
2:58:10
I mean, I think AI, this may not be as shocking, but I think it's going to, it sounds cliche, but it's going to change everything.
2:58:18
It's going to be everywhere.
2:58:20
And um, you know, even even the kind of intersection of fintech and AI is just, I think, incredibly interesting.
2:58:26
Like, I think my bias for the past several years has been to invest in fintech companies that lead with software, you know, as opposed to financial products.
2:58:33
Um, and it's part why we built that incumbent network.
2:58:37
It's in part because of the culture of these firms are changing.
2:58:38
But um you know again the ability to do the work within these organizations is so radically different.
2:58:44
There's just massive labor budgets to be able to capture and so again I think we're going to see the adoption of AI probably proliferate even faster than we did you know products.
2:58:53
Although that happened quickly as well. Yeah. Makes sense.
2:58:54
Well thank you so much for stopping by. My pleasure. Great having you.
2:58:59
We have to have you back and talk more.
2:59:01
We could go on forever but yeah we'll let you get back to your day.
2:59:04
I'm sure you have a lot going on. Awesome. Awesome. Thanks. See you. Fantastic.
2:59:08
Um, we are pretty much done with our ad reads. We did a lot of them.
2:59:13
Um, but uh, we still need to tell you we mentioned Figma. We failed everyone. I know.
2:59:18
I know you want more ad reads.
2:59:19
Um, remember we are 100% corporatebacked here at TBPN. Um, that's right.
2:59:25
We But and we're also sponsored by Figma.
2:59:27
Think faster, think bigger, build faster.
2:59:29
Figma helps design and development teams build great products together.
2:59:33
We were at Figma uh config yesterday. Are so exciting.
2:59:37
Uh you can now I mean my favorite is Figma Figma sites.
2:59:43
It's a it's I I posted about this but it's a product that I've wanted since the very first day I use Figma. Uh real quick.
2:59:49
So we have Alex joining from Hollow. Yeah.
2:59:53
Uh to talk about the new American Pope.
2:59:56
I'm very excited about that's amazing.
2:59:58
So he's going to give us some perspective. Katherine Bole.
3:00:03
Also, did this did this happen while we were live?
3:00:05
Because it happened while we were live. Okay.
3:00:07
Because you keep referring to this and I'm like I'm still seeing I haven't gotten the update.
3:00:11
So, this is the pope has been decided.
3:00:13
So, Hollow is based in Chicago. Okay.
3:00:15
And the new American pope is from Chicago. Wow. New pope elected.
3:00:20
Credit to Catherine for this. 2025.
3:00:20
The Catholic Church announced the election of a new pope signaled by white smoke rising from the Cistine Chapel.
3:00:26
This event uh marking a significant transition in the church's leadership was celebrated widely.
3:00:31
The new elected pope was expected to address the public from the central window of the St. Peter's Basilica.
3:00:37
Many people learned about this historic event through various online posts with some humorously noting the unconventional ways they discovered the news.
3:00:44
Um a lot of people posting memes. Very fun.
3:00:47
Um well, I'm excited to invite Alex to the show.
3:00:52
I'm so glad he could hop on the same day. That's amazing. Um he's not here yet.
3:00:55
Um, so we can go through some other posts and talk about what else is going on.
3:01:00
I like this post for I got a post for you.
3:01:03
Will Brown has joined Prime Intellect. Oh, wait, really? That's amazing.
3:01:10
I mean, huge pickup for Prime.
3:01:13
Some personnel news for you. Some personel.
3:01:15
If you're not familiar with Prime Intellect, fascinating, fascinating company.
3:01:18
fascinating company. uh they do uh I mean it's technically a crypto company but they do decentralized training of AI models and yeah Will's a great poster and obviously very sharp in AI so congratulations to Will excellent uh roll out of this announcement like he just was teasing he was teasing it for
3:01:35
days I was sitting on the edge of my chair very excited congrats to him and welcome to uh Alex uh to the stream good to have you here thanks for having me thanks so much uh yeah that was fun how that came together this is amazing I'm so glad you could jump on the same day with Harley from Shopify and coordinating, but made it happen. Busy Busy day. Busy day for you. Uh I imagine.
3:01:58
Yeah, it's pretty exciting day for us.
3:01:58
I mean, it's like a one ina million chance that the Pope happened to be American and then that he happened to be from Chicago. It's crazy. That's where I am today.
3:02:07
So, yeah, it's been a fun day for us. Been a fun day for us. That's amazing.
3:02:10
Would you mind kicking us off with just a a brief introduction on yourself and the company just for so everyone knows?
3:02:15
Yeah, I'm Alex, the CEO and co-founder of Hallow, which is a prayer and meditation app that um we're Catholic, but we hope to be a resource for anybody interested in growing in Christian spirituality.
3:02:26
We've been working on it for five or six years now.
3:02:30
We're a series C startup, so Oh, wow. Very cool.
3:02:32
Talk about uh talk about what it was like kind of starting the company at that point in time.
3:02:38
It it still felt like an era where people in SV didn't really talk about faith.
3:02:44
It was kind of a didn't feel like it wasn't a market that people interfaced with very frequently so they didn't think of it as a big market.
3:02:52
It was almost like Silicon Valley had gone so far towards atheism atheism effectively that it was that religion was like taboo. Yeah.
3:03:02
For a long time, religion was seen as like anti-science and technology with science and therefore you couldn't be religious and build a tech company, even though now that's been massively disproven and has been disproven forever.
3:03:13
But uh anyway, what was your experience starting the company?
3:03:16
Yeah, I mean for me it was my own we started I I started it for myself.
3:03:21
I had fallen away from my faith and discovered uh a relationship with Jesus, a relationship with God through prayer and like really learning about what it meant not just to talk to God, but to really listen to him, to really sit in silence and to spend time in contemplation and meditation.
3:03:35
And I had no idea that those things were that there was a Christian spirituality tradition of those things.
3:03:41
I thought it was just, you know, hey, ask for stuff and repeat the things you heard as a kid or memorized as a kid.
3:03:46
So, it had changed my own life.
3:03:48
Uh but yeah, I was I was in Stanford and working on this thing in in Silicon Valley and pitching um uh pitching Jesus a Jesus startup and it was certainly not it was certainly not the uh not what people are used to hearing.
3:04:02
Honestly, it was fun for me because I got to go to all these VCs and you know my story is just my own relationship with Jesus and how he's changed my life and how he's brought me this peace and this love and this joy and I just get to go into these you know boardrooms and just pitch my own faith which is fun.
3:04:16
But it's certainly uh the vast majority of people thought it was a stupid idea.
3:04:19
I mean 99% but that's true for any any startup.
3:04:22
But yeah, I mean it's uh like prayer people don't pray anymore. They meditate. Prayer is a dying thing.
3:04:29
Uh you know it's been dying for a while.
3:04:31
It's going to continue to die.
3:04:32
And it's funny because is is not hallow is a contrarian idea really only in like Silicon Valley and New York.
3:04:38
If you go to, you know, the middle of the country, even if you come out here to Chicago and you're like, "Hey, do you want a meditation app or do you versus do you want something to help you grow in your faith?"
3:04:47
You know, the latter is much more it's like, "No, 75% of Americans are praying every week."
3:04:50
It's a really important part of people's lives and it's a huge nobody's trying to do anything to help people.
3:04:55
But so in Silicon Valley though, it's fun because it's a contrarian idea.
3:04:57
So it was always fun to always fun to pitch.
3:04:59
It's honestly the best of both worlds.
3:05:00
You have contrarian here, which everybody's trying to be contrarian, and then non-contrarian in the market, which is where amazing you're growing.
3:05:08
Um, have you seen a big surge of downloads around the the conclave and the I mean like religion is the national it's the global news story this week?
3:05:18
Uh, does that drive uh growth for the business?
3:05:20
Yeah, I we take it really seriously to try to help.
3:05:25
help. um you know this is different than like a um we talk about it often as like a political thing um but it's very different for Christians and for Catholics especially than you know a presidential election in the US and the most important part for us is and this is true also for political elections but certainly for this the most important
3:05:44
part is prayer and so the thing for us is just to make sure that we're spending time praying for the church praying for the you know repose of the soul of Pope Francis after he after he passed and so we tried to create some content to help people journey through that and then also to pray for the cardinals as they
3:05:58
were choosing the pope and then now to pray for the new pope and to get to know him a little bit and learn about his writings and his homalies and where you know what he's trying to do for the church and um so yeah for us trying to help grow deeper in prayer and use this as an opportunity to let God work in our hearts was we thought a big opportunity so certainly certainly pretty busy for
3:06:15
us and we got like today was one of our biggest spikes and downloads of all time because you know you send out a little push notification that's like white white smoke there's a new pope so let's pray for him you know um but for us we just try to use it as an invitation to, you know, let out in a little bit more. Yeah. Uh, how do you think about design Yeah.
3:06:29
Uh, how do you think about design of the app?
3:06:31
I feel like the app store is so competitive and there's so many dark patterns when it comes to uh, you know, mobile games.
3:06:39
I'm sure you're trying to use best practices, but you probably have a moral framework that you're following that lines that you don't cross.
3:06:46
Have you thought about actually building the app to be uh, something that can grow and be a fantastic business?
3:06:53
um with while still like satisfying the core mission of the company.
3:06:57
I would certainly hope we have a have a moral framework.
3:06:58
I care a lot more about getting into heaven than our retention rates.
3:07:01
But the um but retention is important.
3:07:03
Actually, it's funny because retention is a great retention is a great example.
3:07:06
Like we work a lot on retention.
3:07:08
You want to drive great retention.
3:07:09
And for us, what that means is we measure retention based off of whether you're starting a prayer, whether you're praying on on the app.
3:07:15
And so a retention rate is just okay, if you downloaded the app, you're looking to grow deeper in your faith, you're looking to try prayer and meditation and growing in your spirituality, how successfully did we help you to build a daily habit of prayer.
3:07:25
And that's a really, you know, that's the core of our mission.
3:07:27
But it also, you know, as a subscription business, which there's a free version of Hallow and then a subscription version, but as a subscription, that's also all you care about is trying to get new subscribers in at low cax and then try to keep retention, which for us is just adding value to people.
3:07:40
you know, for there's a lot of people who have a lot of very strong opinions on this, but like Christianity and the church especially has always had a very clear stance, which is like business and economics and certainly entrepreneurship um can be forces for real good.
3:07:55
They can they can be used for evil and most of the time they are.
3:07:58
And that's the same with technology.
3:08:00
Like most of the stuff on the internet is bad.
3:08:01
It's at least if not bad, distracting and noise and awful for like your soul.
3:08:06
Uh but God can still use it.
3:08:09
So just because we screw it up the vast majority of the time doesn't mean that God can't use it for his own good to try to bring joy and love into people's lives.
3:08:17
And it's the same thing with you know startups which is and even Pope Francis was really clear on this like Pope startups and business can be a tremendous force for good as as as long as they are you're doing them with a spirit of service aligned with you know the right values treating your employees well trying to serve your customers not trying to do dark patterns or anything and doing it in a way where money is a tool and never the object.
3:08:37
If it's the object you're always going to leave unfulfilled, it's always going to be sad.
3:08:41
It's, you know, it's it's never going to be the end- all beall.
3:08:43
You're trying to make it your God.
3:08:44
But if you use it as a tool, then it can be a great tool to um help, you know, serve your brothers and sisters around you.
3:08:50
Can you share a little bit more around the news today and around Pope Leo?
3:08:54
Uh we were live when the news was announced and we've had like eight guests so far today, so certainly haven't been able to get to into it.
3:09:04
Uh so for our own curiosity or even at a meta level like uh how can someone get to know the new pope like what what is the the correct uh to even digest that information. Yeah.
3:09:18
Um well in a self-s serving we have a challenge launching that uh is to get to the new pope and to pray and to try to spend some time in silence but also to get to understand the new pope and most of the time it's in through homalies.
3:09:29
So these are cardinals that are chosen who were then priests and then bishops and then their cardinals.
3:09:34
And so they've given a lot of homalies.
3:09:36
They've given a lot of sermons and you can tell a lot about where a person's heart is at, what they're trying to do in the world and what they think the world needs and what you know they've heard from folks in terms of what they need from their homalies.
3:09:44
Um but you know at a at a super high level for the folks who haven't been following the news, the a new pope was chosen.
3:09:49
Pope Francis passed away.
3:09:51
Um this was the Monday after Easter Sunday which is beautiful.
3:09:56
like his last day was Easter Sunday which is just such a is such a beautiful timing.
3:09:59
beautiful timing. Um but then there's a period of morning and then the the cardinals get together in this like super old school in the cysteine chapel beautiful place and they vote on for a new pope and it's been it started yesterday so it's been two days so it's relatively quick but they go through these rounds of voting each day and you have to get to 2/3 and then that's the new pope that's chosen and today the new
3:10:19
pope was chosen and it's Pope Leo I 14th which is uh the name that he choose you choose the name as a as a pope and he is a cardinal from he was a cardinal from Chicago who lived in Peru for about 20 years trying to serve especially the
3:10:34
poor and and um act as a missionary but then he worked in the Vatican for a while and got familiar with all the all the Vatican stuff and was was a very good uh was a very worked very closely with Pope Francis. Um you know it's
3:10:44
Um you know it's crazy because he's the first American pope in the history of the papacy which is insane.
3:10:50
I mean it's not that crazy because the church has been around for 2,000 years and America's only been around for a couple hundred but a few hundred but um but it's the first American pope which is huge from Chicago which I live in Chicago currently with my wife and kids and hallow is based out of Chicago so that's just insane.
3:11:03
I mean the ch he was like people kind of thought maybe he was in some sort of list of front runners I guess but like certainly not top five.
3:11:12
Nobody would have thought he was you know the top three or four or five.
3:11:15
um you know for for me it's and and then he comes out and he blesses the city of Rome and then the whole world.
3:11:22
So it's this picture where he's out on the balcony blessing everybody and he gave this really beautiful speech of you know just how God loves each of us and he just wants to enter each of our hearts and that we shouldn't be afraid and we should go forward with with faith and with hope and and uh you know with the protection of Mary and the angels and all all the fun Catholic stuff.
3:11:39
Um but really just to let God into our hearts and so he gave this beautiful speech.
3:11:42
Um it's it it'll be fun, but you know, it's he's 69 years old, so he'll be the pope for like, you know, probably 20 years or it'll be a long he's a relatively young pope, so um it's a cool thing to get to witness. That's very cool.
3:11:55
Are are people already reading into like the political implications of this?
3:11:58
I know uh the the Wall Street Journal was a little bit critical of Pope Francis for some environmental decisions he made.
3:12:03
um uh what are people expecting from the pope in terms of like political leadership or shifting the the culture around um uh the politics of the church? Yeah.
3:12:14
You know, we always and especially as Christians, we run into this all the time.
3:12:19
And it's honestly is what happens in the gospel like you read the gospels and you read the Bible and what they tried to do to Jesus was they tried to they they tried to bucket him into these political things and they were like, "Oh, you say you're the Messiah, so aren't you supposed to overthrow Rome?
3:12:31
That's the current like operating power."
3:12:32
And he's like, "Guys, guys, guys, I'm not focused on your like right left fights.
3:12:36
I'm not focused on your little disagreements with your politics.
3:12:40
I am trying to build a kingdom, but it's not this kingdom where it's uh, you know, I'm going to like fight a war.
3:12:46
It's a kingdom like it's your heart. I want your heart. That's what I want. I want your life. I want your soul. I want your heart.
3:12:50
Like, I want I want you to live a life of love."
3:12:52
And so, what we tend to do is the same thing.
3:12:54
We've done it for 2,000 years.
3:12:55
But we tend to do as Christians is we like we bucket these church leaders into these political cate categories.
3:13:02
And often times it's appropriate because they, you know, speak very politically, but especially as the pope, it's such a funny role because American politics are such a small portion.
3:13:11
I mean, you're the pope of I mean, you're the pope of the world, but certainly the the billion and a half Catholics which are spread, you know, there's a small minority are in the United States.
3:13:18
And so even just thinking, you know, for me with Hallow, we have a global population now.
3:13:21
And thinking of politics in different countries, it's just like you can't really compute it.
3:13:25
But you know what he he seemed what Francis was really focused on.
3:13:29
I I think uh was this was was was trying to share the love and the mercy of Jesus with people especially people who are the most marginalized who are who are in the toughest places.
3:13:42
Honestly, it's a lot of what we try to do at Hallow.
3:13:43
And I think this is what Pope Leo will continue Pope Leo the 14th will continue to try to do it.
3:13:47
He he spoke a bunch of it about that in his first kind of blessing.
3:13:51
He's spoken about it before.
3:13:53
about it before. for I mean one of his quotes that I looked up that I loved was like we we spend so much time as Christians focused on teaching and on theology which is important it's a beautiful part of the faith but we forget that the first thing that we're supposed to teach is just like hey there's this dude that I know that's awesome that I love and I want to share
3:14:11
them with you now he said it much more beautifully than that he said you know the first thing we have to teach is that is to know and love Jesus Christ but it's the person it's it's it's not it's not like this set of facts or ideologies or politics or whatever it's like no I just have this I want to share with you, this relationship that I want to share with you. That's all. And I think that's That's all.
3:14:25
And I think that's what he'll try to continue.
3:14:27
Politically, actually, you know, on some of the more sensitive topics, he's been very reserved.
3:14:31
So, like there's not a there's not a lot that you can tell on on his stances other than the things that the church has always stood very clear on.
3:14:39
So, he stands very clear for pro-life.
3:14:39
I mean, he's he's got a very pro-life message, which is the same as Pope Francis, both for the unborn and for elderly.
3:14:46
He's got a very clear stance on protecting the environment.
3:14:47
God gave us the environment and you know the church's job and us our job as Christians is to inspire us to take care of what the the gifts that God has given us.
3:14:56
So, you know, he pushes for a lot of the same things.
3:14:58
But Leo actually is a really interesting name because the Pope Leo I 13th was the one who really fought against this socialism, like this rise of socialism, also unbridled capitalism.
3:15:07
And he was like, look, you can't just, you know, exploit people for money.
3:15:10
That's, you know, we shouldn't do that.
3:15:12
But also, there is private property.
3:15:12
And it was really fighting against this rise in communism.
3:15:15
And so, choosing the name Pope Leo does actually say a lot of really interesting things about what he's hoping for for the church. But we'll see.
3:15:22
I we we've got 20 years to figure it out. So, we got some time.
3:15:26
Alex, thank you so much for joining. This is fantastic. Super insightful. Thanks for having me. We'll talk soon. Good luck today. Bye. That's fascinating.
3:15:33
Going to have a busy evening. For sure.
3:15:34
We got Gary in the waiting room. Let's bring him in.
3:15:37
We're excited to have him on board.
3:15:38
Um yeah, what what a great uh topical update.
3:15:41
I'm excited to dive more into the Pope and kind of understand where he lands on everything.
3:15:47
Um, uh, Pope's someone who's like kind of, you know, drops out of consciousness but then pops up every once in a while and a banger homaly.
3:15:59
You got a new homaly alert.
3:15:59
Really shake up the tech industry. Yeah.
3:16:01
With a banger homaly hopefully.
3:16:03
Um, anyway, we got Gary Vaynerchuk coming in to the studio to to the show.
3:16:08
Excited to talk about the creator economy, what we're doing, what he's doing, how they intersect.
3:16:14
Um, and I want to ask him about this Walt Disney corporate chart. Have you seen this? The the famous uh chart. Yes.
3:16:22
Of like how everything interconnects.
3:16:23
And I have an I have an interesting hot take I want to get his reaction to because this chart, everyone cites this is like, oh, it's okay to, you know, build this really complex business where everything interacts with each other.
3:16:33
Disney created this chart 10 years before he died.
3:16:37
He was 50 and had spent 30 years building the Disney empire.
3:16:41
This was a reflection on his life and his career.
3:16:45
Um, and we got Gary in the studio.
3:16:48
So, welcome to the stream, Gary. How you doing?
3:16:51
Welcome in the back of the car. There we go. Uh, where where are you? Where are you going? Wait, wait.
3:16:56
How was how was Bloomberg?
3:16:58
You were over on Bloomberg TV.
3:17:00
I was on Bloomberg TV a few minutes ago and now I'm upgrading to the most important business show on in the world. Thank you. Thank you.
3:17:09
First of all, men, you you guys look very sharp. Thank you. Thank you.
3:17:11
Yeah, we try and dress up.
3:17:13
We take it professionally. We are the media. You guys look good.
3:17:16
I am in New York City headed back to the office.
3:17:19
I'm like in the thick of this major launch of my V friends trading cards and uh but I'm really really humbled to be on this show and you guys obviously we we've spoken a couple times offcreen, but I'm going to give the flowers while I'm on it so other people hear it.
3:17:33
I love what you guys are doing. I'm proud of you guys. Thank you.
3:17:37
I cheer for you guys and I'm thrilled to be on the show. Thank you.
3:17:40
Thank you so much for coming on.
3:17:40
Tell us about tell us about the launch today to start.
3:17:43
Uh I have to imagine this has been in the works for years now.
3:17:45
So tell us about what you're launching and the significance.
3:17:52
Look, I um knowing how high caliber the audience is here, let me say it this way.
3:17:57
The the direct answer is we have a tops trading card launched nationally, globally actually, which is if you pay very close attention to the narrow sports card world is a big deal.
3:18:07
The only other IPs that are on tops Chrome are Disney, Disney itself, Star Wars, Marvel.
3:18:15
So, it's a big head nod to this tiny young intellectual property that I'm building that has the ambition of Pokemon, Marvel, Disney.
3:18:22
But I mean, year four and back to, you know, you were just mentioning Walt Disney, he was doing that 110%.
3:18:29
Travis from Uber and I used to invest a lot together.
3:18:32
When he took over and was the day-to-day CEO of Uber, he's like, I would hit him up about random things. He's like, I can't.
3:18:38
I'm 100% focused on this.
3:18:38
I I'm four years into Be Friends and I'm in the process of getting to a place where I can focus 100% on it, but I'm not there yet.
3:18:47
But yesterday was a great day, especially for me.
3:18:50
I grew up a baseball card kid. Tops is the apex.
3:18:51
But at a higher level it back to the audience that's here I really think that intellectual property is going to be a very big topic of conversation over the next 20 years.
3:19:05
I think as we go into this AI era um I think people will understand the value of IP more and more and more and uh I'm grateful that you know on my belief of what the blockchain means which is what I started be friends on as an NFT project and and my understanding of storytelling and brand building around comic books and cards and cartoons and all that stuff.
3:19:28
Um I'm pretty excited man to be honest.
3:19:30
know directly yesterday was a big day but it's a tiny tiny little pebble in this boulder I'd like to build over the next three or four decades. Yeah.
3:19:38
Talk about uh you know one of the you know creating iconic IP takes time.
3:19:43
There's no there's no way to uh there's no way to shortcut yet at the same time crypto is known for just being ruthless in terms of expecting things you know now yesterday things like that.
3:19:58
How have you found and obviously I don't think there's very few people in the world that work harder than you, right?
3:20:03
So you're like working on uh on delivering that you know you know and growing the the the value of the IP day over day over day.
3:20:11
How have you found the the the pace?
3:20:17
Pretty easy if you're willing to deal with with push back.
3:20:19
Meaning to your point, you know, if you if you go talk to hardcore NFT collectors, that small group, right, in the scheme of 8 billion people in the world, a lot of them will tell you that over the last 18 24 months, I've not been the darling of the ball, because I just refused to do things that were going to create short-term economics. Yeah.
3:20:42
And so I had to take my bumps and bruises on some of the dgens and I was empathetic like when you are running a marathon sprinters make fun of you. Yeah.
3:20:55
So you know how have I dealt with it?
3:21:00
I'm grown meaning I've been running businesses for 30 years of my life dayto day.
3:21:05
So I didn't I've also been a public figure for almost two decades.
3:21:10
It wasn't hard for me to deal with the cynical tweets. I have a vision.
3:21:16
I'm focused on what I'm building.
3:21:18
And over the last 24 months, building the infrastructure of trading cards and comic books and cartoons, my Moonbug collaboration, my Topps collaboration, us becoming a leader in live social shopping on whatnot.
3:21:31
These are the pieces that are being put in place.
3:21:33
And when you look at the NFT values, because people are falling in love with Patient Panda and Fearless Ferry, you know, I know why people buy Spider-Man comic books.
3:21:43
I know why people buy Mickey Mantle rookie carts. I need the storytelling.
3:21:46
While there was uncertainty in the market, especially with the prior regime's SEC, I've just focused on building incredible community and collectibility and infrastructure and building out my team.
3:22:01
And um so to answer your question, it was quite easy and quite hard.
3:22:05
It was easy cuz I am who I am as a human and an operator.
3:22:09
It was hard because even if you're a gangster and focused and I like to be all those things, I'm a human and you know when you get that push back and people like where what the value what this that or like where did Gary be go, you know, you you're going to you got to eat it.
3:22:26
But the reality is is I've been very clear about what I've been doing from day one.
3:22:31
You can go look at my CNBC or podcast interviews in 2021.
3:22:34
I said I'm building a 30 40year IP.
3:22:37
99% of NFTs are going to go to zero.
3:22:40
I see a path to not being part of that 99%.
3:22:42
It is going to involve the real world, not just digital.
3:22:45
I will stay on top of my web three understanding, my web two understanding.
3:22:51
And uh you know, I've spent six months on understanding AI creation is going to matter for this IP, you know, because I'm required to or the updates on new blockchain or what Coinbase is doing with Bass as a layer 2 or what's going on with YouTube Kids Dynamics.
3:23:05
And I mean, I'm just in my traffic, bro.
3:23:07
And so I'm uh I've handled it easily.
3:23:11
How do you think about uh value transfer for intellectual property going forward?
3:23:16
I mean, for we were in the dark ages for a while where you couldn't even use a song on social media without getting the thing taken down.
3:23:25
Now, it feels like most of the platforms have figured out how to funnel the ad revenue around to the correct creator.
3:23:32
Imagine that gets better with AI, but uh it's gonna get it's gonna get better with AI and a lot better with AI on top of blockchain where you could really really layer it all together. So, what do I think?
3:23:42
I think people in the intellectual property business are big winners of the next half century and I'm grateful that between Gary Vee, the personal brand, and V friends, the the intellectual property that has obnoxious ambitions, um that I'm going to be in the uh in the game.
3:24:00
What is what does the next uh one to two years look like?
3:24:03
Uh you've been laying out, you know, your your master plan, giving us updates, but uh what is Yeah.
3:24:10
What is it what's the immediate future look like?
3:24:15
Social media creative at scale.
3:24:15
The believe it or not, this is analog, but the comic books are monstrous for me.
3:24:18
We just put out we but it's a modern twist.
3:24:23
We're selling comic books in packs, so it has like a baseball card feel.
3:24:25
So different covers, different variations, and we're selling it ex on on whatnot and Tik Tok shop.
3:24:31
So we're doing commerce tamement, which is something I believe very deeply in. Mhm. Yeah.
3:24:36
Um so right now I'm going into the chapter of here's how I look at it.
3:24:42
I don't know if you men knows this, but Harry Potter's original book is a very soughtafter collectible and very valuable. Yeah.
3:24:48
But Pokemon and Star Wars first books are not that soughta.
3:24:54
not that soughta. Spider-Man's rookie card in 1966 genres I think an undervalued collectible but is not super sought at because when you're a comic book collector or more importantly the first time Spider-Man appeared in the world it came in comic book form Harry
3:25:11
Potter came in book form trading you know Pokemon came in trading card form the form factor of the collectible when it first appears becomes the alpha becomes the the real central focus and then the IPs expanded to everything from pajamas to cereal to vitamins to movies to video games. My what I'm focused on right now
3:25:33
My what I'm focused on right now is getting people to fall in love with my characters.
3:25:37
So animation, social media content, comic books, trading cards that have stories on the back.
3:25:42
I'm very focused on that.
3:25:44
What that's doing is it's leading people when they fall in love to get into the ecosystem and that then that brings them back to wanting to own VR series 1 NFT cuz that is the original origin of the IP.
3:25:57
So next 24 months is keep my eye on macro technology.
3:26:03
Make sure I'm utilizing AI and everything that it brings to the table for me to expand the output of my creative both in volume and quality.
3:26:09
pay deep attention to the new blockchains and the layer twos and the innovations that are happening in NFT land because obviously you know this is an at the end of the day a digital collectible first and everything else second and then most of all figuring out more ways for people to fall in love with Ambitious Angel and Balanced Beetle and the very lucky black hat.
3:26:32
Uh do you you said you're one of the most uh active sellers on whatnot.
3:26:38
Are VCs still underrating live shopping?
3:26:42
It feels like one of those things that took off in Asia, but there haven't been that many.
3:26:47
I would say it's taken off in certain Yeah.
3:26:50
subgroups and and for certain product types here and and certain demos, but I'm curious as a seller, how how do you view it today?
3:27:00
I view the the QVCification of social media as one of the most significant microemerging trends in the community of venture capital, private equity, business opportunities for entrepreneurs and humans.
3:27:13
I think it is incredibly real.
3:27:16
Um I wouldn't call that VCs are underrating it.
3:27:19
I think whatnot got a obnoxious valuation.
3:27:20
But I think that's the macro infrastructure to your point DT I think entrepreneur I think small businesses and entrepreneurs and startup founders are underestimating it.
3:27:31
If you sell something physical, if you sell something and live social shopping is not part of your daily debate strategy and then ultimately execution, you're misplaying spring of 2025.
3:27:48
every if you sell vitamins, if you sell underwear, if you sell raetball, if you sell something and this is not part of your repertoire, you're basically similar to someone who's not using social media at all in 20089, which means you're not going to go out of business.
3:28:09
It's not like you're a doofus and you're dead.
3:28:12
It means that you're leaving an obnoxious amount of opportunity on the table. Yeah. Yeah. Makes sense. That's a good framework.
3:28:20
We'll get on there and we'll start selling 2026 ad slots uh right next to you.
3:28:24
Um yeah, I know I know we got a hard stop. Anything else you want? You know what's funny?
3:28:28
Michael like I now I want to say thank you and I want to say commerce tment.
3:28:34
You may not sell ad slots because that's a different form factor but if you don't think that you guys could sell and I don't think this is the right move for the tone and ten or what you're doing.
3:28:43
However, there are general business items that this show could sell at scale, even passively while people are watching with shop for a briefcase or these are the best travel shoes or I don't know fountain pens.
3:28:55
I don't give a Like you guys could dominate. Love it. I love domination. I want to dominate.
3:29:02
We'll discuss we'll discuss we'll put our master plan together standing desk floating across the screen and we're just saying bye now. Bye now. Three left. Great to see you, Gary. Fantastic. Have travels. We'll talk to you soon.
3:29:14
Anyway, uh let's do some timeline.
3:29:16
We got 15 minutes until Will from Whoop is coming up.
3:29:20
Amazing thing about GV, he's the same person always. Oh yeah, totally.
3:29:26
Every interaction, talking with him here, he's in the car just doing business. Yep. I love fully authentic.
3:29:34
And uh I like the the the clear dedication of V friends.
3:29:38
I mean he is on an absolute mission.
3:29:40
So yeah, I love to see it.
3:29:43
Anyway, let's go through some timeline.
3:29:45
Uh first up from Harsh, he says, "Winsurf sold for three billion.
3:29:49
Cursor is now valued at 9 billion.
3:29:51
Windsurf bought by OpenAI.
3:29:53
OpenAI is an existing investor of Cursor. Both are VS Code forks.
3:29:54
VS Code is owned by Microsoft.
3:29:57
Microsoft owns 49% of OpenAI.
3:29:59
And it's the uh and it's the the big short photo. Hey, there's a bubble."
3:30:06
Uh, and uh, I mean, a little silly, but it makes sense that everyone's getting into this.
3:30:10
This one from Leo Ga, if we can pull it up.
3:30:12
Uh, is one of my favorites.
3:30:14
Uh, from frog and Toad said, "Frog put the profits in a box there."
3:30:19
He said, "Now we will not be motivated by profits above the cap, but we can open the box," said Toad.
3:30:27
"That is true," said Frog.
3:30:27
just a timeless children's tale about uh obviously referencing the the open AI profit cap.
3:30:35
Uh Nick Carter also had an interesting post about AI, the K-shaped reaction to artificial intelligence.
3:30:40
For people who are naturally curious and love to learn, AI vastly improves their pace of information ingestion.
3:30:47
For people who hate reading, writing, and see knowledge work as pointless busy work, AI will atrophy their cognitive functions. I couldn't agree more.
3:30:55
Uh, if you're curious, you'll just be tinkering with chatbt all day long.
3:30:59
I was trying to pull a list of the fastest companies.
3:31:05
I mean, I'm sure everyone's seen that chart, the fastest companies to 100 million of ARR.
3:31:08
I wanted to see the big boy version of that.
3:31:10
Fastest to 1 billion in revenue.
3:31:13
Uh, obviously Google, Facebook, all these companies have done it very very quickly.
3:31:18
Um and I was able to just do one deep research report then have you know turn it into a scikitlearn or I forget uh I forget exactly what mapplot lib chart all within one uh one chat GPT uh chat interface and I was just going back and forth for probably like 30 minutes while Jordy was just watching me uh you fully fully voice mode too. Yeah, it was great.
3:31:42
just talk to it and say, "Hey, yeah, change this uh title. Make this bold. Make this font bigger."
3:31:46
Analyst in my pocket is great.
3:31:48
Um uh I'm not going to say the name of this account, but I will say I will read the post.
3:31:53
It says uh there is a phenomenon on TikTok where businesses will exploit their young female employees to do an informal ad for their establishment.
3:32:02
Have you heard about this? I don't.
3:32:04
Oh, we have like a junior employee.
3:32:07
I don't call this exploitation.
3:32:08
I call this shareholder value creation.
3:32:11
being on a team and being willing to do things that aren't necessarily directly listed on your Yeah.
3:32:18
But I mean, if it's not within your purview and you're like, you know, forcing your employees to post about your stupid business or gun to your head, make a Tik Tok. Yeah. I mean, I I don't know. It seems kind of silly.
3:32:30
Um, but uh yeah, I mean, you got to negotiate that in your employment contract.
3:32:35
Hey, this isn't part of my job if I don't want to be doing TikTok for you anyway.
3:32:38
can always say no to Tik Tok ads.
3:32:42
There's this video that went out from frothless, uh, the money isn't real.
3:32:46
I don't know if you saw this video, but it has a very cool like retro vibe.
3:32:50
We I don't even know if we can play it, but uh, uh, it has this very cool like retro VHS vibe and it's making all these points about like, you know, crypto is the future, money isn't real, gold standard dropped.
3:33:01
And the whole time I was watching it, I was just like, this feels like an ad for buying gold.
3:33:07
like you can still just buy gold and yet it's it's it's funny that like all like 90% of this is just an ad for gold and then at the last second it's just like oh actually buy Bitcoin or some some it's actually don't even buy Bitcoin it's like buy dollar sign crypto on Salana or something like that.
3:33:23
It was like a very odd pitch.
3:33:24
You're getting a memecoin ad.
3:33:26
Yeah, it was a memecoin ad and I was like I don't I I I feel like a lot of the statements you're making are just, you know, gold bug talking points basically.
3:33:36
Anyway, uh Roit says, uh, this image is unironically worth 100 billion in annual revenues. Did you see this?
3:33:44
Gemini Advanced, you ask it.
3:33:44
Uh, what are the best headphones in the world?
3:33:49
It says, it's a classic question with a delightfully complex answer.
3:33:52
There's no single best pair of headphones in the world. Let's dive into it.
3:33:55
gives you this big long text response and then on the other side you go to Google and you click and and you search world's best headphones and it just immediately shows you exactly what you can buy.
3:34:04
And what was your interpretation of this post?
3:34:06
Like what what do you think Roit's trying to say with this?
3:34:08
Well, I mean first this just goes back to what I was saying earlier is like the Google dilemma is just will be a a HBS case study within probably five years around disrupting yourself. Yeah.
3:34:24
but not in necessarily a great way, right?
3:34:28
There's some businesses that like we're going to disrupt ourselves and they sort of launch an iteration of what they're doing, but don't kill their golden goose.
3:34:35
I mean I mean I think this is a you know the funny thing here is uh I think that a lot of consumers the right side just getting shown the pretty picture.
3:34:46
I completely agree completely agree.
3:34:48
I I don't think the LLM response is better here.
3:34:51
I want to say I think people make with headphones.
3:34:52
Headphones specifically are not necessarily the best example because it's emotional.
3:34:58
It's like a part of your outfit.
3:34:58
It's highly, you know, personality driven.
3:35:03
It's not necessarily like I want a visual response and also I want like the data can be presented in UI better than just a big long text block.
3:35:10
So you look at the Bose over here and it has the price, the brand which is important, the star rating, that's also important.
3:35:17
But I mean Gemini could easily just add those sponsored you know modules in. Yes.
3:35:23
But but in terms of like big block of text like you know 4,000 words on the best headphones like that's cool but I and I'm okay with the LLM kind of noodling on the question but I do still think that a lot of people would prefer just to have a visual representation of like here are here's what we think are the best.
3:35:43
Here's five others that are potentially in the running in the conversation.
3:35:46
Um, and here's images, prices, you know, just just basically write an entire uh wire cutter report.
3:35:54
Um, instead of just being so it just this highlighted to me just like the gap between the current UI for some of these Yeah.
3:36:04
some of these use cases and then and then text.
3:36:05
Yes, text is the universal interface to quote Rune, but um there still is a lot of benefit that comes just to UI and imagery. Yeah.
3:36:11
The the interesting thing here is I mean very easy for Google to just like move the sponsored module into the LLM. Yeah.
3:36:23
But the the the then the bigger issue for them is you know chat GPT being the preferred consumer LLM. Yeah.
3:36:30
And growing astronomically. Yeah.
3:36:34
And you I mean you imagine that um I mean Google has a decent image generation.
3:36:39
And I think they have actually a great one, especially with VO, the new uh video module.
3:36:45
So, but but there really is integration challenge in putting all of these together.
3:36:49
Like we've been joking about like the PDF upload, like when will like all these different models that you have to choose from.
3:36:54
Everything's buried in drop downs and menus.
3:36:56
Um it really would be better like actually integrating all of the different AI models into one unified search box.
3:37:04
Like that's what Google has done over the past 20 years, right?
3:37:05
like you search for a flight, it knows, hey, let's go to the flight UI and it has different it instantiates a a UI that's not developed on the fly.
3:37:15
It's not coded on the fly.
3:37:18
AI certainly has that promise of that, but there's still plenty of uh plenty of, you know, business logic routing that can happen in the LLM.
3:37:26
Like, you know, every once in a while I'll ask it like generate an image or or make an image of this and it'll just describe the prompt and then it'll say like, hey, do you want me to actually generate this? I kind of got confused.
3:37:35
did you want text or image?
3:37:37
Um, and so clearly within chatt there are multiple routes that it can go down like do you want me to write code and then if if you say yes it writes some code if do you just want text?
3:37:45
Do you want me to go out to the web and search?
3:37:48
Do you want me to generate an image?
3:37:49
There's kind of like four or five like tool usages. Yeah.
3:37:51
Um Google when you search has like 10 or 50 I don't know hundreds because there's like the Wikipedia knowledge box there's also the flights. There's images. There's videos.
3:38:02
There's all these different things that it can search and and and turn up in the UI.
3:38:06
And the gap between that and where the LLMs are today, especially for some of the some of the less productized uh AI products, um really is uh it's clearly like a path that that OpenAI is marching down, but it's going to take a while. Yeah.
3:38:20
Anyway, speaking of AI, uh Sonia Wang from Sequoia is coming on the show tomorrow, but she was recapping the third annual Sequoia AI ascent.
3:38:29
Absolutely banger lineup.
3:38:29
Jensen Wong from uh from Nvidia talked about token generating AI factories as the new industrial infrastructure.
3:38:37
Uh we were talking to her partner uh yesterday and uh Andrew Reed.
3:38:42
Andrew Reed and and we were and and I have this big question of like when will we see the first data center buildout for humanoid robotics because it seems like until that happens we're not really on the scaling curve of that technology.
3:38:56
Uh we've we've seen that for LLMs.
3:38:59
Uh we are starting to see it with self-driving cars, but we are definitely, you know, there's a lot of noise in humanoid robotics, but we're not actually seeing like the satellite images of the thousand 100,000 H100s all go into one facility.
3:39:12
Jim Jim Fan from Nvidia was actually at aent talking on about why simulation is key to robots passing the physical touring test.
3:39:20
And you would so you would think you'd be simulating on a huge scale.
3:39:23
data center build and that's something that it can't just be a talking point for a humanoid robotics CEO.
3:39:30
It has to be it has to be the domain of Dylan Patel and semi analysis until I see the satellite photo of your buildout.
3:39:37
Uh I'm I'm not fully convinced that we're there.
3:39:40
Um but Brett Taylor becoming Cto at age Facebook CTO at age 29 was there.
3:39:46
Jeff Dean, one of the most legendary programmers of all time, uh is over at Google. Sam Alman was there.
3:39:53
Chase Lock Miller from Crusoe.
3:39:54
Really uh really insane lineup stacked.
3:39:58
Well, we'll have to get more of her takeaways from that. Yeah.
3:40:00
Um the there's this other uh uh poster for moving to Europe.
3:40:07
Uh your student debt will not follow you here.
3:40:09
And so Andre says, "We can weaponize American AI against them."
3:40:14
And Burn Hobart says, "Sending Europe a bunch of people who have credentials indicating that they're suitable for office work, none of whom understand compound interest should be considered an act of sabotage.
3:40:23
Similar to the Nordstream attack, just sending our most indebted stu college grads to Europe."
3:40:32
Anyway, uh we have our next guest.
3:40:35
Uh let's bring him into the studio.
3:40:37
We're excited to talk about Whoop, break down uh fitness trackers and everything that's going on today. Welcome to the stream. How are you doing? What's going on? Hey, what's up, guys? How we doing? We're good. Doing great. Big day. Big day for you today. Yeah, congratulations.
3:40:49
Uh yeah, bring it down for us.
3:40:51
No, it's great to be on with you.
3:40:54
It's a It's an exciting day uh for Whoop.
3:40:56
Obviously, we build uh wearable technology designed to improve health and performance.
3:41:01
I've been building this company for 13 years. Wow.
3:41:05
And uh I think if you chart kind of the history of the company, it started really around, you know, high-end athletic performance.
3:41:12
And I think for the past decade, you've slowly seen the company evolve from being focused on um you know, the world's best athletes to being focused on a much more general population.
3:41:25
And in a lot of ways, our our launch today, I think, crystallizes that.
3:41:29
We came out with uh two new hardwares, the Whoop 5. 0 and the Whoop MG.
3:41:34
Uh 14-day battery life, a whole set of new uh health sensing, a battery pack that, you know, gives the the sensor up to a month of of charge without uh without needing another charge.
3:41:47
Uh and then we we've come out with a whole suite of new features.
3:41:52
So, we came out with uh health span with Whoop age, which will tell you essentially how old you are.
3:41:58
I think it's going to be a fairly addictive feature based on people's um response to it already.
3:42:02
Uh we came out with a heart screener uh with ECG.
3:42:09
So you'll be able to screen your heart uh with a medically cleared feature that's cleared by the FDA.
3:42:13
So you can do ECG monitoring.
3:42:16
Um see if you have a which affects about 1 to 2% of the population.
3:42:22
Uh we came out with a whole new suite of women's health features which is pretty exciting.
3:42:26
uh menstrual cycle coaching.
3:42:30
Um and u and then you know of course like all sorts of new bands and apparel.
3:42:35
Um we announced that we're going to be doing blood testing soon.
3:42:37
So you know what started as Wait, you skipped over that but I'm I'm curious to dive deeper.
3:42:44
That's is that blood testing in you know people can visit labs or or have somebody come to them or or how far away from from my whoop being able to takes your blood while you're wearing it?
3:42:54
just give me a little prick.
3:42:56
Uh you know the original uh yeah the hardware itself won't give won't be giving you the prick but we are going to enable you know uh clinical lab blood tests uh which will then be integrated into your your Whoop data.
3:43:12
I think a challenge that everyone feels as a consumer who cares about their health is I've got some data over here.
3:43:20
I've got some data at a doctor's office. I've got my Whoop.
3:43:21
I've got, you know, wearable data and that none of that information is connected and we're trying to bring more of that under the same umbrella.
3:43:31
So, you know, we went from having strain, sleep, recovery, um, health monitoring, stress monitoring.
3:43:39
We've now added things like, you know, ECG metrics.
3:43:41
We came out with blood pressure today, which is a huge deal. Wow.
3:43:45
And then, you know, on top of that, we're now going to be introducing things like blood testing.
3:43:49
So when you start putting all of this data under the same roof and you can layer in uh coaching and analysis, different forms of artificial intelligence, it's pretty powerful what you're going to be able to tell people. That's amazing.
3:44:07
How how uh how competitive are you you and the team and how much does that impact your kind of product development cycle?
3:44:13
I mean, I have to imagine like, you know, obviously there's a variety of of fitness and and health trackers out there, but you guys seem to be very clearly at the at the edge with this new launch.
3:44:27
Uh, and I imagine already working on, you know, the next iteration, but what's what's the culture like internally?
3:44:35
You know, I wouldn't say we spend a lot of time um thinking about or talking about the competition in part because the space for wearables went from actually being incredibly competitive to now having maybe the fewest players it's ever had. Yeah.
3:44:49
If we were to talk about um competition 10 years ago, right?
3:44:52
I started the company in 2012, but let's say like 2015, we'd be talking about Nike and Adidas and Under Armour and, you know, Fitbit and Jawone and and um you know, Intel and Microsoft and um Samsung and Google and here are all the other companies that are going to enter the space and Amazon's coming and Facebook's coming.
3:45:16
Uh and so and of course Apple's been in the space.
3:45:19
So, um, today, you know, it's it's really only like three or four companies, uh, that I think are playing a big role in pushing pushing health monitoring.
3:45:30
And I think we got this far by having our own point of view on the space.
3:45:35
We've done things a little differently.
3:45:37
We built a device that doesn't have a screen.
3:45:38
You know, it really just focuses on health monitoring.
3:45:42
It doesn't do a bunch of other things.
3:45:44
It's not uh, you know, it's not a tool that you can get emails with or or call an Uber with.
3:45:48
It's it's really focused on health monitoring.
3:45:51
So, you know, I think competition's real.
3:45:54
I think you want to be paying attention to the market, but I wouldn't say that we spend a lot of time um, talking about competition.
3:46:04
Now, that doesn't exactly answer your question because you asked if we're competitive, and I would say we are competitive.
3:46:10
Uh, you know, we like to win.
3:46:12
when Amazon knocked us off.
3:46:12
And so Amazon met with us in like 2018 to invest in the company, never invested, came out with a copycat product in 2020 called the Amazon Halo.
3:46:24
And we were so competitive then towards them that their forwards on every circuit board we manufactured, we wrote, "Don't bother copying us. We will win."
3:46:35
And we literally we were that message was actually directed directly at Amazon because we knew they because you knew they were going to reverse engineer it, right? Yeah.
3:46:44
We knew they were taking our product apart and so there was sort of like an inside joke that of course they were going to have to see that message. That's hilarious.
3:46:53
That's so that's so demoralizing.
3:46:53
You know, you're like you're one product manager of of 300, you know, working on Halo and you just like discover this.
3:47:03
You're like, "Guys, I have I have some bad news.
3:47:05
for being, you know, we're being sent messages.
3:47:07
Uh, can you talk about the the I'm particularly interested in the in the Healthspan feature.
3:47:14
Uh, you know, I I've tried a variety of different um uh various, you know, testing companies over the years.
3:47:23
I'm I'm an investor in in Well, famously, your biological age is like what five years old, three years old. Yeah. Yeah.
3:47:28
This is this is our joke like there's this kind of like competitive dynamic if you're doing anything related to biomarkers that you would just drive it down eventually like they're going to tell me I'm you know actually negative one like I'm still in the womb biologically but how do how do you guys kind of work what what does that product actually look like in practice and what was what was important to get right there.
3:47:49
Yeah, it's a feature we've worked on for a few years now and uh it's called health span with whoop age and it really has two key numbers.
3:47:58
The first is your Whoop age, which is essentially what we define as your your real biological age, which is obviously different than your your chronological age.
3:48:08
And then it's got your pace of aging, which ranges from negative 1x to 3x.
3:48:14
And um and the lower the better for that.
3:48:17
And those two numbers kind of play off one another.
3:48:20
The the age itself is based on six months of data.
3:48:23
And the pace of aging is looking at your last 30 days.
3:48:28
So you kind of get a sense for have my recent behaviors been positively affecting my my um you know my overall health.
3:48:36
And we developed this feature in partnership with the Buck Institute uh which is one of the top um institutes for longevity in the world.
3:48:46
And in particular we worked with an expert named Dr.
3:48:50
Eric Verden and we looked at a universe of all the different um variables that are related with all cause mortality.
3:48:58
And you know, we looked at a a pretty large universe of different metrics, but ultimately we settled on nine that most closely um correlated with all cause mortality or were leading indicators of all cause mortality.
3:49:16
And uh those include the the hours of sleep you get, your sleep consistency, um exercise as measured as like the time you spend in heart rate zones, uh your your steps throughout the day, uh your V2 max, which is a huge one, uh the amount of time you spend strength training, uh and your resting heart rate, and so lean body mass.
3:49:39
So we we took um you know we took each of these metrics.
3:49:42
We actually show some of the research that is related to each one of them.
3:49:46
And when you get the feature you can go down every single of those nine metrics and see the degree to which it's adding or subtracting from your age.
3:49:54
And in a lot of ways this is it's probably one of the first times Whoop has been really explicit on how good you are at a specific metric relative to your age.
3:50:05
um and and you know your gender and so uh people have found it very actionable because you know maybe you're great at these five things and these four things are making you older and so now you know what you have to work on. Yeah. Very cool.
3:50:24
Um I have a question about uh Meta Raybands partner with Lxodica Ray-B bands.
3:50:30
Have you ever thought about partnering?
3:50:31
Jordy was joking that you should partner with PC Philippe or uh potentially Vasheron Constanton or maybe Admar Pigay.
3:50:37
Uh but uh have you ever explored that?
3:50:40
Do you see it in the future?
3:50:41
What do you think on the partnership side?
3:50:45
We're we're certainly open to uh to different partnerships.
3:50:47
We haven't done a lot of them to date.
3:50:49
I think there's a few different categories of partnerships.
3:50:53
So um you know, one would be around uh just like the whole universe of accessories and apparel uh that Whoop has.
3:51:01
Actually, one of the things that's quite unique to Whoop is it's the most customizable wearable on the market.
3:51:07
So, you can create 70,000 different types of bands and looks and feels for the product.
3:51:12
I mean, for your for your audience that's watching this that's not familiar with the product, like I'm just showing it right now, but you know, these bands come off very easily, and you can swap in and out all sorts of different colors and looks and feels.
3:51:27
We've got, you know, everything from leather to cashmere to, you know, an everyday um uh silicone and uh and so we are looking at different partners in that category where maybe we'll do specific band developments with with someone.
3:51:43
Um the sensor can also be worn in different locations on your body, which is something that's unique to WOO.
3:51:49
So you can wear it on your upper arm, you can wear it in your boxers, you can wear it in shorts, um women's bra, underwear, and uh and so today, Whoop makes all of our own apparel as well.
3:52:01
But that's as you can imagine another area um for potential partnership.
3:52:07
Another category I would say of partnerships is around data.
3:52:08
And so you know, Whoop obviously has a unique set of data.
3:52:13
And then look, there's other products on the market that have unique sets of data.
3:52:16
A very simple example of this was we partnered with um with Wings um you know about nine months ago and you know everyone who has a certain Wings scale when they step on it it goes straight into the Whoop app it updates their profile the the weight the lean body mass would feed into your health span.
3:52:34
So things like that that just feel really seamless.
3:52:36
Uh you know you asked about like meta and Ray-B bands and those sorts of things.
3:52:40
I think from like a data display standpoint, you know, we'll go where the eyeballs go, right?
3:52:48
Obviously, today everyone's got a smartphone.
3:52:50
So, as a consequence, we have an iPhone app and an Android app, right?
3:52:54
If one of those platforms emerges as being really popular, uh, you know, one of these AR platforms, I could certainly imagine, uh, Whoop data appearing there.
3:53:05
I think at the end of the day, we view ourselves as a tool for collecting this data and helping explain it, but we are open-minded to like what what the platform is that you analyze it on. It makes a lot of sense.
3:53:17
Jordan, last question on my side uh and then I I need to go get uh one of the new ones. Yeah, very curious.
3:53:24
Now, um, uh, how I'm assuming since I I imagine the majority of your revenue I is really on the software side.
3:53:34
Does that mean that the ter like and I imagine a lot of your manufacturing is in is in Asia.
3:53:38
My my uninformed assumption is that you guys aren't terribly impacted by this given that um I imagine you know the real value that people are getting is from sort of the on ongoing sort of membership but um talk about that and and maybe how you're kind of um planning around around the tariffs.
3:54:01
Look, I mean we we are impacted by it. No question.
3:54:03
Uh we manufacture um some products in in China.
3:54:06
We also do some manufacturing in Mexico.
3:54:09
We've got accessories and apparel that we source around the world.
3:54:13
Um so yeah, look, the tariffs have impacted us.
3:54:16
You know, I think for now we're we're taking it on the chin rather than passing it to consumers.
3:54:24
Um and you know, my expectation is that some of this will evolve.
3:54:30
And look, our standpoint as well is all right, we have to have a manufacturing policy that uh adapts to where the US is and US relations with China and and all of these different things.
3:54:43
So, I would say we're looking at a few different options in that category, but we haven't we haven't done anything yet that directly affects the consumer in a negative way.
3:54:56
Uh, and at least I'm happy with that. Yeah, that makes sense. Well, this is exciting. Yeah, congratulations. Launch.
3:55:02
Um, where can people get it? Whoop. com. Whoop. com. Whoop. com, baby.
3:55:08
And uh and I just want to say congrats to you guys, I think, on on creating a cool new category in this show.
3:55:15
I've enjoyed seeing snippets on uh on the internet and listening to you guys.
3:55:19
I I I appreciate what you do. Thank you. Thank you.
3:55:21
Well, come back on whenever you have news and Yeah, we might we might start we might have to start flashing our our health spans. Y on the Chiron.
3:55:31
So that uh so it works well.
3:55:33
We we track our our eight sleep scores daily with the audience to sort of keep ourselves accountable.
3:55:38
But just because the audience wants that for Yeah. Yeah.
3:55:42
We're going to add every single health metric because we want to we want to do this for decades.
3:55:45
You can't you can't stream for three hours a day without taking your health very seriously. Yeah.
3:55:50
I think like every 30 days just kind of a live update on your age, your health. That's great.
3:55:54
That's what the people need. Yeah. Wait.
3:55:57
doing the show 3 hours a day aged you 10 years in 3 months. What happened, Jordy? Yeah, hopefully not. Awesome.
3:56:04
Well, congrats to you and the team on the launch and uh we'll talk more soon. We'll talk more soon. Thanks so much. Bye. Cheers. Fantastic. Giga stream.
3:56:13
I think we're over four hours now.
3:56:15
Getting close to four hours actually right on the dot.
3:56:20
So, thank you if you watch the whole thing.
3:56:21
Thank you if you watched some clips.
3:56:23
Thank you if you bought from any of our sponsors.
3:56:25
We have another great show tomorrow.
3:56:28
I'm looking forward to it.
3:56:30
It's going to be Friday and that means it's rough.
3:56:33
It's the worst day of the week.
3:56:34
It's our last day of podcasting for the week. Yeah.
3:56:36
But we got to we we got another week next and then another week Monday always comes around here. Yeah. Thanks, folks. Thank you for watching. We'll see you soon. Bye. Have a great day.