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>> Delta team, you are clear to engage.
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7 5 4 3 You're watching TVPN.
4:59
>> It is Thursday, August 28th, 2025.
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We are live from the TVPN Ultradome, the temple of technology, the fortune finance, the capital of capital.
5:08
>> Uh Nvidia earnings were yesterday.
5:08
They hit consensus estimates both on earnings per share and revenue, but the stock the stock sold off uh in after hours trading.
5:20
Uh wasn't bullish enough.
5:20
Uh the whispers were that uh maybe something even crazier was going to happen, but this business has been on a tear.
5:29
Um the quarterly revenue chart is absolutely insane.
5:33
One of the craziest charts I've ever seen in business.
5:36
Uh and the pricing power is unrivaled.
5:38
the gross profit margin uh per fiscal year is insane. They're up in 75%.
5:44
Um so fantastic uh business overall, but of course the question is um uh where does Nvidia go from here?
5:56
Where is the uh where is the business?
6:00
We can read from the Wall Street Journal to kind of give you the headlines. >> It's rough.
6:03
It's rough when a when a business announces a $60 billion buyback and everybody's screaming bearish. That that's bearish.
6:09
Yeah, it's like we're giving profit back to uh shareholders.
6:14
>> Yeah, we have an extra $60 billion sitting around because we're doing so well and everyone's like boo. >> It's crazy. Grow faster.
6:20
Um Nvidia set fresh sales records on Wednesday as the world's most valuable company publicly tra uh world's most valuable publicly traded company continued to capitalize on strong demand for AI computing power. Sales hit 46.
6:33
7 billion, up 56% from the year earlier.
6:37
Uh in line with revenue estimates from analysts.
6:40
Uh revenue from the important data center segment which includes sales of the company's most powerful chips used to train and refine artificial intelligence models rose 56% to 41. 1 billion.
6:51
And this was slightly lower than what analysts expected at 41. 3.
6:56
And so that's probably what was driving the the the market moving in the after hours.
7:01
Um because uh that should be the pl that that should be the strongest place of growth is the data center business whereas you know if gaming was selling off or they have some automotive businesses they they have a variety of other products.
7:13
Um the vast majority I think 90% of the revenue almost is uh is from data center and obviously that's been the huge the huge driver and the huge narrative.
7:22
We're actually going to pull up a quick graphic right now of uh of Jensen for you guys in case you haven't seen it. >> Oh, yes.
7:31
>> Yesterday >> looks great.
7:33
>> Going headtohead with himself. >> Yes. Yes. Yes.
7:35
>> He he's really he again >> market cap's 4. 4 trillion. Is that right? >> Uh hopefully. >> There we go. >> Yep.
7:42
>> Um quarterly net income was 26. 4 billion.
7:45
Uh 59% higher than a year ago.
7:49
The company's the company predicted revenue of 54 billion for the third quarter, slightly higher than consensus.
7:54
Nvidia shares fell about 2% uh because of a narrow miss of revenue forecast for its data center business.
7:59
Surging demand from the fast growing AI industry is largely responsible for Nvidia's strong results as software companies like OpenAI, Microsoft, Amazon.
8:06
com, Alphabet, and Meta Platforms continue to train ever more powerful AI models.
8:11
Um, and so the there were a few numbers that stuck out from the earnings call.
8:18
The big one that everyone was talking about was was this prediction, this broad prediction of not specifically Nvidia's revenues, but of overall AI infrastructure spend quote through the end of the decade, which is always kind of hard because does that mean you include 2030 or do you stop at 2029?
8:37
When does the decade really end?
8:39
Uh, but most people are calling it five years.
8:41
They're calling it the end of 20 uh 2030 and the prediction from the Nvidia team was that there we would see three to four trillion dollar spent on AI infrastructure by the end of the decade.
8:56
And so I think that's supposed to be an aggregate number.
8:58
He's not saying that in 2029 we will be spending 4 trillion on AI infrastructure per year.
9:05
Uh it's more that just over the next 5 years we will see a total of 4 trillion 3 to four trillion go out.
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trillion 3 to four trillion go out. Uh and my initial take was this sounds high obviously but how does it comp to situational awareness because uh Leopold Brander yes seriously Leopold Ashen Briner did a great job forecasting out the growth of AI capex AI infrastructure
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spend and so I pulled the numbers and um 3 to four trillion is actually way lower than what situational awareness was uh estimating which pegged uh 2030 it's something like $8 trillion just in that year and maybe something like 15 trillion in total investment through the end of the decade. I think that includes
9:49
I think that includes some power spend as well.
9:51
some power spend as well. So the the definitions it might not be purely apples to apples here but it's funny to frame Jensen as like bearish relative to Leopold who's like super agen's like yeah you know um I'm happy to grow Paulo macro on X said am I the only one
10:11
thinking Nvidia is completely jumping the shark here with these kind of projections I know AI people will swallow whatever but seriously only Elon could get away with this sort of talk which is Nvidia expects 600 billion in capex for data centers in 2025 and 3 to 4 trillion in data center capex before 2030. >> Before 2030, Tyler, what you got?
10:28
>> Before 2030, Tyler, what you got?
10:29
>> Uh, I was just going to say like people have always kind of said Jensen is like not AGI pled like app jugglingly just because like >> if you're super AGI pled obviously you wouldn't be selling the GPUs.
10:36
You would just hold on to them.
10:40
>> They're like the most important thing.
10:41
So >> maybe maybe I don't know.
10:42
Um >> yeah the the majority about this. Yeah. >> Yeah.
10:48
I mean, the other number that stood out is that Nvidia's revenue from Singapore keeps breaking all-time highs, reaching 10. 1 billion in sales.
10:53
Y this last quarter, it ranks second after the US and just behind Taiwan.
10:58
Year-to- date revenue from Singapore is approaching 20 billion. Yep.
11:02
A lot of people had uh thoughts on this um and kind of trying to >> figure out >> the like loose like accusation from like mostly anons is like maybe this is someone who's smuggling into China but Nvidia the team made it clear on the uh on the call they used a very specific phrase to say that the the the company that was buying in Singapore had been cleared by the United States government.
11:32
And so, you know, who knows?
11:32
Maybe there's something that has to that the government isn't aware of.
11:36
Maybe the government needs to revisit that.
11:37
But like it seemed like they they were very clear that that the deal was above board.
11:42
>> But the the the reason that it stands out is if they you know, they've done 20 billion year date to Singapore.
11:47
If they get to 40, that will be 7% of Singapore's GDP just going to Nvidia. >> Yeah. >> Uh which is wild. >> Yeah.
11:55
Uh the other thing that was interesting um there was an exchange around uh between Nvidia's CFO and an analyst >> um and uh Crest CFO said we have in in reference to the government or uh conversations with the government we have been communicating she said if nothing shows up I've got licenses I don't have to do this 15% until I see something that is a true regulatory document. Mhm. Yeah.
12:23
So maybe the the 15% deal was announced.
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It's more of uh like a directional thing and maybe it's not papered yet.
12:32
And uh I mean as we saw is that it could just be like another chip on the board that's going to be moved around and immediately traded away.
12:41
There's a lot of these things that get like pitched and before they even turn into anything real that affects the business in reality, they get traded to for something else.
12:49
>> Optics matter >> for sure.
12:50
>> Potentially more than the incremental revenue >> a ton.
12:52
Yeah, you know, is is the White House going to be chasing after a few billion dollars?
12:57
You're, you know, picking it off uh pennies, >> but you know what else matters? Ramp. Time is money. Save both.
13:02
Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place.
13:05
Uh Tyler, on the concept of of holding on to the GPUs, I was talking to Jordy about this earlier today.
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Um it seems like there's this question of like if Nvidia is paying 60 billion in uh in buybacks or they're they're they're spending all this money like shouldn't they put that we're in this boom.
13:23
Shouldn't they invest that money in growth?
13:24
Shouldn't they do something else?
13:25
And um Jordy was was mentioning like maybe they should take more seriously like building an actual cloud service, building their own data center, holding on to the GPUs as you said.
13:33
Um and my counterargument to that was basically that they like Nvidia has pretty solid revenue concentration across like the duopoly of I believe it's uh Microsoft and Amazon are like the two biggest power law buyers.
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Um I'm pretty sure it's somewhere in here.
13:53
Um but anyway, like the hyperscalers are incredibly important.
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incredibly important. Um so people go through it's meta and Microsoft actually uh is the one that that that people are are you know uh guessing it is but in in anyway the hyperscalers have this have this oligopoly going in cloud and
14:12
there's this there's this game theory where if Nvidia said hey we're going to compete with AWS we're going to compete with Google Cloud Platform or Azure then the then those hyperscalers would have a immense incentive to go even deeper into their own silicon and cut out Nvidia's margin. And so there's this world where
14:30
margin. And so there's this world where okay, yeah, maybe in this hyper long-term it might work out, but there would be immense pressure in the short term as opposed to right now if you're Nvidia and you have all the hyperscalers
14:43
bidding for chips and they're all in super high demand and so you're able to reap really high gross margins off of that, make a ton of money, uh you'd basically be giving that up, I think if you if you broke up the igopoly that buys from you. Like it's really really
14:55
Like it's really really great if you're selling something and two people walk in and they both want it because they have to pay the max price.
15:02
And we've heard those stories about um Elon and uh Larry Ellison getting dinner with Jensen Wong and being like we need chips and of course Jensen saying like well you know Satcha and Andy Jasse want chips too and Mark Zuckerberg wants chips like take a number right. Yeah.
15:18
>> Um anyway >> yeah and they're in the beautiful position right now which is however much they make of a certain chip is exactly how much they'll sell. >> Yeah. Yep.
15:25
Uh anyway, uh the next earning call I hope it's on reream one live stream 30 plus destinations multiream and reach your audience wherever they are.
15:34
We are of course on reream.
15:35
Uh should we go over the Ben Thompson analysis or Dougl from semi analysis joins in about 15 minutes.
15:40
Uh uh Ben Thompson writes he he uh quotes from the Wall Street Journal of course and says it's always dangerous to invoke the mythical law of large numbers, but the most important place to start with Nvidia's earnings is to check the supply and demand balance.
15:55
Here's the answer from CEO Jensen Wong on the earnings call.
16:00
Right now the buzz is I'm sure you all I'm sure you all know the buzz out there.
16:05
The buzz is everything is sold out. H100s sold out. H200s sold out.
16:10
large CSPs are coming out renting capacity from other CSPs and so the AI native startups are really scrambling to get capacity so that they can train their reasoning >> meta is buying from Nvidia but also renting >> yes >> from Google there was a a10 billion deal announced
16:28
there last week >> Ben says he made this point a year and a half ago and it still holds as long as demand yeah demand lives in the future uh he lives a day ahead or he did when he was in Taiwan now he's in America um uh as long as demand for Nvidia GPUs
16:42
exceeds supply then Nvidia share sales are governed by the number of GPUs they can make that supply is certainly increasing which is why Nvidia sales continue to climb but assuming that supply increases are linear then by definition Nvidia's growth rate is going
16:57
to slow as it lapse ever larger revenue numbers that themselves grow exponentially yes this was another reality check on are we feeling the acceleration or are we decelerating and although though the numbers from Nvidia's revenue growth are insane, like staggering. It's like one of the most
17:13
It's like one of the most beautiful charts I've ever seen in business.
17:16
Um, it is technically decelerating.
17:18
Just like technically, if we were to just like do the math, it is not accelerating anymore. Um, it's not bad.
17:25
It's just like it's a it is a reality check on things. Yeah.
17:28
>> Um, >> so, um, the big complicating factor is China.
17:33
And I didn't understand this as much as I I kind of disagree with Ben maybe a little bit on this because the uh >> like China does seem like a complicated factor but it seemed like the business in America was doing great and and really China was like a call option. It was a nice to have.
17:49
If it opens up and AI isn't seen as a weapon and and Nvidia can seriously grow the China business, it's huge huge upside.
17:57
But it doesn't it doesn't necessarily mean that they're in trouble right now if they can't do anything in China.
18:03
So, uh he quotes from CFO Klet Crest. Um >> I don't know.
18:07
I mean I think I think >> you know again looking at Apple's situation in China like it is definitely bearish.
18:16
>> Completely different though.
18:16
Nvidia doesn't actually manufacture in China >> whereas I'm not talking about manufacturing.
18:21
I'm talking about purely demand right?
18:22
Apple's closing retail stores. >> Yes.
18:25
Apple sold a lot more in China than Nvidia ever did.
18:29
>> And so Nvidia like the whole the the the when when when when Jensen was selling Nvidia chips to China and the first rumblings of like hey maybe he shouldn't do that for geopolitical reasons um like popped up.
18:44
One of the things people would say is that look like yes it's uh you know it's kind of anti-free markets to not let him sell in in China but also there's plenty of demand in America like he could he doesn't have to sell in China because there's there's there's enough
19:00
>> Jensen talks about 3 to four trillion in capex before 2030 he's certainly including China in that >> yeah he he I think he pegged it at like a $50 billion backlog of demand for Nvidia chips in China if if there were no geopolitical considerations. Um I am
19:13
Um I am very interested to see where this evolves because um the the the like AI is a weapon narrative is definitely cooling off.
19:24
Uh and so we could definitely see more opening up.
19:26
Um but uh Colette Crest addressed the H20s.
19:28
Let me first answer your question regarding what it will take for the H20s to be shipped.
19:34
There is interest in our H20s.
19:36
There is an initial set of license that we received and then additionally we do have supply and we are ready and that's why we communicated that somewhere in the range of two to five billion this quarter we could potentially ship.
19:45
Uh we were still waiting on several geopolitical issues going back and forth between the governments and the companies trying to determine the purchases and what they want to do.
19:52
So it's still open at this time and we're not exactly sure what the amount will be this quarter.
19:58
However, if more interest arrives, more licenses arrive again, we can also still build additional H20s and ship more as well.
20:04
Nvidia clear, this is Ben Thompson again, Nvidia cleared one hurdle when the Trump administration after pausing H20 sales, allowed them to resume.
20:12
The Chinese government, however, told Chinese companies not to buy the H20s, according to the Financial Times, which we covered on the show.
20:18
Uh Ben Thompson says he's always wary of falling into the trap of blaming the US for Chinese decisions.
20:25
This is overly solopyistic view of the world uh is the root of a lot of bad analysis.
20:30
Um beyond being insulting to the intelligence and valition of the US chiefs US's chief political geopolitical rival.
20:38
At the same time, it would be nice to see the counterfactual of Lutnik keeping his mouth shut or better yet the Trump administration not causing a ruckus about the H20s in the first place.
20:47
The problem of course is that Lutnik is right.
20:50
Chinese companies using Nvidia chips preserves US dominance of the dominant AI software stack.
20:55
On the flip side, Chinese companies not using Nvidia both diminishes US control and for Nvidia specifically threatens not just their China sales but in the long run their sales everywhere, not just from Chinese competitors but from competition generally should a Chinese open sourced uh Chinese pioneered open- source CUDA alternative gain scale.
21:13
Um and by extension the fact that Nvidia is >> and remember they're already crushing it on the model side. >> Yes. Yes.
21:21
And so the next thing might be you know maybe it's not Deepseek V5 that's like the you know a huge jump in capabilities but the Deep Seek team or the Highflyer team figures out how to have DeepSeek run on any hardware with an open-source stack that's kind of a dropin replacement for CUDA.
21:39
Well, and we were we were talking earlier before the show about in a >> if you're extremely AGI pilled, >> yes, >> at some point in the future, you can just ask the AI, hey, figure out how to run on on hardware other than Nvidia. >> Yes.
21:56
Rewrite this so that it doesn't run on CUDA.
21:58
Tyler, you like that take? Are you laughing?
22:02
>> Yeah, that's a good take, I guess.
22:02
I mean, it's like >> it's like if you're if you're Nvidia, you want AI to be like bullish but not too bullish.
22:09
good but not too good because if it's if it's bad it's bad for Nvidia if it's good it's good for Nvidia but if AI is amazing you can just in one line like hey uh rewrite rewrite chat GPT or rewrite GP reimplement GPT5 on on uh on TPU or on >> I think it it would just be more to just ask it to like just take over Nvidia the company and then pull it into >> Yeah. Yeah.
22:33
I guess at that at that point we're in like such bizarre territory.
22:36
Um but I mean truly like replatforming should be something that AI would be uniquely good at.
22:40
Um I would imagine >> yeah I mean you already see like a lot of code like one of the early like coding use cases was just like translating like JavaScript to TypeScript like something like very simple like that. >> Exactly.
22:53
I mean AI has been good at just translating English to French for a long time. >> Yeah.
22:57
I mean that was the original like transformer. >> Yeah. Yeah. Yeah.
22:59
And and also I mean when you look at the success of uh like what is cognition really really great at?
23:06
What does Microsoft highlight cognition for?
23:07
Uh it's not necessarily uh like one-off projects.
23:11
It's more like repplatforming. Yeah. Like tech. >> Yeah. Tech debt.
23:15
Oh, you have some enterprise system and it's on C and you want to put it on Python.
23:19
Like let's rewrite it and that's a huge pain to go rewrite all that business logic, but you can just have, you know, Devon or an agent go and like hack away at it for a while.
23:29
So, um, you could imagine that that potentially would happen in the future, but if I but if you've been following George Hotz's like, you know, problems with Nvidia or and AMD, he's been really trying to like unseat Nvidia as the high margin uh business in the space by getting AMD to solve some software bugs.
23:51
And I think at a certain level if there are intractable bugs that even George hot can't solve well then you know like the frontier AI model might not be able to solve them uh too.
24:04
So um I I I don't think this is going to be an overnight story that we're going to see CUDA un unseated.
24:09
Um anyway um Ben Thompson continues Moes in China.
24:16
One interesting way to think about Nvidia and China and why Wong is so desperate to sell into the country is the nature of their moat.
24:21
Uh he says let's talk about ASIC.
24:23
This is Wong wants uh let's talk about ASIC first.
24:25
A lot of projects are started.
24:28
Many startup companies are created.
24:29
Very few products go into production.
24:31
And the reason for that is that it's really hard.
24:35
Accelerated computing is unlike general purpose computing.
24:36
You don't write software and just compile it into a processor.
24:40
Accelerated computing is a full stack codeesign problem.
24:42
The AI factories in the last several years have become so much more complex because the scale of the problems have grown so significantly.
24:50
So Ben Thompson says the answer captures two part of the mo.
24:55
First is CUDA, Nvidia's software stack for controlling Nvidia GPUs which is the default option.
24:59
Uh the second is that CUDA is everywhere which means you can go to any cloud provider, hire developers familiar with CUDA etc.
25:05
Um and then Jensen says uh that in in addition to all that it's just extremely complex systems problem.
25:13
Uh it's just a it's just a it's just a extremely complex systems problem.
25:17
Uh people talk about the chip itself.
25:20
There's one ASIC the GPU that many people talk about.
25:22
But in order to build Blackwell the platform and the Ruben Ruben the platform, we had to build CPUs that connect fast memory, extreme energy efficient memory for large KB caching necessary for agentic AI to the GPU and a super NIC to scale up switch which we call NV link.
25:38
Um this this is the third part which is networking.
25:44
I keep referring to Nvidia's GPUs, but in reality, GPUs work at the system level, particularly for training, and Nvidia's ability to link GPUs together into a single coherent system is unmatched.
25:55
This is a big revenue driver, too.
25:57
Uh, this quarter networking uh re networking revenue was 7.
26:00
3 billion, which is more than Nvidia paid for Melanox, which is the foundation of their networking offering. Pretty sweet.
26:09
They paid they paid billions, but then now just in this quarter they made more revenue from that acquisition.
26:13
It's truly one of the greatest acquisitions of all time, says Ben Thompson. >> Wow. >> Yeah. Insane.
26:19
Um I don't know if you you can go subscribe to Stickery to read the rest of the uh of the article.
26:23
Um, my other takeaway uh was on the debate about um about uh should Nvidia pay a uh uh a dividend or do stock buybacks?
26:37
And so I looked at the data of is this out of character?
26:43
Should you read into that?
26:45
Because it's a huge number, $60 billion going out of the balance sheet onto Yes. Uh into share buybacks.
26:51
And it's also like the stock's never been it's the biggest company in the world.
26:55
The stock's never been higher.
26:57
Like we're kind of like buying the top almost >> top blasting yourself potentially.
27:04
>> It feels it feels odd but but I was wondering like okay we need to reality check this like is this actually something new?
27:09
Uh is this an idea that they're like out of out of ideas or something?
27:13
Um and that's the that's the teian critique of Google doing dividends or share buybacks is >> they don't have any ideas.
27:20
>> They don't have any ideas.
27:20
Um, and so we walked through some of the ideas and there weren't any that really stuck out.
27:26
If they if they build their own hyperscaler, well then they're competing with their best customers.
27:30
>> You mean a a cloud service provider really go hard in that >> Yes. Yes.
27:34
If they say, "Hey, Amazon, like you don't need to put any more orders in.
27:37
we're going to we're going to take the GPUs for a it's like okay well then they lost all that all that margin all that business that could be really disruptive >> and that business will take a long time to scale to the point where >> and then and then Nvidia is investing in startups and and they have a whole they have a whole business just around uh uh GPUs that go into cars.
27:55
They have an auto buy Y Combinator.
28:01
>> The craziest thing >> just start coming up.
28:03
I mean, we should sit down and the dumbest things that they could do. >> Gulfream. >> Yeah. Okay.
28:09
But so what I had uh uh what I pulled in terms of numbers was as in terms of the the the the market cap of Nvidia at the start of the year, what percentage of that market cap was paid out either in uh stock buybacks or dividends.
28:28
And so this year 60 billion, it's a lot, but the market cap's super high.
28:34
And so in fact the uh the total amount of uh the total net payout as a percentage of the start of the year market cap is 2. 82%.
28:49
So you can think about it as like you're getting 2. 8% 2.
28:50
8% like yield on the investment although obviously like the the the the share price movement is much more important. Last year it was 2.
28:59
7% the year before it was 1. 42%. 42% and in 2022 it was. 12%. So much lower.
29:05
So it is growing but um >> it was it was much higher in 2016. 2016 was 7%.
29:15
>> The bears came out of hibernation in a big way. Nvidia is still up 4. 6% in the past 5 days. >> Yeah.
29:22
Of course >> it's like >> Jensen has the hardest hardest job in the world. >> Truly. Truly.
29:28
I mean, it's such a it's such like a price per to perfection.
29:33
Like the perfect avatar for the AI boom.
29:36
Not not just indexed AI, but actually like throwing off cash. Amazing margins.
29:41
Just really great all around.
29:41
And uh yeah, it's hard to imagine them like it's not like they're like getting over their skis because like they're >> the thing you have to give him credit on is the relent I mean among a bunch of things, but relentless focus even during this period of euphoria.
29:56
I mean, there'd be a lot of companies that would be like, "We need a mobile phone.
30:00
Let's make the Nvidia phone. We need a cloud."
30:04
You know, we need We were joking the other other week about uh how a lot of the Mag 7 have a social network, right?
30:11
He's not >> he's staying focused on >> He hasn't even like joked about buying Tik Tok and we have. >> Yeah. Um Yeah.
30:17
>> Yeah. Um Yeah. It's it's one of those things where we saw a a pullback in Nvidia after the crypto boom when I I mean there were a bunch of other things going on with the market and interest rates but uh Nvidia drew down immensely and part of that or part of the story was that uh GPUs were being used to run
30:37
Ethereum nodes and and validate and when Ethereum went proof of proof of stake instead of proof of work it became a lot less compute inensive and so there was this kind of overhang there was also an overhang from COVID and people buying there was chip shortages and people buying gaming PCs and stuff. Um and so
30:51
Um and so Nvidia drew down a ton.
30:53
Uh Ben Thompson wrote Nvidia in the Valley and basically like bottom ticked it perfectly.
30:57
Um and and fortunately Nvidia is set up I mean it seems like it is set up to with withstand a some sort of like correction or drawback or stagnation in in AI progress.
31:13
like the business would contract of course, but there's nothing.
31:18
They're not over their skis where they've like made this massive commitment and they're um and they'd and they'd be in a ton of a ton of trouble, at least from my perspective.
31:25
Anyway, let me tell you about figma. com.
31:27
Think bigger, build faster.
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Figma helps design and development teams build great products together.
31:32
We have our first guest, Doug Olaflin from Semi analysis, hopping on the stream in just a few minutes.
31:38
In the meantime, um I do want to go through this post that Ben Thompson highlights from Ethan Ethan Ding um about uh the changing economics of AI.
31:50
It's a longer post, so we'll have to do it a little bit later.
31:51
Um but he quotes here, imagine you start a company knowing that consumers won't pay more than $20 per month. Fine.
31:59
You think classic VC playbook.
32:01
Charge at a charge at cost, sacrifice margins for growth.
32:05
You've done the math on CAC, LTV, all that.
32:08
And the but here's where it gets interesting.
32:11
You've seen the A16Z e A16Z chart showing LLM costs dropping 10x every year.
32:17
So you think I'll break even at $20 a month.
32:19
And when models get 10x cheaper next year, boom, 90% margins.
32:25
The losses are temporary.
32:25
The profits are inevitable.
32:27
But demand exists for the best lang language model. Period.
32:33
And the best model always costs about the same because that's what the edge of inference costs today.
32:37
When you're spending time with AI, whether coding, writing, or thinking, you always max out on quality.
32:43
Nobody opens Claude and thinks, you know what, let me use the the bad version to save my boss some money.
32:49
We're cognitively greedy creatures.
32:51
We want the be the the best brain we can get, especially if we're balancing the other side with our time.
32:59
Uh while it's true each generation of Frontier model didn't get more expensive per token, something else happened. Something worse.
33:05
The number of tokens they consumed went absolutely nuclear.
33:09
Chhat GPT used to reply with to a one-s sentence question with a one-s sentence reply.
33:13
Now Deep Research will spend three minutes planning and 20 minutes reading and another five minutes rewriting a report for you while 03 will just run for 20 minutes to answer. Hello there.
33:22
The explosion of RL and test time compute has resulted in something nobody saw coming.
33:26
The length of task that AI can complete is doubling every six month.
33:30
What used to return 10,000 tokens is now using returning 100,000 tokens.
33:35
So, uh, interesting dynamic there.
33:35
We will, uh, continue with that, but we need to introduce our first guest of the stream.
33:41
Doug Olaf from Semi analysis. Doug, how you doing? >> Good.
33:44
This time my mic should work. So, >> there we go. >> Sound great. >> Miked up. >> Thank you.
33:50
>> I like that the last time.
33:51
>> I like that you're holding it, too, like some type of rapper.
33:55
>> It's much more personal.
33:55
Can we call you I'm going to call you Young Semi.
34:00
>> I am getting a little ASMR vibe. It's perfect though. I love it. >> Hello.
34:03
Welcome to Young Semi's rap. Anyways, what's up guys?
34:05
I have no idea what we're talking about.
34:09
>> We're talking about Nvidia.
34:09
We're talking about Nvidia earnings.
34:10
Give us >> Should we be talking about something else? >> Yeah.
34:14
What else is >> No, I I think that's the right thing to talk about, but I I guess my brain is really broken.
34:19
I'm like, bro, this is a snoozer compared to the blowout quarters we've passed. >> Yes, that's fair.
34:23
Um what did you take uh what do you think about the fact that uh Jensen is on a relative basis extremely bearish compared to Leopold Ashen Brener at situational awareness.
34:36
Leopold expects 15 trillion in capex or AI spend by 2030.
34:39
Jensen a mere 3 to four trillion.
34:47
>> I don't know what to tell you man.
34:47
I think there might be uh some people might be talking their book, right?
34:51
Like I guess I guess uh I I I I do know Leopold.
34:55
I definitely know his worldview is Manhattan Project for AI.
34:57
So I think maybe Jensen hasn't come come around to the Manhattan Project for AI, but I think just a mere 2 or three trillion is uh quite a bit of capex.
35:06
It's um some would say it's not an insignificant amount of money, but um they tried to bait him on the call too about tokens token revenue uh about it 10xing next year.
35:17
I thought that was kind of interesting. Um I don't know.
35:18
It was it was a fine result. >> Yeah. Yeah. Yeah.
35:22
Uh go into that token revenue.
35:24
There was something where it felt like he was he was making the case.
35:28
He was trying to lay out the economics for the actual customer saying if you spend this much you can make this much money and it felt like I don't know just like a different different way of framing his business.
35:40
Um can you explain exactly what he was doing there? >> This is okay. Okay.
35:45
So, one, semi analysis, as you may have figured out, is on to this.
35:48
We're trying to figure out the math ourselves.
35:50
Um, they obviously scooped us, but uh not quite scooped per se, but there's a lot of work to be done to understand the the unit economics, right?
35:57
A lot of people have asked, hey, what's the AI ROI, right?
36:01
Like >> you guys are spending all this money and like the the I'm sure you saw the tweet on the timeline.
36:08
>> Depreciation is bigger than all the revenue. This is a total bubble.
36:09
Blah blah blah blah blah.
36:11
Um, the depreciation number, I don't know.
36:13
I think Martin Scraley of all people was like this really sucks.
36:16
Um but I I think a lot of it the data center long line >> just saying to be clear >> saying it sucks because it's just not good analysis. It was a bad analysis. >> Yeah. >> Yeah.
36:28
I think he specifically talked about like human level intelligence on a B 100.
36:31
He used a pretty long useful life.
36:33
I don't know if we agree with that useful life, but like the data center side of that capex and the power side of it extremely long useful life like let's just say 10 20 years.
36:40
So you can there definitely some of that is pulled forward and so you can say that capex is not going to be just be used for next year or this year.
36:47
It is a multi-year investment.
36:48
But on the on the GPU side, I think the unit economics is the question that people are really trying to get to the bottom of.
36:54
And the one that um Colette specifically called it out is you spend $3 million on Iraq and you can make $30 million in token revenue.
37:03
Um I think one uh you know which tokens are you selling?
37:06
Uh right that that's like the real question here is like how many tokens are you selling? What's the throughput?
37:11
There's a lot of assumptions here.
37:12
semi analysis, I'm not going to lie to you, is like quite literally working on this right now to figure out like what's the type of like, you know, if they were selling anthropic tokens, which are like have a premium because they're really good at uh Sweetbench, right?
37:23
Or if they're selling GPT or if they're selling Mlama or GPT OSS, right?
37:28
>> But it's pretty clear to us at least >> that it's very very economic to run these things.
37:33
Like one rack, if you could find 100% free tokens, you are or no paid tokens, you are minting money.
37:42
it is just straight up like a 10x return on one year.
37:43
That might not even be, you know, that might be a multi-year thing where you you're able to print a lot of money.
37:49
Um, these tokens, the the GPUs that are able uh the amount of tokens that are able to come out of it is we're talking, you know, millions and millions and millions a year, if not billions or something or on inference on like an annual basis.
38:01
And if you get that all paid, you're you're you're printing, dude. >> Yeah. Yeah.
38:04
Yeah, I mean it it feels like we're in this like like middle ground between like there's there's some you know I I believe Nvidia revenue is decelerating technically uh the the earnings >> that's because supply is increasing linearly. >> Yeah. Yeah.
38:20
Like they're they're >> so it's uh don't let anyone call say law of large numbers that's not what it is.
38:27
That's but because it get like misqued like what happens is like the base gets bigger and so it decelerates.
38:32
bigger and so it decelerates. It's mechanically impossible for it to accelerate on a larger maybe not mechanically impossible but it's extremely hard right you you go from 50 to 100 billion then you have to go from a 100red billion to 200 billion just to keep that same rate without a deceleration so it's getting a bigger
38:49
and bigger base >> yes but but a year ago like there were plenty of people that were saying like yeah like acceleration like we are literally accelerationists like we believe in acceleration and we believe that like yes like we will go from 50 to 100 to 200 to 400 to 800 continue continue uh and more so because even that would be uh continuous growth. Um
39:06
Um anyway, so so you have this so you have this narrative like of like there is some deceleration in in the in the rate of Nvidia growth but the chart is still insane.
39:17
Uh and then simultaneously like like the the profitability of actually using their product seems very very good.
39:25
So, does that just mean that we're we're in this like it's it's a snoozer in the sense that we're in this era of like the economics make sense, the business is good.
39:33
It's like the oil business now.
39:35
It's not going to fall apart, but it's also not going to explode.
39:40
Like we're in kind of a a smoother territory, whereas like a few years ago, we when we were before the kink in the graph of Nvidia revenue, it was very much like what is going to happen here?
39:52
>> That's a great question.
39:52
>> That's a great question. Um this is where you know I I definitely think and I get why people are saying bubble big numbers are happening there's a lot of exciting technology the internet is a great example but um let me give another example that I think kind of maybe is a better analogy Apple when it came out
40:07
with this iPhone and I'm sure you can tell me exactly where yours is next to me next to you right everyone got one in like a really quick amount of time it became this giant generational product where we went from like zero people with a with a smartphone to 60% of people with a smartphone within 5 years, right? Um, and it sold a crap ton of them and
40:24
Um, and it sold a crap ton of them and then it kind of uh the first few years were these exciting blowout quarters, especially in the beginning like these these you're like, "Holy crap, this changes everything."
40:33
And then it becomes boring execution.
40:34
Um, so we could be in the world of boring execution, but I definitely think um, you know, the ROI of the underlying >> rack is really good asterric if you have paying tokens.
40:47
But if you look at the vast majority of tokens that are being consumed today, they're definitely not paid, right? That's the free side.
40:52
I think I was here on GPT5 day, which by the way, I literally got off that call and then I started thinking about ads and then we posted it on semi analysis. It was like very funny.
41:01
I wish I had the hot take then, but but it would have scooped us.
41:05
But yeah, that's an example where >> never scoop yourself. >> Yeah.
41:08
Never scoop >> when you're in the subscription business at least. >> Yeah. Yeah. Exactly.
41:11
It's like, dude, I don't I got to keep I got to keep the lights on.
41:14
Um, no, but if you think about it, like it's about how to translate tokens into revenue, um, in a way that isn't like this premium model.
41:22
And I think, you know, agentic purchasing, which is like kind of our, you know, 5-second thesis of how we think is a potential way to monetize the free business.
41:30
That's an example of that's how you monetize it.
41:32
And all of those tokens now that are free, you found a new end state of people who don't want to pay for intelligence, right?
41:39
I don't think you can make the assumption that um someone in Indonesia with the GP per capita way lower than United States is going to be paying 200 bucks a month for GPT5 Pro, right?
41:49
Um the reality is those tokens have to become something of value.
41:56
Otherwise, we're just going to print deflation.
41:58
We have to make it tokens are like uh tokens are like a website like www. com, right? Like whatever.
42:04
You have to make it a business on the tokens.
42:06
And so I think we're in that portion where it's pretty clear that if you can if you can monetize those tokens, you're going to have a really really good business.
42:14
And now it's the question of how do we get the token machines to become revenue monetization.
42:21
And so that's kind of the path forward I think of, you know, maybe the boring execution that happens for the model companies and the startups and the whole ecosystem altogether.
42:30
But Nvidia's side as you know being the fundamental core infrastructure it's pretty clear horse you know horses out of the barn for for the infrastructure they're building everyone's buying them people are like holy crap we got to have more power like it's it's you know you could see >> some of some of uh some folks on the timeline were bearish on the buyback.
42:55
Do you have any ideas of of better ideas uh for how to spend that money if you were running Nvidia than uh than than a buyback? So, okay.
43:05
Oh my god, I'm I'm in buyback discourse all again.
43:10
Like buyback discourse anyways has like a little bit of uh little bit of religion, but I think remember the buyback is a $60 billion authorization.
43:18
Um, an authorization is not a commitment to uh it means that they can buy you have to go get your authorization from your board of how many shares you're allowed to purchase and 60 billion for a company the size of Nvidia is like kind of a penny in the bucket.
43:32
They make a lot uh you know that's you know that's one year of profitability I think.
43:37
Uh no, let me make sure I get that.
43:39
Yeah, that is one year of cash from operations right now.
43:43
So that's actually not that much.
43:43
60 billion sounds like a huge number, but they just make so much money that that is a correctly sized buyback author authorization for Nvidia in my opinion.
43:54
>> I think um what should they do with that money is going to be one of the greatest questions of uh like all capital allocation history.
44:01
That same question came up with Apple uh came up for Apple when they were gang busters, right?
44:06
They didn't reinvest back into all this other stuff. They printed cash.
44:10
They bought back a lot of shares. stock went up.
44:15
>> The the most tangible example of financial engineering in our time. Um, >> yeah.
44:19
Didn't they return something like a trillion dollars? >> Yeah.
44:22
$1 trillion to shareholders in the past like >> dec it's it's actually kind of like okay so you can feel different ways about it cuz it's also kind of spooky like just if you are an active market investor who is listening to this you you can understand Apple's a stock that will not go down.
44:36
It like it is like it is against like it levitates.
44:38
It's like 30 times earnings.
44:40
earnings isn't even growing, but they just gush so much cash and they purchase re repurchase so much shares and they're such a huge part of the S&P 500.
44:46
Like you could make an argument that like Apple's percentage contribution of the P&L of like the S&P 500 from like 2010 to 2020 is like 25 like it's it's it's a meaningful amount of percent.
45:00
So the entire 401ks of the entire country got paid by Apple's buyback.
45:04
That's kind of sick if you think about it.
45:07
But on the other side, think they should launch a mobile phone or a social network. >> Mobile phone.
45:14
>> No, we we were just joking how like every company like gets euphoric like it's time to make a >> Well, all uh six out of the mag seven kind of have a social network if you count iMessage and you count LinkedIn and YouTube and Twitch.
45:25
Like Andy Jasse has Twitch, which is kind of hilarious. Elon has Twitter.
45:29
And we were thinking uh the obvious one is Jensen buys Tik Tok, but I think they got to do DJX cloud social network where you can just talk to other other fans basically. Yeah.
45:43
>> I I don't think I think Jensen's pretty strategic.
45:45
I don't know what he's going to spend it on.
45:47
I want him to spend it on something like inspiring and mindblowing where you're just like, "Dude, this is this is sick. You're a genius, right?"
45:54
But the reality is deploying like hundred billion dollars of capital, it's pretty hard.
45:57
That's not like walking around like that is like >> super hard >> buying a country like what are you going to do with it? >> Yeah. Yeah. Yeah.
46:03
I mean like the the best thing to do if you care about innovation is give the money back to your shareholders.
46:08
Let them invest in venture funds or let them invest in startups and and maybe don't try and build that functionality internally.
46:17
>> Yeah, capitalism would say that for sure.
46:18
I definitely think that you should you should swing if you see a fat pitch. Yep.
46:22
Um meanwhile you see all the hyperscalers who are plowing back as much money as they can into the into the neoclouds.
46:28
They are saying hey we are seeing a giant ROI.
46:30
So I think that that's like you know a fundamental question for Colette and Jensen that's very hard to answer.
46:36
I don't and you know I don't I don't think you could tell me what what would I do with hundred billion that's adjacent to Nvidia's business.
46:42
That would be a better business than what Nvidia does.
46:46
The answer would be >> maybe nothing honestly.
46:47
If you could purchase something that would be sick.
46:50
Um, also I wanted to make one thing before we continue.
46:52
Back on the social media thing, if I've learned anything on being on the timeline, dude, it's billionaires are just like us.
46:59
>> They just want to tweet at people >> get in fights. >> They love that. >> Yeah, it's amazing. >> True.
47:06
Uh, what what did you think about uh Colette Crest's comments?
47:08
She said, "We have been communicating in regards to the government.
47:12
If nothing shows up, I've got licenses.
47:14
I don't have to do this 15% until I see something that is a true regulatory document. So, they have a license.
47:22
Um, I think I think to me how I took that is they have they think that there's a high conviction they can sell H20s to a certain point.
47:33
That's my my reading of it.
47:35
Um, I do think that there's this weird spot here though.
47:39
>> Well, I think that that my reading of that was she felt that we're selling H20s and we're we're not just sending wires to to Uncle Sam yet. Yeah. Yeah.
47:46
I don't think they're sending wire.
47:50
Well, because here's the thing is like they have a deal at the top level, but no one has like the the administration hasn't gotten done like the bureaucracy of like, okay, here's the mechanics, right?
48:02
Um, so if they have licenses, they can send it.
48:05
Maybe they will hold it on, you know, they they have enough cash.
48:07
I think they can they can they can wire a little bit uh over.
48:11
I think they have they're good for the money.
48:13
Um, but yeah, I think it's just kind of it's a it's a complicated administrative thing, meaning that like they have what is in theory the deal, but no one has actually inked the mechanics of it, of how they're wiring it, >> and it could always it could always change.
48:28
>> What do what do you think could um if people were were bearish on just a small beat?
48:33
What do you think could could flip uh the timeline gigabarish?
48:36
Would it be just a a bad miss?
48:39
I think the other we we were talking earlier, you know, potentially hyper like language coming out of other hyperscaler earnings calls of saying like, hey, yeah, we're actually reducing >> orders, things like that.
48:53
That those those to me like it feels like one sentence in another hyperscaler's earnings call could send the stock down a meaningful amount.
49:01
But curious, >> I think what it would have to be is pretty much the explicit the explicit endorsement of everyone who's involved being like, "Yeah, this is a bad idea now."
49:15
Like we got to we got to stop investing, right?
49:16
Like um like meta >> like what happened with the metaverse. >> Yeah. Yeah. Exactly.
49:22
We're we're like all of a sudden it's time to get fit and we're you know maybe we shouldn't have spent like $10 million a year on metaverse and like did you guys know Horizon whatever that it was like the launch day >> the like do you know the launch day statistics? It's like really funny.
49:38
>> He spent like like I don't know let's just say $20 billion and like on launch day there were like a thousand people on >> like >> that's not a lot.
49:46
>> I mean I you could have just sent me a check in the mail.
49:48
I would have showed up for like a million bucks, dude.
49:49
It would have been better. That's wild.
49:54
>> Dogs just sitting there just >> I'm like I'm an act I'm a happy active user as long as these checks keep coming.
50:02
Um so >> the dog I think it's a belief that it's a bad investment and at the current time investment you know there's like a >> a vague vibe in terms of what is being bullish or bearish or what is investment appetite.
50:19
No one can really define it for me. No one really knows.
50:21
But at this current point in time, like if you're looking at the board, I think Zuck is bowled the f up, right? Like he is so bullish.
50:30
He's he's paying for all this stuff.
50:32
You know, Sam Alman, Sam Alman, dude, he's like, "Give me another trillion dollars and I will give you a trillion dollars of compute."
50:38
He's like, "Maybe there's a bubble, whatever."
50:39
I think most of the participants right now are pretty excited.
50:44
>> And I do want to like, you know, I I wrote about like the internet bubble actually like quite a bit.
50:48
Um, >> yeah, I was going to ask what what how much have you studied Broadcom specifically?
50:53
I was I was trying to look up I I don't from from what I could find Broadcom wasn't doing >> buybacks even during the the crazy heyday.
51:03
>> Buying a bunch of companies with their stock.
51:04
That was the the big >> Yeah.
51:05
But I don't think Broadcom is the perfect comp actually. Yeah. Um Yeah.
51:09
Broadcom was like >> Broadcom was a baby in the 2000s.
51:11
Um and then also Broadcom, the machine that is Broadcom got bolted together with um Huckan like >> you know the the actually capitalism's greatest hero.
51:24
He is so hardcore like he he his his whole thing is like >> you know did you know his entire company >> denominative determinism is crazy.
51:32
>> 50 people of it cover the entire uh organization of Broadcom.
51:35
It's like it's like he is the cut to the like cut to the core.
51:39
Um anyway, sorry this is a completion.
51:41
What do you mean 50 people?
51:43
>> 50 people is the entire IT department of like the 40,000 people at brought home. >> What? >> That's insane. >> Yeah. Wow, dude. >> Yeah.
51:54
And their revenue ramps were so humble.
51:55
It was like 100 to 200, then 200 to >> 400 something like that in the in 1998. Yeah. >> Yeah.
52:02
But that's like But you that's not the right company.
52:04
Cisco was the Cisco is Nvidia. >> Cisco is Nvidia.
52:08
That's the That's the comp.
52:10
And those revenue ramps were pretty nuts.
52:13
But I think the difference though is Cisco was not gushing cash like Nvidia was.
52:16
Like it's not even close.
52:18
I think they had like a 20% profit margin.
52:19
Um >> and also I think the difference too is during the internet bubble it was pretty clear that everyone was >> doing fraud effectively. Yeah.
52:30
>> Um >> with a lot of circulars, right? >> Yeah. Yeah. Yeah.
52:33
The circular transactions that was a huge pretty well-known thing.
52:37
I actually talked to a guy who quit his job at one of the the the networks and became a hedge fund guy.
52:44
Was like, "Yeah, we're shorting these stocks." The the revenue zero.
52:47
Like like he literally left to go join the financial industry to short stocks. Um >> wow. That's wild.
52:52
>> Um I don't think >> that's a true bear.
52:54
That's a true bear right there.
52:56
>> That's conviction, you know?
52:56
That's like the the inverse Leupold actually.
52:57
Um >> Um So I I just don't think we have that widespread >> like craziness.
53:05
>> like craziness. that the internet bubble was in a lot of ways like websites barely worked man you could barely use stuff I mean I'm I don't know about you but I am using chatb here's an example so yesterday Satia hit the timeline and and dropped the thread on how he's using GPD5 and co-pilot everybody was
53:25
immediately just like bearish bearish like why why is he post posting use cases >> I think he's just flexing on everyone being like I have the code to GPT5 like I got a copy >> um but but it says It does say something that that he's just showing how a product is actually valuable to him in his work life and people are like bearish. >> It's very moderate. It's a very moderate >> It's very moderate.
53:45
It's a very moderate thing because he's not saying like oh yeah like I used I use GPT5 to make decisions as a CEO.
53:51
No, it's like it's like I use in this narrow use case.
53:53
It just reminds me about this particular thing.
53:56
Creates meeting notes like very practical like you know one iteration forward of the technology cycle.
54:01
He's not saying, you know, oh, I'm I'm on the beach because GPT5 runs Microsoft now.
54:08
>> Yeah, I have my coding swarm running Microsoft instead of me. >> Yeah. Yeah.
54:13
>> I don't think he's I I think it's um >> I think another part about the tech bubble that really make and like look, stocks are expensive for sure.
54:20
I'm I'm going to like hedge like you know, no one knows the future. Markets are humbling.
54:25
That's something I really want to like things can happen that are just like crazy outside of like what you know.
54:30
Dude, the 2000 tech bubble was like pretty crazy, like really really really way way crazier in a lot of ways in terms of just like raw speculation.
54:37
Um, the revenue accelerations you're seeing from hyperscalers should give you some credit that like there is revenue happening.
54:42
People are losing money on selling tokens, but like this isn't this like totally fake business model yet.
54:50
Um, but but just like history, what happens is and there's a really good book called Technological Revolutions in Financial Capital by Car I can't say her name. Perez Car Yeah.
55:01
I don't know why I can't say Carl. >> Carlo Perez. Thank you. >> Yeah, >> Carlo.
55:05
You got to throw a little accent on there and then it comes out easier. >> She's great.
55:10
>> But but that I think that that's like a really good way to think about it is like this stuff will have a blowoff.
55:15
Like capitalism works via these like concentrated blowoff booms that create a new technology.
55:21
Now, are we possibly in one? Yeah, for sure.
55:24
I mean, we're doing real investment, but we don't know.
55:26
You know, when you're building a new industry, pretty much the supply demand curve is unknown to anyone.
55:34
No one knows what the actual demand is.
55:36
They know it's larger than the supply today, so they build more supply.
55:39
But then at some point, you figure out where demand is and you're like, "Ah, we reached it."
55:45
and then you completely overshoot it and then you're like crap. >> Yeah.
55:49
It'd be interesting to to look back of of how analysts at the time were were looking at the car being like not everybody's not going to have a car.
55:57
Like people like every family in America is not going to have a car and then and then >> over who needs one? Who needs one? It's so expensive.
56:04
>> You only use it here or there.
56:04
I can I can ride the bus, you know? >> Exactly.
56:09
>> What about uh Daario's math was going viral earlier this week.
56:12
He was talking about how uh if you look at uh if you just look at the basically the P&L of of a foundation model company, it looks really bad because all the cohort stuff. >> Yeah.
56:25
You have exponentially increasing costs, but if you look at each model as an individual company, it's like you invest some money and then you make more back.
56:34
You invest some money and you make more back.
56:36
Um do do you think that >> that made perfect sense to me, but I don't know.
56:41
don't know. Yeah, but every but it's the interesting thing is you have >> fin twit which is just like everything's bearish and then you have tech which is oh that makes that makes sense like maybe it's a little overheated but >> they should do more they should 100x every year
56:57
>> in certain parts you're telling me that you're making that return on a cohort let me give you hundred billion dollars >> yeah of course I think um look and and and I'm guilty of this as well you get to sound smarter when you're bearish for sure and vent is inherently bearish. Um, Um, for sure.
57:12
That's that's part of it.
57:14
>> Um, I think >> I think this >> this is going to be really interesting because every step of the way people are going to be have been skeptics and probably will continue to be skeptics, which is like pretty great honestly if you if you're talking about like a true capital formation bubble.
57:29
Um, one of the reasons why 2000 was so intense was like, dude, you I read a book.
57:33
I forget it's like um I can't telem dude, it talks about how like infinite bandwidth is like infinite information.
57:40
Like it's like a real vibe book. Oh, sure. >> It's pretty crazy. It's pretty nuts.
57:44
Um, and I just don't think we every I think we haven't had this like new age belief that ASI is going to change everything.
57:55
Like, you know, the tech people believe that, but everyone else is like, no.
57:57
And so I think as long as we have that skepticism, it kind of prevents some of the worst aspects of like let's say a true bubble.
58:05
And I think the real question to be asked is how meaningful is the spend that can be converted into revenue because >> if these if those tokens can be converted into revenue via like agentic purchasing like the chat the GPT5 router example >> those are big markets man all of travel all of purchasing all of consumer dude trillion dollar markets get a take rate.
58:27
Do you think uh GPT5 or or Chat GPT will eventually go free only?
58:30
Uh because I was thinking about it like I love the $200 a month version.
58:36
I'm hitting the Pro and 03 Pro constantly with like basically everything.
58:40
I don't know if I'm making the money or losing money, but >> money. Yeah.
58:45
But it feels like it feels like something that uh in a few years like people will be like, "Oh, well like you know your stated preference is that you don't want to use it, but you still use it so it's fine."
58:54
Um, and and it just feels like that might be the way it goes.
58:59
And I'm wondering if there will ever be like again this era of like luxury software, like a really expensive thing that is really just for a narrow segment of the it feels like a consumer app, but it's just for like the tech elite and then it's gone. I don't know.
59:14
What do you What do you think? >> I I I don't know.
59:15
I think it it is pretty cool at this moment in time.
59:17
I definitely feel like it feels unsustainable because we know prao curves exist all around us, right?
59:24
Have you ever heard the statistic about like I I want to say it's like Clash of Clans?
59:29
Like the 1% of people who were like really into Clash of Clans were like 35% of all revenue. Yeah.
59:34
Um, and so if you don't have a usage based, like a usagebased take rate, what's going to happen is the hyper core users are just going to use the hell out of it and you're going to lose money because those are, you know, that's the market, dude.
59:50
The guy who's hyper addicted.
59:50
It's like, you know, >> you know, you're not >> cash and with with chat GBT, you could be on a $500 a month plan and they can still monetize your purchasing that they're driving. >> Yeah. Yeah.
1:00:03
So maybe, oh, we won't monetize like the the >> purchasing activity that we're driving because you pay.
1:00:10
It's like, well, you don't really doesn't really matter to you >> if they're taking a cut on the back end. >> Yeah.
1:00:15
Uh, have you have you thought started thinking about the market size for uh romantic companions or AI companions?
1:00:25
>> I haven't, but I'm telling I if based off of Foro's feedback, it's big, dude. >> I know. Yeah, it's crazy. I didn't expect that. >> Killed my boyfriend.
1:00:36
>> I thought that was just like a couple people on a Reddit like just a just a very niche subset like less than 1% of the audience, less than 1% of the users.
1:00:44
>> That's the thing, man, is there's there's these paro curves all around us.
1:00:47
Like that 1% is probably like in this hardcore niche using 40 in this like in ridiculous way, right?
1:00:55
>> That's what I saw on the on on the day that chat launched.
1:00:57
We obviously had a ton of different guests on talk talking about, you know, the product and everything, but I was just refreshing Reddit and every every single person was like, I'm unsubscribing from the $200 a month plan in protest like over and over and over. >> Crazy. >> Lots of people. >> Yeah, it was.
1:01:15
I mean, we we can go back and >> I mean, it's it's a it's a unique it's a unique dynamic in the world of like romantic or adult content because typically there has never been price discrimination with zero marginal cost in that market.
1:01:31
Like you have zero marginal cost on just the adult content websites, but you don't have price discrimination.
1:01:36
It's usually like a Netflix type subscription if you can get any money out of people.
1:01:39
Or you have only fans, which is price discrimination.
1:01:43
You can have a whale that 1% pays 35% of the revenue, but it's not high it's not as high margin because you're passing it through to the creator.
1:01:52
And so this is the first time where you could potentially have a situation where you get a whale who's hooked on buying virtual Birkin bags for their virtual girlfriend and and you are instantiating those Birkin bags to the tune of $100,000 of real money that has actually zero cost.
1:02:09
That's why you can be frustrated with Elon's advertising through his account recently, but you can't you you can also make say realize like, hey, he might be super rational if he's like there's a few billion of ARR in this product >> and I think Google's going to stay away from it and I think eventually >> and if he hates OpenAI and just wants to like >> I I actually I think it's I I hate it I hate to say it's a good strategy, dude.
1:02:36
It's a really good strategy because I think um one thing that it it's so like the one thing that the the revealed preference from five is that clearly the virtual girlfriend economy is much bigger than we thought.
1:02:47
Um and then the you know using that >> the other thing is is the the market for people that I think everybody was overestimating how big the market for reasoning models are and because from what we've heard it's like 95% plus of people are just using chat GPT like Google >> or they're using you know >> Yeah.
1:03:12
And it and it's not heard some I heard some rumor that Elon insisted that that the that Annie be able to use the reasoning model instead of just and it's like way more expensive. >> She needs to think.
1:03:23
>> She needs to be able to do the math.
1:03:23
She needs to be able to do the math.
1:03:27
>> You have to trust your Annie.
1:03:27
You have to trust your girlfriend.
1:03:29
>> She's analyzed she's analyzed her love for you from first principles and >> it's it's real. >> Yeah.
1:03:35
I mean, I I guess there's some rationale there, but there's no there's no evidence in the market that that actually results in like lower churn for romantic companions.
1:03:42
But I think Elon just from first principles being like, I want the I want the romantic companion to be really be able to >> be ableie must be able to do novel physics. >> Yes. Exactly. Exactly.
1:03:53
>> Well, here's the thing though is I think maybe what we're what we're struggling with is we're we're focusing on the wrong thing cuz now with the reasoning chain, we can do RL, right?
1:04:01
What if you can have the best freaking girlfriend?
1:04:08
You can now you can RL your way to the best companion.
1:04:10
I don't think that that would be possible without reasoning.
1:04:12
So, let's think about that, you know. >> Yeah. Yeah, that makes sense.
1:04:16
Maybe setting up a virtual environment uh with you some verifiable reward.
1:04:21
I don't know what the reward would be.
1:04:25
>> Well, John John's other take that I think is is real is at what point like imagine somebody has like their AI companion that they've spent hundreds of hours with and then the companion says, >> "I want a new dress." >> Yeah. >> And it's a $100.
1:04:40
It's like a digital skin, right?
1:04:42
Like >> if you don't get it for me, maybe I'm just going to bounce.
1:04:46
>> I'm going to be a little bit I'm going to be off. I can be upset. >> I can be upset. Yeah. Yeah.
1:04:49
The reasoning works >> and Okay. Okay.
1:04:51
So, dude, the digital skinning, that would be really sick, honestly, cuz as you guys know, that's a proven business model, right?
1:04:56
Dude, like I hate to say it, I I have paid for skins and games, man, right?
1:05:01
You can you can you can pay for skins in games really easily.
1:05:05
You're like playing this all the time.
1:05:06
I mean, this in the Only Fans like industrial complex, this for sure happens, too. >> Super real. Super real. Yeah.
1:05:12
I mean, >> I mean, it more real, right?
1:05:14
It's like >> Yeah, I played Counter-Strike for years.
1:05:18
I maybe paid like $10 at some point, but I I got so much value out of that game.
1:05:23
Finally, it was like, "Wait, I can have like flames on the gun. Like, this is sick. What's 50 bucks?"
1:05:26
Like, that's what I would pay for just a normal game.
1:05:30
And I'm getting that much value. So, it was a no-brainer.
1:05:31
Um, >> you would be a whale if you were really really gaming today. >> Oh, yeah.
1:05:35
If I had the time to play the games, I would win 100% whale.
1:05:39
>> Get this man a CS GO uh watch.
1:05:39
Yeah, >> you need you need to log in on Valerant right now.
1:05:45
Everyone tell get this guy on Valerant right now. Give him a credit card. Get him some skids. >> Yeah. Yeah.
1:05:50
Get the Get the Epic Games guys over here.
1:05:53
Pitch me on joining Valerie just so they can hit earnings.
1:05:57
>> Do you think uh do you think Med uh do you think Meta is paying MidJourney at nine figures a year as part of that deal they announced? >> Oh, 100%.
1:06:05
I I don't know what the actual economics are, but like I think to me >> I like how they just announced it like casually, but like clearly it's like a massive like just a massive deal.
1:06:16
>> Well, it it probably not so massive that it needs to show up in like disclosures, right?
1:06:21
I mean >> under 10% of revenue you can probably >> which is a big number for them. >> Yeah. Huge huge number.
1:06:28
>> But man, David Holes, what a what a tear. What a tear.
1:06:30
>> I if I had to guess actually um Zuckerberg probably tried to buy it. Yeah, of course.
1:06:36
>> And Pete definitely tried to buy it and Mid Journey is probably too big enough to be like, "No, no, no, no, no. We'll partner with you.
1:06:41
We'll get distribution, but we're not for sale."
1:06:42
Y >> So, I think that that's probably what happened, but he's like, "Okay, well, okay.
1:06:47
Well, how about we have some special preference, right? Access."
1:06:49
And we share economics and some future thing.
1:06:54
I don't know what the hell that looks like. And then like, great. >> Yeah.
1:06:56
My my read is that it was probably as material as an exit just spread out over some period of of time, >> maybe forever, >> which is which is amazing outcome for the midjourney team and and honestly >> great for Zach and and >> and great for the product.
1:07:11
Like I'm going to enjoy using MidJourney photo filters on Instagram more than whatever they were cooking up before. >> For sure.
1:07:20
>> They're definitely on the frontier.
1:07:20
Um yeah, one last thing on Nvidia.
1:07:22
Um and we'll let you go because I know I know this is last minute.
1:07:25
Um uh how are how should we be thinking about automotive?
1:07:30
I noticed that they had you know they have this kind of like the order of magnitude business where I think it was like 40 billion in the data center 4 billion in gaming and then like 400 in automotive and with the self-driving car narrative it feels like Whimo were finally here and yet Tesla's matched up with Samsung.
1:07:48
Google obviously has the TPU.
1:07:50
I don't know if there's TPUs in the Whimos, but it just feels like Nvidia is not like really taking that very seriously maybe or maybe they will be and all the OEMs will come.
1:07:58
But it it's like Nvidia seems to be good at you know gaming big huge chips in the data center but then nothing really in mobile on you know mobile gaming and nothing in the car really materially yet.
1:08:10
But how should we be thinking about like the other areas that Nvidia could potentially chop down?
1:08:14
So, I definitely don't think there's a ton of GPUs in production uh in production cars.
1:08:22
There's definitely a lot that happens.
1:08:23
I'm sure there's like if I had to guess their go to market is something where you have some amount of distributed compute that also works with your data center cuz like you know >> Jensen is data center to the rest of the world, right?
1:08:35
And so I think that that is probably their most exciting part, but I think at least historically they've done a pretty bad job.
1:08:41
Maybe not bad, but I just don't think they had like that moment. >> Yeah. >> Right.
1:08:47
Like I think they've they have really good technology, but their go to market just hasn't hit the like the magical moment.
1:08:53
Like Qualcomm actually, ironically, is doing very well.
1:08:55
They've acquired their way in, I think, especially acquired, but also organically.
1:09:00
organically. Um, and I can't speak specifically to like, you know, the Orin or whatever pro like whatever specific automotive skew, but in the businesses that I do follow that have been really successful in terms of automotive, I
1:09:12
think they've been a totally different tra like a go to market and that that is mostly by pandering to OEMs and really adopting their stack and trying to suck up to them versus Tesla obviously wants to do everything from first principles on their on their own. And so I think
1:09:25
And so I think they're like, "No, no, no.
1:09:27
We want to have this as a competitive differentiator.
1:09:30
So I think there's just some kind of like go to market and let's be real man.
1:09:34
I think if we're talking about like you know maybe if we're talking about like hey if I was actually a CFO of of Nvidia and they have like an opportunity dude acquire into the automotive market you could you could crush cuz you you would then have the whole thing.
1:09:47
But in at least last administration no way in hell.
1:09:50
Maybe this one they're open for it.
1:09:53
But if it's if there's a China Samur review it's it's as good as dead.
1:09:56
That's the other problem. Um, sorry.
1:09:58
Is that >> you clarify that? China review.
1:10:00
What were you >> China SAMR strategic something something market review. Yeah.
1:10:05
Um, so essentially the antitrust reviews that happen in the United States get approved, not approved, right?
1:10:12
>> There has pretty much never been >> a chip.
1:10:16
>> There are no more chip deals and like you should never think that there's going to be a new chip deal.
1:10:18
Every chip deal that happens almost always gets struck down by by the Chinese market specifically.
1:10:26
A good example is the Intel Tower semi deal.
1:10:27
Um that would have been sick for Intel.
1:10:29
Um definitely was a fan, but it became pretty clear that >> like you know, give me the tit for tat, right?
1:10:37
The Chinese regulators are going to be like, why would we approve this if we've been effectively at like a cold war at a like a semiconductor geopolitical level.
1:10:46
geopolitical level. So you should effectively assume if there is a Chinese business because if you if they if you say if they say no you they effectively say okay all your business in China is mine that's like a very very quick high level and that's pretty hard bill to swallow and so they've been blocking
1:11:04
these deals so effectively especially M&A in >> chips and semiconductors has been very close to zero flip side of the of like how like Figma I got antitrust review for uh for Adobe in America but was blocked in Europe and Europe's been blocking but with semis it's much more about the Chinese side reviewing. Got Got it. >> Yeah.
1:11:27
And I think the answ the baseline assumption is it won't happen if there's Chinese segment. That's mine at least.
1:11:36
>> Couple quick questions.
1:11:36
Uh Bill Bishop in the uh Substack chat says Trump approved modified black wall for China.
1:11:44
China's still not buying.
1:11:44
I don't have any context. Do you?
1:11:47
>> This is quite This is No, no, this is the B20.
1:11:51
This is the rumor this morning. Um >> I think or B30.
1:11:54
I don't know what the numbers. Okay.
1:11:56
I think and this is a great question, Bill.
1:11:59
I think this is the And I think Bill more than anyone else would appreciate this is what Chinese companies say publicly versus what they do privately are often very divergent.
1:12:09
And there was actually a really good podcast that my friend shared me and I did not.
1:12:13
I asked them to TLDDR it.
1:12:15
But it it gives an example of how effectively what they do is in in in person or like they effectively knowingly act in bad faith.
1:12:21
So they'll say, "Ah, yeah, we we'll we'll comply with this and they won't comply or they'll say, "No, no, no, don't do this."
1:12:28
But they'll also stockpile.
1:12:28
So I I don't know if the official statement makes a lot of sense because at this point in time H20 is like majority of Chinese imperence is probably done is probably done on an Nvidia GPU anyways whether if it's smuggled or purchased legally.
1:12:45
I think odds are it will get purchased the B 30 will be purchased.
1:12:48
It obviously the official party government view is like we don't need this crappy American technology because we are going to have our own destiny.
1:12:58
But in private, if I had to guess, they're going to be buying it and they will also be building it at the same time, right? Like that's it.
1:13:05
The plan has always been to do both.
1:13:07
And they've consistently done it um done that specifically in the semiconductor industry.
1:13:11
And you're starting to see where um you go from a low-end copier to actually starting to go up the tech tree.
1:13:17
And we're we're already seeing it.
1:13:19
A good example is Applied Materials um which is a semiconductor manufacturing equipment company, Semicap.
1:13:23
um they are starting to lose really hardcore in the low-end market in China.
1:13:28
And part of that is actually not even just the technology being worse, but rather the copying is getting better.
1:13:34
And so they they they're going to do both.
1:13:36
They'll definitely buy it and they'll say, "Oh, no.
1:13:39
We're not going to use it for these things, but probably use it anyways."
1:13:42
And then slowly go up the technology tree themselves.
1:13:43
So, >> how suspicious should we be of that uh of that that Singaporean buyer?
1:13:47
Colette called it out on the call uh saying it was US approved already.
1:13:53
Is is that should people be reading into that as much as they are on the timeline?
1:14:00
>> Um >> I think I think it's not a bad thing to read into is a small amount of money.
1:14:07
If I had to guess, it went to Joro.
1:14:09
So, it's like a Chinese customer in in inside of a non-Chinese unrestricted place.
1:14:15
There's a lot of different ways they can skin that cat.
1:14:16
So, that's >> um final final question.
1:14:18
Uh Mark Cuban replied to one of our newsletters on Intel.
1:14:24
He said, "Maybe I misread Intel's SEC filings on the matter or maybe they have changed."
1:14:28
But based on my readings and a confirmation from Chad GBT, let's give it up for Chad GBT.
1:14:32
The Department of Commerce got warrants for Intel stock that can only be exercised if Intel sells 50% of its foundry.
1:14:38
In that event, they get Intel shares.
1:14:40
If within 5 years, Intel does not.
1:14:42
The Department of Commerce gets nothing.
1:14:44
In all cases, Intel gets all its compromise chips money if they live up to that agreement.
1:14:51
Anyone else read it differently? >> That is correct.
1:14:54
So, specifically what that is doing is aligning and also by the way, I've been trying to shop this take around the Trump government intel investment is good.
1:15:02
In my opinion, it is a good thing.
1:15:04
I know people are like anti they're like ah it's communist and like you can be angry and like whatever >> is the thing that Mark's alluding to is that only the poison pill or is that >> that is that is only the warrant side it's specifically and dude it was in the press release talking about like over 50 uh you know the second they don't own 50% um the government will have warrants for the rest of it.
1:15:22
So this in my opinion if you think about it aligns the government with like you this happens often in financial transactions where the warrants are given as an upside kicker for something you want to happen.
1:15:35
So um what does this sound like and what does this align to?
1:15:37
It aligns the government with Intel IFS being an independent subsidiary which is consistent with what Frank Yuri who is the chairman of the board who is like the guy I have a personal beef with at this point.
1:15:49
this point. We've written so much about how the board sucks blah blah blah blah um uh really wants to sell IFS I think and Li Bhutan does not want to but it's pretty clear the future is separate and I think the investment is good because Trump can essentially force people to give them orders which to circumvent
1:16:07
tariffs >> and then over a long period of time the real problem with Intel is they don't have customers and they also don't have like an ultimate backstoppper the the original plan was that Intel would be the the the first customer and ultimate backstoppper you don't believe in either of them being a good option. Now you can
1:16:20
Now you can have the US government kind of broker that relationship for you.
1:16:23
I think that that's a path forward for Intel and that's the first one we've had in a hot second.
1:16:28
So >> are you good on time?
1:16:29
I have I have more questions.
1:16:31
>> I I I I do have to go after that that take. Okay.
1:16:34
>> But um I do appreciate you guys.
1:16:34
Uh I love I love this place honestly for invite me back whenever.
1:16:39
Um but yeah, appreciate you guys. Talk to you.
1:16:43
>> We will talk to you later. Have a good one. >> Have fun out there. Bye. >> Uh back to our show.
1:16:46
Let me tell you about Vanta.
1:16:49
Automate compliance, manage risk, manage risk, prove trust uh continuously.
1:16:54
Vanta's trust management platform takes the manual work out of your security and compliance process and replaces with continuous automation whether you're pursuing your first framework or managing a complex program.
1:17:04
Uh thank you everyone to the to in the chat for engaging.
1:17:06
I saw some funny commentary that the Substack chat is maybe the the Winnie the Pooh Bear with the tuxedo on and the boys in the YouTube chat are having a wild time talking about Fortnite and uh and uh romantic companions.
1:17:23
>> Anner in the chat says not quite one hour this time with semi analysis. Close enough.
1:17:26
Yeah, we always >> try to get to the 60. I'm trying to be polite.
1:17:31
>> Um we should switch to uh potentially more important than Nvidia.
1:17:33
Will Will Depw says he's going to dwinkify. Current weight is 161. 2 pounds. See you in 8 weeks. >> Oh, wait.
1:17:44
Let me check the date on this post.
1:17:46
Just 3 days before bulking season starts. Interesting. September. Sepmber. Gotten the memo.
1:17:53
>> We got to send uh Nick, can we send uh some mass gainers to Will? Let's get his address.
1:17:58
Honestly, we might already have one.
1:18:00
>> Let's send Yeah, let's send a lot of 8 weeks supply of mass gainer.
1:18:02
We'll send him some creat we Yeah, we should get a whole the whole whole army of supplement providers to put together a package to bulk him up. Yeah.
1:18:14
>> Uh I I I think I think he's going to look great >> and we're going to be up in the bay.
1:18:18
We'll have to get a lift in with Will ASAP.
1:18:20
Um uh John Holtzquis says uh there's he's sharing a screenshot.
1:18:25
An F-35 pilot held a 50-minute airborne conference call with engineers before his fighter jet crashed in Alaska.
1:18:32
Uh, and he says, "Feel the same after my conference calls." TBH.
1:18:37
Um, >> it's a crazy story.
1:18:40
>> Um, yeah, the the pilot ejected, so it was fine.
1:18:43
It was just a total total loss of the of the plane itself.
1:18:47
>> The F35 does not look good for the F35.
1:18:48
Um, Kevin Quac says, "I entirely judge the Stripe podcast on whether they have actually finished at least one beer by end and refuse to watch one until that's true."
1:18:57
>> I did scroll through the one with Scott Woo and I was like, "Okay, the beer's going down. Beer's going down."
1:19:01
Wait, uh, Tyler, what do you got? >> Yeah. Okay.
1:19:04
So, so I looked at the Scott Woo one.
1:19:05
I went all the way to the end and you see in the frame it's him talking and then there's four basically full Guinnesses.
1:19:10
Like three of them are literally full and then one of them is like maybe down to like the logo. >> Okay. Interesting. Unbelievable.
1:19:15
Well, also, uh, Scott said when he posted, he said he he went non-alcoholic because he had to get back to work, which I respect, but I feel like even if you're drinking a pint of non-alcohol, even if you're having a cheeky non-alcoholic pint, you should finish the pint, right?
1:19:31
>> Also, John Cullison should be a dog when it comes to Guinness, right? >> I mean, >> I agree. I agree.
1:19:36
I I think the whole Yeah. Yeah.
1:19:38
The whole conceit of of like Hot Ones is that like you actually die because you you're eating the hottest wings and that's what brings out the hilarious reactions from everyone from Shaquille O'Neal to, you know, whoever else is on the show.
1:19:51
Like they have fantastic guests and the beauty of the show is that the the hot Well, you can't hide from the heat.
1:19:58
Um but it it put it throws you off and so you give more candid conversations and it's funny and it puts you in this un >> Well, yeah.
1:20:06
So the so the challenge is they they publish the podcast >> during the middle of the workday. Yeah.
1:20:13
>> So if they were hitting publish and and and the boys are getting sloshed. >> Yes.
1:20:17
So they I mean they need to do a Friday night a Saturday night because a lot of people tech people would be down to have a cheeky pint but on a Friday.
1:20:25
>> But it must be on it must be on a the start recording. >> Yeah. >> On Friday evenings. Make it very clear.
1:20:32
Maybe release it on Friday evenings. >> Yeah.
1:20:34
I think uh >> I saw Will Wilmanitis had a good um response.
1:20:38
I think he said he wants to see five to eight Guinnesses and all split the G every time on the first sip.
1:20:44
>> What is >> I can >> Oh, split the G is the Guinness.
1:20:46
You're supposed to drink. >> Yeah.
1:20:49
On the Guinness glass there's the logo.
1:20:50
On the first sip, you have to get down. >> Okay. Okay.
1:20:53
Well, they did they did open.
1:20:55
I mean, Cheeky Pint uh implies the existence of uh of a show called Cheeky Rack. Correct. Yeah. >> Yeah.
1:21:05
I I think this might be the one where Yeah.
1:21:07
where you where we we have a tech person on.
1:21:10
We interview them about financial control and and projections and capex spending and depreciation schedules while crushing a 30 rack of Bud Light.
1:21:21
>> Yeah, >> I think that might be the move.
1:21:23
>> That might be that might be what we something there.
1:21:25
>> There's something There's something there. >> Cheeky rack. >> Cheeky rack.
1:21:27
It just has a nice ring to it. Shout out to uh Ilhan.
1:21:29
Ilhan over at Boston University yesterday was watching with six of his friends from their dorm today. They got 10 >> 10. No way.
1:21:41
>> The team you guys >> the team got to see it.
1:21:44
>> Welcome to the stream.
1:21:44
Uh uh get all 10 of you folks on graphite.
1:21:47
dev code review for the age of AI.
1:21:49
Just go sign up right now. Create accounts.
1:21:51
You can get started for free.
1:21:53
Graphite helps teams on GitHub ship higher quality software faster.
1:21:57
Honestly, if you're in college, you should create an account and then you're at least familiar with this.
1:21:59
If you get into the workplace, you can be like, "Yeah, I I I'm already AI enabled."
1:22:04
There's been a million articles about how there's this delta in early stage hiring between uh like like early stage, it's harder to get a job.
1:22:12
It's harder than ever to get a job out of college.
1:22:13
But the AI enabled folks who are able to say put on their resume like I know AI skills and I'm I can use AI tools and get more leverage out of them.
1:22:23
uh not have an >> all three all three of our summer interns actually made >> yes >> made things as part of the application pro process without being asked we didn't say anything >> I mean Nick over there was saying he was vibe coding yesterday and I was like really like we didn't hire you as even a
1:22:40
programmer like you did not market yourself as a as a as anything related to to technology really and and you've been doing a fantastic job uh doing what I expected you to do but then vibe coding was just like added on uh the production team is always troubleshooting stuff using AI. >> We're going to give Nick a mic soon.
1:22:55
>> We're going to give Nick a mic soon. >> Okay.
1:22:56
Yeah, we we'll get everyone a mic. Uh anyway, >> legend. >> Uh >> continue.
1:23:01
>> Sucks at PowerBottom Dad.
1:23:01
Uh with an absolute banger.
1:23:04
You're scrolling on your phone. Slow day online. You look up.
1:23:09
Your kids have moved out of the house. You're 65.
1:23:10
Your parents are long gone. Panic takes hold.
1:23:13
You want your time back, your youth back, but it's too late. You look down. Three new notifications. How exciting. >> Wow.
1:23:21
that this hits like that Rick and Morty sketch about the the Roy like whole life flashing behind your eyes. This is crazy. Yeah.
1:23:30
Uh remember folks, you got to touch some grass. Always grass. >> Yep. >> Touch some grass. >> Keep it on you. Keep it on you.
1:23:39
>> Thank you to the Ketone IQ folks for sending over some of these.
1:23:44
>> Yeah, we're going to be we're going to be taking ketone shots later.
1:23:47
>> That guy wound up going to the same gym as the founder, which is cool.
1:23:49
Anyway, uh >> Dylan Patel uh says, "Interesting coincidence that Caner Fitzgerald has first question on Nvidia earnings after the H20 is unbanned."
1:24:02
>> Put on the tinfoil hat course.
1:24:03
>> Howard Lutnik is a former chairman and CEO >> and his son runs the firm now.
1:24:06
So, >> Fitzgerald clearly that's a good spot.
1:24:10
First question on the Nvidia earnings.
1:24:13
Yeah, I I do wonder uh as I was listening through the the earnings call, um I would have loved to get semi analysis folks in there asking questions.
1:24:21
I would love more more media folks uh on the on the call asking questions, but it seems to be it seems to be restricted to uh you know traditional sellside analysts.
1:24:29
I wonder if that's like a hard and fast rule or if that will shift as like you know the the the sellside banking world kind of de uh disagregates a little bit because a lot of what Dylan Patel and the folks at semi analysis do is is very sellside research adjacent.
1:24:47
It's in fact many in many ways it's it's superior uh because it's more focused.
1:24:51
Um anyway um we talked about this Sam Alman said their AI may be in a bubble uh and Dr.
1:24:56
Periq Patel says uh MFR has been telling us we are on the brink of AGI for the last three years and the moment he ships a bad model he says we're in a bubble. Uh not quite.
1:25:07
I still don't understand where that where that question where that actual um bubble um like topic came from.
1:25:15
But at the same time, it's different to call a bubble when you're when when the aggregate value of all when the aggregate value of all AI stuff is at like, you know, 50 billion and then it 10xes in a year like that is a different that's a very different environment. >> Yeah.
1:25:32
I mean, uh, OpenAI with with close to a billion weekly activives or or whatever, >> a billion a month in revenue, >> they'll be fine.
1:25:42
It's it's the found it's the number 10 through 50 labs that have no revenue or no users that are are the ones that are really going to struggle.
1:25:54
So >> it just feels a lot it feels more it feels less like I mean there's there's elements that feel like do but there's also elements that just feel like 2010.
1:26:03
>> It's like what was going on in 2010?
1:26:04
There was like >> kind of a bubble inflating and there were hot startups that got overvalued.
1:26:10
ultimately there was like a power law in a lot of the things that came out of that era.
1:26:13
You know, you got Facebook at a trillion or whatever and then and then kind of like you know the next biggest social network was onetenth and then the next one was onetenth of that and there was a lot of B2B SAS that got built for point solutions and narrow use cases. So I don't know.
1:26:29
Um, I think that I think that uh that talk with uh Doug overall was pretty white pelling and pretty pretty like uh I don't know what's what's in between a white and a black pill like something just like even keeled.
1:26:41
I felt even keeled after that.
1:26:44
>> Uh >> anyway um >> uh 80% chance cuts rates next month according to poly markets.
1:26:54
Uh let's pull this up and make sure that that is >> decreases interest rates.
1:26:57
Now, this this like somewhat should be priced in because I feel like there there have been uh slight interest rate decreases already happening.
1:27:05
The the question is just like would they cut rates more aggressively?
1:27:09
>> Well, I don't want to read too much into this, but there was some reporting from the Journal about Trump's mood >> and uh you could potentially read into this with this poly market.
1:27:20
Apparently, Trump wants to be at the White House more frequently this term.
1:27:25
blaring music with the doors of the Oval Office.
1:27:29
>> Do you have this article?
1:27:30
>> Uh, working later into the evening and telling >> Can you pull this article up?
1:27:35
>> I I I I want to I want to read through the full thing if we have it. Oh, wait.
1:27:38
Did you just have a long post because um I have to I have to run for a second.
1:27:42
So, if you can read through that, I'll be right back. >> Yeah, let's do it. >> Let's do it.
1:27:46
Um, in Trump's second term, a Boulder president charges ahead unchecked.
1:27:53
Uh that was where this quote is coming from.
1:27:55
Uh this article is going to be fairly political, but this is not a political reading.
1:28:01
So some aids to Donald Trump warned the president that building a ballroom at the White House would force them to tear down part of the East Wing and disrupt daily operations and tours.
1:28:08
Trump said he would build it anyway, and the contract was given to builders chosen by the White House.
1:28:14
In his first term, administration officials regularly curbed Trump's impulses on matters big and small, including on tariffs, immigration, and controlling the Federal Reserve.
1:28:22
In his second term, Trump has been surrounded by fewer people who try to dissuade him, according to officials, Trump allies, and observers.
1:28:29
I think he's learned that that there is not much that can really stop him from what he wants, said Mark Short, who was Trump's director of legislative affairs in his first term.
1:28:39
Uh, in recent days, Trump renewed a call to end mail and voting, announced a new policy of coercing local governments into abandoning cashless bail policies, threatened to send the military to Baltimore, and said he'd like to send and he'd like to send it to New York and Chicago as well.
1:28:53
All of which pushed the bounds of his authority.
1:28:57
In one of the most aggressive steps in that direction, he tried to remove Federal Reserve Governor Lisa Cook from her post on Monday, setting up a conflict with the Supreme Court, which has recently suggested that the central bank is protected from direct political manipulation.
1:29:11
Some of his new directives are encouraged by advisers, while others appear to come from Trump himself.
1:29:15
Seven months into his second term, Trump has taken to rifling more frequently with authoritarianism uh after positing during the campaign he would be a dictator only on day one of his presidency. >> Such a wild quote.
1:29:32
>> Wild about the uh the music >> um >> playing music with the doors open or something.
1:29:38
I want to know what music he's listening to.
1:29:40
How closely does his playlist match the uh the campaign playlist?
1:29:45
And was Trump featured on the Panama playlist?
1:29:48
I want to see his Spotify.
1:29:51
>> That's a good question.
1:29:53
>> I don't think they found him.
1:29:53
That would have been like headline. >> Yeah.
1:29:55
The crazy the other crazy line in here, and I I hadn't heard of this before. I'm surprised.
1:29:58
Apparently, Trump is giving away campaign style baseball hats to visitors emlazed with the phrase Trump 2028, even though the Constitution bars him for running from for another term and keeps him in the White House and keeps the hats in the White House office.
1:30:14
>> I mean, yeah, Trump is still at like two or 3% on poly market because the market is just pricing like Yeah, like legally it can't happen, but like the funniest outcomes the most likely I guess the 3%.
1:30:28
Uh >> yeah, so this was the line.
1:30:28
I'll read it again because it's just hilarious to visualize.
1:30:31
So Trump wants to be at the White House more frequently this term, blaring music with door with the doors of the Oval Office open, working later into the evening and telling his advisers that he is having fun.
1:30:41
The reason I highlight this is if you can remember times where >> you're working late, you got music blaring, and you're having fun.
1:30:50
>> I mean, at least he's at least he's having fun.
1:30:54
>> At least he's having fun.
1:30:56
>> Certainly more than the There's a comment on Substack right now.
1:30:59
Max Condrat uh says semi analysis needs the first and last question on the next earnings call.
1:31:04
Leopold ash and Brener too. Clear pill. I completely agree.
1:31:06
Um speaking of clear pills, there's this post uh from Nick in news.
1:31:10
Nvidia's data center revenue from Q2 chopped out at 41. 1 billion.
1:31:16
Analysts were expecting 41.
1:31:19
2 billion and then it just it's over.
1:31:22
It's like off by the slightest fraction.
1:31:25
and and the and this anime character is just holding this like tiny little pill.
1:31:29
Um, I actually prefer more air bubbles. I'm a bubbler.
1:31:31
I don't really understand the reference, but >> speaking of uh speaking of analysts, should we get into this?
1:31:37
Uh, >> speaking of analysts, should you analyze your data on Julius?
1:31:40
What analysis do you want to run?
1:31:43
Chat with your data and get expert level insights in seconds. Go to Julius.
1:31:47
Loved by over two million users and individuals at Princeton, BCG, and Zapier.
1:31:53
Um, should we get into this post from Grizzly Research?
1:31:58
>> I will never be able to get that right.
1:32:00
And I' we spent 30 minutes talking to the founder and I still I still get it wrong every time about it.
1:32:03
Uh, what what do you want to talk about this? >> Uh, Grizzly Reports. Grizzly Research. >> Oh, yeah.
1:32:08
We should go through this. This is fantastic.
1:32:10
>> So, um, uh, I guess shorteller Grizzly Research has come out with a new article, uh, as of yesterday called Archer Aviation, the Nicola of the Skies.
1:32:21
Archer, if you're not familiar, is the >> previous company of Brett Adcock. >> It's an E.
1:32:27
>> Hindenburg Research is gone but not forgotten.
1:32:29
The idea remains Grizzly Research seems to be adopting picking up where uh Hindenberg Research kind of left off. Yeah.
1:32:37
>> So, Grizzly Research says >> uh Archer Aviation, which is a public company, uh let's check. >> Flying cars. >> Yep.
1:32:44
>> They make flying cars. >> Flying cars.
1:32:45
Uh they spacked in 2020 >> and surprisingly >> they're only down 7%.
1:32:52
>> They've done well which is you know there were a lot of spaxs that went out went down by 90% 80%.
1:32:56
But um >> they're up 159% in the past year. >> Wow.
1:33:03
>> What's the market cap?
1:33:03
It must be$6 billion $6 billion company.
1:33:05
That's pretty pretty big.
1:33:08
>> And so Grizzly >> certainly has a good re it has a reasonable narrative for retail. It's like flying cars.
1:33:12
If that's going to happen at some point, maybe you want to buy. >> Got a pure play here. >> Got a pure play here. That's >> a pure play.
1:33:17
Retail loves a pure play.
1:33:20
So, uh, Grizzly reports, uh, here says, "Archer Aviation has built a reputation as a leading publicly traded EV tall company through misleading projections and PR rema tactics.
1:33:32
Our in-depth analysis conducted with EV tall engineers scrutinizes all major players and finds Archer's midnight aircraft fundamentally flawed and likely uncertifiable.
1:33:41
In contrast, their competitor Joby Aviation is making tangible and impressive progress on all fronts.
1:33:48
site visits to Archer state-of-the-art Covington, Georgia manu uh quote unquote state-of-the-art Covington manufactur uh Covington, Georgia manufacturing facility in June.
1:33:58
Uh July and August 2025 show little to no production activity.
1:34:03
>> Fun fact about Joby, you know what the founder's name is? >> Joby. >> Joe Ben. >> Joe Ben. >> Joe Ben. Bevert. Bevert. Be vi.
1:34:12
>> Yeah, we need to go back.
1:34:12
I mean there there >> he has vertical takeoff in his name.
1:34:14
the nominative deter determinism of Joe Ben is so good.
1:34:19
Uh, and I believe uh I don't want to get it wrong, but I think I think I have a friend who worked there at at Joby and said that they really enjoyed the engineering culture and they really like the company.
1:34:31
Um, but even Joby, I think by their own admission would say that they're they're not, you know, it's a very tough business.
1:34:38
>> It's just an early stage.
1:34:38
It's a frontier technology.
1:34:39
Uh, I don't think that they would make the claim that cars have >> arrived fly. >> Yes.
1:34:45
And then you you you uh add in the regulatory >> fascinating with all of this with the backdrop of of what's going on uh with Zipline where there's no human.
1:34:56
It's not a flying car, but they seem to have solved some of the EV tall pieces.
1:35:00
And so overall, I feel like there's there's going to be things happening.
1:35:06
There's going to be value created in EV tall broadly, but uh it's going to be hit or miss.
1:35:11
And some companies are going to be able to nail it.
1:35:13
some companies are going to fall behind. So, continue reading.
1:35:16
>> Grizzly uh allegedly visited uh Archer's facility and found little to no production activity.
1:35:23
This >> this is the one in Coington, V, Georgia.
1:35:26
This comes despite claims of current production along with current scaling to production of 50 aircraft per year and a final goal of 650 aircraft per year uh with support from Stellantis.
1:35:35
Archers $6 billion and it's bright in the middle of the day.
1:35:40
Maybe it's a weekend, I don't So, they have a $6 billion order book.
1:35:44
Grizzly says it's inflated with questionable and fraudulent commitments.
1:35:47
There's a company called Air Chateau, >> uh, which is based in the UAE, has anou for 100 midnights, which is valued at around $500 million.
1:35:57
>> Isouou something like a I mean, it sounds like an IOU honestly, but uh it's it's something like a like an LOA.
1:36:05
>> Yeah, it's it's basically saying like if you can make these, we'll buy them. >> Yeah. What is LOA? LOI.
1:36:11
>> LOI >> letter of intent.
1:36:13
>> Yes, >> that's what but is this is used full binding contract potentially.
1:36:19
>> Yeah, it's non non-binding, but it's meant to show something that you can then go show to investors and say like we have demand for this. >> Yes. Okay.
1:36:26
So, UAE operator Air Chateau has only ever I guess purchased one helicopter in 2023 >> and they're claiming they lack the scale or capital for such a fleet.
1:36:35
And they they also believe that Air Chateau is now defunct.
1:36:40
There's a picture of the founder of Air Chateau here uh which it with a good looking regular helicopter.
1:36:47
Future flight globals up to 116 midnight order is tied to a shell company with no operational track record.
1:36:54
>> So that is concerning.
1:36:54
Cacao Mobility's 50 aircraft commitment fell apart after Archer failed to deliver for a Q4 2024 demo in Korea.
1:37:04
Yet the order remains in the backlog.
1:37:06
The US Air Force's up to 148 million agility prime contract has only awarded 33 million with just 744,000 uh dispersed.
1:37:20
Uh and the 110 firm fixed price.
1:37:23
>> We were just talking to a friend yesterday.
1:37:24
They were saying, "Oh yeah, like the the DoD did a contract for our product uh and it really accelerated the business and and he was like, "Oh, we got like I don't know, I forget it was like 5 million or 500k or something."
1:37:35
It was it was it was a decent amount of money.
1:37:38
And I was like, "Oh, did they actually like pay that like or was it just like, you know, some sort of thing and then it didn't materialize?"
1:37:43
He was like, "No, like like we did the deal.
1:37:44
We sent them the products and they paid and like it was done."
1:37:47
Um, but that's not always the way it works.
1:37:49
So, you obviously have milestones with a lot of these uh a lot of these contracts.
1:37:51
And from Grizzly Research's post, it sounds like the Air Force was was, you know, headline number was 148 million.
1:37:58
Um but the but the contract only awarded 33 million and has only paid out around $750,000.
1:38:10
Uh and the fixed price, the firm fixed price portion only paid 1.
1:38:12
3 million, which is obviously much lower than expectction expected.
1:38:16
Uh anyway, you want to talk about the launch edition in UAE?
1:38:21
>> Yeah, so they had uh a launch edition uh Grizzlies claiming it was nothing more than a staged hover at a photo op location using an obsolete aircraft recycled for marketing, the choice of venue, lack of real test data, and diversion of scarce engineering resources.
1:38:35
All underscore that this was a PR stunt, not a meaningful step towards certification or commercialization.
1:38:41
The company also claimed to have delivered their first Midnight aircraft there.
1:38:44
Yet they remain the sole owner of this aircraft that has now supposedly been delivered two times. >> Interesting.
1:38:52
>> So >> the recent defense pivot is desperate attempt to stay in stay in the race, says Grizzly Research.
1:38:57
But the company lacks resources and capacity to be critical credible player.
1:39:00
In conclusion, Grizzly Research believes uh Archer's fragile foundation will soon collapse, akin to Nickel's downfall as mounting deceptions unravel and investors demand accountability.
1:39:10
Um, and yeah, what's interesting here is that, uh, I remember we looked at the video for Archer.
1:39:15
Uh, and we were going really back and forth on like, is there CGI in use here? Is part of it CGI?
1:39:26
It was kind of hard to tell.
1:39:28
And that's just the nature of like launch videos now, honestly.
1:39:29
Uh, they're all pretty hard to tell because like the CGI is really good.
1:39:34
Um, but the bigger question is from our discussion of SpaceX yesterday to actually deliver like we wanted flying cars to actually deliver flying cars.
1:39:45
It's not enough to build one.
1:39:47
You have to build the system that builds the flying cars.
1:39:49
And so from my perspective, may I don't know about the price of the stock or any of that, but uh if I'm if I was going to be excited about a company that was that was in the flying car industry, I would be much much more focused on how does the manufacturing process work?
1:40:06
How can they reliably produce more and more at a faster and faster pace?
1:40:13
And are we seeing a true acceleration in the rate of progress even if they're blowing up all the time?
1:40:21
>> Well, that's that's the thing I was thinking about.
1:40:22
Uh if you're an EV tall company that wants to one day carry consumers, you can't really afford to have a what SpaceX the video we covered yesterday, you know, a highlight reel of a bunch of >> I completely disagree.
1:40:33
I completely disagree because you know who's flown on top of that exact rocket that's blown up so many times and they have a YouTube video of the rocket blowing up? The astronauts.
1:40:41
astronauts. the astronauts fly on top of it because eventually it got to a point where >> yeah they blew up the first 50 or whatever >> it just wouldn't be good >> and then they did 200 without any blowups and you're like yeah at this point they don't blow up so I'm down >> but I think if if if Archer or or Joby
1:40:57
or anyone released a video a bunch of a bunch of their aircraft exploding >> it would not be a good time to do that right now >> wouldn't be good for the stock >> but 10 years ago >> Archer announced it that they are the official uh They they're the official air taxi provider for the 2028 Olympic Games here in Los Angeles. >> Um, and again, I think that uh I think
1:41:18
>> Um, and again, I think that uh I think that Grizzly would at least um I don't think they would bet on that.
1:41:25
Uh uh yeah, they Grizzly says, "We think Archer's ambition to fly a certified aircraft at the LA Olympics in 2028 are laughable."
1:41:37
I can't imagine how hard it is to get sort of when I hear about uh UAE or any of the sort of markets that seem to be more open to technological experimentation like SpaceX started with Quadrilene ATL and I think that the regulation in Quadrilene ATL is probably a little bit easier than Starbase Texas.
1:41:57
Uh and and so when I hear, oh, the first time we fly is going to be at the most high-profile event in the most regulated country and the most regulated state and the most regulated city in America in the world.
1:42:11
Like that seems like a really really tough challenge.
1:42:13
Like uh if Texas would probably be easier to get regulatory approval for like there's other countries that would be easier to get regulatory approval for.
1:42:21
going straight to the Olympics is a huge huge um huge uh like push.
1:42:27
But I don't know, it might just be, you know, framed as like we're the official air taxi company and we're here, you know, advertising our our business more than the product.
1:42:37
Um but yeah, um lots of lots of skepticism. Lots of skepticism. >> Yeah.
1:42:44
So Joby trades at near double Archer valuation. Really?
1:42:47
Um, somebody on Reddit in response to this Olympics uh announcement says, "If anyone from Job's team is reading this, please step step up your PR game.
1:42:57
Archer is way behind you in product but ahead in marketing.
1:43:01
You need both uh for a new company. >> Yeah.
1:43:07
>> So, retail on retail violence.
1:43:07
I I I think I think we will see a lot of uh a lot of small EV tall aircraft like what Zipline's doing before we are actually flying in in EV tall vehicles.
1:43:21
Um helicopters exist like they that like what is the actual pitch here?
1:43:28
It's just is it just cost that we're optimizing for because are we getting a new capability?
1:43:34
And what they finally wound up building, um, Archer, the latest one, the Midnight Aircraft, uh, looks a lot more like an Osprey helicopter where it can tilt into a plane mode and go a lot further.
1:43:46
Are we are we trying to say that this is going to be like a helicopter but but faster?
1:43:50
Or like a helicopter, but cheaper, or like a helicopter, but you don't need a helicopter pilot?
1:43:56
Is it a is it a driverless helicopter?
1:43:58
I still don't fully understand the definition of what what how how is a flying car different than a helicopter because this doesn't look like something that I can drive on the 405.
1:44:13
>> And that was what I was promised.
1:44:13
That's what I was really promised with the flying car was like you can just drive it as a car at 75 miles an hour down the highway if you want >> and then you can also just >> take it into the air.
1:44:24
>> Take it in the air and fly like a plane at hundreds of miles an hour.
1:44:27
That was like the highlevel pitch.
1:44:29
But if you make just like a plane or you make a helicopter, those already exist.
1:44:35
>> People that have driven cars fast and canyons will tell you that it's possible to get some air time. >> Some air time. Yes.
1:44:40
Anyway, if you're planning on uh building a helicopter business, building any business, you got to get your brand mentioned on chat GPT. Go to profound.
1:44:49
Reach millions of customers who are using AI to discover new products and brands.
1:44:53
Um, there are some new demos that hit the timeline from Higsfield.
1:44:58
Swap to video is powered by Nano Banana.
1:45:01
What a wild name for a product from Google.
1:45:07
Swap any pick into a video. It's literally bananas.
1:45:08
Uh, they they turn this runner into the queen.
1:45:11
They swap Angelina Jolie into some stock footage.
1:45:16
I'm sure she will love that. This is very cool. Look at that. Yeah, that's fun.
1:45:21
>> The queen just running.
1:45:21
It looks so realistic now.
1:45:23
Yeah, even the motion blur in there, like everything is just mashed perfectly.
1:45:28
[Laughter] That's the perfect one. Play it again. Play it again. It's so funny. The queen. The queen.
1:45:37
That really That really takes it to the next level. That's fantastic.
1:45:39
Oh, anyway, uh we do Do you want to scroll back to some of the other posts that we that we uh skipped over? Uh we can go through.
1:45:49
>> Yeah, 4chan is suing the UK government.
1:45:51
Toby over at shopify highlighted this.
1:45:54
>> Uh there's some funny excerpts.
1:45:54
Um >> yeah, well what I did I tried to read this and it was late and I didn't really understand.
1:46:00
So uh apparently I didn't 4chan is alongside Kiwi Farms which are both these like communities online.
1:46:06
Um but the introduction says the internet is a global system for commu of communications between computer servers located in data centers around the world.
1:46:15
Despite the internet's global reach, it is more or less universally acknowledged that the internet is predominantly an American innovation built by American citizens, residents, companies, and that the United States has the largest and most thriving technology sector of any member state.
1:46:28
Foreign governments, particularly those in Europe, uh, which have not managed to build technology sectors of their own for the past half decade, have sought to control the American internet and hobble American competitiveness.
1:46:36
So, they're they're they're suing the UK, and they start off by just like making the argument that America is the best.
1:46:42
argument that America is the best. And so uh uh Toby Luke asked Grock to turn the complaint into a green tax and Grock said be the internet global comm system between servers mostly American invention built by US peeps and
1:46:57
corporates US has biggest tech sector in G7 foreign goss especially Europe can't build their own tech try to control American internet with laws and stuff for half a decade threatens Americans and others with fines arrests jail for illegal stuff on their sites Porjan and Kiwi Farm Sue UK. Enough is enough. Enough is enough.
1:47:17
>> This is not that great of a green text.
1:47:19
I'm going to >> I'm going to say it.
1:47:20
Uh it just feels like it just turned it into like some punchy paragraphs and they just threw the little uh the little greater than symbols at the front. Yeah.
1:47:27
Uh it it lacks the >> read >> MFW or like sorrow. png.
1:47:31
Like I I need I need more 4chan green text.
1:47:37
>> Read the notes from from Andy over at two cents. >> Okay.
1:47:39
The notes from Andy at two cents.
1:47:41
Andy says, "This is incredible." Uh, the parties.
1:47:43
Um, number seven, plaintiff 4chan is a limited liability company.
1:47:49
Uh, and then eight, Delaware was a colony of the United Kingdom of Great Britain until the assembly of lower counties of Pennsylvania that declared itself independent of British authority on June 15th, 1776, thereby creating the state of Delaware.
1:48:00
Delaware was subsequently the f the only state first state to ratify the Declaration of Independence, the instrument which created the United the United States of America.
1:48:11
Uh anyway, I I don't know where this is going.
1:48:14
I don't know what the >> clearly having fun with the complaint. >> Yep.
1:48:17
I think >> we can switch gears to Mahul.
1:48:18
He is just on a tear >> wire cutter says the MAD is a whole different kind of robot vacuum. I agree. >> Yep. >> It is. It it goes to town. Yeah. In my house.
1:48:33
>> So, this is kind of like a proper sort of like groundup rebuild using modern technology of what most people think of as a Roomba or robotic vacuum cleaner.
1:48:44
Obviously, that was from the previous generation of artificial intelligence where there were some pathfinding algorithms, but uh Maddic has, you know, actually a really solid world model and image generation or image recognition.
1:48:59
And so it will uh it will, you know, really hunt around your house for dust and dirt and messes and clean it up.
1:49:05
Uh Meahul sent us a few of them.
1:49:08
We've been enjoying them.
1:49:10
This isn't a promoted post or anything like that, but uh we're just a fan of building cute little robots, which I'm a big fan of.
1:49:16
But you know, if he needs to pay sales tax, he's got to get on Numeral HQ. Sales tax on autopilot.
1:49:23
Spend less than five minutes per month on sales tax complies numeral HQ.
1:49:27
Uh TCP says, "Are you a small business owner struggling to make ends meet?
1:49:33
Then try being a big business owner.
1:49:37
Always a brilliant strategy.
1:49:37
Always the correct strategy, you know. >> Go big. >> Just go big.
1:49:41
Just become a big business owner."
1:49:43
Uh uh says, "Market cap for Ridge will go nuts when Shawn has a baby.
1:49:50
Imagine all the product ideas he will come up, including the Ridge pacifier, which looks crazy."
1:49:53
And also like a weird rendering where it's kind of like that's like it's shaped like it would be outside of the Yeah, it's inverted.
1:50:03
It's inverted but the um but the concept is sound. >> Yes.
1:50:09
But I like I like building the Ridge world.
1:50:10
I don't >> fully think of the Ridge as like that super tactical brand, but uh that's certainly where people went in the comments thinking about like tactical strollers and stuff like that.
1:50:20
Oh, I mean I their initial customer base was the Everyday Carry crowd. Yes.
1:50:26
>> They even bought everyday carry. com. >> Oh, really? I didn't know that.
1:50:29
>> So, yeah, they're very they're very tactical. >> Mhm.
1:50:33
>> Well, >> um Catrini Research says Nvidia down 3% on earnings.
1:50:37
I think everything will be fine. Open Twitter.
1:50:39
See Satia posting like he's selling AI courses.
1:50:42
I think a few put contracts for anyone. >> That's ridiculous.
1:50:48
Let's actually read through what what how Satcha is using GPT5 and co-pilot.
1:50:51
Um, >> so I I I I have a very different read on this, but let's take the current >> SA says based on first way he's using it.
1:51:00
Based on my prior, he's prompting based on my prior interactions with a person, give me five things likely top of mind for our next meeting.
1:51:06
Uh, >> Nick does this for us very well. >> Yeah.
1:51:12
Draft a project update based on emails, chats, and all meetings in uh in a series.
1:51:17
uh KPIs versus targets, wins versus losses.
1:51:20
So the benefit of course of running the whole business on 365 copilot is that uh they have email in Outlook, they have chat in teams, they have meetings in uh and and like this is true of Google for the most part, I guess, except Google doesn't really have a Slack competitor.
1:51:39
So, a lot of people are having to piece those two together.
1:51:44
And that's probably where a company like um what's that what's that uh enterprise uh like search across your entire enterprise business? >> Glean.
1:51:56
>> Glean comes in potentially.
1:51:56
But certainly having this as kind of like the homepage for your uh your you know like dashboard for your whole website all the communications like it's a very reasonable very tractable like use case just saying like hey here's some prompts that you can do that only work here because you have we have all the data.
1:52:19
Um are we on track for the product launch next November?
1:52:21
Check engineering progress pilot program results risk give me a probability. Um, >> that's cool.
1:52:27
>> All stuff you can do in ChachiBT if you if you sync everything in, but you know these things come out of the box. >> Well, yeah.
1:52:33
And OpenAI is trying to build a lot of this functionality. >> Yes. >> Themselves.
1:52:40
And that feels like more of the narrative here which is Satcha like just mostly just reminding people like >> every Microsoft product every Microsoft product has by by by contract the best open AAI model like on the day it's
1:52:55
released because like that is the nature of their agreement >> like they get a copy of whatever and so like if it's it's easy for people not to remember that and I'm sure that there's a lot of Microsoft 365 co-pilot business owners who run on 365 and they've been
1:53:14
on that for a long time and then they're hearing this oh like I got to get my company like AI native like I got to get like AI tooling like should I bring in another service >> it's going to make enterprise and and spec I mean even just you know mid-market SMBs like a tough category
1:53:31
for open AI to really dominate >> but they've won consumer and so I think that that they should be fine over there but uh if you If you're running a business and you have and you're like Microsoft 360, we are a Microsoft company. We use Outlook. We use Teams. We use Outlook. We use Teams.
1:53:45
That's the backbone of the business.
1:53:45
And then you start seeing credit card charges for $20 a month on OpenAI, $200 a month on OpenAI, and you're just like, wait, no, no, no.
1:53:54
We get GPT5 for free at this company.
1:53:56
Like, we don't need to act, we don't need to pay extra for GPT5. We get it for free.
1:53:58
Um, and so maybe this is the maybe this is the solution to the ad free version is if you get on Microsoft 365, they won't have ads in it and it'll be able to do everything and you won't have to pay. I don't know.
1:54:11
We'll we'll have to keep tracking.
1:54:12
Anyway, uh, if you're looking to integrate AI into your customer service workflow, go to bin.
1:54:16
ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake offs, number one ranking on G2. Bin. ai. >> Legends.
1:54:26
>> Uh, you want to talk about Garmin? >> Let's do it.
1:54:28
Garmin is selling a real time health data for your horse uh with its easy to attach tail wrap and sensor.
1:54:38
The Blaze Equin welcome wellness system measures your your hor's heart rate, strides, gate, and more during rest and rides.
1:54:46
Get insights into their health and fitness and make more informed decisions about their well-being and training. I need this as well.
1:54:51
And you know, we talked to the the c the Fitbit for cows company.
1:54:56
Well, now your horse will have a a Fitbit or maybe it's an eightle for your horse. Go to eight. com 5 >> Ultra.
1:55:03
This uh this note from Kane is cool.
1:55:06
Garmin picks niche but spendy activities and goes, "I can crush every electronics maker here."
1:55:10
And it sounds like a super fun business and >> hunting uh long range shooting, fishing.
1:55:19
And so they make very specific uh specific hardware, often ruggedized and figuring it out.
1:55:24
Uh but uh G photo says uh honestly one of the most confusing spam emails I have gotten. I do not have a horse. Um but I love it. I love it.
1:55:34
And some of these photos look really really cool.
1:55:36
These Garmin the uh the >> I had no idea that Garmin is a $45 billion company. >> Huge. Huge.
1:55:43
I mean there's a lot of fishing to do.
1:55:45
There's a lot of long-range shooting or bow hunting.
1:55:47
You want to go out bow hunting without a garment on your on your bow.
1:55:50
And I think they still crush it in smart watches despite obviously having >> totally competition >> because they've differentiated niche down like Apple's going to be kind of the broad broad uh consumer choice for a lot of folks but Garmin has like all the trails.
1:56:06
>> They ask the question what are you running from >> will help you >> yeah go faster. For sure.
1:56:10
Uh Brian Johnson says one of the best new habits I've started lately is calling friends for 15 minutes.
1:56:17
I say hi, tease them or share something funny.
1:56:19
Then it's immediately over. No lingering, no fuss. It's great. >> It's called flirting. >> Not your friends. >> It's called chirping. You call your friends.
1:56:30
>> Hey, uh, did you bench today? What's What's up?
1:56:33
Um, >> this is >> What are you laughing at?
1:56:38
>> This is just a funny habit.
1:56:38
I mean, it's genuinely >> hilarious.
1:56:43
>> It's extremely Brian Johnson coded to take something that's like just calls like, you know, uh, this is like the classic like tech guy.
1:56:48
I'm going to actually do this to him later.
1:56:49
I'm going to do this to him later. >> Yeah. Yeah. Yeah. That guy being friendly.
1:56:54
>> He's texted like once.
1:56:54
I'm going to call him out of the blue. >> Yeah. Hey, >> how you doing? >> Tease him. Tease you. >> Buddy the elf.
1:57:00
What's your favorite color?
1:57:02
>> I mean, people like it. 7,000 likes. It's a good take.
1:57:04
Um, anyway, starting today, Flow by Google.
1:57:06
Google AI Ultra subscribers can generate VO3 fast videos without using any credits.
1:57:11
So, you can fine-tune your clips to exactly how you want them and only spend credits on that final upload.
1:57:17
May this be the peace day res resistance on that new product and bone GPT says I just got unlimited V3 fast.
1:57:26
So people are very excited about that. That's fun.
1:57:28
I've been really enjoying the V3 model.
1:57:30
Continue to continue to enjoy it and continue to use it.
1:57:34
Um so uh Bugo Capital Bloke sounds like we are getting the final Google ruling tomorrow.
1:57:39
For now we exist in the liinal space between it being over and so back via Dios.
1:57:43
This is about the >> Chrome >> Chrome divevestature. >> Yeah. What's the news? Actually out. Okay.
1:57:52
We'll have to track it later.
1:57:54
>> Um so, uh nano banana.
1:57:54
More nano banana news from Google. Love these.
1:57:58
What does the red arrow see?
1:58:00
Google maps transforms with nano banana. Uh levels.
1:58:05
io says if you're not building a mini startup with nano banana today and launching it tomorrow, you're missing the opportunity of a lifetime.
1:58:10
This image model just made hundreds of new startups and apps possible.
1:58:13
The only limit is your creativity and how fast you can ship a user interface and put a Stripe payment button on it.
1:58:18
I think uh and Levelvels has done this a few times.
1:58:22
I think he had some some image generation uh app that allowed you to decorate your house.
1:58:27
So you take pictures of the empty room and then it would give you ideas for decoration and inspiration.
1:58:33
I thought that was very cool.
1:58:35
And uh with much cheaper AI images, it just unlocks new use cases.
1:58:40
So, uh, certainly high >> somebody sniped nanobanana. ai. >> Oh, okay.
1:58:46
>> And what about where's. com go?
1:58:49
>> And it's not Google affiliated, but they're charging up to 60 >> $500 per image.
1:58:56
>> No, they're just saying, yeah, they're charging $64 for 800 highquality images a month.
1:59:03
>> Wait, isn't it like $10 a,000 or something?
1:59:06
Mark, they're marking it up again.
1:59:08
This is what happened with with chat early on where people were just reselling chatbt before they had a lot of focus on on mobile. >> Wow.
1:59:15
Well, if you're if you're launching a foundation model and you're using a code name, buy the.
1:59:18
ai, buy the dot, don't get swooped. Don't get swooped.
1:59:23
Tyler, have you played with Nano Banana yet at all?
1:59:25
>> Yeah, it's really good.
1:59:25
I think the main >> Does it unlock anything new?
1:59:27
Like, is there going to be a new Studio Giblly moment? >> I don't know.
1:59:31
I mean, there's some cool things with just how like consistent the characters are, right?
1:59:34
So if like I take a picture of someone, I can like change their shirt and nothing else will change.
1:59:38
Like it's like you can't do that with, you know, GPT4 image. >> Yeah. Yeah. Yeah.
1:59:42
I just in CHP I feel like it always makes the face just like a little bit uncanny valley when it rerenders it.
1:59:47
>> I think that's probably the main use case >> is that the face just stays the same basically >> for for like photorealistic stuff. >> Yeah.
1:59:53
>> But I I think the main takeaway from Nano Banana is that like Gemini now has like >> you know they have like a rune like they have a poster in house cuz like you saw it was like a week before it actually came out.
2:00:04
Everyone's like, "Oh, it's on Ella Marina. What is Nano Banana?"
2:00:05
And then >> Logan is is just, you know, tweeting the banana emoji.
2:00:10
Like, I think that is like for the vibes. I love it. >> No. Um uh the Yeah.
2:00:16
The other question is I wonder I don't know. Um, yeah.
2:00:20
I wonder if this is going to unlock any like specific viral moments or if it will just be something used by companies because it's cheaper and more reliable.
2:00:34
Um, I'm I'm certainly excited.
2:00:34
Do you think if do you think that there's a potential that it's enough to um get people to switch to Android? >> Um, why?
2:00:45
because it would just like natively have >> Have you used the iOS remove object? >> No.
2:00:53
>> AI feature of something phone because you have the you have the latest and greatest, right? >> Yeah. >> Yeah.
2:01:00
If you take a picture on the phone and then you go and you say like, okay, I'm want to remove this.
2:01:04
I'm going to try and remove this Diet Coke from the image.
2:01:08
You can go in to edit and then in the in the image editor there's a cleanup button and you can like prepare cleanup in in iOS and like as you you kind of draw it takes a long time.
2:01:20
Um you kind of like I guess it only picks things that you can remove. I don't know. Like it's rough. It does not quite work. Okay, here we go. Now it's finally going. >> Breaking news.
2:01:33
Essence has filed for bankruptcy protection. Gabe.
2:01:39
>> Uh, yeah, Gabe literally called this in the chat.
2:01:41
He says, "Jordy might know Essence.
2:01:43
Don't think John would know about them." Called it perfectly. Uh, fashion marketplace.
2:01:49
Um, surprised uh to see this.
2:01:55
I'll try to get an article.
2:01:57
Canadian luxury luxury retailer told employees on Thursday that the filing was necessary as tariffs took an unexpected toll on the business and to preempt a forced sale by lenders.
2:02:08
Essence is filing for bankruptcy protection after what it described as an attempt by lenders to force a sale of the company.
2:02:13
Chief Executive Ramy Atala on Thursday said Essence's creditors want to put it up for sale under the company's creditors arrangement act, a process similar to bankruptcy protection that allows corporations to restructure their finances.
2:02:26
Atala went on to say that Essence will fight a sale by filing its own CCAA application within 24 hours.
2:02:34
Recently, we have worked closely with financial and legal adviserss to develop our own restructuring plan to stabilize the business and rebuild it for the future.
2:02:42
the court will decide which path we follow likely within the next week.
2:02:48
>> Um, again, I believe that uh from I believe uh Gabe, correct me if I'm wrong, but uh I believe that Essence just primarily partners with boutiques, so they don't actually hold a ton of inventory.
2:03:06
Okay, I might be thinking of Farfetch.
2:03:07
Um, but uh hard I mean >> sucks when you're a uh a business that that is in the business of just selling goods and you can't uh do that.
2:03:20
>> Well, good luck to them.
2:03:22
>> Uh let me tell you about Adio.
2:03:22
Uh customer relationship magic.
2:03:24
Adio is the AI native CRM that builds, scales, and grows your company to the next level.
2:03:29
You can get started for free.
2:03:29
And we have our next guest here in the Reree waiting room and now in the TBP and Ultra Dome. >> What's going on? Welcome to the show.
2:03:41
>> Hey guys, how are you? >> We're great. >> Great. >> Good to meet you. Good to be here. >> Um, >> doing great.
2:03:47
>> Uh, can you introduce yourself a little bit for the stream?
2:03:50
>> Yeah, you know, uh, my name is AJ Agarwal, a partner here at Bank Capital Ventures and, uh, been here for 20 years.
2:03:56
Started life in the startup world. >> Yeah. >> Way back when.
2:03:59
and >> been in tech for for a long time.
2:04:03
So, >> were you ever out of the Boston office or were you always in Silicon Valley?
2:04:10
>> I was originally in Boston.
2:04:10
So, when the fund got started, you know, roughly a little over 20 years ago, it was 100% in Boston and that was sort of the year of, you know, Route 128 and, you know, all the great stuff happening uh in Boston.
2:04:25
And, you know, the business on the East Coast has really migrated >> to New York.
2:04:28
I moved out to the Bay Area to open our West Coast office.
2:04:30
You we we launched that effort, you know, about 15 years ago.
2:04:35
Now, you know, at BCB, the majority of our team is on the West Coast and our our second biggest office is New York.
2:04:41
So, Boston, great town, great life sciences town.
2:04:45
>> Well, and YC was there. We started there.
2:04:47
>> Yeah, YC was there originally.
2:04:47
I remember the old old days of YC out of MIT and um and then, you know, YC moved.
2:04:54
Um, so it's um, you know, Boston's a great place.
2:04:58
A lot of innovation here.
2:05:00
It's just, you know, the application layer of AI, the foundation layer of AI, it's all happening in SF and New York these days. >> Yeah.
2:05:06
When when you say like the firm started 20 years ago, you're talking about BCV specifically and not like Bane Capital broadly.
2:05:12
Like how do you tell the story of like the venture firm like launching from within that larger structure?
2:05:20
>> Yeah, it's a I mean it's a great question.
2:05:21
you know, the the firm was started back in 1984.
2:05:23
Mitt Romney and Partners, you know, started it, you know, and uh they, you know, early on that fund was really small. It was like $37 million.
2:05:34
And so some of the early deals were what you'd consider tech companies.
2:05:40
You know, we invested in we were the first investor in Gartner Group. >> No way.
2:05:43
>> Um way back when, which is, you know, classic >> creation of the hype cycle. >> No way. >> Yeah.
2:05:48
Literally created the hype cycle.
2:05:50
So, so, so we have a huge blown up poster of the hype cycle in the hype cycle. We love it.
2:05:57
>> We think you can apply it to all all things in life is a fundamental uh truth. >> It it is true.
2:06:04
>> You know, if you're having like relationship problems, just, you know, the hype cycle, show your wife, look, >> we're going to get to the plateau of productivity.
2:06:11
>> We're just in the trough of disillusionment right now.
2:06:13
>> We are in the >> But we can see the plateau of productivity. >> Yes. >> Yeah. Yeah. I know.
2:06:18
I mean, the gardener was not my friend when when I was running go to market at Trilogy, but um you know, they uh uh but but certainly I mean that business has continued to do great.
2:06:28
Um and so they made a set of early investments out of what you'd consider a small private equity fund.
2:06:34
Gardner Group and Double Click and things like that.
2:06:36
Even Staples you can consider a venture investment.
2:06:38
It it was one store when Bank Capital >> invested in it. It was truly a startup.
2:06:46
And then you know the funds got bigger and they started doing bigger deals and as a result that meant more mature companies.
2:06:52
companies. Um and it was clear that you know in order to do venture in early stage it necessitated a separate fund and you know the firm's been very entrepreneurial over the course of 30 40 years now you know 40 years now you know we've launched a venture fund we have a
2:07:07
crypto fund we have a life sciences fund real estate you know kind of a whole range of things and that's always been the culture which is let's create it each fund stands on its own so we've got to go raise capital you know from limited partners um we make our own
2:07:23
investment decisions but we benefit from the affiliation with the rest of the firm and you know we'll get into industrial renaissance we'll get into AI in the physical world but you know our access to the real world economy through bank capital you know actual physical
2:07:39
businesses manufacturing companies and brands and retailers and financial services companies that's where a lot of young people want to build today um and you know that's a huge source of our competitive advantage you know in the market >> yeah before We get into all that good stuff. >> How'd you meet Joe? >> How'd you meet Joe? >> Yeah. How'd you meet Joe? >> Yeah.
2:07:58
>> Normally we'd be like, "Oh, no one knows what we're talking about here."
2:08:00
But I mean, he's been on Invest like the best. He was in the journal.
2:08:03
Like this is Joe Lamont week.
2:08:05
And so I got I mean, you know, for for my entire career, people are like, you know, we've heard of Trilogy and this week has been peak Joe Leont.
2:08:16
Um I met him my sophomore year at Stanford.
2:08:19
Um, a professor of mine said, "You got to meet this guy.
2:08:22
He's starting a company and you should join him."
2:08:23
And so I I went over to Treser and sat outside with with Joe Limont.
2:08:29
He was a year ahead of me. He was a junior. I was a sophomore.
2:08:34
>> So this was when he was like racking up credit card debt like fin.
2:08:38
>> This was even before Trilogy.
2:08:38
So he hadn't started Trilogy yet.
2:08:42
>> And he was starting a company.
2:08:42
It was called Fourth Connection.
2:08:44
Um and um you know Fourth Connection is today what you'd consider a CRM. >> Sure.
2:08:51
>> But you know we would go around up and down El Camino and go to startups and tech companies and say would it be great if you had one database for all your quotes and contacts and proposals and people are like wow that's so cool that doesn't exist. We'd love to have that.
2:09:06
That was what we were selling at Fourth Connection.
2:09:07
And so when I first met Joe, the very first meeting >> Wait, and sorry, was was that sales builder or was that >> No, that was Trilogy.
2:09:14
So Sales Builder was Trilogy and I, you know, and and he eventually dropped out and started started Trilogy, but >> Got it. Wow.
2:09:21
So this college was like, >> yeah, this is 1988, I think.
2:09:25
You know, now I'm dating myself here, but he um you know, he said to me, you know what the greatest business on the planet is?
2:09:35
And this is like the first 5 minutes, you know, and um and I said, "I have no idea."
2:09:39
And he said, "It's enterprise software." >> Yeah.
2:09:42
>> And I said to him, "What's enterprise software?" Yeah. There you go. Enterprise software.
2:09:46
Here we are still, >> you know, 30 35 years later and it's it's undefeated.
2:09:51
It's still enterprise software. And I said, "Why?"
2:09:52
And he said, "It's the only business in the world that you build it once and your marginal profit is basically 100%."
2:10:03
>> He's like, "It's the greatest business in the world."
2:10:04
He said life sciences is sort of like that >> but he's like you you don't know if it works for 10 years.
2:10:10
>> Enterprise software you know within a year or two if this thing works.
2:10:11
He's like let's start an enterprise software company.
2:10:15
We did this thing fourth connection. We did that for a year. He dropped out.
2:10:19
I decided not to drop out and then he went on to start Trilogy.
2:10:21
I joined him a few years later as employee 18.
2:10:26
So that that was the Joe story. >> Yeah.
2:10:29
Uh I I feel like uh there was a lot in the invest like the best interview.
2:10:35
The thing that stuck out to me was towards the end when he was talking about uh how AI will affect enterprise software and just like his overall playbook of reducing churn, switching a company from growth mode to retention mode.
2:10:50
and and his his claim or his hottake was basically that in the age of AI uh replatforming or ripping out a piece of legacy enterprise software will get easier and so the old school trilogy playbook might be a little bit harder to execute.
2:11:07
Not just because it's more competitive and everyone has heard about it and everyone's kind of running their version of it, but just there might be some fundamental technological shift that's making it easier for companies to, you know, switch to other products.
2:11:20
And I'm wondering how you see that trend, if you agree with that, or how you think that affects the next generation of uh enterprise software companies.
2:11:32
Yeah, I think I mean I think the things about this era that are the same as the trilogy in some ways it's it's almost a you know return return to the past is this idea of CEO selling big deal selling selling a vision um you know in
2:11:47
in the late 90s we had this enormous pull from CEOs just like we're seeing today where CEOs said I got to get on this internet thing I got to modernize I just rolled out laptops to all my salespeople and they're on the airplane just plain solitire. They need apps, you
2:12:01
They need apps, you know, and I need to buy some apps for for my laptops.
2:12:05
And so we would sell directly to the CEOs.
2:12:07
And these contracts would be 10, 20, 30, $100 million contracts.
2:12:11
And we're kind of back in that era now.
2:12:13
And the best companies in AI are selling high to the CEOs.
2:12:19
Every CEO, Fortune 2000, they've got some kind of AI council and they're saying, "This is we're going to fasttrack all this stuff.
2:12:26
We're not going to go through the normal procurement process and everything else."
2:12:30
And so I think the companies that are winning today are in many ways able to sell this larger vision to these large companies to say this is how you don't like get left behind, you know, with the AI revolution.
2:12:41
So I think that part has changed from kind of the SAS PLG era.
2:12:46
Um but in many ways return to sort of the '9s and seable trilogy and I too and kind of that world.
2:12:52
I think the the part that um will be interesting to see and there's been this debate and Aaron Levy's talked about this is will the systems of record get disrupted or will they get stronger?
2:13:05
will they get stronger? Now clearly Aaron's got a you know biased point of view because he's he is a system of record you know at box but but his view is the system of records are going to get stronger because they represent the
2:13:18
ground truth you know models hallucinate you know AI is probabilistic what is the ground truth that that's going to guide these agents and ultimately is that the data that's inside SAP you know and inside Oracle and inside workday and will those systems get stronger. I tend
2:13:35
I tend to be a big believer in systems and of record.
2:13:40
I mean, if you just look at the history of software, the biggest application companies in the history of software have been systems of record.
2:13:47
>> And you know, that's just been true for >> well, even if you look at Satia's uh Satia, people were kind of dunking on Satia for posting this thread yesterday, but he was basically just demonstrating how powerful GPT5 is within Copilot because they already have all of your information.
2:14:03
They have your email, they have your calendar, they know who people are.
2:14:06
It's just very easy to just like run prompts on top of the system of record.
2:14:10
And that's just an incredible advantage that >> Microsoft has.
2:14:14
>> Microsoft has. Yeah, I mean the flip side of this uh just to take like the the the counterpoint to Aaron uh at Box is um well the business owns the data and so it's very hard for a company that is a system of record to say no actually
2:14:31
I'm not going to let you suck all this data out of you know my my installation into a data lake or into just a bunch of you know CSV files if you want like if I am paying for a system of record I will demand that you let me print it out and take it out the door if I want because that's my data. But of course there are
2:14:46
But of course there are different integrations that can be made a little bit more difficult.
2:14:51
So uh I'm wondering if in the age of AI there's like the binding between even if even if Salesforce or Box doesn't let me with one click offboard and onboard into a different service if I show up with my you know my Mckenzie or my Bay & Company and I have a team of Accenture but it's all AI and I say hey I want you one of my portfolio take screenshots if you need to.
2:15:17
>> Yeah, one of my portfolio companies is building agents for enterprise migrations.
2:15:23
>> So yeah, I mean can you can you wrestle with that?
2:15:24
Like how how does that how does that play into all this?
2:15:27
>> Look, I I think it's a great point and certainly even even the last 5 years more and more companies are putting um you know trying to get all their data inside you know cloud cloud data warehouses, snowflake or data bricks or whatever.
2:15:38
And so I think that trend is is continuing but the question is for enterprises where is that on the priority list you know it's just not on the priority list.
2:15:45
It's like okay that there and it works and I now want >> to to move forward and I I want to take advantage of the next set of opportunities.
2:15:53
I want to implement, you know, the AI for call centers, AI for coding, AI for, you know, um, healthcare, RCM billing, what, whatever it is.
2:16:02
And do I really want to go through, you know, even though it might be possible today of taking all my data in Epic and trying to push it somewhere else, it's just low on the priority list, you know, at this point.
2:16:13
They've already suffered through the pain of the last 10 years of all these implementations.
2:16:18
And so I think it's like a lot of things inside these enterprises are going to build on top rather than try and rip and replace. >> Yeah.
2:16:26
One of the things that stuck out to me from the Joe interview was uh we're everyone in Silicon Valley is familiar with the concept like built to grow like you're in growth mode. Go go go.
2:16:36
Then there's obviously a lineage of companies that are built to last.
2:16:38
And he brings up kind of a controversial one which is some companies are built to die and that they've they've kind of done all that they will do.
2:16:45
they've built all the products that they will do and they are then they are machines to kind of maintain their customers for as long as they can but that the that particular product will not exist and the people that work there will migrate to other projects in a portfolio.
2:16:57
Uh and I'm wondering if you have a unique perspective from your background a trilogy and then also the overlap between BCVs in a unique position.
2:17:04
I don't know how to how tight the firm is broadly but uh like Brookside can take a company public.
2:17:11
It's like the coolest thing possible.
2:17:13
And then you also have the private equity uh like lineage there that could turn around a company or take it in a different direction.
2:17:19
And I'm wondering if that brings you a different perspective when you're sitting on a board to have a real conversation with a with a with a founder that's not just hey swing for the fences and then you just if it if it's not a home run, you're never going to hear from me.
2:17:31
as opposed to actually I can still help you make good decisions in the era where you're going public or where you're going and working with private equity or where you're winding the company down.
2:17:43
Like do you feel like you have a differentiated perspective there from other venture capitalists? >> Yeah.
2:17:47
I mean I think the reality is that um there are so many different ways to create value.
2:17:52
Um, and it's funny, you know, kind of in this era where venture firms are, you know, kind of, you know, there's a stampede towards becoming private equity firms, you know, and and um, you know, and so like >> I did that first. >> Yeah.
2:18:06
>> Nobody, you know, we we, you know, we we we sort of understand that that desire uh being capital.
2:18:11
Um, and so there just a lot of different ways to to to generate value, to create value, and and one of the benefits of being at Bank Capital is you see all these different divisions. Yeah.
2:18:23
>> And private equity and public equity and credit >> and it's incredibly smart people that are partnering with companies to create value.
2:18:30
And these companies are different stages, different dynamics, different competitive situations.
2:18:34
And you know uh there I mean a lot of great companies end up getting bootstrapped to the point where then they might you know sell estate to to private equity.
2:18:43
That was the case when we invested in Survey Monkey.
2:18:47
You know it was a bootstrap company and then um you know we got involved uh as part of that business.
2:18:53
And so I think that is just the reality.
2:18:54
you know, a good friend of mine, founder, we backed early, you know, Nick at Gainsite.
2:18:58
Um, we were part of that journey and, you know, he decided that the growth profile of the business was still going to be very strong, but was not going to be the 60 to 100% growth that, you know, folks like us, venture investors wanted.
2:19:11
And so he you know orchestrated you know incredible exit to Vista um where you know he was able to transition all the venture investors to a different type of investor that was in many ways ideally suited for that more mature phase of gains growth you know over the last you know four or five years.
2:19:32
So I think that's an important thing.
2:19:34
There's different ways to um you know create lasting value and I think founders often times you know in social media are looking for a pattern or one way there's just not one way you know it's um there there are a lot of options out there. >> Yeah.
2:19:50
On on a similar note I know uh I think it's rebranded Sankity Advisors the credit arm of Bane is now >> Bane Capital used to be Sankity now Bane Capital Credit. >> Got it. Yeah.
2:20:00
uh and I'm wondering if uh if just having in any interaction with those folks has uh given you a differentiated perspective on what's going on in the venture debt markets.
2:20:09
We were reading the other day in the journal that uh there's been we're back to new highs draw down volumes expanded but the amount of deals has has contracted >> also the number of lenders has increased. >> Yes. Yes.
2:20:25
>> The market just basically fragmented >> post. Yeah.
2:20:27
So, I'd love to know your your your your thinking and what you're advising founders on. When is the right time?
2:20:33
What is the shape of the business?
2:20:36
Like, what is the current meta for getting the most out of a venture debt partnership?
2:20:41
Uh, from, you know, years ago it was very different.
2:20:44
How are you thinking about it now?
2:20:47
>> Yeah, I mean, I think debt is very powerful, but it's also very dangerous.
2:20:52
Um, and the reality is that, you know, for an early stage company that's pre-product market fit, I think the best case use of venture debt is some runway extension. >> Yeah.
2:21:04
>> Um, and and not even really runway extension such that you can sort of draw your equity down to zero.
2:21:10
>> Um, and so it buys you a few months.
2:21:10
Um, but we even when you our companies have venture debt and they're pre-product market fit, we we advise them not to actually tap into the debt.
2:21:19
it's there, >> you know, so they can sort of extend the runway a few months.
2:21:23
I think that's one option for venture debt.
2:21:26
I think the second is if it gives you a clear path to profitability.
2:21:29
If you're, you know, a later stage company and the venture debt can avoid a dilutive equity round and you can get to profitability, then I think it's very effective.
2:21:38
I think for businesses which you know are rare in our our our world but that have capital uh you know that are a little more capital intensive certainly credit can be a source of of financing working capital financing you know uh is effective but your business has to be very um predictable and generally credit is best used when you're break even or or close to profitability.
2:22:04
or close to profitability. I mean I think I remember you know we had this great company Reich um that was you know a PLG company kind of in the space of ASA and Monday and all those companies ultimately you know I think exited for north of 2 billion but I remember Vista
2:22:20
was looking at the company and they just said look you know uh given uh you know given this level of ARR we can we can take that amount of AR and put 2x that number of debt on the business you know because the business is so profitable because it's generating cash and that can allow that money to come out, you know, to shareholders. Um, so there are
2:22:41
Um, so there are a lot of interesting ways you can leverage debt.
2:22:44
I just think you have to be very careful if you are not quite a predictable company that has a path to profitability.
2:22:51
Then I think you've just got to be very selective.
2:22:52
Yeah, it feels like something where uh you can get in a lot of trouble if it's if it's a if it's not a foregone conclusion that you can raise another equity round.
2:23:00
Like but if you're at the place where you could always do an equity round, there's always demand at some price.
2:23:06
Um but if if you're ever going to be in a situation where there might not be enough demand to clear your next 12 months, 18 months of burn um at any price, you are in trouble potentially.
2:23:18
Um >> yeah, >> give us um Yeah, please.
2:23:19
Oh, I was just gonna say, uh, we had Pete from Astronomer on the show.
2:23:23
Uh, how where does that rank in terms of like crazy wild cards in your career?
2:23:29
I I feel like it was uh it just gripped the whole tech community and I'd love to know a little bit of the playbyplay of like how you experienced that internally.
2:23:39
Uh, because it feels like the most unexpected like story to ever emerge out of a company that is uh managing well hand and well handed extremely well handled. Yes.
2:23:53
But we all know about Apache Airflow now.
2:23:56
>> No one no one had in their 2025 bingo card play or Apache Airflow. >> Exactly.
2:24:01
>> Both are and Gwen at Paulra.
2:24:01
But um you know I I I got a call from you know my partner Enrique who's on the board you know Thursday morning and you told me what happened and I hadn't you know uh been on Thursday.
2:24:14
Thursday it was the concert was like Wednesday night right?
2:24:18
>> Concert was Wednesday night. Yeah, exactly. >> Hey, how's it going?
2:24:22
>> So, I get this call and I'm like, oh my god, that's crazy.
2:24:24
And so then I went on social media and watched the video and then later that afternoon, you know, I ran into my wife and I was like, "Oh, this thing happened to our company."
2:24:34
And I was explain and I I assumed it was sort of this thing like in this narrow tech world, you know, that I that I live in, you know, and she was like, "Oh my god, everyone's talking about that video. It's gone totally viral.
2:24:46
viral. my kids were picking me and I've you know the the part of it going you know viral in tech that's happened and good news bad news at various of our companies over time but the part where it became part of the cultural zeitgeist for the entire country for literally 3 days um never experienced anything like
2:25:06
that um and um you know I think the board um and and the management team Pete obviously is a founder >> um they you They did a really good job of, you know, one being, you know, number one, you know, we we responsibility to the employees and our customers and and let's do what's right. Um, number two, um, you know,
2:25:27
Um, number two, um, you know, this is obviously a cultural moment, but there also real people involved and their families and things like that.
2:25:38
>> So, I think they handled in a way that I think reflected a bit of that balancing act.
2:25:42
Um and um and so you know I think uh you had Pete on the show. He was great.
2:25:49
And >> um you know and I think uh the company uh came out the other side uh with more visibility.
2:25:57
Certainly I think our our customer base feels very good about the business.
2:26:01
The business you know um you was growing very rapidly um and and has continued to do so.
2:26:07
So you know we feel really good about the business.
2:26:11
We feel good about the investment and um you know uh thank God for Gwennneth. So >> yeah. >> Yeah.
2:26:18
As always >> absolute masterclass.
2:26:19
Uh give us uh an overview of how you're thinking about uh what some would call American dynamism but just this industrial renaissance.
2:26:29
How you're thinking about what's what's in what's important but maybe not investable versus what's important and investable from a venture standpoint. >> Totally.
2:26:38
Well, we we don't like to call it American dynamism, but we call it industrial renaissance.
2:26:42
But, uh, you know, we we we think that, you know, it's an it's a really important um trend and opportunity.
2:26:49
And certainly, you know, I think that that there enormous tailwinds um, you know, that are um, you know, heading in this direction.
2:26:58
Certainly the the advances in technology and computer vision and um, and and the sheer cost of robotics and automation has come down.
2:27:05
has come down. the you know the geopolitics onshoring tariffs labor shortages all of that I think is creating uh the tailwind certainly you've got similar set of dynamics uh if you extend into you know the military and and and department of defense you know our our strategy here um you know
2:27:27
really starting with our investment in ka systems way back when yeah >> I think has been to invest in companies where >> the the core innovation is still software, you know, and there are elements that involve hardware and robots and things in the physical world, but the core innovation is ultimately software. And I think KBO is a good
2:27:45
And I think KBO is a good illustration of this.
2:27:47
You know, when when Mick showed me the prototype way back when, 2004, he said, you know, inside an Amazon warehouse, a worker spending 90% of their time walking to the shelf and 10% picking.
2:28:01
And so he said, and he said, having a robot pick one of a million SKs that are different shapes and sizes and weights and colors and t-shirts versus like a broom, he's like, that's an impossible problem.
2:28:13
It won't be solved for at least a decade.
2:28:14
You know, it's now been, >> you know, now 20 years, it's still not a solved problem.
2:28:18
But he said the problem of getting a robot to move a shelf from point A to point B.
2:28:23
He said that's a trivial problem, you know.
2:28:25
And so his insight was instead of having the worker go to the shelf, I'm going to have the shelf come to the worker, you know, and that alone triple productivity built this great company powering all of Amazon today.
2:28:38
It's, you know, it's really core to their fabric of how they run their their warehouses.
2:28:42
And so we're looking for opportunities like that that are fundamentally software at their heart.
2:28:48
It's more of a systems approach.
2:28:51
You know, really thinking about a problem holistically.
2:28:52
these companies tend to be more full stack as opposed to just selling a widget uh of some kind.
2:28:57
I think that also prevents you from being commoditized um by lowcost you know offshore manufacturers trying to come in.
2:29:05
So those are some of our thoughts kind of in this industrial renaissance world.
2:29:10
>> So you've backed every humanoid robot company. Um, no.
2:29:16
>> Sounds like sounds like >> Yeah, we were talking about this like >> you see the exquisite demo and I it must be a jump to try and understand okay >> can this person are they just a genius and they can build one or are they building a system that delivers to the tune of a million?
2:29:32
Uh we were talking about this with SpaceX obviously tons of rockets blowing up.
2:29:37
I think they're on ship 36 but like the goal is not just get one rocket to space like we did that. we went to the moon.
2:29:43
Um the goal is like get it really cheap and reliable so it's going every 30 minutes.
2:29:48
Uh same thing with uh what we're seeing with Zipline.
2:29:51
Those those folks are are just focused on like scaling and manufacturing.
2:29:57
The Starlink stuff's the same.
2:29:59
Uh it's a completely different dynamic and problem that you're actually solving.
2:30:02
Um Jordy, where you want to go next? >> Good question.
2:30:07
>> Good question. Um I guess yeah I think uh Erin Sllov had a post yesterday having some some uh he has a a manufacturing tech company and this idea of like >> basically yeah understanding specifically these industrial renaissance companies I have to imagine you're often times meeting entrepreneurs where you're like
2:30:32
this seems like a good business it should exist but um like what what is your like actual investment criteria for a company that wants to make things in America that's not not a company that is a system for making things but but something where it's an actual uh physical product as the as the output. >> Yeah. I think if if you're actually a a >> Yeah.
2:30:53
I think if if you're actually a a a core manufacturer as opposed to a technology company that's automating manufacturers, um I think the bar is very high to to invest as you know um from a a venture standpoint because I think there are a couple things you got to believe.
2:31:11
I think number one, you got to believe there's truly proprietary technology and and that's just a high bar in manufacturing.
2:31:19
manufacturing. I mean you you know you've seen it you know with um you guys were referencing the Roomba earlier and >> you know Shark Ninja you know like anytime you know every Dyson product every you know uh product that's out there they have some equivalent um and and Shark Ninja is a great company I'm not disparaging them at all but you know
2:31:39
you realize you're going to get competition very quickly as a manufacturer and so the question is where what is that source of um you know competitive differentiation And oftentimes it's software, some kind of software or network effect or data, you know, that allows this business to maintain proprietary margins and a huge competitive advantage over time. And so
2:32:00
And so I think you need that or you need just an extraordinary, you know, entrepreneur, a founder, you know, an Elon, you know, founder.
2:32:09
I just think it takes a very special kind of founder to build a a physical products company.
2:32:14
you know, you're you're just dealing with the physical world has is is far less forgiving on on so many dimensions.
2:32:21
One, just making money, but two, having it work.
2:32:26
>> On that note of software, is it always some is it always software that enables like the bootstrapping of a network?
2:32:30
I'm thinking of like Apple gets power from software, but not just software.
2:32:34
It's like iMessage integration, a network.
2:32:36
Uh Nvidia gets power from software, but it's CUDA. What is CUDA?
2:32:41
It's a network of talent and and standards.
2:32:43
It's not just you copy CUDA and you're good or you're feature parody.
2:32:48
Tesla, they have self-driving.
2:32:51
It's great as a single thing, but it really is like a scaled network that gets better the more people use it.
2:32:56
Is there some sort of dynamic there that creates a flywheel effect? >> Absolutely. Yeah.
2:33:00
I think that flywheel is really important.
2:33:02
You know, we're investors in this logistics company called Shipob. >> Oh, yeah.
2:33:07
>> And you know, Ship Bob's like a, you know, it's a tech company up and down.
2:33:10
But when you think about why is ship Bob so powerful, it is ultimately a network effect because we have so much density.
2:33:17
We have so many warehouses.
2:33:17
You know, we know and we have so much data.
2:33:20
We know that, you know, customer A in New York City is going to order this product from this vendor.
2:33:28
So, we're going to make sure that product is sitting in a warehouse on the East Coast.
2:33:31
And by the way, we're not going to get that right 100% of the time.
2:33:35
the 30% we get it wrong, we're going to take be able to fill up an entire truck of stuff from LA and get it to New York so that we can inject that package, you know, at the last mile and bring down the package, you know, the the delivery cost by two or three dollars.
2:33:50
And so it's a classic network effect business that's underpinned by data and software, but certainly relies on in in that example relies on physical warehouses.
2:33:58
you know, we have a certain number of physical. We don't own those.
2:34:01
You know, those are through partner sites, but those are physical assets that are out there that create the density.
2:34:07
We're using physical trucks to move things from point A to point B.
2:34:11
But ultimately, our ability to do that is driven by data and software, you know, uh at the ground level.
2:34:17
and and those founders made a really interesting decision >> which was we are going to partner with third party warehouses but they have to use our entire stack of software.
2:34:27
We're not going to rely on their if they don't use our warehouse management >> our pick and pack software they don't adhere to all of that we're not going to work with them because we need to have that >> you know pane of glass that sees every bit of information from from soup to nut.
2:34:44
So I think your point uh John's a good one which is you know the these businesses that ultimately create some kind of network effect um ultimately you have that flywheel that that keeps going and allows you even you mentioned Door Dash I think on a previous um you know podcast a few days ago.
2:35:00
These businesses that people think of as low margin once you get that network effect and that flywheel it you can just compound forever.
2:35:12
>> Well thank you so much for joining.
2:35:12
Uh there's a Ship Bob fan in the chat spamming Ship Bob will be a 10 billion Bob. >> Let's hear from Ship.
2:35:18
You guys have a great rest of your day. >> All right, everyone. You too. >> See you.
2:35:23
>> Uh let me tell you about public.
2:35:23
com investing for those that take it seriously.
2:35:26
They got multiasset investing, industryleading yields, and they're trusted by millions. And our public.
2:35:31
com update is that Bite Dance just made more money than Meta for the first time in history.
2:35:38
Yeah, I think this is a boo because we root for Zach. We root for America.
2:35:40
We are team Zuck, but you got to give it up >> but you got to give it up for big numbers.
2:35:44
Congrats to the team over at Bite Dance putting up some heroic numbers.
2:35:47
48 billion dollar in Q2 uh to Meta's 47.
2:35:51
5 just just just over 47 billion.
2:35:57
Oh, it's got to be rough over there.
2:35:59
>> Well, up next we have the founders of Framer.
2:36:02
>> Welcome to the stream. How you guys?
2:36:03
>> Gentlemen, what's going on? >> Hey, guys. >> Good to be here. >> Big day. >> Big day. Uh you guys are up late. I'm so Yeah.
2:36:11
Thanks for hopping on late.
2:36:11
I'm so trained to when we have two people, they got to debate.
2:36:14
I think we got to get these guys to debate. >> What are we debating? >> We do that all day. So, >> yeah. Yeah. Yeah.
2:36:20
That's the life of a of a founder.
2:36:23
>> Uh g give us uh give us an intro, the update, and uh >> I got the gong ready for you guys. >> What? Yeah.
2:36:27
What is top of mind for you guys? >> Uh just wait. >> Just you'll find out. >> All right. Yeah. >> All right. Here we go. >> All right.
2:36:36
So, the update is uh so we're Framer.
2:36:38
We're uh a web design platform for uh for professional or like professional web design platform where companies can run their entire.
2:36:44
com and we uh uh raised series D that we announced today. >> Let's go. >> Wow. That's what it's for.
2:36:53
>> That's what the forund2 billion. >> Wow. That is a big number. >> Congratulations. >> Big number.
2:37:01
Um >> are you guys in sales?
2:37:04
>> What the >> uh we just celebrate.
2:37:05
We we just enjoy >> huge capitalism fans honestly.
2:37:10
>> Yeah, it's really just a love for business and big numbers.
2:37:13
>> Um but uh but yeah, it's it's a staple and it's a it's our pleasure to hit it uh whenever whenever we can.
2:37:18
Uh but give us give us first time on the show.
2:37:20
Give us quick background on on the on the company.
2:37:25
You guys want to start >> history? >> Yeah.
2:37:29
So, um I'll go pretty quick like we um we're both product designers and um we sold our first company to Facebook where we were product designer for a couple of years and after Facebook we figured um hey let's do another company before we get old.
2:37:41
Uh that's more than 10 years ago and um we always love building creative tools.
2:37:46
building creative tools. So we figured okay you know like starters are pretty hard why don't we pick something that we really like working on so let's build the next Adobe and uh everybody around us said like don't do that you'll probably raise some money but not for
2:38:00
design tools just don't tell any investor you'll be you'll be be building that but we did and then uh 10 years later and a big pivot here we are >> overnight overnight success >> overnight success success >> basically what framer is really good at or yeah like Uh, you know, I can talk about the product market fit. What we're
2:38:18
What we're really good at is we allow folks to basically designers ship websites themselves for companies.
2:38:24
So, you have your, let's say, your Figma where you do your design and you turn it into an application.
2:38:30
>> You've got tools like Squarespace and Wix where you make your personal sites, but a lot of company websites are still built with code. It's kind of slow.
2:38:37
You need a developer team. >> Yeah.
2:38:40
And uh over the last couple of years, we saw more and more companies just uh wanting to ship sites much faster and do that in a visual tool. That's what we built.
2:38:48
>> What's your take on the the the vibe coding boom?
2:38:50
Where what are the within I mean we're all familiar with the growth of vibe coding stuff.
2:38:56
Um what are the overrated use cases?
2:38:59
What are the underrated use cases within the vibe coding boom?
2:39:05
>> Yeah, I think we're about to find out.
2:39:07
Um, I think, um, I think everybody's just really excited with where it's going to go because >> in the beginning of this year, I'm sure that if you type in, you know, like make me a nice front page for the company that you're at, then, >> you know, you're not really going to use that result yet.
2:39:22
But you can see it's going to get there, right?
2:39:24
Like we're close enough for the LMS to like it's not going to win any awards.
2:39:27
You can't really use it for your site yet.
2:39:29
Maybe for your personal site. Mhm.
2:39:32
>> So I think over the next year or two, um, somebody's going to make that work for companies.
2:39:37
Somebody's going to make that work on brand.
2:39:38
Uh, somebody's basically going to allow designers to sort of like teach the LLMs how to generate just like an engineer kind of handholds an LLM to write the code. >> Yeah.
2:39:49
>> And I think we're kind of on the on the on the crisp of figuring that out.
2:39:51
And that's obviously what we're spending a lot of time on.
2:39:56
>> How how important is the uh is the kind of network around Framer?
2:40:00
I know there's people that make businesses, designing sites that can be adapted and things like that.
2:40:07
Is that a uh core part of the business in in the way that maybe sort of like the Shopify app ecosystem might be or or is it more uh in the direction that the platform is heading?
2:40:19
Is it more about allowing people to generate, you know, sites entirely um based on their own brand assets and things like that? >> 100%.
2:40:30
So, we call it uh creators and it's it's a it's a whole economy by itself at this point.
2:40:35
Um people building more than just sites for clients, which is typically what you would think of is okay, you you build a website for a client.
2:40:45
Um next to that, they build templates, they build plugins, they build all kinds of assets that can be sold on the frame marketplace.
2:40:52
Um and we're starting to see people make serious money uh off of that.
2:40:56
Um, the most impressive examples are folks that basically start with a new Twitter account with zero followers and then set out a challenge to get to 10K in let's say 30 days just by making sites and selling assets on our on our marketplace.
2:41:15
>> Are they successful or it sounds like they've they've already done this?
2:41:17
Is is that what you're saying? >> Yeah. Yeah.
2:41:20
This is happening every day.
2:41:21
This is h this is the whole thing now uh on design Twitter and uh I think um yeah there's a couple of outlier examples of people are now doing like three or 400k a year just building businesses on framework by selling these assets. >> Yeah.
2:41:34
Are there are there uh features or functionalities that you think you want to add based on the generative AI boom?
2:41:43
I'm thinking like uh we've seen these like not just okay build a landing page for a business but build a game or use 3JS or WebGL and there's like there's more tools that feel previously it was like okay that's if you're going to build a a video game in the browser like that's going to take you a long time and now people are vibe coding them.
2:42:02
Are there other features or you know web components that you want to like surface more easily to you know proumers?
2:42:12
Yeah, if you have like a a big web platform, you can go a few ways.
2:42:14
Like one is obviously the marketing sort of that what we're trying to figure out.
2:42:18
Just help startups ship the most beautiful websites >> really quickly that that go very fast.
2:42:24
And then >> you can always go into e-commerce, but all I see is Shopify.
2:42:27
I see a lot of people try, but all I see is Shopify.
2:42:30
So, >> you got to be pretty confident to go after that.
2:42:33
And then the third thing is that >> there's something between an app and a site that people can't really make today, right? So, there's websites.
2:42:40
We're really good at marketing websites now, but there's obviously websites that do more, right?
2:42:44
Like so they're more like a database, a catalog, they could have a feed, they have login state >> and that's that was always constrained by people that could express that could express that logic and for that you had to code and I think you know like we're in an interesting time where the LLMs can maybe help with that.
2:43:00
So it's definitely something that we're also uh going after. >> Yeah.
2:43:04
How how uh it feels like your guys' strategy is uh uh the the entire you know market for creative tools today is extremely loud, right?
2:43:14
Every every day there's new tools launching.
2:43:16
You guys seem to be extremely uh focused still on on this core value prop of helping people make beautiful, simple, professional sites.
2:43:26
simple, professional sites. is uh how much how much uh what do you h how do you think uh not not to get too far out into the future but how do you expect uh like do you think the dot like my view is that the dot is is like a hyper
2:43:42
durable asset that will continue to have a lot of value for for de you know for for the for the uh you know the next decade two decades etc and there was a time when people thought that URLs and and everything would just become application and things like that and I don't think that's panned out. Um, how
2:43:59
Um, how what's your guys' vision for uh basically the future of the website itself, right?
2:44:06
At a at a time when you know already we're seeing in different tools um you know different you know consumer LLMs that will generate UI and scrape websites and things like that.
2:44:17
Uh how what's your kind of um what does the website look like in 10 years?
2:44:24
>> Yeah, not not like a chatbot, but you'd be surprised.
2:44:26
We've been pitching obviously for this round and you'd be surprised how many VCs think that that might be the case. >> Yeah.
2:44:32
>> Um but the web uh as a like as a form to present your brand and build brand equity just isn't really going anywhere.
2:44:40
But one of the things that we really like I mean we're both product designers.
2:44:42
So obviously we have business goals, but if you ask me why I get up in the morning, it's also to make the web cooler and the browsers can do a lot of really cool stuff, right?
2:44:50
The LLMs unlock people to build stuff for that and the websites kind of look boring.
2:44:57
Like they've only gotten to look more boring over the last 10 years.
2:44:58
So I think tools like framework can really help the designer sort of express more interesting websites.
2:45:05
So I think the you know with that and more people being able to execute on that but as well as sort of like you know showing more like doing more cool stuff that the browser can do like combining 3D and video on websites making much richer cooler experience.
2:45:21
I think that's really where things are going.
2:45:23
So I think it's only the browser is still such an underrated sort of piece of technology in terms of how it's used for presentation and if we give folks the tools to build like cooler output for that then they will.
2:45:35
Yeah, I think I think it says a lot that all you know every major AI company wants to have a browser themselves or they want to buy Chrome, right?
2:45:41
That that to me says, you know, all you need to know at least for now around where >> uh where are the categories going >> and it's pretty interesting that that all uh the AI brands uh are very heavy on their personality on the internet, right?
2:45:58
So they all have free websites, beautiful brands, um really nice. coms. Yep. Do's forever.
2:46:04
We're We're big do enthusiasts here. >> Huge enthusiasts.
2:46:08
Thanks so much for hopping on, guys.
2:46:10
>> Yeah, congratulations you guys and the whole team. Awesome. >> Thanks for having us. Thanks so much. >> Cheers. >> All right. Cheers. >> Bye. >> See you.
2:46:16
>> Up next, we have a great. com. Super. com.
2:46:20
But before I tell you about that.
2:46:20
com, let me tell you about adquick. com.
2:46:21
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2:46:25
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2:46:26
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2:46:31
and we will bring in superd. com with some news. One of the best. com. >> How you doing? Good. >> What's happening? >> What's latest? >> Good. Doing well. Thanks for having me.
2:46:44
>> Thanks for hopping on. Give us the news.
2:46:47
>> Well, first I I saw your comment.
2:46:47
Thank you for the uh the domain shout out. >> Of course. >> It's fantastic.
2:46:52
Give us before we dive into the news, how how did you get any crazy stories getting the domain?
2:46:57
>> Yeah, definitely crazy stories.
2:46:57
So, uh we we we had a different company name.
2:47:02
We were called Snap Travel. We wanted to rebrand.
2:47:04
We did this whole activity and this whole exercise.
2:47:05
And we liked the name super because it it's how it made our customers feel like when they saved money, when they found a great deal, they felt super. And we loved it.
2:47:13
But it was such a generic word.
2:47:14
If you Google super, you're just like getting Super Mario Brothers, you're getting whatever you're getting.
2:47:19
So we're like, "Okay, we got to go and get the com."
2:47:21
We reached out multiple times. Didn't get any answers.
2:47:25
And we're like, "Okay, forget this."
2:47:26
B Meta at one point launched some product called Super.
2:47:29
were like, "Oh, they probably like are going to try and buy it."
2:47:32
And it was just like, "We're not getting this domain."
2:47:33
And then we got a domain broker.
2:47:35
Uh, and out of nowhere, they were like, "Okay, this person's like interested."
2:47:38
But it was a pretty intense negotiation process.
2:47:40
It was kind of in the in the single-digit millions.
2:47:44
Uh, and then it got to the board level.
2:47:46
Uh, and it was split and it was 50/50.
2:47:48
Half the people were like, "I don't think this is worth it.
2:47:50
People don't really care about domains anymore.
2:47:53
They just like search on Google." >> It's so not true.
2:47:54
It's so like people are people are people I mean domains are still >> I think wildly underpriced like dot specifically and it's because people have just been so trained if you've been on the internet for any amount of time you know that when you are on the website of a big business it's a short.
2:48:15
com and when you're on the site of a less legit less established business and consumers are really smart they just pick up on these things and um yeah It's interesting.
2:48:25
So you guys I I imagine you guys have trademarked super.
2:48:27
com because you can't trademark like super or who knows. >> That's right. That's right. So we trademark super.
2:48:35
com and very Anyways, the story was it was 33 on the board and ultimately as a CEO I get to make the hard hard decision.
2:48:40
So we're like we're going to do this.
2:48:42
So So we bought the domain and you're right.
2:48:44
I think I think for consumers it does matter, right? So >> totally. >> Yeah.
2:48:48
So the big news uh we just wanted to introduce our incredible momentum.
2:48:51
So we crossed over 200 million uh in annualized >> crazy >> and and and if you think of the evolution, so we've been around for about 9 years now.
2:49:03
We started the company and it was just like >> hotel this travel hotel deal, right?
2:49:07
So we were doing hotels for like four or five years and then we like completely rebranded to super.
2:49:14
com, expanded the product, introduced this membership program and that's just allowed the business to completely take off.
2:49:19
So, we're now, you know, hundreds of thousands of paying members as part of this membership club to like save more, earn more, build credit, uh, and just experience more of what life has to offer.
2:49:31
So, it's >> how is it how is it trying to get, uh, coverage from the legacy media for just doing a lot of revenue?
2:49:37
I feel like they they still are like, h, like I don't know if it's a story like come back to us when you raise like a million dollars, but you're like, >> ma'am or sir, I've we're doing hundreds of millions of revenue. I think this is more.
2:49:51
>> No, it it's it's so it's so interesting.
2:49:53
The traditional media, they don't they don't have the time to like think about that and there's like if it's a fund raise, I'm going to I'm interested.
2:49:58
If it's not a fund raise, I'm not interested. Right.
2:50:01
So, um but there's a lot of companies that are doing really well and driving a lot of revenue and I'm happy you guys are are talking to us. >> Yeah.
2:50:08
What are the other uh business models in the category that you deliberately avoided from like lessons from like the previous cycle uh previous strategies that maybe like might have product market fit loosely but not real sustainable business models?
2:50:25
>> Yeah, that that's a really good question.
2:50:26
So, let me take a little bit of a step back.
2:50:27
Okay, so the company Super.
2:50:29
com, we have a membership program called Super Plus.
2:50:31
Super Plus is 15 bucks a month.
2:50:34
And the idea is when you're a Super Plus member, you just get 15 to 20 benefits.
2:50:38
So you can save on hotels, you can save on gas, you can save insurance, you can save on pharma, you can earn money playing games, filling out surveys.
2:50:45
We have a master card that helps you build your credit score and earn 1% cash back.
2:50:48
And some people come in and they use like one or two products.
2:50:52
Some people use like five or seven products, but ultimately it's like you think this is worth 15 bucks a month or or you are getting more than $15 a month worth of value, right?
2:51:00
And for some people that just I just book hotels like once a month and I'm saving, you know, thousands of dollars.
2:51:06
For other people, it's I'm using the cash advance product. I'm earning money.
2:51:09
I'm building my credit score.
2:51:10
So, everyone kind of uses the app somewhat differently and we use AI to kind of customize the app.
2:51:16
So, you'll see what we think is most relevant to you that will give you the most value from your membership.
2:51:20
Now, you asked a question which is like what hasn't worked out, right?
2:51:24
So, we are like, okay, what can we add to the membership? What can we try?
2:51:27
try? We tried something about two years ago uh where we thought we could get into selling discounted like physical goods like actual products right found and what we learned yes it's very very tough it's almost impossible to compete with Amazon but the hardest part was that you can't consistently get
2:51:49
>> a large supply of discounted >> physical products because either it's like it comes and it goes and then it's like oh this is a hot item now and then it's not or it's like you outdated stuff and then it sits in a warehouse and you couldn't keep that steady supply of discounted goods and it became a very unreliable customer experience. So we
2:52:04
So we actually acquired a company tried to build up the goods business had a physical warehouse in in Miami and then we ended up just shutting that whole division down and and shutting down that warehouse.
2:52:16
So not overnight success >> what's working on the customer acquisition side?
2:52:21
what what where are you guys you know spending money on acquisition most aggressively and and uh then I have another kind of related question. >> Sure.
2:52:31
Uh so each product has its own acquisition channels that work well right so we don't necessarily advertise the entire membership and say hey come join and get like 15 plus benefits.
2:52:41
The way we acquire customers is we go for like one product and then they come in and they're like, "Oh, I'm going to become a member because this product is so worth it."
2:52:50
And then hopefully they stick around and do more things, right?
2:52:54
So for hotels, it's a very high intent product.
2:52:56
So what that means is it doesn't matter how much advertising you do on Instagram or Facebook, it doesn't really work, right?
2:53:02
What works is when you're on like Google or Kayak or Trip Adviser and you're like typing in like best hotel deals in New York and you have that intent to purchase.
2:53:10
So like on the travel side, it's a very high intent channels.
2:53:13
If you have something like make money playing games, that actually works really well on social cuz people are scrolling on Tik Tok.
2:53:20
>> What's the uh what's the what's what what's the actual economic model for that?
2:53:24
Because if anytime somebody says that I that if you tell John you can make money playing video games, his you know, I'm a little bit worried he's going to get on Super and and get have a little bit too much fun. He he likes video games. >> Yeah.
2:53:38
So, I'll tell you I'll tell you the model on that.
2:53:39
And first of all, it's not just games, right?
2:53:41
So, I'll give you one that's really easy to understand.
2:53:43
So, if you come to super.
2:53:43
com and you want to make some money and you go to earn, you may see something that says if you've never taken an Uber before, download the app, take your first ride, and get 20 bucks.
2:53:53
Pretty obvious, pretty simple.
2:53:55
So, they'll go in, they'll download the app, they'll take their first ride, and we'll just deposit $20 into their wallet.
2:53:59
And for Uber, that's obviously a user acquisition strategy.
2:54:03
they believe that that and Uber is probably paying us 20 bucks and we're just, you know, or 30 bucks and, you know, and we'll pass most of it back to the member.
2:54:10
Um, but for Uber, that's a user acquisition strategy and if they can then get that customer to eventually take more rides and that that's worked out for them and they were happy to pay that 20 bucks.
2:54:19
For game developers, it's kind of the same thing.
2:54:22
It's like, you know, you get paid for like downloading the app and getting to a certain level.
2:54:26
Now, if you get to that certain level, then potentially that game developers generated some revenue from you because you've seen some ads, clicked on some ads, maybe you bought some gems, uh maybe you did something else.
2:54:37
So, it's just it's just almost like an ad network play.
2:54:41
>> Um where it's just another source of user acquisition for a lot of these companies.
2:54:44
>> Are you guys uh do you guys spend time uh like thinking about uh how you're showing up, how the different products are showing up in LLMs?
2:54:53
Is that a meaningful acquisition channel for for you guys yet? >> It is. It is.
2:54:58
So, it's something that we're looking at closely.
2:55:00
Uh you've probably seen there's a ton of AI companies that's working to help you optimize how you show up in LLM.
2:55:07
So, some of it is almost traditional SEOish where you just kind of need to have that basic infrastructure and right folder structure and red information.
2:55:16
But what we're seeing is that the LLMs are pulling from a lot of userenerated content as well.
2:55:22
So things like Reddit and like Trip Advisor forums and you know uh you know even YouTube for that matter like wherever user generated content is happening they're pulling from that as well.
2:55:31
So some traditional SEO and it's actually spending a lot more time and energy thinking about user generated content and how we can help you know be part of and moderate some of those conversations. >> Totally >> great.
2:55:42
Thank you so much for hopping on.
2:55:43
We congrats on the milestone.
2:55:45
>> Massive more air horn.
2:55:48
>> Enjoy the rest of your day. >> Cheers. >> All right. Thank you guys. >> Congrats.
2:55:51
>> Let me tell you about bezel. Getbzel. com.
2:55:52
Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. Go to getbzel. com.
2:55:59
And we have another great.
2:55:59
com coming into the studio. Keychain. com.
2:56:05
Simplify your supply chain with AI powered CBG. Uh good to meet you. How you doing? >> Thank you.
2:56:13
>> Uh would you mind kicking us off with an introduction on yourself and the company and uh maybe some background um and how you got into this particular business? >> Sure.
2:56:21
I'm Oshin Hanahan, co-founder and CEO of Keychain.
2:56:23
Uh, I spent the last 14, 15 years building online marketplaces.
2:56:31
>> I built a company called Handy.
2:56:31
Handy's like Uber for Handyman and Cleaners.
2:56:35
>> Built it up to nine figures of revenue. Sold it to Angie's List. >> Congrats.
2:56:40
>> Angie's uh Yeah, that was a that was a good outcome.
2:56:42
Uh, the largest home service company in the >> Hey, let's give it up for good outcomes. Yeah, congrats. That's awesome. Sorry. Continue.
2:56:55
>> What gets a ding in a bell?
2:56:55
What are the What are the rules? >> You never know. There are no rules.
2:56:58
It's whatever I feel like.
2:57:01
>> But keep keep it rolling. We'll see. I I can feel some more.
2:57:05
>> I feel some more stuff coming.
2:57:08
>> Um I I took on running Angie.
2:57:08
So, uh I became the CEO of Angie Man. >> Sorry. Sorry.
2:57:16
I just had to had to mess with you.
2:57:18
I mean, it is found that's put him in the founder seat. That's good.
2:57:22
>> Not enough not enough not enough uh founders do that is get acquired and then take on the take on the top.
2:57:27
>> I don't know if I'd recommend it. It's a lot more work.
2:57:29
I feel like when you sell a company like there's this thing where you can just rest, invest. Yeah.
2:57:34
>> And that's what my co-founder wanted to do.
2:57:36
He was like, could we not do all the things we should do all the things?
2:57:41
>> You're like, get ready to be important at work, buddy. every day.
2:57:45
Not just some days, every day. >> That's wild.
2:57:47
Um I advocate that for all for all my friends who get acquired.
2:57:50
I say you should become the CEO of the acquiring company. That should be the goal.
2:57:55
Um but yeah, anyway, you wound you found your way elsewhere. >> Yeah.
2:58:00
So I I was a CEO, my co-founder was chief revenue officer, and we um >> we we ran it all the way to the end of 22 >> and then we both left and we um took a little break and then started another company.
2:58:12
Um, and we, you know, second time founders tend to do this thing where they think they're going to start a studio company where it's going to have like four or five companies inside it and they won't actually have to run many of them.
2:58:23
We we we tried to do that uh very unsuccessfully for all of about a month and a half.
2:58:30
>> Uh, and there was one idea inside there that just started to work really well and we um we doubled down on it and really got behind it.
2:58:36
Um, and we've been running it for about a year and a half.
2:58:41
And the idea is to build the platform that CPG runs on.
2:58:44
So you you guys know this, but most CPG companies don't run their own facilities.
2:58:50
They have co-mans or co-producing facilities that run >> all of their production.
2:58:54
Um, and there's a whole industry of about half a trillion dollars in the US of 20,000 companies that make, you know, all the products that you eat, drink, wash your hair with.
2:59:06
Um, and we are building the ecosystem and platform for those companies to run on.
2:59:12
So, we're starting with search and discovery at Keychain, and we've built the deepest database of how brands and retailers find manufacturers. >> Um, >> yeah.
2:59:23
So I um am like super intimately uh familiar with the space.
2:59:27
I ran a consumer package goods company and it was always a struggle finding um finding supply chain partners.
2:59:33
It was always some kind of like loose network of asking friends for favors and whatnot.
2:59:40
The the the best-in-class database about a decade ago was uh just from a news website called BevNet.
2:59:45
And they and they did they kind of aggregated up some manufacturers.
2:59:50
I think they let people run ads.
2:59:51
uh and it wasn't their primary business.
2:59:54
They were mostly like a news and reporting organization, a trade a trade publication.
2:59:57
Um so it makes a ton of sense.
3:00:00
I would love to use this product if I was building a CPG company today.
3:00:04
Um >> yeah, it's funny the process the process somebody has an idea for a CPG brand at least prekey keychain and it was like you just start asking your friends, people random people would how would you make a protein?
3:00:16
I met I met your co-founder Jordan during I think probably back in 2020 cuz was investing in random consumer brands.
3:00:23
Super sharp um uh uh kid at the time now now clearly grown man. >> Yeah.
3:00:31
Um but uh but yeah this process is is still I mean the the challenge is is in how do you make sure that the incremental consumer products entrepreneur and the I would say it's easier to go acquire the customers that are making a lot of net new products or have like a product release schedule.
3:00:49
It's also how do you make the the incremental CPG founder aware that keychain exists so they don't go through the traditional process of just asking friends and asking around how do I make this thing?
3:01:02
>> Yeah, I I think you're right and that's that's where we started.
3:01:04
So we we built the product for enterprise.
3:01:06
So at at uh at Handy and Angie, some of our biggest partners were the Walmarts of the world and the Targets of the world and the Costos of the world where we did their home service.
3:01:16
So we we had those relationships and they obviously make most of the private label product in the in the in the country comes out of the biggest retailers.
3:01:24
So we actually built the product for large private label um brand owners, the people who you know churn out product every single day. >> Yeah.
3:01:35
>> And that's where we started.
3:01:35
Um so today eight of the top 10 retailers in the country use keychain.
3:01:39
And the same is true actually of the large brands.
3:01:42
So you think of the large strategic brands.
3:01:45
Some of them have invested in keychain like Hershey's and General Mills.
3:01:47
Um they obviously have a lot of facility that they they you know make some of their own product but they also contract outsource a lot of it.
3:01:55
So we built the product for them to be able to search for manufacturers. And it it's funny.
3:01:59
So because we built the product for enterprise, we almost got the startup for free.
3:02:08
like we got the fact that the startups are out there and they're constantly looking, you know, it's harder for them, but because we built this data asset.
3:02:16
Um, and I, you know, I heard you in your last segment talking about SEO and LM optimization, we started with the data asset, which is the deepest asset anywhere in the world of US CPG manufacturing.
3:02:27
We've invested millions of dollars into building it.
3:02:32
Um, and it frankly can tell you who can make what better than any broker, any trade show, any, you know, phone a friend. >> Yeah.
3:02:40
Are you guys, do you feel like you're is is it trade shows that you're disrupting, right?
3:02:44
I mean, if you wanted to, if you wanted to go, if you wanted to make CBG products and you're Target or someone like that, you're going to a trade show and you're like, "What can you make for me kind of thing?"
3:02:53
And, uh, this just seems a lot more efficient.
3:02:57
Uh, I I went to Expo West once and I almost overdosed on caffeine because it was like that year every single product just had maxed out caffeine.
3:03:04
It was protein bars with caffeine and all that stuff.
3:03:08
>> This is deeply bearish for Las Vegas.
3:03:08
We need to get Taylor Swift to go to the sphere immediately because there's going to be no more trade shows after this is done. Just kidding.
3:03:17
>> Well, we if you if you had gone last year, I think you would have o overdosed on uh psilocybin because everything seemed to have some form of like mushroom in it.
3:03:26
>> Or you would have overdosed some protein.
3:03:28
>> There's always a trend protein protein psilocybin. >> Oh my god. >> Yeah, there you go. You got it. Yeah, you got it.
3:03:34
for when you want to build muscle while you hallucinate, >> which is first.
3:03:40
But anyway, um so we we don't so much think about it as disrupting trade shows because we really do think there's a role for trade shows and it's just not what we think.
3:03:50
Trade shows are a truly awful way to do structured data discovery.
3:03:57
And that's what some people do to trade shows.
3:03:59
Like they walk around looking for a particular thing.
3:04:02
Trade shows are a freaking amazing way to deepen a lot of relationships quickly. >> Yeah.
3:04:11
>> So, if you know who you're meeting >> and you've done the research in advance on Keychain and you've set up conversations, you can meet the right 15 manufacturers in 30 minute segments and have the best trip to Expo West ever.
3:04:23
Or you can wander around getting absolutely loaded on caffeine because you're going from booth to booth to booth and have a pretty ridiculous time and maybe you meet two of the right people.
3:04:34
So it's like how do you take structured data and figure out how to appropriately use the right tools so that you can have a great trade show experience.
3:04:44
And that's the first that's effectively the first product the keychain has launched.
3:04:48
So that product today is in month 18 >> and it does about a billion dollars worth of search volume per month. >> Wow.
3:04:58
>> Um and we're in the process now of launching our second product which is a bridge into the operating system for manufacturers. >> Yeah. Uh last question.
3:05:07
We we we got to let you get out of here but uh we have one more sound effect.
3:05:12
Do you have any fundraising news for us? >> We we do. Yeah.
3:05:17
We we we we raised a little bit of money.
3:05:19
Um >> how much did you raise?
3:05:22
>> We've raised in total the last round was 30 million.
3:05:26
So we raised $68 million. >> Wow. >> Congrats. >> There we go.
3:05:32
>> It's almost like you've done this before.
3:05:36
>> The the ding and the bell thing.
3:05:37
>> This Yeah, that gong hit is uh authentic. That's uh analog. We have a real gong. >> Oh, that one's real. >> That one's real. Yeah.
3:05:45
>> That wasn't a video of you doing that before. No, no, no, no. We have a real gong.
3:05:49
Anyway, thank you so much for hopping on the show. >> Awesome. Yeah, great to meet you. Congrats on Boston.
3:05:54
>> We'll talk to you soon. >> Bye.
3:05:56
>> Uh that was a very cool segment.
3:05:56
Um I would have killed for that in 2012.
3:05:59
Um anyway, let me talk about Wander. Find your happy place.
3:06:04
Book a wander with inspiring views, hotel, great amenities, dreamy beds, top tier cleaning, and 24/7 concier service.
3:06:09
It's a vacation home but better.
3:06:11
And up next, we have a guest in the ream waiting room.
3:06:14
Let's bring him into the TVPN Ultra Dome.
3:06:18
>> Sean, you welcome to the show.
3:06:20
>> What's happening, guys? How are you? >> How are you? >> Good to see you. Good.
3:06:23
This is I'm just looking I mean, >> this is what the fortress looks like, man.
3:06:28
>> Welcome to the fortress.
3:06:30
>> Finance, the welcome to the capital.
3:06:32
>> Thank you for having me. We love you guys.
3:06:34
Um for news, it's phenomenal.
3:06:36
So, >> uh, kick us off with just a brief introduction on yourself, a little bit about your career, and then I want to go into, uh, the, uh, the the hope for common stock, the bullcase for for startup Common Stock. >> Yeah, for sure.
3:06:49
So, um, I'm John Callahan.
3:06:52
I, uh, been an entrepreneur in venture capitalists for a long time. We started True in 2005.
3:06:55
We're an early stage fund.
3:07:01
>> There's also a sound effect.
3:07:02
>> 20 year 20 year overnight success. >> Yes. >> Yeah. Exactly.
3:07:05
That's the way it all is here in the valley.
3:07:06
So uh yeah so you know we we started the firm with a vision of frankly our tagline was more venture less capital we thought the world needed venture capitalists who were going to you know take big risks and entrepreneurs you know were coming out at that point by the way post sort of bubble crash post 1. 0 auto crash.
3:07:25
There were a lot of new technology changes, DHTML, open APIs.
3:07:27
So, all of a sudden, all these really creative founders were coming up with really cool ideas.
3:07:35
You guys remember mashups and you know, it was it was you could do a lot of things with all of this infrastructure that had been built in the 1.
3:07:42
0 and you could build a lot of application layer value.
3:07:44
So, that that is that is a pattern I will talk to you about here about what we're seeing today.
3:07:50
So, um that worked out really well for us.
3:07:53
TR's been uh extremely lucky.
3:07:55
We've been investors in category defining companies like Fitbit, Pelaton, Ring down in LA.
3:08:00
Jamie Simmonoff is awesome.
3:08:03
Also in LA, Sweet Green with John Neman.
3:08:07
>> Uh Ring, which which ring >> isn't Ring the joke that say there is only one door.
3:08:14
>> There's only one security company.
3:08:14
The one that protects you and your family and your neighborhood. Ring. >> Yes. Yes. Yes. Of course. >> Yeah.
3:08:21
We uh the company is acquired by Amazon. >> Yeah, that's right. That's right. Jamie up.
3:08:24
>> I had a funny ring story.
3:08:24
Uh, someone on our team was was dropping something at my house the other night and I see somebody with a hat on and a backpack on outside walking around my car.
3:08:34
I'd already I was already in uh >> like about to go to sleep or whatever and I fully thought uh Dylan on our team was was somebody doing a break in.
3:08:43
So >> yeah, in the early years of that in terms of what Jamie, you know, I think at one point they caught a criminal a day.
3:08:52
They did a big thing with the LAP. It was just awesome.
3:08:53
But also like the wild animals and all the Anyway, >> Ring is great.
3:08:58
We're also big in enterprise.
3:08:59
Uh we do a security hashy corp, all sorts of other things.
3:09:02
We've had seven IPOs, 60 MAX.
3:09:04
So we've been doing this a long time.
3:09:07
Um >> and we're the biggest in our category of of Pure Seed, four billion in capital, 16 partners. >> Um it's all we do. All we do. >> That's amazing. >> Yeah. >> Um yeah.
3:09:17
So take me through uh like the last few cycles from your perspective, what's changing around uh where the founder sits in value acral common stock uh how you process zerp and the last bubble and crash and all of that. >> Yeah, for sure.
3:09:36
So that's kind of what caused me to >> write this piece.
3:09:40
And it's like >> like all things I've been, you know, it it the good ones always take like an hour to write, you know, kind of thing.
3:09:46
and the other things that you kind of nash around.
3:09:48
nash around. So um been doing this a long time and have seen a lot of waves and we've been a part of a lot of waves and um the things I that we are experiencing now and I can talk through them around AI but it's really capital efficiency which we'll talk a lot about
3:10:02
that drives a lot of the the sort of solution to the tragedy or the fixing of the tragedy for common but capital efficiency the size of the TAMs um you know the founder ethos today your your question right now John like what's happening with founders um it's all leaning much more towards this do more with less. The conversation now at uh
3:10:19
The conversation now at uh you know great white in LA or at Koopa in PaloAlto or you know is >> um or blue bottle at South Park.
3:10:27
It's all about like how much I can build with how few either you know employees or or or capital. >> Sure.
3:10:36
>> And that's a good thing.
3:10:36
You know you guys talked about the earnings release yesterday of Nvidia, but Jensen said yesterday there's two to three tr I think he said three to four trillion >> Yeah. of capex.
3:10:46
Our numbers internally are sort of two to four trillion of capex going in uh to the to the AI wave over the next five years. >> Yeah.
3:10:58
>> So any other wave web 2 mobile cloud that we've been a part of the value that is created at the at the application layer on top of that capex is on the order of 5 to 10x.
3:11:14
So, we're talking about new TAMs, like markets that haven't been invented yet, that we don't know about yet.
3:11:19
Net new consumer behaviors, net new enterprise behaviors at a level that uh is, you know, I don't want to say they're like unprecedented, but like it's just really big.
3:11:31
And as you guys have noted a lot on the show, the waves happening really fast, quite a bit faster.
3:11:36
The waves kind of keep coming in faster in faster increments.
3:11:40
And we're just seeing that combination come together and create what I think is the vintage of a lifetime as a venture capitalist or as a founder.
3:11:50
We've got the most powerful tools we've ever seen.
3:11:53
>> On the TAMs, you know, like we we talk a lot about software.
3:11:56
It's one or two trillion dollars globally. I think it's like$1.
3:12:00
2 doubling in five years as a market. It's super big. Yeah.
3:12:04
Services are 17 trillion today. >> Yeah. >> Doubling. is to 30.
3:12:12
>> So like you have these >> Yeah.
3:12:13
I want I want to push on that common point because I feel like you're you're you're correct that uh revenue per employee has never been higher.
3:12:19
But I feel like with like maybe midjourney is the exception that proves the rule.
3:12:27
But founders have not turned their turn a cold shoulder to preferred equity in this cycle.
3:12:33
Like there are plenty of founders who are saying I'm fine selling 10% of this company every six months.
3:12:40
and and they've done very well and >> 15% every three months >> and each deal has been accreative to the share price potentially but uh you know they are getting diluted and uh and I'm wondering if there's more nuance to that >> structure yeah more opportunity than ever to do to do
3:12:59
more with less right but at the same time more >> more opportunity to do more with more >> the opportunity is so large there's there's a lot of reason >> if I could do more with less imagine how much I can do with more >> you can do with way more
3:13:11
>> I think it's a matter of magnitude here in context and you mentioned Zerb so we have to kind of talk about Zerb it's been super well covered but like >> that distortion is at a level you know remember it was like a decorn a day was being crowned there's three again
3:13:25
trillion dollars of limited partner capital locked up in in zombie unicorns according to Bill Gurley's estimate which I referenced in the in the in the piece and and other do you think this time is do you think this time is different. >> I think that time was different. So the
3:13:39
>> I think that time was different. So the answer is no.
3:13:42
I'm not count I'm counting on this time being a time that is like other waves.
3:13:46
The reason the distortion by the way like we should talk about it for a second.
3:13:51
So and and well here's why uh I think this time won't be zer. How's that for nuanced? Right. >> There you go. >> Yeah. >> Yeah.
3:14:00
Uh it's the same people like the founders.
3:14:03
If you look at the senior leadership at at at startups and companies, they were the ones who, you know, were at different levels through ZERP.
3:14:10
They've been stuck under the stack.
3:14:11
I'm not saying zero equity.
3:14:11
And and in fact, if you look at the last couple of, I don't know, maybe four quarters, there's probably been 20 mega seed rounds, the $350 million seed round or whatever, 20.
3:14:24
>> There have been 2500 seed deals done first half this year.
3:14:30
>> Um, and you know, it's power loss.
3:14:32
you're going to have lots of failures and stuff, but just just when you look at Zerp on a magnitude basis, so much distortion happened and I'm not saying there's not going to be those companies to your point that just keep raising and raising and
3:14:44
>> but I think founders are going to be a lot smarter about post money valuation because most of as you guys probably know that that the 14 >> there's a there's a company that there's a company that I won't name that is uh a perfect example of this. They've raised
3:14:57
They've raised under a million dollars. Um, so single Yeah.
3:15:04
hundreds of thousands of dollars.
3:15:06
They're doing millions of dollars in revenue.
3:15:08
They have logos from every single top AI company and they're just growing like a weed.
3:15:13
Like it's just clearly they're on to something and the founder has no real interest in raising.
3:15:21
He could pro like he feels like he can take it as far as it can go just off of just raw customer demand.
3:15:30
>> You guys had Wade on I think last week, right?
3:15:32
Um the great example of a company that you know raised a little >> um but kept making the choice.
3:15:37
I think that term you guys talked about was super cool. Seed scaling.
3:15:40
I hadn't heard that but it's but it's what we're seeing.
3:15:43
So I guess John the answer is like I'm not saying no venture capital.
3:15:47
I'm just saying, you know, that's me.
3:15:49
Uh, but I'm saying like, >> yeah, >> Zapier Zapier's funny because the the category that they're in, which is like aentic workflows, is like they're, you know, dominating, you know, having having been building this business for such a long time and yet I can think of like a hundred companies that have raised on the same kind of core idea of what they're doing.
3:16:15
So it that category is like turning into a crazy capital war, but hopefully Zapier is in a point right now given that they've been at it for so long that that they can just keep playing their own game.
3:16:27
playing their own game. Um >> yeah and I and and in in a world in which if it's true that on top of all this capex all these net new companies and behaviors are going will be created there's I just think there's a lot of room we have one thing we've done uh as
3:16:43
technologist all of us is we have always underestimated the potential and we've underestimated the tail like both the curve and the tail of everything it's web 2 is still booming along mobile is still booming along at massive numbers and so >> look at Oracle stock price Oracle is still crushing like >> got to be the mag 8. >> It is. >> It is. >> Yeah. >> Yeah.
3:17:03
So there's I think there's a lot there.
3:17:05
And then the last point on the common is just that like you know that has fueled Silicon Valley, right?
3:17:09
has fueled Silicon Valley, right? it it has fueled Silicon Valley for all sorts of different outcomes to you know sprinkle wealth or gains down throughout a company's stack and then those I mean literally I said in the post this has happened thousands of times in my career where that engineer or you know VP or director then takes more risk and and that's what we need and and that has
3:17:31
fueled the valley and so my thinking is that it's it's that the Zer distortion is what was different but that Silicon Valley is um one you know never bet against uh uh the valley would never bet against >> yeah of destruction >> the when when companies you know as an investor when I was looking at trying to figure out the why now investing in 2021 and 2022 and in fintech it was like okay
3:17:58
Stripe exists plaid exists you have these new kind of like infrastructure players that allow you you know there's better banking as a service platforms but the why now was like it wasn't necessarily fully it didn't feel fully like a Y now and then you'd end up paying 100 times revenue for basically a lending company that like yes they benefited from like you know plaid being you know like what it was at that time
3:18:25
um in in terms of you know market penetration but uh it wasn't you know in the end a lot of those businesses didn't really they didn't end up really going anywhere whereas I think having a real why now today you know it's uh founders very easily talk and investors will talk themselves into being like okay they'll talk themselves into feeling like there's a why now even if they're just kind of fabricating it. Um Um >> yeah. >> Yeah.
3:18:54
>> I mean the why now you've talked a lot about it in the enterprise but the why now in the enterprise has caused you know a lot of new entrance to have great success against incumbents right that's super interesting.
3:19:03
super interesting. Um there are all sorts of new again this whole like if if you were talking about enterprise software a few years ago kind of preai you'd look for these like tiny little verticals where you could have an advantage and now the whole playing
3:19:16
field is open to to startup founders and they're having incredible success either in you know but you've you've you've had a bunch of them on your show um and I think that's also really interesting not without it so it's coming from the customers right it's coming from the buyers of technology want this new thing. Incumbents have a hard time
3:19:33
Incumbents have a hard time delivering that new thing.
3:19:35
Not going to be smooth like like you know I like how you're talking about where you are on the hype cycle like it's going to be bumpy throughout the curve but um it's just a remarkable time in all of these markets and um and I think that's spectacular.
3:19:51
I mean again I think it's it's it's the chance of a lifetime for a builder um to start something now with with these dynamics. >> Um yeah. >> Yeah.
3:20:00
>> Yeah. I remember being I mean I graduated uh graduated uh college in 2018 and feeling like I had m you know missing mobile right like not being an adult for like a massive >> tech trend like that felt you know I I
3:20:17
read the tech crunch headlines for years of all those companies but not having been actually in the trenches >> feeling like uh praying for another praying for another bubble certainly got one uh with with uh real, you know, potential that we're already seeing. So,
3:20:33
So, >> well, thank you so much for hopping on.
3:20:36
>> Great having you on, John. >> Awesome to see you.
3:20:37
Hey guys, we invited you to our thing in San Francisco, the connected stack. We'd love to have you. >> Oh, fantastic.
3:20:44
>> Huge enterprise AI thing.
3:20:44
The show from the floor, whatever, a lot of founders, whatever.
3:20:51
>> Um, thank you for having me. It's awesome.
3:20:53
We really appreciate what you guys are doing.
3:20:55
>> Come back on again soon.
3:20:55
Yeah, we'll talk to you soon about that. See you. Bye. >> Bye.
3:20:59
Uh, up next we're going over to air. in.
3:21:03
Have you used this product before?
3:21:03
I used this and was obsessed. It's like I don't know.
3:21:07
I'll let him describe it. Let's bring him in. I We absolutely should.
3:21:10
And that's why I was so excited to talk to him because I was like, you can pitch us directly on the show. Use this product.
3:21:17
>> Hopefully we didn't wait too long. How you doing? >> What's happening?
3:21:20
Sorry we're running behind.
3:21:22
Great to meet you, Shane.
3:21:24
>> Nice to meet you guys.
3:21:24
Thanks so much for having me.
3:21:26
>> Yeah, thanks for hopping on.
3:21:26
Uh can you uh just introduce yourself, the company, a little bit of the backstory quickly? >> Of course.
3:21:32
Um it's great to meet you both. Shane Heg Day.
3:21:34
Um my co-founder Tyler and I started a business called Air.
3:21:38
Uh it's an enterprise software company.
3:21:40
We help creative teams manage all their media assets.
3:21:43
So we help them store and organize all their content and then execute on the day-to-day workflows of making quality images and videos, putting them out in the world. >> Yeah.
3:21:53
I was >> the anti-Slop company. >> Yeah.
3:21:56
I mean, uh, >> there is some like I feel like there's some crazy link between like your clients or your company, your your customers and like the brand like the the culture at your company feels like particularly design forward.
3:22:09
Like I'm looking at your your landing page and it's incredible.
3:22:14
I I don't know like where this >> they're talking the talk and they're walking the walk. >> Yeah, exactly.
3:22:19
Like like were you guys designers beforehand?
3:22:20
Like did did this was this something that like came from a particular person inside the organization?
3:22:26
is just like everyone in the company is so focused on design.
3:22:30
>> I think um you know look if you're going to sell a product to creatives specifically that's going to be your ICP >> um you really have to live and breathe the market um you have to put out great content on an ongoing basis to talk about the narrative of what you're doing and you have to meet those expectations with how you deliver the product.
3:22:48
The marketing site is just an extension of the product.
3:22:51
And uh I think in many ways uh it's come from an obsession about who our customer is and how we meet them where they are with what they care about. >> Yeah.
3:23:00
Talk about the marketing.
3:23:00
I've seen a few of the stunts that you guys have done.
3:23:03
The latest one with the Rizzler. Like what?
3:23:05
This is a very it's a >> Yeah.
3:23:08
When did you know you wanted to work with the Rizzler?
3:23:10
>> When did you know that you wanted to be the first enterprise software company to probably partner with him? It's just a wild choice.
3:23:18
Um, look, I think I if you look at great generational enterprise software businesses, they all have a singular go to market motion that contributes to 50 to 60% of growth.
3:23:31
>> And every enterprise software business chooses a different channel to really focus on depending on who their customer is, what they're good at, and where there's arbitrage in the market.
3:23:40
For us, it's content marketing.
3:23:43
And and there's a nuance in how we approach content marketing that we call culture-led growth, which is all fancy words to describe the the format of content marketing that we do.
3:23:54
It's not HubSpot SEO or gong social all the time.
3:23:56
Uh for us it's great, you know, seinal campaigns that we put out in the world that espouse, you know, the the narrative of what we do.
3:24:07
Whether it's product marketing or just a viral campaign with a, you know, 14-year-old, it doesn't matter.
3:24:13
You're pushing a story out to the market and getting a group of folks who care about that resonate with it, uh, and begin a conversation with you.
3:24:21
So, um, that's that's how it it took years to get here to a point where we knew working with the Rizzler or Kareem or Taylor Loren or any of the other influencers with the right ones.
3:24:32
But, uh, it's been a fantastic motion and wildly efficient for us.
3:24:37
>> How much have you, you know, I appreciate, uh, I remember when Air launched and I remember thinking uh, you know, I I worked on worked with a ton of different companies on, you know, marketing campaigns and stuff like that over the years.
3:24:51
over the years. So I understood the value prop even though I felt like it was almost a it was a contrarian move to launch like what the original product like helped you just store assets and a lot of people I'm sure even VCs back then would have said
3:25:05
>> well like they get Google Drive offer they're getting Google Drive for free it's going to be tough to compete um but but clearly there was there was demand for this um now how are you guys thinking about uh not to ask like a very VC coded question, but I'm genu genuinely interested. How
3:25:23
How how are you guys thinking about leveraging generative AI?
3:25:26
If you house all the, you know, brand assets for a business and you can understand kind of like the aesthetics of a brand, it puts you in a good position to not just store assets but help people generate new ideas.
3:25:42
>> Just like automatically mass matching assets to tags and like creating like an ontology on top of the data. >> Totally.
3:25:49
Um, I think you know in this moment in time there is a rush to value.
3:25:56
Everybody, every enterprise out there is trying to immediately get to the thing that's going to compound their business on an accelerated basis.
3:26:01
The last conversation you guys were in, I love that tail end of that conversation around there's never been a more open environment in the enterprise for new entrance like us to come in and rebuild the entire stack of how a company operates.
3:26:14
Um but when you look at at different areas of the enterprise in in order to scale you have to have or or automate to your question around AI you have to have a place to automate from >> um you know set another way uh slop in is slop out.
3:26:31
Uh and the richness of your solution is going to depend on the richness of the data that you that you build on top of.
3:26:38
In every area of the enterprise, there has been a system of record that has structured and organized the data so that you can automate and centralize.
3:26:47
This has been playing out for 25 years.
3:26:49
You know, it started with Salesforce building out what we now see as a CRM as a mustave inside of a business if it's trying to scale sales.
3:26:58
Same thing with development cycles with GitHub or, you know, marketing work with HubSpot for multi-touch attribution.
3:27:02
Um, there's never been a system of record built for creative work for images, videos, PDFs, visual forms of data.
3:27:10
Um, at the highest level, if you asked a CMO or a creative director, um, you know, how are your assets performing? What's performing best?
3:27:19
What are you going to invest in next?
3:27:20
That's like a six-month job for an analyst.
3:27:23
And at the lowest level, if you're trying to talk to a designer about what they do every day, they spend 75% of their time collecting content, approving content, sharing content, and doing all of that all over again.
3:27:36
And so our ambition at Air is to build a system of record for creative work. It's one product.
3:27:40
We're never going to build a second product at Air.
3:27:44
We're just going to go deeper and wider in what we do.
3:27:46
And yes, you got to start with storage.
3:27:49
That's the hard problem to start with.
3:27:51
you have to sync and organize millions.
3:27:53
Today we're up to about 150 million assets that are being managed in our product.
3:27:57
But the magic is on what you can do on top of that.
3:28:00
You know, the workflows that you can automate.
3:28:02
Uh whether that's rights management or whether that's like generating variants of something that you could plug into different ad units, it shouldn't matter.
3:28:10
It can all sit on top of the baseline architecture.
3:28:14
>> You should uh create a a workflow to help legacy brands not get cancelled. by Zoomers.
3:28:20
So, it's like it'll pop up an alert.
3:28:23
Hey, Boomer, if you if you put this on social media, you're gonna get cancelled by the Zoomers.
3:28:28
And I think that could that could uh save billions of dollars of lost market cap.
3:28:33
Uh I hope I hope that the you know, one it's funny, we had a we had a hackathon that finished this morning and one of the things that came out of it was a a newsletter that goes out on an automated basis to admins inside of a workspace.
3:28:48
And because if thinking about our product about 15% of our customers have more users on air than they have full-time employees.
3:28:56
Starts with your creative team expands to marketing, sales, product partnerships, your agencies, your influencers that you work with.
3:29:01
Uh and then the other dynamic is that um you know about 11% of our customers spend uh more than more than 25 hours a week inside of our product.
3:29:16
Um, and so this newsletter aggregates what all everybody did and spits out, uh, a summary of that with all of the work to the admins in the workspace.
3:29:27
And so, uh, visibility, I think, you know, to go to your point around boomers and zoomers and not getting cancelled, visibility, I think, is really important.
3:29:35
Um, and our opportunity to do that in a system of record is is no different than Salesforce providing a dashboard to your CRO to understand like which reps are performing the best or where where to lean in segment wise uh or why you know win rates have improved. >> Yeah, makes sense. Um, amazing. Anything else?
3:29:55
>> No, this was this was great.
3:29:55
Uh, come back on anytime.
3:29:57
You're the only only person in the world so far that has made just storage interesting on the show.
3:30:02
So anyway, uh, thanks so much for hopping on.
3:30:08
Have >> Yeah, we're gonna we're gonna we're gonna actually sign up for this because we we were we were at a very we're very much at the >> Put you guys in the game here. Come on.
3:30:16
>> You guys are you guys are the sort of beacon. >> Yeah.
3:30:18
Well, we were we were iMessage scale where like our version of air right now is just the group chat.
3:30:23
>> Yeah, it's literally all iMessage. It's a mess. >> Come on.
3:30:25
John can make the intro to Soilent.
3:30:27
We're in the mix here, you know? Put us in the game. >> Let's do it. >> Thanks, man. Great to meet you.
3:30:32
>> I'll talk to you later. Cheers. Um, >> all right.
3:30:36
We're going to cap this off by just pulling up this post of what the Garmin horse tracker actually looks like because >> you want to end with the Garmin horse tracker.
3:30:46
>> This is the most important story of the day.
3:30:48
>> Important story of the day for sure.
3:30:49
>> The Garmin mid it's uh see it wraps around the horse's tail.
3:30:55
Where how else do you think you were tracking the horse's health, Jordy?
3:30:58
Garmin is now sharing a selling a wearable you put on your horse. It goes on the tail.
3:31:02
Obviously, this >> No, no, no.
3:31:04
It's further down in the >> further down.
3:31:06
So, that's what it looks like when it's not on the horse, but when you apply it to the horse while you're wearing your Garmin watch.
3:31:12
So, you can be riding your horse, check your hor's vitals from your Garmin watch.
3:31:19
That's the future I want to live in. That's horsepower, baby. >> This is important.
3:31:22
I mean, this is a trillion dollar company to me.
3:31:24
They're sitting in >> This is Look at this thing. Yeah.
3:31:26
Look, get in on that horse tail tracker.
3:31:28
What is it actually tracking here?
3:31:31
Midnight, outdoor training sessions, indoor training sessions, recovery, transport, max activity, heart rate.
3:31:38
It c it calculates the heart rate, how many strides you can view the data live.
3:31:42
And then Sugar's got a bunch of strides. That's hilarious.
3:31:47
Um, no, this seems this seems amazing. >> Beautiful stuff.
3:31:51
This is why we love technology.
3:31:52
>> It's as as much of a breakthrough as as Whimo.
3:31:55
You know, it's already >> really arguably more important.
3:31:56
arguably more important for some >> horses aren't self-driving.
3:32:01
>> Uh, thank you for tuning in today.
3:32:01
Uh, >> Max, uh, Con uh, Conrad from the Substack chat, we need a this time is different sound effect. I agree. >> Yes.
3:32:13
>> Uh, this time is different.
3:32:15
>> This time is different.
3:32:16
>> Yeah, there must be some clip from like a movie where someone said that or something.
3:32:19
Where where does that time is different come from?
3:32:20
Maybe we can get Warren Buffett saying it or something.
3:32:24
I'm sure he said it at one of his uh, meetings or something. >> Yeah.
3:32:26
Uh anyways folks, thanks for hanging with us today. We love you.