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No technical difficulties.
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No one can stop us from streaming.
3:05
No one can stop us from podcasting. Bad day.
3:08
They didn't want us to podcast. Yeah.
3:11
You they they they said we couldn't do it.
3:12
They said we couldn't get difficulties, but we did and we're live.
3:17
Baby, we're not sure exactly the cause.
3:18
Could have been a sophisticated state actor.
3:22
Could have been super intelligence.
3:23
Super intelligence gone rogue.
3:25
They know that we're the last thing standing between humanity.
3:28
People say this, the last jobs will be live streamer, AI, uh, thumbnail artist, thumbnail artist, and and those are actually the only two things.
3:37
Eventually, the the AI research will just be automated as well. Yeah, exactly.
3:40
Anyways, speaking of AI research, we have a ton of stories in the AI uh in the AI trade deal world.
3:44
Uh the biggest one is that uh Zuckerberg continues to be on a tear.
3:52
Meta snatches Apple's AI chief.
3:54
They went and poached from OpenAI.
3:56
Now's Mark is poaching from Apple.
3:59
Uh 10 million plus pay packages.
4:02
The rumor uh as super intelligence hires mount.
4:04
uh Ring uh Raming Pang who led Apple's 100 person foundation models team is leaving for Meta super intelligence group amid growing internal turmoil at Apple over its AI strategy.
4:17
We've talked about this a bunch uh Pong or Pang, I'm not exactly sure how to pronounce that, joins a wave of top tier hires from Mark Zuckerberg, including Alexander Wang, Nat Friedman, exanthropic and OpenAI researchers lured by multi-million dollar compensation and personal recruiting pitches from Zuckerberg himself. phone calls.
4:34
We and we talked about this with uh with Doresh yesterday.
4:36
He's still he's still like they're underpaying them. Like it's so valuable.
4:40
And so yeah, the the numbers are staggering.
4:42
But if you're a multi-trillion dollar company, how are you how is the board how are the shareholders not okay with you or like okay with you not offering like top dollar to actually get the best talent?
4:56
Uh maybe we should pull up the chart of the Mag 7, see how the different companies are doing, the big tech companies doing.
5:03
And yeah, the other thing here, second to last, and Zuck is in founder mode.
5:07
He's he's acting like he's on top of that chart.
5:09
He's acting like he wants to be on the top of that chart.
5:11
And so I think that's what he's doing.
5:13
And if you remember, Apple's MLX team, a group of people almost left only a little bit ago and Apple had to to renegotiate their contract. I remember that. Yeah. Yeah.
5:25
Weren't able to uh retain Pang Pong. Yeah.
5:29
Uh but and yeah, this team was once central to Apple intelligence, now faces a major reorg under Zfang Chen as more engineers eye the exits.
5:36
They got to figure out the comp structure at Apple.
5:38
I bet that they're thinking about this now.
5:40
Um well, Mark Gur has a post here.
5:42
We're back to printing posts, folks.
5:44
Um he says, "This is one of the most significant AI job changes since the beginning of the generative AI era. Started a few years ago.
5:52
Rooming is Apple's most respected AI researcher and engineer and his departure amid Apple's AI turmoil turmoil could have a reverberating impact breaking Apple's top executive and distinguishing engineer.
6:06
Uh and of course there was a jokey post from Gabe who says Apple's top executive in charge of AI is leaving for Meta's group.
6:13
Uh and Gabe says bearish for both companies. Very rude.
6:18
Uh this is this is obviously a very talented individual.
6:21
Well, really quickly, let me tell you about ramp. com.
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6:30
Uh, and then speaking of OpenAI, uh, DD Doss, friend of the show, has a post, OpenAI paid an average of $733,000 per year across 6,000 employees in stock, nearly three times every single other public company. Not burned on. Stock compensation, yes.
6:49
uh was at 119% of revenue. Yes.
6:54
So this is non-cash compensation.
6:57
So it's not putting them in, you know, you know, disastrous financial condition, but there is a lot of dilution there.
7:03
And I'm sure investors are thinking about that.
7:04
Um and what's interesting is that the information has an article that comps how the stockbased compensation at OpenAI tracks with other major companies.
7:14
So um at at OpenAI, they're making uh they spent 4.
7:17
4 4 billion on stockb-based compensation.
7:20
Uh that's 119% of total revenue.
7:23
At Google before the IPO, Google was spending 16% of revenue on stockbased compensation.
7:32
Facebook was only spending 6% of revenue.
7:34
So the the delta between how much more R&D they have to do, how much more salary do they have to pay uh before their revenue catches up is crazy.
7:43
It's not just stockbased comp, too.
7:43
It's it's all everything going into training. It's very expensive. Yeah.
7:48
I mean, everyone posts that like here are the Google financials.
7:52
Every VC Randle's posted this before um from Kleiner saying like, "Oh, I just want just one Google in my portfolio because the company was incredibly financially stable.
8:04
Even pre-IPO, like within the first few years, it was like everything looked great.
8:09
like amazing revenue growth.
8:10
Uh all the costs were under control, cash flow, like everything.
8:15
The meme was that they were spending on crazy food and perks and massages because they wanted to be.
8:20
We're like, "Hey, we don't want people to think we're too much of a monopoly, right?"
8:23
Um the the thing the thing here that does make sense is, you know, OpenAI is the first real credible threat to Google search monopoly.
8:34
And it makes sense that in order to compete with a multi-t trillion dollar company, Yeah.
8:39
you're gonna have to not necessarily act like a five-year-old company.
8:43
You're gonna have to um spend in a bunch of these different, you know, categories.
8:47
Um well beyond what a what a traditional start. Yeah. Yeah. I completely agree.
8:51
It's like it's a new category like LLM, chat, interface, but every mag seven company is threatened by you.
8:59
And so they're all like, I'm going to pay so much to fight.
9:04
And even if that's even if the like the aggregation theory and the default app open AAI and chatbt on the home row, like even if that's not really that much at risk, it's just distorting the hiring market and you got to hire people. Yeah.
9:17
And some people were calling out too that that Open AI it while it it serves as a functional tool for a lot of people, it's also serving as this social product as well.
9:27
And people are spending many hours in the app on a daily basis and that becomes a threat to meta. Yep.
9:34
So purely from you know Meta wanting to they're competing for consumer attention. Yep. Right.
9:39
And so yeah and I mean the same dynamic plays out in the GPU market.
9:45
If there's a massive capital war for GPUs, Nvidia is supply constraint.
9:47
The price goes up and that's what's driving the cost of all these GPUs way up.
9:52
Um, OpenAI is forecasted to spend six billion this year with compute costs and talent retention has become expensive as inference itself.
10:00
Investors now face mounting dilution risks, plus the wild card of a potential Elon Musk settlement.
10:06
So, there's a lot going on over there.
10:07
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10:15
If you're not on Figma already, what are you doing? What are you doing? What are you doing?
10:20
Uh, well, you're probably not working at Jane Street. Uh Jane Street is uh $4.
10:22
3 billion India options trade triggers market ban and crackdown.
10:29
Street was like you know what we need another PR crisis.
10:33
We got the apology form here.
10:33
We got the apology form to Jane Street Capital.
10:36
Uh why why why were you hating on Jane Street?
10:40
Uh I thought Indian regulators were like good.
10:43
I never actually looked at the Indian options market.
10:44
Look that South Sudan thing kind of shook me and I had a moment of weakness.
10:48
I have a poor understanding of what counts as arbitrage.
10:51
Wait, what are options again?
10:53
I just like dunking on prop trading firms.
10:55
And then at the end you sign.
10:55
I hereby respect James Street Capital and will not talk down on the future first ballot hall of famer.
11:01
And great post from Alice at Just Plan. Yes. Fantastic.
11:06
And so um um uh yeah, there's been a lot of push back here.
11:13
Matt Lavine broke it down, but also was getting tremendous push back on his post.
11:17
People were accusing him of being in the pocket of big Jane high frequency trading.
11:22
Big high frequency trading.
11:23
Um well here here's the here's the high level on the story.
11:27
So uh a secretive arbitrage strategy that netted Jane Street $4.
11:29
3 billion in India's booming options market has now led to a trading ban and a five and a $570 million seizure order by India's security regulator SEBI.
11:40
The firm allegedly manipulated the Nifty Bank index by moving thinly traded underlying stocks to profit off of a far larger options positions, trading up uh up to more up to 7.
11:52
3 times more in derivatives than cash, while SEB frames it as extending marking the close.
11:56
Jane Street calls it textbook arbitrage, exploiting a massive price gap between overhyped options and underpriced stocks.
12:03
SEBI launched the probe after Jane Street's lawsuit with Millennium exposed the strategy's existence.
12:08
The Indian markets imbalance where options trading volume can exceed underlying stocks uh cash stocks 353 to1 left retail traders vulnerable and regulators on edge.
12:19
I had no idea that options were so popular in India. I had no idea. Yeah.
12:22
So um Jane Street did not want anyone to know about this.
12:27
Basically what happened was there was a few traders at Jane Street that discovered this strategy.
12:30
They were studying the Indian market.
12:31
They realized that there was this massive massive options market relative to the underlying stocks and so the there's an opportunity to arbitrage by buying certain buying the derivatives and selling the stocks or vice versa and so and getting tricky at the close. Yeah.
12:47
So so so they were and what happened the uh the at least some of that initial group that discovered this trade and were executing it went to Millennium. Yep.
12:55
Then Jane Street sued Millennium for trade secrets and through the lawsuit everybody was being very vague about no not everyone just Jane Street was Jane Street was like we were operating a unique strategy which we won't tell you about in redacted market.
13:09
They didn't even want to say India.
13:11
Then Millennium gets in the courtroom and is like oh our India strategy where we do exactly this and and Millennium lawyers are like we here's exactly what we did.
13:21
And then the Indian regulators are like, "Wait, both of these firms are trying to do this over here. Like, get out of here."
13:27
It is interesting that the the regulators had to discover this through the courts. Yeah.
13:34
I mean, in America, not their own.
13:36
You wouldn't really notice it because it's just like, oh, okay.
13:38
The the the these two assets are, you know, pushing closer to alignment value.
13:45
Basically saying, your honor, it's called finesse. It's called finesse.
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14:01
Whether you're pursuing your first framework or managing a complex program, um, it's time to sock, too. It's time to sock, too.
14:07
In other news, uh, uh, Sean Magcguire, friend of the show, multiple time guest, is in hot water with, uh, I don't know, the left, I guess.
14:17
Um uh he is being attacked for attacking uh Mamani the Democrat nominee for mayor of New York City.
14:25
Uh Pavle Asparov also friend of the show has been has uh has a case study here.
14:33
Let's pull up the uh poly market by the way. Oh yeah. Yeah. I want to see.
14:34
So people are calling for Shawn Magcguire to either be disciplined or step down or leave Sequoia.
14:41
Um but the poly market has it at 17%. It seems unlikely. There is a website. Yep.
14:48
Uh that is that people are signing. It's like Sean.
14:50
xyz or something like that.
14:53
Um and yeah, anyways, if you want to kind of cover uh so Pavle says, "This is an interesting case study in media being clearly disconnected from the cultural pendulum.
15:01
This is obviously not going to result in any sort of action from Sequoia.
15:04
And if you had any pulse on things, you would know that."
15:06
And so Shawn Magcguire rides on um and is continuing the pipe.
15:12
I don't see anything happening here.
15:14
I think he he probably regrets the way in which he phrased the initial post yet.
15:19
He made a 30 minute video explaining uh explaining it.
15:26
I'm sure uh way more people saw the original post than saw the video. Yep.
15:31
Uh but um yeah, hoping hoping everybody can resolve their differences.
15:34
And yeah, I don't see him I don't see him going anywhere.
15:38
I think he um there was there was a similar call to to push him out of Sequoia during the Trump stuff because he was like the first major Sequoia partner to really be vocal about supporting Trump and there was some backlash to that.
15:49
There's some questions about whether or not Sequoia would have his back there and they did and so we'll see how it goes but um seems like he's he's he's I I think he's enjoying the fight online.
16:00
He likes a good he likes a good fight online. Uh he enjoys it.
16:06
Wrestling wrestling in the mud.
16:06
He's wrestling in the mud for sure.
16:07
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Um in other news, uh Replet and Microsoft are bringing vibe coding to Azure.
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This is an exciting deal, bringing it to the enterprise lowode platform.
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Replet will integrate directly with Azure container apps and neon serverless Postgress letting enterprise employees build test and ship software by simply describing it in natural language.
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16:48
Replet already counts 500,000 business owners and says the deal makes anyone in the org a developer. Yep.
16:55
Sojot has been on an absolute tear.
16:58
Tons of bottoms up adoption from business owners and it's and I'm excited to see he's also been really good at working with the hyperscalers.
17:04
Like he had an early Google deal.
17:06
Now he's got a Microsoft deal.
17:07
Somehow he's made both of those deals work.
17:09
Which is interesting because typically you know they're like if you we go with you we want you to stick with us only.
17:14
But Microsoft's taken this very uh agnostic approach to they serve everything from open AI to uh to you know grock and then they'll also serve llama and they'll also serve uh deepseek uh Microsoft really wants to provide every possible model every possible endpoint for AI so that you stay on Azure and you can use everything you want.
17:37
Um so very excited for OMJ to uh be teaming up with Microsoft. Very exciting stuff.
17:43
Meanwhile, Jack Dorsey back in the mix.
17:47
Unveiled Bit Chat, a Bluetooth only WhatsApp rival.
17:50
Block CEO and Twitter co-founder Jack Dorsey spent the holiday weekend coding Bit Chat and a open-source messenger that passes end-to-end encrypted text over Bluetooth or local Wi-Fi.
18:01
No SIM card data plan or account required.
18:04
The test flight beta and white paper promise off-grid comms at concerts, protests, or disaster zones and cites Apple's airdrop bands as motivation.
18:13
Although early the peer-to-peer architecture taps the same uh Noster protocol Dorsy champions in his decentralized social vision.
18:20
So good to see uh one of the one of the all-time greats back coding on a weekend shipping.
18:28
Um people are also uh you can uh I'm sure would guess this but um leveraging uh Bit Chat's um Bitcoin support sending sending Bitcoin back and forth. So makes a lot of sense.
18:42
Yeah, excited to have him back in the game.
18:43
Um well, if you're selling stuff on the internet, you got to head over numeralhq. com. Sales tax on autopilot.
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18:53
Um in other news, TSA has begun letting travelers keep their shoes on.
18:57
You had a good take on this, Jordy. Yeah.
19:01
What is the ROI on pre-check now?
19:04
I think it's very There was the shoes line and then there was the shoe line and then there was the note.
19:09
It was you didn't have to take off your shoes, but you waited in a longer line like 80% of the time because so many people had pre-checked that the line would often be that's only it felt like that's only been in the last like year and a half years.
19:20
But now it's like you pay you wait in a longer line and you still take off your you still leave your shoes on just like every other line. So, but it's crazy. It's been 18 years.
19:27
I remember when they rolled this out.
19:29
It was not because of 911 actually.
19:31
It was because post 911 there was a shoe bomber who tried guy who put explosives in his shoes and tried to light it on a plane and then everyone got freaked out about shoes.
19:41
But it was like this freak thing.
19:41
It didn't actually result. He wasn't successful.
19:44
Um but it was still very like visceral and scary and crazy.
19:46
It was like oh there could be a bomb in your shoe.
19:48
You have to check the shoes.
19:49
But throwing the shoes through the X-ray doesn't really detect I think like the bomb material.
19:55
I think that's why they swipe now.
19:56
So the the the uh the residue is actually more important, but they're replacing this with a bunch of CT scanners, AI threat detection software.
20:04
There's a whole bunch of stuff that can screen footwell with with footwear without unclasping it. So it's a phase policy.
20:09
It's already live at airports from LAX to Baltimore.
20:11
Should reach all standard lines nationwide nationwide by late July.
20:16
I'm excited to see TSA's go to market on this.
20:19
I want to see their efficiency.
20:20
It's great to see they're already in testing in some markets.
20:22
Here is the here is the value prop for pre-check.
20:24
Uh pre-check is now p pushing a more like clear experience where it's touchless and you don't need your ID or your boarding pass.
20:32
So you just like scan your biometrics, either your fingerprint or your eyes, something like that. Interesting.
20:38
I'm sure I'm sure the schizophrenics will love that. Yeah.
20:40
The uh CEO of Clear is on Invest like the best as of I think this morning. Yeah. And uh cool story.
20:47
I guess she bought it out of bankruptcy for like $6 million.
20:49
I was I haven't had had a chance to listen to the full episode yet uh and turned it into a monster. That's very cool.
20:57
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21:07
Um in other news, uh Unilever partnered with Nvidia to generate a ton of AI uh AI ads and it actually worked pretty well. Um, they got 3.
21:17
5 billion social impressions and they did some sort of collab with Crumble Cookies and then they generated a ton of images.
21:26
They said crumble flavored soap. I don't know. It's scented.
21:28
Um, but basically they were able to send every influencer that they work with a ton of different variations.
21:34
Just say like here's here's a thousand assets and a thousand taglines. Pick whatever you want.
21:39
None of these overlap with anyone else. Interesting.
21:42
And so, and so for someone like Unilever that's just like trying to just like blanket Tik Tok with stuff, it like works really well.
21:49
I had a funny uh incident with a portfolio company once where I was I said they were doing a launch or fund raise announcement and I was like, "Try drafting some text for your investors so they know how to position the product and things like that, right?
22:00
Because oftentimes one of the the things that will just hold an investor back from sharing is not knowing just like the the work to draft the post that makes sense and uh and they they they made like 20 or 30 different lines but they gave them to everybody.
22:17
So a lot of people use the same line so bad like rookie mistake. Yeah. Rookie mistake. Don't do it.
22:24
Um, and in other news, uh, Swix has a story here that, uh, the new version of Chrome, Google Chrome one, uh, they're on version 138.
22:29
You got to ring the gong for the Chrome team.
22:32
Um, they are now shipping Gemini Nano for every user.
22:37
So, you'll have a local LLM in the web browser that that in theory web apps will be able to interact with.
22:45
So you'll be able to go to a web app and if they're in Chrome, they will assume that there's an LLM available, which is very mode on Google that's rolling out.
22:53
Yeah, I I haven't used it in the US, but it's going to be the default in India.
22:57
So, so Sundar announced that today basically I I think that's because the the uh the arpoo in India is lower and so that they can uh they can risk yeah they can risk losing a little bit of AdSense revenue while they adjust and figure out how they monetize the AI search how to put some ads in that bad boy.
23:16
They're going to put a lot of they already are but I'm sure that the I'm sure that the monetization rate is lower in AI search mode in AI mode and so they need to roll it out to a really big audience.
23:27
India has a billion people, right? Tons of them use Google.
23:31
It's an interesting ad unit.
23:31
I don't I don't think this will be something that's permanent, but you can imagine in a free LLM, it's takes a little bit longer to inference Y the query.
23:42
And you could imagine that's an ad.
23:42
Just put an ad basically while you're waiting, right? That's not a bad idea. Yeah.
23:48
And then it's like, hey, if you want to if you want it faster or instantly, you can you can pay effectively.
23:52
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24:11
Well, our first guest is here.
24:11
We've been keeping him waiting because of our technical difficulties, but we have Alex Roy, someone that I'm very excited to talk to. Welcome to the stream. How are you doing? What's going on? Welcome. Thanks for having me. Huge fan of the show.
24:23
I really appreciate you brought you brought me howls of delight when you had booked Sohan last week like 24 hours after the story broke.
24:30
I'm like you guys are nextgen media. It's fantastic. That's amazing. That's amazing.
24:33
Um for those who don't know you, can you uh introduce yourself a little bit of your history but also I I want to talk about what you're up to now and then I'm sure we'll have a bunch of questions.
24:42
I'm excited for this intro too because we had another a friend of the show last week who said I had a non-traditional background for venture venture and then he goes on to say that he was like a product product product big tech which is fairly traditional certainly more traditional but I feel like you did have a nontraditional background so so take us through it uh 20 years ago I was really into street
25:06
racing and I was obsessed with the can history of the cannonball run this illegal race cross country within the 70s and uh and so but as a startup guy I decided to if I was going to break the record I had to approach it like a startup so I wrote like a business plan as if it was a startup the competitive landscape was 18,700 law enforcement agencies and the terrain and the, you know, road conditions. Uh, but
25:28
Uh, but the SWAT analysis, but you're actually worried about and so uh ended up um using everything off the shelf one could use in '05 for mapping.
25:41
So, you know, Google maps didn't exist.
25:44
Google Earth had just gone public.
25:46
So, I was using Google Earth and its back-end tools uh to figure out, you know, how to plan the drive.
25:50
Drove cross country a couple times at a practice, had a thermal camera.
25:53
I I salvaged from from a old Cadillac and um you know, laser jammers, radar detectors, everything one could have.
26:01
And then created a map uh of the police locations, dropped it into a Garmin, and then inserted into Google Earth to plan the drive because in Google Earth, it's always daytime, but in the practice run, it's 2/3 at night.
26:13
and so plotted latitude, longitude of every potential police trap and spotter plane, triple redundant communications, the whole thing broke the record. Wrote a book about it.
26:23
Uh, and turns out, and I didn't know this, the DARPA challenges were happening at that time.
26:27
And so I got when uh, as soon as Wired magazine did a story about our cannonball uh, drive, I got outreach from all these DARPA teams.
26:36
And it was all the same thing is, "Oh, Roy, you're using radar, LAR jamming, mapping, everything we use.
26:43
you're just selfish and only not trying to help anyone but yourself and we're trying to make roads safer and uh so I became out of that uh an angel investor in like autonomy and mapping and then launched a podcast about uh AVs and EVs because I'm that's that's the future and eventually I got
27:00
recruited to join Argo AI which was Ford and VW's self-driving car unit where I was an executive for four years and so I little did I know that everything I was doing to try to drive cross country as fast as possible was directly relevant to investing in the future of road safety makes no sense. Yeah, that's amazing. Yeah, that's amazing. Yeah.
27:18
For for those who might not be super familiar with the Cannonball Run, can you explain uh Red Ball Garage, Portoino, uh the history and kind of where it went now and kind of the current status of the uh I mean it's still illegal, but people are doing it.
27:32
There's these there there's these like delays.
27:34
I see Vin Wiki videos like oh yeah, a year ago I did this run.
27:39
uh what's the current culture and and and uh and like status of the cannonball?
27:43
So uh you know uh the unknown forgotten history of the cannonball is that 100 years ago car companies didn't know how to market you know internal combustion cars.
27:50
So they hired this guy named Irwin Baker who was a motorcycle racer to drive from New York to California as fast as possible.
27:56
No gas stations, no highways.
27:58
And every few months a car would come out with a slightly larger gas tank or slightly better fuel economy and he would go again.
28:04
and he would go again. And so he went from the record his first record I think was uh weeks and eventually cut it down to uh you know some I don't even remember this he did 141 records cross country but that's how you marketed internal combustion back then to prove that it was more efficient than trains and
28:23
cleaner than horses and as the interstate highway system was built out and um you know speed limits arrived the cannibal culture just evaporated but what is largely unknown is that it was Coca-Cola that underwrote the creation of local and eventually regional gas stations and which unlocked iterations in in better speeds for Baker. And so if
28:43
And so if you go forward a hundred years, you could kind of look at electric cars today.
28:48
As more Tesla superchargers were built, it beca it unlocked electric cannonball records.
28:53
And in the future we'll have other records.
28:54
Uh today um there are maybe I don't know hundred or so people in a in a Facebook group, the Cannonballers group.
29:02
uh myself, Ed Bolan from Vinwiki who broke my record, Arie Tolman who set it during COVID.
29:07
And you know, people go on solo runs and occasionally there's a multi-car run.
29:12
Um but the modern history is almost entirely based on uh the legacy of Brock Yates.
29:20
He was a very libertarian editor for Car and Driver.
29:22
And from 71 to 79, he went he operated a full-on illegal multi-car race.
29:27
Uh when it got covered in Time magazine in 75 or 76, it got a a lot of a lot of attention and the last one in 79 then led to the movie and that was the end of Cannonballing in an organized fashion.
29:39
Um it lives on today in that at the Cannonballers group. Yeah.
29:43
What what is the what do you think's next for Cannonball?
29:45
Do you think people are going to try and uh get creative with the EV challenges because that feels like almost an entirely new dynamic.
29:54
But then also if you could explain kind of the the idea of like a COVID run and how that might make it kind of impossible to ever reset the record.
30:04
I don't know what your take is on that but just giving a little bit of that history because it is fascinating.
30:09
So you know the traditionalist group is you know multiple cars internal combustion as fast as you can. Yeah.
30:12
And uh you know I did it in 31 hours uh in in 2006.
30:18
Uh and then uh I was the our team was the first team to break it in like 25 years. Yeah.
30:24
Uh and then 8 years later, Ed Bolian did it in 2850 and then Arie Tolman arrived during co with his team and did it in like 2530ish.
30:33
So, you know, it is since the co record.
30:36
What uh what were they driving?
30:38
Uh Arie was in an Audi RS6 disguised as a Ford tourist police car.
30:42
Ed Bowling was in a Mercedes CL 55.
30:45
I think I was in a BMW M5 disguised as a stormchaser tornado research vehicle. Yes.
30:52
Um, it's a lot of S63s, E63s, that type of car.
30:58
I mean, there aren't many American cars that could do it.
31:00
Today would be like a Cadillac, you know, C5 Blackwing.
31:04
Oh, that's what John drives. Great, great car. Fantastic. Perfect.
31:07
If they could just lift the speed restriction on the Wait, are you in New York right now? I'm in Scots. I'm in Scotsdale. Oh, okay. Okay.
31:14
Well, I'll see you in like two hours then. You could.
31:18
So the um so you know I looked when I looked at the history of cannibal but as an investor I was studying the history of the cannibal because understanding how gas station networks were financed and built and and monetized and eventually made profitable.
31:34
Um I was like looking at EV charging network business.
31:36
I'm like well how does that have they learned anything from 100 years ago?
31:39
And the answer is no they didn't.
31:42
And so uh you know the the the lack of infrastructure and the lack of reliable infrastructure with you know uptime was a huge Achilles heel for the EV uh industry and only Tesla figured this out early.
31:54
And so uh I looking at Cannibal Baker I'm like well why couldn't I be the cannibal baker of EVs and eventually so in 2014 15 started doing electric records.
32:03
Uh Tesla was the only vehicle at the time capable of setting these records because of the charging network.
32:09
And uh recently I began looking at uh you know Lucids and Porsche TYON and those are the only vehicles that could break the Tesla record.
32:21
And recently a Porsche TYON second generation became the first car to break the Tesla uh electric record in 39 something 39. What?
32:28
And and what goes into a great EV for breaking a cannonball record?
32:35
Is it just total capacity of the battery or ability to sustain high speeds for a long time?
32:40
I mean, or battery swapping.
32:44
Battery swapping seems like logical, but none of the cars have that uh stock.
32:46
So, I don't know how you do that.
32:48
Like a fuel cell is common in a in a gas car, but is there an equivalent in Yeah.
32:54
I'm also curious what other tech would you would you use today?
32:56
Would you use a network of drones? I can imagine. Oh, yeah. That's interesting.
32:59
You know, potentially have thousands of drones spread out.
33:04
Well, this is where cannonball history and record-breaking overlaps with investing in defense because if you if you understand the history of like radar detection and laser uh speed measurement and laser jamming, it's all analogous and they are literally parallel tech in defense.
33:21
And so um the electric records up until recently because the power density of the batteries is is less than you know a fuel tank full of gas.
33:31
Your speeds were basically limited to the optimal cruising speed of an EV which is in the 70s.
33:38
And uh and then you have the issue of the charging networks.
33:41
So there's nothing you can really do to a pure EV today.
33:46
There's not much you can do to increase their efficiency and you certainly can't increase their speed without eating into the into your battery state of charge.
33:54
But everything comes down to the charging networks.
33:55
So when Tesla, you know, when their network was 150 kilowatt across the board, your maximum your minimum time cross country was X.
34:04
When they went to 250, you char you cut a little time off that.
34:06
Uh what's so fascinating about the recent Porsche TYON record is the TYON's EPA battery uh EPA range is less than a Model S longrange which is what I drive.
34:19
However, the Electrify America network, which was a terrible charge network for years, um went through upgrades recently, and if you buy the cheapest Porsche TYON with the big battery option in its lightest weight configuration, rear wheel drive only, and you can charge at Electrify America at speeds that are faster than any Tesla.
34:40
the cliff in the Porsche battery will let you go uh I think max charge rate slightly beyond 50%.
34:47
Whereas a Tesla the first cliff is at 20%.
34:50
So that's how the TYON did it.
34:53
Less battery range, faster charging deeper into the battery. That's the trick.
34:59
A Lucid today has is the longest range EV you can buy, but it does not uh its battery chemistry is not designed for what the Porsche is.
35:07
And so for the time being, Porsche will hold the record.
35:11
I think the next generation Tesla or Lucid could take it.
35:18
Talk about EV the state of EV charging networks today.
35:20
Coverage, you know, are networks holding back EVs at all. We live in California.
35:27
There seems to be plenty of of EV chargers around.
35:29
Doesn't seem to be any type of bottleneck, but I'm curious nationally.
35:37
Well, I think that the non-Tesla charging network, regardless of its ubiquity, has a lot of issues with handshaking and seamless payments and just hook up to your car.
35:45
Uh Tesla figured this out, you know, out of the gate.
35:49
Like, it has to be frictionless or people are not going to want to do it.
35:52
And so, the American EV charge industry still has a lot of work to do.
35:58
And uh and even if they do, the non-Teslas on the road, I mean, we have Rivian, Lucid, and the Porsche TYON.
36:05
Those are all great great models, but other than that, there aren't there isn't like an amazing EV product from any other American OEM.
36:12
I mean, some of the Honda some of the Hyundai's are good.
36:15
And so, you need both half the equation.
36:17
This is where the Chinese are so strong because the vehicle hardware and software and infrastructure is all very good, dangerously good.
36:26
Can you talk about um it it's it's kind of surprising to meet someone who's taken uh you know, traditional combustion engine cars.
36:33
so seriously to the limit and then be interested in EVs.
36:39
I feel like a lot of the traditional car guys are like I I would never.
36:41
Um so what excites you about EVs broadly and then what do you think about the current state the the change to the EV incentives uh that that are going on right now?
36:51
Um, how does the outlook look, you know, with with Elon?
36:54
Like the Tesla sales are kind of dropping, but that's for a variety of reasons from everything from like political to exports to China to, you know, they're late in the refresh cycle.
37:05
There's so many different things going on.
37:07
So, uh, so what excites you about EVs and where do you see it going?
37:12
Well, uh, I'm, you know, I'm I think I'm very American in that like I'm totally agnostic of technology.
37:17
Like what is the coolest, best, newest thing? Are we making it? Let's try it.
37:20
And if someone else is making it, we should make it.
37:24
Like that's just that's it.
37:24
This country became great by ex innovating and exporting.
37:28
So I don't care how something works as long as it's really great product.
37:33
So uh you know the EV tax credit expiring I think it's September.
37:37
Uh look um it's going to it's not it's not awesome if you're an American car company selling EVs and it's going to certainly slow rate of adoption because prices will go up.
37:48
Uh but um the real question is you know how do we depoliticize technologies um from our internal American discourse such that the United States long term can compete in export markets.
38:03
I don't really care like about the political opinions of who develops a certain technology because we need to create jobs here and be exporting stuff outside the US and the Chinese are going to kill us long term in the EV market if we don't get on board.
38:18
So the EV tax credit expiring sucks, but it's a minor piece in the holistic system that we need to be debating and executing on.
38:26
And you know, I recently met a woman uh Ela Dinski from the I think the Foundation for American Democracy.
38:33
She said, "We need a Pentagon for industrial policy.
38:38
Uh there doesn't need to be, you know, verticalized monolithic, you know, command economy, but it needs to be a little less chaotic and more focused than we've been."
38:46
And I think that's really essential.
38:48
Uh really really essential.
38:51
How do we solve the depreciation problem with EVs?
38:53
I think it's for for the consumer frustration of like let's say you buy a Model Y, drive it for 9 months and suddenly it's worth half of what you paid.
39:04
Uh I well I don't know if there is a solution to that.
39:06
solution to that. uh you know I I I probably the best solution is we need to be investing in EVs and supply chain such that we can bring cost down such that there isn't such a huge delta between the new cost and the depreciation and it's I mean all cars depreciate to some
39:24
extent EVs more so I mean the great news for a lot of Americans is that used EVs are really cheap a lot of them are great I mean used Teslas are fantastic I mean assuming you well don't but don't buy an old Model S but everything else is fantastic Yeah. Uh, where are you seeing opportunities
39:38
Uh, where are you seeing opportunities to invest in or alongside the EV trend?
39:44
Um, there's so many different parts in the supply chain.
39:46
There's so many different adjacent products that an EV buyer if you're not going and funding like the next Rivian or the next Lucid, where do you see opportunities for founders?
39:59
Well, you know, I you know, automotive is a very small part of my fund, new industry venture capital.
40:03
Uh I mean a lot of the the biggest bets mostly have been taken and they're very expensive.
40:09
You know the I think most the opportunities are in in manufacturing and in energy.
40:14
Uh however um there is I mean we only do deep tech but outside deep tech there are a lot of opportunities adjacent to transportation and EVs and especially AVs.
40:23
When people talk about job loss uh you know due to know driverless vehicles I think they are missing the big long-term picture.
40:33
uh the there is a universe of startups that don't exist yet even not even barely in conversation over dinner for providing services for passengers in autonomous vehicles.
40:42
You know my mother um you know she's older and she has some issues with shopping.
40:47
She would love to have an attendant or someone just to go with her on trips to go shopping.
40:53
Like where where is the Uber for elder elder care?
40:57
That would it's a startup that's adjacent to Uber and Whimo that figures out how to connect them and has a supply of people who can do that.
41:04
Most people who are driving Ubers probably shouldn't be just from a safety standpoint, but they'd probably be very good at helping people.
41:12
And there's a much better long-term opportunity in employment opportunity for that role than there is for driving cars. Yeah.
41:20
Now, I'd also add that the the fear and concern and the politization of driverless tech is doesn't track with the history of automation in other other verticals.
41:31
You know, we used to have 100% penetration of elevator operators in this country.
41:37
And we went from 100% in 1946 to 1% in like about 1970.
41:41
But the total number of people employed by the elevator industry is bigger today than it was ever. Interesting.
41:49
Because elevators will always be a business, but there's other roles around the elevator industry.
41:53
That's true of transportation.
41:54
So, I just don't buy any of the the panic and doom that that companies new tech at all.
41:59
companies new tech at all. What about uh what about go to markets the race between Whimo and and Tesla obviously very different you know approaches in terms of de you know fleet development uh but I'm curious how you're seeing that race
42:15
so the race uh there is I mean I used to like to say there isn't a race in AV because there'll be multiple winners there's no one can name an elevator company other than Otus but there are the big five elevator companies on earth they're all big so in AV. Um, Whimo and
42:28
Um, Whimo and Tesla are both going to have products and the people who claim one will win and the other's destroyed, it's absurd.
42:38
Uh, but the real race is, you know, can Whimo develop a business model outside of robo taxis before, um, Tesla can generate a business at scale in robo taxis because Whimo is not in the personal ownership business and and Tesla is barely in robo taxi at all.
42:57
So Whimo needs to get into the licensing business and probably miniaturaturize their hardware such that it can conform to and become invisible on passenger cars.
43:06
If Ford or anyone else had Whimo Techch inside, if they could do that now, I mean Tesla's in in a tight spot.
43:12
Uh but Tesla's got the opposite problem.
43:15
They've got to deploy a I would say perceptibly safe system because no one knows what safety means.
43:23
um and get into the robo taxi business at scale uh with all the friction unique to their business model before uh Whimo can invade their space.
43:30
But ultimately, you're going to have three or four or five companies competing in AVTEC.
43:33
You know, we're we we just seeing growing pains in both companies executing on different business models and that's going to play out.
43:41
Um they'll both have their place.
43:44
Um last question uh for me at least.
43:44
Um, I'm interested in uh you you compared the cannonball run to uh building a startup business plan.
43:54
What do you think about the actual activity of racing in a cannonball?
43:59
That idea of uh of risk takingaking of uh the stress on your body and founding a company.
44:05
Have you found any analogies between the two?
44:10
Well, you know, the can when you actually years of planning go into a cannonball drive and then it's over in, you know, sub 30 hours.
44:15
I don't know of anything in uh except maybe like an emergency product deployment that would as stressful, physically stressful, but every other component of it is similar.
44:27
And in that way, the cannonball is more similar to say a um deployment of a prototype in a uh defense scenario for the first time.
44:36
and you have you got to deploy it. It may not be ready. You don't know.
44:40
You spent years developing it. It's go time.
44:43
That's the closest analog.
44:43
And I I I spent a lot of time with, you know, law enforcement and uh defense folks today.
44:50
And um I'm constantly amazed that they find what I did so interesting because to me it's nowhere near as interesting as as what they do.
44:56
But then when you start talking about laser jamming and communications and mapping, spoofing, you know, a know aircraft transponders to mask your location and then I'm like, yes, conceptually it is all the same thing.
45:09
Uh I I would also remark that um there's something profoundly um American about the cannonball which I think points to like the spirit of innovation.
45:25
It isn't unique to the United States, but that drives American dynamism, which is that whatever the rules are, how far beyond them can we go successfully without hurting anyone.
45:36
Let's go, let's find out.
45:36
And that is the opposite mindset of a lot of founders from other countries and sadly Europe. Yep. No, that makes no sense. Makes sense. Last question from me.
45:43
The CEO of Ford was recently making some comments.
45:48
one basically talking about white collar work broadly which felt more like he was just paring you know maybe Daria or something like that but on the other side he's been very outspoken about how innovative you know Chinese EV manufacturers have been um at multiple different kind of touch points do you think that American car manufacturers outside of Tesla have the will to start to innovate at the level of of some of these Chinese EVs.
46:21
Well, I know Farley and I and you know, to his credit, uh after I set my last electrical record in a Tesla, uh he he invited me to dinner and sat next to me and grilled me on everything about Tesla Model 3. So, he's he's good. Uh he's on it.
46:34
Um and the Mache reflects some of those those lessons.
46:39
Yeah, the Mache the R I my buddy my neighbor has a has a Mache Rally and it's great wild car. It's good.
46:46
Uh look uh you know the Chinese um car market um has been there for anyone to see who wanted to go over there and do competitive intelligence for years.
47:00
And the same thing's happening now has happened in the 70s when the Japanese arrived in the United States.
47:04
People weren't paying attention because like oh they can't these foreign they can't innovate.
47:08
They don't know what they're doing X Y and Z.
47:09
Well guess what they did and the cars are great.
47:12
and friends of mine, uh, Kevin Williamson's a journalist who went to China and has driven everything.
47:17
He's like, "The cars are better than anything sold here, uh, even Tesla because they're built better than Teslas." So, we've got a problem.
47:24
Uh, the only companies that are really have an opportunity in in the near to midterm are, you know, Lucid and Rivian and Tesla from the United States.
47:32
Uh, the other the legacy OEMs have individual models that are okay. Maki, you know, okay.
47:37
you know, okay. uh uh I don't know what's coming what GM's got but the real question is what could be exported to any other country to compete with a Chinese car in that market and the answer right now is other than Tesla basically nothing um Lucid stands alone
47:53
it's a luxury model it's really good uh and Rivians are very cool because the products are great but we are in a tight spot and you know we need to whatever your politics are the United States needs to have national champions that are exporting We shouldn't be talking about Tesla versus Whimo. We should be
48:09
We should be talking about Tesla and Whimo and exporting the hell of anything we can that employs Americans here that are great products that then support the American soft power narrative for the rest of the century. Yeah, that's great. Great answer. I completely agree.
48:24
Uh thank you so much for stopping by.
48:26
Yeah, we got to do this again soon. This is super fun. Anytime, guys. Love you.
48:29
Thanks so much for hopping. Cheers, Alex.
48:31
Well, if you have an opinion about a public car company, get on public. com.
48:36
investing for those who take it seriously.
48:38
They got multi-asset investing industry leading yields in their remember the day when Figure was allegedly getting valued north of Ford Motors.
48:48
Well, yeah, if you want to rotate into Ford, you can do it on public.
48:50
If you want to rotate out of Ford, we can also do that on public.
48:53
This isn't financial advice here on the show.
48:57
We're just giving you the facts.
48:57
And the next fact is that Ryan Peterson from Flexport is joining the stream in any minute now. Ryan, how you doing?
49:06
You just threw me in here. I'm eating food.
49:07
I didn't realize I was going. Yeah, it's okay. Surprise, surprise.
49:11
What are you having for lunch?
49:13
We've been under attack today, so the stream's been late. What you got?
49:16
Looks like Chinese food, but it's a fancy salad. Oo, nice. Oh. Oh, is that Blue Barn? Yes.
49:21
Oh, Blue Barn's fantastic. Great spot.
49:24
Uh, anyway, what is new in your world?
49:27
Can you give us the update?
49:27
Uh, we we we lived through the tariffs.
49:29
We checked in with you a few times.
49:31
uh give us the temperature check on uh where we are with tariffs, global trade broadly in your business.
49:38
There's no strategy with the tariffs.
49:39
They're purely to torture Ryan Peterson. It's all all caps.
49:42
We're learning how to read and write in all caps all over again.
49:48
Someone said the the art of letter writing was dead and then Trump just proved us all wrong.
49:51
You know, he's writing letters to national uh to countries with really amazing capitalization standards. Yeah.
50:00
They would just call you Mr.
50:00
for flexport is that the best part is that he's dictating because he doesn't type himself.
50:04
So he's telling them no like capitalize tariff and capitalize country. Yeah. And all caps for trade.
50:12
Certainly has a certain aesthetic to it.
50:15
Um it's it's a yeah whether there's a strategy to it or not is a really good open question because we got new tariffs that are at above like on our allies Japan and Japan and 25% tariff. I don't know.
50:29
I couldn't tell you what what the plan is there but it's uh every day new things basically. Yeah.
50:38
What about uh what about just the general mood of customers, the flow of shipments?
50:43
I mean, initially it was like, you know, the the the boats are sitting at the port not moving because people are just terrified.
50:50
We heard about, you know, iPhones going in the bellies of 747s on rush flights to get out of the get out of the the airport like minutes before the the tariffs went into effect.
51:01
Has has there been any more clarity?
51:04
Are we in some sort of return to normaly where at least CEOs can feel like they can plan ahead for what's coming or is it just as much uncertainty?
51:16
It's um you know today's the day.
51:16
So the tariffs are the the 90-day reciprocal tariffs came out and they were paused for 90 days. Mhm. 90 days ago today. Mhm.
51:27
Um so they are going unless something is announced which he announced like six or eight countries yesterday with their new tariff rate but everybody else um that's happening today.
51:37
They'll go back to the 90day to the original rates from April 2nd that freaked everybody out uh tonight at midnight.
51:45
Um now then I believe he tweeted earlier today or truth social um that it'll be on August 1st that those new duties are due.
51:54
So there probably will be a bit of a race here for the next three weeks to try to get stuff in at the 10% rate instead of the higher rates that's coming back.
52:02
Um the thing that freaked everybody out uh 90 days ago was more the China rate which was 145%. Yeah.
52:09
And that's come back down to 30 and people are kind of like okay with it. I don't know. We'll see.
52:14
We'll take the temperature here and we'll see what happens with with freight bookings.
52:17
But see things seem kind of normal with the customer base, but we haven't got enough data yet.
52:22
I mean, it's brand new information.
52:24
The new rates that came out yesterday and that are going to go into effect in the next just as a little extra data.
52:29
Right now, the S&P and NASDAQ are basically flat.
52:34
Uh, but copper prices have hit all-time high on this planned 50% tariff.
52:36
I am interested in China.
52:40
I remember when you were explaining the nature of the tariff.
52:43
There were a few different elements.
52:45
You were talking about the the energy prices into China basically being passed through.
52:51
I believe that was a tariff on oil that then was getting passed through to the cost of goods in some way.
52:56
How are you thinking about the you said 35%.
52:58
Is that all in or is that just a piece of the overall tariff picture if you're considering doing business in China going forward?
53:08
Um it'll depend on your product.
53:08
The tariffs are driven by three things.
53:10
tariffs are driven by three things. one is the the country of origin and that is a something that actually Trump is changing the rules around in real time uh with this idea of trans shshipment that he said goods that are trans shipped through Vietnam will pay a higher duty but like that very odd I mean those of us in the
53:33
industry think of trans shipments has no effect on duty rate whatsoever because it's still the original country if you if you ship from goods from China to Vietnam and then from Vietnam to the Unless you did what's called substantial transformation, you change them into a product of Vietnam, they still pay the Chinese duty rate. Yeah. Yeah.
53:49
Uh whereas he's kind of changing those rules in real time and have not yet published something in the code of federal regulations that we could actually understand what he means.
53:55
So remind everybody that true social is not how laws get and regulations get published.
54:01
It's um we're waiting to see what really comes out. Yeah. So okay. Okay.
54:06
So you have the country of origin, you have the classification um which is okay what type of goods are they that that drives and do they have the components of steel and aluminum that sets a different duty rate or what is the thing actually classified as?
54:20
And then the third one is valuation. How are they valued?
54:24
And those are the three kind of key drivers of what your duty rate is.
54:27
Um and right now on the there's just a lot of uncertainty that we're waiting to see what this trans shshipment thing means.
54:34
the world will find ways to minimize their duty rate.
54:39
Um hopefully in legal ways.
54:39
Don't don't don't make sure you work with an attorney and don't just go do this.
54:43
But it'll be very interesting to see like can you actually save duty by shipping from China to Vietnam somehow uh in this world like I don't know I don't know what the definition of trans shipment is going to be.
54:54
The interesting the other interesting thing here is that from a trade perspective, logistics and customs companies are kind of happy about this stuff because it adds complexity.
55:05
You need leader, you need partnership from experts more and you're doubling the amount of trade because there's going to be um in if there's incentive now to move goods from one country to another, transform them and ship them onward, that's two shipments, one from China to Vietnam and one from Vietnam to the US.
55:21
M um or like you know one of the sad ones that came about here is we have a customer longtime customer that makes bicycles in the United States and they import components and assemble them in the US and sell them.
55:35
Well bicycles got an exemption.
55:35
They're duty-free but the components did not. Oh interesting.
55:42
So these guys are actually better off shipping their manufacturing offshore now and that's what going to happen. That's very odd. Uh have there been Yeah.
55:48
You feel like it feels like there's a little bit of this like game theoretic dynamic where Trump puts these blanket tariffs all over the place, but there's potentially an incentive for some country to just jump head first and say, "Hey, we're playing ball.
56:02
Give us the lowest rate possible because we want to grab as much manufacturing capacity over here and be as friendly as possible."
56:10
Have there been any um like I mean I know that the the the situation with Japan has been mo more difficult than expected.
56:18
Have there been any countries that have popped out as like new favorite trading partners of American companies in your feeling?
56:28
Companies wise is different from the government probably. Sure. Yeah. Yeah.
56:32
the government, it looks like the UK so far and but the UK's got a 10% duty rate and some nice exemptions that they got on auto um which I guess is like Land Rovers and Bentleys, maybe Aston Martin. Yeah.
56:46
Um they don't make a lot of those, but um Jaguar is that is that how they make I don't think they've been making many cars. No, no.
56:55
Jaguar Jaguar actually took a year off.
56:57
They skipped a year producing cars.
56:59
They were taking a year off business.
57:01
We're just going to sell down our inventory. Oh, okay.
57:03
It wasn't just because the commercials were that bad. No, no.
57:06
Then they launched the rebrand after they had announced that, hey, we're we're not producing any new cars, which was like your job.
57:14
You belong in a Jaguar commercial. Look at you.
57:17
You belong in the north of England.
57:17
I actually I didn't understand the convertible.
57:23
I didn't understand the hate on the actual silhouette of the new Jaguar. I thought it was cool. It was very cool.
57:27
I mean, it was one of those prototype cars that didn't have like mirrors or anything.
57:30
So, they clearly needed a lot to do to make it a real one.
57:34
Um, but uh yeah, I mean a lot of but so uh come back to your question.
57:39
The UK is interesting because uh they actually have a trade we have a trade surplus with the UK and they still got a 10% duty rate.
57:44
So, that told everyone, oh, the best you could possibly do is 10%.
57:46
uh even if you have a trade even if we maintain a trade surplus.
57:50
Vietnam is probably the best example of someone that tried to play bowl and they said, "Hey, we're going to do everything duty-free on American products being imported."
57:57
Uh and they ended up with um what was it 25 20%.
58:02
And then this weird trans shipment thing that I already got to that we don't understand yet.
58:07
Um so that's probably the thing that Trump would like to get is that trans shshipment.
58:14
What he would like to have is that these countries put duties on China and Chinese goods coming into Vietnam.
58:20
They want them to get hit with high duties so that you're not effectively laundering, washing Chinese goods through that country.
58:26
Y doing some minimal transformation and then shipping them to the US.
58:29
They want to make it so like it's a you know like create this coalition of the willing against China.
58:35
That's my that's my read on it.
58:37
And it's hard it's kind of hard for them. Yeah.
58:40
There's kind of two narratives.
58:42
One's like Trump likes tariffs.
58:42
He wants to throw tariffs all over the place, make us a high tariff country.
58:45
On the flip side, there's like this is about a trade trade war with a rising nearpeer competitor and the entire narrative is really just US versus China and everything else is in service of that.
58:58
Is is that a reasonable narrative that you think people should It's one of those two probably. Yeah.
59:03
maybe some balance and I'm not sure they know and there might be different factions within the US government that want different ones of those and it's it's it's pretty hard to get a read on it.
59:13
Um, but from a company perspective, they're just looking for whoever makes the cheapest stuff that's high quality that they can sell.
59:22
I mean, I don't think these countries, there's not that many companies.
59:25
They might on the surface like claim to be patriotic or have some views or something, but that's not that's not what companies are meant to do.
59:32
They're meant to make money.
59:32
Uh, and so they're going to they're going to route, you know, they're wait till the rules get set and then they're going to water flows downstream.
59:38
They're going to downhill.
59:40
They're going to go figure out where the best place to make stuff is.
59:43
Yeah, we saw this with Nvidia where there were chip bands and Nvidia is, hey, the speed limit's 65.
59:47
I'm going 64 miles an hour.
59:49
And so I'm going to make a specific chip that is as good as possible while not breaking that regulation.
59:56
Like that's not the spirit of the law.
59:58
And it's like, yeah, I'm a three trillion dollar company.
59:59
My job is not to adhere to the spirit of the law.
1:00:03
I got to adhere to the letter of the law.
1:00:04
I got to make as much money as possible.
1:00:06
And so that's what that is what companies are supposed to do.
1:00:08
So government needs to set the rules and then we all figure out how to make money giving those rules.
1:00:11
The problem right now is that the rules change.
1:00:12
So you can't make any decisions in the next I I I advise people wait. Yeah. at least tomorrow.
1:00:17
I mean, we'll see what what new trade deals drop tonight, but I think every few weeks. No, no.
1:00:23
If if any if if if history is a guide, as soon as you leave this Zoom, Yep.
1:00:29
there will be news and someone check Twitter right now.
1:00:32
What uh what what's what's the EP how how cooked are are Teeu and Sheen right now?
1:00:39
Um there had been some reporting last week around, you know, people bas you know, US shoppers ditching them because the loophole.
1:00:45
I didn't know how how real that was.
1:00:48
I haven't seen the latest data of um I think they're both back live.
1:00:50
You can buy stuff on their apps again.
1:00:51
So, I think they're they're set up in a way that lets them transact and just pay the customs duties.
1:00:57
Um and I I think they're I don't know how the consumer is responding to it all.
1:01:03
They had to stop selling for a couple weeks.
1:01:04
So, that probably hurts you pretty significantly.
1:01:07
Um, but if it's a $30 couch and then you're paying $90 or or whatever, it's like, well, it's only 30% on their on their wholesale price, not on the price that you pay. Oh, right, right, right.
1:01:21
So, I think they may be fine.
1:01:21
It's all But I have heard that um apparel companies who is who most directly competes with Sheen at least, actually sales are up quite a bit despite the tariffs and having to raise prices.
1:01:33
And that's probably in part because Sheen's volumes have come down and the com consumer is shifting their spend onto other brands.
1:01:42
So we've seen that a little bit in our customer data and our fulfillment business where customers are exceeding their forecasts.
1:01:50
So the world is not all doom and gloom from a ecom perspective which it's a big departure from 90 days ago where I was screaming everyone's going to go bankrupt and companies were screaming that to me.
1:02:00
Um, I think that relaxing the Chinese tariffs uh made a big difference, but again, we're going to figure out what happens in the next 24 hours of with these new duties and how people respond to that over the next few weeks.
1:02:12
It's going to be exciting.
1:02:12
Um, what about uh some of the smaller players in the market like just the the the broad like drop shipping economy?
1:02:18
like drop shipping economy? Georgia and I were talking about this this morning, how it feels like um and Sean Frank from Ridge was talking about how like the the default road to entrepreneurship a few years ago was like spin up a Shopify store like white label some stuff like
1:02:33
you know get get a business up and running and then it shifted to like courses and influencer stuff and AI and and info products info products and now it's it's and Cluey and these other things that they were kind of talking about like the modern uh you know first time entrepreneur uh track. Uh is are are
1:02:49
Uh is are are these like you know small lean drop shipping operations still going?
1:02:58
Do you think do you do you ever run into any of these people?
1:03:00
Do you ever see them kind of like you you used to hear about like oh someone just found this really interesting niche on on ads and they scaled this like very simple business to like tens of millions of dollars.
1:03:11
Are you still seeing that or or do you think that's kind of like I think you mostly see it in China and Vietnam but selling into the US. Yeah. Okay. They're entrepreneurs.
1:03:21
They're entrepreneurs who figured out how to do marketing and branding and the more that that was something I predicted would happen 20 years ago that it would take but that it would take a generation because that they have to speak English.
1:03:31
They have to know enough about they have to have enough humility to go I speak English but not that well.
1:03:37
I should probably hire an American to do the writing.
1:03:40
instead of like the writing myself and have it be English but terrible.
1:03:45
On on Sunday I wanted to get a new hose.
1:03:49
What is not a not a spigot but one of those things that you can like control the flow nozzle or whatever.
1:03:52
So I go on Amazon I I search hose nozzle.
1:03:58
And I went five pages without finding a legacy US brand that that would sell me one.
1:04:04
And they're all these names that are basically some com five, six letter combination of English letters that that doesn't even read well.
1:04:14
I think Amazon has a real problem in that regard. Yeah.
1:04:16
And I I I would I would happily like I want to check a box that's just only buy from brands that have been around for 50 years.
1:04:25
And I would h I would just happily like those are the products that I want to buy because I don't want to buy the $6 product that's going to break in a year and I got to buy another one.
1:04:31
and I got to buy another one. I just want to buy the thing that that you know it's not it's been and the thing to watch on this front those companies don't 60% of all the sellers on Amazon don't even have a US entity they're being they're like the goods are
1:04:47
actually imported from abroad interesting and there's a there's a bipartisan movement in DC to block this policy to block this law to make it so that you have to have a US entity you can't just import as a Chinese company or whatever country country company. You can't just
1:05:02
You can't just import stuff into the US like without someone here who can be held accountable to following the customs law to whatever other child safety laws, you know, other stuff that's downstream that can happen.
1:05:15
Um, and I think Amazon has business exposure there that people like you are going to at some point I I start gravitating towards Shopify and like the shop app where you're like I don't know there's something higher quality about people trying to build a brand on Shopify today.
1:05:31
Anyways, um and then they have political exposure.
1:05:34
I mean, what did Trump call them?
1:05:35
A treasonous I forget what the for passing through the the tariffs into Yeah, he called him.
1:05:43
For me, for me as a consumer, it's not like I want my hose nozzle.
1:05:44
It's not like I need an Americanmade hose nozzle.
1:05:49
It's just like this this commitment to like this this relationship that you have when you're buying a product, which is I want to trust that this company put in a real effort to design a product that is going to be effective and durable and I'm happy to pay four, five times what the what the the entry ticket price is. So, Lindyism, I like it. Yeah.
1:06:13
I mean, people are clamoring for this on Pinterest.
1:06:14
this on Pinterest. like they want to search Pinterest from like be any image that's posted on Pinterest before 2023 like before the AI images came because you search for anything and it's just a lot of like a sneaky AI stuff stuck in there and if you're looking for something very specific you're like I
1:06:33
don't necessarily want an AI image and there's no real good filter other than just like is it in the Pinterest database with date created before 2023 like that is the provenence of that image and it's kind of the same thing like on on Amazon on being able to filter for did this company exist, you know, 10 years ago. What was the what what was the
1:06:51
What was the what what was the post-mortem on the on the conflict in the Middle East from a trade standpoint?
1:06:57
I remember there was one night that her well it looked like two tankers had been blown up and I and I was seeing that like open source intel on it being like, "Oh, like I just was feeling bad for you.
1:07:08
I didn't I didn't send you a message or anything, but I was like, "Oh, this is the last last thing that that uh the that global trade needs right now, but we seem to get out of it."
1:07:19
Yeah, it's um the trade of muse is incre much more important for the wider economy than just for certainly not for containerized trade trade.
1:07:25
It's pretty small like only about 2% of containers go in and out of the um interesting straight of Bormuse and that's basically going to Dubai Jibali port it's called.
1:07:34
It's a top 10 port in the world, but it's mostly a trans shipment port, meaning cargo comes in there, gets unloaded.
1:07:40
Think of it like a packet switcher, the cargo comes on, it gets rerouted.
1:07:43
Um, it's not that important of a port in the wider scheme of things.
1:07:48
The big the big thing obviously is oil.
1:07:49
It's like 20 something 5% of the oil in the world flows out of there. And it it's fascinating.
1:07:54
Look, if you look at the oil prices, look at the price of diesel.
1:07:58
There's no sign that anything ever happened in the Middle East at all.
1:08:00
Like you don't even see a blip upward. Um, wow.
1:08:03
And when Iran threatened to close the straight of Hormuz, the oil price went down 6%. Instead of spiking. Yeah. Weird. Why?
1:08:14
My read is like no one thinks that's a credible threat.
1:08:17
Because if they close it, China gets all their oil out of there. Yeah.
1:08:22
And China is like kind of necessary to keep if Iran stops, you know, if Iran screws with China, like what's left?
1:08:28
Like you gonna be against China and the US?
1:08:30
Like this is probably bad strategy. Yeah.
1:08:32
Uh I thought that would maybe if when I saw that they might do that I was like this is kind of some 4D chess by Trump if he gets Iran to shut down the straight of war moves.
1:08:40
We don't need it in the United States.
1:08:41
We got we produce our own oil basically.
1:08:44
That's an overstatement but um when the oil price goes up America does better now, right?
1:08:48
We produce we're the number one oil producer in the world.
1:08:50
Like that might be good for us as a country. That is a crazy story.
1:08:52
Like just the idea of us I mean I grew up with the idea of like energy independence and the idea of America needs oil and we got to go to these wars to get the oil and oil drives everything and now you know we're a net exporter.
1:09:07
I think there there is it's not like purely that we produce it.
1:09:11
We can just keep it here and be self-sufficient, right?
1:09:14
Isn't it that we're we're producing it like it has to be there's different grades of oil in our refinery capacity is like different. Yeah, sure.
1:09:20
There's some of that, but um that's uh nonetheless a higher price of oil would benefit American companies.
1:09:27
Now, yeah, like normal people, you and me, you know, our energy bills will go up and it'd be bad, but on debt for this for the country, you probably income inequality goes up or something, but we high price of oil is good for the number one oil producer in the world.
1:09:41
How how do you think uh retails broadly are uh thinking about interest rates in the next 12 months?
1:09:48
You know, there's certainly pressure on that front.
1:09:50
On Powell, it would be, you know, retailers have had to get used to high rates and if you're financing inventory and things like that, it is meaningful cost.
1:10:01
I' I've heard rumors of of um aggregators, you know, shutting down um that were heavily debt fueled probably can't sustain in in this type of environment.
1:10:14
So, I assume like everybody else, I don't think they're that I don't think we're that sophisticated in our business.
1:10:23
Like, but cheaper interest rates would definitely help consumers buy more stuff uh and drive a lot of growth.
1:10:29
And I think most of us would realize like, hey, we we kind of took it for granted for too long.
1:10:35
We probably should have borrowed more money when it was 2% and bought more stuff and done capital investments.
1:10:41
And the next time around, I think it'll be a a massive spending splurge or investment splurge if they drop interest rates back down.
1:10:47
People won't take it for granted. Totally.
1:10:51
Um Europe and SF, there's been a bunch of massive trade deals and SF uh AI engineers going to Meta.
1:10:58
Uh what's been the mood on the ground?
1:11:01
Do you have any advice for the folks picking up uh nine figure checks?
1:11:06
I just Well, I love First of all, I love asking people because if you didn't get an offer, what's wrong with you? No.
1:11:14
And and if if you're not if people aren't po if there's not like whispers that that people from your company are being poached, you're probably not at the right lab, you know, or lab.
1:11:24
Oh man, maybe I should make some posts about this getting angry at Zach for taking my best people.
1:11:30
Yeah, the scops need to continue.
1:11:32
The rumor the rumors are true.
1:11:32
So he's been he's personally dialing the entire engineering team. Yep.
1:11:39
The advice would be it's um you should go read the most important business book ever written. Mhm.
1:11:49
It's called The Prince by Makaveli. Oh, sure.
1:11:53
And Maki's rule number one is never hire mercenaries.
1:11:59
He says it over and over again.
1:11:59
It's the whole theme of the book. Mercenaries are useless.
1:12:02
they will run away when the time they'll they'll take your money and then run away when it comes when it actually come to fight.
1:12:08
Uh and that is really dangerous out here in this world of AI poaching people paying this much money, you know, I'd be I'd be very uh worried if I was how do you build a culture out of that?
1:12:21
It's going to be challenging.
1:12:23
They should all go read the book and figure out what are they going to do about that.
1:12:28
How do you think about the sports analogy?
1:12:29
A lot of people are kind of comparing the current trade deals to sports.
1:12:33
No one thinks about Otani as a mercenary, you know.
1:12:37
Yeah, it's interesting question.
1:12:37
Um, sports you have a fixed size of your team, so you can only have so many players.
1:12:44
players. So maybe there's something to be said for that of like okay you've got therefore it bids up the price of the also if you look at if you look at the the you know we we know nothing about sports but I growing up in the Bay Area watching the Warriors go on this very dominant run I'm sure at any point many
1:13:01
of those players could have increased their well not at any point because they have contracts that for years and so it's like a point you know the ultimate is Tom Brady because Tom Brady his secret was marrying a supermodel a wife who made so much money that he could work below market price and they could build out a great team. So maybe you need to
1:13:19
So maybe you need to hire engineers who have rich spouses. There we go. There we go. It's a good take. Yeah. Yeah.
1:13:25
That's going to be the next the next bull signal. Yeah.
1:13:29
I don't I don't do it for the money to the holiday party. Okay. You're getting poached.
1:13:33
You're going to the top team.
1:13:35
The holiday party was was popping. Yeah.
1:13:39
But it's uh Yeah, it's I don't know.
1:13:39
I'm fascinated by seeing how this plays out and it is um you know at the end of the day you got to hire the best talent and Zuck's kind of smart.
1:13:47
He's got the war chest and OpenAI did this before.
1:13:49
I mean they hired they were hiring everybody.
1:13:51
I love seeing them whine about it because all my friends have had their engineers poached by Open AI who are overpaying by 2x. So yeah. Yeah.
1:14:00
A front end engineer was making 350k just of you know HTML and CSS. Yeah.
1:14:06
And that it's it's kind of crazy. Yeah.
1:14:08
350 and and then you know tw tens of millions of dollars and probably stocks hopefully not for the front end engineers. This isn't even people.
1:14:18
Hey, no slander for front end.
1:14:20
I mean it depends on when they got in, right?
1:14:21
If they got in a couple years ago it could have 10xed in terms of, you know, net value.
1:14:27
It's, you know, it's one of those it's like trying to be the toughest fighter or something.
1:14:31
At some point, you know, you can beat up everyone on your block, but you eventually run into Mike Tyson and you're going to lose.
1:14:35
So that's exactly what's happened. Yeah.
1:14:36
I mean it's it's maybe better not to try to fight. Yeah.
1:14:42
It's so interesting because like the last the last like big like the I mean we've had it we've had a few like big hypers scale like really fast growing super hot like ordained as like winner companies like SpaceX, Tesla, uh Uber and those companies were not seen as a direct threat to Google or Microsoft or Apple.
1:15:01
Microsoft or Apple. And so it's not like there was ever I mean Google was kind of thinking about Whimo as a counter to Uber but it was never like our core business might disappear so we have to spend you know unlimited money to protect that you know what we have
1:15:16
people are people are starting to talk about how the competitive dynamic between meta and open AAI being that if you're spending three hours a day talking with chat that's three hours a day that you're not putting comments on your friends Instagram posts or hitting reals. or things like that. So there or things like that.
1:15:32
So there there's, you know, we all have 24 hours of the day.
1:15:36
We're making more humans, but you know Yeah. Yeah.
1:15:41
I I I want to see what ideas they have because, you know, the way to compete with Google was not make a better search engine like 10 years ago, 20 years ago.
1:15:50
You know, it's that a lot of people tried that, you couldn't do it.
1:15:54
So I don't know that the way to compete with OpenAI is to make a better chatbot. I completely agree.
1:16:00
like they got to come up with some new ideas here and I don't know what they are.
1:16:03
I don't know what they have in mind.
1:16:04
Maybe they maybe I want a new I want a new uh thing at the bottom of the Instagram app that's just dopamine and it's just a perpetual loop.
1:16:12
You don't have to scroll. Yeah. Yeah. Yeah. Something there.
1:16:17
The whole app might be that eventually.
1:16:19
Just surfacing content you want to see would be a win. Yeah.
1:16:22
Uh anyway, this has been fantastic, Ryan.
1:16:24
Thanks so much for hopping on. Always good. Yeah.
1:16:27
Send us a note when when when when uh new po new truce hit the timeline.
1:16:29
Uh we would love your reaction.
1:16:33
I don't think you guys can handle the the speed at which this is going to happen.
1:16:36
We might need you back on the show tomorrow. Who knows? Yeah. Yeah.
1:16:38
I don't think you need that. Well, take care, guys. We'll talk to you later. See you, Ryan. Cheers. Bye.
1:16:44
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1:16:57
It's billboard time and we have our next guest in the studio already.
1:17:01
Jonathan from Air Garage talking about parking. How you doing, Jonathan?
1:17:06
It's time to talk about parking.
1:17:08
Everybody's favorite topic, parking.
1:17:10
I'm just glad I finished my lunch before I uh got let in on like, so I'm I'm a little more more prepared than he is.
1:17:16
It's a It's a bit of a random stream today. Late, but the heart. Is that a TV? That looks like a TV.
1:17:23
Yeah, I wish it was a real hearth.
1:17:23
I You know, it's San Francisco.
1:17:24
It's June or it's July now, I guess.
1:17:26
But it's uh pretty much always cold, so got to try to stay warm however you can.
1:17:31
I think the real hearth comes after the next round. That's right.
1:17:32
Once there's some major liquidity in the business, maybe then you can upgrade. Uh but give us the news.
1:17:38
What's the latest from you?
1:17:40
Yeah, very exciting news today.
1:17:40
We just announced that we raised our series B from and it was led by headline growth and participation from some of our existing investors and customers and all that jazz. So very exciting.
1:17:50
$23 million series B and hit that gong. Let's go. Great contact. Great contact. Great contact.
1:17:58
Sounded Sounded very very full from this end. Yes. Yeah. It's fantastic.
1:18:02
Um uh so give us uh give us an update on where the business is today.
1:18:07
um kind of introduce the business and yourself and then we'll kind of dig into some questions. Yeah, definitely.
1:18:12
So, Air Garage, for people that haven't heard of us before, basically we work with real estate owners that own parking lots and parking garages and we help them manage and monetize their parking assets.
1:18:21
So, you know, if you've ever parked your car in the United States or really just anywhere, you know that it's a pretty terrible experience.
1:18:27
There's signs that are confusing.
1:18:29
It's like a five paragraph essay on a sign. The machines are broken.
1:18:33
They eat your credit card. They eat your ticket. All that sort of stuff.
1:18:36
And you know, I think a lot of people when they first experience that or if they've thought about it at all, it's kind of like one of those schle blindness problems that most people you experience it, but you just kind of ignore it when it happens in your daily life.
1:18:46
If you've thought about it, you're kind of like thinking, okay, maybe it's like this because, you know, that's how real estate owners like it. They want to scam me.
1:18:52
They want to like rob me blind.
1:18:54
A lot of people, you know, they have it out for real estate owners, but um it's not that way at all.
1:18:58
Real estate owners hate it, too.
1:18:59
And so we work with those real estate owners.
1:19:01
We've built this basically vertically integrated operating system for parking real estate.
1:19:06
It combines everything involved in taking it from being a piece of asphalt with stripes on it to a full-fledged parking operation that generates income using technology.
1:19:12
So, it's the technology you would expect in any other industry, but it's just completely new to the parking industry.
1:19:20
So, we do payments, we do advertising, enforcement, we build hardware, we build software.
1:19:24
Basically what we're trying to do is bring as much data and visibility to these assets as possible to generate more income for real estate owners to create a better experience for driver at the same time.
1:19:33
And so you know the net result is we can increase net operating income by 20 to 50% for real estate owners and for a real estate owner that's huge because your asset is valued on NOI and you want to make as much as as much as possible.
1:19:45
So uh that is how we've managed to grow as much as we have.
1:19:49
So we've grown 10x since we raised our series A.
1:19:51
We're actually cash flow positive as business which is awesome. Congratulations.
1:19:54
You know, just trying to get as many locations across the country as possible.
1:19:58
So now we have 300 plus locations in 38 states across the United States. Fantastic.
1:20:03
I have two funny stories about parking.
1:20:05
One uh once was I I started I stopped carrying a wallet because I was like Apple Pay is so good. I'm fine. I don't need a wallet.
1:20:13
And I got locked in a parking garage that didn't take Apple Pay once.
1:20:17
Uh, and I had to talk my way out of it and and hit hit the security guard and be like, "Sorry, I literally have no money of any kind. I I can't do anything."
1:20:25
And then the other time I was parking in a in a garage going to a restaurant.
1:20:29
Um, and and like it's very confusing how to pay for this garage because there's no like there's no like gate.
1:20:35
So, you just go in and there's a ticket attendant and the guy comes up to me in like a jack in like a like a you know security vest or whatever and uh says like here, "Yeah, you pay me." And I pay him.
1:20:45
And I go into the restaurant and the restaurant owner is like, "Yeah, that guy doesn't work there."
1:20:50
And it was just like an enterprising homeless man, I think.
1:20:53
And so, you know, good on him, but uh not not the best user experience.
1:20:58
So, yeah, I I have a ton of questions.
1:21:00
Um I I want to know I mean, so hardware like that seems actually pretty hard to solve.
1:21:04
I mean, taking cash, credit cards, Apple Pay, like the demands are pretty wild.
1:21:11
Um do you do you white label stuff?
1:21:11
Do you actually develop everything?
1:21:14
Do you have manufacturers for this stuff? Is it commoditized? Um like what is that?
1:21:17
What is the shape of that side of your business?
1:21:22
Yeah, so the hardware that we do is is all basically cameras and sensors.
1:21:24
So it's mostly license plating cameras that sit at the entrance and exit of the garage and they track every vehicle that goes in and goes out.
1:21:32
That gives us real-time occupancy data, gives us enforcement data, but then it also can actually enable these magical experiences where I park in our down near our headquarters in downtown San Francisco.
1:21:43
We have a garage right near there.
1:21:44
my account because I'm already registered with their garage.
1:21:46
When I drive into that garage, it automatically starts a session for me.
1:21:49
When I drive out, it automatically ends my session.
1:21:50
I never have to touch my phone.
1:21:53
So, to your point, you wouldn't have to carry a wallet anymore and it bills me for exactly the time I use, right?
1:21:57
And it's like that's when you think about it, like that's just how parking should be, but it's not that way, right? It's like so old school.
1:22:04
And that's because basically real estate owners, they hire a parking operator, which is basically a property manager to run their property.
1:22:11
Those parking operators, they're 50 to 100 years old.
1:22:13
They've been doing things the same way since the 1980s.
1:22:14
They use cash and machines and attendance.
1:22:16
And yeah, they all use basically parking machines in their locations.
1:22:21
And it turns out the parking machines are just kind of the wrong way to run a parking facility.
1:22:26
You have those gate arms.
1:22:27
People more often than you would think, people drive through those gate arms.
1:22:29
A lot of owners when they're switching to Air Garage, they're telling us about, you know, 15 times a month somebody breaks their gate arm and it's like $4,000 to fix it every single time.
1:22:36
And that's on top of you spent $100 $200,000 to buy the gate arm in the first place and then you just need an attendant to sit there and like babysit it.
1:22:44
So one of the things that we do differently at Air Garages is we're in entirely a gateless system which means you remove that entire huge sort of headache and expense of maintaining and and keeping these gate arms in your facility.
1:22:57
And so when you're a driver, that's also a better experience.
1:23:00
You drive in, you drive out.
1:23:02
The license preing cameras track your car. We get real-time data.
1:23:03
You get a better experience and you have a lot less expense and sort of uh you know maintenance issues to to deal with with the gate arm because I think a lot of people can relate to the experience as well of like especially after a big you know sporting event or event that you've been to, you're trying to get out of a parking garage, you're sitting there for an hour because people are taking so long to go through that gate one at a time.
1:23:24
You get rid of those you entirely get rid of the bottleneck and it's a way better driver experience.
1:23:27
So our hardware, the way we build hardware, we build it all actually inhouse, which is very unique for any parking company.
1:23:35
Most parking companies, they don't even build their software in house.
1:23:36
We build software and hardware in house to give us the best control and visibility.
1:23:39
Uh but the critical thing is you don't make the hardware a dependency, right?
1:23:43
If if a camera goes down for some reason, people can still drive in, still drive out, they can still pay, we still have a functioning system through the software.
1:23:53
So you remove that dependency and it makes it a way better experience and also you just get a better experience as a driver and as an owner.
1:23:59
Okay, I gotta ask two VC coded questions.
1:24:02
I'm sure that I'm sure you got in the raise, but I'm curious.
1:24:04
So uh we had the CEO of Metropolis on uh I'm sure you guys were competing in a maybe at at some point in a more intense way.
1:24:15
They've taken the more rollup approach in terms of asset heavy at very asset heavy. They raised 1.
1:24:20
7 billion to buy it's not and not technically asset heavy because they're not like purchasing the assets themselves but they did basically just go acquire operators.
1:24:29
So they just took yeah to your point they took a an inorganic growth strategy which yeah I certainly have lots of thoughts on but finish your question. Sorry. Yeah.
1:24:37
No and I'm just curious like I'm sure every you know investor meeting leading to this B people were like have you thought about raising a billion and doing this strategy and and you did not.
1:24:49
So, um I'm curious kind of the um h how you how you evaluate those two approaches.
1:24:55
Yeah, I think that there's a lot of different ways to build a company and you know, basically the thesis that they're working on is actually the same thesis that there's another company called Reef Parking.
1:25:05
I don't know if you've heard of them, but they took the same approach and what they did is they raised about a billion dollars from SoftBank in 2018 2019 that was right as we were raising our seed round.
1:25:15
So, a lot of people were looking at that saying like, "Ah, they beat you to it.
1:25:18
Sorry, you're out of luck.
1:25:18
But the thesis is basically, okay, we have this technology, we have this platform, we're going to raise a bunch of money, we're going to acquire this old school operator that has all of these locations and contracts already.
1:25:28
And of course, we're going to, you know, it's going to look beautiful in a spreadsheet.
1:25:31
We're going to replace all of this GNA or this overhead or this cost of goods sold of human labor.
1:25:37
We're going to replace it with this technology and and our margins are going to look great and there's going to be a bunch of upside.
1:25:41
It's kind of like classic private equity playbook.
1:25:45
um you know it's it's a very like investor obsessed spreadsheetdriven way of building a business and the critical ingredient that has to be true in that is like we have the technology and that's what wasn't true really for reef parking and that's why that whole thing sort of went sideways and they're no
1:26:02
longer really a business I mean they're working through restructuring uh mubadala has like taken over that business and is trying to sell it last I heard and uh you know that's the question for Metropolis is like do they have that technology and we're taking a very at air garage. From day one, we
1:26:13
From day one, we started by taking over one parking lot, working from first principles, figuring out how do you run this parking lot using the technology that we have available to us.
1:26:22
We didn't know what a parking company was.
1:26:23
We didn't know what a parking operator was. We knew nothing.
1:26:26
We were just completely making it up from scratch, which is a huge advantage compared to doing things the way they've always been done.
1:26:31
And so, we've built the platform as we've gone along to actually truly do what we say it does, right?
1:26:38
And that's the question for them is as they're going through their portfolio and trying to transition people, are those people actually going to transition to the platform?
1:26:43
Does the platform actually work?
1:26:45
And the thing is, real estate owners have been burned so many times in the last 20, 30 years by vaporware software and people saying like, "Oh, we have technology and you real estate people are so old school and you don't get it and like we're going to change your life and make things everything great with this technology."
1:27:00
And it hasn't played out many times.
1:27:00
And so it's very hard to earn that trust with real estate owners.
1:27:03
And so if you start taking over locations and you don't have that technology and it doesn't work out then you sort of quickly fall out of favor and so they're making that bet and that's the question is do they have it remains to be seen.
1:27:13
I you know I have an opinion on that of course I won't comment directly on that but yeah it's just a different vision for how to build that endstate and then you know do we go and do roll-ups in the future as well potentially because we do actually have the technology. Mhm. Jord, second question.
1:27:29
Uh, second VC coded question.
1:27:29
We had Alex Roy uh on uh famous cannonball driver wrote the driver.
1:27:36
Um, and we were talking a lot about autonomous vehicles.
1:27:41
I'm curious how you think AVs will impact the parking industry. Interesting.
1:27:47
Uh, people have had the sense of, oh, there's so much parking in cities and when we have AVs, we won't need them.
1:27:54
that's never fully tracked for me because gotta charge them, you have to maintain them, you have to store them.
1:28:01
It there's there's way more demand during rush hour than there is, you know, during um you know, and and I don't want to send my my AV, you know, if I have an AV that that I personally own, I don't want to put a bunch of miles on it, driving it way out of the city to then circle back.
1:28:17
So, it's never fully tracked to me that some people just like parking lots more than parks.
1:28:22
Like public parks, you can't really do a lot of car spotting in them.
1:28:27
Walk around hunting for the Lamborghini.
1:28:28
Can't do cars and coffees in a public park.
1:28:30
You got to have a parking lot. No way.
1:28:32
That would be fun though on the grass.
1:28:35
You know what's funny is is this was a question I got all the time in our uh series like our seed race and that was like at the peak of the autonomous vehicle hype wave like the classic hype wave that autonomous vehicles has followed.
1:28:46
And this was every VC in the sea round was of course asking about this and that was actually six years behind. What you say?
1:28:54
Saying I'm six years behind. You're six years behind.
1:28:56
Well, and yeah, the funny thing to me was that during this this most recent fundra basically nobody asked us about that and that's while at the same time I'm in San Francisco riding in Whimos and cruise cars constantly.
1:29:07
And so it's like actually real now versus 6 years ago it wasn't actually real.
1:29:12
Um you know I think I have a lot of thoughts on this.
1:29:13
thoughts on this. One of the one of the reasons we chose floodgate actually to lead our seed round at the time was because they saw without us they independently came to the same conclusion that we did that you know basically parking is going to be this really interesting asset class over the next 10 to 15 years at the time based on
1:29:29
what they were seeing because uh Ann the partner at Floodgate is on the board of Lyft or was on the board of Lyft at the time and so she was seeing the changes even before autonomous vehicles with just the Uber andyft trend over the last 10 years and so what they saw saw was somebody's going to need to basically figure out what to do with all this space in our cities. Like 26% of the
1:29:47
Like 26% of the median urban core by land area, median urban core over 500,000 people, 26% by land area is dedicated to parking.
1:29:56
So that doesn't even account for garages under a building.
1:30:00
That is dedicated surface area in the urban core of our cities.
1:30:03
Not looking at the suburbs, which is even more parking.
1:30:05
That's a massive amount of space in our cities.
1:30:08
There's eight parking spaces for every car in the United States.
1:30:10
I think the stat is there's enough parking surface area in the United States and eight is the low end.
1:30:15
The estimate is actually 8 to 11 parking spaces for every car.
1:30:16
Uh there there's I think one stat that I saw that basically there's enough parking space in the United States to cover the entire state of West Virginia with asphalt.
1:30:28
And so regardless of how you look at it, there's going to be some repurposing that needs to happen.
1:30:31
And in order to do that over time, you first need to like understand how that space is being used today.
1:30:36
And that's the thing is like that just doesn't exist.
1:30:38
Like the parking operators that are in running these facilities right now, they're so old school.
1:30:42
They're doing things manually with paper and like they don't have any real-time visibility about like how many spaces are actually filled right now and like what's our busiest day of the week?
1:30:51
These like basic insights that you know if you were a real estate owner and you called your hotel general manager and said, "Hey, what's our busiest day this month?"
1:30:57
And your hotel general manager couldn't tell you the answer to that question, like you would fire them on the spot because that's like basic information you need to run an asset.
1:31:05
But that's the state of the parking industry is like literally we took over an asset actually last week, massive garage, very large asset in in a sort of tier 2 market.
1:31:13
But you know, the way they were tracking validations is literally a paper spreadsheet in a binder, you know, tracking who gets a validation for going to the retail shops on site.
1:31:22
That's the state of the parking industry.
1:31:23
And so our mindset has always been, you know, if someone's going to bring this online, we're going to bring it online and be able to more flexibly use this space in our cities.
1:31:30
Maybe that's autonomous vehicles in the future where they're parking in our facilities and they need to be able to pay for their parking in an APIdriven way.
1:31:37
That doesn't exist right now.
1:31:40
There is no default online way to purchase parking or no operating system or no sort of uh system of record for where the space is used in our cities.
1:31:48
And then the other thing that's really interesting from our perspective too is we've taken a lot of things in the parking industry that traditionally were fixed cost parts of your business and turn them into variable costs because we're a software company.
1:31:58
We're a technology company instead of a basically a staffing company which is what these traditional companies are.
1:32:02
So if like parking revenue starts to trend downward, that actually squeezes all of our competitors in a really helpful way for us where like our cost of goods sold is entirely marginal instead of being this fixed cost, which then means that we can survive and thrive in in an environment where parking supply continues to uh decrease because parking demand is decreasing.
1:32:20
And actually parking supply being constrained is great for our business because that's the time when you actually can charge for parking.
1:32:26
I mean, I can I can see how this becomes a major catalyst for you guys.
1:32:27
If I drive into a city center in an autonomous vehicle, it drops me off and that and then I want my vehicle to park nearby.
1:32:37
Imagine imagining the the interaction right now between the average city center parking garage and an autonomous vehicle. Just not going to work. Yeah.
1:32:46
Anyway, so great great congratulations again.
1:32:48
Thank you so much for the progress.
1:32:50
Looking forward to the next 10x. Yeah, get get on it. Get on it. We'll talk to you soon. Working on it. Thank you both. Awesome. Have a good one. Cheers. Bye.
1:32:58
Uh, next up we have Jonathan from Grock coming.
1:33:01
We actually uh are gonna reschedule that one so we can jump into some timeline. Okay, cool. Um, yeah. Oh, okay. Okay.
1:33:09
We're pushing him to 155. Great. Um, cool.
1:33:13
Uh, yeah, let's do some timeline.
1:33:15
Well, uh, Aliano over at Palunteer received an airdrop of Mati Matayena.
1:33:22
Favorite energy drink that I drink four of every show basically. Delicious.
1:33:28
Congratulations, Elelliana.
1:33:30
That is 480 milligrams of caffeine. It's an adult amount. It's an adult. It's a horse amount. It's great. Um, love to see.
1:33:39
Shout out to Rob for dropping those off at Palunteer. Wonderful.
1:33:41
And, uh, I think he's enjoying them.
1:33:44
Uh, let's tell you about Wander. Find your happy place. Find your happy place.
1:33:50
Book a Wanderer with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and 247 concier service.
1:33:56
It's a vacation home but better and wander. com to go check.
1:34:01
Everybody thought our ad was AI and I think that's a great compliment to Wander.
1:34:06
It uh the the property that we were at in the Wander property we were at in Malibu.
1:34:12
It looks almost too good to be true, but it's very real and you can go stay there today. Yeah. Uh let's see here.
1:34:20
Uh Ahmad had the post that I was referencing earlier.
1:34:22
He said, "Why is Meta scared of OpenAI?"
1:34:24
This graph says chatb is not just a productivity app.
1:34:29
People are spending hours on it to talk to AI, write poetry, etc.
1:34:30
Meta needs attention to drive ads.
1:34:33
If this trend line continues, AI will eat social app time.
1:34:38
So, so this is mobile minutes per daily active users per day and chat GPT is at 29 minutes.
1:34:45
Now, the question is like we're not seeing a drop off from any of the other apps.
1:34:50
So it might be that chat GPT is cannibalizing something else in people's life.
1:34:54
Maybe like talking to other people.
1:34:56
But uh but it could also be books.
1:34:58
It could be you know time spent reading the newspaper researching or doing anything else.
1:35:02
Um it it's not exactly showing up in the Instagram data there.
1:35:07
That would be really really if you like when you see you know chatt going up and Instagram going down then you get really worried.
1:35:12
Uh but still uh chat GPT is on a generational run.
1:35:17
pretty crazy going from five minutes what uh a year ago to 29 minutes today. So 6x growth in a year.
1:35:23
Uh people people love it.
1:35:27
I spend a lot of time on it. I'm always doing stuff. It's fun, you know.
1:35:31
It's just like super interactive.
1:35:33
Just dictate something, get the response, read it out.
1:35:34
It's just like so much more efficient way to learn for so many different things. Totally.
1:35:38
I would love to see what uh what these other a like actual proper AI companion apps like replica what their usage per DAU looks like because I would expect that uh at least for paid users it's it's significantly higher than that.
1:35:55
Well, let's tell you about getbzzle. com.
1:35:57
Your bezel concier is available now to source you any watch on the planet. Seriously, any watch. Go check them out.
1:36:03
We'd love missed opportunity to ask Alex Roy about the right watch for the for the Cannonball.
1:36:08
Oh yeah, he'd probably say an Apple Watch today.
1:36:11
Yeah, he's very technology pled.
1:36:13
Very disappointing answer.
1:36:13
Um, we have a trade deal. Trade deal. Summer U.
1:36:17
She says, "Today is my first day at Meta Super Intelligence Labs.
1:36:22
I'll be focusing on alignment and safety.
1:36:24
Building on my time at scale research and seal grateful to keep working with Alexander Wang.
1:36:28
No one more committed, cleareyed, or missiondriven.
1:36:32
Excited for what's ahead.
1:36:34
Uh, congratulations to Summer.
1:36:34
Uh, I would imagine this was a maxed out contract.
1:36:39
Yeah, good to keep the team together. It's interesting.
1:36:41
It's because Alex was was, you know, moved over to Meta, but Scale is still an independent entity, but it seems like some folks from scale are now moving over to Meta, and Meta is probably looking through seeing who makes sense where, and the businesses will kind of diverge.
1:36:58
will kind of diverge. It feels like the true like super intelligence research and the hardcore AI research of training new models that llama v5 I guess is happening going to be happening over at meta but scale obviously still has a business in um in data generation and so um if you
1:37:17
were kind of on the research side at scale you're probably going to be moving over at some point but this is probably the first of a few of announcements we'll we'll we'll see totally so she was the VP of research at scale AI prior to that was uh in research at Google DeepMind for almost six years. So, So, got it. An absolute killer. Yep. Um who do we have?
1:37:34
We have a few people in the waiting room. Um fun. Jacob, I don't know.
1:37:41
Jacob, we have to figure that.
1:37:43
People might just be joining.
1:37:43
The link might have leaked. The link is leaked.
1:37:45
This is the thing we use.
1:37:48
We shouldn't uh we can highlight.
1:37:49
So, announced that they had an ad yesterday. Can we pull this ad up?
1:37:53
Is that Yeah, let's pull it up. Let's play it. ad. It's in the tab.
1:37:56
at Lamxnt says, "First off, banger.
1:38:00
Second off, this video means as soon as V3/insert new AI video generation model drop, immediately assign hands to diving head first into it, seeing what they can do."
1:38:10
This is the biggest bull signal for new companies, having the human resources capital to be able to actively chase staying on the bleeding edge of new tech that and innovations the second it drops.
1:38:20
Massive, massive, massive.
1:38:20
You simply cannot beat a team that is hellbent on being first.
1:38:23
So, I thought this ad was very cool.
1:38:25
It was It's really it's really crazy because it it's they like the heart they're really doing a great job of solving all the key problems with generative AI which is like character consistency.
1:38:37
Uh it's not fully photoreal and so very clearly in the prompt they said make it look like Grand Theft Auto and and then all of a sudden it's it's like a Giblly moment.
1:38:47
And I feel like this is kind of the first video that we've seen that's really dominated like a new style that I think you'll see a lot more people be making them.
1:39:00
Well, it's perfect too because can make a GTA themed ad whereas like very few brands could brands can do that. Yep.
1:39:08
Um but yeah, I mean I I imagine that this will be as simple as giblify this image pretty soon.
1:39:14
just, hey, take the trailer for F1 and make it uh GTA style and it'll look amazing and people will do that for all sorts of videos.
1:39:24
Uh, it'll be very slow and expensive first, but then it'll be very cool. Let's play the WO ad. This is pretty cool.
1:39:29
Our parents told us to get real jobs, get off our phones, go to college.
1:39:35
I took a completely different route.
1:39:38
There's something different about kids who make money online.
1:39:41
They don't give a You taking a foot? Sounds like heaven, bro.
1:39:45
There's a huge influx in kids dropping out of school. Shot, bro.
1:39:51
Dude, we got to grow faster. Just use, bro.
1:39:55
Yo, we're printing the super trim here in my garage.
1:39:57
College enrollment numbers are on the decline. Lead. See that movie?
1:40:02
Start making money online.
1:40:04
Bunch of great cameos in here.
1:40:05
And once you taste that freedom, there's no going back.
1:40:08
Was that Blake Anderson there?
1:40:11
It looked kind of I think that's another guy, but it does look like Blake.
1:40:13
Um, the How much of that do you think was AI?
1:40:17
I think it felt close to 100%.
1:40:20
I think some of it might have been actual game footage.
1:40:22
I'm not exactly sure, but um, some of that could have been just generated in GTA 5.
1:40:27
Like you could Yeah, it's possible just to actually go shoot some of this.
1:40:32
Yeah, the interesting thing here is it feels like uh is, you know, 10 years ago, we talked about this earlier with Ryan, 10 years ago, uh the like online entrepreneur meta was drop shipping and Shopify had kind of a crazy flywheel of of different types of influencers online, promising mostly young men that they could make millions of dollars selling products online.
1:40:57
and that uh that that by the time people I think were making a bunch of courses about it, I think it had be become incredibly difficult to actually arb uh and and like buy product from a traditional you know US brand and sell it on Amazon and make any kind of money.
1:41:14
And so that whole industry um like effectively has shifted over the last um over the last uh I want to call it five years into what what are now like info products.
1:41:27
And so has this effectively an economy of people selling info products and then armies of young people that that basically do like bounty style work for them.
1:41:38
So, uh, clipping for a musician or clipping for a live streamer, things like that.
1:41:46
It is a cool way for somebody in high school to make their first money online.
1:41:50
And I think that is like a formative moment to have real dollars hit your Stripe account.
1:41:54
But, um, you know, this this, you know, that kind of meta is constantly evolving.
1:41:59
Um, I think they have over a billion dollars in in transaction volume.
1:42:03
So, we got to have the, uh, founder on again.
1:42:05
He was had some interesting takes.
1:42:08
Um, are we ready for our next guest or should we keep doing extremely tapped in?
1:42:12
Um, we have Jake who's at we're flipping the schedule a little bit.
1:42:18
Let's bring in Jake and then we'll go to Craig. Nice to meet you, Jake. How you doing, Jake? Welcome.
1:42:23
Thanks for having us on, lads. Yeah, thanks so much. Great to have you.
1:42:26
Uh, we're we're uh we're dealing with a bunch of different scheduling stuff today.
1:42:29
Would you mind kicking us off with an introduction on yourself and your company? Sure. Yeah.
1:42:32
So, my name is Jacob Glennville.
1:42:34
I'm the founder and CEO of Cineac.
1:42:36
Um, previously at Fizer, I also founded a company called distributed bio.
1:42:41
Um, at Cinevac, we focus on universal immunity technologies.
1:42:44
Uh, that's a universal flu shot that we recently closed a series A to be in humans in eight months.
1:42:51
And then some of you may also have seen some of the news around our universal antivenenom program that's a single antivenenom that can treat all snakes. That's amazing. I hate snakes.
1:42:59
I uh I actually am like it's the one thing I'm terrified of.
1:43:04
John always checks his boots for snakes. I do my hero growing up.
1:43:09
You you raised a series A and you you're going to have a drug in market in eight months.
1:43:14
Is that how how much how much did you have to raise prior to to get to that point?
1:43:18
You know, usually we hear about bio companies having to raise pharma companies having to raise a billion dollars to even have a shot at getting something in market. Trials.
1:43:28
We're going to be in humans in eight months.
1:43:29
So that's the first human trial.
1:43:31
So there'll be more more to spend.
1:43:31
Um we've raised uh prior to the series A we brought in about $50 million.
1:43:36
Half of that was non-dilutive from like the Gates Foundation, SEPY, the Navy, the Army, the Naval Medical Research Command, and Rare U and a number of other places because what we work on is a a it's a bio threats problem.
1:43:49
It's also a global collective goods problem if you think about how much money's been spent on, you know, 90 billion dollars of productivity loss just on flu alone in this country every year.
1:43:59
And so in addition to that, we had uh NFX and the Global Health Investment Corporation that were our backers.
1:44:05
And then now we're raising we've just raised another 45 million.
1:44:08
So nearly 100 million raised gets us into humans, which is a really big deal because we we show it's safe, but then we also show it's effective.
1:44:16
And so we have we can establish the first universal vaccine and a platform technology that we can make more universal vaccines out of.
1:44:24
I definitely feel the productivity loss every time.
1:44:26
Every time I feel myself getting sick, I'm like, "This time I'm gonna power through it.
1:44:30
I'm gonna be just I'm gonna be just as effective.
1:44:31
I'm not going to let it like let my email pile up because I just feel terrible."
1:44:37
And it's very difficult to How How different is is this path from the traditional biotech path?
1:44:41
I feel like a lot of biotech companies, they go public really early.
1:44:45
It's just a completely different path from like what we typically see in venture.
1:44:49
Are you taking more of like a Silicon Valley venture path or or do you see yourself as the same kind of strategy as the biotech companies that we've seen like um like the other companies that have just kind of gone through the normal like IPO early then the stocks trading based on the you know the FDA uh results and that type of stuff.
1:45:09
I I historically have always tried to ignore the normal path and go what's the best path for this company.
1:45:13
So my last company I actually never raised any venture capital.
1:45:16
I built a series of profitable verticals and we um exited to Charles River Laboratories without taking venture.
1:45:22
Here I need venture because we're going to go through these very expensive phase trials and even there we have accelerated approval and some other tactics that make it much less expensive than some of the ones you described.
1:45:33
So what's going to happen for us is uh human trials after that.
1:45:35
There are sources of uh potential non-dilutive funding that could give us write really big checks once you're in phase one to potentially cover the phase two and phase three or we do a series B and then maybe a series C to to get the first product out.
1:45:50
And the whole idea is to prime the pump.
1:45:52
Once you're profitable, then it's a rounding error to run your other programs, which is like so torturously expensive for the first product.
1:45:59
like once you once you've got something commercialized, then you can go build the other ones.
1:46:02
You know, it's also possible that we get kind of some FOMO going because the current $7 billion flu market, there's four companies that are all competing over that and all of their vaccines are like 10 to 60% effective.
1:46:15
Like one in three people who got a flu shot last last season actually benefited from it.
1:46:18
And so I'm I'm imagining those groups are going to be like, I I want to work with these guys otherwise I might lose market share.
1:46:25
And so there might be an opportunity there for an acquisition or partnership earlier. Yeah.
1:46:29
On the non-dilutive funding side, what has been your take on the NIH uh discussion publicly?
1:46:34
We had Andrew Huberman on the show and he was uh talking about some of the risks of cutting some of that early stage funding.
1:46:40
The the number that was being thrown around was around 40% cuts.
1:46:42
Um I don't know if that affects you directly because you're kind of already running the company, but uh what's your take on on the NIH situation?
1:46:52
Well, look, I'm you know, I'm in biotech in general.
1:46:53
I think we've benefited and we're able to bring this technology forward because of non-dilutive sources out there. So more is better.
1:46:58
Um we our antivenenom program has been supported by an NIH award.
1:47:04
Um that said, you know, there I'm working on a fundamentally new technology and sometimes we've had a hard time convincing uh grant agencies to go in at the NIH in particular.
1:47:15
I think some people just didn't get it because it was too different and new.
1:47:20
that changes as we have more data, but also I think a little shakeup sometimes is helpful to be able to have them invest and try new things rather than just reinvesting in the past because the past technologies just weren't working.
1:47:29
I think we need new stuff.
1:47:29
So obviously I think I think the United States needs to maintain its preeminence in biotechnology.
1:47:35
biotechnology. It's one of the 21st century sectors where we have dominance and you don't want to lose that because you know there's China and other organizations out there that are countries that are very happy to try to fill those shoes and once you lose that
1:47:48
the brain drain goes the opposite direction and that's part of the reason why we maintain the preeminence is that we have the the institutions that are propped up partially by government money to be able to go make all these breakthroughs and have your genentex and and so forth. So I I think for those
1:47:59
So I I think for those reasons I think the United States should remain the the global epicenter of biotechnology because of macroeconomic reasons. Yeah.
1:48:08
Janentech the original VC uh what 100bagger or something like that. Fantastic return.
1:48:15
What what what kind what what are your kind of goals on the efficacy side?
1:48:19
Obviously the goal would be 100% but if this typical flu vaccine is 10 to 60% effective what what are you aiming for?
1:48:27
Yeah, we're looking at like we'd like to see somewhere between 80 and 95%.
1:48:28
It's hard to get that last 5% for any vaccine because you have people that have significant um you know immunosuppression or or some sort of deficiency.
1:48:40
But what we're seeing in the animals and all the work so far, I think probably 85 90% maybe 95 is sort of what we're aiming for.
1:48:47
Like and that's a big deal, right?
1:48:48
That's that suddenly changes the not just like you get a you get a shot and that Pavlovian thing.
1:48:54
I mean that's a big problem with vaccine skepticism is people like I got the shot and I still got sick, right?
1:48:59
And so you can solve that.
1:49:01
People like I took the shot, I didn't get sick for two years.
1:49:03
That's a that's a better outcome.
1:49:03
But the more profound thing that happens is that when you start distributing a vaccine like this around the world, the pandemic era is over because you don't go, "Oh god, there's an H5 in1. It's getting in cows. It's getting in people."
1:49:15
There's just like, "Hey guys, there's a reminder.
1:49:17
Um, we're seeing some H5 and1 in people.
1:49:18
If you haven't had your centiliflu shot in the last two years, go get a booster."
1:49:22
And then you don't have a pandemic anymore.
1:49:23
And so that's a crazy transition compared to how humanity has been operating since the beginning of time.
1:49:30
Um what uh what is the key unlock for the universal antivenenom? Yeah.
1:49:36
So it's the same biology.
1:49:38
It's the idea that there are these little Achilles heels on these proteins that the like the viruses that can change just about anywhere but they can't mutate a couple key sites. Snake venoms.
1:49:48
There's 650 species of venomous snakes around the world and they all have different venom but they share certain toxins and those toxins have conserved sites.
1:49:58
The origins of this antivenenom was I found a guy named Tim Frey who had for 18 years he had injected himself with escalating I was about to I was about to ask we cover we covered that story and it was just like it was such an example of dude's rock this guy what what a hero. Yeah. Yeah. Yeah.
1:50:17
Tell us the full story because it's like it's an incredible story.
1:50:21
This guy just he decided he was going to make himself immune to snake venom but like all of them.
1:50:24
And so he started collecting a managerie of snakes in his basement like of all the gnarliest snakes around the world.
1:50:30
And he started off with tiny little doses.
1:50:31
It was I don't know if you guys saw Princess Bride, but it was like the powder of Princess Bride.
1:50:36
Starts with tiny little doses and he would slowly increase the dose until he was he'd be able to tolerate a full dose.
1:50:42
So normally he would kill a person easily.
1:50:44
And then he started letting the snakes bite him.
1:50:46
And so he had 202 bites and 654 immunizations over 18 years of 16 of the most deadly species from around the world.
1:50:54
And so I heard about him and I'm working on universal flu vaccines.
1:50:56
And I was like if anybody has the beating through their veins right now a a universal antivenenom it's it's going to be this guy. And so I contacted him.
1:51:05
We we started doing a research project together and it was phenomenally successful.
1:51:09
So it it just speaks again to the power of universal immunity to be able to completely change the face of 21st century medicine.
1:51:17
What is the what is the distribution of that antivenenom going to look like?
1:51:19
I imagine we should put it everywhere, right?
1:51:23
First aid, you know, growing up I mean growing up in California like being in the country a lot I it was always in the back of my mind as a kid of this like fear because I'd come across snakes all the time.
1:51:35
you know, this fear of, you know, you you don't necessarily know what bit you and then you don't necessarily, you know, first of all, is it is it venomous or not?
1:51:45
Hopefully, you're not getting bit by snakes a lot.
1:51:46
But then, you know, you know, if a person is getting treatment, are they even going to have the right, you know, um, so I'm curious what that kind of go to market looks like.
1:51:54
How do you get this distributed as widely as possible?
1:51:59
So, I mean, the way you described it, that's that's right.
1:52:00
And it's worse in the developing world.
1:52:01
So there there's a lot more people who die and get permanently messed up by snakes than you might think.
1:52:07
It's 140,000 people who die every year and another 300 to 400,000 that lose a limb, which really sucks if you're in a village because then your your family's having to take care of an invalid when really they need everybody to be able-bodied.
1:52:19
Um, and so yeah, right now there's 650 venomous species of snake and they make one antivenenom for each snake or sometimes a couple snakes in one bottle.
1:52:29
But so you get bit and first off they have to bring you probably multiple hours sometimes to get to a hospital has IVs and then they go, "Oh, I'm sorry, bro.
1:52:38
Were you bit by like a super venomous snake?
1:52:39
Did you happen to have the presence of mind while you were being bit to ruffle through the grass and grab the snake and bring it in a doggy bag so we can take a look at it so we can check?" Yeah.
1:52:48
Did you bring the killer snake that just bit you?
1:52:49
Did you bring it with you?
1:52:51
Otherwise, we don't know if if they we stock the anti if it even exists and we don't want to give it to you because it's made out of horse antibodies and it can cause a whole bunch of like gnarly side effects.
1:53:00
And so that's that's the world that we're trying to replace.
1:53:03
What this is now is a single uh we're halfway through.
1:53:06
We've got half the 300 species of neurotoxic snakes and we're working on the other half.
1:53:10
That was what the cell paper was.
1:53:11
But the idea is to have a single product.
1:53:13
Um it's fully human antibodies so they don't have all the side effects of the horse antibodies.
1:53:18
Um, you can liophilize them, freeze dry them.
1:53:21
And so the idea is like an epipen for snake antivenenom.
1:53:24
You have some solution and you have some dried powder, you just you get bit, you turn a little crank, shookie shookie, and then you stab it into your leg and you get the antivenenom immediately.
1:53:30
And that means it can be in backpacks.
1:53:32
It can be out in villages outside of um refrigeration.
1:53:36
There's no multiple hours of waiting.
1:53:38
And they don't need to know what kind of snake bit you and that that will change uh change a lot of people's lives. That's amazing. Very cool.
1:53:45
I'm glad you guys found each other. Yeah. you know.
1:53:47
Uh yeah, thank you so much for stopping by.
1:53:50
We we have a slam schedule today, but uh this is fantastic and uh I thank you for fighting the good fight against snakes.
1:53:57
I there's nothing I truly hate more.
1:53:59
So So I really appreciate it making the world one man one man versus my my literal only phobia. So thank you.
1:54:06
I I have no problem with spiders, no problem with anything else. I hate snakes.
1:54:11
So thank you so much for doing what you do.
1:54:15
There's a part of your brain that actually is umworked.
1:54:16
So if you you're shown a bunch of pictures, you'll spot the snake picture first.
1:54:20
So there's something deep in our brains that has taught us recognize and fear snakes from primordial times. Yeah.
1:54:27
And so what you're experiencing is not unusual.
1:54:28
We've been built to to tell these things.
1:54:30
And I'll I'll tell I'll pass on your thanks to Tim because he's the one who really deserves credit for this. Yeah.
1:54:36
I'm I'm also Irish, so there's probably something about the Pied Piper and wanting to rid the world of snakes. It's in my blood.
1:54:41
But we'll we'll get to that.
1:54:43
the Snake Eradication Project.
1:54:45
Second, uh, thank you for making the world safer from Congrats on the raise.
1:54:49
Uh, and congrats on the raise. Good luck. We'll talk to you. Cheers. Bye.
1:54:51
Uh, next up we have Craig Pigot from Halter.
1:54:54
I was very excited for this company. They raised money.
1:55:00
This is the most excited you've ever been about a startup.
1:55:02
Well, it's an extremely bullish story and we'll hear it from him.
1:55:05
It's about running your ranch the way you've always wanted. Yes.
1:55:08
Thank you so much for joining, Craig. How are you doing? I'm doing good. How you guys doing?
1:55:11
Uh, you're overseas, correct? I'm in uh New Zealand. Yes. Awesome. Uh, thank you.
1:55:17
I think it's early your time, I guess. Is that right? Oh, it's like 8:30. It's not too bad. Okay, not too bad.
1:55:23
Uh, well, thank you so much for joining.
1:55:24
Uh, why don't you kick us off with an introduction on yourself and the company? Cool. Yeah.
1:55:29
Craig, um, founder and CEO of a company called Halter.
1:55:31
Originally from a farm, engineer by training.
1:55:34
I did a stint at Rocket Lab, working for Peter Beck, which was kind of my intro to startups.
1:55:41
Um and then yeah founded halter.
1:55:44
We effectively are an operating system for a or for farmers and ranchers.
1:55:48
Uh we built a collar that goes on a cow.
1:55:51
Um that collar is solar powered and um runs a bunch of ML on the edge to train the animal to respond to cues.
1:55:58
So we can then virtually fence and shift these animals from a phone or from the farm's phone.
1:56:02
Uh which means we can run more productive farms.
1:56:04
Um egg covers about half the planet's a lamass.
1:56:08
So that's like the the goal I guess is to lift the productivity of that of that land. Interesting. So yeah.
1:56:15
Uh what was the state of the art beforehand? Um fences. Just cowboys. Yeah.
1:56:26
Barbw is literally barbwire.
1:56:26
Fences for hundreds of years have lifted the productivity of land, but obviously they're pretty expensive and hard to move and a lot of shortcomings.
1:56:35
And so how do you actually steer animals with just a collar?
1:56:41
They the collar has cues on it, like sound cues out of each side.
1:56:43
Um, if you imagine maybe like parking your car and as you like back into a wall, it beeps and so it gives you like feedback on how close you are to a virtual fence.
1:56:54
Um, so we use sound and vibration and then we train the animals with a low energy pulse.
1:57:00
It's like 100 times less than an electric fence that say most cows in New Zealand would be used to. Yeah.
1:57:06
Um and yeah, the collar does all of that training and and kind of animal guidance.
1:57:12
What has been the story around uh cowboy employment in the context of uh adoption of tech?
1:57:18
I imagine this is the kind of thing where uh I'm using cowboy uh sort of as a joke but but I imagine by introducing this technology you can free up you know ranch workers to do more important things like for example taking care of a sick cow or something like that. Has that been the case?
1:57:37
Yeah like um there's been massive labor shortages on farms and ranches for a long long time.
1:57:42
It's obviously not glamorous work.
1:57:44
And so I think a tool like halter does automate a bunch of work.
1:57:50
Um but really it also enables you to just be more precise and kind of run a like a a more productive operation and then you can any extra time you do have you spend on the neverending kind of to-do list of running a a ranch or a farm. Yeah.
1:58:04
Can you give us the state of the business?
1:58:05
I mean yeah I want to know about scale.
1:58:06
I imagine how many how many cows are we tracking at this point?
1:58:10
I I I think people don't understand the scale of your business, so I just want to hear from you.
1:58:15
Yeah, we're live in New Zealand, which is where we started.
1:58:17
Um, Australia and the US.
1:58:19
I think we're across like 18ish states in the US.
1:58:22
Um, we're on over a thousand farms, um, hundreds of thousands of cows, uh, which we fence and shift and track and monitor their health every day. Mhm.
1:58:36
Um and growing uh over like 2x year on year at the moment.
1:58:41
So it is like and there's Well, you got a lot of room to run. I looked it up.
1:58:46
There's one and a half billion cows in the world.
1:58:47
Uh according to some survey.
1:58:53
Um and I'm sure some percentage of that are just relatively wild and and not billion cows.
1:58:57
Wait, cows are expensive.
1:58:59
I feel like that's like a trillion dollar market then. It must be. Yeah. I had no idea.
1:59:03
the um the the funny thing about the TAM is it's like it's very different to most businesses.
1:59:10
It's kind of a function of land mass, not like population.
1:59:13
So you do end up with um like a very distributed TAM through South America and Europe, like everywhere.
1:59:21
Um so but the market is is huge.
1:59:24
So we're trying to remain focused on yeah NZ, Australia and the US like even within that is just a multi-billion dollar opportunity for us. science.
1:59:34
Would you guys would you guys ever do uh health tracking for the animals?
1:59:37
Is that something that you already do?
1:59:38
I imagine farmers would would love to understand like metrics around stuff like heart rate, HRV, things like that, steps, etc. Yeah.
1:59:49
To do the guidance well, you need to understand each cow's like behavior um and how they respond to the cues and how best to train them.
1:59:57
So kind of a a byproducts maybe underelling it, but as a function of that you then can also do health and fertility and things like that very well as well.
2:00:05
So um we already that's already part of the product um whether a cow's sick or um not healthy for any reason or if they're fertile um which is important for breeding and things like that. too. Yep.
2:00:18
If you got the hardware there, you know, that is just a over there update to a to the collar.
2:00:24
Um, and then we kind of turn that on as like a additional SAS product.
2:00:29
So, I mean, is the is the is the business model mostly uh like subscription SAS uh structured or is there a hardware component and a fixed cost as well to kind of onboard?
2:00:42
It is um the hardware is bundled in the software.
2:00:46
So it's pure purely a per it is like very sass like there is tiers you can start on core and upgrade to pro or unlimited and um there's a small kind of upfront installation fee um we have to put up towers on these farms to like run the network to talk to the collars so um but predominantly it's just a ongoing subscription you don't buy the collars or anything like that.
2:01:10
Yeah take us through the raise and kind of what the plan is going forward. Yeah.
2:01:15
So, we just closed a 100 mil series D from uh led by Bond. Um very meer. There we go. Love it. Awesome. Awesome firm.
2:01:26
Um and probably two things really like um more expansion in terms of new markets and and even just pushing harder into the markets that we're currently in.
2:01:35
and then a huge amount of product and R&D work like we've kind of for the first time taken a very analog operation and converted it into this like digital farm like farmers spend 2 hours a day in the product and they're doing everything from animal health to the fencing and shifting to like measuring their grass and all that.
2:01:57
So, and there's just so much kind of room to run on new product and and shipping new product.
2:02:01
So that's the other kind of half of the of the raise is just doing more kind of building our product and engineering teams and doing more R&D on that side.
2:02:10
Will we see will we see cow BCIs in the next uh 20 years?
2:02:17
BCIS um good good question. Don't know. Don't know.
2:02:24
Yeah, maybe maybe unnecessary.
2:02:26
Uh it's uh but you know if if you can do something you know a call a collar is potentially more uh elegant solution uh than than probably pretty costly to uh to implant the brain chip but who knows anything's possible.
2:02:42
If anybody's going to do it you guys. Yeah.
2:02:44
Uh well thanks for stopping by.
2:02:46
There's definitely some benefits to being on the on the outside. Yeah, for sure.
2:02:49
It's a little bit easier to change it out and clean it off if you need to. Awesome.
2:02:54
Well, congrats on the raise and uh yeah, come back on when you have more news.
2:02:58
Yeah, thanks so much for stopping on. Cheers.
2:03:02
Uh up next we have uh Jonathan from Grock coming into the studio talking about chips.
2:03:07
Hopefully we can uh get him in.
2:03:10
We've been juggling things.
2:03:10
How'd you sleep last night, Jordy? Go to eightleep. com. Absolutely terribly.
2:03:15
My eight couldn't couldn't save me.
2:03:17
My But you can get a pod five at eight. comtbn.
2:03:23
Uh, and one of the issu we got somebody.
2:03:26
Yeah, we have Jonathan here. How's it going? It's good. How are you? Welcome.
2:03:30
Thanks so much for stopping by.
2:03:30
Sorry about the little mix up with the scheduling.
2:03:32
Uh, glad you could make it though. Great to meet you. Thanks for having me.
2:03:36
Um, would you mind uh introducing the company and the and the current state of the products that you sell just for anyone that might not be familiar? Sure.
2:03:45
So, the company is Gro JRQ and uh we sell uh tokens as a service.
2:03:48
So very much like you use OpenAI's API or Enthropics API except we serve mostly open source models.
2:03:56
Um and we've built our own AI chips that allow us to do this much faster than anyone else.
2:04:03
Yeah, I remember the initial demos.
2:04:03
I believe it was on an early version of Llama and the inference rate was just so much so much higher.
2:04:10
What were the key decisions that you made to enable faster inference?
2:04:16
One of the key ones was we don't use any external memory.
2:04:19
um every time you read from memory, the chip just has to wait for it and it's very slow and it's like drinking a drink through a martini straw.
2:04:27
Um and so what we've uniquely been able to do is keep the cost down while also being very fast.
2:04:33
You can actually get speed off of a GPU, but then it just becomes completely uneconomical to use because you have one user using that at a time.
2:04:43
So what are the trade-offs of of not having uh offchip memory?
2:04:46
I imagine, you know, there's a big discussion over how important are large context windows.
2:04:52
Is that an important factor to uh to kind of how LLMs are scaling and and ultimately you're somewhat beholden to the decisions that are made by AI researchers at big labs, right?
2:05:07
Well, interestingly, we actually support um very often the largest context or the largest context that's practically offered by anyone else.
2:05:14
Um and this is a little counterintuitive to most people.
2:05:17
The trade-off we have is memory capacity, but GPUs have a memory bandwidth issue.
2:05:22
So, what the researchers do to improve the memory bandwidth issues always improve the memory capacity issues for us.
2:05:28
Um, so we can run all the same models with the same context length.
2:05:32
The trade-off is actually something else.
2:05:34
Um, you could think of us a little more as a nuclear reactor instead of thinking of us as a diesel generator.
2:05:40
Whereas GPUs, you can take just eight GPUs and use them for a model.
2:05:45
we need a lot more of our LPUs, but when we're running that model, very much like a nuclear reactor, we get much better cost and it's better for the environment because we in our case, we use less energy. Interesting.
2:05:56
Um, what does the shifting landscape around different custom silicon look like right now?
2:06:02
I feel like every hyperscaler is taking it more seriously.
2:06:06
We've heard stories of Microsoft wanting to pull back from Nvidia chips.
2:06:10
It seems like Amazon's kind of doing the same thing with tranium and inferentia. Um, what what is it?
2:06:17
Are we going to just be in a world where every hyperscaler has their own chip or do you think that the market will fragment in kind of a different way?
2:06:25
Well, my background I'm actually the person who came up with Google's TPU chip. So, I started as 20%. Um, and no way.
2:06:31
Wait, it actually started as 20% project. It did. It was unended. That's amazing. Yeah. So, there are 20%s. That's a real thing.
2:06:39
But um what most people don't realize is that there were actually three different AI chip efforts at Google and that was the only one that actually survived and was competitive with GPUs.
2:06:48
The other two ended up getting cancelled.
2:06:49
And so when you start looking at the broader and broader uh world of chips being built, a very small number of them are actually going to be uh competitive with GPUs.
2:06:58
So most of those are going to be canceled.
2:07:00
But I think where people get really confused is they keep talking about the chips.
2:07:06
And so, uh, it's not about the chips, it's about the software.
2:07:08
Uh, there are all these little features like, um, prefix caching, um, speculative decode, um, uh, and all sorts of things like that.
2:07:19
If you didn't have one of those features, you wouldn't actually be able to be competitive with the the, um, latest GPU, no matter how good your chip was. Sure.
2:07:29
So, um, the thing is, you have to first catch up in software, and only then do you get to compete on the chip.
2:07:34
And so one of the things that we did that was very unusual is we spent the first six months working on a compiler which makes our software work very easily.
2:07:41
So we can actually compete on the software level um with uh Nvidia.
2:07:45
Uh we have the same models running and only then do we get to compete on the chip.
2:07:53
So are you talking about at Google that was like the the push to break out of like the CUDA ecosystem essentially?
2:07:59
Well actually this was uh at Grock.
2:07:59
So at Google we had these handwritten kernels which are these sort of assembly routines and it's uh the same as with uh GPUs. Okay.
2:08:10
GPU and GPUs are actually more similar than what we've built here at Grock. Yeah.
2:08:15
How how do you think about the the current AI paradigm and how long like the current algorithmic machine regime will last or or where how it will change because I feel like the the narrative around companies that bet on a particular, you know, okay, we're going really long on the transformer or something like that.
2:08:36
Then there's always this question of like, will the transformer stick around?
2:08:39
Well, it's been around for a long time. It seems really good.
2:08:41
Maybe it'll be around forever. Maybe it won't.
2:08:42
Um how do you think about those?
2:08:44
Is that is that the right question to be asking? Yeah.
2:08:47
I I remember when we were at Google um we hired this really senior person right before we were done designing the TPU and he came in and he said, "You cannot build a generally programmable chip that will out compete GPUs. It's impossible.
2:09:00
Instead, we need to stop what we're doing and just create a uh chip for a particular model." Sure.
2:09:06
and we had to walk him through the whiteboard and show him, but we actually ended up proving to him we made a faster chip by making it general.
2:09:14
And the the counterintuitive part was if you're actually able to optimize some of the circuitry in the chip to be reused for many different things, but you're only designing a couple of those circuits, you can make them much better than if you have a whole bunch of different stuff that's, you know, not as optimized.
2:09:32
And when you look at one of these models, you can't fit one of these models on a single chip anyway.
2:09:38
You have to use multiple chips.
2:09:38
So, are you going to design a different chip for each part of the model?
2:09:42
And it starts to become ridiculous and doesn't make any sense.
2:09:45
There's actually been people recently who've been trying to uh revive that idea.
2:09:50
Um, but in the time when they started uh since they started, became a thing, mixture of experts.
2:09:56
So, if they had already started designing their chip, the chip would be obsolete.
2:09:59
And then now we're seeing other sorts of things emerge that are very interesting and if any of those win, those chips will be obsolete.
2:10:06
So we always focus on as general of a programmable chip as we can.
2:10:12
Switching gears a little bit, uh I believe you're in Europe right now. It looks dark outside.
2:10:16
Uh and it looks like you're you're Thank you for staying up.
2:10:20
Thanks for staying up to hang with us.
2:10:22
Uh talk about the decision to put the first European data center center in Helsinki and kind of everything that went into that.
2:10:28
So, we were at an event here, an AI event, and about a month ago, we decided uh it would probably be great if we unveiled a European data center while at this event.
2:10:43
And literally a month later, we now have it we now have it up and running um actually running models.
2:10:47
So, I think that's a record for time to decide to deploy um and getting it up and running.
2:10:53
We actually congratulations.
2:10:56
Well, we actually weren't expecting it to have it until the end of this week, which would have been insane in of itself, but it's actually up and running now. So, kudos to the team.
2:11:01
Um, the team is probably sweating because they're like, "Okay, this is the bar now.
2:11:06
We actually have to be faster than this to to the previous bar was 51 days.
2:11:10
When we deployed about 20,000 chips in Saudi Arabia, it was 51 days from signing before we set it up."
2:11:17
Oh, I remember that deal. Yeah.
2:11:19
Now it's like a month and three days or something.
2:11:21
So what what makes that possible?
2:11:23
Is it just the en is it the energy efficiency?
2:11:25
Is that a huge part of it?
2:11:28
Best friends with Morris Chang TSMC to make our chips maybe. Okay. Yeah.
2:11:33
Um in our case, we've actually simplified the architecture pretty significantly.
2:11:38
We don't use any um external switches as part of our core interconnect only to move data in and out from the system.
2:11:46
Um it's pretty simple cabling. Um air cooled still. We're not liquid cooled.
2:11:52
We like to stay a generation behind on all of the technology and just compete on the architecture and the software. Okay.
2:11:58
And so that allows us to use these highly proven technologies where everyone's already debugged them and we're not debugging them as we deploy.
2:12:07
But also um because we don't use that external memory.
2:12:09
So that external memory tends to lead to a lot of uh chips that fail in field.
2:12:13
Um and so as you're bringing them up, a lot of them fail. You have to fix them.
2:12:17
Um, and some there was a recent model that we ran that required 4,000 chips.
2:12:22
The first time we ran that model on the 4,000 chips, it worked.
2:12:27
And we would have never been able to do that if it was 4,000 GPUs.
2:12:30
Um, the first time you run something on 4,000 GPUs, you have to replace a bunch of them everywhere.
2:12:35
Um, there's been there's been some rumors that you've operated the uh like the the token business, the API at a loss.
2:12:44
that feels like a completely rational strategy in many ways.
2:12:49
Um, nothing wrong with that.
2:12:49
But can you comment on that as a as a strategy?
2:12:53
Is that just a misconception? Um, is that deliberate?
2:12:56
Um, how do you think about just investing for adoption broadly?
2:13:02
Because there's like it's really important as a business to grow and there's a whole bunch of different strategies and tools in the tool chest.
2:13:10
What do you think is valuable?
2:13:10
What's what's been the strategy to date and how's it evolving?
2:13:13
I let's let's get even more specific than at a loss because when you're running a service you can claim you're not at a loss because you have an infinite amortization time on your capex and your chips and that's what a lot of the neo clouds are doing.
2:13:26
So we actually agra uh uh aim for a more aggressive payback period than anyone does with GPUs and part of the way we can get away with this is first of all um our electricity cost is about onethird per token versus a GPU.
2:13:39
So our opex is already lower. Okay.
2:13:45
And that's sort of the flat.
2:13:45
You have to beat your opex otherwise you are losing money period.
2:13:48
There's no accounting tricks you can do.
2:13:51
And then on top of that um the question is how quickly can you pay back for us.
2:13:56
Everything we run is above our opex cost.
2:13:58
So we're not losing money.
2:13:58
But different models have different payback periods.
2:14:02
Some of them as quick as two years on our V1 silicon.
2:14:04
Some take you know four years. And it's a blend, right? Okay.
2:14:09
And that overall blend is what we're happy with. Makes sense. Yeah.
2:14:13
On on that note, um there's one world where, you know, the models are getting better.
2:14:18
Everyone just wants the best model for every single task and they're just willing to pay for the latest and greatest constantly.
2:14:25
there's this other interesting model where I feel like we get a new capability whether it's just the ability to convert you know tech CSV to JSON or something really or like raw text to JSON or data extraction or you know um censoring you know bad words and a whole
2:14:41
huge transcript and like the problem is completely solved by the LLM and you don't need to throw a more advanced model at it in the future even if one comes down the pipe you just need speed and and reliability and and eventually cost. And so do you see is is there an
2:14:55
And so do you see is is there an important part of your business where you can be the the like baseline provider for a current capability that will continue for decades potentially even as a newer model comes online or do you want to try and shift the business towards the being constantly on the most aggressive side of the frontier and is there actually a tradeoff there or can you just do both?
2:15:21
So um a very common usage pattern we see is that people will develop their systems on the latest and greatest model. Yeah.
2:15:31
And then um they will optimize it for two things.
2:15:34
One is they'll optimize it for speed and the other is they'll optimize it for cost. Yeah.
2:15:39
Very often the most successful AI startups are spending almost as much per month on token as a service as their total revenue, right?
2:15:48
and they'll they'll lose money on paying employees and things like that, but they're trying to keep those balanced.
2:15:52
Yeah, we can bring the the cost per token down.
2:15:55
Interestingly enough, the uh general inclination is that they want to spend the same amount.
2:15:59
They just want more tokens because those tokens can actually turn into more quality if you can iterate, if you can do more in parallel.
2:16:05
The speed thing is super important because that's engagement.
2:16:08
So um if you think about it um uh every time you uh increase the performance of a model by about or any service by about 100 milliseconds your um engagement rate or your conversion rate tends to improve about by 8%. That's on desktop.
2:16:25
On mobile um it's over 30%.
2:16:30
And so people have no patience on mobile whatsoever.
2:16:33
Y and so what we see is people get stuff working.
2:16:36
working. they prove that it's possible and the most capable model and then they'll um try and find one of the models that we run all the open source models um and then um when they're able to find one that works for them because they have to try a couple then they're
2:16:50
very happy and then they don't change things and so there are a couple of models which are actually quite old quite terrible that we would love to deprecate but there's a bunch of users because their system works and they don't want to touch it. Um the other thing is and
2:17:02
Um the other thing is and this one's interesting.
2:17:05
So we had one of our engineers uh try solving a bunch of math theorems and they were using um this thing called lean which is a formal theorem prover and while and they would use different LLMs in the background to solve and then they would use lean to test um every single time Claude Opus would actually solve it in the fewest iterations.
2:17:27
However, uh Quen 332B running on our chips because they're so fast always solved the theorems faster.
2:17:36
It may have more iterations, but it was able to go through them faster and so you actually got the result faster with the less expensive model running on Grock. Interesting.
2:17:46
It's been a crazy year so far. Yeah.
2:17:46
Uh we're about halfway through.
2:17:49
What are you excited about in the next six months on the Grock side and then what are you excited about in the broader open source ecosystem?
2:17:58
Well, on the Gro side, uh we're continuing to scale up.
2:18:00
We're going to add a bunch new data centers and new continents.
2:18:03
Um uh after this, I'm going somewhere else in the world.
2:18:07
I'm not going to tell you where where we're working on getting another data center um uh deal done. Um amazing. But congrats.
2:18:14
Also, there are some rumors that we might have some new improved systems or chips or something coming later this year.
2:18:20
And there's allegations allegations of massive advancements.
2:18:26
Rumor rumors of breakthrough. A major breakthrough. Yeah, I love that.
2:18:29
Um, can you give me uh your uh retrospective but also your current take on just Moore's law broadly?
2:18:40
Yeah, I I think Moore's law is true, but I don't think it's the most important part, and people miss this.
2:18:44
So, Moore's law, for those who don't know, every 18 to 24 months, the number of transistors on a chip doubles.
2:18:50
That translates to the economics get better.
2:18:52
That translates to um uh the chips get faster and you can trade that off.
2:18:58
and you can trade that off. what's really been happening in the last 5 to 10 years and I don't know what to call this law um but like when I left to start Grock one of the observations was every 18 to 24 months not only did the transistors double but the number of chips doubled the transistors doubled and the number
2:19:16
of chips doubled and so when we started we actually uh asked ourselves the question what would happen if we assumed there were an infinite number of chips how would you design the system differently and that's one of the reasons we decided to rid of the memory altogether because the memory just holds bits that are doing nothing waiting for an active chip to do something with them. We're like, let's just make
2:19:35
We're like, let's just make everything active and do everything all at once.
2:19:38
And so that was a a very important um uh observation for us.
2:19:41
And I think people are going to focus more on the number of chips doubling over the next couple of years than um how much each chip improved.
2:19:52
Can you I know uh we we'll let you go.
2:19:54
This is my last question.
2:19:54
This is my last question. Um unless Jordy has something but uh can you tell us a little bit about uh broadly what uh international leaders in other countries generally are are thinking or what's driving their motivation to spin up
2:20:11
token factories these AI factories new data centers uh the the the sovereign AI efforts um and because I'm thinking back to you know the development of the original cloud computing revolution and it felt like there wasn't
2:20:29
as much of an incentive or or narrative around well we can't possibly just let AWS come over here and set up shop this feels different what are the motivations is it is it economic is it freedom of speech like what what what are the what what are the shape of the conversations
2:20:47
that you're having that get an international leader excited about setting up an AI factory a token factory a data center so It's a little bit less about um fear and control and it's actually more about they're not getting enough compute. So,
2:21:01
So, think of it this way.
2:21:04
Um GPUs are expensive and there's only a finite number of them being built not because they wouldn't build more GPUs, but because they rely on that external memory, which is a real bottleneck in the supply chain.
2:21:17
Um and so Nvidia is going to build every single GPU that they can physically build this year.
2:21:22
AMD is going to build every single GPU that they can physically build this year and then they're going to sell every single one of them.
2:21:29
If they could build more, they would sell more.
2:21:31
That means that there's an allocation problem.
2:21:33
Countries aren't getting all of the chips that they need for what they're doing internally.
2:21:37
So, for example, when we built that data center in Saudi Arabia, there were a bunch of people who'd been waiting over a year to get GPU orders filled, and they had no idea when it was going to happen.
2:21:48
And so, they switched over to us because they could immediately get access to compute.
2:21:51
So, what you're seeing is a lot of these um sovereign plays are more about making sure they get the compute.
2:21:57
It's as if we're entering the industrial age and all of a sudden everyone realizes if I plug something into an electric socket, I make all of my workers more efficient.
2:22:07
Well, if everyone else in the world is getting that or it feels like that's the case and you're not getting that, you're not getting the efficiency, you're not getting the compute to um augment your workforce and make them more capable, you're at risk of falling behind.
2:22:18
M and so for them it's as if all the power companies are focusing on some other really rich regions of the world and they want to get that power as well so that they can start running their AI models.
2:22:31
So is that more like the like the 5G roll out the idea of just bringing mobile to your country uh versus uh Google search I suppose is is that the more accurate analogy maybe that would be fair.
2:22:45
That makes a lot of sense.
2:22:45
Uh Jordy do you have anything else?
2:22:46
uh any any expectations around uh OpenAI's uh alleged new open source model? Oh yeah.
2:22:55
Is that something that you guys are going to be you know integrating heavily with?
2:22:59
If OpenAI open source is their model, we will um uh immediately launch it. Amazing. Awesome. Well, that's great news.
2:23:06
Uh well, thank you so much for taking the time.
2:23:07
I appreciate you staying up late.
2:23:09
We'll talk to you soon and congrats on the new on the new data center, new record. Cheers. Have a have a great Bye.
2:23:18
And let's tell you about graphite. dev. graphite. dev.
2:23:22
Code review for the age of AI.
2:23:22
Graphite helps teams on GitHub ship higher quality software faster.
2:23:28
The best teams in the world, including TVPN, of course, use graphite. Um, what else?
2:23:37
Uh, we have some timeline.
2:23:39
We have some timeline we can go through.
2:23:40
We got to get out of here soon.
2:23:40
Yanni, uh, Yonyi Rickman says, uh, he wants to get long mold. Did you see this? Yeah.
2:23:46
So, I threw this in here. Request for startups. I want to get long mold.
2:23:51
Basically, he says, "Mold is super hot right now.
2:23:53
It's like the protein of environmental contaminants.
2:23:54
It's in everything with no signs of going away. It's in the air."
2:23:58
Um, and this stood out to me because uh I once rented a house that ended up having mold in it. It was a huge disaster.
2:24:06
Uh, took a lot of time, was making me sick.
2:24:09
Uh, and I think a lot of people suffer from mold exposure or mold ill uh, related illnesses and don't realize it at all.
2:24:16
So, there's a bunch of different ways that you can solve this.
2:24:20
I don't necessarily know what they all look like.
2:24:22
I mean, one of the biggest Yeah. Yeah.
2:24:25
He mold testing, eight sleep of mold, smart air purifiers and testing.
2:24:29
That makes a lot of sense.
2:24:29
Then he says mold insurance. I maybe that's genius.
2:24:34
I don't know that that's not what I would have thought of, but yeah.
2:24:37
And then mold resistant building materials. That's kind of cool. Yeah.
2:24:39
So, there's a bunch of different categories.
2:24:40
So, I wanted to throw this in here.
2:24:42
If you are long mold yourself and your business, go reach out to Yoni.
2:24:46
I would love to see more solutions here.
2:24:48
In other news, tomorrow night, there will be a Gro 4 release live stream. Wednesday, 8:00 p. m. Pacific. They're staying up late.
2:24:57
I love how they always do their streams after after everyone else has left the office and gone home.
2:25:00
They're like, "We're still here.
2:25:02
Uh we're going to go into our tents.
2:25:04
Uh you know, come out of our tents and and and do a stream." So I'm excited for this.
2:25:09
I mean this is going to say a lot about about um you know the feels like it hasn't been long since Grock 3.
2:25:17
So yeah there there will be a big question about where this hits.
2:25:21
Also uh you know we hit this like pre-training wall.
2:25:23
It feels like you know a lot of people are saying we need new algorithms, we need new ideas and uh and I'm sure they'll be able to the the question is not like can Grock bu can XAI build a big data center and and and get to the frontier.
2:25:35
questions now is like can they push past the frontier with some actual like completely unthought of innovation.
2:25:42
So that'll be interesting to track.
2:25:44
But either way, I'm there's a ton of interesting to see what they're doing on the image side, video side.
2:25:50
The video side would be very interesting.
2:25:51
I mean, uh, Axe has a lot of video data because, you know, X has been uploading video, you know, certainly not as much as YouTube, but a lot of YouTube videos get uploaded to X in full. Yeah.
2:26:00
Imagine imagine if you can tag Grock under like a meme and say animate this. Yeah. Yeah. Turn this into GTA. That would be crazy. 20 second GTA V.
2:26:10
That probably be very expensive on the inference side, but you know, maybe worth it. Have a lot of GPUs.
2:26:14
Uh should we close with this Audi ad? Beautiful. Let's do it. Advantage Audi. Beautiful ad.
2:26:21
I couldn't tell if this was a real ad. 10 out of 10. No notes.
2:26:25
I couldn't tell if this was actually live.
2:26:26
If it is tennis balls, if it's not in the shape of the Audi logo. Fantastic. Fantastic.
2:26:35
Well, thank you so much for tuning in today.
2:26:37
We will be back tomorrow.
2:26:37
A little chaotic startup and assembly.
2:26:44
They didn't want us to podcast, but they couldn't stop us. They couldn't stop us. They'll never stop us.
2:26:48
So, we will see you tomorrow. Have a