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4:50
Today is Wednesday, June 18th, 2025.
4:52
We are live from the TBPN Ultra Dome, the temple of technology, the fortress of finance, the capital of capital, uh the home of the golden retriever. We are so back.
5:04
Uh Delian sums it up well.
5:07
He says, "We thought it was so over, but in fact, we are so back because Chimath Polyhapatia is launching a spack."
5:14
Or he's exploring the idea and he's having advanced conversations, advanced talks.
5:22
I think I'm going to vote yes.
5:22
The reason for that is that 99% 99% of Spa sponsors quit right before they're about to hit a big Yes, I agree. I agree.
5:29
I think that this could be the one and I think everybody should be open to the idea, right?
5:37
Let's let's it's not the the the vehicle is not the problem.
5:39
It's the it's the asset that you know that that that becomes a part of it.
5:45
And so let's uh let's keep an open mind. I agree.
5:49
He might he could very well be backing Stripe, right?
5:51
I've never wanted a poly market on something more.
5:53
We need a poly market on whether or not this back happens before the end of the year ASAP. ASAP. Immediately.
5:58
Um also, I mean, if the spa gets out, you know where to go. Public. com.
6:03
Investing for those who take it seriously.
6:06
multiasset investing, industryleading yields, they're trusted by millions. Go check it out.
6:10
Um, let's read through some of the news that we want to cover today.
6:13
Give you a little bit of overview of the show.
6:17
Uh, the big news is more development in the story around Time Warner. Look at that lineup.
6:22
Wow, that is a stacked lineup.
6:24
It's getting to the point it's actually a little hard for me to read.
6:28
It's a little hard to read.
6:29
Yeah, we might have to condense some of this down, figure out a way to kind of roll up.
6:32
We're working on a lightning round product.
6:34
Something where we can go back to back to back.
6:35
We did it with the teal fellows. Worked out really well.
6:38
We've been doing it at YC demo day.
6:38
I think we're going to do it uh more frequently because there's so much news.
6:45
Have you been following how many funding raising announcements have been going out?
6:49
Like the timeline is just like six companies raising legitimate like seeds, series A, series B's every single day. Y narrative violation.
6:57
The venture capitalists do not appear to be on vacation somehow. We'll see.
7:01
These might be deals that got done before before uh the the private jets left for Europe.
7:09
But that's right, they're just getting announced now, but we'll be here covering it, talking to the founders who are raising big dollars from bigname VCs.
7:15
And we have some news about who's joining what team and uh uh there's a lot of movement amongst the tier lot of action.
7:21
So there's there's an update to the David Zazlov story about Time Warner.
7:26
We'll we'll dig into a little bit of the split of what's going on.
7:29
This is of course uh HBO, HBO Max, they went to HBO, they went to Max, they went to HBO, they went back and forth the brand eventually.
7:35
Now they're splitting up the company entirely.
7:36
Uh and big news uh Warner's chief to receive pay cut after split. This is uh David Zazlov.
7:42
Um and so he will uh be making less money now as he's only overseeing kind of half of the organization.
7:51
Uh Craft Hind is also removing all artificial dyes on the back of the Maha movement.
7:56
a lot of stuff that uh uh that uh RFK Jr. has been pushing, right?
8:01
Bobby Kennedy, I've been surprised at how quickly some of these players have been willing to give up.
8:09
They're moving on their sacred artificial dies.
8:11
At the same time, with the artificial die story, I don't know.
8:15
I still don't have a firm idea of exactly how dangerous they are, exactly the impact.
8:20
Like, it seems like there's a study that shows that You've never been afraid of them.
8:23
I've never been af I'm still not afraid of them.
8:24
Um but but it seems like right now the the narrative is that uh they might lead to increase slight increases in ADHD symptoms uh amongst kids.
8:34
And so if that's true that's obviously something we want to avoid.
8:37
It seems like you know a lot of the rational to they don't have you're taking the side of big food.
8:42
I'm just saying like like the the the actual narrative the comm the science communication I think has been lacking on the food desk.
8:51
It's been a lot of like it's scary, but it hasn't been concretized in the sense of like of like it takes two years off your life.
8:56
It it it raises your chance of cancer by 5%.
9:01
Like we're not there yet.
9:01
And we've been there with other products and uh and I think that there is more.
9:05
There's like we need more from the scientific community or from from the actual thought leaders in Maja anywhere else to really make it clear like what are we getting when we remove this?
9:15
It seems like something that like we could do without because apparently food dies they just make they just make stuff like more enticing basically. Yeah.
9:23
And and there's plenty there well well the the more important thing is there's plenty of of natural alternatives that are already used in Europe and other places around the world that we can.
9:33
So it's kind of like a why not conversation which is fine but it would be cool if we actually knew to a point exactly how bad it was for you.
9:42
I I would always like to see that if possible.
9:43
Um, other news, obviously the the the the war between Israel and Iran is raging.
9:47
Now, there's a more interesting dynamic emerging in the oil markets.
9:52
We're going to have a found Iran to talk about oil markets soon, but um, China will pay if Iran's oil is cut off.
9:59
The country's refineries have become hooked on cheap imports of sanctioned Iranian crude.
10:03
So there's a very interesting dynamic between Russia, China, and Iran as they all are kind of going to various levels of conflict with neighboring countries, neighboring areas.
10:15
Um, as they get cut off, they kind of drive each other towards one another.
10:20
And so, uh, it'll be interesting.
10:22
They would be unlikely bedfellows because of the difference in religion between China and Iran, but certainly uh likely trade partners if uh if they you know need to keep the oil flowing and Iran obviously needs to keep the money flowing as they fund their war effort.
10:39
So interesting story there.
10:39
Uh Andy Josie from Amazon is also talking about AI potentially cutting the size of their big workforce. Um which is interesting.
10:48
We've heard this from Clarno.
10:50
We're going to have the CEO of Clara on the show soon and dig into how much of that is real.
10:55
Where exactly is generative AI agent stuff like actually affecting hiring?
11:00
Where can you actually um get leverage? Get leverage.
11:03
But the thing with leverage is like the game the game theoretic outcome is usually like, you know, I can do X with 10 employees plus AI. You can do X.
11:14
You can do the same amount of output with 10 employees and AI.
11:18
And so we both wind up using the maximum amount of employees and AI.
11:21
Like you like it doesn't always play out that that there's an advantage to be gained by cutting your workforce. Totally.
11:31
Especially if we're in kind of this more like centaur era where we're not fully uh delegating entirely and it's more like we want these AI enhanced uh employees and we need lots of them.
11:40
So uh but but it is interesting.
11:42
He says about 41% of employers said that they would downsize their workforce due to AI.
11:48
A World Economic Forum survey found and so lots of people are talking about this.
11:53
It's unclear if it's just a signal to the market that hey, we're going to be more profitable going forward.
11:56
It' be interesting to to think about what type of messaging there was from CEOs in the dot era.
12:03
Hey, we're going to be able to all the fax machine employees are going away. Yeah.
12:08
Uh Eli Liy is buying a gene editing startup. They're paying 1.
12:11
3 billion for Verve Therapeutics.
12:13
Uh it's on the cover of the the business and finance section today.
12:19
Um so I I'm I'm not super familiar with this.
12:21
We need to have some more biotech people on to really dig into this, but uh they're paying $1 billion upfront adding potential treatment for uh cardiovascular disease to its portfolio.
12:31
Under the agreement, the companies said Eli Liy will buy all of the gene editing startup shares outstanding at for about $10. 50.
12:38
the stock was at around $6 beforehand.
12:41
Um there's another $300 million contingent on the company's lead treatment achieving certain clinical milestones.
12:48
Uh the treatment is being evaluated in phase 1b clinical trial study and has been granted fasttrack designation by the food and drug administration.
12:57
There's a lot of excitement about uh Marty at the idea. Some quick notes on.
13:01
com era CEOs and how they thought about workforce expansion or contraction because of the internet.
13:08
So during the dotcom era, many CEOs and founders of internet companies believed that the internet would enable them to operate with leaner workforces compared to traditional businesses.
13:15
This belief was rooted in the idea that the internet could bypass established distribution channels, automate processes, and reduce the need for large numbers of employees to deliver products and services.
13:25
The web was seen as a killer app that could connect buyers and sellers in seamless lowcost ways, fueling optimism about efficiency and scalability.
13:34
However, this vision did not always materialize as expected.
13:37
While some companies did achieve efficiencies, many dot firms rapidly expanded their workforces in pursuit of growth and market share, often hiring hundreds of employees within months.
13:47
So, when the bubble burst, these companies faced uh quite a lot of pressure with layoffs and uh it did lead to a glut in the job market.
13:54
Um but it was ultimately driven by that desire to compete and capture market share.
14:02
So many of these CEOs, they they aspired to say, "Hey, we're going to have these much leaner sort of work forces, but the reality was that it was a lot more complicated than that."
14:10
Uh, and there was some overhiring.
14:12
So anyways, I I think we uh we'll probably we'll see some of that, right?
14:18
There's this pressure to just compete and just access the best talent. Yep.
14:21
and scale headcount uh in order to win market share and and I'm sure that will lead to uh layoffs at different points um that might be blamed on AI because right now AI is a straight scapegoat.
14:32
If you want to downsize, you can be like we're 10 times more efficient than we were last year.
14:38
And if you want to upsize, you can be like this stuff's too dangerous or it's too big of an opportunity or you want to spend more on capex. We have to go after it.
14:44
Yeah, it is it is the dominant narrative. It drives everything.
14:47
Uh it even drives the FDA uh because the FDA uh reporting to the Wall Street Journal here says the FDA chief to fasttrack some drugs.
14:52
This is what Eli Lily is banking on and tap AI.
14:55
And so uh artificial intelligence is top of mind even for the uh even for the government.
15:02
Uh embracing artificial intelligence, taking on companies that make ultrarocessed foods and offering a fast track to approve drugs the Trump administration views as a priority.
15:12
Welcome to the new FDA as envisioned by Dr.
15:15
for Marty Moery uh who is leading the agency under health secretary RFK Jr.
15:21
Both men have said they want to overhaul the agency, citing what they see as FDA's reputation for coziness with the pharmaceutical companies.
15:27
Uh Maker's uh goal is to deliver more transparency, unleash innovation, eliminate conflicts, and lower drug pricing, said Cali means a White House adviser and ally and former guest of the show. Let's hear from Cali.
15:42
Uh very interesting uh the changes.
15:45
And so I'm not exactly sure how they're planning on implementing AI, but it actually does make a ton of sense because um uh FDA officials said about 6,000 people at the FDA are using uh AI weekly.
15:56
AI can modernize the FDA and radically increase efficiency in the review process.
16:01
efficiency in the review process. I mean that is huge because you wind up sending in like a 100,000 docu 100,000 page document citing all this stuff and a lot of the early FDA trials are just fact-checking that you actually filled out the form properly or factchecking that you even have scientific data like
16:19
did you do the test at all and then if you did the test then we will evaluate the results and put the scientists on it but there's a lot of folks in the FDA where their job is not actually to understand the efficacy or the results of the trial but just to understand that the trial happened at all and that is something that AI could probably jump into pretty quickly. So, that's So, that's exciting.
16:37
Um, other news, uh, the Senate is set to pass a bill regulating stable coins.
16:42
This was on the front page of the Wall Street Journal.
16:45
Uh, the Senate was poised to pass legislation to regulate a widely used type of cryptocurrency, a key victory for the digital asset industry after it poured money into last year's election.
16:55
bill, the first of its kind, put federal guard rails on digital currencies, would set up oversight of stable coins, a popular crypto asset typically pegged to a fiat currency like the US dollar.
17:06
The peg keeps their price steady, making them attractive to traders looking for a store of value while they buy and sell more volatile cryptocurrencies.
17:13
And stable coins can also be used for crossber payments.
17:17
We've covered the Genius Act a few times.
17:19
We are having Kathern Han come on the show to talk about exactly what's going on for her to break it down. It'd be fun.
17:24
We've uh talked plenty about unstable coins as well as stable coins.
17:30
But but yeah, her analysis should be um spot on. So excited to get that.
17:33
Um in other news, there is a shakeup at Renault. Is that right? Caring.
17:42
Renault's star boss tests his skills at caring.
17:45
Deo revived the car maker's fortune at Renault as CEO, but views are split on whether he can do the same for the luxury group.
17:52
Luca Deo was among French business elite celebrating the opening of the 2024 Olympic Games at a party hosted by luxury group LVMH at its five-star Chevel Blanc Hotel in Paris last July.
18:05
Let's hear it for luxury group LVMH.
18:08
Uh the Renault chief executive joined LVMH patriarch Bernard Arno and top executives such as Louis Vuitton chief Petro Beccari.
18:16
Uh but few expected that within a year the motor industry veteran would end up with the top job at LVMH LVMH's longtime rival Carring.
18:26
And so he's hanging out at the LVMH party.
18:28
Little do they know there's a trade deal in the works and he's going to go work for the direct competitor at Caring.
18:34
The Italian is set to leave Renault next month and become the boss of Caring, the struggling owner of Gucci and Son Lauron from midepptember.
18:41
While Deo has spent his entire career in the car industry, he has been making discreet overtures to the luxury sector from some for some time.
18:50
According to two people with knowledge of the situation, he cemented his reputation by leading a turnaround overn uh which he took over in 2020 when it was reeling from the exit of Carlos Gon. Do you remember this? No.
19:04
Uh he escaped he he escaped in a suitcase.
19:07
Do you remember this whole story? Oh, it was amazing. Yeah.
19:11
The the Carlos Goon story is insane.
19:13
Uh goon had been ousted after his arrest in Japan on charges he denies later later making a daredevil escape to Lebanon in a musical instrument box. That's what happened.
19:22
So he so he in a plane in a in a private jet.
19:25
So he so he chartered a private jet under someone else's name and then basically was sleeping in a p in a like a large guitar case or something like that or you know one of those like roadie cases that has like uh speakers in it and stuff.
19:37
So he goes in there and then he gets out and he can't be extradited because he's in his home country because and he claims that um like the Japanese government was accusing him of was basically being like anti-competitive with him because he was dominating the Japanese market and they were like you're cooking the books.
19:53
It's unclear and like we'll never really know I guess who who did the right thing.
19:57
But uh Deo came in and was like okay I'm going to turn this around uh be a little bit more by the book maybe maybe don't get you know charges.
20:06
Don't want to end up in a situation where you're getting snuck in a private jet in a in a musical instrument case.
20:13
You just want to avoid that. Yeah.
20:14
You want to be in the couch.
20:17
It's not life's not about what you should do.
20:19
It's about what you, you know, shouldn't do, right?
20:20
It's about avoiding things. So, he took over.
20:22
So, Deo took over in July of 2020.
20:23
Renault shares price has almost doubled. Let's hear it for that.
20:28
While Volkswagen has fallen by a third and Stalantis has been almost flat.
20:32
Stalantis is also in trouble.
20:33
Renault's operating margin improved from a loss in 2020 to a record 7. 6% last year.
20:38
As he moves from one top French group to another and prepares to steer another turnaround, the question is whether Deo's lack of experience selling handbags and high heels will help or hinder his bid to revive Carring.
20:50
Luxury is a bit different from car makers, said one luxury executive who said Deo was a big captain of industry and a real star who could still succeed in his new role.
20:58
Caring isn't lacking in creativity, but in structure and discipline.
21:02
Uh, a combination of strategic missteps and global slowdown in demand for high-end handbags and watches has left Caring in a diff difficult position.
21:10
Flavio uh created a fund manager and luxury specialist at Gam said caring had to do something big to address the situation.
21:19
Caring slowdown follows years.
21:20
The caring the caring uh caring lvage dynamic is interesting. So Caring has Gucci, St.
21:28
Laurent, Vanetta, Balenciaga, Brioni, you know, a bunch of other brands.
21:32
LVMH has pretty much every other one besides Hermes, which is obviously an independent uh company.
21:37
I thought they were investing or they own a stake of Hermes.
21:41
They have they have some some ownership.
21:43
Um uh and it was always the goal to just kind of buy up and eventually take control, but that didn't happen.
21:49
Um but the power law dynamics that we see in venture clearly playing out here.
21:54
Caring is a 22 billion euro uh market cap group uh down uh over 60% in the past 5 years.
22:02
Uh LVMH is um you know an order of magnitude bigger 270 billion dollar uh company uh at uh that's that's up 20% it's 27% over the past 5 years.
22:15
So if you remember um not uh too long ago, Bernard Arno was richest man in the world. Yep. Still up there.
22:22
Everybody said um this is uh people weren't exactly excited about that except for us. We were excited.
22:29
No, I I think that I think the push back was like okay the Instagram era made it so that the a a um curing cancer. Yeah. Is that the criticism?
22:41
criticism? wasn't the criticism was that he wasn't a technologist and um but anyways he's an honorary technologist um anyway in other news this is there are two crazy deals happening today uh Dylan Field is leading around into Senra
22:59
Systems which is a wire harness company is that named after David Senra I think so we'll have to ask we have both of them on so today so we can figure that out uh and then Spotify Daniel Ek is leading a $600 million round into drone maker Helsing at a 12 billion valuation. And so I mean Spotify and Figma, they're
23:16
And so I mean Spotify and Figma, they're in different categories, but I see them both as like, you know, like consumerish internet like designheavy like not hardware.
23:27
Aspire, everyone should aspire to be an angel investor that leads $600 million rounds. Yes.
23:33
Or $25 million rounds in the case. Yeah. I mean, there's a range. Yeah, there's a range. You can do a lot.
23:38
But yeah, stop, you know, don't aim so small and think, oh, I just want to write 100k flyers, you know, shoot for the, you know, 25k lead or sorry, 25 mil lead check or 600 million depending on the opportunity.
23:51
So, we can dig into this more uh when we get to that.
23:54
Uh, also, uh, you know, the $5 million US investor visa, the gold card. Yeah.
23:59
People were joking that like uh common is going to apply for one and then just be a citizen even though he's like you know public enemy number one in the war for Iran.
24:07
Um well 70,000 people have applied for it. It's a lot.
24:11
How many of those are real?
24:14
I don't know but uh yeah.
24:17
Is it is it like you put down a $5, you know, model, you know, 100 bucks.
24:22
Uh I mean I would I I believe that there there are that many people that would that would be willing to pay for sure for sure like just look at demand for luxury apartments in tier one American cities like there's so much international demand and that's just to have an asset in America that that that that feels more durable than something in your country local currency. Exactly.
24:49
So the number seems staggering but also maybe believable.
24:52
We'll have to dig into where it goes from this.
24:54
We can we can read into this article more, but I thought it was an interesting headline.
24:58
Um, yeah, apparently there's 59 million millionaires.
25:02
Uh, many of those wouldn't be able to just uh, you know, slam 5 million down for a gold card, but many of them uh, I'm sure would be able to.
25:12
So, there's also an interesting article in the Financial Times today uh, breaking down the weapons that are being used.
25:19
Obviously, we know some defense tech founders that are playing in the in in this world generally, mostly on the smaller drone side, but uh the uh the the the uh the Financial Times has a good breakdown showing the different missile types of systems.
25:34
There's uh ballistic missiles, cruise missiles, and then UAVs.
25:38
And you can kind of see the different arcs that they take.
25:40
We were talking about this with like regard to hypersonics, but uh Iran has four different uh kind of ranges and different different classes of ICBMs that they've been senting sending over.
25:54
Uh one is the Haj Casm solid propellant missile named after the IRGC commander that's Kasamsulammani who was assassinated by the United States in 2020.
26:02
They are uh immortalizing him in the name of this rocket.
26:05
It has a maneuverable warhead and according to Iran was used Saturday night and might have struck the Hifa Hifa refinery.
26:10
Uh there's the Fata one, the Korum Shara and the Ahmad.
26:17
And there's a few different ch uh tradeoffs between range and payload and uh it'll be interesting to talk to some defense tech founders over the next few weeks about what's actually on the ground and then how do you counter this stuff.
26:28
Some interesting electronic uh warfare or propaganda uh happening right now. Oh yeah.
26:35
Apparently, the satellite signal for Iran's state-run television channel has been hacked.
26:40
So, every channel is now playing anti-regime messaging. Interesting.
26:45
Uh, which are calling for freedom and revolution against the regime. So, interesting.
26:49
Um, I think that's like the the biggest question to answer is like how popular is the actual how how popular is the current regime?
26:59
Um because there's obviously, you know, it's it's very it's very advantageous to someone who's attacking if I'm attacking your country, I'm going to say Jordy's really unpopular.
27:08
Everyone who says everyone who says Jordi's popular is lying and and you never really know.
27:12
Um but something like that shows that there is at least enough will.
27:17
We got to get Shervin on the show. Yeah. Oh, yeah. That'd be great.
27:21
So, uh he he's uh according to X very excited to be to be able to go home.
27:28
Yeah, he wants to go home.
27:29
And there's a lot of folks that are in that in in that camp.
27:30
Um, uh, the other news, uh, Musk's XAI nears a $9. 3 billion fundraising.
27:37
You highlighted this later on the show yesterday.
27:39
Uh, investors shrug off White House spat. Makes sense. Uh, they're closing $9.
27:43
3 billion in debt and equity and the burn rate is over a billion dollars a month, right?
27:51
Yeah, I think that was the stat. Burning a B.
27:53
Investors have placed orders on more than 5 billion in a bond and loan offering, giving the company's bankers at Morgan Stanley confidence that they can finalize the financing round. I know the bank on this.
28:02
So, uh Tesla is down 5% in the last month.
28:04
Is that the number that you would think if if this if No, the narrative would be it's 75% down like based on the news and like the drama.
28:16
I don't think many people could pull this off though.
28:17
If you're if you're a, you know, series C founder, don't make wild accusations about the president.
28:24
Expect, you know, take a little bit of a hit. Yeah.
28:26
Bigger bigger hit than than u, you know, 5%. Yeah. Um, yeah, it's wild.
28:32
Well, people know naturally aspirated V12 is coming in the next Tesla. They're moving on.
28:39
They're they're This is if they can if they can do that, this is a 10 trillion dollar stock.
28:42
Maybe a hundred trillion dollar stock.
28:44
They can really have the right engine. Why not one quad? Yeah, one quad. Let's do it.
28:48
Uh Musk company told investors that it also expects to complete a $4.
28:53
3 billion equity raise alongside the debt package, giving it the firepower to build the data centers it needs to expand.
28:59
It is competing with OpenAI, Anthropic, Google, and others to develop and commercialize AI tools.
29:05
Musk's group launched a chatbot, Grock, as an irreverent alternative to chat GPT and Google's Gemini, claiming that it would seek truth rather than a politically correct narrative.
29:13
Musk combined XAI with his social media company X in March in a deal that valued the company, the combined entity at $13 billion. That's up there. Uh TPG's in the deal.
29:26
There's a couple other folks in the deal.
29:28
Anyway, uh let's move on to some timeline.
29:31
What's going on in the timeline? Let's get into it.
29:32
Uh I think we should go deeper on uh what's going on at Warner Brothers because this is an interesting story that we didn't really get to uh somewhat in the tech in the tech world because of course they interface with Netflix, former Fang, current Fang I guess, but Fang's just falling forever.
29:50
Um but the news today that's driving the the story is uh Warner's uh the chief executive David Zazlov will take a pay cut after the company splits.
30:00
And so the news is that uh Zazavv could receive over $150 million in stock by exercising options if share price targets are met postsplit.
30:09
Um Gunnar Winden Widenfells will become the CEO of the cable networks company receiving a 15 million stock and options grant.
30:17
Um and so we'll go into this into this split.
30:20
Um the new pay package goes into effect only if the split happens by the end of 2026.
30:26
We need a poly market on this to be tracking it.
30:30
But Zazlov already received options for nearly 21 million shares last week.
30:34
The underlying stock was valued at more than 200 million at the time.
30:37
The board gave priority to retaining Zazlov and giving him strong incentives by trying by tying pay to performance.
30:45
Um he will head the streaming and studios business after the split and is often he's often one of the highest paid CEOs in the S&P 500s.
30:51
Last year he received a pay package of 51. 9 million. Up there with Tim Cook.
30:58
pretty big pretty big feeling criticism amongst showers.
31:03
Yeah, a lot of folks have been kind of saying that his strategy has been misdirected.
31:07
A lot of focus on the brand, which we'll go into with the HBO stuff, but um interesting to see how how this dynamic is playing out.
31:14
Um at the new company, he would keep his $3 million a year in salary.
31:17
His target bonus would fall to 6 million with a cap of 12 million from a target of 22 million and a payout of 24 million last year.
31:26
Uh the contract promises Zazlov a target of 15.
31:28
5 million in equity awards the first year and 7.
31:31
5 million annually after that the amount could rise or fall with performance.
31:35
Um he's going to invest and they kind of go into the this is like an incredible amount of detail but I guess they had to share this with the board and so it's in the journal now.
31:44
Um, I'm kind of interested in like how this actually plays out.
31:46
But, um, anyway, I don't know.
31:49
We we we could do a little bit of of backstory on Warner Brothers Discovery to kind of set things up to to take us up to speed.
31:56
Um, I mean, it's a really, really old company like literally started by brothers like Harry, Albert, Sam, Jack Warner began screening motion pictures in mining towns across Ohio and Pennsylvania in 1903. Wow.
32:11
You don't see many brothers companies anymore.
32:14
We've completely lost the the user last name as the name of the company. Yeah. Meme. That's completely gone. I do.
32:22
I do think um uh Chris Amdon uh is bringing this back. Oh, he's doing it. Amazon Heavy Industries. I like that.
32:31
Um so that's a good start.
32:35
I do think that could be the next meta because totally it allows you to quickly, you know, the just some meaning as an investor.
32:43
As an investor, it's like I want to invest in the company that the founder attaches their name to, right?
32:49
Because I'm putting it all on the line.
32:51
I'm not just going to like dip on this company because then when Oh yeah, that company named after me is, you know, failed. Yeah, exactly.
33:00
Putting it all on the line. Yeah, it's good.
33:01
I I I think it could could become a meme just like the the browser company of San Francisco or of New York and the compute company of San Francisco and American manufacturing company of America.
33:09
Like there's a whole bunch of those.
33:11
Um and and and and we're maybe reaching the end of that meta and a new meta show. That meta is over.
33:17
Do not do not name yourself the the media company of Hollywood.
33:22
The media company of Hollywood.
33:24
Although you did throw that out at one point as a good name for us.
33:29
It'd be disrespectful to the folks who are actually using that name.
33:31
Um, so they uh, so in 1923, not far from here in Hollywood, California, they incorporated Warner Brothers pictures in 1923.
33:41
So they were grinding for 20 years just showing motion pictures in mining towns, just showing up to some mining town in Ohio or Pennsylvania saying, "You guys want to see a movie? You guys like flicks?" Yeah.
33:53
Just like not even incorporated really as like a proper company.
33:57
Um 1927 they released the jazz singer uh popularizes the synchronized sound talkies.
34:02
This was the the generative AI the VO3 moment of the day uh when you could hear sound synchronized with the uh with the movie and this propelled them to major player status.
34:16
Uh and then you jump forward 40 years 1967 Jack Warner sells his remaining shares.
34:22
Seven Arts by the studio and the firm is briefly renamed Warner Brothers 7 Arts.
34:26
Uh in the next three years, parking and services conglomerate Kinley National acquires Warner Brothers.
34:32
The just like changed hands a bunch.
34:34
Uh the Discovery Channel launches in 1985.
34:39
In 1990, there's a 14 billion merger of Time Incorporated with Warner.
34:42
This creates Time Warner.
34:44
And we're going to get to uh Time Warner in 1996 acquires Turner Broadcasting Systems, Ted Turner's company.
34:52
That's CNN, TNT, and Cartoon Network for 7. 6 7. 5 billion.
34:55
And so now it has a cable portfolio.
34:58
And then in the dot boom, you got to get in on the internet action.
35:03
And of course, you get to America Online announces it closed.
35:07
One of the best names of all time.
35:09
It really is a great name, America Online. Yeah, it's fantastic.
35:12
And I think I think the I think that that the IP is like kind of floating around. It's like the Enron IP. You could just like AOL.
35:23
com still exists, but but like does it really exist? Yeah.
35:27
So I mean this was the I think this was the biggest merger of all time. I go to AOL. com I get a Ramp ad. Oh yeah. So that's cool. Well, time is money. Save both. Save both.
35:37
Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. Go to ramp. com.
35:42
the official corporate card of the Golden Retriever. Exactly.
35:45
Uh so AOL announces a B$165 billion merger with Time Warner, forming AOL Time Warner.
35:53
Uh later judged one of the least successful mega deals in US history.
35:59
Uh o over the next 10 years, the the early 2000s, AOL is dropped from the corporate name.
36:04
Time Warner ultimately spins AOL off as a standalone company.
36:09
Uh, in 2018, Discovery Communication closes its $14.
36:12
6 billion purchase of Scripts Network Interactive for HGTV and Food Network rebrands Discovery Inc.
36:18
So, they have like a package of of cable assets there.
36:20
Um, uh, Warner Brothers uh, so in n in, uh, in 2018, AT&T completes its $85 billion takeover of Time Warner and renames its division Warner Media.
36:36
And so Comcast has Universal and AT&T has Time Warner.
36:40
And kind of like uh the the the the pipes of distribution are also owning the networks of distribution which also own the shows which own the content and and this is the this is the nature of of of the the the TV media era basically pre uh pre- internet.
36:55
We haven't seen this with the social networks that much.
36:59
We've seen like a couple big deals from like Spotify, you know, doing like one-offs, but there there aren't as many like, okay, the social social network bought a like a creator organization that's operating on top of it.
37:11
It just doesn't really happen.
37:13
Um, but maybe in the future, who knows?
37:16
Um, in 2020, Warner Media debuts uh direct to consumer streaming service HBO Max in the United States.
37:22
And HBO has a fascinating history, too.
37:24
Um, Disney at one point bought Maker Studios.
37:26
Do you remember that for for Did that go anywhere?
37:32
I wonder if they like kept pumping stuff because like it feels like like the core Disney IP portfolio.
37:37
Maker at one point had tens of thousands of creators.
37:42
Um, and I don't know a true network.
37:45
Were they thinking of it?
37:45
I wonder if they were thinking about it like the new uh what's that what's that like farm team that Disney has where they uh where like Justin Timberlake came up from and like Britney Spears was part of it. It was like mouseeteers.
37:57
Are you familiar with this?
37:58
I don't like there was some sort of like child actor farm team that Disney had for a while.
38:05
they would put different child actors on for like little bits to kind of like audition and they'd get some screen time, but it wouldn't be like they they're starring in their own show.
38:12
And if they did well, they would wind up getting music deals and movie deals and kind of rolling from there.
38:18
So, I could imagine them thinking about that as being like a uh like a an arm into the next generation of talent, but unclear if they Yeah.
38:30
Maker Maker Maker Studios uh was absorbed by Disney Digital Network uh in 2017.
38:35
This was a couple years after the acquisition and it effectively is no no longer operating.
38:43
So not be interesting to talk to them and get the postmortem, see what they're up to now.
38:47
Um so yeah, HBO Max AT&T agrees to spin off Warner Media War.
38:53
It's these assets change hands so much, but they merge it with Discovery in a $43 billion reverse Morris Trust transaction.
38:59
Discovery CEO David Zazlov is tapped to run the combined entity. This is in 2021. Deal closes.
39:03
Warner Brothers Discovery or everyone calls it WBD begins trading on NASDAQ under the ticker WBD.
39:11
Uh they consolidate HBO Max and Discovery in 2023 into a single streaming platform branded Max.
39:17
Uh, and then responding to brand recognition concerns, uh, in 2025, this was May 14th, uh, Warner Brothers Discovery announces Max will revert to the HBO Max name in summer of 2025.
39:30
And that was like everyone was saying that's a massive L to what dropped the HBO brand name because they've spent decades building HBO home box office like The Sopranos, Sex in the City.
39:41
It used to mean something.
39:45
It meant it meant stood for movie quality television.
39:47
and you turn it on, you're going to get quality content and they built that.
39:52
It was such a premium brand and then they just like, "Yeah, we're not going to use it anymore." It was a mess.
39:56
I mean, there is the counterfactual, which is like they wanted to put Discovery assets on an app and so if they put that on HBO and all of a sudden you're going to HBO and seeing like home and garden content or I don't know exactly what's on Discovery these days, but you know, Food Network, you might be like, "Ah, this doesn't feel like HBO.
40:14
It's like diluting the HBO brand."
40:16
Um but still it was it was a little bit of a mess.
40:19
And so uh facing debt and strategic pressures, Warner Brothers Discovery unveils a plan to split the two publicly traded companies uh into two publicly traded companies by mid 2026.
40:29
Streaming in studios will be headed by Zazlov and Global Networks will be headed by CFO Gunnar Widenfelds.
40:37
Uh and so this was the big this was the big news last week, June 9th or the week before.
40:42
Um yep, they're going to split into two different companies.
40:44
Uh the uh there will be uh Global Networks uh which will be home to CNN, TNT, TBS and Warner's dozens of cable channels as well as international holdings.
40:55
Global Networks will hold 20% stake in the second entity which Warner is referring to as streaming and studios which they're going to give a different name to.
41:05
Uh and it plans to use earnings from that stake to pay off debt.
41:07
And so it's still a little bit of katsu happening but they are drifting apart.
41:12
I mean, it it is it'll be interesting to see how these two entities trade once once they're independent, right?
41:19
There could be more of a growth story around HBO Max. Yep.
41:24
You know, if they if they continue to want to compete with with Apple and Netflix and the many other players, Prime, etc.
41:31
um the cable uh division will uh you know it's hard hard to see what what the long-term growth story there but I'm sure they'll continue to find a way to make money.
41:43
I mean the weird thing about this is that like the the the Wall Street Journal has this little little infographic about what's in global networks and what's in streaming studios.
41:51
And in global networks it's Bleacher Report, cable channels, CNN's plan streaming service. That's I believe CNN.
41:58
Oh yeah, they're not calling it.
41:58
Is it is is it is it was that ESPN where their pro streaming service just called ESPN?
42:04
Is what what is CNN going to do?
42:06
Are they going to do CNN plus?
42:06
This is the chart, Jordy.
42:08
So um uh Global Networks has Discovery Plus, which I believe is a streaming service.
42:14
And then streaming and studios has HBO in addition to HBO Max.
42:18
I believe HBO is just a channel because they're still selling HBO to cable subscribers as a premium channel.
42:24
And so even though they are like separating these things out based on whether or not it's streaming or a cable network, it's really more of like a separation around the brands and the IP.
42:35
And what I'm seeing is that is that uh CNN and Discovery are more like news, reality TV, more ephemeral, less durable franchises, less longived IP.
42:49
And over in streaming services, I'm seeing DC.
42:50
You have Superman, Batman, HBO.
42:53
These there are real assets.
42:56
Westworld and yeah and Sopranos and Game of Thrones, right?
42:59
Like Game of Thrones could become its own whole world and they do more spin-offs and more movies and stuff.
43:04
And so it feels more like they divided it along IP lines than really along like technology and distribution lines. But I don't know. Yeah, we'll see. We'll see. We'll see.
43:14
Uh, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today's evolving media landscape.
43:21
Zlov said in a statement. Riveting.
43:23
Um, Zazov is under increasing pressure to boost the company's sagging stock price, which before Monday had dropped about 59% since the company was created from the merger of AT&T's Warner Media and Discovery Communications.
43:37
Shares closed down 3% Monday.
43:39
S&P Global Ratings, friend of the show, downgraded Warner's debt to junk status earlier this month.
43:47
It's really it's really such a dig that they just have, you know, it it's like it's kind of like how if you're in school, you know, it goes like A B C D and then they skip E and just F F, right?
43:58
It's like they they needed to give you that extra like you did really bad.
44:01
And so they because they could just do like AAA debt, double A debt, A B C D E F G H I.
44:07
They they could have it be much more, you know, random or or or just like linear.
44:13
Instead, it's like you go from like AAA sounds amazing. Sounds really safe.
44:18
Like I'm not going to lose my money in AAA.
44:19
And then junk sounds like extremely risky to me. Uh junk.
44:25
Anyway, they're going into into his pay package again.
44:27
Significant portion of Warner's roughly $ 34 billion of debt will live on the balance sheet of Global Networks, which currently generates more revenue and has stronger cash flow than streaming studios.
44:37
So maybe this is more of like a CFO play, figuring out the the finances, kind of like the reverse version of what X and XAI did, right? Yeah.
44:45
Um Warner said it secured a 17. 5 bridge loan, $7.
44:49
5 billion bridge loan from JP Morgan to buy back a chunk of its debt. Yeah.
44:54
If you're if you're this is this is the big leagues.
44:56
You don't go to that VC for, you know, oh, I need $2 million bridge loan to get me to series A.
45:01
This is you go to JP Morgan and ask for 18 bill. Yeah, it is interesting.
45:06
Um, you know, people love to poke fun over the HBO Max Max now back to HBO Max over the last few years.
45:12
But, uh, if you actually look at the full corporate history of these assets, it's always been constantly renaming, changing things around, etc.
45:21
So, in many ways, it's just a continuation of decades of rebrands and restructuring and mergers and reverse mergers.
45:29
So, lots of lots of fodder for the journal.
45:32
Maybe that's what we're here for.
45:34
My my key issue is getting rehearsal uh renewed for another eight seasons.
45:40
I'd like to see 10 seasons. Yeah, it's so good.
45:42
I don't know how you top uh flying a commercial aircraft.
45:46
He has been like changing the direction of that a lot maybe. Oh.
45:48
Oh, here here's how it goes full circle.
45:52
So, um Nathan Fielder becomes the CEO of of HBO Max. Yeah.
46:03
Yeah. becomes your CFI and uh he actually convinces you know management uh and gets sort of a critical mass of shareholders aligned to you know become just to to sort of sell off all the legacy IP and just focus on him and really go really just become a personalityled you know media company
46:24
that's just centered around Nathan Fielder y and maybe they could go into consulting you know you could see um you know other media companies like Netflix coming to Nathan Fielder saying, "How do we you know, we already have subscribers in every household in America. How do we How do we grow?"
46:40
And um you know, I imagine he'd have some wild ideas around around how to catalyze uh growth.
46:45
Yeah, I like that he's been able to basically like do be incredibly impactful at a global scale like as a bit basically.
46:54
He's like, "Wouldn't it be funny if we fixed serious problems with the FAA?"
46:59
And then he like goes and like kind of makes it funny, but mostly he is just actually doing like investigative journalism and like a documentary about aircraft safety.
47:10
And yes, there's like a layer of comedy over it, but mostly it's just uh it's just like impactful work uh and insightful analysis.
47:17
And yes, I would love to see him do that at uh Warner Brothers Discovery.
47:22
Uh come in and you know, as a bit just make it a high-erforming growth stock, give it a growth story. Yeah.
47:29
I mean, he could potentially double uh he could potentially double HBO Max's revenue if he used You remember when he did this gas rebate bit where he It was a $1.
47:39
75 gas, but you had to like take the rebate up, you know, a mountain. Yeah.
47:44
So, he could do something like that with HBO Max, which is like, you know, you can actually we'll give you you have to sign up for for $50 a month, but once you've been a member for a few months, if you hike up Mount Everest and you actually put, you know, this rebate in in the box, we'll offer you a free subscription. Yeah. Yeah. Yeah.
48:00
And so, there could be some um a lot of different a lot of different strategies I could see him rolling out.
48:05
I'd be more interested in his investor relations strategy as CEO.
48:09
I want to see him like as a joke go to Sun Valley, as a joke go on Squawkbox regularly, you know, as a joke tell a really convincing story during earnings that that excites retail, turn it into a meme stock as a joke. Yeah.
48:24
He could do something like he he could live stream and day trade with the company balance sheet as a way to kind of just drive retail engagement. Yes. Yes. Yes.
48:34
I I think you got to put him in the boardroom at this point.
48:37
Put him in the boardroom for sure.
48:38
He deserves a board seat after the rehearsal.
48:40
We should buy uh since apparently after the whole Tesla pay CEO compensation saga if you own like seven shares of a company you get to you could you could sue.
48:50
So it's possible you know we could buy some shares of Warner Brothers and start you know uh or sorry HBO um Max and start actually lobbying to get uh to get Nathan into the boardroom.
49:03
I've been saying this for our buddies who wind up selling companies to public companies and we always tell them our advice for anyone who uh does some sort of like acquire or like sells their company to a bigger company like your job is not to rest invest.
49:17
Your job is to become the CEO.
49:19
Put the company back in founder mode. We're we're half joking.
49:21
But oftent times the the company that's acquiring you is acquiring you because they're not in founder mode.
49:29
and and and you are and you are more agentic and more aggressive and more creative and so you should actually try and get into the boardroom.
49:36
You should actually regardless of what the CEO that bought your company actually wants. Exactly.
49:42
And I think very likely you know better than they do. Yeah.
49:44
And I think we as we as we as friends should potentially buy some shares in the acquiring company, fire up a shareholder lawsuit and say, "Hey, put our friend who you just aqua hired for a couple mill Yeah. in the boardroom. You got an MVP."
50:00
That's basically benched right now. Exactly.
50:01
Because they're not in the board.
50:02
That's the perfect metaphor.
50:04
That's the perfect metaphor.
50:04
Um well, speaking of MVPs, Ben Thompson, MVP of Strateery, has a breakdown on his reaction to the news.
50:12
He says he feels compelled to cover this because as much as he likes celebrating when he gets things right, he also needs to own his L's.
50:21
And I'm taking a big one here.
50:21
He says, "I was very optimistic about the idea of combining Warner Brothers and Discovery."
50:26
Uh, and this is what I love about Ben.
50:29
He's like he really holds himself accountable.
50:31
He gets a lot of things incredibly right.
50:32
things incredibly right. I mean Nvidia and Meta when they were down he was laying out really really detailed bull cases but he does it in a way that's not he doesn't issue like a buy rating you know he just walks through the strategy
50:44
but he still holds himself accountable even though he's like like uh you know he's kind of like the opposite of Kramer like Kramer's like riffing offering like buy and sell ratings like all the time and then like constantly he's not afraid to change his mind. Yeah. Exactly. Yeah. Exactly.
50:57
because he's just going going going on the daily basis.
50:59
Uh Ben's obviously much more detailed in his analysis.
51:02
Uh but then also revisits what he's said before.
51:05
So back when Warner Brothers and Discovery were in the process of that merger, Ben Thompson said there would be increasing uh bargaining power with MVPD providers. I think that's Netflix.
51:15
I don't I don't I don't even know.
51:17
Do you know what MVPD stands for?
51:18
This is like industry jargon.
51:20
industry jargon. um a streaming package jumbo uh a streaming package that appealed to the entire household with a combination of prestige content and top-notch MVPd MVPD is multi- channelannel video programming distributor which is traditional TV
51:36
providers like cable satellite fiber optic okay so so I if they if they go to Comcast and say hey in the bundle that you're offering to Comcast subscribers you know there's is usually like the base tier, the premium tier, and then like every channel possible in like sports package. Yeah. They would have Yeah.
51:55
They would have leverage to say, "We want you to push HBO harder and get the upsell for that and give us more of that because we otherwise you don't get, you know, Discovery reality TV shows or something like that theoretically."
52:10
Um, and so yeah, that's what he's saying is that the streaming package could appeal appeal appeal to the entire household because you get the prestige content, Game of Thrones on the weekends, but then you also get filler content, which he calls uh, you know, his affectionate term for discovery style reality shows.
52:27
And so I don't actually know what the top what the top discovery reality shows are because there's so many different ones.
52:33
And I know Bravo, I believe, is owned by NBC and they have a whole bunch of reality shows.
52:37
I'd love to know what uh Discovery is working with, but there's clearly stuff on HGTV and and other Discovery channels. I imagine they do.
52:44
Doesn't Discovery do like Shark Week? Isn't that the big one?
52:46
I imagine like that's a Discovery thing. I don't know. They have so many.
52:50
So, yeah, they have Deadliest Cat. Deadliest Catchers. Mythbusters. That's classic. Bush People.
52:55
I haven't heard about that one. Dirty Jobs. Dirty Jobs. Mike Row. Okay. Yeah.
53:00
So, uh, so that that that kind of content is something that you'd be putting on the background afraid. Never heard of that. Not interested. That's where No, no, no.
53:09
You It's not as bad as it sounds.
53:11
It's uh contestants are dropped into remote wilderness locations with no clothes for water and must survive for 21 days.
53:17
This would be great if we could get uh venture capitalists to do it.
53:22
Y um I think they could, you know, it's a it's a high-risk, you know, move for them to say, I'm going to take my August instead of going to Europe.
53:31
I'm going to be dropped into the Alaskan wilderness and forced to survive for 21 days on camera.
53:38
But they'd have some grit coming out of that.
53:39
They have some grit and some credibility be able to say, you know, I've I've pushed through.
53:42
I've I've faced I'm in the trenches with you.
53:44
You might be in a literal trench. Yeah.
53:48
Muddy and naked and afraid. Yeah.
53:48
Um anyway, Ben Thompson also laid out uh reason for optimism, a better advertising offering that extended across linear TV and streaming.
53:58
But he says his biggest mistake in his analysis, which was was not properly accounting for the debt which the new Warner Brothers Discovery was taking on.
54:08
A mistake that was greatly amplified by the significant rise in interest rates that occurred over the past few years. Interesting.
54:13
Although uh Warner Brothers Discovery debt is still fairly cheap and is going to and is going down, S&P Global downgraded them to junk thanks in large part to declining linear TV revenues. Interesting.
54:26
It's important to acknowledge, however, that my reasons for optimism were overstated as well.
54:28
First, there were serious questions about uh WBD's MVPD leverage going forward, particularly now that TNT has lost the NBA.
54:37
Second, there's no evidence that Max's breath does anything to mitigate ch mitigate churn, which remains among the highest of any of the streaming services.
54:46
Is that just because it's so expensive and it's like either there's a take over the world moment with Game of Thrones and like you got to be subscribed or else it's like nah, I can skip it.
54:55
I feel like HBO is something that like once a year I'm open.
54:58
They don't have it in them to slop it up. Yeah.
55:02
I'm not like going Netflix is down to slop.
55:04
They're down to just throw watch Netflix.
55:06
I don't even have it installed because like I just don't there's very little stuff on there.
55:10
You can't get to Netflix on your TV. No. Wow.
55:15
I can't get to it on my phone either. You're the last one. Hey Netflix.
55:18
No, you I got a guy for you. Come find. To be clear, I pay.
55:20
They're going to be banging on the door. Okay. Okay. Good. I pay for it.
55:23
And I'm probably on like the most premium tier, but very unamerican to not support, you know, I a great American tech company.
55:32
So, so unlike you, I do I do enjoy the current thing when it comes to cinema and television, but it needs to be take over the world.
55:41
Everyone is talking about it and then I watch it.
55:42
So, White Lotus, the last thing I watched on Netflix was Squid Game season one. Really? Yeah.
55:49
Because it was like so important to see it and everyone and it was good. I liked it.
55:52
But like what was the biggest show on Netflix this year so far?
55:56
Like it's all just background TV to me.
55:59
I I feel like I mean I guess F1, Drive to Survive is pretty good, but I just haven't had a chance to.
56:04
Yeah, but even Drive to Survive I don't I I would be fascinated to understand their viewership in in late in these later seasons versus some of the initial ones. Yeah.
56:15
You know what they should do?
56:15
They should have designed to survive.
56:17
Kind of some Figma spawn con on Netflix all about designers fighting for their lives. Mobile apps. Exactly. Go to figma. com.
56:28
Think bigger, build faster.
56:30
Figment helps design and development teams build great products together. Dylan, consider. Absolutely. Designed to survive. Designed to survive.
56:41
If we don't increase the conversion rate on this button by 5%.
56:44
We get thrown into this pit of sharks. Yeah. Yeah. Yeah.
56:47
If it would be this pit of snakes.
56:50
But that's actually not the stake with drives to survive.
56:53
Like like the stakes are are just like all like interal. I would. Yeah.
56:57
Be like, "Oh, who's poaching who?" Yeah. Oh, this person.
57:02
Coinbase to one of Oh, yeah. We know. We We We know the story. The US Army's designers. Yes.
57:09
And you know, they're pulling them in.
57:11
Meta is trying to pull designers in. It's a hot market.
57:13
Meta just offered $200 million. Too much.
57:18
The number is 100 and that's not confirmed, by the way. It's not confirmed. Um, speculation. Yeah.
57:22
And then they and then of course they they dropped the they dropped the the the HBO name and they went back and forth on that.
57:30
Uh there was a funny uh thing. Compare that to Netflix.
57:33
Certainly the streaming service is investing tons of money in having differentiated content but the long-term goal and by extension the ultimate value proposition for consumers is offering something for offering something something offering something for everyone all of the time to be to be TV in other words but freed from the constraints of geography and time.
57:51
One subscribes to Netflix not to get a particular show, but simply because that is what one does, just as one once subscribed to cable.
57:57
Can you see the difference?
58:00
Just think of the tagline. It's not TV. It's HBO.
58:01
That's not simply a slogan. At least it wasn't.
58:06
But it will be if AT&T sees the brand's ultimate value as a consumer frontend for a de facto Netflix competitor. That is to say, TV.
58:12
More broadly, if my interpretation of these comments is correct, and AT&T plans to build a streaming service to rival Netflix, well, first, good luck.
58:21
And second, that is quite a bit higher level of ambition for the Time Warner acquisition than I anticipated was what he said.
58:26
Okay, maybe I can take the W on this analysis.
58:30
He says it holds up pretty well in the end.
58:32
The mistake was not so much about combining Warner Brothers and Discovery as it was trying to take on Netflix in the first place.
58:38
My instincts were right about that.
58:40
I just wish I'd stayed anchored on that point all the way through.
58:44
And if you look at the uh I saw somebody being like, "Oh, whatever happened to Fang?"
58:47
We I think we covered this in the show.
58:48
Um and uh it's like it was like, "Why was Netflix ever in fang?"
58:52
And it was kind of a good question because like Netflix doesn't have the same just intense power of the hyperscalers and the other trillion dollar tech companies.
59:01
But you look at the stock chart and yeah, it went way way down for a little bit.
59:05
Uh but it's but it's back up and it's been on absolute tear and for a long time it was the best performing stock in the stock market and I think it's up like millions of percent or something like that.
59:18
Like the numbers are insane.
59:18
It's trading at a 57x uh earnings. Yeah. Priced earnings. Okay. What's the market cap? 520 billion. Not bad. Half a trillion.
59:31
Like that's pretty pretty big for something that the narrative was like it's just a streaming service.
59:35
So it's not as dominant as you know Google which has the Google search and YouTube which competes with Netflix and cloud platform or Apple which is the iPhone and it's the gate to Netflix like um or Tesla with the car and the humanoids and the self-driving and all this different stuff.
59:53
Uh Netflix was always just an app that you watch stuff on and there were a lot of them for a while and so there was a question about like how how solid would their lead be long term but they have solidified it anyway.
1:00:04
Hopefully they're on Vanta.
1:00:06
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1:00:20
And you know why I said intercom?
1:00:22
Because spa sponsors are reaching out to own at intercom. No way.
1:00:28
And so I I highly doubt he would entertain any of that.
1:00:30
It seemed like a sort of boilerplate email that they were just blasting out.
1:00:34
Wait, did he did he post this?
1:00:35
He posted he said he said, "We are so effing back. So back."
1:00:40
Um, and he posted a screenshot.
1:00:44
Um, and uh, anyways, I'm sure uh, you know, part of being ready to get spacked at any time, you got to get on Vanta.
1:00:53
Got to get your got to do it, compliance dialed.
1:00:56
And so, uh, Buco Capital Bloke, this was actually two years ago back in 2023.
1:01:00
He talks about Warner Brothers Discovery and talks to license HBO original series to Netflix. Zazlov strikes again.
1:01:06
Corporate financial decisions won out.
1:01:07
Selling the future for money today.
1:01:09
Uh, the HBO streaming's world walled garden is coming down.
1:01:12
It seems you can already watch HBO on Hulu somehow.
1:01:17
You can like pay through Hulu.
1:01:19
And so that's been a thing. Hulu is a weird place. It's a weird place.
1:01:22
Hulu's Hulu is an odd story because it was like this crazy joint venture between all the different platforms and then eventually Disney acquired most of it but like it had like all sorts of content in it.
1:01:34
Never been big into that whole world.
1:01:35
No, you're not a Hulu guy.
1:01:35
Um uh in a hugely surprising move, Deadline understands that Warner Brothers Discovery is shopping some of its HBO library titles to rival Netflix.
1:01:43
And this was kind of the Ben Thompson takeaway, which was that um when you have a fixedpriced asset, it is often better to auction that off to the highest bidder and not need to sell it to yourself in the form of your own streaming service, which then if if Max already has some of the highest churn of any of these subscription platforms and then you can get some of the best content from HBO on other platforms, what's going to keep people on HBO? Yeah. And so HBO Max. So good.
1:02:13
It's a good question, but but the but the the I mean the cash flow should flow directly to them and it should be most efficient because whatever service can monetize it the best could potentially just pay them upfront for that.
1:02:27
And again like yes Netflix has a lot of original productions, Netflix originals and whatnot, but a lot of that is just stuff that they purchased right or purchased exclusive exclusive rights to.
1:02:35
Um they're not necessarily uh producing everything there.
1:02:40
Um, so Warner Brothers Discovery has been an absolute uh roller coaster ride.
1:02:45
The stock was up at $75 a share in mid 2021, sort of a top tick of the Zerp era and then the debt kicked in and uh and the streaming wars took on took off and uh and the rest is history.
1:02:59
So the stock's been kind of languishing between 10 and 15 bucks for the last two years and hopefully they're on to greener pastures now. Yes.
1:03:07
But whatever they're planning, if you're planning to manage a death schedule, you're planning to manage a complex de merger, you got to get on a linear.
1:03:16
It's a purpose-built tool for planning and building products.
1:03:19
Meet the building products, not reverse mergers, but uh I am determined to use linear for everything.
1:03:25
Yeah, linear should eat everything.
1:03:29
It should be the one-stop shop for any planning. Not very adaptable.
1:03:32
You can do a lot with it.
1:03:34
It's a system for modern software development.
1:03:37
You can streamline issues, projects, and product road mapaps.
1:03:41
And they got linear for agents.
1:03:43
Of course, they could use it for the development of their streaming platform.
1:03:47
They have software engineering to do, and Linear is the perfect tool for them.
1:03:50
Hopefully, your agents, your various agents are smart enough to ask, "Hey, I'd really appreciate, you know, I don't ask for much, but I'd like to be orchestrated on Linear if you could just get me on there."
1:03:59
I I just don't know why you're holding back Zazlaw from getting a Linear installation going to run his office dayto day.
1:04:05
Well, if they're if they want to compete with Netflix and and other, you know, the primes of the world, the hyperscalers, you know, on streaming and and real technology, they they should absolutely get on Linear Jump.
1:04:16
Anyway, there is this fascinating kind of like I mean it's a it's a Nathan Fielder style stunt almost.
1:04:24
So, uh Pier Richelen uh who's from Cal.
1:04:28
com is fake suing a former employee.
1:04:32
Have you seen this whole thing?
1:04:35
Have you dug into this, Jordy?
1:04:36
This is this is a wild trying to figure it out.
1:04:38
So, it seemed really real, but then he posted this joke Google doc that made it clear that it was a joke.
1:04:45
He says, "Today we are suing Nizzy Abi0 in the court of ma mail for secretly building an actual an actually pretty good email client while getting paid by cal. com.
1:04:59
Read the full case below and you can kind of dig into it."
1:05:00
And but it it it does seem weird because when you dig into it, it's like uh Amrit, who's the founder, says, "Happy to announce I will be joining zero." as a full-time engineer.
1:05:11
Came across this app some months ago.
1:05:12
Literally saw it grow up from day zero.
1:05:14
And and Pier says that Cal.
1:05:17
com to zero pipeline is two for two.
1:05:20
And so two people have left Cal to go build this new company. That can be very rough.
1:05:26
That can be sometimes looked down upon to leave the organization to build something new.
1:05:30
But it seems like maybe it's good.
1:05:32
So Sham's Twali says, "So I need to work on Cal first."
1:05:35
And then Pier says, "Well, the best people don't leave Cal, so it depends. Are you good?"
1:05:41
And then uh and then Nizzy says, "Didn't Cal.
1:05:45
com want to acquire zeroeail before I left?"
1:05:48
And then Pier quote tweets that and says, "Hey, Oric at Grock, what happens if you build a new startup on company on a company device during work hours?"
1:05:56
Which to me looked like he was serious.
1:05:59
And John Josh Serot says, "Shots fired."
1:06:02
But then they're just joshing around.
1:06:06
The lawyer that submitted the complaint uh is named Chad Esquire. Love it.
1:06:10
And and the amount that they that they asked for is like $420,00069, something like that.
1:06:18
But it's this weird like it's weird.
1:06:19
It's this weird like fake stunt to draw attention. It's working. It got my attention. It was confusing.
1:06:26
And you've wanted somebody to build an AI powered email.
1:06:29
Maybe maybe I'm going to wind up checking this out. They they got me.
1:06:34
They they definitely got me with all this nonsense.
1:06:36
But it really is like the new era of like, you know, content marketing and like going viral.
1:06:42
Like a fake lawsuit is what is the stakes now to break through.
1:06:46
You can't just say, "Hey, like you know, this new company's going through."
1:06:49
But it seems like they went through YC and they work together and they're probably friends.
1:06:54
And I mean that that does happen all the time.
1:06:55
It's always like the good ending when someone spins out.
1:06:58
They say, "Hey, I was here for a while.
1:06:59
I had a good experience, but I want to go build my own thing."
1:07:00
And they get the blessing of the CEO.
1:07:02
And usually the founders like, "Well, angel invest or something like that."
1:07:05
So hopefully it really is that narrative.
1:07:06
It's a little a little unclear, but I think that's part of the joke that's going on here.
1:07:12
Anyway, uh whatever whatever they wind up doing, they got to get on numeral sales tax on autopilot.
1:07:16
Spend less than five minutes per month on sales tax compliance. Go to numeralhq. com. Sales tax agi. I love it.
1:07:23
Um Sam Alman's been on a podcast tour.
1:07:28
He's firing shots at Elon Musk.
1:07:31
He says, "I didn't think Elon was going to abuse his power in the government to unfairly complete.
1:07:36
I regret to say I was wrong about that.
1:07:38
I genuinely thought he wasn't going to.
1:07:40
I really I think it's really unfortunate for the country that he would do these things.
1:07:43
I wish Elon would be less zero sum or negative sum."
1:07:44
So the the battle between the the AGI geachads is raging still.
1:07:51
Although it feels like maybe that like like this is coming to a close like like the like they now just have to duke it out in the app layer win in the store.
1:08:00
Like is I think if you if you remember it felt like the big winner of of the blow up between Elon and Trump was Sam and people that had bought a Tesla before Elon went crazy, right?
1:08:14
So there were two winners coming out of that.
1:08:16
Um, so hopefully, um, but again, um, I'm sure there'll be more updates coming down the pipeline around, um, around the the active lawsuit between, uh, both parties.
1:08:29
Well, either way, they got to get on ADO.
1:08:31
Customer relationship magic.
1:08:33
Adio is the AI native CRM that builds, scales, and grows your company to the next level.
1:08:37
Uh, newcomer is on Substack.
1:08:41
He's an investor in Substack.
1:08:41
He's also leaking information about Substack. on Substack.
1:08:48
It's the uh it's the pimp my ride of of Substack scoops.
1:08:51
He's the he's the exhibit. He exhibit, right?
1:08:54
Um so he's generated $400,000 a year from newcomer paid subscriptions.
1:09:00
Uh he's paid Substack $50,000.
1:09:06
Uh he sells his own sponsorships and Substack doesn't get a cut of that revenue.
1:09:10
Uh he also invested $5,000 in Substack's crowdfunding round in 2023 as a show of support.
1:09:16
Um and he's a fairweather friend, constantly agonizing about the huge chunk of subscription revenue that we fork over to Substack.
1:09:24
Two friendly tech newsletters, platformer and garbage day, decamped from Substack over a year ago to Ghost and Beehive, respectively.
1:09:29
Executives from rival newsletter platforms like Beehive and Kit regularly try to cons get us to consider jumping ship.
1:09:35
subtext app oriented strategy has at times annoyed me as it sometimes asks newsletters to do that. Ultimately he stayed.
1:09:42
Uh what's interesting is that now he he has this he got the scoop that that Substack might be out raising new funding on the back of a bunch of growth scoop.
1:09:51
And so it's just a funny dynamic that is uh it's just unique to the new era of like these independent journalists like uh newcomer really is a scoop.
1:10:00
thing I have to call out and uh Eric should come on the show and and talk about this dynamic, but he's generating he's netting $400,000 a year and paying Substack $50,000. Yep. Fraction of that.
1:10:14
They take like 10% I guess or I guess it's a little bit more 12%.
1:10:19
And this is the backbone of his business, which which you would imagine being on Substack, I would guess, helps him generate an incremental $50,000 a year of revenue and and and would probably pay for itself. Yeah, certainly.
1:10:34
I mean, yeah, there's two ways to look at that cost.
1:10:38
one is uh so if you went to a more DIY platform like Ghost that has a lot of the features but you still have to customize it yourself and you're not getting the Substack team of engineers constantly releasing new products well then you're probably going to wind up paying someone maybe more than 50k a year to you know enhance your ghost installation or like optimize it and get the most out of it.
1:11:00
Uh, so there's like the cost side of that.
1:11:02
You can probably do more and more now with AI and get more leverage out of a someone around 50k.
1:11:10
Probably not right there, but maybe 100k starts to get interesting.
1:11:12
If he winds up paying Substack, you know, 2 million in a few years, maybe it makes more sense.
1:11:19
But this is kind of one of the interesting, you know, problems that Substack has to play ball with.
1:11:23
But they can probably negotiate at a certain point because there is there is some element of like, hey, you've gotten really big. we'd love to keep you.
1:11:30
Why don't we give you a little bit discount on on our take rates so that you don't move off?
1:11:35
Who knows crazy snowballing effect though where all the top you know creators which talk amongst themselves I'm sure. Yep. Totally.
1:11:42
But ultimately he says that uh he does get recommend he gets a large number of free signups. Yep.
1:11:49
Through recommendations though that seems good.
1:11:52
Those readers convert to paid subscribers at low rates.
1:11:53
So, um, anyways, interesting.
1:11:57
Um, it'll be interesting to see where Substack's new round gets priced.
1:12:02
I wouldn't be surprised if it was fairly close to their peak valuation, but that would actually be great to see them kind of growing into that um, whatever their 2021 uh, valuation was.
1:12:14
I think it was like 750 million. 750. It's up there.
1:12:22
They raised a series B in April 28th of 2021 at 650 million. So pre or post? Probably post. Post. Okay. So they sold 10%. Oh, not bad. Yeah. Yeah.
1:12:34
I mean this the business seems to be like very much sustainable at this point.
1:12:38
It seems like it's accidentally profitable.
1:12:39
Remember that reporting in the information and talking to Chris, it seems like things are going really well.
1:12:44
Um yeah, just I I I guess there is this question of like how can you quantify the impact of Substacks features on growth?
1:12:53
Yeah, because like the Yeah, the question is like they're driving free signups for newcomer.
1:12:59
Um but is it actually driving an incremental 5 uh 50k in profit for him? Yeah. Who knows?
1:13:05
I mean, he's selling ads against the newsletter. Yeah.
1:13:10
which, you know, he's able to he's he's monetizing those free subscribers. So, who knows? Who knows? Who knows?
1:13:17
Uh promoted post from public.
1:13:19
We haven't done one of these in a while.
1:13:21
Uh we're hosting a private screening of one of the summer's most anticipated films starring Brad Pitt and set at 200 miles per hour if you're a New York-based public member.
1:13:29
You can access the exclusive experience and be there on opening night, June 25th.
1:13:34
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1:13:37
So if you are in New York and you and you're on public, reply Aton to this post and head over to the movie. Be great. Hit him up.
1:13:46
Um over in Defense Tech World, uh Anderoll has partnered with Rin Matal, the German uh the German defense tech company prime really uh to manufacture Barracud Barracuda and Fury over there. That's very exciting.
1:13:58
And then we also touched on uh Spotify founder Daniel A leading a guess when Ryan Mal was founded.
1:14:10
That the way you're saying that makes me think it's like 1650.
1:14:11
I'm putting you on the t I'm putting you on the spot like Tucker put uh what's his name?
1:14:16
How can you possibly report on the news if you don't know when it was founded?
1:14:20
This was this was the best bit earlier. I have to read it out. Read the muffin man. Tucker.
1:14:25
Do you know the muffin man?
1:14:25
The muff Ted goes the muffin man. The muffin man. Muffin man.
1:14:30
No, I don't know him personally.
1:14:34
How can you know anything about Drury Lane if you've never met the muffin man?
1:14:37
John, this is a post from Zack Stewart. Real gotcha. Really, really good.
1:14:40
Uh, anyways, you can still I give you permission to comment on the even though you don't know 1889.
1:14:47
Not I I knew it was really old. 1889 Dusteldorf. Okay.
1:14:50
I was I was pretty far off Germany 50, but but over a hundred years.
1:14:56
Uh I mean that yeah that that's the same uh I it's General Atomic is part of like this roll up and the and the and it came out of like I think General Dynamics at some point and the company that that the founder of the company that competes with Fury for the uh for that autonomous program that they're competing for right now.
1:15:23
um was like the designer of a submarine in the Civil War or something like that.
1:15:32
Like I'm pretty sure that he's he died more than a hundred years before Palmer Lucky was born. Yeah.
1:15:37
That's the that's the cultural difference between the two companies that are competing for this like one contract.
1:15:42
It's like a fascinating dynamic about like how legacy they are.
1:15:46
Like it's not just if you're in the game for a while, you know, decades after after you start the company, your your greatest enemy will will be born and then they'll have to grow up a little bit.
1:15:57
They'll have to learn the game. Yep.
1:15:59
And then they're going to come for you. Wild.
1:16:00
So yeah, Spotify founder Daniel E is leading a $600 million funding round into the German defense startup Helsing.
1:16:07
This is the This is kind of more of an anderal equivalent over in Europe.
1:16:12
Uh valuing that four-year-old company at 12 billion.
1:16:16
Uh the bi the business makes battlefield AI drones, submarines, and robo fighter pilots.
1:16:20
Uh it's now one of Europe's most valuable startups, and they're using some renders here, John. Look at this image. They're render maxing.
1:16:31
They're render maxing happens. Is a cool render.
1:16:34
Yeah, look at the water there.
1:16:35
It's definitely a render. Who knows?
1:16:37
It's hard to tell these days.
1:16:39
It's so It's be We're beyond the uncanny valley.
1:16:42
Um, and so, uh, Helsing is is expanding from its origins in artificial intelligence to produce its own drones, aircraft, and submarines as part of a bigger push for, uh, locally made and and owned uh, defense products for uh, European countries and and really companies all over the world. Crazy. It was founded in 2021. Wow.
1:17:03
By Torsten Real Ry Riyle. Okay.
1:17:07
A video game entrepreneur.
1:17:10
Gunbert Sherf a former German defense ministry official and Nicholas Kohler an AI researcher and uh they have partnerships with Saab already uh as well as Mrol. Yeah.
1:17:21
And tons of American venture capitalists in the deal.
1:17:26
You got Lightseed Excel and General Catalyst Conor's cooking. They've raised over 1. 37 billion.
1:17:31
Uh the the the Daniel X said the world is being tested in more ways than ever before.
1:17:40
that has sped up the timeline for Helsing's financing, X said, pointing in particular to the conflict between Russia and Ukraine where drones and other AI powered systems have been deployed at scale for the first time.
1:17:52
There's an enormous realization that it is now really AI mass and autonomy that is driving the new battlefield.
1:17:57
And so, uh, yeah, exciting exciting deal.
1:18:01
If they want to get more attention, want to do some hiring, they should get on ad quick.
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1:18:24
We have David Center coming in the studio in just a minute.
1:18:28
Uh in the meantime, if you're looking to go deeper in AI, there's uh AI startup school has been going on for the last two days up at Y Combinator.
1:18:38
And Andre Carpathy gave a banger talk and Swix, friend of the show, uh grabbed pictures of every slide from his talk and reconstituted it into a full uh into a full uh like slide deck.
1:18:55
So you can go and read the full talk if you want.
1:18:57
And so go check that out on laton.
1:18:59
space if you're interested.
1:19:01
And we have David Senate in the studio.
1:19:03
How you doing, David, brother? Welcome to the show. Now I can hear you. What's going on? What's going on? I can hear you. It's great to see you. Not much. How are you guys? Great to see you again. Long time no talk. Long time no talk.
1:19:18
Did we talk yesterday or the day before? Yeah, yesterday. Something like that. It's too long. I need every few hours. Yeah. Yeah.
1:19:26
Honestly, between the show and then the hour that we typically talk with you afterward, at some point we should just start, you know, streaming it live.
1:19:35
Get up to get up to five hours a day.
1:19:37
This is this is this scratches the itch a little bit. Yeah.
1:19:38
You guys haven't announced our month-long extreme podcasting summit in Malibu yet.
1:19:43
I was going to wonder if you wanted to talk about that.
1:19:46
I'm super down to talk about. I'm excited.
1:19:48
I've been inviting other podcasters like you need to fly out.
1:19:50
It's going to be summer podcasting entire month.
1:19:53
Rob, you have to have a podcast to go. Yeah.
1:19:57
The summer of extreme podcasting in Malibu, California.
1:20:02
I I I want to I want to create I want to create the center for I think we're going to tip it in Malibu though. Oh yeah.
1:20:09
With the people that are coming. Yeah, for sure. The weather. Come on.
1:20:12
No one's like, "Hey, come visit Austin in the summer."
1:20:15
We need We need a fresh start.
1:20:17
We need a fresh start, too.
1:20:18
You know, there's something about the mothership where like I I think Austin works because you need to have like all the cross-pollination from Kill Tony and random people coming in.
1:20:26
Malibu is for monk mode podcasting. Yeah. But it's for Yeah.
1:20:32
If you're a comedian and you're friends with Joe Rugen. Yeah.
1:20:35
Obviously moved to Austin.
1:20:36
That's really good for your career. Yeah.
1:20:38
But that doesn't apply to us.
1:20:38
So yeah, there's going to be a good crew uh amassing out there.
1:20:43
Uh break us break it down for us.
1:20:46
what's top of mind for you before I I I have something.
1:20:48
So, uh James from Profound announced their round today. Oh, cool.
1:20:53
Uh he's coming on the show later today. Great.
1:20:55
Uh uh David and I are both investors in Profound.
1:20:58
Uh they announced a $20 million series A led by Kleiner with participation from Nvidia, Saga, South Park Commons, and SV Angel.
1:21:09
And of course, it's hilarious.
1:21:13
It's hilarious the the lineup of investors and it's like Jordy and David. Yeah. Yeah.
1:21:18
It's GMO from Versell, Jordy and David and Jordan Singer, friend of mine snuck in there as well.
1:21:24
So stacked they're building an answer engine helping uh teams, you know, optimize.
1:21:31
But we'll get into that later.
1:21:31
But but maybe let me let me actually there's a perfect like ramp crossover.
1:21:35
I don't know if you guys have heard of this little company called RAMP. Heard of that? Who's the player?
1:21:39
So, I was actually in New York with James yesterday and every time the last few times I go there every few weeks and uh the last few times I've been there made sure to like spend time with him.
1:21:49
Uh James found and uh there's actually a funny way that I met him.
1:21:54
So, uh Kareem obviously co-founder and CTO of RAMP uh is a good friend of mine.
1:22:00
And the reason I think that Kareem is such a great founder is cuz he has this like divine discontent with everything that he does.
1:22:09
So nothing's ever good enough.
1:22:09
The the product's not good enough.
1:22:11
This go to market's not good enough.
1:22:12
The sales isn't good enough.
1:22:14
Like everything could be improved.
1:22:15
And I was at dinner at his house like I don't know maybe like two months ago.
1:22:19
And this was going on and on about all the things that like need to be improved and things that he thought like he hated or whatever.
1:22:24
And I was like, "All right, enough of this.
1:22:26
Tell me like what you actually like.
1:22:27
Like who are the founders or the products that you think are great?"
1:22:30
And one of them was Profound and James.
1:22:32
And so I wound up looking looking James up on Twitter and I found that he followed me and so I actually followed him back and then we went up DMing and I was like, "Hey, are you in New York?" He's like, "Yeah."
1:22:43
I was like, "I'll be there uh tomorrow."
1:22:45
He's like, "Come by the office."
1:22:45
Um and so yeah, I just thought it was hilarious that, you know, Kareem his his bar for excellence is excessively high for people and products and James Profound have exceeded that.
1:22:55
Um so that's actually how I met James and why I was invited to invest in that round. Awesome. Love it.
1:23:02
Should we move on to Jimmy? Let's talk Jimmy. Break it down for us.
1:23:07
Uh, how did you originally land on on Jimmy I as someone to profile?
1:23:12
That that's a question I had for you guys because you guys both grew up or like lived in LA for a long time.
1:23:15
So, my interpretation of Jimmy I is like every single person in the music business knows who he is, but the average person doesn't.
1:23:24
Were you guys familiar with him at all? Yeah, I was loosely.
1:23:25
But I think part of it when you when I actually think back it's like the the tech angle beats and Apple is probably about introduction to it.
1:23:36
But also like reading stories about Dr.
1:23:38
Dre because I was a fan and kind of like the the inner scope mafia like that was that was in the news when Dr.
1:23:46
Dre was like the one of the leading artists at that time.
1:23:50
So Jimmy I is easily like top three people that I want to meet and I when people ask me like out of all the living entrepreneurs who you want to meet that that usually when I say that that's surprising many people don't know him.
1:24:02
I've been fortunate enough to have dinner with two people uh one was mentored by Jimmy and worked with him for a very long time.
1:24:07
Another person competed directly with him and the way that people speak about him there's like an unbelievable level of respect and just the the guy's unbelievably driven um really like relentless.
1:24:20
And one of my favorite documentaries, so like you know this cuz like I read the same books over and over again.
1:24:25
I like read the same quotes over and over again, but I also watch the same documentaries over and over again.
1:24:29
And so my favorite documentary is The Last Dance.
1:24:30
Obviously you see what what comes up when I text you guys.
1:24:34
It's Jordan from The Last Dance.
1:24:35
Uh but the second one would be The Defiant Ones, which I probably watch at least 10 times.
1:24:40
And everybody's like, "Oh, what's the documentary about?"
1:24:41
And if you go and like look it up, it'll say, "It's about the long-term friendship and partnership between Jimmy I and Dr.
1:24:47
Dre that goes back, you know, three decades."
1:24:49
It's like, "Yeah, it's about Yeah, but really it's a documentary about entrepreneurship.
1:24:51
This is like if you think of founder mentality, you think of like the way entrepreneurs think, the way they act.
1:24:56
It's like in that documentary.
1:24:56
And I've been wanting to do an episode on him forever, but there's just not there's no books about him.
1:25:02
He's never written an autobiography or anything like that.
1:25:03
So, I was like, you know what, it.
1:25:05
I'm just going to watch the documentary again.
1:25:07
I'm going to take notes on the documentary and build an outline just like I would for a normal episode.
1:25:09
And then I found every single good interview he's ever done and then transcribe that and then essentially combine all that to use that as like my own book.
1:25:16
Um, but I I think it's I'm really interested in these people that are not well known to like the general population, but everybody in their industry.
1:25:23
There's a great line from um Warren Buffett where he's like, "Hey, if you want to learn about an industry," he's like, "Enter every single like top CEO uh top executive in the industry, you might have to talk to 20 different companies."
1:25:36
And then you always ask him like, "If you had to eliminate one of your competitors, I think he uses the example like if I gave you a gun and you only had one bullet and you could take out any of your competitors, who would it be?"
1:25:46
And he's like, and Warren's point, he's like, that's all you're gonna ask all these people, usually they're gonna arrive with the same question. He goes, that's the guy.
1:25:50
That's the guy in his case you should invest in.
1:25:52
Um Jimmy is very much so that in the music industry.
1:25:57
And I just find his I mean there there's there's a line in uh he's been like really good friends with Bruce Springsteen for like I don't know six decades, five decades, something like that.
1:26:07
And there's a line that's in the documentary that's also in Bruce Springsteen's book where Bruce was talking about and Jimmy has this mentality.
1:26:14
He was like, I didn't want to be rich.
1:26:15
I didn't want to be famous.
1:26:15
I didn't even want to be happy. I wanted to be great.
1:26:18
And I think that's what really attracts me to to Jimmy I in particular and people like him is just this relentless drive where he started out with nothing.
1:26:26
He started sweeping the floor in a recording studio to working with John Lennon, Bruce Springsteen, Tom Petty, Dr.
1:26:31
Dre, Eminem, uh founding one of the most successful record companies of all time.
1:26:37
Then saying, "Hey, I got bored of that.
1:26:38
What I'm going to do next?
1:26:39
I'm going to start Beats."
1:26:40
you know, growing that, starting his streaming service, and then selling that to Apple for billions of dollars.
1:26:46
Like, he's just incredible person. Insane.
1:26:49
Um, did you get did you get much into his uh he has a program at at USC?
1:26:55
Have you covered that at all?
1:26:55
My buddy Ben Taft is on the board there.
1:26:57
That's at the end of the documentary. That's actually funny.
1:27:01
The the the least interesting parts of biographies cuz everybody can understand like the struggle, right?
1:27:06
It's like you started out talking about family life all the trying to figure out your your path in your early career then you you might hit on something and then it's going well and then you take another step back and there's this whole like climb that everybody can empathize with.
1:27:18
One of the things that I think should be cut out of completely is the end where they're like I bought a building I'm so rich I donated a building named after me.
1:27:28
It's like that's just not relatable.
1:27:29
It's just not interesting.
1:27:29
So yeah, it is covered in the documentary.
1:27:32
I of course was not going to put that on the podcast, but they probably want to talk about that, too.
1:27:35
No, that's No, you like there's a great line.
1:27:38
Actually, let me read this to you.
1:27:40
Um, because here's the funny part.
1:27:42
Um, Jimmy is a great storyteller, too, which I think is really important.
1:27:46
And I think above and beyond like yes, we're studying these great entrepreneurs to learn how to build a big business and take ideas from them like, "Hey, that idea work for them. We can use it for us."
1:27:55
But like more important that is like I building a business is just part of our lives.
1:27:59
It's a huge part of our lives.
1:28:01
I'm interested in having like an interesting, fun, unique life.
1:28:04
Like I want my kids or, you know, my friends after long after I'm gone to like read the life story of mine and be like, "Oh, this is a page turner.
1:28:12
This is actually interesting."
1:28:12
That is Jimmy has incredible stories, you know, for a five decade long career in um in music.
1:28:20
And what I like is he intersects with all the other greats.
1:28:22
So, David Geffen, who is, you know, one of the the greatest, I think, entrepreneurs, investors of all time, and somebody that's like really reclusive now, and I really wish wasn't.
1:28:31
I would love to read his autobiography, but David Geffin started this huge like gold rush because he wound up selling his uh his record label for like $500 million.
1:28:41
And I think with stock, it wind up being, you know, six or seven or $800 million.
1:28:45
And so when that happened, all the other people that were record producers just like Geffin and Jimmy were like, "Oh I need to start my own record label."
1:28:53
And so Jimmy goes, and David was his mentor.
1:28:57
And he goes, "Hey, we kind of do the same thing, but you just made a lot more money than I did.
1:29:01
Should I start a record company?"
1:29:04
And David goes, "You should definitely do it.
1:29:05
There's a lot of people in the record industry way dumber than you are."
1:29:08
And it's like and and Jimmy talks about like that actually giving him inspiration. It's like, "Oh, wait.
1:29:15
Okay, this guy's succeeding.
1:29:15
Gavin obviously, but other people are succeeding.
1:29:17
Uh, and you know, they're not it's not just a test of intelligence, but there was uh there's all these different record labels start at the exact same time as Innercope.
1:29:26
And somebody in the documentary says this great thing uh where it says the reason that Innercope was successful versus a lot of other startups at the time was Jimmy was an animal, the most driven and brilliant person at the same time.
1:29:37
He was never off and he didn't understand why everybody else wasn't the same way.
1:29:45
And so like these are the kind of people that like I like to study.
1:29:47
These are the kind of people these are the kind of friends I like to make.
1:29:49
These are the kind of people I like to be around.
1:29:50
Just like they're fully alive and completely committed to what they're doing.
1:29:54
Do you have any insight into how he transitioned from sweeping the floor to actually engineering and contributing to studio sessions?
1:30:04
Like you you you told us that story about I think it was Jim Cameron like reading textbooks while he was driving. Was that Jim Cameron?
1:30:11
I think uh like there's usually James Cameron. James Cameron. Yeah.
1:30:15
Uh was there's usually like an arc where there's go to where the heat is, get in the room with the greats.
1:30:24
And it seems like he was able to do that by like sweeping the floors and showing up and just being like I will do anything to be in the important place.
1:30:30
But then there's also this second step of like learn to contribute beyond just floor sweeping because you just nailed it.
1:30:38
This is exactly what happened.
1:30:40
So he his first his first two jobs in working in a record studio, he got fired. Okay.
1:30:44
Uh the third one he gets set up. Why? This is amazing. Very pro getting fired. So yeah.
1:30:52
Well, because he's a college dropout.
1:30:53
So let me I'll just like give you like the 15-minute version.
1:30:56
Interrupt me whenever you want.
1:30:56
Of the hourong episode and cuz it's like and especially because we're all fathers.
1:31:00
I think this is like really important.
1:31:02
Like the one of the most important relationships is between father and son.
1:31:05
And like if you really think about all the work that I'm doing, I'm going to hit, you know, the 400th biography read in like 3 weeks or 4 weeks from now.
1:31:12
It's like all daddy issues all the way down.
1:31:13
Like just stacked on top of each other.
1:31:15
You either want to be like your dad or you hate him and like trying to like we got ready for Oh, come on.
1:31:21
Uh and it's it's going to be about the vacuum cleaner guy who I'm obsessed with.
1:31:27
Somebody just Most people would be like, "Oh, for 400 you're going to do like Steve Jobs, like Elon Musk."
1:31:31
You're like somebody doing really really power vacuum.
1:31:34
Let's give it up for vacuums. Vacuums. That's why he's like go.
1:31:41
You tell me another guy that has been running this company for 40 years, owns 100% of it. Highly likely.
1:31:44
I have a friend of mine, a guy I know actually tried to gave tried to I'm going to take a tangent real quick because this is a funny story.
1:31:53
Uh you know Dyson owns 100% of his company.
1:31:56
I've heard the rumors that he's taking out everybody's like, "Oh, he's worth $20 billion."
1:31:58
No I've heard it taken out like five plus billion a year in cash and has for a very long time. That's amazing.
1:32:05
And so it's like, wow, that makes Mark Benov look like a chump.
1:32:07
Mark Benov sells $2 million of Salesforce every single day.
1:32:10
So he's making like $600 million a year in liquidity, but that sounds like dice.
1:32:14
Wait, he's selling or is this so so Mark Benov has a retains the equity.
1:32:22
No, no, don't give me that Um, and so the the funny part is this guy I know um told me this story where you know he he's he's managing ever larger p uh pools of capital and has to keep buying more and more private businesses and so you can't buy a $500 million business anymore or two $2
1:32:38
billion business just doesn't move the needle and so he he gave a very friendly like hey would you guys be interested to Dyson uh to to sell and again I like highly disagreeable people I like people that are obsessed with their product they do it forever it's just like people like us Yeah. And um that you can't buy.
1:32:52
And um that you can't buy. There's no number.
1:32:55
It's just like I'm not for sale. Thank you very much.
1:32:58
Uh and so they approached Dyson and I'm paraphrasing.
1:33:01
His response was, "Fuck you.
1:33:03
This is a family heirloom." This is the paraphrase. Family heirloom. This is the paraphrase. That's amazing.
1:33:10
Let me Let me go back to Jimmy though.
1:33:11
I talk about Dyson forever.
1:33:13
Somebody just pulled a a tweet.
1:33:15
They're like, "This guy's been tweeting about the vacuum cleaner guy for since 2018."
1:33:17
I was like, "Yeah, like you I saw I saw that I saw that post. I mean, this is great. David Lore.
1:33:22
But in 2019, you got like four likes on a post.
1:33:25
You said like I just I just read my 83rd biography. Yeah. Yeah.
1:33:31
I've slipped some of those in like isn't it like Jay Gould or something?
1:33:35
It's like this is a person that only you know about basically and you've done like multiple episodes. No.
1:33:41
So, so we like I very few entrepreneurs living knew about Jake Gold.
1:33:45
But the reason you should study him is because again I'm always interested in who's influencing the influencers, right? Oh yeah. Yeah.
1:33:51
Who was the one that influenced Steve Jobs? Right. That Edwin Land. Edwin Land.
1:33:55
I'm sending you Edin I'm sending you Edwin Landon shirts by the way. I'll bring it with you.
1:33:59
No, but the uh Jay Gold thing is interesting and don't and then let me get to Jimmy if you want.
1:34:04
I mean sure you can do whatever the you want.
1:34:05
But uh the reason I I studied Jay Gold and I've read a bunch of old books about him is because I'm reading biographies of Rockefeller and he was asked like who's the best businessman you know?
1:34:14
And he said without hesitation, Jay Gold.
1:34:15
I'm like well that's interesting.
1:34:16
And then Cornelius Vanderbilt, keep in mind when Cornelius Vanderbilt died, okay, he owned 5% of the money supply.
1:34:26
That's like that's like the GDP metric for Stripe.
1:34:29
They're like, "We want to power 1% of the GDP."
1:34:30
Founders need to be more ambitious.
1:34:32
They they they put up the the the the page in the deck 1% of the TAM. Yeah. No, no.
1:34:37
Try to get 1% of the money supply. Five 5%.
1:34:39
Well, you got to start somewhere, you know, 1% of the money supply.
1:34:45
And so when when Cornelius Vanderbilt was in his 70s and he was by far the richest person on the planet, he said the smartest man in America was Jay Gold. Jay Gold was like 33.
1:34:52
And he had said that because they just went headtohead to compete over uh the uh the control of a railroad.
1:34:59
And Jay Gold smoked him and then you interesting thing then Cornelius Vanderbilt actually sent hired hitmen to kill Jay Gold's uh partner. He didn't succeed. Yeah.
1:35:10
that kind of business was completely different than than it is now.
1:35:13
But yeah, there's all these interesting stories in these books that nobody reads.
1:35:17
That's why I love what I do and I try to like highlight them for people cuz I'm like these guys have interesting lives and they ride.
1:35:24
They worked on something for 50 60 years.
1:35:25
What's the chance that they they built a wonderful business for six decades and didn't come up with any idea that you could use? Like that's ridiculous.
1:35:32
So, going back to Jimmy I, it's just like so he gets fired uh I forgot the first reason he got fired uh the first time, but the second time was they just gave him a 90-day trial and they just didn't think he was good enough.
1:35:44
They at on day 89 he gets fired smooth, you know, you you're you're missing dust all over the floor.
1:35:49
The response they said to him was like, "This just isn't for you.
1:35:53
Working in the music business isn't for you."
1:35:54
And this happens over and over again.
1:35:57
Like Sam Walton, you know, his first manager when he was working at CC Penney, he said, "Hey guy, I know you're interested in retail.
1:36:03
Sorry to tell you, you don't have a future here."
1:36:05
And Sam's like, "Okay, how about if I become the most successful retail person in history and I'll build a $400 billion fortune. How about that?"
1:36:11
Like, so I I find like I I love when people, you know, doubt other people and they don't know what they're talking about and you're they're proven wrong.
1:36:19
Uh but Jimmy being fired the first time is really important because then he goes to the record plant.
1:36:23
The record plant is owned and run by this guy name Roy Sakala who is a legendary engineer.
1:36:28
The reason this is important exactly what you just said John is John Lennon after he was a Beatle wanted to work with Roy Sakala.
1:36:35
So nobody will come into the studio on Easter Sunday and Jimmy I is from Brooklyn.
1:36:40
He's this old school Italian family. He gets Roy calls him.
1:36:44
He's like hey we need help at the studio.
1:36:45
No one else is coming in.
1:36:47
You got to come in on Easter Sunday.
1:36:47
And Jimmy's mom's like you're crazy.
1:36:51
You know we're having a feast. This is church. You can't do this.
1:36:53
And and Jimmy says, he's 19, he goes, "I will do anything, anything to make this work." Shows up to the studio. Roy says, "Good. I'm glad you're here. I was testing you."
1:37:03
In the room is Jimmy, Royce Sakala, and John Lennon.
1:37:05
Oh, so he didn't even know John Lennon was going to be there. He showed up anyway.
1:37:09
And that was like the reward. Wow. Bingo.
1:37:13
And so he said, he goes, "Listen, I would do there's a really interesting idea."
1:37:17
So I actually talked to Daniel Act, founder of Spotify about this.
1:37:18
Um, and his whole point was just like he's completely uh like he'll do anything it takes to get information that he feels is helpful.
1:37:27
So when Spotify was going through a lot of rough trouble, he'd reach out to other tech his peers, other tech company CEOs.
1:37:32
He says, "Hey, can I just like shadow you?"
1:37:35
Because like you say you can run meetings with like 30 people.
1:37:38
When I run a meeting with 30 people, not like it's I don't even understand how you do this.
1:37:42
And Daniel's like there's no ego involved.
1:37:44
So he did this with like Mark Zuckerberg.
1:37:46
He spent like I think a few weeks shadowing.
1:37:47
He goes, "I got Mark's coffee. I don't care."
1:37:51
Like, I'm there to learn.
1:37:53
And so Jimmy was exact same way.
1:37:53
He says, "I did everything they did.
1:37:55
Like, I took care I cleaned the equipment. I set up the wiring.
1:37:58
I eventually learned how to be an engineer."
1:38:00
He goes, "I figured out the way that John Lennon was."
1:38:03
If you're He's from Britain.
1:38:03
He's very particular about how he likes his tea.
1:38:06
So, I memorized exactly how he wanted his tea.
1:38:09
He goes, "The way I was about his tea was the way I was about everything."
1:38:14
He got so good at making John Lennin's tea that John Lennon wouldn't let anybody else make his tea.
1:38:19
So his point was like, man, you're these guys are they're legends are letting you in the room. Just be useful.
1:38:25
Sometimes it's running an errand, sometimes making tea.
1:38:27
Sometimes it's fixing the drum sound.
1:38:28
And then John just felt he could trust them.
1:38:30
And so John starts sending them to he he just takes him everywhere. They go to LA together.
1:38:36
They're recording in London uh in New York together.
1:38:39
And like it's exactly what you just said, John.
1:38:40
It's just like you get in the room and you do whatever you can to stay in that room.
1:38:45
Yeah, that makes a ton of sense.
1:38:45
Uh I I want to talk about uh his his picking ability and how he became immediately successful.
1:38:54
Uh you know, Tom Petty, Stevie Nicks, you two, the list goes on.
1:39:00
How much of that do you think was a function of just like his innate taste and and ability to spot greatness versus just drive and relentlessness and just listening to every single possible what is what is the comp to the venture world where you can be a great venture
1:39:15
investor even if your hit rate is like you know 5% because it just matters and getting you know actually getting into the companies that matter and move the needle and people will kind of forget about a bunch of misses and and companies that didn't go anywhere. Okay. Okay.
1:39:29
Yeah, you guys know I don't give a about venture, so I'm definitely not going to talk about that.
1:39:31
But I will talk about how this relates to founders building great products. How about that?
1:39:35
Cuz that's the only thing that's actually interesting and matters.
1:39:36
Um, so Jimmy's idea was, and the example I used in the podcast where he his thing is like, okay, producers, which you know, he was an engineer, then he turns into producer.
1:39:46
He goes, producers are always like, I did this and I did that.
1:39:47
He's like, this is the analogy for venture and and founders.
1:39:51
He's like, uh, would be producer and musical artist.
1:39:53
He's like, I'll read this to you.
1:39:55
He goes, you're only as good as the artist that you're working with.
1:39:57
You're only as good as the founder that you're investing in, right?
1:40:00
Any producer or any venture capitalist who says, "I did this and I did that," is full of 99% of what's going on in the studio is the artist.
1:40:08
And so his point was, I don't have, he wasn't the founder, right, in this situation.
1:40:12
He says, "I don't have the talent.
1:40:14
I'm there to do whatever I can. I'm in service of them."
1:40:16
And so his whole point is like, if I want to be successful, that I'm going to pick the best possible talent.
1:40:21
How do you arrive at that?
1:40:23
Well, the the thing about excellence and greatness is like people don't actually know what it is until they like get close to it.
1:40:28
And so part of this is luck and randomness because Bruce Springsteen's most important album that he ever makes is Born to Run.
1:40:35
Okay, that's his third album, right? Bruce is still doing it.
1:40:38
He's one of the top selling artists.
1:40:40
He winds up becoming a billion off his career and everything else.
1:40:42
But before then, his first two albums were not doing well. He was not doing well.
1:40:46
And so, uh, Jimmy is the engineer on that album and he sees firsthand the level of work ethic and dedication that Bruce Springsteen will have to this.
1:40:57
And so, the way that Bruce was about like a drum sound is the same way that like a Steve Jobs was about every single pixel that's on any device that he's making.
1:41:06
And so Jimmy tells the the the story where it's like Bruce would stand over me and say one word over and over again. He'd say stick stick.
1:41:14
And what that means is like we're hit the hit the drum again because it's not producing the actual sound that I want.
1:41:20
It took them three weeks of just in the studio every day hitting that over and over and over and over again until Bruce got what he wanted.
1:41:26
Um and so once you see it's like oh and then what happens Border Run comes out winds up being one of the bestselling art um albums of all time.
1:41:33
It's just a complete phenomenon.
1:41:36
So now he sees the the level of craft that John Lennon puts on his work then and Bruce Springsteen.
1:41:39
Then he starts working with Stevie Nicks who just came out of Fleetwood Mac who was a legend. Tom Petty.
1:41:44
Then he gets in the room with Dr. Dre 15 years later.
1:41:48
You just know it when you see it.
1:41:48
How much do you think it was driven by like like uh casting a wide net and meeting lots of people?
1:41:56
I'm I'm thinking about like as a founder, there's a very different approach to hiring talent.
1:42:00
If you can think about this in the sense of like hiring talent, knowing who to work with than like the Bill Gates mindset versus the Jim Simons mindset.
1:42:07
Like I think Jimmy's more of a Jim.
1:42:09
That's exactly what I was thinking of.
1:42:11
Jim Simons his whole thing and I just did an episode on him too, right?
1:42:15
Renaissance Technologies in case people don't know essentially just has a money printing machine. Yeah.
1:42:19
And and most importantly for this Renaissance Technologies hasn't is isn't in the business of hiring thousands of people and firing the bottom 20% every year. Microsoft for years. There's Yeah, exactly. There's no turnover. There's no turn.
1:42:30
Microsoft is notoriously high churn and that's by design.
1:42:33
It's a very different thing.
1:42:34
If you leave Renaissance Technologies, you you your money, your personal money comes out of the medallion fund and the medallion fund is a magic moneymaking machine.
1:42:40
So, you do not want whatever you want to do in life, you don't want your money out of the medallion fund. So, you will stay there.
1:42:45
So, when you go and read Jim Simon's biography, it's that's a great analogy, John. Thank you.
1:42:48
It's very similar to how Jimmy picked his talent where he's just like, "This is the most talented person I could possibly work with, and it may take me years to recruit him, but I will do anything.
1:42:56
I will go take I will go to his house. I'll meet his kids.
1:43:00
I'll spend I'll do whatever possible."
1:43:02
And then what happens is then you read up on the people which I just did for the Jim Simons episode on who he recruited and it's like they weren't like normal mathematicians or PhDs.
1:43:09
Every single person was a mathematician or physicist or PhD working.
1:43:12
They have like theorems named after them or they like they discovered something in mathematics.
1:43:17
They were literally the best of the best.
1:43:18
And so like Bono um and again I think some part of this is like pattern recognition.
1:43:23
recognition. saw the the edge that Bruce Springsteen had and then he gets introduced to Bono when you at the very early days of YouTube and he sees him perform he's like oh he's got the edge and so he's like let's work together Bono's like no let's work together Bono says no let's work together Bono says no and he says uh that he chases Bono says
1:43:40
he chased us around the world until we agreed to come to the studio with him would not take no for an answer he happens to you he is like a virus and he takes over your organs and brains he just knows that this is going to work out well for both of you I don't think there's a a person live that won't listen to this Jimmy Ivy episode and get something out of it. And it's just like
1:43:56
And it's just like this relentless pursuit of what you want to do.
1:43:59
And his whole thing is like he wasn't a big fan of how the music industry they they they their their metric of success was like total records sold.
1:44:08
His was like did you make a great album?
1:44:10
He's like great is success.
1:44:10
A lot of people sell a lot of albums and they suck.
1:44:15
If you can make something great first then you'll be able to get more customers, more listeners, and more everything out.
1:44:20
But the the the primary thing was great and there's a great example of this which I think is really important too and you see this all the time where at the end of the documentary towards the end uh Dr.
1:44:30
Dre had he had all this the issues.
1:44:33
He starts his own record label for the very first time.
1:44:36
His first two albums he puts out completely flop.
1:44:38
And Jimmy's his partner and Jimmy has cor partners.
1:44:41
They're like, "Hey, you need to fire Trey."
1:44:43
And Jimmy and this this is another thing I admire about him.
1:44:46
He has these lifelong relationships.
1:44:48
We have been friends for years.
1:44:50
I hope I hope we're friends for decades.
1:44:52
You know, this is I'm not this is really important to me like these compounding relationships.
1:44:56
And so they're like, "You need to fire Dre."
1:44:58
goes, "Yeah, we could do that and we'll save on my salary, too, cuz I'm going with him." And so, what happens?
1:45:01
They try to fire Dre cuz these idiots that can't do what the artist can do, don't know what they're talking about.
1:45:09
This guy's a generational talent.
1:45:09
You're like, "Get him off the payroll." And what happens?
1:45:12
Jimmy is spending day after day after day doing these listening sessions with Dr. Dre. Dr.
1:45:16
Dre would come over Jimmy's house every day.
1:45:20
They listen and try to find an artist for Dr. Dre to to work with.
1:45:21
Jimmy gets his tape of Eminem at the rap Olympics, gives it to Dre.
1:45:26
Dre's like, "What is this?" Right?
1:45:28
And then they they Dre starts working Eminem.
1:45:31
He becomes one of top 10 selling records artists of all time.
1:45:35
But more important than that, Jimmy says something that was great cuz at the very beginning, his first like two albums were super controversial. There was like protests.
1:45:41
There was congressional hearings about Eminem's lyrics.
1:45:44
And he goes, "We weren't looking for like a white controversial rapper." Yeah.
1:45:48
We were looking for great.
1:45:48
He's so consistent from the day one from when he's 19 till when he retired at close to 70.
1:45:54
Great can come from anywhere.
1:45:54
You just have to find great congressional hearings are such a success metric.
1:45:59
You know, Palmer Lucky told me that.
1:46:01
He said the thing he learned from Zuck was that it's not you're not getting dragged in front of Congress because you did something bad.
1:46:07
It's because you're being crowned as like the victor essentially.
1:46:11
What what was Jimmy's approach to financing different deals?
1:46:13
How did he think about control?
1:46:16
It was it possible to I I understand in the record industry there there there can often be like a parent label and then and then you can have a new label under it.
1:46:25
Did you get anything there or did that not come up?
1:46:29
He no he like he he actually does like really interesting deals.
1:46:32
really interesting deals. I mean he keep in mind so like my metric of success is not like he wound up being a billionaire but that came like way after even if he never did beats to me he'd be unbelievably successful just with the life he lived and like the the
1:46:46
experience you know probably made hundreds of millions but with beats he made you know billions uh there one of the things was like what we went especially with like a tech focus is like when he sells I think he sells like 50% of his of inner scope I forgot who maybe to MCA Okay. And it was like for
1:47:01
And it was like for like $150 million.
1:47:04
So it's like it's fantastic outcome, but when you we're talking about $3 trillion market cap tech company, so it looks small.
1:47:10
Um but but no, finance was not like a a focus on any of the interviews or any anything in the documentary other than like mentioning random dollar amounts with like taking in partners and stuff. Yeah. Yeah.
1:47:23
uh on on the on the protests and congressional hearings.
1:47:26
Uh did you it feels like there is something there where uh when a founder is successful enough eventually they have to put on the suit and go to Washington and start lobbying and do something like that.
1:47:35
Uh, did you dig into any stuff that he was able to do or apply his methodology to even trying to smooth over that situation?
1:47:46
Because it did seem like an existential risk to the rap industry at that time if they were really going to clamp down on explicit lyrics beyond just the the the content warning.
1:47:56
He he doesn't he doesn't state it like that.
1:48:00
That's part of the reason he had to sell like uh he he like went with one partner to another cuz like I forgot the company he was with but they were like hey like I think it was like underneath com it was like a bigger conglomerate that owned like another label and then under that label was scope kind of thing and they're like we have senators
1:48:17
calling like we this is such a small part of our business like you have to go elsewhere because like I'm not I have a you know $200 billion cable company or something like this is not but I I but the I think the interesting part here is I think he He's he's a phenomenal marketer and that's what everybody would keep like a relentless salesperson. Um I
1:48:32
Um I think that's one of his gifts.
1:48:35
But I think he understood that like remember he signed like Marilyn Manson, Trent Resner, Eminem, like uh Tupac, he Deathro Records, like literally people were there was they were the rappers were killing each other.
1:48:47
Like that was under inner scope.
1:48:48
And obviously he didn't want them to shoot each other.
1:48:51
But his point was with all of this with like this congressional uh protest and you know the the media saying that he's like a smuter and everything else like it's good for business and like it's it all this outrage cuz what happens when we were kids remember I was listening to Eminem.
1:49:07
Eminem was like a huge influence on me cuz I had this like all this like pen up anger about like my early life and like I I felt I was born into an environment that I didn't belong in and I was better than and like Eminem was kind of a soundtrack of like yeah like you I feel that way too and so like music is very much like a young person's game.
1:49:24
So you have like 60-year-old congressman or Bob Dole saying like you should listen to this.
1:49:28
What as a kid you remember was like being a teenager like oh that makes me more interested.
1:49:31
I want more of that and and he does this too like um with Beats.
1:49:35
So the idea before the streaming service he had the headphones.
1:49:39
He's like it doesn't make sense for Dr. Dre to endorse anything.
1:49:43
He he he had like sneaker endorsement offers and all this other stuff.
1:49:44
And he said there's a great line documentary. He goes Dre sneakers. Speakers. You should do sneakers.
1:49:52
She's got that like, you know, high pitched Italian twang voice, which I absolutely love.
1:49:56
And so they're like, "Bose the the leading at the time in 2006 or whenever this was h happening, the time the leading uh headphone uh product was Bose."
1:50:05
He's like, "Headphones to put you to sleep.
1:50:08
I don't want to put you to sleep. I want to make you move.
1:50:11
I want you to get off your ass."
1:50:12
And so what happens is they made them distinctive so you could tell with the big logo on the on the on the ears what they were, right?
1:50:17
And then he's like, "Our idea, my marketing idea is very simple.
1:50:20
I'm going to put them in with the best musicians on the planet.
1:50:24
That's going to get everybody to try them and then once you try them, you'll stay because the the sounds good.
1:50:28
And then he expanded out to athletes.
1:50:29
But what he did is he wind up spreading it to the 2008 uh NBA Olympic team or US Olympic team, the men's basketball team, and they it got banned and there was all this coverage because Beats wasn't an official sponsor, right?
1:50:43
And so you can't wear them and so they wore them anyways.
1:50:47
They wind up getting fined and everything else.
1:50:49
And Jimmy's like, "This is the best thing ever happened to us." Makes sense.
1:50:52
Uh, I mean, that's fantastic.
1:50:54
We could do this all day.
1:50:56
This is always a pleasing. Uh, we will talk. We'll see you soon. Uh, yeah.
1:51:03
Next, next time we do this, it might be in person. We got some plans. How are you guys doing? How are you guys?
1:51:07
Are you Have you Are you going to But if people drop in, you're like, "Okay, guys, this is the end of the segment.
1:51:12
Now you have to get up and leave." We could do that.
1:51:14
We're We're We have some ideas we'll share with you.
1:51:16
But you can just do a whole show with us.
1:51:17
It's gonna be No, I can't I can't I can't do three hours of this.
1:51:21
I can do three hours alone with you guys, but not You can do it. You can do it. You know what?
1:51:25
In three hours, if it's live and not edited, I'm going to get cancelled. I'll get You'll be fine. You'll be fine. You're good. You're good. We'll bleep out. We'll work out.
1:51:33
We'll do 30 minutes, then 45, then an hour, and then two.
1:51:37
What did they used to do on TV?
1:51:39
There was like a twominute like Remember there was like a delay, like a tape delay.
1:51:42
We'll need a tape delay for you.
1:51:44
You're already swearing like a sailor.
1:51:46
So, we got to clean that up. Uh, we'll work on that.
1:51:48
That that that means we're gonna have to we're gonna we're gonna go do the Porsche Experience Center. That'll be fun.
1:51:52
And uh we'll have to get get behind the scenes of that.
1:51:56
I cannot wait extreme podcasting.
1:51:58
Senra in a GT3 RS, you know, just just tearing up the track.
1:52:04
What was the What was the Ferrari that I sent you guys? A12. Super fast. Fast competition. Competition. We got to do that one. Awesome.
1:52:11
We'll talk to you soon, David. All right, guys. Talk.
1:52:13
Up next, we have Katherine Han from Han Ventures coming in the studio to talk about the stablecoin bill, the genius bill is slated to pass.
1:52:21
It's on the front of the Wall Street Journal today and we're very guiding and establishing national innovation for US stable coins.
1:52:31
We had her on the show and uh yeah, we're excited to talk to her. So, welcome to the show.
1:52:35
How you doing, Katherine? What's going on? Hi. Hi. How are you guys? We are great. Uh big 24 hours. Congratulations.
1:52:42
I think are in order, but please get us up to speed on what's actually happening and where uh where things are in Washington.
1:52:48
And I love that you called me Catherine.
1:52:50
That was my Washington name.
1:52:51
I haven't been called that since I used to appear in court.
1:52:54
Uh but uh Katie, let's update the let's update the Chiron. Katie Han.
1:52:57
So uh thanks for having me on, guys.
1:53:01
Actually, I literally just walked off a plane.
1:53:03
I was down at the COTU conference.
1:53:04
Um where I was talking to a lot of founders, Crypto and Naan, uh and everyone loves your show.
1:53:09
So I I'm happy to be here.
1:53:12
Um, well, thanks for making the time. Yeah, thanks.
1:53:14
I think congratulations are in order.
1:53:16
I don't know if I would say that yet.
1:53:18
I mean, first of all, the bill passed through the Senate. Um, great great news.
1:53:23
Obviously, it's another signal.
1:53:23
I think kind of like I feel like I did when ETFs um were approved.
1:53:28
By the way, not really by the SEC, although um that was the body that formally approved it.
1:53:34
But as I said last time I was on your show, guys, make no mistake, the DC circuit, that article 3, that other branch of our government, left the SEC no choice.
1:53:42
Uh the courts don't always get it right, but sometimes they do.
1:53:47
And the courts unanimously in that case, uh said that the SEC had acted arbitrarily and capriciously.
1:53:54
So to my mind, the court system is the reason we have ETFs in this country today for Bitcoin um and for ETH.
1:54:01
And I think of this is a bit a similar thing.
1:54:04
Now, here we have another branch of government stepping in.
1:54:06
In this case, you have the Senate passing this um introducing this legislation, passing this legislation.
1:54:13
Now, of course, the House has to vote on it and then the president has to sign it into law.
1:54:19
Um so, if those two things happen, you can say congratulations are in order for the industry.
1:54:24
But I think one thing that is not really being discussed and I hope we can discuss today is there's another very important bill.
1:54:30
Um, and I'm not going to slap a percentage on and say which bill is more important, but that's the market structure bill.
1:54:36
And to me, that's really the transformational bill um, for the crypto industry. Okay.
1:54:43
So, break Yeah, break that down for us. Yeah.
1:54:45
So, there's one bill um, stable coin bill, as you just mentioned, that the Senate passed.
1:54:49
And one of the things that I loved to see about that is the bipartisan support um, for that bill because I think uh, we used to be as an industry pre-political.
1:54:57
Brian Armstrong always talked about the industry being pre-political and I think I don't want it to be the case that this industry is too political on one side or the other.
1:55:08
So I really love to see these moments like we saw yesterday in the Senate where you have a number of Senate Democrats voting in favor of sensible rules of the road.
1:55:16
And I think this is a classic example of that.
1:55:19
So I'm delighted and I hope the House passes it.
1:55:22
But I don't see why we have to choose between a just a stable coin bill and the market structure bill.
1:55:28
And the stable coin bill obviously paves the way for a regulatory framework for stable coins in this country. So that's that.
1:55:38
But then there's another bill, the market structure bill, and that kind of will answer or attempt to answer the question of what's a security, what's a commodity.
1:55:47
And I know you guys have been covering crypto for long enough.
1:55:48
You know, this is kind of an age-old debate.
1:55:52
um and you know where can there be an enforcement action?
1:55:54
Well, the big question is well what's a security and what's not and I think the market structure really goes a long way in answering that question and that's why I think it's so fundamental and we've seen courts across the country weigh in on that question.
1:56:07
Um and and that's because we don't have legislation and said it was all so clear and of course it wasn't all so clear. Yeah.
1:56:15
So what what's the what's the timeline there?
1:56:18
What what are the different players?
1:56:20
what do people want out of it?
1:56:22
What what is the core, you know, kind of uh crypto industry and both on the investor side and and company side want out of it?
1:56:29
And and what are what who who would who would not want it to go through at least how the the crypto side has it in mind?
1:56:39
Look, I think I think everyone in the crypto industry wants the stable coin bill to go through and become law.
1:56:43
I don't think there's really any question about that.
1:56:46
The question is, do you go for both? Yeah.
1:56:48
for both? Yeah. Um, someone just described it to me as in a sports analogy and I'll probably fumble that one, but it was like do you go for the field goal or do you go for the touchdown and the thing about after a field go you know after a field goal the other side gets the ball back and I think Congress really operates in kind
1:57:05
of six to 10year windows and you know it's on their mind reform regulatory clarity for crypto right now and I think the transformational bill for crypto right now is very much that market structure bill we also want that stable coin bill and we have this unique moment in time where we have bipartisan support for both bills. So, personally, I say go
1:57:25
So, personally, I say go for both of them and worst case you end up getting the stable coin bill only.
1:57:33
Um, but I do think that's not the most desirable outcome for the crypto industry.
1:57:37
I think the crypto industry deserves, especially after years of uncertainty, both a clear message from Congress.
1:57:43
I think Congress ought to do its job and pass both bills.
1:57:44
And I especially think that because after the Supreme Court last summer uh in a case I said that this was the most important case for technology policy, not for just crypto but for tech policy in decades was the overturning of the Chevron doctrine.
1:58:00
And that takes power kind of away at a high level away from regulatory agencies and puts it back more in the hands of the courts.
1:58:07
And do we want to have another 10 years of litigation percolating up from the district to the appellet court to the Supreme Court on what's the security or what's a commodity um in a patchwork of different answers throughout the country or do we want Congress to answer that question for us now?
1:58:23
And I think it's incumbent for Congress to answer that question now.
1:58:27
You asked who what does the industry want?
1:58:29
I think people this is a big industry.
1:58:32
We say crypto is not a monolith.
1:58:35
It's a broad new asset class and stable coins are a very big important piece of that asset class and a growing piece as you guys saw.
1:58:43
I shared with you the stats um you know almost a quarter of a trillion dollars.
1:58:49
I think you banged the gong for that stat uh locked in supply growing enterprises um across the world integrating stable coins.
1:58:57
You probably saw those announcements from some of the big tech companies in the last few weeks.
1:59:02
And I think one thing that everyone's wondering is those ones that haven't yet dived in for stable coins is well what are the rules?
1:59:09
So this bill that was passed yesterday out of the Senate, the Genius Act, so important for that. It's like here you go.
1:59:14
And so what kind of institutional interest will be unleashed once that bill becomes law.
1:59:19
I think that's really exciting.
1:59:22
What's your h how would you how do you think about big companies getting excited about stable coins and thinking or or institutions and being like there's a lot of potential here.
1:59:32
We should create our own stable coin versus we should just figure out how to leverage this technology.
1:59:38
Where where do you see the kind of line and and opportunities?
1:59:42
Well, look, we already have two very dominant stable coins right already today.
1:59:46
Um Tether USDT and then we have USDC.
1:59:50
Um so clearly it's not winner take all.
1:59:53
I mean those two are both growing and they both have market share.
1:59:55
So we think there will be stable coins like those that will have network effects but we also think at the same time there are some businesses that are just so big and just so important and if they launch their own stable coin um we could also see that too.
2:00:09
Um I don't think we see a world where everyone I think we get asked this question all the time.
2:00:13
Is there going to be a world where every company has their own stable coins?
2:00:15
You know um we don't think so.
2:00:18
We could be wrong, but that's not the view of how we see this evolving.
2:00:23
We do see Yeah, we had we had Aaron Aaron Frank from Lightseed on earlier and he was comparing uh certain companies would launch a stable coin and they it maybe would feel like Koh's cash where it's like, yeah, I don't have any of that nor do I uh I don't have any.
2:00:38
And and that's the thing.
2:00:40
If I did, would you want to use it on other platforms? Right.
2:00:43
I mean every bank could launch a Visa network competitor theoretically but that doesn't necessarily make sense. Yeah.
2:00:49
So so in your mind is the is the broader market structure bill the kind of thing that could catalyze a massive amount of new activity in from my view you know stable coins have been getting adoption.
2:01:01
There are a bunch of exciting use cases.
2:01:03
We have a public American stable coin you know issuer in circle now.
2:01:06
It feels like yes, regulatory clarity is important there, but having broader clarity around how tokens are treated by, you know, how the government actually views tokens feels like it could catalyze, you know, much more of an explosion in investment activity and new company formation and you new use cases for tokens.
2:01:27
Is that the right framework?
2:01:30
I think that is the right framework because like I said stable coin is a big important piece of the pie.
2:01:35
Um and and very lowhanging fruit by the way to my mind.
2:01:38
Um but crypto as an asset class is much broader.
2:01:41
So when you say where do the industry players where do the crypto investors where do we want to see it?
2:01:46
I don't think it's a monolith.
2:01:47
I think crypto as it grows to a multi-trillion dollar asset class like any multi-t trillion dollar asset class you have different factions.
2:01:54
And I think some fairly and some really smart people think just take this take this win and move on and don't worry about the rest.
2:02:04
And I I think that's a little I see why they might think that if they think that it's this or nothing, but I don't I think that's a false choice.
2:02:11
I think that we can have both and this isn't a really opportune moment to have both.
2:02:17
Um, and I think the the question that has belleaguered the industry really has been the question over securities, commodities, um, which agencies are going to have jurisdiction.
2:02:25
I think that's a bigger question.
2:02:27
And I think it would be a real shame if we let this moment go to waste.
2:02:31
You know, the irony, too.
2:02:32
So, you have some stable coins who are only stable coin companies who are like, "Yep, genius act." And move on.
2:02:38
they don't want to get dragged into this broader um kind of a more omnibus package, right, with the market structure legislation.
2:02:46
But I think that's a missed opportunity and I think we'll be sorry as an industry if we don't go for both now.
2:02:51
Again, go for the touchdown.
2:02:53
Um and with you know, I think all of the like I told you all of the fundamentals are kind of working all at once together now when I last talked to you guys and it's very much part of it.
2:03:03
So why would we not go for that?
2:03:03
So, I think some folks who don't maybe have an appreciation for how sometimes, sorry to say it, slow Congress operates.
2:03:09
They've been trying to update the moneyaundering laws for two decades.
2:03:13
Um, and it's like out of sight, out of mind sometimes.
2:03:16
And I think we have a really unique moment to press for both here.
2:03:20
to press for both here. And the irony is some Democrats who are opposed to market structure um you know h they because of abuse potential abuses who are opposed to the crypto industry they cite abuses they cite fraud um they cite speculation they site Trump coin and I I get all of those
2:03:40
criticisms but I'll tell you what had the market structure bill been passed that would have answered a lot of those questions totally the irony is if you would have had the market structure bill you wouldn't have had a lot of the blowups that you had in the past several years in this industry. Totally. Is Totally.
2:03:52
Is crypto truly coming home to America?
2:03:54
We went through a period where crypto is being pushed offshore.
2:03:59
We've heard over the last year that some crypto founders feel like they can come back to the states now, maybe actually have an office state side.
2:04:07
Are you seeing more and more momentum there with with some of this positive regulatory movement?
2:04:12
uh or is it or are you still seeing momentum around uh places offshore, Singapore, etc.
2:04:20
I think look everywhere that you're going to want to develop does is going to have some rules that you're going to have to follow.
2:04:26
When I hear founders who say there is no regul it's often gives you the answer that there is no regulatory regime whatsoever.
2:04:33
Sorry bology if you're watching but uh I I am seeing that onshoring a bit.
2:04:40
we were kind of seeing the offshoring in an unfortunate way.
2:04:41
But it's not only regulation that matters.
2:04:45
It's hiring top talent and certainly there's top talent right here in Silicon Valley and other places um in the world.
2:04:52
I mean you mentioned Singapore.
2:04:54
Singapore has top talent to be sure but you know there's a lot going for the US.
2:04:58
So, we're still very optimistic and I don't think it but we were getting to a very dangerous point with the crypto industry um had the likes of Gendler and others like him been left kind of to just do this.
2:05:10
Now, fortunately, the courts were pushing back.
2:05:12
Um so, it wasn't a partisan issue.
2:05:15
It was just the courts were starting to say, "No, you've gone too far."
2:05:18
I mean, I lost track now.
2:05:20
I literally lost track of how many federal courts of all political persuasions uh and appointments ruled against Gensler's regime and not just Gensler but others like it where you had very activist regulators um who were really far out of their lane and um and you saw courts curbing back on that.
2:05:37
So I think that was already we're at a dangerous spot but the courts were maybe going to save us but you don't only want to rely on litigation to save you of course because then you've already lost.
2:05:48
But I think hiring talent is important.
2:05:49
I think um you know access to capital and traditional venture maybe that's a little different in the crypto asset class but I think also fundamentally what you have going on right here now with AI particularly in Silicon Valley and we've talked a little bit at the
2:06:03
early stage about some of the synergies between AI and crypto because of course AI creates digital abundance and blockchains are good at enforcing digital scarcity and I think you're going to see more and more synergies emerge and use cases over time and I'm not going to say what they are because
2:06:19
you know we've seen that before in crypto a lot of overpromising underd delivering on use cases um so let's just stick to right now we see synergies there's a lot happening in Silicon Valley obviously with AI we think that's going to benefit the crypto industry and
2:06:36
so in addition to regulatory clarity if you're a founder you want access to great talent you want your visa situations sorted out for your employees you want um access to other founders depending depending on what type of company you are, you want access to capital. So, I am optimistic um about
2:06:51
So, I am optimistic um about the state of crypto in the US, but also elsewhere.
2:06:56
And we invest in companies.
2:06:58
Uh we invested in Squads.
2:06:58
We've announced that um and I know Steppen, one of the founders of Squads, watches your show.
2:07:05
Um but Steppen's based right now um overseas and I was just having a conversation with him about how do we get you to come and bring squads to the US. Awesome. Awesome.
2:07:16
I I I I want to talk about the longer tale of regulation because it seems like the stable coin bill is very straightforward, like the least the the the least ambiguity there.
2:07:29
Then you have the the the market structure act and there's a lot more to do there, but I'm sure that there's like riders getting pitched and all sorts of longtail things like how much are we actually like where does the line end between what we're actually trying to
2:07:44
define versus what we're still in the exploration fe uh phase of because you have NFTTS, crypto gaming, there's uh you know uh uh prediction markets, there's so many different crypto applications that trying to kind of do them all at once. Maybe that's the right
2:07:58
Maybe that's the right approach.
2:08:00
Maybe these need to be handled like after we've done the technological exploration.
2:08:05
But what's your view on kind of the long term?
2:08:07
My view on that is is no because we can't just wait but we can't have an NFT bill a bill for event contracts or we can't have specific bills and if you saw if you think back to the advent of internet that's not what we had you know we had section 230 it applied broadly to platforms and I think we need something similar here.
2:08:25
similar here. So on the one hand I would say it can't be um so specific that it's like okay if you're a um you know events contract platform it's this rule and if you're an NFT player because again we don't even know yet what will be created um uh really at the end of the day we've
2:08:43
seen some early use cases with product market fit obviously chief example of that is Bitcoin but what if we had had this conversation guys back in 2010 and you said okay we've got Satoshi's white paper and there's this thing called Bitcoin let's pass some crypto regulation. It would have just been for
2:08:56
It would have just been for Bitcoin and that would have been a mistake because then a couple years later on the scene we have ETH then a few years later we have Salana.
2:09:02
few years later we have Salana. So I think what we need to do so you don't wait for the end state to have any regulation right you don't do regulation by enforce I can tell you what we don't do we don't do regulation by enforcement you don't wait till the end state um of
2:09:17
things but nor do you want to get so with such specificity today and do the the current state of regulation by the end state of regulation um that you can't do either and so I think what you have are some guiding principles some generic rules of the road and really that's all the um market structure bill
2:09:35
is and there's enough clarity that you had Democrats vote for it last time uh it came up so it's not like it's so specific it talks about and I think look I think you have people like Hester Pur who is SEC commissioner has written and given speeches on this of what that ought to look like what is a decentralization test and those are some
2:09:55
guiding principles that you can kind of look at and apply as you think through this legislation you know what body ought to regulate it Um and and and sure you're going to have some outliers and new technologies emerge that you're like, "Okay, does this fit neatly in the bill?" No. But we have laws for No.
2:10:08
But we have laws for everything in this country with technologies that developed that don't fit neatly in a particular bill.
2:10:14
And that's why we have that's why we actually have we don't do regulation by enforcement.
2:10:20
Uh we do notice and comment.
2:10:22
We do things like advisory opinions.
2:10:24
Certain bodies, by the way, do do advisory opinions, not uh judges.
2:10:26
And then if if all else fails, uh you do go and sometimes seek article 3, seek a judicial interpretation.
2:10:34
But I think that's like I said, that's kind of the failure state if you're having to go to the courts.
2:10:40
Um but indeed, that's what was happening because we were getting no rules of the road and we were only getting unfair regulation by enforcement.
2:10:47
And I say unfair because Gary Gensler basically picked what should have been the best companies in crypto, the poster children for compliance, and brought enforcement actions against them.
2:10:57
And then the complete spectacular disasters didn't bring anything.
2:11:02
So uh until after the fact and um so I think regulation by we got to have you we got to have you and Gary on the show to to hash it out.
2:11:09
I'm sure you guys have had some funny conversations.
2:11:14
Thank you so much for hopping on guys for having me.
2:11:15
You have a good rest of Okay. Byebye. Bye.
2:11:18
Up next we have Justine Moore from Andre Horowitz.
2:11:23
incredible map knowledge dropped a fantastic market all around AI image AI video models.
2:11:30
We're going to have her take us through it. Welcome to the show. How are you doing? Can you hear us? Can you hear us? Hello.
2:11:41
Oh, I can hear you guys now. Sorry. There we go.
2:11:43
Hey, I was saying to John when you dropped your new market map, I was saying, you know, it's a great sign of respect in our culture to drop a new market map and and come on the show.
2:11:53
So, we're honor incredibly bullish on market maps.
2:11:56
I find them extremely interesting and I think they got a bad rep a couple years ago, but I'm glad that you've stayed the course.
2:12:02
And we are pro strongly pro market map.
2:12:04
Yes, the people love market maps.
2:12:07
It's like you can guarantee a popular tweet if it has a market map in it. Absolutely.
2:12:10
And I think people got kind of sick of like, oh, like we know the playbook, we've seen it, but there's a playbook for a reason. It works.
2:12:17
So, yeah, take us through the latest market map.
2:12:19
Um, what are you tracking?
2:12:21
How did you decide what to divide it up into and and what uh what kind of inspired this moment specifically? Yes.
2:12:28
So, I mostly do AI creative tools here at A16Z.
2:12:31
So, I spend like all my time testing all of the image, video, audio, etc.
2:12:35
Um, and obviously the past few months in particular, video has been like the thing.
2:12:41
Um, there's been like V3 obviously, which was a massive moment with adding the audio for the generations.
2:12:47
Um, Hedra around the talking characters.
2:12:49
Um, the new Miniax model, the new bike dance model, Seed Dance, which is in the arena already outperforming V3.
2:12:57
So, it just felt like a good time to refresh sort of what's going on in the video space.
2:13:02
Um, and I kind of formatted this market map just thinking about um, more from the perspective of a creator, like less in terms of the go to market of the company, more just like if you're a person trying to create a video with AI, where would you go for these different use cases?
2:13:19
So there's first sort of the model like the foundation model companies where it's either text to video or image to video. Most places do both.
2:13:29
um where they actually take your input generate have their own proprietary model that generates the video for you.
2:13:36
So that's the the vos, the clings, the runways, the pikas.
2:13:38
Um and then there's also now this emergence of what I call like multimodel apps, places like um Korea and and Flora and Visual Electric that enable you to run um a bunch of models in one place.
2:13:53
So like if you want to take a single prompt or a single image and see what it looks like in five different models super easily, you can do it somewhere like that.
2:14:03
Um and then the other side of the market map is sort of like what happens when you add speech and talking characters.
2:14:09
Um, and so some folks do that by like generating a talking avatar from an image where you can eventually have the person move and other folks do that by taking like a video of a person and then um applying lip sync over it and then syncing the audio.
2:14:23
So that's sort of the distinction between talking avatars and lip-sync.
2:14:26
Yeah, it's interesting that you're in the consumer group because I can imagine that a lot of the talking avatar companies wind up selling to corporations that want to vend in talking avatars for example.
2:14:36
Are you seeing a lot of that?
2:14:39
Um or like I guess how how how uh rigorous or uh stringent are founders about like hey we are trying to build a consumer app or we're just building a cool technology and it might land as a consumer product but it also might land as a B2B play.
2:14:52
Um most people are not at all rigorous and often don't even know at the beginning.
2:14:58
So what we actually saw with the first generation of AI video was it was only researchers making these like magical models and they had no idea what the use cases were going to be.
2:15:07
they all just put like a text prompt box in front of the model and then you got an output and like a big company and an individual were using the exact same interface.
2:15:15
Now I think we're starting to see more at like what we call the app layer which is essentially like how do you productize this?
2:15:24
How do you create workflow and and therefore how do you go in to specific verticals.
2:15:28
Um maybe an example of that is all of the like standalone video ad um creation products.
2:15:33
So things like Creatify or captions where or Hey Jen has a product for this too where um you can literally just like paste in a link to your Amazon or Shopify store.
2:15:42
It will pull all of the info about your product, your logo, your brand, and it will generate a talking head avatar like holding your product and describing it.
2:15:53
And that's something that like a V3 or a cling the general video model companies won't do today. Yeah.
2:15:58
Um, where are you seeing the strongest like low churn adoption of these tools?
2:16:04
Because just personally, like V3 was the thing that got me to subscribe to Google Pro Max 25, which we can go into the names and how difficult it is to access these.
2:16:15
Um but but other than that uh there there haven't I haven't seen that many where like we've seen the ASMR Stormtroopers or something but I but it hasn't been clear to me that someone's building like the next Pixar and they're actually thinking about it like Mr.
2:16:30
Beast and they're like I'm building a studio. This is a business.
2:16:33
I have ad integrations and I have a content schedule.
2:16:35
It's very much in like the testing phase.
2:16:37
We see the Studio Gibbly moments go viral.
2:16:38
So where where is like the true long-term value playing out right now?
2:16:44
Okay, on the content creation side, where we are at right now is actually there's a bunch of content agencies like, you know, there's a bunch studios, Dream Studios, there's there's probably like 20 of them now.
2:16:59
Uh, one called Paracosm, that's that's really cool.
2:17:01
Um, and these are people who are just early adopters of the tools and they're getting hired by brands and ad agencies and entertainment companies to use the tools for them, uh, and make content.
2:17:12
and make content. I think the problem now in what you're describing is like the people at Pixar would have to know how to use the AI video tools and how to set up the workflow in order to create their next movie using AI and we're not
2:17:24
yet at like the tools aren't mature enough and we don't have enough people who are working at those entertainment companies who know how to use the tools that it's primarily being done with these external AI native agencies or contractors today. Um, I think like one
2:17:35
Um, I think like one of the first AI IP we've seen is the Italian brain rot characters.
2:17:41
I don't know if you guys No, I don't know this. I haven't seen this.
2:17:45
The Italian brain rot characters are huge.
2:17:47
So, I can't even say the names here because they will sound ridiculous.
2:17:51
But, um, it's people basically making images of like an animated talking baseball bat and like a ballerina whose head is like a cup of cappuccino. Okay. Okay.
2:17:59
And a shark who wears sneakers. Okay.
2:18:02
But they're starting to build like a cinematic universe. Oh, it's massive.
2:18:07
Yeah, accounts have like millions of followers.
2:18:09
World isn't ready for Italian brain ro.
2:18:11
So, is it is it uh is it like decentralized in the sense that like I could just go and participate in this like broader trend? So, yes and no.
2:18:17
I would say there were a couple accounts that originated the first few characters and then other people started participating using the hashtags remixing. Okay.
2:18:29
And then the good the characters that were good that came out of that sort of bubbled up to become part of the cinematic universe the cannon they have bombadiri bombadro crocod crocado which is a a bomb he's a crocodile plane that shoots bombs. This sounds like Yeah. Yeah. Super super viral.
2:18:49
The kids probably love it. Yeah. It's wild.
2:18:51
Um before we go into more of the consumer side, t talk to me about some of the uh the more like uh niche like B2B use cases because I remember when like GPT3.
2:19:04
5 and we got four four uh GPT4 dropped, there were still like a lot of hallucinations, but you saw companies that were just like, yeah, like sure it's not incredible at writing poetry, but it's amazing at just like converting this messy text to JSON.
2:19:18
and they were all of a sudden just running tons and tons of queries.
2:19:23
And so I would imagine that in a in a in a in a video workflow, things like what Runway was doing in the old days of just like green screening or the the stuff that like artists aren't going to really get upset about because it just feels like a better, more advanced tool.
2:19:38
Are are a lot of these companies building tools like that or is all the focus just on like let's oneot the next Oscar film?
2:19:44
Yeah, it's a great question.
2:19:46
There's a decent amount of vertical focus.
2:19:48
I think also like it's very hard for this for startups like if you're not a Google to or an open AI or whoever to play in the game of like let's train the largest oneshot best video model.
2:20:01
So a lot of them are focusing on verticals like um Luma which is a company we invested in this really cool tool where you can upload like a 9 by6 like iPhone style video and you can just say extend and it just basically like outpaints around the existing video and makes it look like so you can just change the dimensions of your video really fast. Yeah.
2:20:20
Um or more of just like a practical tool, but super useful for a bunch of creators that are filming vertical content probably and they want to distribute in a horizontal format, so they just do that. Yes, exactly.
2:20:30
That makes a ton of sense.
2:20:32
Or or something like Higsfield that it has all these really special effect like motion lures essentially.
2:20:38
So you can take like an image of a car and just say like this is like here's a template of what a car explosion looks like.
2:20:45
Make this specific car explode. Okay.
2:20:46
Um, and then on the B2B side, we've seen a lot around like how do you scale marketing or L & D or like executive presence type content.
2:20:54
So like, you know, tools like Descript now allow you to take a video of someone talking and then change the word that they're saying by changing like cloning their voice, having them the voice say the new word and then doing a new lip dub, new lip sync. Yep.
2:21:09
So, you could have your CEO sending what looks like a personalized holiday message to like every single customer or something like that. Yep.
2:21:17
Or maybe something worse with a fishing scam, but I'm sure we'll get safety at some point.
2:21:21
What do you What do you think uh the long-term ambitions of companies like Google with VO and Bite Dance with their model?
2:21:29
What do you think they want out of this category?
2:21:33
They obviously have a massive edge.
2:21:33
I saw um Anishh was posting about uh Google's edge or YouTube's edge around IP with VO you can generate um yeah what was going on there the Disney thing was that like a real deal or is that just a beneficiary of like some sort of relationship or Yeah.
2:21:51
Then I I I want to get a sense of of do do Google and bite dance do they want to be developer tools that just vend into a bunch of these platforms?
2:22:00
Do they actually want to own the end customer? What is this market?
2:22:04
Is there a generalized market in the long run of just generating funny videos for the average consumer or is it gonna all be verticalized out where I want to generate ads?
2:22:14
I maybe want to generate you know customized messages but I I want to understand like this is a good overview of all the of the ways you can generate content but like how does the market structure evolve? Yes. Um, okay.
2:22:27
On the IP question, I have not talked to Google's IP lawyers and I'm not an IP lawyer, but my understanding is Google, but this is legal advice, right? Yeah, exactly.
2:22:35
This is and financial advice. All the above.
2:22:39
Our compliance team is going to love this.
2:22:40
Yeah, they're going to love it. Sarcasm.
2:22:42
Uh you can uh I I think my sense is basically, you know, when YouTube came about, it was suddenly like all this IP content is on the internet and Google cut deals with a bunch of the IP owners about essentially what what can be posted on various Google properties and if that content gets monetized, how it ends up going to the end rights holder.
2:23:00
And so that's sort of the the working theory right now about like why V3 can generate IP content and not get sued when a lot of other people are struggling with that.
2:23:09
Um, in terms of the market dynamics, it's so fascinating the question around like Google and by dance and and eventually I think Facebook I hear is going to do more in video soon as well.
2:23:19
Um, like why they're doing it and what their strategy is.
2:23:24
I think first of all like if I'm one of those huge consumer giants, AI is such a massive shift in consumer behavior that like you want if if you want to own the interface to consumers, you probably want to own text, image and video generation as well.
2:23:36
and they have the resources in terms of data.
2:23:39
Like YouTube, for example, is a perfect example of this.
2:23:43
They have a ton of compute, they have a ton of money, and they can hire the best researchers to build the best models.
2:23:47
I think the question, as you sort of alluded to, is like, do they do they sell those models via API and let other people build the consumer experience on top of them, or do they own the endto-end consumer experience?
2:24:01
My honest take on it so far has been like it takes so long in the big company product teams to get stuff done and get new products out that like the model teams are just shipping the models in like pretty basic interfaces like Google Flow and then the product teams are going to figure out if they can catch up with some kind of cool new consumer app later. Yeah. Uh yeah. I mean, yeah.
2:24:19
later. Yeah. Uh yeah. I mean, yeah. My my question is like how much uh what will the market actually look like for the average consumer wanting to generate images and video or will it just be something that people default to chat
2:24:34
GPT because maybe they already have a subscription or they're fine with the free tier and it doesn't end up there ends up being a bunch of different applications on the enterprise B2B side but then not so many like you know core consumer subscriptions on just like cool videos, pictures, etc. I mean, it seems
2:24:51
I mean, it seems like it's a killer killer moat for Google Cloud Platform to have V3 as an API.
2:24:58
Even if Google can't figure out how to productize it fully, it's like they do seem to have a real moat.
2:25:03
I want to get into that about uh YouTube is obviously an incredible training data resource.
2:25:09
Uh you mentioned that there was another company that that just surpassed them. Was it Tencent?
2:25:13
You said uh Bite Dance this year. Bite Dance. That's right.
2:25:16
So, I I have a question about that because um obviously with codegen uh GitHub has a lot of public repos that people can probably just scrape.
2:25:27
It's also just not that much data.
2:25:29
You can probably fit it on a couple hard drives, maybe sneak it out the back and go a flight and and train somewhere in Malaysia or something.
2:25:35
Um you can't do that with YouTube.
2:25:37
Like, it's just too much data.
2:25:38
And so my question is uh is how durable how much should we be thinking about a durable data mode in video generation for YouTube because it seems like something that they could really like clamp down on and would give them a durable advantage but I don't know there's so many other there's so many other ways to attack any of these model developments um totally that there's a lot of different options.
2:26:03
So there's a couple parts of the data question.
2:26:05
The first part is like what do you own versus what do you scrape?
2:26:09
I mean we've seen companies like OpenAI we'll scrape YouTube as well to train their models.
2:26:12
I think Bite Dance also like you know here we think of YouTube and Facebook and whatever here in the US I mean as as being the big hosts of content but like there's all these massive companies in China like Bite Dance who have their own um have have their own user generated content on like their version of Tik Tok and their version of YouTube and their and I'm sure there's reposts of American videos over there.
2:26:35
So it's not like even has a unique flavor.
2:26:36
It probably can generalize pretty well, right? Totally though. Yeah.
2:26:40
Like I was one of the very early users of all the Chinese video models when you still had to access them on Chinese apps with Chinese phone numbers and they were definitely very good at things that were more um China oriented than the US models.
2:26:53
That makes a ton of sense. Um Oh, okay. Okay.
2:26:55
The other the other thing that's important to mention on data is um in video in particular, it's not just the volume of data.
2:27:03
It's also the quality of data and the quality of data labeling because essentially you can't just feed a video into a video model and assume it can understand what's going on and and pull out the relevant info.
2:27:14
You have to have really sort of dense labels is what we call them or super detailed captions about like this is this style shot shot from this sort of camera.
2:27:23
The camera is coming from this angle.
2:27:25
this is the sort of character, this is how the character is interacting with the background.
2:27:28
And that quality data is what drives quality in the video models.
2:27:32
Um, and China has really benefited there because there's so many more PhDs than there are here.
2:27:39
And it's much cheaper for these companies to hire them um to do these these dense uh labels for the video data. Yeah.
2:27:45
Well, how does MidJourney fit into all of this now?
2:27:48
It's such an interesting company because no venture dollars, this like behemoth kind of quietly hiding in a Discord server still.
2:27:57
Uh I saw some examples of video. It looked fantastic.
2:28:01
Seemed like they hadn't added audio yet, but how how do they fit into the whole the whole piece?
2:28:06
Because it seemed like early on they they developed a really great um feedback loop for the data that maybe wasn't happening with some of the other model providers. Yeah.
2:28:15
So, the midjourney model came out this morning um really conveniently like 10 minutes after I put out my market map without mid journey video because it was not yet available.
2:28:24
Um I was just playing around with it too. It's it's really cool.
2:28:26
They do image video um and they and so they don't do text to video which is actually sort of easier.
2:28:32
They can start with their the super high quality images that they generate on the platform and then animate those.
2:28:37
I think of like a low motion and a high motion setting.
2:28:39
Um, from what I've tested so far, um, it's it's better as sort of like a low motion, scenery, environment, light interaction type thing.
2:28:49
Like you have a photo of a person and you can then animate sort of rain and wind and them walking slowly.
2:28:55
And it's not as good at like what I call physics heavy world model type things like two cars running into each other and exploding.
2:29:04
that sort of thing requires um uh a very very large and costly usually like texttovideo model that is more difficult to train.
2:29:14
Um whereas midjourney I mean I I have no idea how they did it. It's a great model.
2:29:18
They could have taken one of the open- source image to video models and and fine-tuned it on all their own data. Yeah. Yeah.
2:29:23
I've noticed V3 is really really good with some of that physics stuff, but it still gets confused.
2:29:29
like if a car is driving away, all of a sudden you'll be looking at the front of the car and then the back of the car and it'll get kind of mixed up. Um, but yeah.
2:29:36
Are you uh as as all these different models have progressed, I I always remember uh Brad and Trevor McFed and just how early he was to to what I think will be this like new wave. Is that Lil Michaela?
2:29:51
Yeah, Lil Michaela, which was like basically CG a CGI influencer. So, very early.
2:29:56
I think we're going to see a lot more of this.
2:29:59
Uh, and we we've seen some of this to date, but do you expect that to be kind of like a new a new like how how bullish are you on on sort of like entirely AI creators getting um getting real adoption following turn followings turning into real businesses?
2:30:15
I'm sure you've you follow a bunch of them already.
2:30:19
Yeah, I'm I'm personally super excited about it because it kind of separates um the content from the character.
2:30:26
Like now, you know, before AI, if you were on Instagram, like you were both the character and the person coming out with the content.
2:30:33
And so, you had to like look in a way and present yourself in a way and talk in a way that was like interesting to the Instagram algorithm.
2:30:40
And now it's like anyone with a good idea can create a compelling character.
2:30:43
Um, and so I think some of those are human characters.
2:30:46
I've already seen way too many examples in my reals feed of only fans models who promote themselves with AI avatars of themselves now, which works shockingly well.
2:30:54
Um, there's some photorealistic human influencers, but honestly, some of the more interesting ones are things that could never be influencers before AI.
2:31:06
So, there's one called like raccoon stole my iPhone, and it's a it's an AI raccoon influencer.
2:31:11
There's like AI Capy Bara influencers.
2:31:14
There's like mystical creatures, like all of these things that just come out of people's imagination competing uh for mind share with uh Instagram pet pages, you know, dog pages, things like that.
2:31:26
Uh did you have a reaction to Fountain Head?
2:31:28
Uh it was the the or sorry, Mountain Head, not Fountain Head. Oh, yeah.
2:31:32
Mountain Head, the movie, the the core overarching theme was that basically deep fakes or AI generated content had gotten so good that it was causing global unrest.
2:31:41
Uh did did it did it resonate at all?
2:31:45
It does feel like I now have, you know, multiple times a day I'm I'm seeing content online and and it's like getting I we're both in the community notes program, so it's like you see content getting community noted.
2:31:58
One person says, "It's not real. Look at this link. it it was this image. They redid it.
2:32:04
Another person says, "It's real. Look at this."
2:32:06
Like, so it's like I just assume that everything's fake and made up unless I see it, you know, with my own eyes.
2:32:11
But I'm curious if you if you uh if it resonated at all with you.
2:32:14
So I've not I largely consume AI slop, so I have not seen the movie. Um I should watch it.
2:32:21
You should watch the movie the motion picture on slop. Yeah.
2:32:23
Uh once they have that, I will watch the the full film.
2:32:29
But um it's so we talked about this a lot actually with audio models it with the last like election cycle cuz video I think wasn't there yet to have convincing deep fakes.
2:32:37
Um but audio like there were way less cases of even though you could make really realistic voices cloning candidates and saying things that weren't true.
2:32:46
There were way less examples than we thought of that actually like impacting any any election in any sort of meaningful way.
2:32:54
And I think part of it is like things like you mentioned the community notes program where like you have sort of citizen watchd dogs on various platforms saying this is real, this isn't real, running them through various sort of AI detectors.
2:33:05
Um but I also think like people are starting to develop more skepticism around everything they see online and whether or not it is real, which is probably not a terrible thing. Yeah.
2:33:17
I had this take that After Effects would be more impactful on the election than AI video because like you can just show a clip of a burning building from 2020 and it's real video, but you recontextualize it and say, "Oh, you know, this the the the capital's burning or something and it's from years ago or or just, you know, speed up a video, slow it down, edit it out."
2:33:37
They would do this with various politicians.
2:33:38
Uh, you know, cut out the ums and os and they'll sound sharper.
2:33:42
add a bunch of gaps and all of a sudden they sound like they're slower.
2:33:46
they're slower. Yeah, it it even, you know, we're we're here in LA and and when all the imagery was coming out of the the protest from a couple weeks ago, it was like burning Whimos kind of looks like something you'd generate with VO3 just because it was so symbolic and just such a crazy image and then like make an image of a guy with a Mexican flag
2:34:06
riding it doing burnouts around a a car that's on fire and it's like that looks like and even and even just the way that was photographed there was like it looked like all of Los Angeles was engulfed in flames, but it was really like one crazy block with a bunch of different angles and then a bunch of different posts and and you drive around and you'd be like, "Oh, there's not that much." See, that's the other interesting
2:34:25
See, that's the other interesting thing is like even real footage can be manipulated.
2:34:28
Totally like any kind of story can be manipulated in a way like AI or are you seeing uh I think like you know there's exciting uh companies like Worldcoin, you know, doing like proof of human.
2:34:41
Are you seeing any infrastructure players trying to do like do anything on like content verification side and like trying to create some sort of um mechanism to to prove whether something was like authent you know actually shot on an iPhone right you know proving through the metadata and some type of like public um setting is there is there any pitches uh from from that side? Yeah.
2:35:06
So mo largely honestly today that has come in two places.
2:35:09
One is the model companies themselves will often watermark the content in some way like the V3 generations has little V3 11 Labs which does the audio.
2:35:18
They actually have a site where you can upload any audio and it will tell you if it was generated with 11 Labs or not. That's cool.
2:35:23
Um which which is pretty cool.
2:35:25
The other um place we've seen development there is for like prominent individuals um like you know celebrities or someone who's there's like value behind their brands and who potentially even might want to monetize it in the age of AI.
2:35:38
Like if you're an actor and you suddenly don't have to, you know, film go fly back to LA when you're filming a movie in Australia to tape like five ads for some cell phone brand and you can have your AI avatar generated to do it instead and it looks just as good.
2:35:53
like you might actually want to, you know, have some licensing company that owns your AI licensing rights, whether it's your traditional talent agency or not.
2:36:01
Um, who can manage that for you? Yeah, totally. Very cool.
2:36:06
Well, thank you so much for stopping by.
2:36:08
We could talk for another hour.
2:36:09
I have so many more questions in the in our doc, but uh we'll have to have you back.
2:36:12
So, thank you so much for stopping by. Thanks, Justin. We'll talk to you soon. Great chatting. Have a good one.
2:36:16
Up next, we have Anishh from Traversal coming in the studio kicking off lightning round.
2:36:19
It's our new lightning round. We're here.
2:36:23
We're we're we're getting to every single finance five startup update. Kicking it off. Welcome to the stream. How are you doing? Doing super well. Thank you for having me.
2:36:32
Uh can you kick us off with an introduction? What do you do? Hi. Yeah. So, my name is Anish.
2:36:37
I'm one of the co-founders and the CEO of Traversal.
2:36:38
Uh where we are basically trying to build an AI site reliability engineer.
2:36:42
So, when you have software systems, they break and we try to help troubleshoot why they broke and how to fix them.
2:36:47
Is is is the current status of the market entirely uh human site reliability engineers or are there like a suite of tools that are you know just not AI enabled enough and and uh and and you can kind of piggyback piggyback on. Yeah.
2:37:05
So I'd say the current state of observability I call it observability 1.
2:37:08
0 has been putting a lot of eyeballs on your data.
2:37:11
on your data. So essentially the the great iconic companies now like data dog and Splunk and graphana and dino trace um and what they basically did is help they store your data and then help you visualize it through you know numerous dashboards but the toil of actually figuring out for an on call engineer
2:37:26
what happened is what I call dashboard dumpster diving that's what they still have to do right and there isn't that intelligence layer of actually helping you search through this pabytes of data and I think that's what this new generation of AI agents and LLMs and some of the research we have done in our PhDs uh unlocks Yeah. Have you been tracking? I mean, it Have you been tracking?
2:37:42
I mean, it feels like site reliability engineering should be bene a beneficiary of AI and yet it feels like we've been seeing more and more outages like Cloudflare went down, Google went down, we had another outage while we were doing the show.
2:37:54
The whole internet went down.
2:37:56
It feels like it's happening more and more.
2:37:57
Is that just me being more sensitive to it or more news or I'm just online more or are these systems actually getting more fragile?
2:38:04
Yeah, I think two things are happening.
2:38:06
happening. One is as humans we like to push the limits of everything we can do and so we're always going to be pushing the limits of software systems and they're getting more complex there's more microservices and that was happening before the age of of um LLM powered code agents right and now with everything happen in the world of AI
2:38:23
software engineering with cursor and get a co-pilot and windf and so on so forth I think the amount of code that's being written is there's going to be like a camrian explosion right where I think most of it is going to be written by AI systems and so the system is going to get even more complex and less and less is going be understood by us who are as engineers. And so I think it's going to
2:38:38
And so I think it's going to be even harder to debug things because we don't actually understand what's written and it's more complex.
2:38:43
And so I think I think that's actually going to throttle the use of AI software engineering tools and mission critical systems because if I'm ahead of infrastructure, I'm like I don't I don't trust this.
2:38:54
I'm not going to allow this to affect my core infrastructure.
2:38:55
And so I think you need tools observability 2.
2:38:58
0 to help actually be in line with it.
2:39:00
I guess um h I feel like finding truly great SRE is like a massive challenge like how how do you like you know if you can deliver on the product side like how much bigger do you even think like the market is like the market demand for great you know basic effectively you're it sounds like you're wanting to offer productized S sur talent um how much how much like demand is out there for for for what you're building Yeah.
2:39:30
So, first of all, like we've been trying to hire an excellent SR and we still haven't been able to.
2:39:36
There's so there's a massive labor market discontinuity where just it's impossible to find fantastic SR.
2:39:42
Um, but I think if I think of the role of an S sur, um, the way I think about it is like it's it's all about the health of software systems and I I think of it as like the master hierarchy of needs.
2:39:53
So, in your level one, you you know, you have a heart attack, you got to deal with it right now.
2:39:57
And I think that's what having a production incident feels like and that's where SR have to spend a lot of time where everything else nothing else matters.
2:40:03
Level two is when you have these like constant stream of alerts happening.
2:40:06
That's the equivalent of having like some sort of like chronic condition that you have to deal with all the time and you can't think like a year in advance.
2:40:12
And only when you can deal with these things then you can start thinking about like your long-term health and like life hacking and you know optimizing your sleep.
2:40:18
And that's when I think you can think about the long-term health of a software system how you would architect it over the next four 5 10 years.
2:40:24
And so I think all of the time right now for SRRES is being spent in like having a heart attack and a debilitating condition.
2:40:33
What I think they should be doing and the best SRRES is thinking about the long-term health of a system.
2:40:37
How do I architect the system for the next 5 years so that it's robust?
2:40:40
And I think that's what they want to be doing, but they're forced to be on call all the time.
2:40:44
And so I think that's what we want to stop them from having to do and they can spend their time on the more meaningful, you know, aspects of their jobs.
2:40:50
uh talk about the trade-off between fully agentic systems here versus uh more of a co-pilot dynamic.
2:40:58
Yeah, so I think if I think about it, there's there's I think of it as a 2x two.
2:41:01
So think of the the y-axis as uh the severity of the of the issue.
2:41:05
So you can have alerts that are happening all the time to really complex incidents.
2:41:09
Um and then on the other hand, you have how agentic is it?
2:41:15
agentic is it? So on the close to zero would be you have a runbook you have some sort of playbook that exists and you need you have humans or engineers go execute those those runbooks and um on the other end you have a you know where you really don't know what to do and so you have 50 people in an instant war
2:41:30
room trying to figure out what happened right so if I think about for low um value alerts typically you have a playbook or runbook that engineers can go execute and that's I'd say less agentic because you can just kind of the meta workflow is always the same which is like look at this dashboard then look
2:41:46
at this logs and you know correlate between them or something and on the fully agentic side is when uh even teams of engineers have no idea how to solve it a priority and that's where you need to come up with architectures that are truly novel where it doesn't fall into a pre-existing runbook so that's I think
2:42:01
the type of architectures you have to build to deal with the most visible incidents that uh an enterprise faces I think that's really been our focus of the company last question I was going to say are you the first assistant professor at Colombia to raise you $48 million in the first two financings of a of a startup. Do you have any is it
2:42:17
Do you have any is it is there anybody that's got you beat there? I don't know.
2:42:22
But Colombia has been an absolutely wonderful partner.
2:42:24
I think they they've been very supportive.
2:42:26
I think they understand the importance of AI and and how in some in my opinion this is the industrial age of AI.
2:42:30
So if you want to be a good researcher, you have to be in the weeds learning how these systems work.
2:42:35
You can't just be theorizing in a vacuum.
2:42:36
And I think everyone myself and Colombia understands that.
2:42:41
So they've been incredibly supportive institution.
2:42:42
and I'm yeah I hope that I continue my relationship with them over a long time. That's awesome.
2:42:47
Talk about the traction to date.
2:42:49
You guys have been in stealth.
2:42:49
I'm sure you're going to get a flood of of inbound interest today, but uh yeah, who who are you guys building and and working with so far that you can share?
2:42:58
Yeah, so we've been um I can talk about a few that I'm allowed to speak with and some I can't, but they've all been some of the largest enterprises in the world who basically any company that cares about downtime.
2:43:07
So those turn out to be companies like infrastructure companies, payments, streaming, financial institutions because if you go down your customers feel it immediately.
2:43:15
Those have been the customers that we've typically uh focused on or they've been attracted to us as well.
2:43:19
Uh and we found that actually as you go to the larger enterprises, two things happen.
2:43:23
One is they actually have all the data cuz if you don't have the data, we can't do anything.
2:43:28
Um and so the the the instrumentation is mature, but at the same time it's fragmented.
2:43:32
You have like so many teams, so many different services.
2:43:35
And so I think that's where an AI agent that can talk to all these different systems at the same time adds a lot of value.
2:43:40
So we've we've found ourselves more and more uh pull towards the enterprise.
2:43:44
Um and yeah, it's it's in deployed in a number of you know um mission critical environments.
2:43:49
People are using it every day to help them troubleshoot pretty complex incidents.
2:43:52
I think that's what we feel uh proud of.
2:43:56
I'd say it's great that this product sort of self- selects for really high quality customers that are going to like, you know, once they onboard and they're getting value, we'll probably be customers for, you know, years and years and years.
2:44:06
Um, so very very exciting, John.
2:44:09
Uh, uh, let's I think it's time to hit the gong. Absolutely.
2:44:12
Not going to he's not going to come on the show and we go and $48 million. Congratulations.
2:44:19
Fantastic lineup of investors. Uh, Sequoia, Kleiner. Great great group. Great group. Fantastic. Thank you for coming on.
2:44:26
Uh come back on when you have news and congratulations on the milestone.
2:44:30
Have a great rest of your day.
2:44:32
Up next, we have John Lee from Sapphire Building uh uh Electric Mobility.
2:44:38
Um very excited to talk to him. John, are you there? Welcome to the stream. How are you doing? Hey, doing good. How are you guys doing? Doing great. What's going on?
2:44:46
Uh would you mind kicking us off with a little bit of introduction on yourself and the company? Yeah, absolutely.
2:44:50
Uh just a quick background on me.
2:44:53
quick background on me. I was a former contracting officer in civilian side at naval system command headquarters where I was in procurements for different systems from NATO sea spare missiles to submarine sonar sensor systems counter ID jammers to energy upgrade systems on the DDG Navy ships left him to volunteer as head of contracts full of US government where I helped to increase their revenue in you know landed some of
2:45:13
the large contracts there in the 30 over $800 million contracts there um and then went off to do a lot of other uh you know helping startups most of them exppilenteer friends you know trying to get contract from the US government helping with the go to market side and
2:45:27
then I've met with my co-founders to start Sapphire and we're accelerating electrification for defense starting with some of the deepest IP from the US government where our first IP is out of Oakidge National Lab. It's great to meet It's great to meet you. Yeah.
2:45:38
What's the uh uh what is the main gating factor in uh electrification in the military?
2:45:44
Is it on the supply side?
2:45:46
Is it just on the deployment side?
2:45:47
like can you give us some concrete examples of where uh electric systems can be leveraged for the war fighter? Yeah, absolutely.
2:45:54
So right now um absolutely for sure on the supply chain side we there is an absolute shortage of if there is a surge capacity need for us to be able to produce in the US from the cathode to the anode and up and have the vertical integration to be able to do it on our own.
2:46:11
on our own. uh there is a lack so there is a huge push from US government to make sure we onshore or or reindustrialize the from ground up in terms of that production capacity especially when it comes to surge capacity uh if and when we we need it we
2:46:27
need it and um and and we're lacking behind uh in in their production side but also we're just um uh just behind in the uh advancement of how um the battery cells are evolving and how we need more energy power on the battlefield. It's It's not interoperable.
2:46:43
Um it's not interchangeable and there's not enough of it, especially when there's no grid.
2:46:50
What What are some of the most uh important weapon systems or just defense systems that uh are are impacted by that? Yeah, absolutely.
2:46:58
So, it's actually um goes all the way down from handheld uh for for soldiers and up.
2:47:03
So, we're talking, you know, we're talking to um, you know, Air Force research lab program manager and there was an actual, you know, case where um, there was a soldier that's doing an air strike call halfway through losses battery and the coordinates are still on him and because of that battery loss, it uh, it was a friendly friendly air strike fire and that just is not acceptable.
2:47:28
Uh that is such a easy elementary fix.
2:47:31
Um to be able to have a battery management system software that allows us to reserve that extra percent.
2:47:40
Uh it's an advancement that we have not been focused on is something that we need to do.
2:47:44
But on top of that is the grid is to be able to provide a a tactical micro grid out at the edge where hey if all the power goes out bring it in.
2:47:53
And now we've got a a tactical micro grid that's solar powered self-sustaining that provides a interoperable also energy source to mobile uh systems as well as standing systems and that network uh availability also does not exist today.
2:48:08
Uh well what's oh sorry talk about the decision to to be dual use.
2:48:12
I'm sure there was a lot of thinking that that went into that.
2:48:18
It'd be interesting to get your insight. Yeah, absolutely.
2:48:19
That's uh certainly uh amazing question that was something we've been learning a lot from since the company started.
2:48:26
So the the our core IP technology is out of Oakidge National Lab where some of the nuclear materials were invented and uh our CT has been there for over 20 years and he's got funded by ARPA to work on a silicon nanop particle that would go into lithium ion batteries essentially a favorite word uh play with uh water and cornstarch and creates this thing called ube.
2:48:48
Uh it's very fun for the project for the kids. Yeah.
2:48:51
But it's a nonneuttonian fluid, but we're doing that shear thickening effect in the battery cell. Interesting.
2:48:56
And that happens immediately upon a bullet hitting the battery or a car crash hitting it.
2:49:01
Then it solidifies from liquid to solid, preventing it from uh crunching up and provided extra structural strength for added safety.
2:49:10
And so we uh started having conversations.
2:49:12
We kicked off the company three years ago, raised friends and family around um and kicked off the company.
2:49:17
And we were talking to electric vehicles and defense at the same time.
2:49:21
And what we uh we really wanted to really understand uh like what I'm really passionate about is protecting and saving lives.
2:49:28
Like I could care less if it's you know uh 10 10 technologies or 100 technologies do it.
2:49:32
Like I'm going to protect and save lives.
2:49:34
That's where my passion is.
2:49:35
When I was working on the counter IED jammers to put into our vehicles and sentcom so that the en enemies cannot blow up the IEDs under our vehicles uh as a contracting officer.
2:49:46
Then um it was just kind of a moment where I was like I couldn't do anything unless what I'm doing is impacting and hoping to uh protect and save lives.
2:49:55
And so uh we talked to EV companies and and they wanted more safety, but they also wanted to in increase performance and decrease cost. They want it all right.
2:50:06
And so um we are uh so we so we went to really focus on how do we decrease the cost.
2:50:12
So now we're, you know, we're really focused on we went back to the drawing board on the EV side to say, okay, with our particles, it's a lower cost than the aluminum steel that's surrounding the battery packs.
2:50:22
And so we're looking at how do we decrease the weight to increase performance while while having same if not higher safety on the EV side.
2:50:30
But that sales cycle is actually, you know, you I I I've been working with the government uh uh you know, pretty much all my life in defense.
2:50:36
And I think government was slow, but EV could be slower.
2:50:42
Uh, and I was just kind of like, wow, if I wait until we have, you know, this technology and we keep building it, it's not like people will just come and buy it.
2:50:52
It's just not how it's going to work.
2:50:53
You know, that's not how how we did at Palunteer.
2:50:56
Like we we have a playbook here.
2:50:57
We don't have to recreate the playbook.
2:50:58
We're going to go to the end user and figure out what they need and then we're going to give them what they need and however the business model uh fits that is what we're going to create.
2:51:07
And so it that's the approach we took. Yeah.
2:51:09
On the defense side, um, is this something that you could actually go and build a whole program of record around or do you just need to be a subprime contractor and and vend into some of the larger primes as they build out new systems? Yeah.
2:51:22
So, we really flipped um uh the entire business model on its head from the beginning where we say, "Hey, we've got a core IP. How do we create this?"
2:51:31
And then, you know, it in the traditional sense, you would say, "Let's build it.
2:51:35
Let's sell it to another supplier who then supplies it to another system."
2:51:39
an assistant was selling to a customer.
2:51:40
Instead, we just went straight to the customer.
2:51:42
We say, "What do you need?"
2:51:43
And they say, "We need electrical, tactical, dirt bike that can be deployed out of air, deconfigurable, reconfigurable, and can be parachuted down.
2:51:51
When it lands, I don't want it to blow up from that impact.
2:51:54
And it has to go, you know, x amount of miles, and it has to carry 350 pounds because we have gear.
2:52:00
It's not 180 lb type of bike."
2:52:02
And that just didn't exist.
2:52:04
And so we partnered up with the subcontractor uh with a top uh dirt bike company and we newly designed a electric dirt bike tactical for Absoc air combat controllers us as a prime and that was the most important thing.
2:52:18
We said we're not going to wait for somebody else to sell.
2:52:20
We're going to own the customer.
2:52:22
We're going to own the supply chain for it to integrate and become that next uh nextG systems integrator 2.
2:52:27
0 that we all know is in a dire need.
2:52:30
electric dirt bike for the military just sounds like something straight out of like a COD side mission or something. It's incredible.
2:52:36
We're down to We're down to test. That's all it sounds. Yeah. Yes. At least send us one. We'll go for a ride.
2:52:41
I do not be burning around the gong here. Yes. Yeah. Sounds amazing.
2:52:46
Uh but yeah, thank you so much for stopping by and telling us about the business. This is fantastic.
2:52:52
We'll talk Well, thanks so much for having for having me. Really appreciate it. Cheers, John. Thanks for coming on.
2:52:57
Up next, we have Connor from Speak.
2:52:57
uh uh language learning program. Uh let's talk to Connor. Welcome to the stream.
2:53:05
How are you doing today, Connor? Hello. Hello. Welcome. Thanks for having me.
2:53:09
I was expecting you to come on and say just start talking in a variety of different languages.
2:53:15
You're not impressing us.
2:53:17
Drop some drop some foreign languages on us.
2:53:19
Uh do do you speak any foreign languages? Wow, great question.
2:53:23
Just getting right into it.
2:53:25
Uh, I mean, I should be able to speak Spanish, uh, because I took 5 years of it in high school and college, and I have the classic story of, uh, I learned everything except how to speak.
2:53:34
Uh, which segus into what we're trying to do and we finally have Spanish.
2:53:38
So, uh, you know, I'm working on it.
2:53:40
I'm getting better very quickly. Yeah.
2:53:41
Break down a little bit of the history of the company because it's interesting go to market, interesting history, uh, interesting strategy. Sure. Yeah.
2:53:50
I mean for context for everyone, we are trying to build the world's best language teacher using AI.
2:53:55
So imagine, you know, a really good tutor, but they're in your pocket, available whenever, wherever, thinking about how best to teach you.
2:54:01
Um, and it's speaking first.
2:54:03
But yeah, the the kind of interesting and weird thing about our history is we started this company a while ago.
2:54:09
We've been working on it for like 8 years at this point.
2:54:13
The first few years are really just like AI research into how how we could use AI to build the technology.
2:54:16
And um and then we realized that we needed to go focus on one market.
2:54:20
So we spent uh the next four years or so focusing on a single market, a market that I had literally never been to in my life before, which was South Korea.
2:54:28
A market where how did you pick that?
2:54:32
So we uh we we kind of did a bunch of different um you know market analyses.
2:54:38
We built a free app and we and we like released it in a bunch of countries and saw what kind of traction we had.
2:54:42
Ultimately, the thing that was the most convincing to me was I I went to South Korea to talk to some of our earlier users and I saw like literal skyscrapers that were filled with English classrooms um and all and it was just very clear that the country was obsessed um over learning English, but there was also um way more competition and solutions there than anywhere else in the world.
2:55:03
So, um, we we really thought like the only way we were going to build something interesting is if we actually built something substantially like structurally better using technology like a 10x solution.
2:55:12
Um, and that market was going to be the market where we would get the most signal cuz the only way it would work is if we actually built something unique.
2:55:20
And you know, today we are the clear number one leader.
2:55:25
We've got about 80% brand awareness.
2:55:26
We've had double digit percentage of all South Koreans try our product.
2:55:30
Um, and uh, yeah, it's air horns.
2:55:34
What's the universal universal?
2:55:36
This is the universal language of celebration.
2:55:38
The real universal language.
2:55:39
It's the voa of celebration.
2:55:41
Um, what uh like uh walk me through like how much value you're trying to deliver in the product?
2:55:46
like uh am I benchmarking this more towards like a fun app to noodle on from time to time or uh you know a college level curriculum that actually will you know almost guarantee fluency if I work through it?
2:56:01
It's really the second like like people do become fluent if they use our method and um and really the benchmark is these you know cram schools in Korea that people are spending hundreds of dollars per month on or you know those private tutors that cost $40 to $80 per hour um to study with and that's really like the thing that we're benchmarking against and uh really trying to surpass in terms of efficacy and and enjoyment.
2:56:26
Um I'm trying to think uh you guys have raised a lot of money from a bunch of great investors.
2:56:32
I I was trying to think through uh how they might think about risk factors to the business.
2:56:38
And one of those I could imagine would be uh real time translation with AI gets so good that that maybe people you know don't feel the same uh drive to learn languages.
2:56:51
Now, the counterfactual or counterpoint would be something like, you know, uh, robots being much better at chess than humans, yet, you know, humans still love to play chess.
2:57:01
And so, I I'm I'm curious how you think of that or if that's something that's kind of come up at all and and how and how you um would would address something like that.
2:57:10
It comes up all the time.
2:57:12
You know, uh, one term that, you know, is in some sci-fi books is the idea of like a babbleish.
2:57:16
You put something in your ear.
2:57:18
Um, which by the way I think will be launched by many companies this year.
2:57:22
I mean Google kind of released that with Google IO um last month as well with AirPods a little bit. They teased it at WWDC. Yeah, exactly.
2:57:31
Um, so that's going to happen.
2:57:31
I mean we're already seeing this birectional real-time audio speech to speech technology proliferating.
2:57:36
Um, and my response is always, you know, what we're ultimately doing is we're building something that is all about human connection and aspiration.
2:57:45
Like the reason people learn languages is because they actually want to be able to connect with other people and they aspire to to to to to be someone that speaks multiple languages.
2:57:55
Um and that's the fundamental behavior we're we're we're helping with.
2:57:59
And so uh if you think about like the world's greatest translator, like the the UN translator, uh that's like highly paid and it stakes are high, there's still an immense amount of friction in that interaction.
2:58:10
And so, um, especially when you're learning a language because it's, you know, for example, English and it's the language that will allow you to travel the world and talk to anyone.
2:58:17
Um, or really, frankly, any language, um, I think that people will want still want to do that in the era of really great live translation.
2:58:27
And in fact, um, my contrarian bet, acknowledging I'm extremely biased here, is more people will learn languages, not less, because it will become radically more enjoyable and easy.
2:58:37
Imagine you just have your best friend who's teaching you every single day and that person is funny and and like knows all about you and can talk about whatever you want and make it extremely personalized.
2:58:46
I think a lot more humans like challenges. It's very challenging. It's fun. It's it's stimulating. Look at chess. com. Yeah.
2:58:54
The business is ripping and like chess has been completely solved by AI for years. Yeah. And yet people do it.
2:58:58
Uh talk to me about what's working on the customer acquisition side.
2:59:02
I want to hear about the footprint of the business internationally and and domestically and then uh just kind of like the pricing model and how customers think about actually paying you for the service. Yeah.
2:59:14
So I mean the the business model right now is quite simple.
2:59:16
It's just a consumer subscription business.
2:59:18
We have multiple tiers and that idea is we can build tiers for the people that are really dedicated and want all the power tools and intelligence behind it.
2:59:24
Um, and we do charge a premium.
2:59:27
Like it's it's a little bit more expensive than most other uh, you know, consumer subscription businesses.
2:59:33
We're we're talking, you know, depending on the market, somewhere around $100 a year to over $200 a year.
2:59:38
Um, there's a lot more room there to play and we're just getting started.
2:59:42
Um, but the Yeah, I think like um, size of, you know, business and where we're at today.
2:59:47
So, you know, uh, I mentioned South Korea is kind of our bread and butter.
2:59:50
That's where we've been up until relatively recently trying to, you know, stay under the radar and just work on building the best possible product.
2:59:57
And then we we've really started to expand in the last two years or so.
3:00:01
And so we we're now um, you know, becoming a very popular brand in uh in Japan and in Taiwan.
3:00:07
And we've actually now expanded coverage to uh over 40 countries around the world in the last few quarters.
3:00:13
Um and just yesterday we have now gone from an English language learning app to a language learning app with the launch of learning Spanish, Italian, um French, uh Korean and Japanese and more languages on the way.
3:00:27
A large part of why we're even able to do that is uh because of all the like agentic AI content creation that we're doing like localization has to be like completely oneshotable by most modern LLMs.
3:00:38
Like you can just like this is the transformer.
3:00:41
It's really good at transforming stuff.
3:00:42
It transforms things from one language to another.
3:00:45
It's like the best the like the the most bread and butter. Yeah. Uh anything else? Very cool. Very cool. It's fantastic. We got to get on there.
3:00:53
Uh my Chinese is a little rusty. I know how to say. Oh yeah. What do you know?
3:00:57
Yeah, which is not even factually correct, but it generally means I really enjoy beer.
3:01:05
speaker, but it's a good line to have if you're ever uh I don't think we should go to China.
3:01:09
No, but uh it's a good line to have in your back pocket. Totally. Totally. Um I just know boo yao.
3:01:13
Don't want if somebody comes up here on the street, I don't want it. I know ying hame. What's that mean?
3:01:21
Your eyes are very beautiful. Oh, there you go. Learn that.
3:01:25
Honestly, between the three of us, we could we could be dangerous.
3:01:27
We could we could establish a beach head.
3:01:30
Tell the people to go away.
3:01:32
compliment some nice compliments.
3:01:34
So, it' be fantastic progress.
3:01:37
Um, yeah, come back on when you have news.
3:01:40
Yeah, we'll talk to you soon. Okay, have a good one. Thanks, guys. Bye. Cheers.
3:01:42
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3:01:59
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3:02:02
Um, and uh, before we get to Trey at Tener, let's tell you about Bezel. Go to getbzzel. com.
3:02:08
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3:02:15
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3:02:20
How did you sleep last night? I got destroyed.
3:02:22
I had a rough I had a very rough night.
3:02:24
I had a very rough night.
3:02:26
It was It honestly I got a little cocky. I slept really well. Uh, Monday night.
3:02:32
Yeah, last night I got six hours 17 minutes 62.
3:02:36
All the tides have really turned, John.
3:02:39
We went on a That was truly a generational run.
3:02:42
I got to I got to make it all back tonight. I'm sleeping 10 hours.
3:02:45
Make it all back in one sleep. In one sleep. Nobody out sleeps me. It's the best.
3:02:48
Sleeping 10 hours is actually surprisingly challenging.
3:02:54
Yeah, it's almost too much time. 25 kids, it's brutal.
3:03:00
Uh, in other fundraising news, Applied Intuition closed their series F round of fundraising at $15 billion valuation.
3:03:04
We had Quaser Ununice on the show at Hillen Valley. An absolute dog.
3:03:09
He's going to be running out of uh running out of letters soon.
3:03:14
I mean, he's got quite quite a few to go still.
3:03:17
What is I wonder what the latest series letter we've ever that has ever been done in venture history.
3:03:23
Like has I I know people have done F, but have we seen a series K? Have we seen a series S?
3:03:28
Like how far down the the the alphabet has anyone gone ever?
3:03:36
I could see someone like a Clue just raising like $1, speed running it to get to the series.
3:03:42
That would be an interesting strategy.
3:03:44
I could definitely see uh Stripe being deep in the alphabet.
3:03:47
They've been going for what almost 20 years now that business.
3:03:52
2007 2010 I guess 15 years they've been in business. Yeah.
3:03:56
So they could be deep into the deep into the alphabet. Yeah.
3:04:00
Um SpaceX I don't even know if they are numbering or lettering their rounds anymore.
3:04:05
Uh because some of them are so like they're really the it's a tender offer. It's a preferred sale.
3:04:11
It's a common stock sale.
3:04:11
Kind of just moves around.
3:04:13
Uh what were you laughing at?
3:04:15
Oh there's always stuff to laugh about.
3:04:17
Um Looking up the timeline. Looking up the timeline. Uh, what else we got?
3:04:21
Um, uh, we have our next guest, Trey from Tenner. Here we go. He's fax maxing. Hey, Trey. How you doing? The fax man. Doing well, guys. Yeah, doing well.
3:04:32
I daring to see myself uh on that screen. Um, reverse.
3:04:37
You know, you never picture yourself in mirror image. It's horrible. Yeah, it is confusing.
3:04:42
Um, well, thank you so much for joining us.
3:04:44
Uh, can you kick us off with an introduction of the company?
3:04:47
Uh we've we we've heard TJ Parker teasing and educating us a little bit about this market, but I want to hear from you. Yeah, 100%.
3:04:52
I mean, our uh solution, we work with providers that receive patients.
3:04:58
Those patients get sent from other providers typically via what's known referrals, scripts, um terminology, doctors, right?
3:05:04
And those doctors, when they send a patient, they'll describe it as like sending a patient into a black hole.
3:05:10
The patient doesn't get contacted.
3:05:11
they don't know where they're at and it loses uh a ton of money actually to those receiving providers that are trying to convert those patients into real um visits um that end up getting denied if they don't have complete documentation. So, it's a whole mess.
3:05:25
It's it's a real problem and it turns out it all starts at EAC documentation.
3:05:29
Over 90% of these visits originate via EAC documentation and if you can solve the facts, you can really uh drive a great outcome for those providers.
3:05:36
So, that's So, so I I I like I hurt my knee.
3:05:39
I go into my general doctor and they refer me to a knee specialist and at some point there needs to be a whole bunch of faxes going on.
3:05:48
Is that just for insurance or for everything? Yeah.
3:05:50
So, I mean, imagine you get sent to that knee specialist and then the knee specialist says, "Hey, I really want to send you to a surgical center."
3:05:56
Now, the surgical center has to go collect all this documentation to say, "Okay, Kugan, are you maybe they don't address you by that name, but you know, they're going to say, "Do I have do I have enough basically to get past an authorization?
3:06:07
an authorization? is is the payer the insurance company going to pay for this or do I need to basically say hey sorry we don't have complete documentation I have to send you to PT in that time frame weeks go by and you have no idea what the hell's going on super frustrating um I mean you mentioned EAC
3:06:23
we've heard a lot about faxes driving the medical industry broadly what is actually the state-ofthe-art in the fax medical world right now this conversation usually is like it's like a misnomer really when we talk about Most times you hear people talking about facts, you should really think like emailed PDFs. You should think eax,
3:06:39
You should think eax, right?
3:06:42
It's actually very rare nowadays, at least as what we see, that people are literally going in and like putting the pieces of paper. Yeah.
3:06:48
It's it's actually um you know, it's more like if you wanted to send um you know, you want to send a patient, I'm just going to write click, download the whole chart, and then I have to send it somehow.
3:06:57
It's as easy as sending an email.
3:06:59
It just happens to actually travel on fax wires.
3:07:03
Like that's the actual mechanism, the protocol.
3:07:04
It's not SMTP, it's fax line. Interesting.
3:07:06
And that's important from like a regulatory perspective, right? That's right.
3:07:09
And to be honest, it's actually even that is a little bit overblown.
3:07:12
In many cases, it's very possible to to have a secure email inbox um which we see a lot of as well.
3:07:17
Legacy network and that's the one they use and has network. Interesting.
3:07:21
How how did you get into this? It seems Yeah.
3:07:23
When did you when did you realize you wanted to drive efficiency in in healthcare business process?
3:07:28
I I to be honest, I have no like I I like uh I view like automation as kind of this like uh also sort of this like uh false profit.
3:07:36
It's um I learned about this from my mom who's sending patients out and she'd say Trey, it's like um it's like sending patients into a black hole and it it's not really like automation just so happens to be one piece of the component.
3:07:49
The other big thing is nobody knows how much it costs, right?
3:07:50
So, if I tell you, look, it's going to be I if I say, look, it's going to be $300.
3:07:55
And you know that right off the bat, you're actually way more likely to show up than if I tell you, look, we're going to have to determine your cost once you show up, which is what most people do today.
3:08:02
Um, and the reason they do that is because then they also have to go and run a check and make sure they understand how much uh your insurance is going to cover and pay for uh in in the process.
3:08:10
Um, so really, we exist to solve the black hole problem.
3:08:15
I don't really give a crap about solving the facts.
3:08:16
It's just like if you say you're going to solve a problem and the first sort of hurdle is okay there's a bunch of unstructured PDF flow and if we can structure that we get like a good chance at it.
3:08:27
That's sort of how we approached it.
3:08:28
Um no uh not not that much of a student of the game to just love that.
3:08:33
Talk to me about the scale of the customer that you can sell to.
3:08:37
Is this is this something where like if you go to like a few networks and you win really really big uh it's kind of like game over or do you need to go to like every single doctor in a local like uh in a local neighborhood and and get them on board? Yeah.
3:08:49
So I mean somewhere in between to be honest, right?
3:08:51
Like there's there's you have so much private equity in healthcare that you if you think about the size of their markets, they're often consolidating.
3:09:00
So those consolidated entities, those are really our ideal uh you know customer profile.
3:09:06
We do work with a number of health systems, but like to be like if we're just being honest, right, it's like if you want to centralize an inbox and a really a salesunnel when you think about the patient funnel is really a salesunnel.
3:09:18
You still have to go do it department by department.
3:09:20
So, um there's not like 20 deals to be done.
3:09:22
There's probably more like uh 200,000 when you look at like the size of of of providers because we unfortunately can't work with like two provider shops. But yeah, totally.
3:09:32
What's the scale of the business like today?
3:09:35
So, we're processing uh we have 20,000 providers sending, right?
3:09:38
So, they're sending faxes, sending emails.
3:09:40
We've got hundreds of providers using Tener to process and then we've got millions of patients.
3:09:47
Um, millions of patients. Let's go. Uh, oh, thank you. hell yeah. Um, so yeah, man.
3:09:57
And how much did you raise today? We raised $11 million. That's right. Wow. Let's go. Let's go. There we go. That's That's fantastic.
3:10:10
Who How How did the round come together?
3:10:12
What was that process like? Was it preemptive?
3:10:13
Did you guys go out for it? Who'd you get on board? All right.
3:10:16
I literally was just a little bit of background. I literally got lost.
3:10:22
So, I'm in the Lincoln Center.
3:10:23
We had an like completely unrelated to the fundraising event.
3:10:25
We had a big prospect customer event in the Lincoln Center tonight. Yep.
3:10:27
I get lost 5 minutes before cuz I wanted to grab some some food, some some nuts. and I get lost.
3:10:33
I'm sprinting to the door and I found it.
3:10:35
So, I'm like running hot.
3:10:35
Um, but so to answer your question, like um I feel I sound really salesy right now.
3:10:43
To be honest, I'm usually a horrible fundraiser.
3:10:44
Historically, horrible fundraiser.
3:10:45
This came together in like four days.
3:10:48
It was like um the the business it was 25 mil a day.
3:10:51
It's pretty pretty solid. Good run rate.
3:10:53
You should have just kept going. Why not? Why not? Okay.
3:10:57
Most of our rounds have been so we had a partner at Andre.
3:11:00
I mean this is kind of like I think the some of the fun shop talk but you know so you you have a GP partner or most deals at Andre right.
3:11:08
So we had a GP and a partner.
3:11:10
Now partner at Andre goes and actually becomes a GP over at IVP. Oh interesting.
3:11:15
And what does what what does he do?
3:11:17
He was just board observing us for two quarters and we said we're going to hit the thing and he just calls me up after the quarter ends and like so did you do the thing?
3:11:24
And I said yeah we did the thing.
3:11:25
And so we did the round and then um there were a couple of other firms that we just like really respected that um were that were just like yeah we're doing the thing let's do the thing and we did it. That's amazing.
3:11:35
What's the uh what's the use of funds like?
3:11:37
Is this uh like R&D heavy spending a lot on engineering?
3:11:42
Are there hard costs in the business?
3:11:44
Is it hiring a lot of sales reps?
3:11:46
Is there some sort of like crazy payback period where you you know you have to go and install it or win a customer and then you get paid back over like a really long time because I imagine like this seems like a pretty low churn product if you can get it installed but it might be expensive to do that.
3:12:00
That's a great Yeah, it it's really um it's an expensive deployment period and so you're looking at an expensive first year typically speaking. Yeah.
3:12:09
Um so not so so yes, the traditional hey we're going to you know keep growing the sales team that's just been growing off of growth anyways. Sure.
3:12:15
uh but get way ahead of the engineering team.
3:12:17
We're launching this product.
3:12:19
So like we have these millions of patients, right?
3:12:20
And I'll give you like one quick example.
3:12:21
It's kind of interesting.
3:12:23
You think about the fact that you got sent over to like a uh um let's say you're sort of having trouble sleeping.
3:12:30
You turns out you get diagnosed with sleep apnnea.
3:12:31
You now are going to get a CPAP.
3:12:34
Now you might actually qualify based on all the clinicals you've done because you've been to a sleep doctor.
3:12:38
You've been processed through edema.
3:12:40
You've been processed through diagnostics.
3:12:41
We have all your clinicals. We have your insurance.
3:12:44
we can actually suggest to you all these other services basically that you qualify you're eligible for to go and get um and uh whether that's additional consults, behavioral treatment, uh pharmaceuticals, things like that.
3:12:56
Um and so we're launching this big network product and it's a it's a huge lift on the engineering team and so we've been growing that team really aggressively as well.
3:13:03
That makes a ton of sense.
3:13:05
It's been an honor to hit the gong for you. You're an absolute Chad.
3:13:09
Uh thank you for coming on.
3:13:11
Congratulations on the milestone.
3:13:11
And I have a feeling you'll be back here in the temple with us very soon with how you're talking.
3:13:17
So congratulations to you and the team.
3:13:20
I wanted to I was hoping I'd get some credit is like I I see all these guests come on. I'm a big fan. I saw the jacket.
3:13:24
I was going to say fantastic.
3:13:25
Honestly honestly you wear it. It looks natural.
3:13:28
A lot of people put it on. It looks performative.
3:13:32
You know it's like stolen valor. Yeah. Yeah.
3:13:34
So we don't want to draw too much attention if that's your daily, but we appreciate you dressing up for the occasion. Yeah. You look sharp. You look sharp.
3:13:39
and uh just do us a favor and never wear casual clothing in the workplace ever again.
3:13:44
Just, you know, make this a part of your daily, you know, you're you're a healthcare technologist.
3:13:49
You know, you should be dress you're a businessman. Yep.
3:13:52
So, we've got fit we got fit Fridays.
3:13:55
It's the opposite of casual Fridays.
3:13:57
You have to dress really really nice going into the office here in New York. There we go. I love it. That's amazing.
3:14:02
We're doing our part, man. We're doing our part.
3:14:05
You guys have a great to see Great to see you. Great chat. Great chatting.
3:14:09
Congratulations to you soon. See you.
3:14:09
Up next, we got James from Profound coming in the studio.
3:14:12
Oh, is there another gong hit coming in? Let's hear it.
3:14:18
[Applause] James, how you doing? There he is. What's going on? Break down the news. What's going on? I got the mallet ready. What's happening? How you doing, guys? Doing great. Great.
3:14:28
Well, we've already covered your raise.
3:14:30
We've talked with David Senra.
3:14:32
We've we've got the backstory on how David Senra met you and invested.
3:14:36
Um but uh super excited to have you on to to break down the news yourself.
3:14:41
Yeah, thanks for having me.
3:14:41
Um yeah, and congrats on all the TBPN traction as well.
3:14:46
It's uh inspiring just to see your story kind of continue to take the main stage. Thank you. Thank you.
3:14:53
Um we had you on recently.
3:14:53
What's what's happened since?
3:14:56
Talk about the new round and then I I want to hear about traction and kind of what you're seeing on the product side as well. For sure.
3:15:03
Um yeah, I guess since we last spoke, it's just been, you know, uh a lot of days in the office. Uh we we moved office.
3:15:11
We moved across to the other side of Union Square, New York City.
3:15:14
Uh the entire team is here in person, uh working very hard.
3:15:18
We're in office six days a week.
3:15:20
Um and yeah, I love to hear that as an investor.
3:15:26
I I'm not going to I'm not going to pretend I don't.
3:15:32
I think, you know, it's it's it's very exciting.
3:15:35
I think the the tailwinds are mind-blowing.
3:15:39
It's, you know, this is a clear platform shift, maybe one of the biggest platform shifts in the history of marketing as hundreds of millions, billions of consumers turn away from blue link search and instead talk to platforms like chat GPT and get a response.
3:15:55
uh how your brand shows up, how your products show up, how your services show up in these AI responses is becoming like boardroom level discussion for every brand on the planet.
3:16:09
So yeah, we're we're building profound as a new age marketing platform to guide marketers, every every brand on the planet to this new generative internet, an internet where you can talk to it and it talks back to you.
3:16:21
Um I think the closest huristic would be SEO for AI but you know once you start to look underneath the hood there's a lot of fundamental differences here these models are opining they give you know they have sentiment they they give opinions you know the the kids are using chat these days and uh you know more like an operating system um and yeah how your brand shows up there is P 0.
3:16:49
What are some of the big struggles that maybe legacy brands are facing in terms of shaping their you can imagine canonical horror stories yet?
3:16:59
I feel like it's all pretty good stuff.
3:17:01
Well, most of most of the time I see uh examples of this, it's always somebody screenshotting like, "Oh, I I nailed it."
3:17:08
Like like the JPT recommended my brand, but I imagine that there's probably some people that are uh having having rougher experiences.
3:17:16
Well, the models are probabilistic.
3:17:16
So, you know, you ask the same question 10 times in a row and get 10 different responses.
3:17:21
So, that's kind of the, you know, that's one of the main upsides of using technology like profound is you get the kind of aggregate response um across all of the major platforms.
3:17:30
Um, I mean, yeah, we we work with RAMP as an example.
3:17:36
Uh, they're an example customer.
3:17:38
Um, and you know, we 7xed their vis their visibility in a category where they didn't have much visibility.
3:17:46
And the way that you do that is by you understand through lots of prompting.
3:17:51
You you understand how the models are talking about your brand, your products, your industry, your competitor, and where where they're going in order to answer those questions.
3:18:01
And then you strategically start creating content for bot. Mhm.
3:18:10
Oh, we got And yeah, it's it's it's it's pretty tractable. Amazing.
3:18:14
Talk about uh the round, who participated?
3:18:17
Uh it's a pretty pretty great list.
3:18:19
Uh biased, but uh not Dave David Senro like does not really angel invest.
3:18:25
Like it's very it's very very rare, so you got him. Yeah, thanks.
3:18:31
Um yeah, it's it's it's cool.
3:18:31
So it's it's a you know it's a real kind of like pinch me moment.
3:18:36
Um we're we're working so Kleiner Perkins led the round.
3:18:40
Um so Ilia Fishman's taking a seat on the board.
3:18:43
Um in addition we have Coastal Ventures that's with Keith Ra boy. Uh Nvidia um Ventures.
3:18:54
[Music] Sorry sorry sorry didn't let you finish but uh had had to had to go. Um, continue. Continue. Uh, Saga Ventures.
3:19:05
So, yeah, that's uh Max Alman, Ben Bra Ben Braverman, Thompson Ren, um, South Park Commons, SV Angel, um, and then a bunch of really great Angels.
3:19:14
Uh, obviously the most important, uh, being, uh, a guy called Jordi Hayes. Too kind, too kind.
3:19:22
Um, but, uh, but yeah, uh, give us an update on, uh, almost like an investor update.
3:19:28
um uh which which I won't share, but but give it give us an update on on kind of the the like what is I'm curious what the sales cycle is right now with with companies that you're talking to.
3:19:38
I imagine this is like a kind of a hair on fire issue where they realize like hey we don't know what's going on or or things are happening.
3:19:45
Um is it is you know what does that look like with some of these bigger multinational you know brands and and companies that you guys are working with?
3:19:52
Yeah, I think you know what the the the thing you know what they're realizing is true is that this platform shift is so big that they need dedicated technology to understand and control how they show up in answer engine outputs.
3:20:08
Um they can't rely on like existing marketing technology.
3:20:10
If anything just purely because the space is moving and evolving so quickly.
3:20:15
um which I think is really evidenced by the fact that we are able to work we're working with Fortune 10 brands.
3:20:22
So literally some of the biggest brands in the world are using profound there's thousands of marketers on the platform now.
3:20:31
Um it's hard to it's hard to mention logos you know as as we all know it's it's tricky but some you know some of the logos that we are able to mention are so we have brands like MongoDB indeed Mercury Docuine Zapia uh ramp plaid row absolute squad yeah uh chime us clay uh resend uh so yeah we're working with you know That's just the ones we can mention.
3:21:02
Um, and yeah, I think, you know, these brands are coming to us because we've built the ubiquitous technology in this new category that, you know, we we've we've we're sucking the oxygen out of the room and uh we're building a better product and um yeah, I think that's a function of a very talented engineering team here in New York.
3:21:25
Basically, category leader working six days a week.
3:21:27
the only option would be to try to work seven days a week, but then you risk some major burnout.
3:21:32
So, better better just not compete at all and and just let let James cook. Just be be a customer.
3:21:37
Well, thank you for coming on, James.
3:21:39
Uh, awesome milestone and uh I have no doubt we'll have you back on again soon. Yeah.
3:21:43
Thanks for having me, guys. I appreciate that. Cheers. Amazing. We'll talk to you soon. Bye.
3:21:51
We got backto back guests coming in the studio next.
3:21:54
We got uh Warp and Senra Systems.
3:21:58
We're going to figure out who's joining first.
3:22:00
Senra is coming on first.
3:22:02
Okay, we got Sen, not David Senra, not David Senra.
3:22:04
We already talked to him.
3:22:06
We got Jordan, the founder of Senra Systems. Let's bring him.
3:22:09
He is an emerging wire harness manufacturer.
3:22:15
We're going to try and get Senra.
3:22:15
In the meantime, I think we have Warp. Okay, let's do Warp. Welcome to the stream. How you doing? Ready. There he is. Sorry. Sorry for the chaos.
3:22:24
I told you now from now back and forth, but you're here.
3:22:29
We're live on TVPN in the Ultra Doome. It's great to have you.
3:22:33
Uh exciting exciting day.
3:22:36
Give give everybody some some background uh on you and the company and uh then we can talk about the news. Yeah. Yes. My name is Aush.
3:22:44
I'm the founder and CEO of Warp.
3:22:47
And as some of you may have seen, we are the best way for startups to run payroll, handle compliance, hire people, and do all those fun things.
3:22:53
We just also announced our 18 million series A.
3:22:57
It's not the gong, but I'll let you do the honors.
3:22:59
I'll let you do the honors. Let's go. Why? Boom. Boom.
3:23:04
I have a I have a feeling we'll need a bigger gong for warp.
3:23:06
Uh hopefully uh hopefully we can get in here before the next round.
3:23:09
Um, yeah, talk about talk about competing in a in a in a big but crowded category.
3:23:15
Um, and maybe kind of the a little bit of the origin stories of of the business as well because Yeah.
3:23:24
Um, you're relatively new but but clearly making waves. Yeah, totally.
3:23:30
I mean, Jordy, you've known us from the very early days, I think.
3:23:32
Uh, and we've been we've been friends and kind of working on this from the very very start.
3:23:39
So I think you've seen that journey, but really what I think about is um there's almost like such a high bar today for building incredible products, right?
3:23:47
I think um a ramp obviously comes to mind where you know you you start out in this like huge market and you see a incredible like opportunity and maybe it looks like there's all these players but if you can build an amazing product, if you can give startups uh companies the best product experience like that actually has a lot of demand.
3:24:06
So I think on on our end, we also saw that there's all these different tools that people kind of piece together for running their companies, running payroll, handling compliance. It's very disjoint.
3:24:15
It's very manual still today, especially for startups.
3:24:19
And um if there's one thing that startups hate, like and I've done this before myself, is stare at a piece of like paperwork from government like New York Department of Taxation, whatever, and have to do do it themselves.
3:24:32
And that's just so so annoying.
3:24:33
So we're kind of automating all of that for once.
3:24:35
um using tons of kind of automation AI beh be behind the scenes to kind of accomplish that and also just building a really really amazing product.
3:24:44
So, one of uh I think one of our customers told us this the other day is that using all these other providers feels like you're using like Bank of America to pay somebody or like TD Bank, but then if you use Vorp, it feels like you're you're using Rex or RAMP or um Venmo to pay your friend.
3:24:58
And that's the kind of like the qualitative sort of product like difference that we think about.
3:25:08
How much are you thinking about uh agentic workflows and features versus traditional bread, you know, SAS, bread and butter, crud, you know, uh traditional fintech, all that kind of stuff.
3:25:21
Yeah, it's it's a huge part and I think um we're we're being thoughtful about it.
3:25:26
Like I think there's a lot of players that are just like waking up to it and their approach is well, we're just going to jam like some AI kind of buzzwords kind of sound cool.
3:25:32
But I think we have the luxury that we're starting in this um almost in this time where like all these advancements are happening very very quickly.
3:25:40
So uh maybe you guys don't know but like my personal background actually is in computer science specifically focusing on AI back at MIT and so it was very cool to see some of these things early on right before this started taking off and now we have the opportunity to build this in a way that is from the ground up we can actually like architect this in the right way.
3:25:59
So a lot of these manual paperworks like maybe the customer doesn't even know about them or think about them and know they're completely abstracted away from them.
3:26:05
All the PDF filing paperworks taxation that would typically be their responsibility or their accountants or controllers whatnot.
3:26:14
We can absorb them for the first time and there's no like middle ground that we have to cross where they're kind of doing it and then it's slightly automated and they're asking some chat UI.
3:26:23
No, it's just like fully in the background automated.
3:26:25
Where's the growth coming from?
3:26:27
I know you guys are growing quickly.
3:26:28
Uh you don't have to give us like you know the the full secret sauce but how how and why are are you winning customers over?
3:26:35
We I think the biggest thing is we have seen tons of founders just telling their friends about us.
3:26:42
Um so if they if if customers using us we target a lot of our you know startup founders a lot of the folks that you would have know of like Rahul from Julius AI and Isaiah from Bland and I think tons of these really cool startups they're that are building all these amazing products they have lots of like Twitter presence very online and they will tell their friends or tweet about us or say something positive and I think that's been a huge driver.
3:27:05
Um, so first and foremost just like building an incredible product people will tell their friends but also targeting these like very awesome companies that will kind of spread the word.
3:27:15
Why is payroll so igopolistic?
3:27:17
I feel like there's like ADP, Pay Locity, Paycom, Pay something else in the public markets.
3:27:23
Then YC has like three unicorns in payroll.
3:27:25
Like I get that there's a lot of money.
3:27:28
Yeah, I I get that there's a lot of money where the money is, but like why is there not more of a compounding advantage?
3:27:34
like what's the market dynamic?
3:27:36
Is that expected to change or is it just like you can go and win even if you get 1% of the market and that's like fine?
3:27:41
the market and that's like fine? I think it's definitely more of the latter but at the same time um it's almost like banking right like if you think about banking broadly um how many different banks exist and fintex exist and they all kind of can win big um even some of
3:27:58
the biggest players that are you know obviously like ramp like in the grand scheme of things the market is so so large that even a small portion of that can be huge um and every 5 to 10 years it seems like there's some new wave of technology where the consumer behavior your shifts enough. So like one thing I
3:28:13
So like one thing I think about a lot is the founder expectations have shift shifted a ton right they're used to using tools like superhuman and linear for running their teams and then they go log into like a Salesforce like junk you know like HR hefty thing and I just kind of hate that.
3:28:30
Um so I think there's some consumer behavior shift there's also the fact that you can reinvent these things from first principles every 5 10 years and then AI is a big piece of that puzzle too.
3:28:39
It almost feels like the opposite.
3:28:40
It feels like like payroll it's such it's so cumbersome to rip it out that that it's actually a slower turnover.
3:28:49
And so if as opposed to some of these tools where it's easy to rip them out, you if there's really really great product that's actually better, you're going to take over the market and get everyone to rip it out and replace it very quickly.
3:29:02
But payroll system, it's like pulling teeth to get it out of the system.
3:29:07
And so like people, yeah, I don't like the one that I have, but I'm I'm not I'm not going to change or anything. I don't know. It's interesting.
3:29:14
Are you thinking about stable coins at all?
3:29:15
They've been in the news in the last 24 hours.
3:29:16
People have talked about the potential of stables helping maybe just like saving you money or earning you more float or something like I I it seems like most of the payroll companies are pretty mature in terms of like squeezing every penny out of the dollars that they transfer around.
3:29:31
But is it a bullcase at all or in is does it change the economics at all?
3:29:35
all? I from where we sit I mean we haven't seen a ton of requests coming from customers directly which is the main thing that I try to track right but I think more macro level it seems like the moment for stable coins is definitely happening so I I I I'm
3:29:50
bullish overall but I haven't seen a direct uptick into like payroll especially because I think if you especially for us focused use cases which is where we are um we do global contractors obviously and that's a smaller part of like what we're doing. But for those players, it's probably a
3:30:05
But for those players, it's probably a bigger thing that they need to think about uh for international.
3:30:08
But I think the one one maybe like take that I have is the US uh banking system gets more than it actually deserves, it's actually like quite good.
3:30:17
Um the ACS, the Fed wires, even though kind they're kind of old and we're stuck with them in some ways and they could be better, they're better than what people realize or give them credit for at least.
3:30:27
Is that just because they've been wrapped in APIs so many times that like they're actually pretty easy to develop on or is the actual underlying system evolved and actually gotten better? It's both.
3:30:39
Um I think the rise of fintex and APIs obviously make a lot of them very easy.
3:30:43
Um but the one like the interesting thing is um like if you look at India and I grew up in India, my family is still there.
3:30:50
UPI which is mobile wallets are actually a huge thing in India and they basically around from 2015 or so there was a period where mobile wallets just went vertical almost within like a one-year period.
3:31:01
Um and the reason that took off is India was largely a cashbased society.
3:31:05
So the delta between going from like cash and change and like counting all of that immediately to phone wallets and QRS was massive.
3:31:14
But in the US you'll never get mobile wallets. Not in a true sense.
3:31:17
what we do have is credit cards and Apple Pay because that there's not enough of a delta.
3:31:21
So like it's one of those things where the US figured out AC rails and Fed wire rails and credit card rails earlier than all these other countries that that are now just catching up.
3:31:32
So they get to kind of leaprog and go to the next level.
3:31:34
But we have like some of these things that have actually worked for a while.
3:31:37
All these like legacy layers of technologies that are built around it um that we don't get to like immediately cross over because there's not enough of a delta.
3:31:45
So, we will be on we will be on like ACS and Fred wires for a long time, but they work pretty well. They're Lindy.
3:31:51
Lindy, I think I think uh gong hit is in order. Oh, let's do it. Talk about the round. Uh 18 million series A.
3:31:59
18 million series A led by led by songers.
3:32:02
We've got Drew Hash Kyle V as part of the round.
3:32:10
Those are all MIT engineer founders where I went crew.
3:32:16
Uh so YC crew we got we tried like all the technical folks um some great uh people joining and we're super excited and very thrilled.
3:32:23
Did you you graduated MIT, right? That's right. That's right. No, no, no, no. That's the new bull. Yeah, yeah, yeah.
3:32:30
That's the contrarian move.
3:32:31
The contrarian thing is you can actually drop out. Don't drop out. Yeah, that's right.
3:32:35
That's where that's where all the new the new out. Congratulations.
3:32:39
I' I've it's been amazing to watch you execute over the years and excited for uh the next chapter. We'll talk to you soon. Awesome. Yeah, likewise. Cheers.
3:32:47
Uh next up we have Jordan from Senra Systems, not David Senra Systems.
3:32:52
These are high quality wire harnesses.
3:32:58
Welcome to the stream, Jordan.
3:32:58
Hopefully we can bring you in.
3:33:00
I know we had some uh back and forth juggling.
3:33:02
Um but great to have you on the show. There he is. We did it. Welcome to the stream. We did it. Welcome.
3:33:09
I love I love when we I love when a plan comes together.
3:33:12
Uh would you mind introducing yourself, the company, and what is a wire harness for those who don't know? Yeah, absolutely. Uh I'm Jordan Black.
3:33:21
I'm the CEO of Center Systems.
3:33:23
Uh you probably don't know what the hell wire harness is, and that's totally fine.
3:33:27
Uh just think of it as like an iPhone charger, but like a lot more complex.
3:33:31
Like when you lift up the hood of your car, you see a bunch of electrical wiring.
3:33:34
It just connects any two or more components together.
3:33:36
Uh, and everybody hates it because it's entirely manual process to design it, entirely manual process to manufacture it.
3:33:43
Uh, and it's just a very like bespoke thing that hasn't changed since the Cold War. Uh, top applications.
3:33:49
I mean, you see it in the car.
3:33:51
I I seem to remember like the Cyber Truck changed their wire harnessing and reduced it by like, you know, it went from like 10,000 feet of wires to like 1,000 feet or something.
3:34:01
Is that roughly like the right story or like G give me a more concrete example?
3:34:05
Yeah, I think uh the thing with wiring, the more you have, the more expensive it's going to be.
3:34:10
So, you put more sensors and computers and uh thingamajigs around your car, rockets or drones, uh you're going to have more wiring.
3:34:17
It's become more expensive.
3:34:17
So, what Tesla did was really kind of minimize the amount of signals they had to go through and there's a little more complexity that goes into that too.
3:34:24
Um, but it's it's in everything.
3:34:26
Like it's the way you power your coffee maker, your rocket, drone, missile, everything else.
3:34:32
Because if you need to connect this thing that needs to send signal or power to this thing over here, the only way you're going to really do it is through copper wire. Yeah.
3:34:38
So, cars, rockets, drones, planes, like what what is the most common product that you're selling your your wire harnesses into?
3:34:48
Is it everything or do you have a specific focus?
3:34:49
Right now, we do a little bit of everything, but right now it's mainly aerospace and defense.
3:34:53
And the reason why is because it's very hard to get a high quality wire harness in the space.
3:35:00
Like not to get super morbid, but like the reason why like the astronaut side in the Apollo mission was there's like a nick on the cable jacket and there was a flamable gas and the whole thing sparked or uh there's a lot of launch failures or launch delays that happen cuz like they can't get a wire harness on time.
3:35:13
And it's this hard thing because if you put a wiring in a car, it's kind of like it sits there, you know, it goes through some bad winter sometimes, but like when you put it into a rocket or a drone, like it needs to withstand crazy environments, get beat the hell up and goes to space, it's in a vacuum, it's all over the place and it has to be like very precise in way gets built because it's all done by hand today.
3:35:36
So there's a lot of like inspection.
3:35:38
And so that's kind of where this like bespoke process on top of the complexity on top of like it being something really niche that nobody really knows about besides myself and the people who work at Senra and the very few people in the US.
3:35:48
Uh this is where we're trying to like take all that tribal knowledge take all that processing and really kind of make a structured output of it too.
3:35:54
So yeah, what what is the key innovation here? Is it automation? Is it robotics? Uh better software?
3:36:02
better just skilled labor 10 times more than the next person giving a damn as you say on your website.
3:36:09
I like the high level is like if any of us ran like TSA tomorrow we just do a way better job than like what it currently is.
3:36:15
And so there's just like caring and just make like kind of just getting rid of all the that's going into it.
3:36:20
Uh but what we're doing from like fundamental portion is like the way large companies today design wire harnesses, they use like Excel spreadsheets and PowerPoint slides and no one's really trained on this thing.
3:36:32
And the way it gets built is like with hand tools and like on a wooden table.
3:36:35
And so the like software aspect of it is like we're creating this like industry standard for how wire harnesses should be designed in like our tool called AMP where we can take the tribal knowledge we have and I tell people like this is how you should design it because every time I get a wire harness I go back and forth to the customer of like you did this thing wrong.
3:36:51
I can't find this part yada yada yada.
3:36:52
And then to build it we're actually using automation and we're using a lot of software processes to make it like a really streamlined effect.
3:36:59
You both can come to my factory tomorrow and start building a wire harness because it's not the most difficult thing to do in the world.
3:37:05
The hardest part is just knowing exactly what steps to do and where to and where to actually perform the process as well.
3:37:13
Talk about how the round came together.
3:37:16
Did Dylan feel have some sharp elbows elbowing out, you know, the the platform wrong side of board table with him boardroom can be rough.
3:37:23
But how how did you guys meet and and and break down the round for us? Yeah, absolutely.
3:37:27
Uh I got introduced to Dylan through one of our investors uh and I facetimed him.
3:37:31
I was uh I think a weekend uh in Laguna and uh all of a sudden we just started hanging out a ton.
3:37:41
Um and I been pitching that we were creating a wire harness design tool which is the Figma of wire harnessing for a very uh and just to kind of explain what we were doing.
3:37:52
Did he scare you and say, "Well, actually, Figma is the Figma for wire harnesses, and I'm gonna eat you alive.
3:37:58
Stay out of my territory."
3:37:58
It's a little bit Little bit different. Little bit different.
3:38:02
Yeah, a little bit different.
3:38:03
Uh I have yet to get a Figma designed wire harness to this day, but maybe one day we'll get it.
3:38:07
Um and we spent a lot of time together and I I I'll be frank like I'm obsessed with the guy.
3:38:13
I think he's just so intelligent the way he thinks from a product standpoint, how he run his company where taking something so bespoke like a design tool as well and breaking into this industry that hasn't been changed in a while too.
3:38:24
Like it kind of just really resonated with me.
3:38:25
And then we were chatting one day and I was like, I'm going to go out and like fund raise.
3:38:30
Uh, and he's like, I'd like to like put a check in. And I'm like, oh, okay.
3:38:32
Like classic made it in Silicon Valley.
3:38:35
He's going to write an angel check.
3:38:37
And he's like, oh, I'd like to, you know, own a substantial amount of the company in the round.
3:38:41
And I was like, "Oh my gosh."
3:38:41
And so, uh, was kind of about to start kicking off the fund raise and doing that.
3:38:48
And I don't know, it just it it really thought to me of like we have really great investors on our cap table, and I'm just super thankful about that, too.
3:38:56
But, uh, I'm excited to just have someone who can be in the weeds with it and just like actually help grow this company, be this kind of like mentor, but also just like this company that we want to grow into as well, too.
3:39:05
Uh, and it's it's ultimately really exciting.
3:39:08
And so, I was like, let's let's do it.
3:39:10
It's, you know, no one else can really understand like the uh struggles and also the missions or the obstacles we have to overcome than Dylan and we just kind of get each other. So, um that's amazing.
3:39:20
What was the final round size?
3:39:23
25 million is the the round size. [Music] Let's go. There we go. Congratulations. There we go. It's great news.
3:39:30
Well, I feel like you'll be back here in the Ultra Dome very soon. Very soon.
3:39:34
We might need some custom wire harnesses.
3:39:38
We're wiring up lights all over the place.
3:39:40
It's there's actually Yeah, we we got extension cords taped to the ground right now.
3:39:44
Probably not your ICP, but we got a lot of We'll figure out a way to integrate for sure. Perfect.
3:39:49
If you ever need anything uh electrical wiring, I'm your guy. So, fantastic.
3:39:54
What's the Before you go, uh how are the the vibes in uh in the Gundo?
3:39:59
You're you're guys are technically in Roondo, so I don't know if you claim Gundo.
3:40:04
I'm calling it the Dondo. No one's gone. Roondo. Roondo. Roondo. Yeah, that's good.
3:40:09
I haven't heard that before.
3:40:12
That seems so obvious now that I think about it. Yeah. Yeah.
3:40:15
It's um I I think the vibes are very high.
3:40:17
I think everyone's just so excited to build.
3:40:21
Uh it makes complete sense.
3:40:21
It's not uh of like not only Senra, but just even the companies in this space too of like there's a time to build, a time to move fast, a time to build things correctly.
3:40:32
And I think it's our turn to kind of uh start changing this entire industry which is in the hard tech space.
3:40:37
Uh and I think it's what percentage of your customers are in Southern California right now versus other states international etc.
3:40:45
I'd say most of our I'd say probably about 80% of our customers are in the US or is not any southern California.
3:40:53
Um all of them are in the US.
3:40:55
Um, but that's because they like kind of having this supplier or this uh face to just like I can come next drive over next door and just be able to support them and talk to them as well too. So, it's oldfashioned. I love it. Yeah. Love it. Well, congratulations. Thank you for coming on. Very exciting. Fantastic.
3:41:14
And we'll talk to you soon.
3:41:16
Have a great rest of your day. Take care. Have a cheers. Bye.
3:41:17
Well, that is our show today, folks.
3:41:20
We hope you enjoyed the lightning round, the deep dives, the chat with David Sedra and Sra Systems visualizing that that uh conversation or or getting dropped in there and and uh Dylan's like, "Yeah, I'll throw in a check." Yeah. And he's like, "Cool."
3:41:36
Like, you know, 50K, 100K.
3:41:40
He's like, "How about the whole round eight figures?" I love it. Um very cool. It's fantastic.
3:41:46
Hopefully we see more of it. It seems cool. No, it makes sense.
3:41:49
It's about the different timeline.
3:41:49
It's not about the fund or the vehicle that gives you the money. It's about the person. It's about the investor.
3:41:55
And it seems like they have an awesome partnership. So, yeah. Very cool.
3:41:58
Well, anyway, leave us five stars on Apple and Spotify and we will talk to you tomorrow. Thank you for watching.
3:42:05
Will thank you for tuning in. Have a great afternoon. Have a great afternoon. Goodbye.