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>> Cracks are forming in Meta's partnership with Scale AI says Techrunch.
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It's only been since it's only been since June that Meta invested 14.
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3 billion in the data labeling vendor software. >> Invested. >> Yeah, invested.
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So, it's not an acquisition. It's not an equire. It's a trade deal.
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It's basically a trade deal.
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That's how I think about it. Uh 14.
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3 billion for less than half the business equity. a big dividend.
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Some of the scale people went over% was a nice nice number.
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>> Yeah, they just pulled it out of the hat. Random. >> Just random. >> It's just random.
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Um and so several of the top executives left scale to go run Meta Super Intelligence Labs. That's MSL.
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But says Techrunch, the relationship between the two companies is already showing signs of fraying.
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At least one of the executives wanting brought over to help run MSL.
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Scale AAI's former senior vice president of Genai product and operations, Ruben Mayer, has departed Meta after just two months with the company.
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Two people familiar with the matter told Techrunch.
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Uh, Mayor spent roughly five years with Scale AI across two stints in his short time at Meta.
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According to these sources, Mayor oversaw AI data operations teams, but wasn't part of the company's TBD labs, the core unit with in meta tasked with building AI super intelligence where top >> I think they made MSL and TBD and like the the >> just to confuse Techrunch reporters like >> just to confuse >> Yes. Yeah. Yeah.
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It's entirely the 40 chest that's going on.
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Um and so after this after this article was published, Mayor reached out to Techrunch and was like, "Hey, you got the story wrong.
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uh my job was to set up the lab with whatever was needed uh rather than data and I was part of TBD Labs from day one rather than being excluded from the core AI unit.
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Mayor also clarified that he did not report directly to Wang and was very happy with his meta experience and was leaving for a personal matter.
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So, >> so again it's hard to read too much into this article, >> but the bigger the bigger question is like like Techrunch has their angle um and then the timeline was kind of in turmoil.
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I feel like the timeline's always been rooting against Alex Wang.
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Um, and there's a few reasons.
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So, I wanted to go through like the bare case for just the question of like was Meta buying scale AI the right move? Like did they overpay?
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Will we look back on this as a great deal?
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Because when we look back on Instagram, we're like, that's one of the greatest acquisitions of all time.
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WhatsApp also great acquisition, very expensive at the time.
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Both very expensive at the time.
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Uh, even Oculus, I was thinking about it and I was like, Oculus VR, super expensive, multi-billion dollar deal.
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Uh, and the level of headset adoption.
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I mean, they didn't even have like a consumer product at that time.
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It was like a dev kit still.
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And obviously retention was super low.
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People would churn off of them.
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And they still do even what, a decade later.
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Like, but you >> But it was very important to Zach. >> Yes.
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And and you and VR is a tech wave that's going to that's going to happen at some point.
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Like we know that the techn is going to get there where it's >> not going to miss the next platform.
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>> He has his surfboard and when that wave come he's he's ready to surf.
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>> Did you get any surfing in this weekend? >> I did. I did. I did.
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I uh >> describe your surfing experience.
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Can you do like 360s off the back and stuff? Can you do a backflip?
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Can you do >> No, no back flips, but uh but I went surfing with a with a TBPN, a technology brother, Steve, founder of Clock Tower, uh Capital.
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Um and he saw me he saw me do a couple airs.
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>> I didn't land either of them, but uh >> you were telling Speeder like he has to get barreled. Did you get barreled?
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>> It wasn't barreling this weekend.
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>> It wasn't barreling this weekend, >> but it was it was it was it was fun.
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There was definitely swell.
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I got quite uh sunburned a couple days in a row. It's fantastic.
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Uh we should one day stream your uh stream your surfing endeavors and we should do it on reream.
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One live stream 30 plus destinations multiream to reach your audience wherever they are.
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People have been asking will TDP expand to other mediums?
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Will you do other things?
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And it's like yes surfing live streams. That's what's next.
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and you if you're surfing and you want to live stream uh head over um >> there's a bunch of questions in the chat we should get to at some point but let's keep talking about this uh scale stuff.
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So >> uh Zuck has a surfboard with Oculus VR.
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Um the question is what's going on with Scale AI?
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Because it's not necessarily an obvious compounder where like with Instagram and WhatsApp it's like you have this network effect.
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It's just going to keep growing, keep growing, keep growing.
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You can grow the user base.
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The user base never goes down.
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The business never gets smaller.
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You just run more and more ads and it just prints, prints, prints. Right?
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Buying a growing social network that has strong product market fit.
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Easy easy to justify at any price basically. Scaling.
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>> Well, Elon wanted to get out at one point. >> Yeah. Okay.
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Anyway, for the most part, >> but if you can buy it and then and then lever it up and then merge it with an Foundation model lab, you know.
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Foundation model lab, you know. So scale AI does not have that obvious like winner take all network effect like >> had very real competition surge which is which was the bootstrap scale AI that was printing money >> which was emerging >> isn't there another one Garrett at
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handshake label box there's a ton of these there's a bunch of players >> and so the reason is because it is not a monopolistic market by default um you might be able to make it one but it's it's it's tough to justify it's tough to think that oh yeah it'll just continue to compound and
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then also if you're AGI pelled you don't believe that basic D labeling tasks are going to be done by humans in the future like if you have a bunch of tasks that are like oh yeah like just you know what do you go to scale AI for oh RLHF this tell me if this is a good answer like if your AGI pill do you think that the next
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version will be able to do that level of task like perfectly >> yeah and the the expectation if if scale had stayed fully independent would be that they would keep having to like bet the company on these new sort of like >> eras >> and that's and that's sort of the story. I mean, scale started as a uh data
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I mean, scale started as a uh data labeling company for self-driving cars and then eventually that kind of hit takeoff where there was not that much more business to for scale to do I believe because Whimo had gotten all of the data and Cruz had gotten the data
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and Tesla had gotten like the the the base level data and then the RLHF boom and the LLM boom happened and uh and Scale was able to move over to that and then all of a sudden they were having their best their best years ever and so the business was kind of like up and
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down very much like oh they have a second act do they have a third act chunky yeah uh very high uh high volatility um and so uh as the market shifts and more and more expert like there like as it shifts to more of these expert data collection processes like
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what we see from Merkor uh scale potentially becomes less and less relevant it's not like an obvious just beneficiary of every next wave you have to keep kind of reinventing the company and so um there's >> and They at some point they stopped working with open AI. Correct. Correct. >> Yes. Yeah. Yeah.
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They stopped working with OpenAI and then uh and then posted the opportunity post metadal it seemed like Microsoft and and uh uh M Microsoft and Google both pulled back from working with scale.
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And so like the core scale business doesn't seem like it's just like endlessly compounding.
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So you really can't underwrite this like 14.
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3 billion investment purely on the basis of scales business potentially.
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>> They're not trying to make money on the investment. Yeah, maybe.
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Yeah, it seems like they need a mad scientist for their lab and every other AI lab scientist. Yeah. Or a deals guy. Exactly.
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So, uh, OpenAI has Mark Chen, SSI has Ilia, De Mind has Demis, Anthropic has Daario.
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Each leader has a different shape and style, but they're all capable of rallying top AI researchers and building teams of missionaries.
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Alex Wang is unproven here.
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So, if you believe that the best talent magnet wins, it seems like a bad deal.
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And that's kind of the bare case.
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Now the bull case is that yes metabying scale AI is a bit pricey but ultimately it was a good decision for the company. Here's why.
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Uh let's review the landscape of big tech's AI efforts.
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Google has deep mind firmly on the frontier.
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Microsoft has GPT5 also frontier.
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Amazon's a bit behind but the core business doesn't seem very threatened by LLMs.
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Nvidia benefits from basically every outcome right now.
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Apple acts as a window into AI probably not too threatened.
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Meta feels like it could benefitly benefit hugely from getting to the frontier, but it doesn't have an obvious dance partner.
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So, what do you try and do?
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You go down the list and you try and buy every company or hire every researcher you can.
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Hence the rumors that uh Zuck tried to buy SSI, tried to hire Mark Chen, etc. , etc. , right?
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>> Because it's super high.
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>> Because it's super high. I mean I I we we saw that image of like some Wall Street uh investment bankers like did like a kind of some of the parts valuation of Google and just deep mind was worth like $150 billion right and so if if you're thinking like okay if I have my lab and it's adding all this
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value all over the place like is that worth $200 billion to my market cap like absolutely right um and so you try and do that so at the top of the list you have something like you know >> assemble a dream team get Ilia Mark Chen Deis get everyone just put the OG OpenAI team and the Deep Mind team together at Meta and like you win, right? But that's
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But that's obviously not on the table.
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Um there's a bunch of reasons why you can't make that happen.
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There's economic reasons, there's interpersonal reasons, there's some ideological reasons.
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Um but Alex Wang isn't that far down the list.
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Uh, and so yes, he hasn't led a real AI lab that's trained a popular big foundation model, but if you look at his trajectory, all of a sudden it becomes a I I I can be a lot more optimistic about it. So he's 28 years old.
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He's a fantastic communicator.
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You've seen him on on every podcast and he clearly communicates very well about >> he's been on Theo, one of the few AI heavy hitters that's been on Theon.
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you joke, but he was on Theo Von really early and he tells a very convincing story and and is actually able to communicate to like to to both insiders and outsiders, I think.
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Um, and uh uh he's genuinely been at the center of the AI boom for his entire career, but he wants to go bigger.
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He's built a great company that easily could have cash flowed hundreds of millions of dollars over time and continued to serve the training data market, but getting further into the action that's happening at the big labs was probably not in the cards if you stayed at scale.
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And so teaming up with people would push back on that and say that that scale was losing real market share to Serge and other players who had a reputation for having higher quality data.
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losing market share, but still like so many big contracts that if they just went like like to like weaker and weaker clients and just like held on and just had high margins like >> built to die >> basically like I I I I do think like the like the run out the clock value on that company is definitely like hundreds of millions of dollars every year.
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It's just such a big market.
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Um but that's clearly not what what Alex wants to do. He's 28. He wants to go bigger.
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He loves being at the center of AI and wants to work on interesting huge problems.
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>> Now he has will have does or will have more compute than pretty much >> pretty much everyone like the latest cluster that Zach's trying to build is is is supposed to be just a couple percent over the next biggest cluster.
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So he will have the biggest.
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Uh, and so, um, uh, I think that you, when you look at, uh, at Alex Wang, you see someone who's been through like the Gartner hype cycle of training data, right?
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It's like, wow, we are teaching cars to drive. This is incredible.
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Then, oh wait, like, they actually don't need that much more data.
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And then like, oh wait, like LLMs need incredible amounts of RHF data.
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of RHF data. and then like oh wait so he's been on the up up and down he's b so um there's uh there's a bunch of different takes here but let me continue so uh there's also the rumor that scaleai isn't fully delivering all the data that MSL needs to train their next model but the reporting here is a bit
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questionable I don't think that the scale acquisition was ever fully underwritten against the value of the training data business as we discussed uh so the and the AI race is so aggressive that every company is grabbing every possible resource not only is meta using other data providers. They also just signed a $10 billion
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They also just signed a $10 billion cloud deal with Google. Yeah.
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>> So this this idea of like oh like >> demand is outstripping supply pretty much.
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>> Oh they did one deal with scale that that means that they shouldn't do a deal with Merkore or they shouldn't do a deal with with Serge like no they're going to do deals with everyone. >> I think all Yeah.
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All it says is that it was primarily an like an aqua hire. >> Yeah.
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An aqua hire of the team and a bunch of the people and mostly it's a bet on Alex Wang.
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And so, uh, I think that the the FUD over the departures is overstated right now.
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Uh, it doesn't seem like it's an exodus.
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They hired a ton of people.
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Uh, there's been rumors that like one person was thinking about leaving, but then wound up staying, and then and then, uh, one person left, but they said they were like never really planning to stay, and then another person left, but clearly to start a company.
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So, it doesn't seem like there's some sort of massive exodus.
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And basically it just comes down to the value of developing an in-house AI team that's like DeepMind.
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Uh it's a that that team if it works and if they build it out the value of that team is immense probably in the hundreds of billions of dollars.
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And so there's inevitably going to be bumps in the road.
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But at the end of the day, Zuck is just betting on the most successful entrepreneur that Gen Z has produced thus far.
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And it seems still reasonable that even if he's not entirely a researcher, he's a deals guy.
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You have him and then you have Nat Freiedman who's able to who's worked with Ilia and you have the pieces of the team to put together the right amount of researchers and engineers to actually go and and build out a frontier capability or near frontier.
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>> It's an all-star team.
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>> It's close to an all-star team. not the all-star team.
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Like the all-star team is Ilia and Demis and Mark Chen, but like that's not happening.
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It's just never going to happen.
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>> Um, what is the big announcement from today?
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Is are are you uh are you trying to tell more of a story around uh enterprise with this?
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>> Um, you know, we're kind of not we're I I think we're just it's more like we're crushing it. >> Yeah.
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Uh uh everyone tells us to be super modest about 93% growth in the US and 94 rule of four of 40.
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They they may be redefining the rule to like make sure the other people don't like have to live in shame.
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>> I keep seeing these articles like in the Wall Street Journal.
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It's like rule of 40 isn't real. It isn't real.
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Yeah, it isn't real cuz we're like crushing everyone.
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>> You were forced to be humble for a really long time. I was forced.
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Well, people were showering me with humble nuggets all day.
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It didn't really exactly work.
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But, you know, I I do think you have to judge humility by the delta between performance and ego.
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>> And I would say somewhat ill modestly, I'm the most humble I've ever been.
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I'm the most humble I've ever been. and uh uh and uh and uh and and and now and I just I think it's like so what we try to accomplish with uh the we've been doing these kind of conferences forever basically because everything we've done at Palunteers like completely uh it it's
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antithetical or at least orthogonal to what you would how you would build a business you guys looks look at a lot of businesses you would never build a software downstream from value creation it's all basically how do I make the client feel like they're getting laid when they're getting That's the whole way you build a software business. In our business, we began in the
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In our business, we began in the beginning.
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I used to tell people, >> you know, this is a we're a mutually >> uh servicing business.
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Both sides should like be happy.
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And uh and the way we built the business was it basically underlying metric I always thought was you know the logic of software should be we charge you something downstream of of of value creation.
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That sum is a percentage of the value we create.
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It's better for both sides because it's uh it's it's it's significantly less than the value create.
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It's good for us because there's a multiple on the value.
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The flaw in the logic was always that FDE model would basically uh mean that you'd get a one multiple.
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So we were structurally misaligned with everyone in finance, everyone >> not at the founders fund but basically everybody else because of that.
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everybody else because of that. Now what we've proven with entology uh FDE structures where FD are actually technical and internal orchestration which is largely artistic basically was now we got very lucky because without large language models this would not be hypercharged so it
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still didn't exactly make sense but lo and behold we have large language models it hypercharges everything so downstream value creation is an enormous amount of money and because of our unit economics now which are you know and some people believe are the best in the world we actually get fairly valued And what are
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we doing actually downstairs is we're saying America's central advantage is the plasticity of how we approach the pragmatism right so businesses have to move from businesses where it made sense to have parasitic software products that are like basically helping you set it's like one of these things it's like you
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believe you're learning to sell they're selling you on something that is you can't get rid of you then run to Wall Street and say our clients all we have 50,000 clients that all hate us they're like great that's a software business cuz the hating means they can't get rid of you. >> But a but a platform business means that
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>> But a but a platform business means that you're creating more value than you capture.
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>> Well, the way we do the way we sell is like and this is why it's just all it's like all these things are hugely contrary.
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We our revenue is going up, our sales is going down.
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The number of people we plan to have in the future is less than now.
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We are very focused on you know everybody's like high volume.
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Uh the volume makes up for you know the fact that revenue decreases per client.
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We're not focused on that at all.
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We believe we're going to make more from people in the future than in the past, sizably more because it's like why should we not capture part of the value that we helped create?
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Actually, it doesn't have to be the majority.
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In fact, it's usually the minority of the value you create.
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We also believe that if from more kind of like kind of architectural implementation technical perspective, the value is in high fidelity data captured in in an ontology with FDS and where there's a an enhancing factor with LLMs and that that's going to be very very hard to replicate.
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Um but um but but again all of this is kind of very non-traditional.
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And so what we're really doing in these conferences is saying the same thing we say on the outside.
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Don't believe anything we're saying.
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>> Talk to other people have done it.
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>> We're not we don't chaperoon the people here.
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So there like you can talk about things you like, things you don't like.
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People are on stage, but learn how to build the business of the future.
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What does the business of the future look like?
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Actually, the interesting thing is workers become more valuable.
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Like actually trained workers become more valuable.
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This is exactly the opposite of what people are saying, but it's true.
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the person at the top is actually crazy valuable.
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People with technical expertise are crazy valuable and everything else is going to be done in foundry ontology and something like an FDA.
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So like the orchestration of the business is completely different. >> Yeah.
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Where are Fortune 500 companies getting screwed by these AI pilots?
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We saw this stat like 95% of AI trials in the enterprise aren't converting. Like what's going on?
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What does it look like when somebody sells someone?
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>> Well, I mean, there's a technical reason.
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These are LLMs are probabilistic. They're not precise.
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The the value of LM is when it's essentially in an ontology wrapper because to to to actually create value, you have to be able to take the output, serialize it, and deserialize it in the context of the business.
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So, the logic, actions, and security of the business and its tribal knowledge and what it's trying to accomplish.
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LLMs are vertically crucial, but the but but the error bound is very very very narrow.
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And the way you actually do LMS in the real world, not in theory, not is like is that you essentially put them in a concatenated chain where each single thing has to be done as a street unit because otherwise the underlying math is 95 times 100 separate chains.
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It's like totally unreliable.
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And if you do it any other way, you're getting a steak dinner >> and that steak dinner is super tasty. It's not going to work.
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And even worse than the steak dinner, honestly, is that you're being taught how to do something incorrectly.
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It's like, it's like, okay, I'm gonna learn how to learn from a wokester. >> Yep. >> Great. Great.
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The damage that woke is doing mostly on the left, but occasionally on the right.
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The real damage they're doing is they're teaching you how not to learn. >> Mhm.
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>> Like, and if you just pick your favorite person, right, left, center, who's just selling complete garbage, it's all conspiracy the whole thing. Yeah.
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It's like uh it's like it's like there's no such thing as building.
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There's no such thing as agency.
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You can get away with FPS.
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Well, if you want to like Palanteer's lifted, one of the things I'm proudest about in the world is we've lifted people from their mom's garage to their own house. Millions of people.
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You want to stay in that garage, you listen to those people.
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And it's the same thing happens in enterprise.
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They're selling you something where you think you're getting laid and you're getting And that once you're like that, it's very hard to undo it. And like Yeah.
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You know that the crazy thing about my life is I'm like this wacky dyslexic.
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It's actually much harder to be dyslexic, but it's also much harder to get because you don't believe you you don't but you don't believe in any of this BS.
21:42
It's like >> Well, so speaking speaking of sales, there was a the CEO founder CEO of a of a CRM company that was making some comments yesterday.
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Did you did you catch >> I look Palanteer, we structurally mind our own business and I love that everyone minds our business, but I would say that what I we constantly have people on TV.
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It always sounds like, you know, the guy in high school who's like, "But I'm so nice. Why don't I get laid?"
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It's like, it's literally like, it's the same. I'm so nice. I'm so nice.
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I create all the value and I'm so nice.
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I'm begging to get laid and no one.
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It's like, I have such a big this, I have such a big that.
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And we're like, yeah, we're not trying, dude. We're here, you know?
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And yeah, >> I don't think about you at all.
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>> I don't think about you at all. And well I it it it's like >> we are very focused on value creation and we ask to be modestly compensated for that value and you know if you disagree like you don't like us as a client or you love us as a client but
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you think it's great we're doing our thing you know in Palunteer right now in the US is the market that counts we don't have the people we don't have the time we orchestrating completely perfectly at Palanteer which of course we don't do as we're like an artist colony, right? We don't have a time to
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colony, right? We don't have a time to like actually focus on like what we need to like extending certain components of ontology we have to do um extending Maven for the sake of the west um building things in classified
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environments uh extending things with high value things like yeah we're focused on that and we don't have the time like when you're growing 93% off of a very serious base with a de facto dimminimous yeah it's the 93 and that's not even our best number. It's 94% It's 94% rule of 40.
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rule of 40. It's like and then people then people are like oh yeah yeah yeah well but we have all the skills we have all the motion but but like somehow our ocean isn't working it's so big but it's not it's like yeah great you have problems to you have time to focus on us we got things to focus on here that are crucial >> and you guys are re it feels like you're
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reacting to uh the changing world and actual like customer needs whereas other players are reacting >> let me give you let me give you a more kind of slightly philosophical economic thing what the large language model does it models do in combination with ontology and FTEES and and knowing what you're doing is it creates period optimality over time. We're not there
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We're not there exactly but every single tech company in the world is going to be paid based on value creation.
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Maybe that's not completely true today.
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It will be true tomorrow.
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tomorrow. So when any company is saying something you really have to ask given that the the aspiration of LLMs are transparency and uh and competence it broadly defined they've actually the big cultural shift on enterprises people
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running enterprises believe that this thing should work I should know the cost of the components in my business to the second I should know how to rebuild things if there's a macroeconomic I should be able to put the bomb on your head and not on his head Okay. So, uh
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So, uh that basically means every conversation in the future is going to be I you create X value, I'm going to pay you Y.
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And the central problem a lot of the larger kind of less a agile scotic companies have is it's like they can't you it's very hard to move from I get paid because you can't get rid of me to I get paid because you could get rid of me but you don't want to because you're creating so much value.
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But that's where the future's going.
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And like people talk about like you know how are we going to you know get do 10x in revenue blah blah blah with the same or less people.
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It's like yes but the whole market's going to have to move to value creation and we're in the business of that and try to do it.
25:28
You know it's not >> Yeah.
25:29
Do you think long term that the gross margins of software companies will change materially because of like LLM inference costs like token factory costs that type of thing?
25:38
Well, you mean like enterprise software companies or >> if I if I look at like the Fortune 500 right now, there's like a set number of gross margin that's out there.
25:45
Uh should we expect like gross margin compression based on >> Well, I basically >> uh what well first of all I think let me just give you the trends.
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I think first of all skilled workers are going to become more valuable.
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You're going to be paying them more.
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They're going to be happier.
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Uh it's exact um downstream politically it's very hard to argue for anything but high-end immigration.
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So like why do you need more people?
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Like we got to make the people we have here work.
26:11
So like politically it's like like you know I'm an unhappy Democrat but running around saying oh crime isn't an issue when everyone knows crime is an issue is like it's like suicidal BS and no one believes it.
26:22
And now that wokeism is luckily mostly at least in that way you know not as punishing we can all just admit the obvious.
26:28
So like transparency is going to be like so the people are like workers are going to become more expensive the overhead's going to become less truly basically artistshaped people are going to be incredibly valuable and they're going to demand to be very highly paid.
26:41
So but the aggregate cost structure will come down but more importantly the products you build are going to be much closer to what the market wants in real time.
26:49
And then again just an obvious thing >> this is happening like we have 10x growth in America compared to Europe.
26:56
Same people same products same everything.
26:58
So it's like and then I the other thing I the point that's a little less obvious that I think people ignore is time is not time.
27:02
We always assume a minute of time is a minute of time.
27:05
It's not like it's like from the time you want to do something to the time it happens.
27:10
If that's 10% of the time you've just gra you just got to 10x.
27:12
So it's like you know it's like pounder is not these kind of atrophy companies.
27:18
They really every it takes them three years 5 years to get a year.
27:21
It takes us a week to get a year.
27:23
a week to get a year. So it's like you know it's like that that's actually what what explains the numbers in a weird way is yes but what if five years represents 40 years what if I'm saying in the next five years it's not we're actually it's like the whole problem with the DCF model actually that experts love is a
27:38
they don't understand product and then b they kind of extend the DCF if they like you so it's like oh I like the person the DCF is super like give him an extra decade of steak dinners but but the real problem that they somehow don't understand in the DCF mount is a year is not a year for pounder like a year is like we don't do holidays. I'm working
27:54
I'm working all the time.
27:56
I'm orchestrating honestly I I sometimes hate the enemies of Palunteer, but god do they get me to go back to orchestration because I'm like I'm gonna these people like like you know and and the basic way I'm going to do it is go, you know, going back to like dyslexic, you know, like organization orchestration of we're going to have the best products, the best people.
28:13
I'm going to recruit those people.
28:15
I'm going to make sure they're the most valuable and I'm going to put them in enterprises that value us.
28:18
And if you don't value us, go go work the go work the people that hate us. Try them out. >> Yeah.
28:24
Do you have a advice for young people?
28:25
I mean, you said like artists like people, not literally artist.
28:29
>> You said you said the company's like an artist's colony.
28:32
>> Didn't you just become an artist if you're >> Well, people underestimate like their artistry because like from a young age >> you get huge benefits for conforming.
28:42
And you can say, well, I don't I mean the central advantage of being dyslexic, we can't conform.
28:44
So that was that ends up being a huge because you just can't.
28:48
So you're going to have to So your basic thing you have to emerge do not conform.
28:51
And by the way, the people who are telling you simplistic that means, you know, like meritocracy isn't going to matter.
28:58
You're not going to judge all these conspiracies that you can't do wealth accum accumulation if you're in this country like in America that that I think actually a lot of these things are true in other countries.
29:07
But in this country, they're teaching you how not to learn, how to be complacent, how to give up your agency, how to fail, and how to blame it on anyone else.
29:14
And if you're So you have to say like all that. Yeah. Reject that.
29:19
That's kind of and then you have to really really look at people and judge them by their fruit.
29:23
The best way to learn is to look at somebody and say, "Okay, well, you know, it's like, you know, you work with somebody like the co-founding team at Palunteer."
29:30
So, you have Peter, Joe, Stefan, Nathan, like part of what made us so good is it's like, okay, you can measure yourself.
29:38
It's like, you know, >> when I started at Pounder, I actually just because I just wanted to be left alone.
29:43
I was like, yeah, I'm going to make some money.
29:44
I'm going to move to Berlin.
29:46
I'm going to live a debaucherous life. That was my goal.
29:48
Like I'm moving to Berlin.
29:50
I I thought I needed 250k.
29:50
I was like at 250k is a minimum.
29:53
A million dollars a maximum. I'm moving to Berlin.
29:56
I'm going to like debauchery forever. >> Burger and Yeah. Uh yeah.
29:58
Well, I had to like Yeah.
30:00
So it's uh and then set up a remote office.
30:04
But like you then measure yourself and it's like okay well I'm highly differentiated on measure on on managing complicated people who have to believe their opinion is their opinion but still have to build a product that actually delivers value.
30:19
>> That's my differentiation.
30:19
And so like you you you surround yourself and then remember you have to remember the >> persuas pers being persuasive and being right are not correlated.
30:28
right are not correlated. So you have to really look at people who are historically right rebutably give them the rebuttable presumption that they are right and work back to discover if they're right or wrong not just and like and all these things and like for example on the pounder thing is a great
30:45
lesson >> go listen to our critics whatever critic you love we're a conspiracy theory so like you could take the leftwing version which is like Palanteer is stripping you of your civil liberties which some people on the right believe Palanteer is a Jewish conspiracy run by a a a mut somehow. Okay, whatever. You know, it's Okay, whatever.
31:01
You know, it's like, okay, well, go actually, how does the product work?
31:05
Does the product protect data? How does it protect it?
31:07
Is it better than any other company in the world at doing this?
31:11
How do you build a company?
31:12
Do you think it's just like an allocation based on a conspiracy? Why did we work? >> Yeah.
31:16
Just pick your conspiracy and that's the strategy. >> Yeah.
31:19
And then and then but then unpack it and learn for yourself like did this work? How did this work? How did they do it?
31:25
Assume that at every single decision, if it was a decision anyone else would have made, you would not have worked because that's a commodity.
31:31
Commodities aren't valuable.
31:31
And then apply that to your life.
31:33
What part of this do you understand?
31:35
Like, you know, what part do you not understand?
31:37
What part do you understand better than them?
31:40
What part could you do better than them?
31:41
And the weird thing about LLM ontology foundry is this actually will work for anyone watching this podcast. Yeah.
31:50
If you're watching this podcast and you enjoy this, you've already passed a test.
31:56
I don't care whether you're a welder, a plumber, a carpenter, an astrophysicist, or a somebody who'd like to build a business or just want to get rich or you want to get enough money and move somewhere and do what I want to.
32:09
It's not the right place anymore.
32:09
But any case, uh but but you've already passed that test.
32:12
Now go out and pass the test for life. >> Yeah.
32:15
Uh you said Germany is not the right place anymore.
32:16
Like what is your current mental model for the state of the world order?
32:20
Like is is is America in decline?
32:23
Are we do we need to bring things back?
32:25
Like who are the power players?
32:26
How >> America is power player number one right now?
32:29
And like all this media BS.
32:29
It's like you know you got to compare America to and you can't compare America to some thing you're pretending in your head could be America. Compare it to Europe. >> Yeah.
32:41
>> Compare I don't know what you want to compare it to China.
32:42
Like you want to have no rights, you know?
32:43
I mean again I'm actually not anti-Chinese culture but CCP, you know.
32:47
It's like compare it to Europe. like no tech industry. >> Yeah.
32:52
>> Everyone rich was born rich basically or with almost no exceptions.
32:54
the most important Germanic company.
32:56
important Germanic company. I hope someone from Germany's listening to this uh compt aloto is petal unish like the only German company since SAP that's real like and they won't listen to us like just think about that you have
33:11
Peter Teal like the most important venture person >> maybe that's ever lived co-founder of Palunteer and you have meas like somewhat you know basic partially dramatics did my PhD in German >> and you have no tech industry wouldn't you have us on speed dial >> yeah Yeah. >> I mean like on speed dial like you don't
33:27
>> I mean like on speed dial like you don't have to listen to what we're saying.
33:31
>> You don't have to agree with what we're saying. Who are you talking to? Who are you talking to?
33:34
You're talking to your like I don't know expert that came here and studied us.
33:40
>> Trust the trust the experts. It's like so it's Yeah.
33:43
It's like energy like we're >> Do you think they will?
33:46
Do you think that there's there's optimism around the idea of >> still pick up the phone call? Right. >> Oh no no I just No.
33:50
I pick I mean I pick up it's crazy who calls me.
33:52
It's like it's honestly like I I I can't talk out of school calls me.
33:56
You'd be surprised the number of people come and I begin every call with >> don't listen to me. Very few people have.
34:02
>> I'm going to give you the freak shoe answer.
34:03
You probably want to ignore it. This is what I think. And they're like, "Huh? Okay. Yeah. Yeah. Okay.
34:06
Some call back, some don't."
34:08
But um yeah, of course I would I mean I have a lot of I mean like honestly we have a huge retail.
34:13
A crazy thing about Germany is a huge retail investor base.
34:15
They don't admit it in public, but in like keep going, keep going. But u but uh yeah.
34:22
No, I'm just saying the point I'm saying is uh you know it's like uh Okay, so then it's like energy, technical talent, understanding how to manage the technical talent.
34:32
It's like that's an art like we have the right venture people, the right entrepreneurs, the right spirit.
34:36
We have generations of people who are entrepreneurial here.
34:40
It's like >> no tall poppy syndrome.
34:42
>> Well, it's funny you mentioned that. That's like Yeah.
34:44
Like you we we're very Well, this is the thing.
34:47
Well, this is the thing. We have to fight for this >> because that no tall pop what that basically means in every people may not realize this but in any every other culture I know of and like and I lived abroad in Germany Europe incredible cultures but if you you your head sticks above the line it gets cut off
35:04
>> there's one culture where that doesn't happen is here the only thing is we have to fight for that because the thing that unifies the woke left and the woke right is they don't like the consequences of meritocracy they want to work back to the inputs so and that that like just will screw society It's like you've got to be able to allow people to succeed wherever they go. Now I was kind of
35:20
Now I was kind of still progressive even though I believe it.
35:23
I would like the inputs to be fair, but the outputs those are the outputs of freedom. >> Okay, last question.
35:29
We got to get you out of here.
35:31
Um uh I walked by your office.
35:34
There were some kettle bells.
35:36
What What are the kettle bells for? >> Oh, okay.
35:37
Well, this is slightly long.
35:39
I'll give you a short version.
35:39
So, to be a cross-country skier, you've got to train year round.
35:43
So you need substantial V2 max and actually uh you need to be strong per unit of weight.
35:48
So as an example, I do um uh 3 days a week of um kind of above and below lactate threshold uh running but mostly pretty far and then once a week kind of at and then I do uh two days of strength, one day of like um endurance strength. >> Mh.
36:07
And currently the thing I'm actually really proud of is I I just started doing hang from a bar as a dead hang like four months ago and I I hit 4 minutes and 36 seconds.
36:17
>> 4 minutes and 36 seconds.
36:17
What's the goal for the end of the year? What do we do?
36:21
>> Well, actually my goal for the Yeah, you got to hit the soundboard. This isn't just money.
36:25
This is a No, I mean my goal for the year uh was uh for actually the next 12 months was um was 4 minutes. Okay.
36:35
>> But then there's the number.
36:35
We got to get those numbers out. >> Yeah. Yeah.
36:37
Well, no, but the number two, the second best uh um mountain climber in Norway, I don't know if we know his name.
36:44
Uh but he I have a picture.
36:45
He did 4 minutes and 22 seconds. >> There you go. >> What can I do? >> Thank us. Bye. Appreciate your work.
36:56
>> We'll talk to you soon.
36:56
Have a great rest of your day. Congrats. >> You too.
36:58
My question is, uh, we're going to go through the timeline.
37:03
Uh, Tyler Cosgrove has written out the full United States versus Google case timeline.
37:09
We're going to dig through.
37:09
Um, we're also going to go through Ben Thompson's.
37:12
But my question that I want to answer is what do these what do these pay for default deals look like going forward?
37:19
Specifically in artificial intelligence, there is going to be a particularly odd dynamic around how LLM queries route on the iPhone by default.
37:28
Like the last possible moment to start taking AI seriously and build like a serious uh AI foundation model lab uh the the last moment that you could credibly do that I feel like or was earlier this year.
37:41
Like that was when the the the the last train left the station.
37:45
And who was driving that train? Mark Zuckerberg. And what did he do?
37:49
He went and tried to buy everything that was viable and hire everyone who is hirable >> that weren't viable. >> And yeah, for sure.
37:55
And what he wound up with was not exactly a dream team. He didn't get Ilia. He didn't get Daario.
38:03
He didn't get Demis, but he got a really solid crew, right?
38:07
>> And some great business guys.
38:08
>> Some great business guys, some great researchers.
38:10
He he also just filled out the the the researcher tiers.
38:13
Like he's got a ton of researchers.
38:15
So I feel like >> wasn't worried about salary caps.
38:18
>> No, no, no, not at all.
38:18
And so and and so we were debating yesterday whether Alex Wang was a good pickup for Meta and my conclusion is like he is the best possible option and I think it'll pencil out.
38:29
I think it'll be a good deal.
38:29
It is a big acquisition and it'll be interesting to see how we look on that in a decade, but I think the opportunity is so big it makes sense.
38:35
Um at the same time uh like what would Apple even do if they wanted to compete in AI?
38:42
like everyone is taken off all the all the pieces are off the board at this point.
38:48
They don't have the DNA for mega acquisitions.
38:49
So, they're not going to go and try and buy anthropic like that.
38:52
That's just not how they work.
38:52
Uh they don't like writing $und00 million checks for talent. Tim Cook only makes $74. 6 million a year.
38:59
They're not going to pay some AI researcher $100 million.
39:02
It's just not going to happen.
39:04
Uh and so everyone else sort of has a dance partner at this point.
39:07
Apple wouldn't just be like trying to turn the cruise ship that is Apple.
39:11
They're building an entirely new cruise ship.
39:13
It's just not going to happen.
39:14
So, I don't think Apple is is going to try and build a serious frontier lab.
39:19
I think they're going to partner on this.
39:20
And the question is, where does it leave them?
39:23
They have something incredibly valuable.
39:24
Uh do you know how many active iPhone users there are worldwide right now?
39:31
>> One and a half billion. >> 1. 4 billion. Isn't that a ton?
39:32
That just I I feel like I was if I had to just guess, I'd be like, >> "Job's not finished." Truly, truly.
39:41
But but so like that is incredibly valuable because it's not just it's not just over a billion users.
39:47
It's over a billion users that have >> they can charge $9.
39:49
99 a month forever randomly. >> Yeah. Yeah.
39:52
So many different monetization, but it's also it's like it's it's the top 1 billion really us like basically of like earners because it's the most expensive phone usually.
40:02
Um, and so and they also have that button on the side that right now activates something that should feel like AI but is very clearly far from the frontier.
40:11
And so the logical outcome feels like a partnership here.
40:14
But what will the scale and structure of that partnership be?
40:18
If OpenAI really nails agentic commerce, as semi analysis suggests, it wouldn't be crazy for Open AI to pay Apple billions of dollars to be the default.
40:28
And so right now we're thinking about if you push the Siri button, you trigger an LLM inference query. That's very expensive.
40:36
Every time I hit chat GBT, it's a couple cents.
40:38
If I do some crazy reasoning things, some deep research report might be a dollar. I don't even know. It's expensive, right?
40:46
If I'm sending off some agent to go and like research every single aquifer somewhere. >> Yeah. Yeah.
40:52
That's what it feels like, right?
40:53
It feels like every time you hit uh you hit a query, it's expensive.
40:56
And so, but that's going to flip.
40:58
And I think each query is actually going to be monetizable and they're all going to be they're basically all going to be profitable like Google searches.
41:04
And so, what if they are profitable, if every time someone hits an LLM, it's not a cost center, but it's actually a profit center, well, then OpenAI can pay to get more search volume, some more query volume.
41:19
And so, that means that maybe OpenAI will wind up paying Apple billions of dollars to be the default.
41:26
And of course they're going to try and build their own device and there's a lot of other dynamics, but um would they go with Gemini because they're already on Google for the search default, but would they go would they do that or or is that too is that never are they never going to be able to compete there because uh Gemini is so deeply integrated with Android and the Android phones are are over here do kind of doing their own thing.
41:50
So um you can imagine >> and over this year there's been rumors bubbling up of Apple in conversations with Anthropic with Chat GBT with Gemini right and a lot of these companies have been throwing around >> some very big numbers with uh with with with Tim and the Apple team and I think they had at least back then they they seem to have some stickers.
42:10
So right now it feels like the foundation labs are going to Apple and saying every time we run a query it costs us 1 cent, 10 cents, a dollar, whatever.
42:20
You got to pay us to use our amazing intelligence. >> Yeah.
42:26
To bring value to your users.
42:28
>> But I think it might flip.
42:28
And I think that the each query might actually be profitable just at the query level because there's going to be commerce that's triggered from those.
42:38
So, in the future, you'll pick up your phone, you'll press the button on the side, and you can instantly fire off a best-in-class OpenAI agent to do your bidding.
42:47
So, you'll say, "Order me some creatine." And it'll just go do it.
42:50
And that will be valuable and that will actually drive that will be a profitable query.
42:57
And so, OpenAI could potentially be paying Apple for the right to do that.
43:02
So right now open AI open AI and Apple do have a partnership in place but the reporting suggests that no money is directly changing hands but I don't necessarily expect it to stay that way. So, I don't know. Uh, what's your take?
43:13
What how do you do do you think that this is reasonable that Open AI could be paying Apple billions of dollars within the next, I don't know, 5 years?
43:21
Or do you think it it flips the other way and Apple is the one shelling out billions of dollars for access to frontier AI models from maybe Anthropic, maybe uh maybe OpenAI, maybe someone else?
43:36
>> Yeah, it's interesting.
43:36
I mean, the people that are paying for chat GBT today probably have a pretty insane overlap with iPhone customers.
43:42
Like, it probably looks something >> Yeah. >> like this.
43:49
>> Um, >> I I think that Sam recognizes I mean, every consumer tech entrepreneur has like realized how important it is to integrate at the hardware level, right?
44:02
This is why Zach is >> hellbent on winning in VR, right?
44:03
he's been sick of like being at the app layer and I know that Sam >> uh does not want to be in that same you know why would he pay billions for Johnny Iive and that team like he he he he understands the importance of the hardware layer and certainly >> will recognize the leverage that Apple is going to have over the entire ecosystem.
44:25
I think the question is a lot of this just comes down to uh in my view uh are consumers going to be paying for AI in the long run?
44:35
I haven't been totally convinced that that that the everyday American is going to be spending certainly not $200 a month.
44:40
I don't even know about $20 a month. >> I think it flips.
44:45
>> It's going to it's going to ultimately flip.
44:47
>> And so I can see I can see there being a period where OpenAI is willing to pay to be like the default intelligence. Yeah.
44:56
>> product within the Apple ecosystem.
44:56
But again, there >> it is just going to be a really it'll be it'll be an interesting dynamic and partnership, right?
45:04
Because it's gonna it's so there's so much tension there because Apple is going to want to Apple is already selling intelligence as a reason to upgrade the iPhone, right?
45:11
And they they've gotten lawsuits over this because they sold Apple intelligence and then people are like, "This isn't very smart at all.
45:18
What did what did I just buy?" Right?
45:20
And so are they going to be incentivized to say >> even 70 IQ is a form of intelligence.
45:26
It's just a low level of intelligence.
45:28
They didn't say they didn't say Apple high IQ intelligence.
45:30
They they didn't say Apple super intelligence.
45:32
They just said Apple intelligence.
45:34
It has some level of intelligence. >> Apple room temp.
45:37
>> Room temp intelligence. >> Room temp. I Apple.
45:43
>> What do you think, Tyler?
45:43
Do you think that OpenAI will be paying Apple or do you think Apple will be paying other foundation labs or or what where will the flow of money go in the next few years?
45:54
>> Yeah, I I don't really see it flipping very soon to where uh like >> prompts or or tokens are like actually super profitable.
46:02
super profitable. Um because you need like both massive you need like way better capabilities and it needs to be way more efficient because like if you just have more capabilities still like right now most people are not paying for chatbt they're just using the
46:15
the you know free tier >> which is like if you compare I mean >> if you compare 40 like look at like 5 months ago if you compare 40 to like 03 >> it was like massive you know difference and people still weren't paying >> in cost or in in capabilities >> capabilities yeah and People say weren't pink. So, you needed to be like way
46:33
So, you needed to be like way better in order for people to actually start paying or you need to be way cheaper.
46:40
>> Yeah, I don't know if I agree with that.
46:41
I I I feel like 40 was definitely good enough.
46:44
People were obsessed with it.
46:45
People were like falling in love with it, right?
46:47
>> Even Meek Mill >> like I understand why as a power user like didn't get that much out of it.
46:51
But >> yeah, but I I think you like if you ask norm people what they think of like AI, they're like, "Oh yeah, this is not going to take my job at all." Yeah.
46:59
>> When in reality, if you used like 03 and they if they used 03 every day, if they were a power user, they would be I think they'd be way more bullish on AI generally. >> Yeah.
47:07
>> So, I think that might be evidence that people like I don't know are not >> I think I mean one crazy dynamic is is Apple says I mean if they were to do a deal with OpenAI, they could just say like great like we're going to we're going to sign up every like how many how many paying subs do you have? Great.
47:24
we're going to start heavily we if Apple just starts heavily pushing chat GBT they will by default get their 30% from the app store right but they could work out >> so like this could end up being like even if even if openai is not directly paying yeah
47:40
>> Apple for it could end up generating >> I don't think it's enough >> you don't think it's enough >> I don't think it's enough money for the value that that it'll bring on if it was actually integrated into like the Siri button at the low level. I can just
47:52
I can just press a button and say, "Order me creatine. Order me creatine."
47:58
And it knows my address because it knows my home address from my contact in the in there.
48:01
It has my payment information saved. It does all of that.
48:07
like I don't know if taking 30% of my chat GPT subscription if I subscribe and if I subscribed on mobile but really most people are going to subscribe on desktop and open AI is going to be constantly being like hey go over here and like use a web view to like subscribe this way and stuff. >> I don't know.
48:25
Uh it'll be interesting to see how how it pencils out.
48:28
I feel like there's going to be some new deal that that that that's going to happen.
48:32
Someone's gonna someone's going to pay someone's going to bid. Someone's gonna pay out. >> Yeah.
48:35
Google team says, "Hey, we're already paying 20 20 billion.
48:37
Why don't we double it >> to be Gemini be the default?" >> Can you imagine?
48:43
I mean, if Gemini was the default on on on an iPhone, that would be bizarre, but I mean, it does kind of like it does kind of match with the with the search deal, right?
48:55
>> Um, >> anyway, let's read through Ben Thompson.
48:58
Maybe we may maybe go through the the history first to get us up to speed.
49:01
Tyler, do do you mind taking us through? >> Take us through it.
49:04
Um, so this is the United States versus Google. Yeah. Which started in 2020.
49:09
>> 2020 starts in October 2020. So that's under Trump. >> Okay.
49:12
>> Um, so yeah, I think let's just go over like kind of the central claim of the actual case first.
49:18
>> So it's basically that Google is violating the the Antirust Act of 1890.
49:22
>> It's wild to think about and you know before Donald Trump was a technology founder Yeah. with True Social.
49:27
There was a time where he was beefing with big tech. >> Yeah, it's crazy.
49:32
>> Feels so long ago >> instead of just competing.
49:35
>> Oh, thanks for getting us up on uh VHS. >> We needed this. >> Fantastic. Only possible on Reream.
49:40
One live stream 30 plus destinations.
49:45
Multiream your VHS tapes and reach your audience wherever they are. Head over to Reream.
49:50
>> It truly is the technology is incredible. >> Yes. Also, yeah. Continue. >> Okay.
49:54
So, so um Sherman Antitrust Act of 1890.
49:56
I also put some of the the victims, previous victims of this act. So, we see Standard Oil. >> Okay.
50:03
>> Standard Oil, American Tobacco Company, US Steel, AT&T.
50:06
This is what broke up Bell Labs.
50:09
>> Um, probably set us back a couple decades.
50:12
>> You know who founded Bell Labs? >> Uh, pop quiz. Who founded Bell Labs?
50:16
>> Wait, is it like Oh, I don't know. Is it Claude Shannon? >> No. >> No.
50:20
>> Who founded Bell Labs? >> Oh, >> Bell Labs. >> Bell. Alexander Granbell. >> Alexander Grabbell. Yeah, that's correct. Yep.
50:29
>> Alexander Graanbell started Bell Labs. >> Let's go. We don't know.
50:31
We don't know how to name We don't know how to name companies. >> I know.
50:34
I was looking at the name. >> Standard Oil. American Tobacco. US Steel.
50:39
>> What does the A and AT&T stand for? Is that America? >> America Technology.
50:43
And >> let me ask Gemini. Okay.
50:46
>> What does AT&T >> Okay. Anyway, continue. And then Microsoft.
50:49
Of course, it was a headache for Bill Gates for his entire career until he retired. >> Yeah. >> Oh, that's so good.
50:53
American Telephone and Telegraph. >> Oh, that's so good.
50:58
>> When you pick a name like that and you actually you understand the job and you're just like, "Yeah, Standard Oil.
51:04
I'm going to standardize oil.
51:06
>> I need a name for my telephone and telegraph company."
51:09
>> H what about American American telephone and telegraph >> founder? >> Okay. Okay. Anyway, sorry. >> Okay.
51:16
So, so basically the claim is that um they're legally monopolizing the search engine and uh the the advertising markets like in search.
51:22
Y >> um so they're they're locking up distribution.
51:26
Uh they're self-reinforcing barriers to entry.
51:28
Um and and they're >> and the evidence is that they paid billions to Apple and other vendors. >> Exactly.
51:35
>> Probably hundreds of billions at this point because it's been like 10 billion for decades, right? Yeah. So wow. They are they're up.
51:41
>> So So that is uh they filed the the case DOJ in 2020.
51:46
>> Um >> wait, should we start with the history of Google search and Safari and then run through this? That might be better. >> So yeah. Okay. Okay.
51:51
So, so Google search in Safari. So, 2002 >> 2002.
51:56
>> This is >> pre iPhone.
51:58
>> Yeah, this is pre iPhone.
51:58
This is just on Safari on the >> Wow.
52:01
>> I guess the Mac or whatever it was.
52:03
>> So, so Google's the default there.
52:03
It's just like >> they just Apple just picked that because it's just the best. They just put it Yeah.
52:09
There's no like Google's been the default search engine on Apple devices since 2002 >> and they we don't know specifics.
52:16
most recently is $20 billion annually, but but it's been over 20 year partnership.
52:24
>> I mean, that's a crazy it's crazy to go.
52:26
I mean, Google was founded late September 1998, and then by 2002, you're the default on Apple, like the previous era biggest computing company.
52:34
I mean, I guess Apple wasn't like what it is today.
52:38
Back in 2002, uh kind of pre iPhone, it was certainly not like the biggest company in the world, but still like >> pre Tyler, too. >> Yeah, Tyler.
52:45
>> Yeah, Tyler. this all pre I mean >> were you born 2005 >> 2005 hey if you want to feel old >> born in 2005 >> born in 2005 okay so anyway uh Sergey Brin what does he >> so so 2005 Sergey Brin suggest suggest some kind of revenue share they always call it a revenue
53:03
>> out of the goodness of his heart what what is he thinking that's crazy >> I I have to assume there's it's like there's some competition he's seeing it on the horizon >> um but yeah I like that he they always call it a revenue share they don't they're not paying to the default. >> They're just helping a brother out, you
53:17
>> They're just helping a brother out, you know.
53:18
And then >> um 2007, >> yeah, 2009, these are like the real negotiations.
53:25
They're like it's like Sergey Bren says like, "Oh yeah, we need revenue share."
53:29
But then when it comes down to it, he's like, "Well, you know, let's slow down.
53:32
Let's push the brakes a little bit.
53:33
The numbers are getting a little high."
53:35
Um and then basically the the actual like numbers are not public.
53:39
Um >> they really only show up as a result of this case, like them being >> Oh, after the fact.
53:44
So, we learned this through the case.
53:45
We didn't know for years. Wow. >> Yeah.
53:48
So, it's not really till 2021.
53:49
>> So, there was like a full decade where people were like, "Yeah, like Google's probably paying Apple something, but >> yeah, but hiding hiding a$30 million >> $20 billion line item and you're >> you can do it if uh I I I believe the disclosure rules in SEC filings are something like if it's a if it's a if it's a division of the company that reports the CEO, then you have to break out the financials. This is like YouTube.
54:13
This is uh the story of like AWS when we first got the AWS financials.
54:17
Um so if it's just something like like you know is some deal and it's just one deal like it's not it's not even uh it's not even like a whole division of the company.
54:26
>> A deal I did with Steve. >> Yeah.
54:27
It's just like just like other other income >> or something like that. I don't know. >> Yeah.
54:33
So 2021 it's it's kind of revealed or or estimated at least that uh payments are around 20 billion a year.
54:39
Um and then 2023, this is also a result of the case.
54:42
Um >> Apple is like confirmed to be taking 36% of the the revenue from Safari that Google makes. >> Okay. No.
54:50
So it's similar to their app store revenue. A little bit higher. 36%.
54:53
And that's probably how they got to the number.
54:56
>> That's pretty crazy that Google's making $6 billion off of >> I never knew they got where they were getting 30 36% for the big man.
55:03
>> For the big >> for the big man. >> That's crazy. >> Yeah. and then 2025.
55:08
>> Like, we know you paid to be here, but I'm going to need a cut, too. >> Yeah. Wow. >> Yeah. Okay.
55:12
So, let's go through the the full >> the case.
55:16
So, um >> September 2023, uh this is really the first like actual like trial.
55:23
>> Um it's the bench trial.
55:23
I >> don't really know what that is, but August 2024 is is the actual like initial judgment.
55:31
>> So, this is Google is in fact violating antitrust. Yes.
55:34
like something needs to be done.
55:36
We don't know what is to be done, >> but we're going to do but then we will eventually decide what the punishment is. >> But they are guilty. >> They are guilty.
55:43
There's no uh you know results like what are they going to do?
55:48
But >> yeah, they're guilty.
55:50
>> Um and then it's not till April of 2025.
55:52
So this is 5 years after the you know it was actually filed.
55:54
Um there's the remedies trial.
55:56
I think that's what it's >> uh yeahies.
55:59
So this is like what is actually to be done now.
56:02
Like we know that they're a monopoly. Okay.
56:05
>> What do we do about it?
56:06
>> And then it wasn't until uh I guess yesterday >> that was Got it.
56:12
>> So we I think we already went through some of the verdict, >> but it's um >> the the uh the judge denied the DOJ's request for forest vesture, >> okay, >> of Chrome and Android.
56:23
>> Um they ordered Google to end exclusive distribution agreements.
56:25
Um so that's like I think we talked about this too with Apple.
56:29
Uh you can't like just it can't be exclusive to Apple the like payments or whatever. >> Yeah.
56:35
What what does that mean in practice?
56:36
Uh it can't be exclusive.
56:36
So they have to pay like Xiaomi or something.
56:43
Are we talking about other phone manufacturers?
56:44
Are we talking about other other search engines?
56:46
Like I know that it like like it's not like if I go into my Safari settings I I can't pick Bing.
56:53
Like I I I can still pick other things.
56:56
It's just the default that that they're paying for.
56:58
Uh to dig into that, Jordy, do do you want to look that up or >> Gemini? >> Okay, cool.
57:04
>> I don't it's kind of like legal ease.
57:04
Um and then then there's uh mandating Google to share search index and and user basically sharing data with >> I don't understand the exclusive.
57:14
So so Google pays Mosilla.
57:18
>> Y >> they Mosilla basically wouldn't survive without Google apparently.
57:21
It's like a very significant amount of their revenue, which is funny because >> Google obviously competes with >> on Chrome >> with Chrome.
57:31
>> Um, and then they do this with device manufacturers like Samsung um that just makes make you know continue to make uh Chrome and Google search pre-installed default. >> Okay.
57:42
And then what's the last one?
57:42
Uh uh search index sharing of the search index and user interaction data with rivals. So was that Bang? >> I Yeah.
57:51
So I guess this means these are all basically direct quotes from the actual like file.
57:55
Um but I assume it means that they have to just share some of the like actual like >> okay >> index data from like whatever page rank is.
58:04
>> Um >> they have to like put out publicly.
58:07
>> So we got to hammer the chief product officer of Microsoft today about Bing and what this means because uh yeah I mean there's got to be a way to make money off this if you're Microsoft.
58:16
This is this is the way to do it. Okay.
58:20
Anyway, any anything else from the the history?
58:23
>> So, just to be clear, the ex they prevent exclusive contracts.
58:25
So, Google's barred from entering or maintaining exclusive contracts that give its search engine, Chrome, Google Assistant, or Gemini app a monopoly position on a device.
58:34
So, basically, they can't go to a >> uh smartphone manufacturer and say, you just can't host any other >> Sure. >> Sure.
58:41
Uh in the chat, Periclet says, "Google's only going to share their search data with like other top three companies.
58:47
It's still remaining a monopoly.
58:49
Uh interesting and people people enjoy the VHS.
58:52
So thank you for for tuning in.
58:54
Um >> also so so these rules um also apply to like Genai stuff.
58:58
So this all this also applies to like Gemini if they want to do the same, >> you know, if they want to lease it to Apple or whatever.
59:03
Um all the same rules apply about >> if you've been enjoying the whiteboard segments, we are thinking about getting a smart whiteboard where we can put up a Fig Jam from Figma.
59:12
Of course, we're sponsored by Figma.
59:13
Think bigger, build faster.
59:15
Figma helps design development teams build great products together.
59:17
You can get started for free. Figma. com.
59:21
Let's run through Ben Thompson's take.
59:23
Um, so he kicks it off with Google's remedy decision. Alphabet Inc.
59:26
will be required to share online search data with rivals while avoiding harsher penalties, including the forced sale. We know this.
59:33
Uh, Google's statement was short and sweet.
59:35
Earlier today, US court overseeing the DOJ's lawsuit over how he distributes search issued a decision on next steps.
59:42
He the Google closes says as always we continuing to we're continuing to focus on what matters building innovative products that people choose to love choose and love.
59:50
Um it's a good line that's a statement of a company that lost some battles but won the war in my estimation says Ben Thompson in in strategy which you should go subscribe to.
1:00:00
There are some cursory objections to Judge Meta's decision but by and large that statement exudes relief and rightfully so.
1:00:06
The company that is truly breathing the com uh the company is truly breathing easier today, however, is Apple.
1:00:15
Apple's actually breathing easier because they're getting that sweet sweet 20 36% off the top.
1:00:22
>> 99% margin 20 20 billion a year.
1:00:26
>> The first set of remedies uh were the ones that Google proposed and has already implemented, namely ending the exclusive agreements that were the foundation of Judge Meta's original finding of liability. So, uh, let's see.
1:00:39
Uh, I want to know what these actual, uh, remedies are. Here we go.
1:00:42
Again, this is literally illegal behavior.
1:00:44
What >> we should just highlight again.
1:00:47
So, Google will be barred from entering or maintaining any exclusive contract relating to the distribution of search, Chrome, assistant, and Gemini.
1:00:54
Uh, Google shall not enter or maintain any agreement that conditions the licensing of the Play Store or any other Google application on the distribution, preloading or placement of Google search, Chrome.
1:01:05
That's just >> this is the bundling thing.
1:01:07
So, a lot of the antitrust cases hinge on bundling.
1:01:12
You say, "Oh, you can't have the Play Store on your Android phone unless you're defaulting to search or you you have to have Chrome pre-installed if you want access to search."
1:01:22
Like all of that stuff is uh is seen as anti.
1:01:28
>> So Ben says again this is literally illegal behavior.
1:01:29
So ending it was the bare minimum.
1:01:31
Antitrust precedent however dictates that judge meta go further again from the opinion. >> Uh this is from meta. >> Oh this is good too.
1:01:38
So uh they cannot ma enter or maintain an agreement that prohibits any partner either Apple or Samsung uh from simultaneously distributing any other search engine browser or genai product.
1:01:55
So you c so Google can't go to someone and say and say hey uh you in order to have search as your default or Google search or whatever deal we're doing or whatever we're paying you uh you can't have anthropic pre-installed or you can't have um uh Mosilla pre-installed like you yeah can't be in the contract uh and and that was and that is illegal behavior and so ending it is the bare minimum says Ben Thompson.
1:02:22
Antitrust precedent, however, dictates that Judge Meta go further.
1:02:26
Again, from the opinion, the question now is what to do about Google's violations.
1:02:30
Precedent requires fashioning antitrust re remedies that effectively pry open to competition a market that has been closed by a monopolist's illegal restraints.
1:02:41
Denying the fruits of the violation is a valid objective, and so too is ensuring that anti-competitive behavior will not recur in the same or related ways.
1:02:51
The court has broad discretion to impose remedies to accomplish those aims.
1:02:55
Judge Meta laid out four fruits of the violation.
1:02:58
The court found that the agreements had four main anti-competitive effects.
1:03:02
They one foreclosed a substantial portion of the relevant markets, thus impairing rivals opportunities to compete.
1:03:10
Two, denied rivals access to user queries or scale uh needed to effectively compete.
1:03:14
Three, reduce the incentive to invest or innovate in search.
1:03:19
and four, enabled Google to increase text ad prices without any meaningful competitive restraint, thereby allowing Google to earn monopoly profits to secure the next iteration of exclusive deals through higher revenue share payments.
1:03:30
These effects did not persist independently.
1:03:34
Together, they enabled Google to widen the moes and pull up draw bridges to ward off competition. Great analogy.
1:03:40
Judge Meta attempts to address number two, necessary scale by forcing Google to share various types of data, including Google's search index, but not the actual data from the web pages in the index or the output of Google's page rank algorithm.
1:03:52
Competitors, which explicitly include Genai providers, will get a one-time snapshot, not an ongoing one, and only need to pay Google's marginal cost for providing the information.
1:04:03
User click and query data showing what results users clicked on.
1:04:08
competitors will get this data at least twice, but the final number will be determined by the technical committee the court will set up and oversee.
1:04:13
Do you fully understand like Yeah, that's a very very odd odd like change and and and remedy like I I I guess it like lets people catch up to where things are.
1:04:27
I it it feels like the remedy is like like there has been this this unfair advantage for Google for years.
1:04:34
We're letting everyone catch up and then we're creating like a fair race, but we're restarting the race and then everyone can go out and do whatever they want.
1:04:41
>> Current thing is big numbers.
1:04:41
Uh $200 million for the free press, Barry Weiss's media company to CBS.
1:04:46
Um >> people did not like the quiet in the chat. They said scream.
1:04:53
Uh $610 million for the browser company.
1:04:57
We talked about that a little bit yesterday.
1:04:59
Uh RAMP hit $1 billion in ARR. Let's hear. [Applause] >> Great hit. Great hit.
1:05:10
Uh 600 billion in meta capex >> capex and one trillion potentially on the table for Elon Musk at Tesla.
1:05:16
So we're going to go through this.
1:05:18
So uh the free press is one of the most impressive media companies built in the last decade says Austin Reef from Morning Brew. Correct. Yes.
1:05:27
Uh huge congrats to Barry Weiss, Nelly Snoozy Weiss.
1:05:32
uh this is a funny name uh for building something truly different.
1:05:35
Uh this is I think still rumored.
1:05:36
I don't think it's fully confirmed at this point but uh it's all it's all but >> yeah it was hard to tell which side was leaking the news.
1:05:46
>> Yeah, there's this dynamic where media likes to talk about media and I feel that 100%.
1:05:50
It's super interesting to hear about like the business of Joe Rogan or the business of Huberman or or any of the experts.
1:05:56
But um uh so so obviously also you know you're surrounded by journalists literally if you run a media company.
1:06:04
So they all talk >> journalistic force headed towards you.
1:06:07
Stand >> by that one before.
1:06:07
Uh but you're surrounded by journalists and so uh obviously everyone talks and the media leaks out and the news leaks out >> and it could be interesting ways for either side to put pressure on getting the finish line what they want out of the deal. >> Yeah. Yeah.
1:06:23
And so uh there's there's a series of takes.
1:06:25
I was talking to a buddy who works in media who was uh coming at me with like a it's a crazy number.
1:06:31
And so that's kind of level one.
1:06:33
Level one of the take is like uh on a price per subscriber basis seems high.
1:06:35
I think they have about a million free subscribers.
1:06:39
$200 per free subscriber feels like a lot, I guess.
1:06:42
Um, kind of hard to tell if you think about long-term value for CBS.
1:06:45
But then others are complaining about the political implications of the deal.
1:06:50
Is this something that's like a give to Trump to help get the the the the de merger, the spinout approved, something like that? Um, >> yeah.
1:06:59
And I mean this is an $8 billion deal, this merger, >> and media companies are now entirely like media companies at their best or personality. >> Yep.
1:07:11
>> And paying $200 million to bring on, you know, a face for CBS, one of the most important properties. Makes sense. >> Yeah.
1:07:21
That's my that's my like level three like final take which is that um you sort of have to put a put aside the price per subscriber uh you know take and you have to put aside the political implications of the take.
1:07:35
I just think about it from it's a big company 8 billion you said something around there.
1:07:40
Uh does bringing a younger more entrepreneurial talent into the organization move the market cap by 1% or 2% over the next few years?
1:07:48
Like I it seems like the same math that we're doing for buying a very expensive AI researcher.
1:07:55
You're paying a lot of money in terms of like what what like a salary would count, but you just can't get that level of talent on any sort of normal >> the overall property. >> Exactly. Exactly.
1:08:05
And so I was the the the person I was talking to who was like, "This is a ridiculous price."
1:08:10
I was like, "Yeah, but dude, like if if you were at CNN, you could probably add $200 million of value to that organization pretty quickly."
1:08:19
Uh, and so it's just a matter of time until like the market and the board of directors and the shareholders kind of wake up to that dynamic of how power lost certain people are and actually go and figure out how to get the deals done.
1:08:32
And >> and David Ellison is doing deals, right?
1:08:35
He just did deal >> 100%.
1:08:37
And >> so there's a lot of big numbers flying around >> and there's an and there's an interesting dynamic where the the premium, right?
1:08:43
We saw this yesterday with the browser. >> Oh yes. Yes.
1:08:46
If you do get a big fantastic outcome uh for having the the at the beginning of the name, >> maybe we should just be the business production network. Drop the technology. Technology's over. The hype cycle peaked.
1:08:57
We're just the business production. >> We're in the trough. >> We're in the trough.
1:09:01
Uh we have some fun stuff coming uh in terms of the hype cycle soon.
1:09:04
Um but uh it's interesting because many companies just cannot justify putting someone on staff for $100 million W2.
1:09:14
We've seen this at Apple with Tim Cook, you know, the CEO pay once you get into the the these eight nine figures.
1:09:22
>> Thank you for bringing that up.
1:09:22
No, thank you for No, seriously, thank you for bringing that up. >> Oh, yes. >> Thank you.
1:09:28
>> Apparently, uh uh Tim Cook, we we'll try to pull up this video in a bit.
1:09:32
Apparently, he said thank you 12 times in two minutes when talking with uh >> President Trump last night at the dinner. >> Yeah.
1:09:39
So, >> so he's very grateful.
1:09:39
Um, so the so yeah, Meta is like the first company to really like break this trend of just like, yeah, we're willing to pay $100 million in salary.
1:09:49
We will do the crazy acquisitions in the aqua hires to get really talented people in the org, but uh I don't think other companies are in that world where they could go out and hire somebody like a Barry Weiss just for $100 million.
1:10:02
Uh, it's got to be done through an acquisition.
1:10:04
That's what gets board approval.
1:10:06
That's what gets shareholder approval.
1:10:07
And so you're kind of wrapping an individual, an influencer, someone who's incredibly talented and entrepreneurial around an organization just to actually get the cash flow to flow through.
1:10:19
>> It's making me think about C CBS News for the first time in decades. >> Yep. So, Yep. Yep. Yeah. Yeah. It's true.
1:10:27
And even if the even if like the uh subscriber numbers are like a little low, I mean, honestly, a million's a ton. It's great job.
1:10:31
Um, but even if they are a little low, it's like, well, what are they what are they compounding at?
1:10:36
at? what what what will the free press be able to be at in a decade with the support of CBS and the and the backing financial backing of CBS and Barry Weiss's execution strategy like could be hundred million I don't know could be really really big uh but you don't have to raise money for it you you can just focus on growth anyway similar story at
1:10:54
the browser company $610 million from Atlassian uh very interesting deal the timeline was not a fan of this >> came from the land down under with a Brinks truck >> yes and it a lot of People are asking is this is this some runaround by the Australian government to try and influence the browsing habits of Brooklyn hipsters? Yeah. Yeah.
1:11:14
>> I don't think there's much >> try to control the narrative. Right. Exactly.
1:11:16
As a way to say, you know what?
1:11:19
What if we could get all of the data from Brooklyn hipsters, all their browsing information? >> Yeah.
1:11:24
They're known communication. >> Yeah.
1:11:26
They're known for drinking PBR, but what if every time they went to PBR on the Arc browser, the Dia browser, it just automatically rerouted them to Fosters? Yeah.
1:11:36
>> What if or the AI assistant on the side?
1:11:38
>> Oh, you're you're in Dio.
1:11:38
You're asking, "Oh, what should I do this weekend?"
1:11:40
And it just auto autopop populates. Oh, yeah. We're using AI.
1:11:44
Throw Why don't you throw another shrimp on the barbie? >> Yeah.
1:11:47
And if you search, is it true that kangaroos are extremely violent?
1:11:49
It'll it'll start spinning it and saying, "Well, actually, you know, they're only >> violent when promote provoked." >> Provoked. Yeah.
1:11:58
They're actually quite peaceful. >> Yeah.
1:12:00
Your dog actually tried to barked at the kangaroo and then the kangaroo went after it. >> Exactly. Exactly.
1:12:06
>> I think this I think this really smart from uh from Australian uh from from >> from uh >> people pulling the strings in Austral. Yeah.
1:12:16
To get a little bit more uh influence over the Brooklyn hipster and the arc and dia user.
1:12:20
Uh Zeb did not like the acquisition and said pull this up.
1:12:25
>> Me uninstalling Arc as a certified Atlassian hater.
1:12:28
Atlassian hater. there is a wild gap between the vibes and so some people had this take that like uh it was it was a vibe acquisition they acquired good better vibes with the next generation of founders uh ar from from what we've seen dia they're
1:12:46
going to continue to operate independently I bet they're going to build some beautiful enterprise browsing experiences like they always have >> yeah and they should they should build in reream one live stream 30 plus destinations multiream and reach your audience wherever they are. So you
1:12:58
So you should be able to stream from your DO browser, from your arc browser.
1:13:01
Um, so my my take on this was there's so basically uh right now the team is saying we're going to stay independent.
1:13:12
We're going to go but my question is are they going to stay are they going to stick with that narrative of like stay independent?
1:13:17
And this is very rare for pre-product market fit acquisitions.
1:13:20
I haven't seen a ton of examples of that where a company was acquired that wasn't like clearly on a you know just >> remember path >> Instagram was bought for a billion dollars and almost everyone involved at the time thought that it was crazy. >> They did. Yeah, that is true.
1:13:38
At the same time >> and it was like a key threat to Meta's business, right?
1:13:43
Like the user growth was >> Yeah. >> insane.
1:13:46
I mean, I would love to look at the uh the retention metrics for DIA versus Instagram because it's totally possible. I I don't know.
1:13:54
Do you know how many DAUs or or total downloads Instagram had at the time of acquisition?
1:14:00
I know it was small, but was it sub a million?
1:14:02
I feel like it might have been a little bit bigger.
1:14:04
Can someone look that up?
1:14:06
Uh but basically, >> look that up, Tyler.
1:14:08
I'm also curious about YouTube as well because YouTube was bought for >> Yeah.
1:14:12
How many people were using >> three times?
1:14:14
Uh >> and again our the dollar isn't what it used to be.
1:14:18
>> Y so when Instagram was acquired um estimated around 860,000 so less than a million DAUs. >> Okay. Okay.
1:14:25
So >> DAU though >> Yeah. Yeah.
1:14:27
But still I mean we're in the same ballpark here. Very interesting.
1:14:31
Instagram >> people people that have >> Yeah. Yeah. Yeah. Yeah. Yeah.
1:14:35
>> DAU is wildly different than users. >> Okay. Okay. Yeah. Yeah.
1:14:39
Uh but still I mean we're we're we're in we're in the rough ballpark where you could where at at the very least you like we have to take what Atlassian is saying and what the browser company is saying at face value.
1:14:51
They are saying we're going to continue building this browser.
1:14:53
We're in it to win the AI browser. We're we're going broad. We're going consumer.
1:14:57
This is not we're acquiring this browser.
1:15:02
We're going to bake it into Trello and we're going to bake it into Jira. No.
1:15:06
Like >> I actually disagree with you here.
1:15:06
They don't they're they all the messaging was that this they're they're not going to be focused on consumer like from Atlassian CEO was that we're going to build great enterprise browsing experience. >> Oh, okay. Okay.
1:15:21
>> So, there's nothing there's nothing in there that that I saw from the Atlassian side that said >> we want to win in the consumer. >> Oh, really? Really? Okay. Interesting. Yeah.
1:15:30
>> They are they know their they know their business, right?
1:15:31
And >> so, >> it's very interesting.
1:15:34
I I can't imagine having like a work browser, but maybe that makes sense.
1:15:37
I mean, people have work laptops, but I feel like the trend has been you have you have like one phone that you do work and life on and then you have separate apps and maybe you have, you know, an enterprise software product installed on your on your phone.
1:15:51
But really like there's the trend seems to be more people using like Gmail and Google email at work.
1:15:56
And it seems like there's less and less like, oh yeah, like I have a separate work computer with a separate operating system.
1:16:04
>> Chrome is very set up.
1:16:04
Chrome is already very set up to have like profiles, like personal profiles and work.
1:16:11
>> Yeah, I have I have two.
1:16:11
I have a personal one and VPN one. Um, so I don't know. Yeah. Um, we'll have to see.
1:16:15
I mean, the the founder is saying like we're going to keep working on DIA, but maybe that means in the enterprise context.
1:16:23
Uh anyway, um we'll have to keep an eye on like where they wind up going.
1:16:30
>> So Mike said again, I said this yesterday, with DIA browser, we're going to collectively redesign the browser to help knowledge workers kick butt in the AI era.
1:16:41
>> And so I that that to me kind of reads a little proumer, right?
1:16:43
I I don't think they're but but it feels like, you know, very much oriented towards people that are working in the browser. >> Oh, yeah.
1:16:53
OTB says, "Get Sager on here to give push back on TFP. Bye."
1:16:55
He's going postal about it.
1:16:57
I I should text him and see if he wants to hop on.
1:17:00
Um, uh, we will, yeah, we'll definitely get him on when when he's ready to to to, you know, go live and ri some takes.
1:17:07
I also invited Barry Weiss.
1:17:10
I'd love to hear her, uh, her side of what's going on and what her plan is.
1:17:13
Uh, it's a it's a fascinating story.
1:17:16
Of course, like these are still like leaks, so most people don't want to talk until there's like finalized, uh, information.
1:17:20
Uh anyway, uh if you're trying to design a browser, you got to do it in Figma.
1:17:25
Think bigger, build faster.
1:17:25
Bigma helps design and development teams build great products together. Get started for free.
1:17:31
Uh and the third big number of the day, ramp has crossed 1 billion in revenue.
1:17:37
Sheesh says Tyler, >> a key question is whether it's gross revenue, it's net revenue.
1:17:42
I think it's uh gross revenue.
1:17:44
He goes back and forth on this, but anyway, they've been on a tear.
1:17:48
Uh, as David Senro likes to say, it's a great example of taking a simple idea and doing it deadly seriously.
1:17:57
Taking a simple idea deadly seriously.
1:17:57
I think David was quoting someone, but I attribute everything to David's.
1:18:00
Now, um, >> we should pull up these videos from the uh, dinner at the White House last night.
1:18:08
>> I only have one question for Eric, which is, is the job finished?
1:18:11
So, we will figure that out today.
1:18:14
>> You're going to call him?
1:18:15
>> I I'm He is He's busy.
1:18:15
I'm going to I'm going to >> All right. play this video. >> Oh, yeah.
1:18:19
You've done an incredible job with Apple, little company called Apple. >> Thank you, Mr. President.
1:18:26
>> Very, very few people have been able to do what you've done. Congratulations, please. >> Thank you, sir. That means a lot to me.
1:18:32
Uh, I want to thank you for including me this evening.
1:18:36
>> It's incredible to be among uh everyone here, particularly you and the first lady.
1:18:40
Uh, I've always enjoyed having dinner and interacting.
1:18:43
Uh I want to thank you >> four thank you >> for setting the tone such that we could make a major investment in the United States and have some key manufacturing advanced manufacturing here.
1:18:57
I think that says a lot about your focus and your leadership and your focus on innovation.
1:19:04
I also want to thank you >> for helping American companies around the world.
1:19:10
Uh this is a very key key thing and I really enjoy working with your administration on on those topics as well.
1:19:21
Uh because I think they're so important to the country.
1:19:25
>> I want to thank the first lady for focusing on education. >> Wow.
1:19:29
>> There's nothing more important than education.
1:19:30
Triple >> uh it is the great equalizer.
1:19:32
Triple >> and uh always will be.
1:19:35
And so thank you so much for including me.
1:19:38
We're all we are all different in some ways, but we all believe in the power of technology to improve people's lives.
1:19:46
And that that is the thing that that binds us all together.
1:19:52
>> And Tim, how much money will Apple be investing in the United States?
1:19:55
Because I know it's a very loud and and it's uh you know, you were elsewhere and now you're really coming home in a big way.
1:20:04
How much money would you be investing? >> 600 billion. >> 600 billion. >> There we go.
1:20:09
We're very proud to do it. >> That's great. Thank you very much. >> Appreciate you, sir. >> Wait, is that 10? Thank you.
1:20:15
So, >> I think it was 12.
1:20:16
Somebody else had counted as 12. I I I was around 10.
1:20:21
>> Um, but still, we should um >> Why wasn't Christina from Vanta there?
1:20:23
I feel like that's key to the US's tech strategy. >> I agree.
1:20:28
Automate compliance, manage risk, prove trust continuously.
1:20:30
Vantage trust management platform takes the manual work out of your security and compliance process.
1:20:35
All right, we got to pull up this video of >> with continuous automation of Zuckerberg.
1:20:39
This was our fourth big number of the day.
1:20:41
Uh Zuckerberg says he will invest around $600 billion by 2028.
1:20:48
Uh Zuckerberg says Meta will invest 600 billion in AI infrastructure by 2028.
1:20:52
Meta's already guided capex of 70 billion in 2025 and 100 billion in 2026.
1:20:58
So that's a big ramp to go from 70 to 100 and then they still got 430 billion to do in 27 and 28 uh to actually re uh reach uh 600 billion.
1:21:08
Spending would need to jump to 200 billion in 2027 and 300 billion in 2028.
1:21:13
That's a lot of dollars >> video in the timeline. >> Let's play it.
1:21:21
And this is quite a group to get together and you know I think um you know all of the companies here are building just making huge investments in in the country in order to build out data centers and infrastructure to uh power the next wave of innovation.
1:21:34
So it's um you know we don't often get together as as uh the the the CEOs of the different companies but it's it's uh good to see everyone.
1:21:44
>> How much are you spending uh would you say over the next few years? >> Oh gosh.
1:21:47
Um, I mean, I think it's probably going to be something like >> 600 billion >> at least $600 billion to >> in the US.
1:21:59
>> Yeah, >> it's amazing. >> No, it's significant. >> That's a lot. Thank you, Mark. It's great to have you. >> Thank you.
1:22:05
Well, thanks for for hosting us.
1:22:06
I quite >> So, does anybody in the chat know if who which which of them went first? >> Yeah.
1:22:12
because because that number that number does not align with that number does not align with with uh Meta's stated cap.
1:22:22
>> Yeah, it doesn't appear in the SEC filings yet, but it is like very forwardlooking and >> no, it was 2028.
1:22:27
>> 2028, which is something that they might not actually put out or might not be demanded by the by Wall Street, but that is hilarious.
1:22:35
Uh anyway, whatever they do, they're going to have to do it on graphite. Graphite.
1:22:38
dev code review for the Age of AI.
1:22:40
Graphite helps teams on GitHub ship higher quality software faster, get started for free. >> Yeah.
1:22:45
So, Meta guided uh capex of 70 billion in 2025 and 100 billion in 2026.
1:22:50
So, to to get to 600 billion, spending would need to jump to 200 billion in 2027 and 300 billion in 2028. >> Yeah.
1:22:57
>> Yeah. What's interesting is that uh so these numbers are like insanely big and obviously it looks like a big acceleration relative to past capex numbers but I'm so inured to big numbers now because of the fast takeoff crowd that was like oh yeah like trillion
1:23:15
dollar buildout data center like next year for sure like AI 2027 like it's going to be 10 trillion it's 100 billion uh and so uh like when I hear 600 billion I'm like >> yeah yeah that sounds like totally reasonable Like I think they'll definitely hit that and and they I don't know they probably will. Like it doesn't
1:23:31
Like it doesn't seem like uh there's many barriers in the way.
1:23:36
Like it's just continue to grow the core business, run more ads, dump the profits into capex, build some more data centers. Uh semi analysis.
1:23:43
Uh uh Doug Laughlin over at uh Fabricated Knowledge has a good uh deep dive today on the glut of lagging edge chips that I think we might have a chance to get to in a little bit.
1:23:54
But, uh, it was a it was a fun dinner.
1:23:57
Are there any other videos that we should play from the from the White House dinner?
1:24:00
>> I like the idea of, uh, this is like this is kind of new podcast format.
1:24:02
Just have a dinner with everyone, have some cameras there >> and just Yeah. Yeah. It's good. What's up, Tyler?
1:24:10
>> Uh, I don't have another video, but um, there is there was a photo that came out.
1:24:13
I'll send it to the chat.
1:24:13
Um, but it was like the full dinner and right at the very edge, I'm pretty sure it's Dylan Field. Yeah. >> Yeah. Yeah. Yeah.
1:24:20
So, someone had the full breakdown here. It's in the deck. much deeper.
1:24:24
Let me let me pull it up. Where is it?
1:24:26
Uh the full list of people who attended the dinner is Wow, there's a lot of stuff.
1:24:34
Okay, so Ed Ledllo has it.
1:24:35
full list of attendees at President Trump's dinner with tech leaders.
1:24:39
The president, the first lady, Susie Wilds, Sergey Bin, uh Gerilyn Gilbert Sodto, Sam Alman, Greg Brockman, Anna Brockman, Saffer Catz at Oracle, Gil Galter, Justin Chang, Meredith Aor, Natalie, Natalie Dump, uh Tony Frizzio, Dylan Field, John Herring, Jar Jared Isaacman, Jared Isacman.
1:25:00
Uh oh, I I guess he >> missing one.
1:25:04
Yeah, Elon didn't go but isn't Oh, Chimath is in here.
1:25:06
So, uh, Sunny, Madra, Sachin, Nadella, Chimath, Poly Hapatia, Sundar Pachai, Mark Pinkis, VC Ranadiva, who owns the Golden State Warriors, and I believe VC Ranad is the the like the guy who worked with Chimath on the first spaxs and VC Ranadv kind of like pioneered that format almost.
1:25:27
Um, >> did you say Lisa Sue from AMD?
1:25:30
>> Lisa Sue made it, David Sax, Sham Sankar from Palunteer.
1:25:33
Uh we missed him yesterday.
1:25:35
He was at this dinner in DC.
1:25:37
Uh Jamie Simoff, uh Alex Wang, Sanjay Morota, Tim Cook, David Limp, Mark Zuckerberg, and Bill Gates. What a crew. Jensen didn't make it.
1:25:47
So the fact that Jensen and Elon are not there, I feel like you shouldn't read too much into it.
1:25:54
It's kind of just like Trump catching up with a bunch of people, but I don't know.
1:25:58
There's also like this Yeah, I don't know.
1:25:59
They they had like falling out, but it seems like they've kind of patched it up. I don't know.
1:26:02
Uh, always always hard to read too much into this stuff.
1:26:07
But speaking of Elon Musk, he didn't need to be at the White House because he's setting up a one trillion dollar pay package. >> 975 billion. >> Oh. Oh, it's not a trillion. Just a little bit shy. Okay.
1:26:20
So, uh, uh, the update is, uh, Tesla's board has green lit a fresh pay package for CEO Elon Musk.
1:26:28
If he hits 400 billion in adjusted EBITDA, he deploys 1 million robo taxis for commercial use, ships out 1 million energy storage units, produces and delivers 20 million vehicles, secures 1 million of ongoing FSD subscriptions, aim for a $ 8. 5 trillion market cap.
1:26:45
The Golden Retrievers are 7 and a half to 10 years in the CEO role.
1:26:52
The starting share price is $3349.
1:26:57
The package includes 12% of company stock divided into 12 segments.
1:27:00
And so um Signal says this is a masterclass in how to design incentives.
1:27:05
This deeply ties Elon's upside on the world radically improving.
1:27:09
If he actually hits those milestones, the value unleashed for society dwarfs his payout.
1:27:13
Most CEO comp is rent seeking.
1:27:16
This is moonshot seeking. I completely agree.
1:27:18
Every pay package for executives should be this absurd on both sides for the company and the individual.
1:27:25
And this is exactly my take.
1:27:27
It's like bet on >> he's done this he's done this before.
1:27:30
>> He's done this before.
1:27:30
And Dan Primac uh when when the when the pay package the most recent pay package came into uh under like legal scrutiny Dan Primac was like I like this when it was announced and I thought it was crazy and I and everyone thought it was impossible that he would pull it off and he did. So he deserves it.
1:27:46
Um and so it was this crazy legal battle but it was actually aligned with exactly what a CEO should be doing creating shareholder value.
1:27:52
This should be a model for CEO comp going forward in my opinion.
1:27:57
Uh there is another side of this which is increasing a founder CEO stake by doing aggressive stock buybacks.
1:28:03
But this is a way cooler because it incentivizes bold investments and huge capbacks on factories, moonshot technology gambles and generally thinking in decades.
1:28:13
So uh I'm super stoked about it.
1:28:15
I think it's I think it's good. I hope it holds.
1:28:18
>> It's a good way to signal.
1:28:18
I mean, they're they're very much signaling to the base, the Tesla army, that that there's a lot of potential upside.
1:28:28
>> Uh Chris Camo said earlier, "Been tracking XAI's accelerating cash burn, flattening user growth, monetization, and fundraising struggles since the beginning of this year, and I don't see how they last another 12 months without a Tesla or Elon bailout."
1:28:40
I mean, saying I don't see how they last another 12 months without a the founder bailing them out.
1:28:49
It's like that's kind of the founders's job.
1:28:51
Just continuously bail out the company.
1:28:53
But I thought this was relevant because I do think that part of this part of setting up this pay package could set up a scenario where XAI gets just merged into Tesla and it becomes a standalone.
1:29:05
Uh uh it it just all gets rolled in. >> Yeah. Yeah.
1:29:08
I mean Tesla has I mean Carpathy worked there like it's it's a fantastic AI organization and it makes sense that there would be a lot of overlap in in what they do.
1:29:16
I I guess there's probably >> and I mean if if X the everything app was part of a public company again, how is that not how does that get valued at less than 8. 5 trillion, right? That's a good point.
1:29:30
>> And so with with Elon having that ace up his sleeve fact that we're all addicted to this app. >> Yeah.
1:29:36
I mean I mean I I guess it's good that there's other milestones in there that that you can't just like uh merge everything together because >> it is it is funny to think about some of the different milestones though.
1:29:45
It's like shipping out 1 million energy storage units feels like wildly like does this even need to be included if you're going to deploy 1 million robo taxis for commercial use?
1:29:58
>> Yeah, that one seems a little bit uh I don't know. Easy sandbag. Who knows? [Music]