AI-Designed Viruses, OpenAI’s First Device, The Mansion Section | Diet TBPN

Summary

TBPN — Diet TBPN
Episode: AI-Designed Viruses, OpenAI’s First Device, The Mansion Section
Date: August 8, 2026
Hosts: John Coogan & Jordi Hays

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Episode Overview

In this episode of Diet TBPN, John Coogan and Jordi Hays discuss some of the most pressing and intriguing developments in tech and biotech, condensed into a lively 30-minute session. The show covers the groundbreaking use of AI in designing viruses, rumors about OpenAI’s first consumer device, legal challenges facing Meta and social media's potential “tobacco moment,” and a deep dive into Authentic Brands Group, which manages iconic properties and consumer brands. The hosts’ characteristic mix of insight, skepticism, and irreverent humor keeps the discussion fresh and engaging.

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Key Discussion Points & Insights

1. AI-Created Viruses: Innovation and Biosecurity

Discussion Begins: [01:05]

• Breakthrough at Stanford & ARC Institute:
  Scientists used AI to create synthetic bacteriophages—viruses that exclusively target bacteria—by training models on viral DNA.

  • “For the first time, scientists have used AI to create entirely new viruses.” — Jordan [01:05]
  • The AI was restricted to learning from and generating only bacteriophages, purposely excluding data related to viruses infecting humans, plants, animals, or fungi.

• Implications for Biotech and Risks:

  • The method could “accelerate biotechnology while also raising long term biosecurity questions.” — Jordan [01:20]
  • Hosts note the eerie post-pandemic context, and potential for democratizing synthetic biology tools (even envisioning a “Best Buy gaming PC” scenario).
  • “Nightmare scenario is you go to Best Buy... you’re able to run an open source model that basically walks you through the steps of creating something really problematic.” — Jordan [01:20]
  • “Doesn’t make me that comforted to be honest.” — Patrick [02:08]

• Safety Claims & Scientific Guardrails:

  • The hosts stress these synthetic viruses cannot infect humans (“...the model cannot generate viruses capable of infecting people.” — Jordan [03:02])
  • Emphasis on the need for new terminology, as the word “virus” now has such negative connotations:
    • “We gotta rebrand virus. We gotta come up with a new word. Just like glp. One peptide that felt very safe...” — Jordan [05:05]

2. OpenAI’s Consumer Hardware: Leaks and Speculation

Discussion Begins: [07:22]

• Rumored Device Form Factor:

  • OpenAI’s rumored device is described as a “hockey puck-sized donut,” priced at $300–$400.
  • “What a funny form factor.” — Jordan [07:34]
  • Discussion of moving, mechanical features designed to make it feel “more alive,” with hardware developed by Jony Ive’s design team.

• Device Features & Functionality:

  • Portable, battery-powered smart speaker—with microphones, speakers, cameras, and sensors, no screen.
  • Serves as a much more expressive, capable voice mode for ChatGPT, aiming for personalized, context-driven conversations.
  • “It will reportedly include lights and parts that physically move as it responds, with the goal of making it feel more alive...” — Jordan [08:20]

• Potential for Product Evolution:

  • Hosts speculate about the integration of features (voice mode, codex, memory, etc.), and whether all systems can be made to work seamlessly before launch:
    • “There’s a whole bunch of these little minor integration issues that probably need to be fulfilled before this product launches...” — Jordan [12:29]

3. NotebookLM and Generative AI for Learning

Discussion Begins: [09:03]

• NotebookLM Use Cases:

  • Hosts discuss Google’s NotebookLM, which allows users to input research and generate conversational AI podcasts for studying.
  • Real-world testimonials from listeners about using NotebookLM to ace exams:
    • “I did that for a history exam. It was like a vocab list and it went through.” — Tyler [10:33]
  • The collapse/merger of LLM features (voice, memory, podcast generation) and whether AI could simply converse live as an expert tutor.

• AI for Study Assistance:

  • “If you’re trying to learn about a topic, [voice] is probably better than just generating a podcast...” — Patrick [11:59]

4. Meta’s Legal Woes – Social Media’s “Tobacco Moment”

Discussion Begins: [14:59]

• New Mexican Ruling:

  • Meta faces over $900 million in penalties and is mandated to set up a $567 million fund to address harms linked to minors’ social media addiction.
  • “The numbers are going to get bigger from here. Yeah, at least. At least they’re going to try.” — Jordan [15:44]

• Comparison to Big Tobacco Settlement:

  • In-depth discussion of the 1998 Tobacco Master Settlement Agreement—annual payments to states forever, not just lump sums.
  • “In return, all the States said, hey, we’ll drop all those lawsuits ... the companies will make large payments and follow new limits on advertising and business practices ... annual payments that continue indefinitely. They will actually have to pay forever. As long as they are in business.” — Jordan [21:12]

• Potential Future for Social Media Companies:

  • Hosts speculate whether a similar structure could emerge for social media—an ongoing financial and regulatory framework shaped by legal settlements.

5. The Decline of DeepMind and Google's AI Direction

Discussion Begins: [23:07]

• Departures at DeepMind:

  • Multiple high-profile exits and sentiment that Google “is no longer a frontier lab” in AI due to bureaucracy and loss of talent.
  • “Google will continue meandering on and releasing models. But their odds of ever reaching state of the art again have dropped to zero.” — Semianalysis (via Patrick) [24:15]
  • Jeff Dean and other key AI pioneers now forming new ventures; Google’s focus shifting to infrastructure and cloud profits.

• Google's 'Barbell' Strategy:

  • Hosts note Google’s strong performance in cloud and chip development, with a positive spin on focusing on core strengths rather than the bleeding edge of AGI/AI research.

6. Mansion Section: Authentic Brands Group Spotlight

Discussion Begins: [29:31]

• Nick Woodhouse's Mega-Mansion Listing:

  • Discussion of the $68.5 million home, segueing into the unique business of Authentic Brands Group (ABG).
  • ABG owns and manages over 50 consumer brands and celebrity likenesses (Marilyn Monroe, Elvis, Muhammad Ali, etc.) as well as fashion, sports, and lifestyle brands like Neiman Marcus, Brooks Brothers, TapOut, Ruka, DC Shoes, and Billabong.

• Brand Licensing as a 'Graveyard':

  • Reflection on the fate of iconic brands and how ABG monetizes nostalgia and licensing:
    • “ABG is a graveyard for iconic brands ... It’s the bending spoons of brands.” — Patrick & Jordan [32:04]
  • Discussion reminisces about the cultural impact of surf and skate brands and the decline in their relevance for younger generations.

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Notable Quotes & Memorable Moments

• “You gotta drop the line: I’m wearing sunglasses because I’m looking at the future and it’s very bright indeed.” — Jordan [00:20]
• “If we’re going to get advances in viruses that deliver gene therapies or medical treatments, we gotta rebrand virus.” — Jordan [05:05]
• “OpenAI’s first consumer device will reportedly look like a hockey puck sized donut and cost roughly $300 to $400. What a funny form factor.” — Jordan [07:34]
• “The word ‘virus’ has such a bad connotation post Wuhan ... You’re never like, ‘I got a virus,’ and someone says, ‘A good one or a bad one?’ It’s always bad. — Jordan [05:44]
• “There’s a whole bunch of these little minor integration issues that probably need to be fulfilled before [OpenAI’s device] launches and delivers the full capability.” — Jordan [12:29]
• “It’s time to start thinking about what sort of battle social media has ahead of it, kind of in cigarette terms.” — Patrick [17:05]
• “The [Tobacco] Master Settlement Agreement ... created a system of annual payments that continue indefinitely ... They will actually have to pay forever. As long as they are in business.” — Jordan [21:12]
• “Semianalysis says ... DeepMind is no longer a frontier lab. ...Their odds of ever reaching state of the art again have dropped to zero.” — Patrick [24:15]
• “ABG is a graveyard for iconic brands. It’s the bending spoons of brands.” — Patrick & Jordan [32:04]

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Timestamps for Key Segments

• [01:05] — AI-Designed Viruses: News, risks, and reframing biotech
• [07:22] — OpenAI’s Consumer Device: Hardware leaks, speculation, future of personal AI
• [09:03] — NotebookLM, voice-driven learning, and educational use cases
• [14:59] — Meta’s Court Rulings & Social Media “Tobacco Moment”
• [23:07] — DeepMind’s Decline & Google’s new AI/cloud focus
• [29:31] — Mansion Section: Authentic Brands Group and the business of nostalgia

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Tone

TBPN’s trademark mix of deep tech analysis and playful banter is on full display, blending timely skepticism with cultural insight and humor, making the episode accessible but still rich for insiders.

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Summary

This episode threads together the accelerating pace—and sometimes peril—of AI deployment in biotech, the rapidly blurring boundaries between software and hardware in consumer tech, the growing regulatory headaches for legacy internet giants, and the economics of memory and branding in American culture. Whether discussing the creation of AI-powered bacteriophages or the ongoing attrition of AI talent from Google, Coogan and Hays probe the underlying drivers, risks, and narratives shaping the present and near future of tech.

Transcript

[Jordan]

No, who had orange in the chat? Because the chat was trying to guess what color sunglasses Jori would be wearing today. Is that orange or is that more of like a burnt sienna?

[Patrick]

Well, I think it's more of a green greenish frame with more. With an orange lens.

[Jordan]

You gotta drop the line. I'm wearing sunglasses. Cause I'm looking at the future and it's very bright indeed. I don't know. No one gets that reference. Anyway,

[Patrick]

It's great to be back. It's Friday. We got a shorter show for everyone today. General partner Khosla Ventures coming on to talk about their new investment, Discovery Loop, founded by none other than Jeff Dean and some of his crew from DeepMind. And then we have Patrick Wendell, co founder of Databricks, joining to talk about their new blog post. I promise it's gonna be more exciting than it sounds like. No, but they're doing smarter model routing and we're excited to catch up with him.

[Jordan]

Very excited. Well, for the first time, scientists have used AI to create entirely new viruses.

[Patrick]

You asked for it. They delivered, they delivered, they delivered. They woke up. You know what we don't have enough

[Jordan]

of viruses that have never existed in nature before. It's marked a milestone that could accelerate biotechnology while also raising long term biosecurity questions. Of course, nightmare scenario is you go to Best Buy, you get a gaming PC with a couple pretty stock graphics cards, and you're able to run an open source model that basically walks you through the steps of creating something really problematic. At the same time, there's a lot of really talented and well resourced organizations that are fighting that tooth and nail. And so we'll probably see a little, you know, back and forth equilibrium there. But lots of interesting questions. Important to note that these viruses do not affect humans whatsoever. Even these new viruses, they target bacteria. So it's more of an experiment, more of a demo. But you can see where things are going.

[Patrick]

And that doesn't make me that comforted to be honest.

[Jordan]

You like your bacteria?

[Patrick]

You know, we naturally have where there's bacteria that is part of being human

[Jordan]

and you would like the bacteria to be unaffected by viruses. Is anyone standing up for the bacteria right now?

[Patrick]

Well, it's more so like you have bacteria in your gut and gut is kind of an important part of body now.

[Jordan]

That bacteria is gonna be suffering from a novel virus? Apparently, yeah. Well, in a study published Thursday in Science, researchers at Stanford and the ARC Institute trained an AI model to recognize patterns in naturally occurring viral DNA, then used it to generate genetic sequences for Brand new viruses. After synthesizing those DNA sequences and inserting them into bacteria, the team found the bacteria produced viable viruses capable of infecting other bacteria. The work does not create a new threat to humans. Be careful. I'm sure that will get cut out of a lot of messaging around this because it sounds really scary on its face. The AI was trained only on bacteriophages, viruses that infect bacteria, and specifically excluded viruses that infect humans, plants, animals and fungi. As a result, the model cannot generate viruses capable of infecting people. While scientists have been synthesizing viral genomes for years to study diseases and develop vaccines, this is the first time AI has been used to design entirely new viruses that function in the real world. And I was going back and forth before the show on is this anything special? You know, we've been using tools to make viruses for bacteria for a long time. This is just another tool to do it, or is this some, you know, material breakthrough? That's sort of the debate point. It sounds really scary, but also like you've been able to design these viruses in a lab for a long time. So what is the material difference here? I think it all comes back to acceleration and cost. If all of a sudden it becomes a thousand times cheaper to generate viruses, then that could reshape biotech in a positive way but also have biosecurity implications.

[Patrick]

Yeah, I think a lot of the reaction is just that it feels like a little too soon post wuhan, a little too soon post hugging phase. There's been a variety of events that I think naturally make people a little apprehensive when you see a headline like this.

[Jordan]

Yeah, a lot of people are like, you know, the Eliezer Yudkowski reaction of ah, like this is bad, but we'll see where it goes. If the approach proves effective across other classes of viruses, it could become a powerful tool for medicine and biotechnology. Viruses are already widely used as delivery vehicles for gene therapies and other medical treatments. And AI designed viruses could eventually expand that toolkit. At the same time, the research highlights how advanced, how advances in AI are making it increasingly important to build safeguards alongside new capabilities, which I'm sure the ARC Institute is working on. And there's also other other AI driven neo scientific labs. I mean, Jeff Deans, one of those was advancing one of the goals of his new company is to work on biotech broadly. He has a very broad remit, but there are more narrow projects like that new company that's focused on finding a cure for the common Cold. There are a few other projects that are more narrowly targeted as well as all the biotech companies that are working on stuff. If we're going to get advances in viruses that deliver gene therapies or medical treatments, we gotta rebrand virus. We gotta come up with a new word. Just like glp. One peptide that felt very safe. It was like, you're not doing steroids, you're not on gear.

[Patrick]

What's the lizard?

[Jordan]

You're doing a pep.

[Patrick]

You're not doing Gila monster.

[Jordan]

Gila monster venom. Exactly, exactly.

[Patrick]

Not doing Gila monster venom.

[Jordan]

No.

[Patrick]

Some Chinese peptides.

[Jordan]

The Chinese peptides was a rough go, but in general, I think the fact that it was like just a peptide, it felt much more welcoming as opposed to being in the world of the steroids, the performance enhancing drugs. And it became easier for people to jump in, oh, I gotta learn about peptides. Oh, there's naturally occurring peptides. Cool. I'm into that. But virus has such a bad connotation post Wuhan, as well as just everything. You're never like, I got a virus and someone says a good one or a bad one? Like it's always bad. Yeah, it's never good, but. So they need a new brand for that if they're gonna commercialize that for sure. But we'll see anyway. There's a whole article in the New York Times about it. This AI just created viruses not found in nature. The new study published Thursday in Science, goes well beyond duplicating viral genes. Scientists at Stanford University and ARC Institute taught AI to recognize patterns of DNA in nature and then use that DNA to write recipes for entirely new viruses. The viruses dreamed up by AI do not pose a threat to humans because they are all similar to a naturally occurring virus called Phi X174, which can only infect bacteria. Really hardcore name for something that's not that dangerous. PHI x174 sounds like a offspring of Elon Musk. Governments and scientific organizations have been slow to develop guardrails that could block the creation of a deadly virus, even as the science races ahead. So I don't think they'll be open sourcing this anytime soon. But there is other news. Mark Gurman's been reporting on OpenAI's first consumer device. It'll reportedly look like a hockey puck size donut. Mark Gurman, the Germinator.

[Patrick]

Oh, the Germinator.

[Jordan]

The Germinator, yeah. OpenAI's first consumer device will reportedly look like a hockey puck sized donut and cost roughly $300 to $400. What a funny form factor.

[Patrick]

Love hockey pucks.

[Jordan]

Yeah.

[Patrick]

Love donuts.

[Jordan]

Okay, so you're in.

[Patrick]

I like where this is going.

[Jordan]

There's also a rumor that it has mechanical pieces on it, so I think it can, like, undulate, potentially. The. The speculation's all over the place. According to Bloomberg's Mark Gurman, the Germanator, as you put it, the battery powered device is essentially a portable smart speaker without a screen, designed to be carried around the house or placed on a nightstand or kitchen counter. It will include speakers and microphones, along with cameras and other sensors that allow its AI to perceive what's happening around it. The device is intended to work much more like a much more capable version of ChatGPT's current voice mode, learning about its owner over time and using that context to make conversations more personalized. OpenAI is also making the hardware itself feel more expressive. The device will reportedly include lights and parts that physically move as it responds, with the goal of making it feel more alive than existing stationary smart speakers from Amazon and Google. The product being developed by Johnny OB's design team is expected in 2027. Features envisioned as the first in a broader family of OpenAI hardware. Long term, the company reportedly hopes to develop AI devices capable of taking over some of the functions now handled by smartphones.

[Patrick]

Jordan, meet your request.

[Jordan]

Yes. Boeing Flashbang. Flashbang. That'd be a good feature request.

[Patrick]

Yeah. It says it has lights, it's got sound. You should be able to use this as an on the go. Flashbang.

[Jordan]

Yeah.

[Patrick]

So you're going to hang out with some friends.

[Jordan]

Yeah.

[Patrick]

You want to prank them a little bit?

[Jordan]

Yeah.

[Patrick]

When you're, when you're kind of coming in.

[Jordan]

Yeah, I do. I was reflecting on the DeepMind story of, you know, the departures there and the question of, you know, how the models are progressing versus the commercialization of those models. There's some real strong points, there's some weaker points within the rollout of Google's AI strategy. And I was thinking about what happened to NotebookLM, because that was heralded as a very magical technology. You would give it some sources, a particular report, and it would just generate a podcast, talking between two different people, much more conversational, and a lot of people like consuming information that way. So you could just go read a deep research report on the history of, you know, how bacteriophages work. If you want to get up to speed on that, because you're going to, you're trying to understand what the ARC Institute is working on with these new viruses. You could go to NotebookLM and say, hey, why don't you generate me a podcast of, you know, two scientists explaining this at, you know, high school level and take it into college level.

[Patrick]

Tyler in the YouTube chat says, Loves Notebook LM use it weekly.

[Jordan]

Use it weekly.

[Patrick]

I always thought that I would have used it when I was in college.

[Jordan]

Yeah.

[Patrick]

And I needed to, let's say, write a paper on something and I wasn't super prepared. I could say, generate me an hour long podcast about this set of topics and I'd listen to that and then I could probably rip the paper.

[Tyler]

Yeah, I did that for a history exam. It was like a vocab list and it went through.

[Jordan]

Okay.

[Tyler]

Yeah, middle aged history, I think.

[Jordan]

Wait, oh, you used NotebookLM?

[Tyler]

Yeah, it generated podcasts. So I basically fed in a vocab list of like dates and various things and then I had it.

[Jordan]

Wait, and was it just a generic.

[Patrick]

How did you do on the test?

[Tyler]

It was really easy. I think I probably aced it.

[Jordan]

Wow, there we go. He needs a better confidence monitor. I'm a big fan of that new trend that's like asking old people, like, how did you write a five paragraph essay without AI? And then the answer is like, buddy, we wrote a five paragraph essay without even reading the book. You just go to Spark Notes or something. But I was interested in the evolution of Notebook LLM because it's this, like, there's this collapsing of capabilities where Sam Altman was recently sort of dragged a little bit for saying like, he would use ChatGPT work to generate a podcast about what's going on on his calendar and the family life and stuff. And people are like, how about you just talk to your kids? But the more interesting technical point on that is that do you even need ChatGPT work to generate you that podcast? Or will the voice mode and the memory feature have enough context to just sit there and talk to you like it's a podcast on the fly, like live Voice. Yeah.

[Patrick]

If you're trying to learn about a topic, for example, pretty good. Is probably better than just generating a podcast because a podcast assumes like some certain understanding. Maybe it's rigid, maybe, maybe it thinks you understand too much, too little. Whereas voice, you can be like, go

[Jordan]

down this, like, exactly, exactly. It's a choose your own adventure. It's an expert call. Instead of NotebookLM, it's TGISLM, basically. I mean, you're talking to an expert and you can just guide the conversation wherever you go. So will be interesting to see where this goes, what the reception is like. I mean, huge, huge delta divergence between like the, the social media pushback for ChatGPT versus, like the app Store ratings. Like, there's like a billion people using it, a lot of people just like the product, and then there'll be like someone dunking on it to the tune of a million likes on Instagram. And so how do you measure those two things when it comes to an actual consumer product? If it's delivering something good, if people are like, if the, if the stated preference is like, I don't like AI, but the revealed preference is like, it's kind of nice to have this thing around the house. It's kind of useful, interesting to see where it goes. The launch of this device will be very, very interesting to see, like, how things come together. Like, you can see the ChatGPT work, ChatGPT, Codex, ChatGPT, like coming together into one product. But there's a world where this product launches with voice mode, and it's not really capable of linking to a cloud Codex instance and writing new software and doing the more advanced things that are required just to accomplish some tasks. Like, you can go to ChatGPT and ask it to pull down an image from the Internet, restyle it, change it, but you can't really tell it to do like 40 of those or like every day, forever. Do a whole host, a whole workflow. But you can in Codex and you can talk to Codex, but it has to be running on a computer. And I would hope that by the time this launches, there's full context. I was doing some work in Codex and I had the output, and then I wanted to generate an image based on that and take it on the go. But I wanted to be able to close my laptop and not. And still be able to access it. So I had to copy the context window into ChatGPT, just the normal app, so then I could access that information and continue to transform it. And that was something that is like a very, very temporary thing that feels like it's going to be fixed in like a couple weeks. But there's a whole bunch of these little minor integration issues that probably need to be fulfilled before this product launches and delivers, like, the full, the full capability of what you can do. Because so many things, so many tasks instead of just knowledge retrieval, require actually firing up a browser, scraping it, writing some code, downloading things, you know, setting up an actual service and workflow, as opposed to just something that can be done within the context window of a single LLM interaction. Last top story, a New Mexico judge has ordered Meta to pay more than $900 million and imposed new restrictions on how minors in the state use Facebook and Instagram. This is a continuation of the social media addiction future. If you're watching this clip on Instagram, let us know in the comments. Are you addicted to TVPN reels on Instagram? It's not our fault. Apparently it's Facebook's fault if we got you hooked on this stuff. The ruling requires Meta to establish a $567 million fund aimed at addressing harms linked to its platforms, on top of a $375 million in civil penalties previously awarded by a jury. So they're up 900 million. They're very close to a billion dollars. And the numbers are going to get bigger from here. Yeah, at least. At least they're going to try.

[Patrick]

Okay, so last time we really covered something from this ongoing saga. There was a verdict. On March 25, a Los Angeles jury found Meta and Google slash YouTube negligent for designing platforms harmful to young people. A woman who said she became addicted to social media as a child was awarded 6 million, 4.2 million against Meta and 1.8 million against Google. And again, at the time, we had this lawyer on, he was giving his opinion. He was like, this is just the start. We were like.

[Jordan]

I was like, no way.

[Patrick]

The jury has a verdict. Talking to the biggest companies in the world, you must pay $6 million, right? Yeah, it was like this tiny amount, but it was to one person.

[Tyler]

Right.

[Patrick]

And so you can imagine as these cases evolve, this new one is in New Mexico.

[Jordan]

New Mexico's not the biggest state in the union. It's not the biggest, but there was

[Patrick]

also one in May 2026. So just a couple months ago, for 9 million to a school district in Kentucky. Same sort of issue. The lawsuit accused Instagram of deliberately using addictive features that contributed to anxiety, depression, self harm and other problems among students, forcing schools to spend more on mental health services. The district had sought more than 60 million, and I guess the total payout was 27 million because it was split between YouTube and TikTok and Snap. And in that case, there was no admission of liability and no required product changes. So I think it's time to start thinking about what the sort of battle that social media has ahead of it, kind of in cigarette terms. Tell us about tobacco Masters agreement. Yeah, exactly.

[Jordan]

So the tobacco companies wound up getting sued individually initially, and there were a whole bunch of court hearings very similar to the senator, we sell ads moments, but more focused on the cancer causing Nature of cigarettes. And the question was, like, who is ultimately being harmed economically? And you would think it's obvious. The person that saw an ad that made smoking look cool, they picked up a pack of cigarettes, they started smoking, and then they got cancer, and their life was cut short. They are the victim. They should be paid by the tobacco company. That's what would be very logical. That's not what happened. In fact, the tobacco master settlement agreement landed in 1998, and it was an agreement between all of the major tobacco companies. There's more nuance to this. One of them broke loose and, like, testified against the others. It's a crazy story, but that's for another time. In 46 states, I'm the good cigarette company, basically. Yeah. And so they don't have to pay. They're not part of the settlement. So they don't have to pay because they basically snitched on all the others. It's crazy.

[Patrick]

Are they still in business?

[Jordan]

Oh, yeah, they're doing great.

[Patrick]

Who are they?

[Jordan]

Legit? Victor.

[Patrick]

I've never heard of it. Yeah, Last name Victor.

[Jordan]

Yeah. They were literally.

[Patrick]

They won.

[Jordan]

They won. Yeah. There's more nuance to it than that, but. But that's, like, one way to tell a story. Anyway, so a bunch of the big tobacco companies versus 46 of the United. Of the US states, the district of Columbia, and several territories. The states agreed to end major lawsuits against the tobacco company. So the same thing was happening where all the different states were suing, and they were suing because the negative externality of cigarettes causing cancer was driving up medical bills in the states. So the states have health care, and they assume, hey, okay, we're gonna spend this much on doctors, this much on radiology, this much on x ray equipment. And then all of a sudden, they're starting to look at their populations and saying, like, wait, everyone's getting lung cancer. We're not equipped to deal with lung cancer. We need to hire way more oncologists and cancer doctors who specialize in lung cancer. We need equipment. We need drugs that treat lung cancer. There's a whole bunch of other things that we have to spend money on. And so you got to pay us because you, the tobacco company, are responsible for us running out of money for our health care system. And so that was the nature of these, like, the battles between the states and the big tobacco companies. You would think it would be the individuals who got the cancer. That would be very logical, but that's not actually the structure of this deal. And so in return, all the States said, hey, we'll drop all those lawsuits. You won't have to. We won't be nickel and diming you across every single state. Instead, the companies will make large payments and follow new limits on advertising and business practices. So the end result, the headline number is 206 billion, which feels like, small relative to today's standards of, like, hyperscalers and social media. Facebook generates roughly 200 billion in revenue every year. Although if they got hit with a $200 billion fine, that would be existential. But what happened with the master settlement agreement with the tobacco companies was that there wasn't just one fixed payment. Instead, it created a system of annual payments that continue indefinitely. They will actually have to pay forever. As long as they are in business. They have, like, effectively a special tax paid to them. And the amount changes based on cigarette sales, inflation, market share, and other adjustments. So if cigarette sale sales fall, the total payments usually fall. And that's a big reason why there's like a shift to non cigarette products.

[Patrick]

Well, and that just naturally makes sense. If less people are buying cigarettes, less people are going to have health issues.

[Jordan]

Exactly, exactly.

[Patrick]

So, yeah, so. So I brought it up because I think that we could be heading in that direction with social media.

[Jordan]

There's also a fascinating dynamic because these states now have an indefinite revenue stream that will be paid to them. And you can model that out financially and you can financialize it. And a lot of people have. And so investment firms and banks and financial institutions have come in and said, okay, you are the state of New Mexico, for example, and you are expected to get 300 million from big Tobacco this year. And then next year we think it'll be 297 and then 298, and then it'll go down. And we can model that out, and we can just give you $4 billion right now in exchange for that revenue stream or a piece of that revenue stream. And then those states can take that lump sum of cash and build a new bridge or something like that, whatever they need to do. So there's been a lot of financialization on top of it. Each tobacco company pays a share of the total amount. Its share depends mainly on the share of cigarette sales among companies that participate in the msa. The settlement then divides the money among states states using fixed allocation percentages. Some states later borrowed against these feature payments by issuing bonds backed by MSA revenue. The MSA also limits tobacco advertising and marketing, especially marketing that could reach children. In simple terms, the agreement created a permanent system. Major tobacco companies received protection from many state lawsuits while states received continuing payments and new enforcement powers. The result is not just a legal settlement. It created the this long term financial and regulatory structure built around cigarette sales. And it's now the 10 year anniversary of starting Lucy 2016. August 8th technically was the day new regulation.

[Patrick]

You know what I'm going to hit.

[Jordan]

Overnight success.

[Patrick]

Yeah, for sure the exact opposite. Slaving away for years in obscurity.

[Jordan]

But very, very interesting. Very very interesting industry to have operated in for long as we have.

[Patrick]

Semianalysis chimed in on the deep not DeepMind news. Not just chimed in.

[Jordan]

I think the term's posterized.

[Patrick]

Grave digging.

[Jordan]

No, not grave dancing.

[Patrick]

No, they're grave digging.

[Jordan]

They're digging the DeepMind in it and then they're dancing on it at the end.

[Patrick]

Anyway, Semianalysis says for all intents and purposes we believe DeepMind is no longer a frontier lab. Due to large numbers of departures from their RL teams and port poor compute allocation, Google will continue meandering on and releasing models. But their odds of ever reaching state of the art again have dropped to zero. Damn it. Google is now simply unable to retain top AI talent again. This is what I was saying the day that the news broke. It's like researchers want to work with great researchers. Right? And so the more talent density you have, the easier it is to recruit. Yeah, Gnome leaving earlier was like a canary in the coal mine. Obviously these are not the actions of people excited about Gemini 4 Pro Jeff. Sanjay Kwok and Oriole are just the latest in a long string of high profile departures from DeepMind. Jeff Dean is the undisputed goat of Google Engineering. Co founded Google Brain and started the GPU program. Google on the other hand decided it was totally worth it to sell enormous amounts of compute to Gemini's fiercest competitors on long term contracts without any hope of ever returning it to DeepMind. More than 20% of total TPU shipments from third quarter 26 to fourth quarter 27 are being sold directly to Anthropic. The issue with Google was not Jeff Dean nor Noam Shazir, but rather their extremely bureaucratic, painfully slow and strategically timid culture. Google will join the ranks of other legendary tech giants like IBM and Intel to get give up on the harder thing and do the thing that will make you more money. Becomes demoralizing as many of the great technology leads have left. And take him taking a victory lap. He wrote a piece on July 21st Google is a secular short kind of getting at a lot of these issues.

[Jordan]

Brutal, brutal stuff. This is insane. On the other side, GCP's working. GCP is basically a money printing machine. No wonder Google executives are choosing GCP over Gemini. So although EBIT margins for these system sales are slightly lower than core cloud margins in the low 30% range, we still expect total GCP to deliver mid to high 30s EBIT margins going forward. How investors decide to capitalize the current TPU backlog and any large future sales is an open question. However, given the strong compute demand from the labs, we expect more multi gigawatt deals to be announced soon, adding to this backlog. In all, we estimate that over 250 billion additional TPU bookings could be added to GCP RPO in the next coming quarters from semianalysis. Very interesting. I mean there is like a, like a positive spin on this which is like they seem to be really good at chip development, really good at cloud, like focus where you're where it's working and you don't have any tensions there because you have excellent teams and then you have the ability to underwrite the that build out with the cash machine that is Google search and YouTube and their ads products. And having more of this barbell approach as opposed to playing in the middle race is maybe ultimately the right thing to do. There are plenty of hyperscalers that have lived that and are doing very well on the back of it, like Microsoft, Amazon for example. They've been partners to labs at various points and, and are very good at building data centers, very good at scaling and have not tried to really go on a crazy poaching race and amass the dream team. And they've been rewarded for it.

[Patrick]

Yeah, I don't know. Still wild series of events. They obviously had effectively a version of ChatGPT internally. They didn't ship it. Thibaut, who's now running Chat Codex was there working on that project product, which is really wild.

[Tyler]

It just seems like Google leadership has a very different idea of where value accrues in AI than Demis or other labs. It's not actually the model itself, it's the infrastructure, GPUs, cloud business.

[Jordan]

It's interesting because you can run back the old demos. Quote about when he was selling DeepMind, he talked to Mark Zuckerberg and is like what are you excited about in the future? Are you excited about AI? And Mark Zuckerberg? Apparently, according to this exchange that Sebastian Malabi reported on, Mark Zuckerberg says oh yeah, I'm super excited about AI. And then Demis is like I'm going to test this guy. I'M going to see if he's a true believer. What do you think about VR? And Zuck's like, oh, VR is like equivalently as big. And then I don't think no even

[Patrick]

said that he was just equivalently as excited.

[Jordan]

Yeah, yeah, excited. And he was excited about a few other things and demos was like, I want to be with someone who's like all in on AI as a fundamentally different technology, not a normal technology, not like VR, not like new devices, not like electric cars, not like satellites in space. It needs to be considered as a completely separate development. Completely separate technology.

[Tyler]

Yeah. I don't know if Sundar believes in rsi. It seems like he doesn't think that that's really going to.

[Jordan]

So the point is that Demos should have probed more and said like, well how excited are you about cloud? How excited are you about AI overviews? And if Sundar. It wasn't Sundar back then, but if Google was like oh yeah, we're equivalently excited about cloud infrastructure as asi, then that should have been Demis's moment to be like maybe I should.

[Patrick]

The only thing, the only thing is there's a world where he's actually so RSI pilled that he's thinking okay, it's over for us. I need to back up the Brinks truck and help help Anthropic. Right. Putting together this like, you know, almost a quarter of a trillion dollar financing package and variety of data center guarantees to enable Anthropic to scale up. Even though they don't have really access to the debt markets in the way that Google does. Google's ownership in Anthropic is capped at 15%. They I believe have roughly 14%.

[Jordan]

Weird. Well how is it capped?

[Patrick]

I think Anthropic just oh, we don't

[Jordan]

want you to have.

[Patrick]

They don't have any voting rights. They don't, don't even. They're not even a board observer. They don't have a board seat. They basically are just a purely financial background.

[Jordan]

A branding moguls Miami beach home lists for $68.5 million branding mogul Nick Woodhouse was was sailing around Miami for his birthday in 2019 when he realized he found his new home. Turning to his wife Jocelyne Woodhouse, the Canadian born businessman said we have to live here. It wasn't long after relocating from New York in 2020 that the couple, then living in a condo on Sunny Isles Beach, Florida saw a waterfront lot on a guard gated La Gorch Island. Is that how you pronounce It La Gorche, I don't know, island in Miami beach from a friend's boat. The property had the foundation of a house that was was just starting to be built. The Woodhouses purchased the partially built home for 17 million in 2021 and completed construction of the roughly 8,800 square foot, seven bedroom contemporary house around 2023. It's a 0.4 acre estate and they're selling it for 68.5 because they're building another home nearby. Nick is the former president and chief marketing officer of Authentic Brands Group. And that's why I wanted to talk about this because Authentic Brands is a very fascinating company. Tyler, you have something here.

[Tyler]

Yeah, so it's pronounced Legors.

[Jordan]

Legors.

[Patrick]

Thank you.

[Jordan]

Legors. Well, Authentic Brands Group is a very interesting lifestyle platform, I guess. I don't know exactly what you would

[Patrick]

call it, but they have some truly tier one assets.

[Jordan]

They own more than 50 consumer brands as well as likenesses and estates of celebrities including, including Muhammad Ali, Elvis Presley and Marilyn Monroe. But what stuck to you?

[Patrick]

Let's start at the top. Cream of the crop, they own Tap Out.

[Jordan]

They do iconic brand Tap out tees.

[Patrick]

And if you guys ever run into John on the weekends, he's almost certainly head to toe. Tap Out.

[Jordan]

It was one of their first purchases, Silver Star and tap out. In January 2011, they acquired the rights to the likeness of Marilyn Monroe. So if you see Marilyn Monroe on a T shirt, Authentic Brands is getting a check.

[Patrick]

They own Ruka, the surf brand. They own Neiman Marcus, they own Prince. They own Brooks Brothers Goodman. They own DC Shoes. Yeah, Tyler, I know, I know you're still, you're pretty much head to toe Volcom at all time. Volcom. Maybe some billabong thrown in there. Well, they also own billabong.

[Jordan]

Anyway, Nick is the former president and chief marketing officer of Authentic Brands Group, a licensing and managing company that works works with companies such as Reebok Champion and Brooks Brothers.

[Patrick]

Says ABG is a graveyard for iconic brands.

[Jordan]

It's the bending spoons of brands.

[Patrick]

No, it really is. I mean, it's somewhat sad because a lot of these brands are so, so iconic and with the right sort of management and investment, they would be back to their former glory. A lot of the surf brands and the skate brands are a little sentimental for me just because I grew up watching so much of the content that those brands put out and following the different athletes on their teams. Those industries have just been impacted surfing most aggressively just because kids that don't live by the ocean now they don't really care about surfing. They care about chrome hearts.

[Jordan]

Do you think the surfing industry needs a federal backstop?

[Patrick]

I would push for one, certainly.

[Jordan]

Yeah.

[Tyler]

Yeah.

[Jordan]

Couple. Couple billion dollars from the treasury directly to get Volco, Quicksilver, Billabong back to the proxy.

[Patrick]

We're onto something here. This is our new platform.

[Jordan]

I think so. Okay.

[Patrick]

We'll be back in the ultra dome. We're going to have a lot of coverage this weekend, too. Around. You may have been seeing some of our Getty images.

[Jordan]

Yeah.

[Patrick]

You might be seeing some more.

[Jordan]

Yeah, we're working on it.

[Patrick]

We'll see.

[Jordan]

But have a great weekend.

[Patrick]

We'll see you Monday.

[Jordan]

See you Monday. Leave us five. Five stars on Apple Podcasts and Spotify. Sign up for our newsletter tppn.com goodbye.