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- [00:01]
John
You're watching TVPN today's Friday, May 29th. We are live from TVPN Ultradome Temple of technology, the fortress of finance, the capital of capital. Let's go. We have a great show.
- [00:10]
Jordy
It was great to see you.
- [00:11]
John
Missed you Wednesday, we missed you Thursday. But we're back, it's Friday, we have a great show. We have a banger lineup. Jon Gruber from Daring Fireball is coming the Grubinator. We have a lightning round with a bunch of exciting fundraises. Then Kyle Kuzma the NBA champion and entrepreneurs coming on. And Brad Gerstner from Altimeter, the Gersonator coming on the show. Very excited for that bunch of stories. We're gonna go through mostly the stories that have just broken in the last 24 hours. The first is this insane video from Blue Origin. Very, very disappointing to see. Blue Origin's new Glenn rocket just blew up at LC36 while attempting to stop static fire ahead of NG4. We can watch this video because it is absolutely insane.
- [01:00]
Jordy
Nuclear bomb went off.
- [01:01]
John
It looks like a scene from Oppenheimer. It looks like Christopher Nolan movie. This is absolutely remarkable. Everyday astronaut says, oh my God, that was a very big one. I hate to see setbacks in progress. This is not good. That has to be extremely, extremely frustrating. Brandon Gorell broke down a little bit of the back and forth on this particular rocket initiative. Jeff Bezos rocket company suffered a catastrophic failure last night when it's new Glenn rocket, a reusable heavy lift orbital spacecraft designed to compete with SpaceX's Falcon Heavy. And we were talking about this in the backdrop of the SpaceX IPO. And I heard Brad Gerstner talking about this on CNBC. I think someone was playing a Gerstner interview in the studio today and he was saying the launch business is fantastic, but it's not enough without starlink, which is a fantastic business, but that's not enough without the AI business, which is a fantastic business and growing. And so to just have a launch business and then have a setback like this has gotta be extremely frustrating if you're competing with a company that's going to raise $80 billion. I forget how much SpaceX is actually gonna raise, but they're gonna raise a lot of money. They, they're gonna have a lot of capital to deploy in their march towards ever more frequent and ever more frequently painful.
- [02:27]
Jordy
Blue origin started before SpaceX talked about this before. That's been hard and yeah, unclear how much this will set them back, but certainly disappointing.
- [02:39]
John
So the good news is that no one was hurt, which is incredible because you see the rocket, it looks like it's surrounded by a city. It looks like there's buildings around. And to see that much destruction with no one injured at all is a miracle. And I'm so happy to hear that. Jeff Bezos tweeted, very rough day. We'll rebuild whatever needs rebuilding and get back to flying. It's worth it. And Elon chimed in with some words of encouragement. Space is hard. A lot of folks were sending their encouragement because I think even if you're a SpaceX Maxi, it is very exciting for America to have multiple heavy launch capability providers in the market. It's good. It was very exciting. When New Glenn got to orbit, came back, that was the second time that that sort of rocket technology had been demoed, and it was demoed in America. Even our second best rocket provider is better than everyone else around the globe. What else do you have, Tyler?
- [03:38]
Jordy
Yeah, just some added context. So this was the four, or this was prepping for the fourth test. In the third test, if you remember, this is when the rocket kind of correctly went up, but then deployed an asts.
- [03:50]
John
Oh, yeah, just the wrong orbit. Wait, but that was New Glenn.
- [03:54]
Jordy
Yeah, that was the third test.
- [03:56]
John
That was pretty recent, so they're on a pretty good cadence here. But this is still a huge setback.
- [04:00]
Jordy
AST is down 16% today because of this, most likely.
- [04:05]
John
Interesting, interesting. So Elon Musk lent his support, tweeting, most unfortunate. Rockets are hard. That's an understatement. A lot of people saying, like, if you think software engineering is hard, you could have been a rocket scientist. It is, after all, rocket science. The explosion caused extreme structural damage to its only functional launchpad. While Blue Origin has successfully reached space a number of times with other vehicles, New Glenn has had just one successful flight out of three attempted tries. From 2006 to 2008, Elon Musk had three consecutive failures with Falcon 1 before successfully launching it. And so failure is a natural state of these pursuits, but never fun to watch it happen. There were some people that were syncing up the different angles. We can look at Sawyer Merritts. Oh, did he delete that one? There were some different angles on this that were absolutely crazy to see.
- [05:02]
Jordy
Yeah. This one from Truthful.
- [05:04]
John
Truthful. This is the one that you want to see. Let's pull this up.
- [05:07]
Jordy
Yeah.
- [05:07]
John
This is amazing footage from a local. This literally looks like a nuke went off. So scary. Yeah. Vertical footage. Absolutely crazy. Amazing footage from a local.
- [05:18]
Jordy
I wonder what the reaction is from the people.
- [05:20]
John
Wow, that's really far away.
- [05:22]
Jordy
It's far away, but it's also a pretty big mushroom cloud.
- [05:25]
Kyle Kuzma
Yeah.
- [05:25]
Jordy
I imagine maybe they walk to their cars.
- [05:28]
John
Yeah. I saw some people saying, like, I don't want to hear about my carbon footprint ever again because this seems like an immensely disastrous explosion.
- [05:37]
Jordy
Other people were saying, Bezos did Roman's rocket launch from Succession irl, if you remember this scene, we can pull it up.
- [05:45]
John
Yeah.
- [05:46]
Jordy
You haven't seen Succession.
- [05:47]
John
I've seen the first season. I haven't seen the full thing, but
- [05:50]
Jordy
he has a pet project.
- [05:52]
John
He does, yeah.
- [05:53]
Jordy
And it blows up.
- [05:54]
John
It blows up. That's certainly dramatic. I feel like that makes for good tv.
- [05:59]
Jordy
Yeah. We were right before the show started, we were talking about the nominative detective determinism of Blue Origin. John said it blew up. Or blue as in sort of sad feeling Blue. Sad, sad start. But they will rebuild. They will be back.
- [06:20]
John
So OSINT Defender says daylight reveals the extent of damage caused to launch Complex 36 in the surrounding area of Cape Canaveral's Space Force Station in Florida for following last night's massive explosion at Blue Origin. New Glenn during a static fire test. And there was a static fire test that went poorly at Starbase and they had a similar explosion. And people were regarding that as like a major setback, and maybe it was. But at the same time, we saw a very successful launch of Starship just a week or two ago.
- [06:49]
Jordy
And so this looks way better than I would have thought.
- [06:52]
John
Yeah, I agree. It looked like total destruction.
- [06:55]
Jordy
I was expecting like a zoom out a little bit.
- [06:57]
John
I was expecting a crater in the ground.
- [06:59]
Jordy
Yeah. So you can see here clearly a lot of damage. Not good right around the pad, but there's plenty of other infrastructure that seems
- [07:08]
John
to be still standing. And so you should, in theory be able to rebuild. But I mean, with anything rocket related, you have to imagine that every nut and bolt on that tower, even though it is standing, needs to be reinspected, reexamined, make sure that it's not corroded. There's gotta be so much work for the team, but they have my full faith that they will get it done. Well, shifting over to the token maxing debate, people are spending more and more on tokens. There's been a complete fast takeoff in Enterprise AI adoption, but people are raising questions about what is the ROI on these. There's a whole bunch of companies that are grappling with this. Some good news and a lot of questions for where this goes next. So we'll Take you through it. So the big news is that anthropic recently passed 47 billion in ARR and raised a massive series H65 billion at 965 billion post money valuation. They're almost at 999-9999. Last November, Claude Code was going viral among a lot of early adopters and small vibe coding apps were launching daily. But Q2 2026 was clearly a massive moment for Fortune 500 wide scale rollouts. And so this has become a double edged sword for some organizations. Token maxing dashboards have been reportedly led to potentially ROI negative AI use. At name brand companies like Meta, there was the talk of a token maxing dashboard. People leaving things running overnight that weren't necessarily productive just because they want to rank up on the dashboard. That's obviously very expensive. Uber went back and forth on, well, we blew through our budget, but a lot of people were saying, well, if they set a budget in 2025 for their token spend in 2026, the capabilities have gotten so much better, the models have gotten so much more expensive, so
- [08:59]
Jordy
theoretically you should find more budget.
- [09:01]
John
Their budget might have been very small, but they did say they blew through it. And then the chief operating officer said, I think it was the chief operating officer said something like, oh, we're struggling to understand the financial impact and like the ROI on this st. But his actual comments as you unpack them were much more reasonable. And he wasn't completely dooming on the ROI of the spend, he was just saying that the next iteration will be understanding the impact to the bottom line of this spending. And then AWS was also reported in Axios as having spent something like half a billion dollars in a single month. And so whenever the numbers get big, there's going to be questions about roi. The bull case is that the cost per task completed by AI will decrease very quickly. So even if you're spending half a billion per month on AI or tokens today, the same output will be available next year, maybe for a tenth of the cost. Maybe next year it's half the cost. Even if there's no optimizations to the systems, the hardware depreciates and then more power comes online. Like the market solves these things pretty quickly.
- [10:14]
Jordy
Yeah, it's naturally deflationary.
- [10:16]
John
Yeah, yeah. And I think we've seen that where, where capabilities have gone open source, they've gone cheaper, they've been distilled and you get, you know, 90% of the value, maybe you don't get the exact same flavor somewhere.
- [10:27]
Jordy
There was an example of you know, people are using LLMs to get the weather report.
- [10:32]
John
That was a funny one.
- [10:33]
Jordy
Can be. I'll admit I've done that before. It can be very convenient.
- [10:39]
John
Typically you'd go to like a free chat app for that though not.
- [10:43]
Jordy
Well no, you got a coding model but sometimes it's nice to just ask. Chat.
- [10:48]
John
Yeah. I've been running into this a lot with people. I ran into somebody yesterday who was telling me that they have an agent that looks through their iOS contact book and sees if they added any any new contacts. And I remember being at a conference and you're exchanging numbers with people and it's hard to tell if you add someone to your contacts like who'd you add because you can't. It's a very weird Apple feature that they don't have. Sort your contacts by recently added that's just like a UI feature that Apple should add. They haven't but there's like a $2 app that does that. Basically it just looks at your contacts but you can also do it in the agentic way and have it email you or synthesize everything and go way further. And there's a debate about what's the value there. And people are making those trade offs in their personal life. They're also making it in the enterprise. But of course the stakes are a lot higher in the enterprise because everything has five extra zeros behind it if not nine extra zeros behind it. And so there's debate about over whether AI tooling is being pointed at the most high leverage problems in these organizations. Are you just picking up things that are deep in the backlog and they were deprioritized for probably for a good reason because they were never really going to move the needle. But now you can just say hey, go churn on all these backlog items. That's maybe not ROI positive at current token prices might be in the future, but maybe the cutting room floor should remain the floor and not everything should be shipped necessarily. And then outside of stories like workers checking the weather with AI agents or running endless loops trying random different make work projects, there's definitely a worry that truly needle moving features aren't being pulled forward like people would expect.
- [12:31]
Jordy
Trey says just Vibe code your own weather app each time you want to know the weather.
- [12:35]
John
Yes, Yes, I think you have a post about that in the timeline.
- [12:38]
Jordy
Yeah.
- [12:39]
John
Who was fear not the man who has vibe coded 50 apps. I fear the man who has Vibe coded the same app 50 times. That was a good post. Anyway, there's Definitely a worry that truly needle moving features aren't being pulled forward. I mean we've all had this, this feeling of like, is the United flight booking app getting better? Are you feeling acceleration in the apps that you use? Is the software getting more resilient? We're seeing GitHub uptime going down. You'd think the first thing you would point the agents at is like, make sure we have seven nines uptime. Right? Like that should be the first thing. But there are of course more complex issues there as you're scaling a system. Some of it is just hardware constraints that an AI agent might be able to produce a report. Hey GitHub team, you got to rack some more CPUs because we're shipping a lot of stuff and the service is growing. At the same time, I think people are still running into cookie pop ups and weird UI bugs and just odd things. Not just in Vibe coded sites, but in programs and apps that they use every day. Where you would expect acceleration in software engineering to actually bear fruit. People are sort of waiting for that. At the end of the day, company management is going to have to demonstrate ROI from token spend at these levels. The next round of earnings reports should show material changes in OPEX and downward movement in Net.
- [14:02]
Jordy
That said, if these same companies are invested, they should see a material increase.
- [14:09]
John
Not in OpEx.
- [14:10]
Jordy
No, no, I'm just saying you have a potential off.
- [14:13]
John
Yes, if they're marking their investments to market and one of the companies that they've invested in has a big up round, they can book that as increased income. But the tough questions from analysts will tease that out and ask the question of like, did revenue move? Did true revenue move at least by what you're spending incrementally? Or if you did a layoff and then you substituted that immediately with AI spend, there's no movement in your cost structure. Well, is there any movement in your profit structure or anything else? So at the same time, if you believe, as all trends indicate, that AI is a new and useful tool that will decrease cost over time, some lumpy ROI in the short term to reorient your organization around a new motion at work is completely justifiable. I don't think that boards will be completely up in arms with management teams if they're saying, look, yes, we did go a little bit over the top with the token maxing, but the good news is that basically all of our workforce is AI native. They're all using the tools and they know now that they do have limits. They know not to Check the weather, not to do the useless project. They're much more focused, but they're all familiar with the tools and they've used them from everything from really critical features and security bug finding to checking the weather. And they know where these models are great and where they're bad. And so our workforce is very capable to move forward judiciously in the AI era. And so you probably don't want a literal token maxing dashboard. I think everyone has tested with it.
- [15:51]
Jordy
Meta's tried it. Anthropic has it had it.
- [15:55]
John
I think they took it down or something. But Meta, same thing. It's easy to get obsessed. And the token backing dashboards pop up not just in the literal, like, who is on the leaderboard, but also if you give someone a budget, they can kind of see it as like, okay, well, my boss gave me a $1,000 token budget or a $10,000 token budget, or $100,000 token budget. If I am not using it, if I'm not putting it to use, then I don't look like I'm deploying the capital that I was given. Like, if you give a marketer a brand budget of a million dollars and they come back to you and they say, like, sorry, boss, like, I only spent $100,000, you'd be like, well, like, who'd you talk to? Like, why didn't you find good use of that funding? Like, it's very rare. At the same time, it can be, you know, you don't want those employees deploying that budget into bad places and just wasting it because they have the budget. So these are common problems across all aspects of the enterprise. And so I think the future looks a little bit like Jevons Paradox. Of course, when something becomes more efficient to use, people often end up using more of it, not less. And then also Goodhart's Law, when a measure becomes a target, it ceases to be a good measure. And so we live in a world defined by Jevons Paradox and Goodhart's Law.
- [17:15]
Jordy
And you put those together, the combination of those, many people will call that Coogan's Law.
- [17:21]
John
Coogan's Paradox, Coogan's Paradox, both Jevons Paradox and Goodhart's Law are true. And the synthesis of these two things is, in fact, what's important if you're trying to run an efficient organization.
- [17:35]
Jordy
So Madison Mills over at Axios had some good reporting on it. We were on a flight when I found out. When I saw that reporting that someone had spent half a billion dollars a month kind of accidentally. And we'd heard just imagining the conversation of the first person to kind of like find the number and then, hey, maybe we should talk to the CTO about this. Okay, yeah, probably time to bring the CFO in. Hey boss, we accidentally spent half a billion dollars in the last 30 days.
- [18:18]
John
It's a lot of money.
- [18:19]
Jordy
All right, what did we make? Yeah, what did we do? How did we spend it?
- [18:23]
John
What did we get done? It's tough.
- [18:25]
Jordy
What did we get done this week? And there was a lot of like there was some conspiratorial posts, people saying, oh, how circular deal. Yeah, how convenient for Amazon, who obviously owns a lot of, you know, the big labs to spend all this money on anthropic. Right when they're raising a round and they got this revenue multiple, blah, blah, blah. That's not really how it works. Like it wasn't like this round, this round wasn't like they were just, okay, we're going to give you xx revenue.
- [18:56]
John
And there were plenty of hyperscalers that don't have active positions that were doing the same thing. Yeah, like this was a broader trend. But yeah, it is a crazy skyrocketing cost. But I mean we see this overall,
- [19:07]
Jordy
I think it's healthy how quickly things corrected. It's not like this was, I mean, and of course some companies won't correct. But it is a healthy dynamic that companies were, hey, we got a little bit ahead of our skis for a couple months now. Let's be a little bit more stack,
- [19:26]
John
rank the tokens, cut all the unnecessary token spend, keep all the good token spend. I mean we see this all the time with, there'll be some vibe coded project out there that's like incredibly high token cost with very little value. And then on the flip side, you'll have someone that actually built something really cool with just like their default $200 a month subscription. And they didn't actually have to token max to get the product to where they wanted it to be because they knew what they were building. They used the tool like a scalpel, not a hammer, and they got a good outcome. So the Wall Street Journal has some more coverage of this. Corporate America is starting to ration AI. As costs skyrocket, executives are scrambling to track returns on AI investments as the bill for massive computing needs come due. We talked to Spencer Rascoff from Match Group about this. He was sort of sharing a very reasonable token spend, I think in the single digit millions. But he was still saying that like one of the tasks that him and his team will be embarking upon over the next year will be understanding the ROI on that investment because you should be tracking it just like digital marketing dollars that go out the door. What was your roi? How did it move the needle? So use of artificial intelligence by big companies is exploding. And the soaring costs has some of them pumping the brakes in a way that could complicate AI's triumphal march across the economy. Are they pouring cold water on it? We'll see. Executives across industry this year have urged employees to integrate AI tools. Wired has a whole AI for business deep dive that you can go take their survey into their work, spending freely to encourage experimentation and seeking to send a message to Wall street that their companies won't be left up behind in a coming wave of disruption. All that enthusiasm has resulted in skyrocketing costs for so called tokens, the basic units of measurement for AI computing. Now corporate leaders are scrambling to bring down expenses by finding ways to ration AI. Top technical executives for Uber, Meta, Microsoft, Salesforce, Doordash and other companies have all talked about new efforts to ensure AI use contributes to productivity or have taken steps to reduce the availability of some tools for certain employees. You get nerfed if you're not putting up big numbers. Anyway, we should move on. First we gotta talk about the fossil hunt. Big spenders are pursuing Tyrannosaurus rex skeletons. This was on the COVID of the Financial Times. It's the most important story in the global economy according to the Financial Times as of Thursday. This is an old edition, but this is interesting. Sotheby's is to auction a 67 million year old Tyrannosaurus Rex two years after it sold a Stegosaurus fossil to hedge fund owner ken Griffin for 44.6 million. I thought Ken Griffin was, was.
- [22:20]
Jordy
I didn't know. I didn't know Segas were getting up there like. Yeah, I didn't know that. You know, I feel like T Rex is up here desirability and then everything else is, you know, way T Rex
- [22:31]
John
is the Ferrari of dinosaurs. Stegosaurus.
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Jordy
I always like kind of a minivan of dinosaurs.
- [22:37]
John
Minivan. I was going to say Lambo. I was going to say Lamborghini. They're on a rise. You know, the true dino heads know that there's something there and they're starting to pick up momentum. But they don't have the heritage. They don't have as much of the heritage.
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Brad Gerstner
I don't know.
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Jordy
Yeah, I'm more of a. I think I could get into an Ankylosaurus Oh, Ankylosaurus.
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Zane Mount Castle
Okay.
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Jordy
Ankylosaurus. Triceratops too.
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John
Yeah, I mean the brontosaurus like the big guys, that's special. You gotta have a special, special viewing area for that. Well, this T Rex is named Gus after Gary Gus Licking the rancher whose land it was found on in South Dakota. It'll be auctioned at Sotheby's with an estimate between 20 million and 30 million. The highest for a dinosaur fossil on July 14th.
- [23:23]
Jordy
I was at a buddy's house recently and he just pointed over at this box and it was a dinosaur. And he hadn't taken it out of the box. He's like I've had it for a few years now.
- [23:37]
John
Well is it a glass box that you can see in the.
- [23:39]
Jordy
No, no, no wooden box. It's just a crate.
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John
What's in the box?
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Jordy
Schrodinger's dinosaur Dino Breathe maybe.
- [23:46]
John
The planned sale in New York highlights how the auction house is betting on the fossil market as a place where the wealthy will spend big. The pre auction estimate for Apex which is the Citadel boss Griffin's stegosaurus was 4 to 6 million.
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Jordy
He wound up saying Brachiosaurus. Brachiosaurus is the go to. Brachiosaurus has a crazy ooh odd lots
- [24:09]
John
did a podcast about this amazing. We gotta listen to that. The overwhelming majority of fossil buyers still want to lend their purchases to a museum. Apex is now on display at the American Museum of Natural History. That is fun story if you're in the market go pick it up. Go pick up a T Rex. You gotta do it. It's the ultimate collector's item. It's the Pokemon card for boomers or something like that.
- [24:36]
Jordy
Prepared remarks is sharing some signals. You tell us what kind of signals they are. Kyle Kuzma the AI maxi stocks ripping 10 to 50%. He's coming on the show on 13F of some chud. Can't be Leopold he's talking about. It's no chud Dell plus 40% on earnings after being plus 150% year to date. Dell is now up two hundred and twenty two percent year to date. Not bad Michael Dell not bad for somewhat of a. I'm not going to call it a dinosaur.
- [25:11]
John
Well it's been taken private. Taken public. It's a fascinating history of that company.
- [25:16]
Jordy
A great American technology company $1 trillion company is moving 20% on sell side notes 1.5 trillion space holdco of he says turds 10% intraday moves for no reason software with AI exposure plus 100%
- [25:32]
John
in a month he's blackpilling. Moving on.
- [25:36]
Jordy
So we were. Someone else said this morning, I also thought it was a top signal when Jensen signed. Yeah, that, that, yeah, that infamous shirt.
- [25:47]
John
Yeah, the shirt. Or even when he was drinking with
- [25:50]
Jordy
his buddies, everyone was like, but that was signal.
- [25:53]
John
But yeah, he looked very confident going to earnings and he was confident for good reason. Tay Kim is highlighting a segment from Ben Thompson Institute says great thing about Ben Thompson is he never afraid to tell it like it is amid all the banker and insider propaganda. And this is the quote From Ben Thompson. SpaceX, IPO and data centers in space. Ben Thompson doesn't typically cover Elon companies very closely because they're often disconnected from the fundamentals. Yeah, and they're more of like this 10 year out story. But he says in all seriousness, the numbers are obviously absurd. But then again, everything about this IPO is absurd. SpaceX is seeking a $2 trillion valuation on a mere 18.67 billion in revenue. You think the 67 is intentional there? Like let's get another 10 million in the bank. So it can be a meme. Wouldn't be the first time in revenue. With 4.9 billion in losses last year the growth actually slowed from 35 to 33%. But again that will be massively offset with the new AI computing contracts. So there will be significant re acceleration in the business, which I think is what a lot of people are underwriting SpaceX against. That slowdown happened despite the addition of Xai and thus also X, which tipped the company from a small profit to that massive loss thanks to 5.1 billion in air and D expense that R and D keep in mind went towards building a model that is in fifth place and whose founding team recently left the company. But sure, 26.5 trillion AI opportunity will be very interesting to see if, if, if the macro hard thing, I mean the whole like macro hard enterprise AI thing was. It took people by surprise in the S1 because it was like all of a sudden the biggest number in the TAM figure is this AI enterprise software essentially. But Elon has been talking about Macroheart and entering that category generally for I think over a year. And he painted the top of the data center with Macroheart. And so it's not, it's not like
- [28:02]
Jordy
comments are saying, he left out the part where the infrastructure they built is already generating 15 billion in annualized revenue. Small detail.
- [28:10]
John
And I mean the story is only going to get crazier. I mean people are speculating about the Tesla SpaceX merger and then you have Optimus with the foundation models and the AI compute and the data centers in space and you have this like full stack like very concentrated bet on this ultimate future of artificial intelligence robotics, self driving cars like all of the. It's the sci fi company and Elon's been delivering for 20 years in this category doing things that other great entrepreneurs find very, very hard to do. So it has been lots of reasons to be excited.
- [28:46]
Jordy
The account Russian bot responded to Tae Kim and said the guy is a journalist. His opinion is what you're hitching to what? And Tae Kim says hey Russian bot, you're never gonna guess what I am. That's what he is of course calling Ben Thompson a journalist.
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John
I mean he is a journalist, he's very independent, he's an analyst.
- [29:07]
Jordy
We actually the co host of Dithering
- [29:10]
John
in the waiting room who Jon Gruber has the good fortune of talking to Ben Thompson every day, every week, at least once or twice.
- [29:18]
Kyle Kuzma
Right.
- [29:19]
John
How are you doing? Hopefully twice. Thank you so much for joining the show. Welcome to the show.
- [29:24]
Jordy
Honored to have you on.
- [29:25]
John
Long overdue. How are you doing? How is your week going?
- [29:31]
Ben
Busy as usual. Lead up to wwdc. Always a hectic time to be writing about Apple. Very nice to join the waiting room here and hear you guys talking about Ben though.
- [29:41]
John
Yeah, no, he's the best. I heard a little bit of your take on the Ferrari Luce. I would love for you to unpack it a little bit more because it's shaping up to be a contrarian take. I think a lot of people were looking for something that was more sharply designed classically Ferrari. Like what stuck out to you about the Luci launch?
- [30:02]
Ben
Well, I will say it's funny that you call that out. We endeavor on dithering to make as few mistakes as possible. And we've got numerous corrections to make regarding our take on this, including the fact that we complete. But Ben and I both completely were unaware that Ferrari a couple of years ago, I forget the name of it, but has like a little crossover gas car.
- [30:26]
John
Oh the
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Ben
right. But basically our take was hey, everybody wanted a Ferrari looking Ferrari.
- [30:34]
John
Sure.
- [30:35]
Ben
That just happened to be electric. And yes, there are some sports cars that are electric and this is not that.
- [30:41]
Kyle Kuzma
Right.
- [30:41]
Ben
The luche. Whatever you want to say about it. If you took the nameplate off it and just drove by on the street and asked somebody what brand car do you think that is? Ferrari would probably be very low on the list. You'd probably have to run through dozens of brands before you get there. And I think that really Fuels the primary objection that people have. But my take is, I'm interested to hear that. My take is I think it looks like a nice car. I do. Now does it look like a $650,000 car?
- [31:19]
John
Yeah, that's a good question.
- [31:20]
Ben
I can't see that. I mean number one, I'm not $650,000 car money. I, my stuff hasn't gotten bought by Open.
- [31:30]
Jordy
Well, yeah, no, no. And that's, that's, well, the big question is like I don't, I, I, I have a lot of friends who love cars. I don't have really any friends that I can think of immediately that are going to want to eat the depreciation on this car. Like this car is going to be a $300,000 car in a couple years. In a couple, maybe even in less than that. Right. And we don't even know how the reliability. The car you mentioned earlier, the Ferrari
- [32:01]
John
ff, well they have a Pro Sangue which is a four door suv. It's only a four seater. This is a five seater. So a family of five. This is the only option.
- [32:10]
Jordy
I used to own the original family friendly Ferrari in the modern era, the ff. I got it because it, it had four seats. I wanted to be able to put my kid in the back at the time. And ironically it had so many electrical issues that it was not usable as any type of daily driver. That's my concern with the Luce along with the price tag. It's just like who's in the market to buy an ultra luxury car that is going to say I want something that looks like it's not a luxury car. And then I could go and buy multiple Continental GTs from Bentley for the price of one. And so ultimately my take was I thought it would have been a hit at a $300,000 price tag. And I just can't personally imagine that when they started this project they were aiming to build a $650,000 car that looked like this.
- [33:15]
Ben
I wonder about that because there were reports, I forget the numbers but you know, and of course I'm going to take it back to Apple. But you can't help but wonder, you know, with Jony Ives and Mark Newson's involvement in this, you know that Apple famously had the Titan project, a decade long car project that they ultimately just walked away from and said, you know what, we're not going to do this. But that got pretty far along and there were rumors, unsubstantiated. I don't think anybody even reported it, but there Were rumors that at some point when it got to the, hey, we need to make a decision here, we need to shit or get off the pot that they specked out what the current idea for a car would be and it was going to be like, I don't know, 200,000 or more cost of goods and you know, figure out what Apple would do with their margins in terms of that. And it just was not Apple branded. It would be like if the Apple watch came out and the only ones they made were the solid gold ones that cost $20,000.
- [34:27]
John
Yeah, yeah. It feels like Tesla already sort of created the iPhone of cars. It's, it's like it checks a lot of the boxes. It has this like sort of like polished feel integration. And so if you don't have that industrial might.
- [34:44]
Jordy
Appliance.
- [34:44]
John
Yeah, it's an appliance.
- [34:45]
Jordy
You're happily.
- [34:48]
John
Yeah. The iPhone is not a luxury product. It's not like hand built in the same way. It's a premium product and it's great, but it doesn't. But it occupies a very different place. I'm interested in your like overall take on Apple's ethos. I feel like one of the things Apple does well is the, you know, the Henry Ford ism of like if we asked people what they wanted, they would have said a faster horse. There's a lot of like, it's almost like a paternalistic view of technology where they know better than the consumer. And I'm wondering about your intersection of that with their decisions in AI VR recent products. Like how true is that today that there's still an ethos at Apple of we might do the unpopular decision but the consumer will like it because we know better than the hot takesman.
- [35:44]
Ben
I think that calling it paternalistic is the. I know what you're talking about.
- [35:49]
Jamie
Yeah.
- [35:50]
Ben
But it depends on whether you end up agreeing or disagreeing with what they come up with. I think from Apple's perspective it's, it's more of a, it really does boil back to that Steve Jobs adage that design isn't what it looks like. Design is how it works. And that's the job of designers. You know that certainly in the Apple view of the word that it's not being a stylist. A stylist is somebody who can tell you what to wear if you're a person or you know, tell you what
- [36:28]
Jordy
to do with your hair. Yeah, they dress it up but you're
- [36:31]
Ben
still the same person. Right. A designer is like who do you want to be? Who are you, you know, and style is part of that, but it's just a part. And the hard work of design is making those decisions. And you know, famously just, you know, it's the greatest tech product of all time, probably the greatest consumer product of all time, the iPhone. And one of the core decisions at the front was no hardware keyboard. In a world where the difference between, well actually all the phones had arrays of buttons, right? The dumb phones had number pads and the smartphones had BlackBerry style hardware keyboards. And they, Steve Jobs just addressed it head on in the introduction event, put pictures up of a BlackBerry, a Palm and maybe a Samsung or I forget what the third one was and said, look at what they do. We're not doing that. We're going to make, you know, we're going to do it with software. And it was the thing that the most knee jerk reaction from people who were already in the market for quote unquote smartphones at the time were like, well I can't do this because I spend all day typing messages and emails on my phone and I'm not going to do it by poking at a touch screen. But it turns out now every, you know, within a handful of years, every single phone worked that way. That's a great example of it where they didn't make two phones, they didn't make an iPhone that had all screen and they didn't make a second one with a hardware keyboard that took up a third of the front of the face because they were convinced that that was the right way. And they were right. The market proved them right. It's as good an example as any to just sort of exemplify their mindset. They didn't do it to be paternalistic. They did it because they thought this is our job to figure this out and this is a better way to take advantage of the limited space that a phone is. How does that apply to AI? We obviously haven't seen that from them yet. You know, I mean, and so in some ways I would say this is, you know, it's like if you write about football every single year come January, you start saying this is going to be the biggest super bowl of all time. You know, it's, this is a big WWDC though. It really is because two years ago was the one where they announced the first crack at quote unquote Apple intelligence that did not pan out and didn't pan out in a way that they had to announce in March last year so that last year's WW and said this is going to be Postponed a full year, effectively.
- [39:15]
Jordy
Yeah. And they're seeing like false advertising, you know, claims just around how much they oversold it.
- [39:23]
Ben
Yeah, right. And when they did that, I mean, and again, you know, we're not lawyers, we're not judges, but even as a layperson, that was kind of obvious that that was false advertising. Like, so when they announced their settlement a couple weeks ago on that case, that was really one of the least surprising settlements of all time because it was like you showed a TV commercial that it would do a thing and it still now, a year later, doesn't do the thing. Isn't that false advertising? Right.
- [39:53]
Jordy
That felt like the only real reason to upgrade at that point.
- [39:57]
Ben
But. But then last year's wwdc, in hindsight is kind of weird. Two years ago they announced all of this Apple intelligence stuff, the most ambitious aspects of which still have yet to ship. Then last year they were in like interregnum between the year before where they announced it, but they'd already said all that stuff is coming next year. So they kind of got like a free pass for a very AI light WWDC that was excusable because they already got over the excruciating, hey, we're not ready to announce that stuff we announced last year, but now it's 2026 and it's time to show their cards.
- [40:37]
John
Yeah.
- [40:38]
Ben
And honestly, it seems like they've done a pretty good job keeping it under wraps. What they have. Right. They've announced the deal with Google. Very unusual to have like a white label version of Gemini that, that won't be called Gemini, it's just going to be used for Apple's foundation models that are built in. And there's some rumors from Mark Gurman, of course, at Bloomberg, saying that they're going to have a sort of app store for AI agents. But I, you know, I think it's probably just going to be ChatGPT and Claude and Gemini to be the sort of smarter layer on top of Siri.
- [41:22]
Jordy
But other than that, does that mean you could have a potential situation where you have like a Siri based LLM or sorry, a Gemini based LLM as Siri, but then you could also call Gemini separately to get more features, which feels like even crazier.
- [41:40]
Ben
Well, I think that effectively they don't want to talk about the fact that it's Gemini technology that's going to be Siri. Right. And they're not going to call that Gemini. They're not going to, you know, they've gotten that announcement out of the way. And that's Apple's foundation models. And if you don't have a Google account or don't use a Google account and don't want to use Gemini, you'll never encounter the word Gemini. Right. It's just that it's Google's underlying AI technology that's powering it. I think the biggest question is how good can that be? How good can an AI system be if you're not the company that controls and made the underlying models? We don't really have a good example of that yet.
- [42:29]
Jordy
Well, I would say that we do. And there's a bunch of vertical SaaS, companies that don't make their own models. I think good examples are, you know, coding agents like Cursor, legal, like Harvey, you can make good products. I guess, like I'm more interested in
- [42:46]
Ben
Cursor is probably the best example.
- [42:48]
Jordy
I'm actually more interested in what Apple allows third party agents to do within iOS. Right. Like, well, ChatGPT allow.
- [42:57]
John
Will. Will.
- [42:58]
Jordy
Will I be able to prompt in Siri chatgpt to do things in native iOS apps or other apps in the App Store, like will it be able to use my phone for me or will it still be like question and answer?
- [43:11]
John
This is like will it break the wall?
- [43:13]
Jordy
Yeah. Will it be an agent or will it be a chatbot?
- [43:17]
John
Yeah, that's tricky. How do you think about. Ben always has this interesting take where he says people always want to. Entrepreneurs often want to build productivity tools for consumers, but consumers don't want to be productive, they want to be entertained. And I see Apple as something that feels very productive. The iPhone and all the Mac apps are very well organized. You can be very productive in them. But I see the phone as primarily a consumer device. And if I believe Ben Thompson's formulation of it, I believe that then a more entertainment focused product is maybe the end goal. And so maybe this is my way of saying like we're just early on Memoji or Genmoji or something. I don't know where that all goes, but it's a different set of goals for a consumer company.
- [44:13]
Jordy
We used to joke that Apple Intelligence was the first AI product to really crack humor because it summaries would always
- [44:19]
John
be they were very funny.
- [44:20]
Jordy
So funny. They were very funny. No other LLM could reliably make you laugh like Apple Intelligence.
- [44:25]
John
Yeah.
- [44:26]
Ben
And Image Playgrounds is by far and away the funniest image generation tool because
- [44:30]
John
it's so bad, it's so hard to use the ui. It just doesn't give you feedback on like, when is it generating it? Always asking for, like, another. It's like, do you want to add something else in? And I'm like, I'm kind of done. I don't know.
- [44:42]
Ben
It takes an enormous amount of work, an enormous amount of prompting to make image whose quality is embarrassingly bad compared to any other tool on the market that lets you do it. So why did they do it? I think that's a good framing. And I think sometimes Apple, hopefully when something is new, it takes them some time to find their footing. And I feel like the whole thing, two years ago, put aside the actual legal implications of false advertising. It's just. I feel like they got caught up in the hype and the rush and we need to have something big to announce in June 2024, ready or not. And it clearly was or not. Whereas the Apple way is. And they've emphasized this. Tim Cook has emphasized it many times. I don't know, maybe Steve Jobs didn't, because I don't think he wanted to make an admission like that. But Cook has admitted many times that they do not aspire to be first. They aspire to be best.
- [45:45]
John
Yeah.
- [45:46]
Ben
And if that means not being first, so be it. Right? I mean, that was the. Not again. Going back to the iPhone, there was a whole smartphone market, BlackBerry and research in Motion was a big company. And Microsoft was all in on Windows Mobile. And it was like, hey, Apple's late to the game. Nobody remembers that entire era. Yeah.
- [46:04]
John
Think about how long. How long were they. They were so slow on Bluetooth headsets. Like, Bluetooth headsets were a category for 20 years. And then now AirPods is bigger than the GDP of Vietnam, probably, or something. It's like a massive business. And same thing with a folding phone. Like, it hasn't come out yet. But I'm extremely optimistic about that product. I think that they waited until the final second until the technology was good enough. And I think when that releases, it's going to actually be good enough. And we're going to see folding phones everywhere all of a sudden. But it feels like Apple's at their best when either they're waiting what feels like almost too long, but then it's the perfect time for that particular technology to be diffused. Or they're more on like an Apple TV production cadence where it's not tied to an annual release cadence. And I almost wish for some of the AI features they were treating it like films and shows that go into Apple tv. There's no annual release cadence. It's just like when we finish something, we'll have new seasons every month. We do a little bit here and there and when it's polished it goes out. But that's a very different motion for them. So I don't know. There's a tension there.
- [47:12]
Ben
To go back to the earlier question, there's the underlying stuff that really only Apple can do is provide the frameworks for the built in system apps, Apple's own Apple Notes and Safari and Mail and third party apps to offer functionality effectively like an mcp, you know, for Agentix AI. And they talked about that two years ago. That was the whole thing that they were talking about where you could just ask your phone what was the woman's example? When's my mom's flight arriving? You know, and it just knows to look in email and look for any. Knows who your mom is and knows to look in email and knows that she sent you this. Will, will third parties be able to use those APIs to do it? And then number two, obviously that's going to work with Siri. Apple's built in AI. Yeah, but will the third party stuff and right now all we have is ChatGPT is that optional layer on top of that but will end, you know, according to Gurman and it, you know, Apple said at the time, you know and if you even look now, if you, if you look on your iPhone today, that's called an extension, the ChatGPT. There's only one extension ChatGPT. There are no other ones. Presumably there will be others. At least two others I would presume Claude and Gemini. I don't see them working with XAI and I don't know who else is even a maybe on that list. I also don't see them working with Meta. Those are the only companies I could even think of who have a product of this scope and caliber. But will those be willing be able to do access the same things so that if I choose as a user to use Google Gemini as a layer on top of Siri, will Gemini have access to everything in my Apple Notes so that I can ask questions about
- [49:09]
John
it and vice versa?
- [49:11]
Ben
Right.
- [49:12]
John
Will you be able to go to Siri and ask to pull up the latest email in Gmail or will Google say hey, for that we want you to come over to our world garden? Apple's done a fantastic job with the Shortcuts API. It feels like they've built out basically like mobile MCP servers for every app. You've been able to call an Uber with Siri for like a decade. No one does it because it's a little bit fuzzy but it feels like in the AI era we're getting less fuzzy. We should be on this turning point. But who knows where the business dealings with will wind up.
- [49:41]
Ben
Right? And it's a blessing and a curse. It's, you know there's positives and negatives but Disney or Apple has a Disney like brand where they are overly family friendly.
- [49:51]
John
Yeah.
- [49:53]
Ben
One of my favorite examples of that is my son's now just graduated college actually. But when he was younger we used to go on the Disney cruise ships. There you go.
- [50:04]
John
Thank you. Disney cruise ships.
- [50:07]
Ben
The Disney cruises are super kid friendly.
- [50:10]
John
Sure.
- [50:10]
Ben
But they're the only major cruise line in the world that does not have a casino on the ship. So no good for daddy, you know. And they find the middle ground. They do serve alcohol, you know, but there's no casino on a Disney cruise ship because it's off brand for them. And who knows how that'll change. ESPN is a Disney property and is certainly all in on sports. But Apple has a similar problem and especially it comes to a head like they with the phone and with the mobile revolution. They navigated this spectacularly well with the App Store where there's all sorts of third party apps that provide and do things that Apple itself would not want to be a part of. But they can sell through the store and take 30 or 15% from
- [51:02]
Zane Mount Castle
there
- [51:02]
Ben
are Apple does not make games. People spend an enormous amount of time playing games on their phone and there's an enormous amount of money to be made by selling in app purchases in mobile games. Apple is one of the most profitable gaming companies in the world. Maybe the most. I don't know if you did the math, I'm not quite sure how you would figure that out. And they don't break down services revenue by gaming, but they're certainly one of the most dominant and profitable game companies in the world. By making no games at all, they just have the App Store and with a I, I think they're trying to carve out this middle ground where their own branded Apple intelligence is never going to be as adept as the leading edge models. Because the leading edge models are going to answer questions that Apple would consider inappropriate to be answered and they are going to help you do things that Apple would consider inappropriate for an Apple branded product to help you do. Right. Like there are lines far short of deep fake porno imagery. There's lines far short of that that Apple is not going to want their own thing to cross. And that's the role of these extensions for ChatGPT and Gemini and Claude, where if you choose right, if you want to stick with the Apple branded stuff, you're going to have a more limited AI experience and if you want more, there's an extension system and they can wash their hands of it. Because that's not Apple's Siri, that's ChatGPT or that's Gemini or that's Claude, who's giving you that. But I really do think the whole thing is not going to get off the ground if those third parties, with the user's permission, don't have access to all that stuff on your phone, in your mail, in your notes, all of that stuff. Because if they don't, then they're going. And I think this is where it's in Apple's benefit. Not just to get their 30% of the subscription revenue that you would pay by subscribing through your phone through these extensions to get A plus or pro plan from one of those makers. And trust me, Apple wants that 30 or 15% from that subscription revenue. But the other benefit to Apple for this is it will keep those companies integrating with having your digital life in the Apple ecosystem. Your, your information, your personal information in Apple notes, your email and Apple mail. Yeah, Safari is your browser. Whereas if they don't let third parties have access to that, it's going to push people to say, hey, I want ChatGPT running all of this for me. I'm just going to use what ChatGPT tells me to say or I'm going to go the Google route and put everything in Google Calendar, Google. Keep all the Google products, not the Apple products or the Stranger or like
- [54:03]
John
the, I don't know, I keep comping it to like the Napster analogy of like if you're running openclaw on a Mac Mini and it's literally just opening the imessage app, taking a screenshot and sucking that out against Apple's will. And like it's open source and Apple's fighting it constantly but it doesn't really, they can't really beat it. Like. But that feels very hacker, that feels very prosumer, that doesn't feel like where we're going in terms of broad adoption.
- [54:32]
Ben
Right. Because it's going to start looking clunky compared to other platforms, platforms that have a more native. This is the way it's meant to be. And the other thing about that too is it's all the Mac. Right? Because the Mac is the Apple's open platform where something like that can happen where Open Claw is possible. And as convoluted as it is, that Open Claw is driving imessage by taking screenshots and then analyzing it as an image to figure out what to do. As clever as that is, that's only possible on the Mac. And at least I would guess 85, 90%, probably around 90% of Apple users don't have a Mac. Right. They just have an iPhone and, or an iPhone and an iPad. And so if you know, for it really for the Apple overall Apple user base to move forward as this world becomes the normal world of computing and not the cutting edge world of computing, it's got to work on the iPhone and there's no way to do that without Apple's help.
- [55:41]
John
Yeah.
- [55:42]
Jordy
What is the latest on how Apple is approaching mobile Vibe coding apps we covered a while ago, some of them not getting removed from the App Store but not allowing them to ship updates. It feels like I can understand exactly why both parties there have the views that they have. Apple's like, hey, you're just kind of like building software on the fly. This is like one a threat to the App Store business. It's also going to allow people to generate applications that we don't want on the iPhone. And then the other side, hey, you're stifling innovation. Users really want this? Yes. It's harmless. Let it happen.
- [56:28]
Ben
We don't know. And that is way up. That's a great question because I would put it easily top 3 or 4 on my list of things that I'm most interested in for the WWDC keynote is what is that? You know, what is their answer to this? Including, is it, you know, is this one of those things where 90 minutes or two hours after it starts and it's over and people are talking about the stuff that was announced and we're all going to be like, hey, wait a second, they didn't even talk about the whole Vibe coding thing. They didn't even mention it. And to me that would be a red flag because
- [57:08]
Zane Mount Castle
yes,
- [57:11]
Ben
it's disruptive to the way that the software distribution and development has worked on the platform for 20 years now.
- [57:20]
Jordy
Yeah, and it's like very clearly the future. It's very clearly the future that any iPhone user in 10 years will be generating some of their own software. They're still going to want a lot of stuff that's purpose built. But I would bet that in a decade everyone that is buying an iPhone at some point or another will make their own piece of software on the fly. Just like they would generate and you
- [57:43]
John
sort of can with the shortcut feature. Like you can build something that looks like. I know it's super limited, but if I was truly giving them the most credit in the walk crawl run, I would say that the next version of iOS 27, Siri. Yeah, it's not going to have a text box that you can talk to and it will generate you an iOS app natively, but you should in theory be able to describe a workflow that then becomes like a shortcut that is created. Instead of using all the dropdown menus and going around finding all the apps and linking everything, it should be able to instantiate that for you because it's probably just marked down under the hood or something. Well, but I don't know.
- [58:28]
Ben
They just need to have an answer because it's like part of, part of what makes disruption theory so satisfying as a business theory is that the disrupted doesn't get to choose. Yeah, but that's what happens. The entrenched monopoly, or part of a duopoly or just entrenched way of doing things faces the disruptive technology. They dismiss it at first. Then when it becomes bigger and kind of can't be ignored, they just sort of say, well, I choose not to be disrupted. And it's like, you can say that, but it never works.
- [59:05]
John
It never works. No, no. It's a powerful force and it is,
- [59:12]
Ben
in my opinion, just nerding out. You know, going back, my undergraduate degree was in computer science. It is in some ways offensive to me that iOS is a nearly 20 year old platform. It is a computer and it's a 20 year old computer on which you cannot make software for the computer itself.
- [59:38]
John
Yeah.
- [59:39]
Ben
And I totally understand why that wasn't the case for the first few years when it was more limited hardware and even a few years after that when the whole idea of the App Store was new. But at this point, I mean, an iPad Pro costs like $2,000.
- [59:55]
John
It has a keyboard and a huge screen. It's as powerful as a MacBook and
- [59:59]
Ben
you can't use it to make apps. Yeah, it's kind of.
- [60:02]
John
It is kind of.
- [60:04]
Jordy
Don't you think they'll. Don't you think they'll find a way to allow this and make money from it? Because I would imagine that's what I think. Yeah, Imagine they're there.
- [60:12]
Ben
Yeah.
- [60:13]
Jordy
And they know people want this.
- [60:15]
Brad Gerstner
Yeah.
- [60:15]
Jordy
But the main reason to not allow it is like one just like safety and integrity of software on the iPhone, security stuff. But then also, hey, we got to Figure out how to make money on this. It's the Apple way.
- [60:26]
Brad Gerstner
Yeah.
- [60:27]
Ben
And there's obviously some technology that's already in a way of doing things. The whole test flight ecosystem, which is what Apple's beta distribution is for iOS. And it was a startup, I forget probably more than 10 years ago when it was an independent startup, but Apple saw the wisdom of it. This is a thing that Apple didn't invent. They should have invented it, but then they saw how clever it was and they're like, oh, we'll acqui. Hire these guys and build it into our platform. And so there are ways to distribute software now outside the App Store and it's just by limiting the number of people who can do it. I think the test flight limit is like 10,000 or something like that. And they could do something with AI where that limit is much lower. Like even if it was just like 10 people. Right. Like a consumer level of test flight distribution where you can make apps for your friends and family or yourself and distribute it on up to 10 devices and it doesn't go through. Apple doesn't need approval. You just make it and distribute it and it's only limited to 10 people. Something like that. But there needs to be a story like that though. And I think again, only Apple can really make it a really good rich system where you can make apps that really feel like real apps. But the technology to make the apps, it's obviously there. We're all talking about it this last six months. It's obviously there. And you could do it on the phone itself. And it's super frustrating that some of the third parties that were doing it, like Bitrig, and I forget some of the other ones, but Bitrig was the one I'm most familiar with where they kind of. They're not kicked out of the App Store, but they stopped taking updates to it. And it's like super frustrating because it's not theoretical. It is an actual thing that was actually working and they took it away and it was super cool. And yes, it's disruptive to Apple's business, but in a way that the disruption is inevitable anyway, so why not go with what's cool and do the coolest thing possible that makes new possibilities available to your users and the developers on your platform?
- [62:39]
John
Okay, last question. Give us a recommendation of a recent favorite episode of the Acquired FM podcast.
- [62:48]
Ben
I don't have any recent ones. I'm going through the.
- [62:52]
John
You're going through the archive, right?
- [62:53]
Jordy
The back catalog?
- [62:54]
Ben
Yeah, yeah, the archive.
- [62:55]
John
But what's a recent favorite that you've listened to. Not recent from their catalog, recent from your listening history. What would you recommend for someone who's getting into the Acquired Alcohol podcast?
- [63:07]
Ben
For people who aren't familiar, obviously. Probably everybody listening to this, watching this show knows of the acquired podcast. Me, a big dummy who does a lot of reading and does not listen to. I don't have a commute. This is my home office. So I don't have a lot of podcast time. I stumbled a friend of mine recommended the Mars episode. The Mars Incorporated episode. That's the one. And a friend said, you gotta listen to this. And I'd heard of Acquired, but it's like, I don't know. If you listen to every podcast somebody says you should listen to, you would spend 24 hours a day listening to
- [63:40]
Jordy
more than a full time job, right?
- [63:42]
Ben
So I go there and it's four and a half hours. And I'm like, you gotta be fucking kidding me. And I'm like, but all right, I'll listen to it. And it's of course, fantastic and it's amazing. But the Mars one, it just sucked me in. So that's the one I would recommend. And it is a 100-year-old candy company that the business decisions that not the founder, but the founder's son, Forrest Mars, who's the one who took it from sort of a mom and pop thing to a big one. The decisions he made in like the 1920s and 30s are exactly like the world of business today in the 2000s and 30s. It was like he came from today's world time traveled 100 years into the past, and applied today's knowledge of branding and scale to that world. And there's just these other crazy bits that I had no idea. Like the fact that Hershey, who was the bigger company at the time, supplied all the chocolate to all the companies, including Mars. And they just were like, sure, we don't care. And it was sort of like, heads they win if you buy a Hershey bar and tails they also, they don't lose because you're buying a Snickers bar that was covered in Hershey's chocolate until the day Forest Mars called them up and said, yeah, we're going to cancel your our chocolate contract. And they're like, what, are you crazy? And he's like, yeah, we're going to make our own chocolate.
- [65:13]
John
Vertically integrating.
- [65:14]
Jordy
Final, final question. It can be really brief answer. Do you think that Apple's overall software quality is getting better or worse? Because when I use like the FaceTime app. Recently, I just get enraged because it's a constant experience of, oh wait, I'm in this group and they started a FaceTime and I didn't get a notification and I'm on a call and now it's doing a FaceTime and I start to. Maybe it's just me, maybe I'm. I turned 30 and I just can't use the device anymore. But it just feels like across the board there's less polish than I remember. And I'm wondering what you think.
- [66:00]
Ben
I love how you prefaced it with make it a short answer.
- [66:03]
John
Yeah,
- [66:08]
Ben
I think that to make it as short as possible, I think Apple over the last 10 years is facing a be careful what you measure problem with software quality, where things that you can measure are things like crashes. When an app just crashes and it says, hey, do you want to send a crash report to Apple? Like if you've opted into the share crash reports with Apple thing, their apps crash almost never. Right? Like it's almost unusual when you know you're using Apple Notes and the app just crashes, it doesn't happen. And they've tackled a whole bunch of things like that. Because you can measure it, right? Like there's like a number that used to come in. How many times, how many users today had Safari crash? Well, you can measure that and they've cut that down. The things you can't measure are things like your problem with FaceTime. Like, I'm confused, how do I add somebody here? I thought that I added a third
- [67:13]
Jordy
party or there's an ability to call somebody but it doesn't ring on their side. Yeah, but I'm like, what's the point of just joining a call when the other person's not getting a live notification?
- [67:25]
John
Well, if you happen to be in that imessage group chat at the time, you can see that notification. This is how it works.
- [67:31]
Jordy
The phone's a busy place, but I'm just saying it's like a terrible user experience. Every time where I'll send John a text, I'll just be like, john, we're in the FaceTime. Because I know he didn't get it.
- [67:41]
John
You can press the green button, but it's an extra button.
- [67:43]
Ben
It's a perfect example because Apple's never going to get a number that goes up because you encountered that problem. There is no number that's going to land in front of Craig Federighi's dashboard of problems with Apple software that says Jordy Hayes had problems adding somebody to a facetime today. But you did. And that's the sort of thing it's to going, getting away from when Steve Jobs was there and was not just the CEO of the company, but the number one user of the products. Right. And if that happened to Steve Jobs, that would get fixed. That would start getting fixed the next day. Right. If he had problems adding somebody to a FaceTime call, all of a sudden, that would be the biggest problem in the world. Right.
- [68:31]
Jordy
I messaged search. Right. The number one app that I use.
- [68:35]
John
Well, search is just bad everywhere.
- [68:37]
Jordy
Yeah. But Apple should be able to create like the most elegant solution. It's the number one app.
- [68:43]
John
Search is bad everywhere. I'm not afraid to say it.
- [68:47]
Ben
Searching in imessage technically works, but it is sort of like the way that putting two empty soup cans and tying a piece of string and holding it taut that you can talk to somebody through the can. It does work because the audio goes through the string and goes to the can on the other side. But that's not what people think of when they think of talking on the telephone. Right. And the way that you search an imessage and the way that you get results in the sidebar is not the way people think of search. People think of, hey, I was searching for this one. I was talking to somebody about this one word and it was just a month ago. Just show me the goddamn message where I was searching for that word. And I think that's the sort of, just sort of opinionated from the top thinking that was there because Steve Jobs was running the company and Tim Cook just isn't that type of person. And the company has taken on, as a company, more of the personality of Tim Cook. That's the nature of leadership.
- [69:49]
Brad Gerstner
Right.
- [69:49]
Ben
The organization tends to take on the personality of the person leading it. And.
- [69:55]
Jordy
And there's a lot of good things that have come from that.
- [69:58]
Ben
Absolutely. But I. And that's. And that's, for example, I. Tim Cook loves numbers. And so something like, hey, how many times a week do apps crash? Those numbers have come down. But that is driven by a culture that kind of comes from Tim Cook and I think hopefully under John Ternus, that they can sort of not turn the ship around, but just make a minor course correction back towards, hey, let's focus on just some opinionated shit like, hey, this app is confusing. Like when you open this and you just want to add a collaborator to this, why doesn't it look like this? Shouldn't this be way more obvious? You know, And I think, you know, we can't measure it. This isn't going to come with a number that goes up and down. It's a je ne sais quoi. We know it when we see it. But this isn't up to snuff and I think they've gotten away from that.
- [70:49]
John
Yeah. Well, thank you so much. We went way over time.
- [70:52]
Jordy
You fit it exactly into 60 seconds.
- [70:54]
John
Thank you. We got to do this again because this is super fun. We could go all over the place and there's so much more to talk about.
- [71:01]
Jordy
But have a great weekend.
- [71:03]
John
Have a great rest of your day. Thank you so much for you guys.
- [71:05]
Ben
It was a pleasure to be on.
- [71:06]
John
We'll talk to you soon. Have a good one. Up next, we have Ronak from Trajectory. He's the co founder and CEO. We've been keeping them waiting too long. We have the whole team. Let's bring them in.
- [71:17]
Ben
Give us the news.
- [71:18]
John
What happened? How much did you raise? Tell us about the company. Sorry for keeping you waiting. Please introduce yourselves.
- [71:25]
Michael
Awesome. Great to meet you guys and thanks for having us on. I can start. My name is Michael. Before this, I was on the foundation of research at DeepMind. Built a lot of cool things in robotics and very excited about Trajectory.
- [71:37]
John
Amazing.
- [71:38]
Arjun
Amazing. What's up? My name's Arjun. Before this, I was at Apple working on Vision Pro and then multimodal foundation models. It was good. Hearing a lot of tea. Right.
- [71:46]
Michael
Before this.
- [71:47]
Jordy
Well, John, John also is the number one user in the entire world of the Vision Pro.
- [71:51]
John
Yeah, I watch full movies on Apple Vision Pro regularly.
- [71:55]
Arjun
All of his blog posts. It's great. He's got some great insights on this.
- [71:58]
Jordy
Well, I was saying this John, this John absolutely loves this John.
- [72:01]
John
No, no, no. I'm like still a regular user of the Apple Vision Pro, which is called.
- [72:06]
Jordy
I'll call John. It's so good on a Friday night. It's like, I gotta. I'm in the Vision Pro. Give me a second.
- [72:13]
John
Yeah.
- [72:13]
Michael
Now everyone else in our office is using monitors and everything. Sometimes Arjun is just like, they're working. Great to meet you guys. I'm Ronak. I was at Windsurf before training. Sweet one. And then this led to the 2 billion acquisition of DeepMind. So I went over there, as you guys probably heard on the news, and then left all the acquisition money on the table to start Trajectory.
- [72:33]
John
Okay. But you raised some new money. How much did you raise? What's the deal?
- [72:37]
Michael
Yeah, so we raised 15 million from conviction.
- [72:46]
John
Fantastic.
- [72:48]
Michael
We're building the platform for continual learning.
- [72:50]
John
Okay.
- [72:51]
Michael
We're working with Some awesome companies of Harvey decagon, Clay Rogo, Mercour and basically building agents that learn online. So all of that usage, the edits, the retries, everything they're using in an AI product, using that to make AI smarter every single day.
- [73:06]
Jordy
Amazing.
- [73:08]
John
So yeah, 15 million seems like great amount of money to start a business with, but it doesn't seem like enough to jump straight to training a frontier model at the mega scale. So I imagine your approach is a little bit more capital light. How much of your approach is in the deployment phase with the companies that you're partnering with versus pure research versus something that's going to happen around fine tuning something like what can you tell us about how you actually deploy a model that is capable of continual learning?
- [73:40]
Michael
That's a great question. I would say the way we're thinking about this is every lab is focused on building this smart PhD student and how to make this PhD student smarter and smarter. It's always day one of their job and it's always that they're going to make the same exact mistake every time. What we're interested in is building like building an agent that is 10 years of experience on the job. It doesn't need to be a PhD student, it doesn't need to be like frontier level math or anything like that. But it needs to know your primitives, it needs to understand your business and it needs to really, really understand your rewards. And with that like just doing very, very light post training can get us very very far. So we have models that are 10 times smaller than the frontier models that are able to beat them. But also that's not what we're most excited about. What we're most excited about is that not only are we beating them today, but we're improving 1% every day and that is continual learning. That's the most exciting part about continual learning.
- [74:35]
Jordy
Very cool is part of this too. You mentioned some of the application layer companies that are your guys customers is part of this helping reduce their dependency on the model providers and help change maybe the leverage equation there?
- [74:52]
Arjun
Yeah, I think all of our customers have different motivations but I think really at the main thing they're really attracted to is this idea that like what they're doing and their bet is that product like craft product expertise, domain expertise is going to win and it's going to hold, the taste is going to hold for the years to come and they want to find ways to actually use that and work that into a product. Right now kind of their only lever is like prompt optimization. Putting prompts in. And we view ourselves as like a research lab in their back pocket, like giving them the tools so that they can modify the models, modify the harnesses and have them modify together so that they can do what they do best. And that's make beautiful products.
- [75:33]
John
Amazing. Well, congratulations on the progress.
- [75:35]
Jordy
So great to meet you guys.
- [75:36]
John
Thank you so much for taking the time to come on the show.
- [75:38]
Jordy
I'm sure you'll be back on this year.
- [75:40]
John
Yeah, any day now.
- [75:41]
Arjun
Fingers crossed. Yeah, yeah.
- [75:42]
John
Have a great.
- [75:43]
Arjun
We've got so many more things coming up.
- [75:44]
Ben
Yeah, yeah.
- [75:45]
Arjun
So excited to see y' all soon.
- [75:46]
Jordy
Hopefully hiring was posted in San Francisco, Is that correct?
- [75:49]
Arjun
Yes. Only in San Francisco for now. More to come soon. We're doing our five days of trajectory right now. Check us out. And so many cool stuff to come.
- [75:56]
John
Amazing. Thanks so much. Have a great weekend.
- [75:58]
Jordy
Congrats.
- [75:59]
John
We'll talk to you soon.
- [75:59]
Ben
Amazing.
- [76:00]
Arjun
Talk to y' all soon. Bye.
- [76:02]
John
Up next, we have Zane Mount Castle from Picogrid. A good friend interviewed him for a video about the Gundo years ago. I'm very excited to catch up with Zane if we have him in the waiting room. We've been keeping him waiting and so hopefully Zane from Picogrid will be able to join in just a minute. We'll see. Let us know who is in the waiting room. We're waiting. We'll give him just a second.
- [76:29]
Jordy
Wish we had more time with the Grooveinator.
- [76:32]
John
Yeah, we can go. I mean, he's a professional podcaster. Dithering, of course, is available in the Stratecherie bundle twice a week. We also have to say a little shout out to Jackie Shapiro from the Bronx. Apparently she's one of our newest fans. Thank you so much for being part. Thank you for tuning in to the audience and tuning in.
- [76:53]
Jordy
It's an honor.
- [76:53]
John
It's an honor to have you in the audience. What else is going on? We have Jamie from Pace coming on in just a few minutes. And then Chris.
- [77:04]
Jordy
Chris says what we've all been thinking.
- [77:06]
John
Oh, what is that?
- [77:07]
Jordy
Can you die from a lack of being called Big Dog?
- [77:10]
John
It's a big question.
- [77:11]
Jordy
That's a big question. Do you get called Big Dog too much?
- [77:16]
John
No, not very often.
- [77:17]
Brad Gerstner
I don't know.
- [77:18]
John
I think you have put yourself in the right.
- [77:19]
Jordy
Let's work on changing.
- [77:20]
John
There's certain spaces where you might get called Big Dog and you have to attend. You have to open yourself to the opportunity. You have to open the door to being called Big Dog. Like, if everyone knows your name, they're just gonna call you your name. You have to be. You have to be walking around in a certain space.
- [77:37]
Jordy
Deep fates. This was the post we had earlier. I fear not. The man who vibe coded 50 new apps, but the man who vibe coded one new app 50 times. It's a banger post. I think he meant to say, but the man who vibe coded the same app 50 times.
- [77:53]
John
Yeah, the same new app 50 times. Something like that.
- [77:57]
Jordy
This was good. What else is going on over on Reddit? R cfa Would it be considered insider trading if I'm on a hunting trip or safari with a CEO of a large firm and they get mauled by hyenas and I start buying put options on their firm? Let's say I go to Tanzania on a.
- [78:15]
John
This does not sound hypothetical, but the
- [78:17]
Jordy
CEO of a very prominent firm in the United States when we suddenly get overran by a pack of a dozen hungry hyenas. However, I and my youthfulness are of course quicker than this old man and I managed to escape and hide behind a rock while the hyenas maul him. If instead of helping him fend them off, I open up Robinhood and start buying put options on his company, would this be insider trading? There's absolutely no way this can be priced into the stock predicted. Oh, but the material non public info, blah blah blah. Okay, but what if before I buy the puts, I post a video of him getting attacked on my public Instagram story? What then? Thoughts? Purely hypothetical.
- [78:58]
John
Does not sound hypothetical. Well, it all depends on what the market thinks about the CEO because it's possible that the market sees this bullish signal that the CEO is no longer there.
- [79:07]
Jordy
He's clearly pricing in the 21% nuke salute where the market at least briefly sells off 21% and then hopefully pops back up. But of course people are saying it's priced in.
- [79:18]
John
Everything's priced in. Well, we have Zane from Picogrid here from the New York Stock Exchange. Welcome to the show. Sorry for keeping you for running late here. Great to see you. How are you doing? Doing well.
- [79:30]
Zane Mount Castle
How are you guys?
- [79:31]
John
Congratulations. Why don't you give us the news then I want to go into the product portfolio, the traction, everything else. But what happened today?
- [79:39]
Zane Mount Castle
So we announced our $45 million Series A LED by Bessemer.
- [79:43]
Jordy
There we go.
- [79:44]
John
Fantastic. Congratulations, big number. So take us through the product portfolio, the traction, the latest with Picogrid.
- [79:54]
Zane Mount Castle
So Picogrid, we build technology to help integrate different mission critical systems. So think our sensors, our drones, our robots, our weapon systems, mainly for Military applications. What that means is sort of we're building the open infrastructure, that is the hardware and software tools that make these systems work together. The sort of connected, the connected tissue where the glue between these different platforms. We have active contracts right now with the Pentagon, with NATO, with various allied partners around the world supporting a whole bunch of different applications.
- [80:23]
John
Yeah, when, when we, when we first met, you had an office in El Segundo. Still do you still do. It felt like, you know, a lot of R and D going on, a lot of experimentation, some really great traction with the systems that you'd built. But I imagine that a lot of this funding round is thinking about larger scale manufacturing. What does that look like? Do you need to, you know, bring on new people, buy automated equipment, set up a manufacturing line? Like what does the next couple of years of the business look like?
- [80:55]
Zane Mount Castle
Yeah, so the big bulk of the round is going towards is continue to continue to build out the team and with that all the investments in the underlying infrastructure to build out. And really our biggest challenge the past couple years, John has just been keeping our head above water, keeping our head above all the demand that's coming in and how we can best serve it without stretching ourselves too thin. And that is in the past, I think three or four months, just given all the traction that's been building up. We've actually, I think 7X'd our production line and did so as successfully as you can 7x a production line in a couple months. And it's, it's been a fun journey.
- [81:30]
John
So I mean if you're keeping your head above water, is there a tension between wanting revenue diversification from different customers, different branches of the military, different organizations and focusing on one delivering at scale? Is there a tension there or is it more of like dual use public private? Because as you sort of lay out the product portfolio like there, there are lots of applications here, right?
- [82:00]
Zane Mount Castle
There are. And you look at the problem that we're solving is really inherent to every physical industry. Military just happen to be, happens to be a very large physical industry that has, that's really leading the charge in the adoption of these autonomous systems, the sensors, your drones, your robots, all of that. And it's where the integration bottleneck has been most acutely felt. And it's so for the reason that we've, for that reason we really focused on selling to the military. Looking forward a couple years, I think there will be a strong commercial presence as well. But one of the things with dual use tech is your sales motion to the military and Your sales motion to commercial industry are so different. You have to really bottoms up, think about how best to sell to each of them independently. So for the time being, just given how, how much demand we've seen on the government side, especially the US Military, but we're now seeing this across allied militaries as well, is really focusing on how can we best serve that application and like you were saying, diversify across services. But even within given services there are many, many different program offices, different customers, different mission sets that we can and we are serving and continue to expand out. I was just in Colorado Springs yesterday morning at an army event, a big army event called called the Right to Integrate with the Secretary of Army, Dan Driscoll. Monday morning I'll be back in Colorado Springs with us spacecom. And so we're able to support a lot of different missions with the underlying technology that we have.
- [83:23]
John
Last question for me, do you have any insight into the ramp around domestic manufacturing of solar equipment or solar panels? We've seen some companies, T1 Energy has been on the show. It feels like there's starting to be momentum there. But what are you seeing in that piece of the supply chain?
- [83:44]
Zane Mount Castle
It's a great question. I think I've had that question before. I think we're seeing like manufacturing across a lot of different industries, especially really critical industries. I think energy being one of those, a lot of that is being sort of re domesticated for us. A lot of our for the solar panels that we do buy for one of the products, Lander, most of those actually come out of out of Europe. We are for good reason. We can't use Chinese panels, which is where most of them are manufactured.
- [84:10]
John
Yeah.
- [84:10]
Zane Mount Castle
So we're using European panels. But with that we're definitely seeing a ramp up of manufacturing across all sorts of energy systems and hard tech, silicon, all of that domestically. And that's ramping up really, really aggressively.
- [84:27]
John
Yeah, I'm really hopeful. I mean we've had Casey Hanmer on the show I'm sure you're familiar with. And it feels like there's all the ingredients on the capital side. The AI demand has a ton of demand for solar. Like that could be another big mega trend in the next couple of years that I'm excited about. Jordy, anything else?
- [84:46]
Jordy
No. Great to have you back on. Give our best to Lynn Martin. Hopefully she's running around on the floor.
- [84:52]
John
And have a great day at the New York Stock Exchange. Have a great weekend.
- [84:54]
Jordy
Great update.
- [84:55]
John
Thank you. We'll talk to you soon.
- [84:56]
Zane Mount Castle
Great to see you guys. Have a good one. Thank you.
- [84:58]
John
Goodbye.
- [85:00]
Jordy
Has to be one of the most powerful names.
- [85:03]
John
Yes. Mount Castle.
- [85:04]
Jordy
Mount Castle, it's great. Mount Castle, arguably the most regal name in.
- [85:09]
John
It's a fantastic name and he's been fantastically successful. But we have Jamie from Pace here in the waiting room. Sorry for keeping you waiting. Welcome.
- [85:18]
Jamie
Not at all. It is great to be back. Thank you guys.
- [85:21]
John
Thank you so much for hopping on.
- [85:22]
Jordy
You've been incredibly busy.
- [85:24]
John
Yes. Give us the news, give us an update. What's going on?
- [85:28]
Jamie
Yeah, well, we are super excited today to be announcing our $46 million Series
- [85:33]
John
B co led by thriving with participation
- [85:38]
Jamie
for emergence and proven. Yeah, super pumped to show news.
- [85:41]
John
So what has been the key unlock? I mean insurance operations? Obviously there's a lot of intuitive applications for AI and insurance. I think people understand how this product could be valuable. But what is the shape of the go to market motion? Is this something where you get one big insurance company and like that's 50% of the market and you're good to go? Are you working with startup insurance providers? We've talked to so many different people that are figuring out how to insure data centers and all sorts of different new things and underwriting and new pools of capital. But where's been the biggest growth source for you? You?
- [86:19]
Jamie
Absolutely. So Pace is the operations partner for the world's leading insurers. We primarily are focused on the world's largest insurers. So large carriers, large brokers like Prudential, WW Convex that are our customers today. And we're really helping them to automate a lot of their back office operations and help ensure more of the world's risk.
- [86:43]
Jordy
What are the biggest challenges right now? You know, we've talked with people from all different types of companies selling agents into the enterprise. There's plenty of workflows where if you're getting things right 90% of the time it's like not even close to good enough. Right. But then there's others where like that's a good kind of like first pass and just makes the existing back office team more efficient. So like what's working? Where do you want the models to get better? How are you kind of taking that into your own hands? I don't know if you guys are doing your own post training and things like that or leveraging open source models, but yeah, what is the current state of things?
- [87:26]
Jamie
Yeah, absolutely. So I think that's definitely very true in our regulated market where many of our customers have 99.9% plus accuracy SLAs and we are hitting those day in, day out and then we have to, because that's be the way that these get into production for our largest customers. You know, for us, some of things I'm really proud of as a statistic for our company is that we've had 100% win rate from pilot to production. And a lot of that is because we, you know, it's the product and then our forward deployed engineering team that are working with our largest customers to help them, you know, successfully deploy these agents into production. And so I think that a lot of what we're seeing in terms of, you know, being able to deploy and hit those sort of accuracy levels and really see our customers getting, you know, the, the automation rates and the ROI they want is really combination of the insurance expertise that we have as well as the expertise and kind of bringing that together. What's that, what that has looked like for our customers is we have customers that are, you know, require that 99% plus accuracy. We have customers who are requiring hundreds of thousands of tasks to be automated every day in the background. And we're doing that fully autonomously with agents, you know, we have, for example Palomar, one of our customers has said 90% of their tasks are being completed from intake to outcome successfully by pace agents fully autonomously. And so, you know, we've been super fortunate to see that in production. In terms of, you know, what has been a massive accelerant to our business in doing that, certainly it's been the models getting better. We have very much lent into these agent operating procedures, so sort of natural language instructions that the agents use to complete these tasks long running. And as the models get better, our product has been getting even stronger. And I think one particular area we've seen that is in computer use, a lot of our customers had challenged in the past deploying products because they needed to integrate with various APIs either were too expensive or just prohibitive to build out or didn't exist. Computer use models, they've really gone from something like 30% accuracy on our evals to like 95% plus. And that really allows us to get these models into production and particularly work around cases like desktop applications or legacy web apps or even like we've seen green screen clis and being able to have the agents get live and do this work fully end to end. So those are a few of the unlocks for us recently.
- [89:54]
Jordy
That's great. Another question, there's been some new insurance startups that have been growing very quickly recently and there's been some debate around ultra high growth when you're basically in the risk business can be risky. How do the companies that you guys work with think about growth? Are they really just trying to speed up the back office? Speed up the back office speed up, just like increase efficiency. So when a new customer comes in, they get them onboarded as soon as possible. But what is their general philosophy around growth? Given that these are companies that are at scale, I imagine they're not coming to you saying we want to be able to grow three times faster by doing this. It's more creating efficiency on the back end. But what do you think?
- [90:47]
Jamie
Yeah, so for our customers, these are in many cases 100-year-old plus businesses that are thinking about what does the next decades and centuries look like as they want to, you know, serve their customers better and better. And I think that one thing that's like really top of mind for the business is the protection gap. So last year 60% of the world's losses were uninsured. So that means, you know, a house after a hurricane that's flooded might be uninsured or you know, life insurance. There being just a massive protection gap between what makes sense, you know, for a family having life insurance versus what they have today. And I think a lot of our customers are thinking about that's their kind of responsibility is how do we shrink that protection gap? How do we take the $9 trillion of risk today that is uninsured, that should be insured and enable that to happen. And so for us, what I think we've been most excited to see is when you take the operations component with AI native operations, you can truly change the economics. Like what we are seeing is two orders of magnitude less spend than would have been needed before with agents. And what that enables is our customers to launch new products which they have to be able to deliver an experience to a 10 person company that is similar to the experience that they would have previously only been able to provide to a 10,000 person company for a claim to be paid consistently on time every time. And so that's like really what our customers are pushing towards, which is how can we close that protection gap, enable sort of the 60% of these losses that are uninsured to be insured. And that's truly, I think what is so exciting about this opportunity is like this is the moment that we can really unlock the sort of operations that makes that possible.
- [92:38]
Jordy
Very cool.
- [92:39]
John
Fantastic. Well, I have a bunch more questions, but we'll have to do it the next time you're on the show because we've been running late.
- [92:45]
Jordy
I got a feeling we won't have
- [92:46]
John
to wait any day now. Thank you so much for taking the time for one.
- [92:50]
Jamie
Sorry.
- [92:51]
Zane Mount Castle
Good.
- [92:51]
Jamie
See you guys.
- [92:53]
John
Have a good one. Up next, we have Kyle Kuzma, NBA champion entrepreneur investor. He's with us in the waiting room and we'll bring him into the TPP and ultra down. Very excited to meet you, Kyle. How you doing?
- [93:05]
Kyle Kuzma
What's up, boys?
- [93:06]
John
What's up?
- [93:07]
Kyle Kuzma
How are we doing, man?
- [93:08]
Jordy
You've been tearing up the timeline.
- [93:10]
John
Yes.
- [93:11]
Jordy
We love it.
- [93:12]
John
Thank you.
- [93:12]
Kyle Kuzma
Thank you guys for having me. Thank you guys for having me. I learned a lot from you guys, actually, so thank you. I have something new to this, but you guys help out a little bit, so thanks.
- [93:22]
John
Yeah. What got you into investing originally?
- [93:27]
Kyle Kuzma
Well, I mean, that really starts like when you first get into the NBA and obviously you have a financial advisor and then you learn about typical stocks and bonds. And then I had a lot of great mentors. Like, Koben Bryant was a really good mentor for me especially, you know, he had a fund right before he passed away and he told me to get into it. And I think that was my very first, you know, type of access and like, get in with the whole VC in the tech space with everything. And, you know, we can only play basketball for a certain amount of time.
- [93:58]
John
Yeah.
- [93:58]
Kyle Kuzma
And you got to make it count. But then you got like 40, 50 years to, you know, still live, so what else are you going to do? Because you know that money doesn't last forever, so.
- [94:07]
John
Yeah.
- [94:08]
Jordy
Well, what was Kobe's advice to you? Was it, hey, here's all the things not to do because you get into the NBA, suddenly you're making some money and you get a million opportunities thrown at you every day. So I imagine your financial advisor's primary job is like, how do we just make sure to not do all the dumb stuff? Focus on the basics. But what was Kobe's main advice for you?
- [94:30]
Kyle Kuzma
Well, the number one thing is probably just keeping the main thing. The main thing. And that's like making sure you're focused on whatever your true primary thing is. And that's always basketball, because, yeah, there's going to be nothing that gives me a return, you know, unless I'm like an early investor into SpaceX or something that is going to, you know, propel me, like basketball will. But yeah, when you have a financial advisor, they. They try to keep you very, very conservative. And you think about the little things that you can get, you know, God, willing 10, 11, you know, annual return. But, you know, for me, I want more. And I think that, you know, when you start thinking about, like, the private investment side, looking into space and tech and all these things that have crazy, crazy multiples and are like, flying off the shelves right now, that's where the interest is, at least for me.
- [95:17]
John
How do you think about endorsements versus equity versus investing? There's so many different ways outside of basketball to apply your skills, make money, compound. But there are sometimes tensions, and sometimes an investment makes more sense. How do you, how do you think about these different trade offs?
- [95:37]
Kyle Kuzma
Well, you know, I'm. I mean, I'm going into almost year 10 in the NBA, right? And I think that athlete, overnight success, you have all these, you know, you have your agents, you have managers, and they definitely want you to get, you know, the endorsements, right, because they get their fee.
- [95:55]
Brad Gerstner
And it's.
- [95:55]
Kyle Kuzma
It's a little bit harder for sure, you to really justify, you know, okay, what does this equity mean for me? Because, you know, 90 of things fail anyways, right? So, you know, I think it's all about, you know, getting with the right people, understanding what you're getting into, and like, educating yourself. You know, for me, I'm not the smartest person in the room. And, you know, I think that's one of my best traits that I've had because, you know, anytime you can be inquisitive and you have curiosity, you have an upper edge on almost literally everybody.
- [96:28]
John
But you might have increased access, increased availability to just meet CEOs early, get into rounds. Have you ever thought about having other teammates or friends or even traditional investors tag along with you? Do you see this becoming a career like Kobe did with a fund that other people could invest in?
- [96:51]
Kyle Kuzma
Oh, yeah, 100. You know, I think for me, over the past couple years, I've been, you know, kind of that singular investor and, you know, getting onto cap tables or, you know, hopping into other people's SPVs or, you know, in the VC space that I know and I hop in. But, you know, learning this space a little bit, you know, the money is, you know, having a fun, you know, being able to, you know, take the upside off of your access that you have. And, you know, I'm in such a unique position because as an athlete, everybody wants to talk to you. You know, everybody wants to be around you. And, you know, you can use that for multiple ways. You can use that, you know, to be cool and, you know, party and have a fun good time and be famous. But, you can also use that as leverage to build your own platform if you're knowledgeable enough to then use that access to get into, you know, blue chip companies that you know can really change your life.
- [97:47]
John
So yeah, the blue companies, I feel like there's a tight enough circle that you can probably take those meetings during the off season or when you're not practicing or playing. But have you had to turn away meeting invites to seed series A founders? Because just to see the landscape of everyone who's operating at that level would be just dozens of meetings every day. Or is there something about that that like, oh, you want to go earlier stage at some point?
- [98:13]
Kyle Kuzma
No, I think you definitely want to go earlier stage at some point. I think I'm at that type of inflection point now. You know, I think a lot of my investing has been typically, if it's not, you know, real estate or cpg, you know, getting into tech space a lot of late, you know, late stage growth companies where it's more surefire, you know it's going to hit. But you know, those multiples, when you talk about IPO or somebody acquiring you, you know, maybe a 3, 4, 5X which is all great, right. But you know, to get the hundred x, you know, the crazy unit you
- [98:46]
Jordy
want, let's be honest, you want the thousand X. Yeah. You're not gonna come on.
- [98:50]
Kyle Kuzma
Of course, of course, of course.
- [98:52]
Jordy
Chasing it. Do you find one of the, one of the challenges with privates is that you can't, you know, you can only get in for the most part, at least directly in these certain moments during the season.
- [99:03]
John
There's a big round happening.
- [99:04]
Jordy
Yeah. If there's a big round happening, do you find yourself being like, I'll keep tracking this company but I'm not gon chase it right now or just given. Given. I imagine there's moments where do you
- [99:15]
John
have a partner who can sort of chase it down for you?
- [99:17]
Kyle Kuzma
Yeah, well, you know, I do a lot of research on my own but like very, very thankful to have just like a vast network of like resources and mentors and people that are like way smarter than me. And I like, I think that's like the most important thing that you know because my main thing is playing basketball. Right. And I can only do that for so long. But you know, I think that, you know, I'm in that situation now. There's a couple of companies that like I'm looking at and they're like pre seeds or they're looking at, you know, they're safe rounds and I really, really like them. But, you know, I'm at that point where you know, putting, you know, 25, 75,000 into, like, one of those companies. It really doesn't make sense when, you know, I'm focused on a lot of more like late stage broke companies. Right. Oh, you know, I think you want to track. You want to do this, but, you know, for me, I'm just wired differently. And I think that, like, I think it's part of my ADHD that I have. I'm able to focus on a lot of different things at once. And I think that, you know, when I'm playing basketball, if I'm during. During season, you know, we're not playing basketball 24 hours a day. So, you know, you have to pick and choose your hours wisely. So, you know, if I'm playing basketball, if I have to study film, if I have to work out, you know, I handle that. But then, you know, as soon as I get home from 3 to 6, 3 to 7, I'm in my office, and that's like, study time and my learning time. And I can really focus on understanding different landscapes because every sector is different. Right. And it costs different thinking.
- [100:46]
Jordy
Is AI changing basketball in any way? I imagine you guys are accessing new tools all the time, using the models to do analysis. But how are things. How is AI changing basketball?
- [101:00]
Kyle Kuzma
Well, I think most of us kind of hate. Hate it a little bit, you know, the analytic standpoint.
- [101:07]
John
Oh, sure.
- [101:07]
Jordy
Because it's like, you know, it's like being micromanaged. It's like, oh, you could have been. You could have been an inch over here.
- [101:13]
John
Yeah, bro.
- [101:14]
Kyle Kuzma
It's like. It's like literally like a computer telling you, hey, you should not be taking this shot. But the computer is not the human. And I'm sitting there, I'm like, yo, I'm wide open. You're telling me not to take this
- [101:27]
Ben
shot, but I open.
- [101:28]
Kyle Kuzma
And I'm a professional basketball player. I've made this shot. I don't know if you guys seen this, I think. And I'm not too super educated into it right now, but saw Adam Silver, he talked about implementing something like Hawkeye or something.
- [101:44]
John
Sure.
- [101:44]
Kyle Kuzma
For, like, out of bounds and replays, which I think that's a great idea.
- [101:48]
John
Yeah.
- [101:49]
Kyle Kuzma
Because, you know, we had these coaching challenges and, like, you know, stoppages during the game where, you know, five minutes of real time may, like, go off, and we're just sitting there. And I think that, like, making the game faster in that aspect would be huge for us.
- [102:02]
Jordy
Yeah, just enforcing the rules. But you're not trying to get micromanaged by a computer.
- [102:08]
John
Yeah. What about on the training side? Is there anyone using like AI or. I mean, the other megatrend in Silicon Valley right now is like Peptides. I don't even know if those are legal in the NBA. But are there any like breakthrough changes in like training performance longevity that you're seeing? Like, sort of have moments.
- [102:28]
Kyle Kuzma
I mean, the whoop is like the biggest moment, I think. Yeah, the whoop. You know, like, I don't really. I wish we could wear it during games. I tried to and like the league made me take it off because all summer.
- [102:39]
John
Yeah.
- [102:39]
Kyle Kuzma
You know, that's how I really track my daily life. You know, like they should pay me for what I'm saying right now.
- [102:45]
John
Are you not an investor?
- [102:47]
Kyle Kuzma
No, I missed.
- [102:48]
John
Not yet. Okay, well, they're still pre ipo.
- [102:51]
Kyle Kuzma
No, like, it's not always about that. It's about, you know, good products. And you know, I think it's amazing because you can track everything that you need. Your sleep, your workout, your stress, your strain.
- [103:01]
John
Yeah.
- [103:01]
Kyle Kuzma
And I think that, you know, you know, as we go there's going to be more and more things that pop up, especially in the, you know, athletics and, you know, professional sports and just, you know, just daily lifestyle, you know, because that's what you're, you know, you alluded to earlier with like, you know, I know the biohacking scene and.
- [103:18]
John
Yeah.
- [103:18]
Kyle Kuzma
The founder in the tech space, like it's a huge thing and rightfully so. Yeah, we can't take Peptides, but. Okay, you know, there's a lot of, you know, studies that suggest that it's really, really good for you and probably make better. And I see you guys talking about the enhanced games. I don't know about steroids, but.
- [103:36]
Jordy
Yeah. What was your, what was your, what was your reaction to the Enhanced games? I don't, I don't know if you were to track it, but it showed us like you know, just absolute dedication and human hard work and human spirit can over seemingly overcome PEDs.
- [103:53]
Kyle Kuzma
Well, you know, I don't know too much about the PD aspect. Right. But I kind of feel for certain athletes.
- [104:01]
Michael
Right.
- [104:01]
Kyle Kuzma
Because as an athlete, you know, we put our blood, sweat and tears into this.
- [104:06]
John
Yeah.
- [104:06]
Kyle Kuzma
Right. If you're not really a part of like the power 3, 4, 5 sports like that don't create a revenue and don't really have, you know, a system where it's like unity and everything is fragmented, like, you know, like pole vaulting. And sprinting and swimming. These guys are training their entire life for four years for five minutes.
- [104:26]
Jordy
Yeah.
- [104:27]
Kyle Kuzma
And you know, going to the Olympics, they don't make any money. They might make a hundred, two hundred thousand. I don't know what it is, but it just seems like so to me, you know what I mean? And I think that the enhanced game is very, very intriguing because these other sports, they get a chance to one in this like day and age when you know, you think about AI and you know, everybody thinks oh you're going to lose your jobs or whatever. But sports is the only thing that's going to be really bulletproof because we want to see it and everybody wants to watch it and feel it and touch it. And I think that it's going to be important for these athletes to get paid. And if I'm an athlete, I train for four years and like I barely make money. Like what else am I doing? Like this is a nice avenue. That's interesting and it's different so totally.
- [105:14]
Jordy
Yeah, that was, that was my takeaway. I was like the, the silver lining here is like athletes have, can extend their career. These sports maybe become more interesting to follow if there's like high level competition outside, you know, that gets a lot of attention, that's properly marketed like enhanced games were.
- [105:32]
John
And you can imagine that a lot of the more like if they're restricted drugs right now, those might be studied more and then used after someone retires to recover, remain healthy as they age. If they went really hard in professional sports, beat up on their body, they can get some of that back in their 50s and 60s and not have the torture toll of the physicality on their body. Take us through American Dynamism, Industrials, Anduril, SpaceX, super interesting companies. How did you get interested in those? How did you get up to speed? What was exciting to you about those companies?
- [106:11]
Kyle Kuzma
Well, when I think about that, I think that and this is just like my perspective of investing and there's a lot of tensions, a lot of stress going on geopolitically and I love where I'm from, I love America. Right. I'm sure we all do because it's given us all this platform to even be speaking here, right? Yeah, I like that. And then, you know, I just believe that if you're an investor, like why are you not focused on investing into one serious things but then two things that have, you know, America's interest best at heart, right? And you think about space and you think about defense and where we're at in this World, you know, prime example, space is a crazy economy that's about to open up. You obviously hear about SpaceX and all the other companies that are getting a lift from valuations within it. But, you know, our counterparts and our other people, other countries in the world, they are focused on space and they're focused on getting to the moon and they're focused on all these satellites and, you know, whoever really rules space is probably going to rule the world because, you know, when we fight wars and we do certain things on Earth, a lot of things is, you know, horizontal because, you know, we're fighting on this realm, but up there it's linear. You're looking down and there's a lot of things that could, like, really go wrong if we're not focused on preserving, you know, America.
- [107:40]
John
So that's a fantastic SpaceX bull case. I love it. That is extremely convincing.
- [107:48]
Jordy
You said, coming up on 10 years in the league, what advice would you give to the young Kyle Kuzma on private markets with what you've learned so far? You mentioned some of them work with smart people, build the right network. But if you were to summarize it,
- [108:06]
Kyle Kuzma
I have a really big friend in the space and I asked him this question, like, what would you do or what type of advice would you give to, like, a young investor like me? And he told me, don't be stupid and follow the money. This is the most simplest thing you can do. You know what I mean? Because like I said, there's so many people that are much smarter than me, much smarter than all of us that do all this due diligence, that understand the landscapes of every industry, every science, every biotech, every defense, space company, you can name it. And I think that, you know, following those guys leads as much as you can, but also making your own, like, you know, critical thinking, educated guests on certain things is super, super important.
- [108:51]
John
So, yeah, trust your gut every once in a while.
- [108:54]
Kyle Kuzma
Yeah.
- [108:54]
John
Well, thank you so much for hopping on the show.
- [108:56]
Jordy
Let's do it again soon.
- [108:57]
John
Let's do it again soon.
- [108:58]
Jordy
The chat wants to know how you're thinking of who you got for the first finals. I don't know if you're making predictions.
- [109:08]
Kyle Kuzma
I don't know, man. You know, honestly, there's a part of me that I just want to see New York win because I literally want to see New York go up in flames. Like, literally, literally think about this. Win or lose, the city is going to New York. Fans are one. Incredible.
- [109:27]
John
Yeah, really incredible.
- [109:28]
Kyle Kuzma
And you can just see, you know, all the Memes and stuff. After they win, J.R. smith Films got pummeled in the streets. Like, I want to see more of this. Like, is this funny
- [109:38]
John
over here?
- [109:39]
Kyle Kuzma
Seeing New York win Chaos. Just amazing for the NBA. But this Game seven is going to be serious. It's going to be real, you know, and I think it's hard for anybody win a Game seven on the road, you know, and I think history and analytics kind of, you know, support that a little bit. But, you know, I want to see Wemby versus the Knicks. I think it'll be sick.
- [110:00]
John
Yeah, that'd be sick. Well, thank you so much for coming on the show. Have a great weekend.
- [110:03]
Jordy
Super fun.
- [110:04]
John
We'll talk.
- [110:05]
Jordy
We'll talk soon.
- [110:05]
John
See ya. Goodbye. Up next, we have Brad Gerstner from Altimeter Capital. We've been keeping him waiting and we're bringing him in. Very happy to have him join the show again for the second time.
- [110:16]
Zane Mount Castle
Welcome back.
- [110:17]
John
How are you doing?
- [110:18]
Brad Gerstner
Great to be here, guys. Great to be here.
- [110:20]
John
Fantastic.
- [110:21]
Brad Gerstner
Kyle.
- [110:22]
Jordy
Back to back with Kyle.
- [110:23]
John
Yeah, yeah. He laid out one of the greatest SpaceX bull cases. We're going to throw it to you to try and one up him. He said, whoever controls space controls the world. And for that reason, you got to own SpaceX. I liked it. But take us a level deeper. What are you thinking about in the SpaceX IPO and the lead up? What are you watching for? What unanswered questions are there? What do you think is misunderstood, maybe that more people should be aware of?
- [110:46]
Brad Gerstner
I mean. I mean, come on, guys. We didn't even have any foreplay. You're already driving me down. SpaceX IPO. I mean, first, I haven't seen you guys. Did you sell this thing? Did you sell?
- [110:57]
Jordy
Yeah, I think we did.
- [110:58]
John
I think we're working for you now. I think we're working for you now.
- [111:01]
Brad Gerstner
Did you guys get shares in OpenAI when you sold this thing?
- [111:05]
John
Yeah.
- [111:05]
Jordy
Yeah.
- [111:06]
Ben
Okay.
- [111:06]
John
On the team.
- [111:06]
Jordy
So we're all.
- [111:07]
Brad Gerstner
We're all on.
- [111:08]
John
We're on the same team.
- [111:09]
Jordy
Yeah.
- [111:09]
Brad Gerstner
Okay.
- [111:10]
Jordy
Yeah.
- [111:10]
Brad Gerstner
How much money you make?
- [111:12]
Jordy
Yeah, I mean, we got.
- [111:14]
Brad Gerstner
We got to turn the tables a little bit anyway. Let's talk Space X.
- [111:18]
Jordy
Well, well, well, maybe before that we can rewind a little bit because I do remember the last time we were hanging out in person. It was at Katzenberg's event, Right? You were basically. It was kind of this interesting moment because in some ways we were going through a mini, correction, right? Like, chat bots, you know, grew incredibly quickly. Agents were just starting to work and it's been interesting to see how the market did go through this correction in Q4, but then realize, hey, whoa, agents are a thing. And you would pretty much perfectly called that in the conversation that, that we were having. Which yeah, in some ways it's just been, it's been such a wild year for so many reasons. But I feel like you had a, somewhat of a crystal ball back then.
- [112:06]
Brad Gerstner
Yeah, well, I mean, thank you. And I recall that conversation and the truth of the matter is we've gone through several mini corrections over the course of the last two and a half years. Right. There's been a wall of worry. I mean, on my podcast with Bill, Bill Gurley, you know, we debated this. You know, Bill was saying, will the revenue show up? Will there be gross margins, will there be roi, we're overbuilding, or you know, every supply constraint turns into a glut. And we saw all that wall of worry last year. I mean, I think for me the turning point was when, when we hit inference time reasoning and we really had this whole other vector of scaling intelligence. And I remember having Jensen on the podcast, he said, Brad, inference isn't going to 100x, not go 1000x, it's going to 1 billionx because agents are going to be talking to agents. Right. And so I got very pilled and then what we saw Opus 4.6 in the beginning of December, it was clear that we had crossed a threshold of intelligence that offered a level of utility that was fundamentally different. And if you were paying attention early in December, you could see that coming. But we started the year with the market very skeptical as to whether or not revenues would show up. And let me tell you this, had Anthropic not delivered its revenues that it's delivered this year, I think the stock market would be down 10 or 15%. I think it's that important to the entire narrative because the fact of the matter is OpenAI has not blown away their numbers. Google has not blown away their numbers. Like numbers have been good, but the fundamental driver of, of, of outperformance in terms of offtake of AI revenues has been anthropic, which is the fastest growing company in the history of capitalism. So that buoyed the entire segment and it was when they started posting those numbers and then they said on top of that we're doing it at high gross margins in a way that in Q2 may in fact actually lead to free catch some positive free cash flow. The market really ascended. Remember two months ago, the market was basically down on the year And a lot of these returns, we just had two of the biggest months in the history of altimeters public funds. That's 18 years, I mean, back a long time, but that's, you know, listen, I think we picked some pretty good stocks, memory logic, etc. But I also think it's just a function of the market delivered. These companies delivered. You saw Dell's. I mean, listen, Michael Dell, one of my best buds, and you watch the act, you know that he's delivering with Dell, they just had a server. Revenues up 750% year over year, went from a $1 billion business to a $16 billion business. This stuff is real. But in order for it to stay real, we have to continue to see usage by consumers that they're willing to pay for and growth in the enterprise, small, medium, large that they're willing to pay for and growth in the sovereign domain. I think it will occur, but oftentimes, you know, there'll be some pockets along the way here where, you know, where revenues won't be as strong as people think. We'll have some pullbacks. We could have 10 to 20% pullbacks in the semiconductor stock as just like run of the mill consolidation.
- [115:13]
Jordy
Yeah, yeah, right.
- [115:14]
Brad Gerstner
Run of the mill consolidation. I mean, Micron has gone from a couple hundred bucks to a thousand bucks. Dell this time last year was I think 80 or $90. It's now at $400. These are seismic moves. Yeah, right. And so, yeah, fortunately we were pretty bullish when other people were skeptical.
- [115:32]
John
Yeah. But yeah, it feels like there's, there's like this natural reaction. Anytime there's good news, someone has to dig up something that's like a little bit bearish. Right now we're seeing, you know, incredible anthropic revenues. And then there's questions about ROI on token maxing and how much is going on there. How are you processing that? Are you thinking that we'll see CEOs and management teams on the next earnings cycle sort of start to dig into those numbers? Or is it just the honor?
- [116:00]
Jordy
I don't. Psychosis.
- [116:01]
John
Yeah, well, that's the most extreme version. The other one is, yeah, we actually did spend half a billion dollars in a month and, you know, a quarter billion was super effective. So that's what we're doubling down on in the coming quarter. But how do you think that shakes out?
- [116:15]
Brad Gerstner
Well, I mean, if I, if I size up the debate in Silicon Valley. Yeah, right. There are the bears been bearish on AI for let's call it a while.
- [116:22]
Jordy
And anything that Comes out. Anything that comes out is actually just and still.
- [116:28]
Brad Gerstner
Right. And so now they're saying, oh, all this AI revenue is bullshit. First they were saying it won't show up at all.
- [116:34]
John
Yeah.
- [116:34]
Brad Gerstner
And then it showed up. And then they're saying, oh, it's all bullshit because it's all token maxing and there's no roi. So that's one side.
- [116:40]
John
Yep.
- [116:41]
Brad Gerstner
On the other side of the people who are super AI pilled and they're like, oh no, this is perfectly, you know, Pareto optimal. Everybody's spending the exact right amount of money on tokens, which we also know is not true. And the truth buys in the center. Okay. When you have millions of independent actors all making self rationalizing decisions like altimeter on buying tokens. Right. I don't like, I don't like to waste money.
- [117:03]
Jordy
Yeah, yeah.
- [117:04]
Brad Gerstner
I'm spending money because I'm getting a return. Now, will we, will we experiment with some things that don't provide a return?
- [117:10]
Jordy
Of course.
- [117:11]
Brad Gerstner
I actually sent you guys a slide on this. I think it's pretty fascinating. I don't know if your team can pull up, but this is independent research that we did on this question of token maxing. And what we did is we went to 300 enterprises, right? And we just asked them, are you starting to optimize your spend? And if so, how much do you expect that you're going to spend year over year over the course of the next 12 months? And if you leave that chart up, what you will see, guys, is that in the first category, these are all people who are actively optimizing, but they still expect to grow revenues at over 50% over the next 12 months. The second category are people who are planning to optimize. And even if they're planning to optimize, they say they're going to grow revenue at 90% and so on. So here's my point on this, right? And this is across 300 firms who use a multiple of AI solutions, this is what they expect of their AI, you know, API token usage.
- [118:09]
John
Yeah.
- [118:10]
Brad Gerstner
So what do we, what does that tell us? It tells us that of course people optimize along the way, but we are so early in the adoption curve, right? They're barely using coding today. They're just getting on the coding train. And they haven't really even started on using AI for knowledge work more generally. So we're low in the use, the penetration of coding as a use case. We're almost nowhere in the penetration of knowledge work more generally as a use case. And Then remember this, there are very few enterprises globally that are even using AI. So we are really early in the curve of the people who are actually using AI. So I'm somewhere in the middle. Of course I believe that optimization will continue, but my hunch is that Anthropic and OpenAI, these companies will continue to grow right through the optimization because the growth curve on penetration of both enterprise and use case is so steep. But you know, we'll see.
- [119:06]
John
Yeah. Is this a, Is this a Z0 sum market where every dollar spent on tokens comes out of a SaaS company? How are you reflecting on the SaaS apocalypse? Because we all saw what happened in the market, but there's been some really good news lately. How do you process that?
- [119:24]
Brad Gerstner
Well, I popped on CNBC for a second yesterday and was talking about Snowflake as an example and the stock was up what, 35% yesterday. Now of course, just to be fair, it's only up 10% for the year compared to a company like micron, up 200% for the year, a company like ARM up 200% for the year. But they did bounce back. And what, what I think we're starting to see is the bifurcation. There are companies that are in the token flow. So all these software companies, we just lump together.
- [119:52]
Jordy
Right.
- [119:52]
Brad Gerstner
We treat them as though they're all equal. Sure. But there are certain software companies, Databricks, Snowflake and Clickhouse, all of which we're investors in, which very clear to me. They're in the token flow. As you consume more tokens, the amount of your database queries goes up. I see it at altimeter. Right. In fact, our database queries are growing faster than our token usage, to give you a sense.
- [120:12]
John
Yeah.
- [120:12]
Brad Gerstner
And this is, I think so now they've proven they're in the token flow, so they're starting to get some love. From an AI multiple perspective that's very different than a company, I think like, like Salesforce and I love Marc Benioff and you know, he, if anybody can, you know, get in the token flow, it'll be him. But the reality is the front facing solutions that they offer are more competitive with the models than something like Snowflake. Snowflake's the enabler of the models, whereas I think that Salesforce competes a bit more. So it's going to be more challenging. But I also, I've heard so much about this SaaS apocalypse and listen, I did a pod with Satya, I don't know, 18 months ago where he caused a stir by Saying software is a thin user interface on top of a CRUD database. And Benioff and everybody freaked out. They're like, what are you saying? It's way more than that. Right. And Bill and I did a pod. Is software dead? So it's not like this is new. But then everybody started freaking out in December. All these multiples reset. But the question is, what did they reset to? Okay, and this is what I want to focus on here. So if you show this slide that I prepared for you, fine, esteemed gentlemen, what this slide shows is that the multiple correction just took software from a place where they were way more expensive than the market multiple and brought them into the category of the market multiple. Right. So now they're trading at about 22, 23 times real SBC included Gap earnings. That's about where the market is trading. So now just follow me on this. Software is trading, mostly software names are trading at a higher multiple than in video. Yeah, right. Nvidia is trading about 13 times, earning for 70% growth for the thing that is the most essential thing in AI. And they're, they're, they're at twice the multiple. So, like, when I hear everybody crying that, hey, these multiples aren't fair, it looks to me like the multiples reset from an above market multiple where everybody thought the software revenues and earnings were impenetrable to. Now they're saying, well, I don't know, some of this, maybe three, four or five years out will be replaced. So we're going to raise the discount rate, we're going to lower the multiple. They've only lowered it to the market multiple. Let me just suggest that there's a possibility these trade well below the market multiple. Sure, right. I'm not, I'm not wishing for that, but I'm just saying there's a distribution of potential outcomes here. If you get on the train, if you get in the token flow, you're going to get above market multiple. If you don't, if you slow down, and it looks like every time that computational intelligence improves your business gets worse, then I promise you they will trade below the market multiple and there's. And there's more room to the downside. So for us as investors, you know, Warren Buffett has this, you know, this old metaphor. You know, there's the easy basket, there's the hard basket, or the yes basket, the no basket, the too hard basket basket. For me, software today is generally in this, in the too hard basket.
- [123:15]
Jordy
It's notable because you've been saying that I I think for months now. And there's a lot of people now that there's been a stabilization that say, like, oh, I'm. I'm smart enough. I can, I can, I can outsmart the market here. And like you're saying, even with where multiples are now, you still could be catching a falling knife. I wanted to ask you about the potential data center moratorium and how, you know, the likelihood of something like that, in your view, how that would, if you have less capacity coming online, that would obviously be bad for, you know, chip companies, various companies in the hardware supply chain. But it could be great for people that are actually have, you know, basically like have tokens to sell because they would potentially get more pricing power. How do you think?
- [124:08]
Brad Gerstner
It's bad for everybody. Bad for everybody. But most importantly, it would be horrific for America. And lest we be overconfident in Silicon Valley, let's remember the activists. A small group of activists shut down supersonic technology, and a small group of activists shut down all nuclear clean energy in this country. Okay? We have 100 fission reactors being built in China. We have one in the United States. It's a disaster that happened. And so we can't take for granted that the kooks who are calling for data center moratoriums. Right. Which just think about this for a second. All of our GDP growth is coming from the fact that we are building data centers and driving AI and driving productivity improvements in the economy. A data center moratorium would thrust us straight into a recession and high unemployment. Secondly, it would cede the entire global game to China. Like, overnight, we would lose to China in the global air race, which is not just about AI. It's about economic security, it's about jobs, and it's about national security. So it literally is insane that we would do this. I can't even believe there are people talking about it. However. What? Why are they talking about it? Because people are concerned. Local communities are concerned. I just got back from celebrating my mother's 90th in rural Indiana, you know, over the Memorial Day weekend. And what I'll tell you, sir.
- [125:33]
John
Happy birthday.
- [125:34]
Jordy
Happy birthday.
- [125:35]
Brad Gerstner
She's incredible. She is so incredible. But you think about a place like Mishawaka, Indiana.
- [125:41]
John
Yeah.
- [125:41]
Brad Gerstner
Where, you know, they're building a data center. I mean, folks here, they. They're worried about their jobs, they're worried about their kids having jobs. And then they're told by these crazy activists who show up in their town they're not going to have any water and their electricity bills are going to Go up. So can we blame these people for being a little agitated about what's going on? So I'm actually working on an initiative I'm not prepared to announce today, but with like everybody in the value chain, all of the cloud companies, all of the Nvidia's and AMD's and you know, and off takers, etc. And the white House, that would deliver a very tangible and profound dividend to the communities that we're building.
- [126:19]
Jordy
There we go. I think, I think it's that there's a very elegant solution there. You're the guy to do it. You're the hero that American capitalism deserves. You got Trump accounts done. I feel like this is a good, good next act for you.
- [126:34]
Brad Gerstner
Well, I'm in the mix. I'm happy to do my part. There are extraordinary people around the table. But here's the thing. We have to build the socio political bridge for the next three years. Right? In three years it's going to be obvious, I think the abundance and the benefits that AI is driving for us as consumers. Everybody's going to have their own personal assistant in their pocket, right. For next to nothing. Think about that can do your calendar, can order your food, can, you know, get you a new black T shirt, send mom a birthday present, all the things. And every enterprise is going to have things that up level us all as humans. So I am firmly, just like, you know, John Maynard Keynes was at the start of the industrial revolution. I am firmly in camp optimism about technological progress. But I'm also not head in the sand about the disruption and the concern people have for the next three years. So we have to give them tangible benefits that get us over that bridge. I think we're going to do it. I'm feeling pretty optimistic about it. But you're right to bring it up and you're right to be concerned about it. We cannot take it for granted.
- [127:35]
Jordy
Yeah, the, I mean this just goes back. I think it's entirely fair that individuals, you know, if you say I'm going to put an AI factory in your backyard, okay, is it going to create jobs briefly and then, you know, some, some, some maintenance. I think it's totally fair for people to not want it in their backyard because there's some, they, they perceive some risk and there's no direct benefits because they can just get AI anywhere. Right. It doesn't matter. But there's a solution.
- [128:04]
Brad Gerstner
Yep.
- [128:05]
Jordy
How are you thinking about adoption curves? It feels like part of the reason that we've had these kind of like rolling Corrections is that technology gets adopted really quickly. People assume that it's just a straight line forever, but then there's a new capability, a new technology, and it feels like stuff is just breaking through instantly. Where have you. Are you adopting new frameworks internally to try to understand how quickly new products can get to market? Obviously, enterprise is different, but it feels like the line between consumer and enterprise, at least in coding, has never been more blurred.
- [128:48]
Brad Gerstner
For sure. I mean, listen, I think about when I got into the game, guys, 1999, 2000, and we had about 35 million people connected to broadband Internet. We all saw what Amazon was going to be. But where we got over our skis, right, is we thought it would come a lot faster. And we forgot that there were only 35 million people connected to broadband Internet. Today we have 4 billion. 3, 4 billion. Like, the rate of diffusion and the magnitude of diffusion is radically, radically different. And think about this. We have a natural constraint on how fast we can go because we only have so many memory wafers in the world. We only have so many logic wafers in the world. We only have so much powered shell in the world. That means we can only produce so many tokens, okay? And it's almost as though in 1999, 2000, we could only lay so much fiber. I've said this a thousand times. When we were putting down the fiber in 2000, we called it dark fiber for a reason. There was nobody using it, and we knew there was nobody using it when we put it in the ground. There's not a dark GPU in the world today, okay? There's not a dark token in the world today. So I think it's a very different thing. I think it's a healthy thing. We have this wall of worry. We can't build that much supply. And I would say, if I look at every company, what did they report on their earnings calls? Google was token constrained. They said if we add more tokens, we'd be able to generate more revenue. Same for Amazon, same for Microsoft. Same from OpenAI, same from Anthropic. The world demands more intelligence. Intelligence can only be produced with tokens. And we have physical limits to the amount of tokens we're going to be able to bring online. So, yes, we will have these waves, but I think the rate, the parabolic rate at which these new models are going to produce intelligence, I think we're going to be blown away over the course of the next nine months. You talk independently, you know, to Michael True and the guys at cursor and now, you know, taking over X or you talk to the guys at Anthropic or Open Air and they kind of look you in the eyes with that Oppenheimer look and they're like, we're here, right? Like, we're like, we are going to think about this. OpenAI and anthropic combined to start the year had 3 gigawatts of compute. 3 combined. They're going to end the year closer to 10 and next year closer to 20. We're making algorithmic improvements. We're making massive steps up the scaling law because the amount of compute we're going to have available to us. Think about, you know, macro hard and macro harder. That cursor is going to now be able to train a frontier level model on. So we've got incredible competition in America. We got the right amount of compute coming along. I don't worry about the bubble as much, even though I know that, you know, there will invariably be, you know, some months that revenue doesn't grow as fast. I'm really worried about making sure that America stays foot on the accelerator. Competing globally and winning the air race like this is going to lead to a moment of, of, of abundance for our economy. And it's only through great national wealth that we can raise the floor for everybody else.
- [131:50]
John
Yeah, no, that makes no sense.
- [131:52]
Jordy
There was some reporting this week that Metta is hiring fd. I was sort of surprised to see them going into the enterprise because it feels like they have every advantage on, you know, consumer. They have the billions of users they have, they have exciting hardware, all these things. How much did you. Was that surprising to you at all? Do you expect more companies that weren't traditionally enterprise focused to say, hey, there's tens, maybe hundreds of billions of dollars of revenue here. We should be in this market.
- [132:30]
Brad Gerstner
I mean, the second you start spending $100 billion on CapEx annually, okay, you run into the AWS problem. What's the AWS problem? Now I have all this compute, but I don't use it every day equally.
- [132:43]
Ben
Right.
- [132:43]
Brad Gerstner
Jeff built AWB because he said I have to build my capacity for Christmas Day or, you know, Black Friday. But he's like the rest of the year, half of that stuff sitting idle. It's expensive as hell, so I may as well rent it to everybody else. Right? Turned into, you know, a blockbuster business. But it made his core business better because he could build to Black Friday. Right. And nobody else could because they didn't have aws. So that's why Elon has launched EWS Right. Elon Web Services with his compute and signed up a big first customer with Anthropic. Listen, nobody on Earth is better at turning electrons into tokens than Elon, right? So expect a lot more data centers out of Elon. Expect them on Earth and eventually in space. And I think that changed the whole tenor of the SpaceX IPO, both the cursor and the anthropic deal. I think that went from, you know, people being slightly concerned about it to people being quite excited about. I'm happy to, you know, to, to unpack that. So I think that for Metta, if they're going to be in the game of spending that much money. Listen, Susan Lee is, you know, incredible over there as the cfo and I'm sure they're looking at the strategic plan and Mark is saying I want to build even more because that guy is never going to give up the race right to frontier level. I none of these guys want to give up that race. And so they just have to figure out ways to monetize everything that they're building. Do I worry as a shareholder at some level it's, you know, that's hard, that's hard to take a business, it's been 120% consumer and say, okay, now we're going to be in the business of us and maybe even in the business of enterprise level agents. I think it is hard. I think they're up for the call and remember you suggested the merger between, you know, product led growth, these coding agents kind of feel like consumer adoption. So there's a lot of shared consumer DNA with what's going on in the enterprise today. So they may surprise some folks but
- [134:42]
John
and does have links to like hundreds of thousands of businesses through the ads platform. So it's not like they don't have any relationship to businesses. They do.
- [134:50]
Jordy
So one more that I was curious to get your thoughts on, Kirkland and Ellis is talking about investing half a billion dollars into their own software to help run their firm. A lot of people pushing back on that. Historically you take a firm that doesn't have strong software competency and they spend hundreds of millions of dollars on their own software. There's a lot of examples where that hasn't gone well yet. At the same time, software making software today is wildly different and it's very possible that things are changing, especially if you can get the right partners around. And I know they have some great partners. Do you expect more companies of that scale services businesses to want to try to own as much of the stack as possible and not be reliant on the Harveys or the Lagoras of the world.
- [135:42]
Brad Gerstner
I mean, what else are they going to do? I mean, it's kind of like, what else are you going to announce? Oh, just we give up, you know, and like, they got to do something. The competition is coming straight. Adam? Yeah, I don't think it's a high probability bet, personally. Like, if I was a partner at Kirkland and Ellis and somebody pitched me on that, I say I'm not sure that's the highest and best outcome here. So what is an alternative outcome? Good friend, you know, Josh Kushner, what he's doing at Thrive holdings, right, where he's buying accounting companies. And now I have somebody who's just like deep in the weeds, recruiting the best engineers in the world. Deep partnership with OpenAI. I saw Greg Brockman retweet the great the work that there are that they're benefiting all these accounting firms. Like they're driving just huge productivity gains in these accounting firms. So it seems to me that that's a more likely outcome. You know, a Thrive holdings buying a Kirkland and Ellis and saying, now we're going to, you know, take this thing and turbocharged. I think you're going to see a lot of that out of private equity firms. Out of firms like Thrive Holdings, I think you're going to see take privates where people do that on an individual company basis. But am I confident that software has gotten so easy that a law firm that gets up every day and thinks about writing legal briefs is all of a sudden going to write killer legal software to compete with OpenAI and Anthropic? I think that's unlikely.
- [137:04]
Jordy
What, what is your thinking around the Series A, B, C, these earlier growth rounds? Feels like a lot of investors are just kind of frozen. You were talking earlier about not necessarily frozen in terms of their activity. They're doing a lot of deals, but they maybe don't have as much confidence knowing what will get steamrolled in the future. You were talking about being in the token flow. Is that like where you feel comfortable deploying at this early stage where, you know, you're betting on a, you know, a ten year outcome?
- [137:41]
Brad Gerstner
Yeah, I mean, listen, I think we all have to have the humility in these moments to know that looking out 10 years is almost impossible? Looking out 10 months is pretty damn hard. But I would say if you just looked across our portfolio and, you know, I think Altimeter is performing better than it has any time in its 18 year history, you know, our early stage team, I think overnight success, awesome, you know, awesome work on the early stage side. But if you look at the type of stuff that we're investing in, it is in the token flow, right? We're building to those compute shortages. You know, we had the Cerebras ipo, you know, last week. We had been in that for nine years, you know, investors, you know, Grok. So we're looking at a lot of other semiconductor type businesses, we're looking at a lot of compute data center type businesses. And you know, you just had, you know, your prior guests, you guys were talking about all the stuff you're doing in military modernization and the stuff that's adjacent to AI but benefiting from AI. We're doing a bunch of stuff there in modernization of the military. So I think you find places that are either in the token flow or benefiting from the token flow. And then I would say in growth, like we're just not doing a lot in what I would call inflection stage growth. This is the companies at 5, 10, 15 billion. You know, we've really made massive bets, the biggest bets in the history of Altimeter between open air and Anthropic, which you know is consuming billions of billions of dollars. And so we think they are the principal beneficiaries. And then on the public side for three years now, we basically had 100% of the portfolio in AI and To compared. And you know, as I sit here today, even though it's come up a lot, you know, Hynix is still trading at a single digit multiple and Microns trade a single digit multiple. And Nvidia's trading at 13 times. And you say how is that even possible? Nvidia is up 15x like better than a venture market return over three years. Like, like think about that. Like all the venture returns have been had in the public markets.
- [139:39]
John
By the way, the earnings have come and.
- [139:41]
Brad Gerstner
But their multiples have come down. Yeah, because the earnings multiples have actually come down. This is the cheapest multiple in video has traded at in a decade right now. Okay. And by the way, I think their growth is going to continue to sustain. They're now taking 50% of their free cash flow and returning it by way of dividend or buying back stock. I would encourage Jensen to do 70 or 75%. I think if he does that, by the way, a prediction, you know, look who invested in Apple the second they bought back or the second they committed to 50%, 75% of free cash flow returning to investors Warren Buffett.
- [140:17]
John
Yeah.
- [140:18]
Brad Gerstner
One of the greatest investment returns in history. Right. And so once you make that, cross that threshold, and I think this, you know, they're running that business incredibly well. So the public markets we've had, you know, basically 100% AI and compute, we're basically there, you know, today. So I think it is harder if you're a series B or series C company. Think about what we used to do in software. If it's series A, you had a couple of million in revenue, and then series B, I don't know, you had 20 million in revenue. Shit, you would have a line out the door. People who wanted to do that deal, you wouldn't have a single taker today. Not a single taker.
- [140:53]
John
You mentioned something I think that resonates with everyone. It's very hard to predict what's gonna happen in 10 years. Obviously, your job is to look for,
- [141:01]
Jordy
except for you, as the reverse names.
- [141:03]
John
But I wanna know about the Trump accounts and I wanna know about investing for the next generation for children. Advice also get me up to speed on the program. What's rolling out, what's the progress. But then what is advice to parents in an uncertain time where setting their children up for success is maybe more critical than ever?
- [141:26]
Brad Gerstner
Well, the update is that after four years of working on this and, you know, getting it passed into law last July 4, the Invest America act as part of the Big Beautiful bill.
- [141:39]
John
Yeah.
- [141:40]
Brad Gerstner
You know, it's set to launch and be funded on this July 4th, but we launched the app guys yesterday. So you can download the app every single family. You should tell every family, you know, as a kid.
- [141:52]
John
Yep.
- [141:53]
Brad Gerstner
They should download the app for their kids, get their kids signed up. There are 35 million kids in America under the age of 10 who get at least 250 bucks.
- [142:02]
John
Yeah.
- [142:02]
Brad Gerstner
So if you're basically born after January 1, 2025, so think about, like, under two, you get 1,000 bucks in the S&P 500. If you're between two and 10, you get 250 bucks. Most of those kids get 250 bucks from Michael and Susan Dell. If you live in Indiana, you'll get an extra 250 from me. If you live in Connecticut, you'll get an extra 250 from Ray Dalio. If you live in Oklahoma, you'll get 250 from the state of Oklahoma. Okay. And that's just for starters. We have thousands and thousands of.
- [142:29]
Jordy
There's a lot of billionaires in states that you didn't name that they're starting to Get.
- [142:32]
John
Oh, no.
- [142:33]
Jordy
Listen, listen, they've heard from you. I'm sure if they haven't heard from you, they're going to.
- [142:37]
Brad Gerstner
It's. It's coming. And by the way, the generosity. This is The Giving Pledge 2.0.
- [142:43]
Kyle Kuzma
Yeah.
- [142:43]
Brad Gerstner
We have trillions and trillions of dollars that are going to change hands in this country. This is the single most efficient way for somebody like me to fund the next generation. 100 cents on the dollar goes to the kid. IT compounds for 18 years for their lifetime. It makes them a capitalist and owner. We know they're more likely to graduate from high school and college, more likely to start a business, more likely to buy a home. The societal ROI on this is off the charts. So we launched it yesterday. Get a. Get a rip of this, man. It is now the number three app in the United States. The number three app. We just passed Google. We're only behind Catchy Beauty and Claude. It's incredible.
- [143:22]
John
You're.
- [143:23]
Jordy
You're coming for your kids.
- [143:24]
John
I love that. Is in all three of the top App store apps right now.
- [143:29]
Jordy
Total.
- [143:31]
John
It's a total Gerstner victory.
- [143:33]
Brad Gerstner
Well, I would say, you know, kudos to Vlad and the guys at Robin Hood and BNY and Joe Gabbia at the National Design Studio, and frankly, the whole team at the Treasury Department, led by Luke Pettit and the Treasury Secretary. This is the way government should be done. A citizen had an idea. He was able to go to Washington and actually get a law passed. And then we put together a SWAT team of people who are experienced building these things to build them. And then the consumers, that is the citizens of America who pay for this shit, said, hey, we love that thing, and bid it up on the App Store. So we have a lot of people downloading the apps. There are a lot of improvements coming, so be patient with us. But download the app. Get your kid on the path to compounding. On July 4th, guys, the money turns on. So every parent is going to see that their kid owns a little Nvidia, a little Microsoft, a little Wal Mart. Right? They're a little slice of all the top 500 companies in America. And on July 6, I hope we have a joint bell ringing of the New York Stock Exchange and the NASDAQ from the Oval Office to really signify the start of the trading of these accounts. Of course, parents don't have to know anything about investing. It all goes into the s and P500. Yeah, okay, but I'm cajoling some of our friends. You would know their names. I Think it would be amazing if we had some of our friends gift a share of the most amazing companies in America. You know, the Facebook's, the space X is the open eyes. How about if they all gave just a share of those companies to every kid in America?
- [145:06]
John
Yeah.
- [145:06]
Brad Gerstner
Being we, we are going to change and reorient how the 70% of people who have felt left out and left behind, they are not owners of capital. Okay. We need to get them on the compounding journey. They need to feel like they're on Team America. They're in the game. This does that for every child. This is not a 529 account for the top 10% of Americans who can afford to save. This is for everybody. And it's so gratifying. I was in Durham last Friday. I adopted a school there. 700 kids, $250 to every one of the kids. Now a lot of people say, well, how did you do that? Well, it's $250 times 700 kids. They made a Google spreadsheet. They got them all signed up. I give the principal $150,000 and she QR codes the money and teach you the accounts. Okay? Everybody in America can adopt a school, raise a little bit of money, go to your principal and say, we want to juice up these accounts for all the kids. Get all the kids signed up and the teachers there. This was a school that 75% black and Latino, serving the rural poor in Durham. The level of excitement, a mom came up to me crying. I never thought my kids would, you know, own anything. The teachers so excited to teach the kids about what it means to own something. I grew up in rural Indiana. We had zero. And as I said to the president, when you're at zero, it's a despondent place to be. You don't know how to get to 1. The hardest move in the world is going from 0 to 1. 1 to 2 is easier and 2 to 3 is easier. Yet we're going to get all of these kids from zero to one on this compounding journey. If you start with 1,000 bucks and you say $50 a month, it's $50,000 at age 18. There's no reason we can't put every kid in America on that journey. And to celebrate our second 250 years, right, we're launching a natural. We're going to launch this as a dividend for every kid in America. So I want to make sure that they all sign up starting in 2027. The 3.7 million kids born in 2027. It will be automatic. Get your Social Security number, you get a Trump account. And then we just need to get every small. We're giving money to the, we have 80 kids, you know, to our, you know, roughly 35 employees. They're all going to get 500 bucks at the end of the year into their Trump accounts. I'm just going to QR the money by my team into their accounts. You guys should do it for all the companies you're involved in and really spread the word. Small, medium, large business, realtors, restaurants, everybody can do this. And so we've created an open source platform of universal private ownership where the families have the title and they have the dignity, the dignity of savings. A 401k for life for every single American citizen. I think it's a game changer for the country.
- [147:54]
John
Yeah.
- [147:54]
Jordy
You did it.
- [147:55]
John
You did it. It was fantastic.
- [147:56]
Brad Gerstner
Fucking did it.
- [147:57]
Jordy
Oh, no.
- [147:59]
John
I remember you talking about this and you know, as much respect as I have for you, I put it in the it's too hard bucket. You know, I put it in the like, this is a thing that is just too hard for anyone, even the best. And fortunately it was not, which is fantastic to see is the ultimate white pill. So thank you.
- [148:21]
Jordy
That's amazing.
- [148:22]
Brad Gerstner
It's a, we're, you know, it's still day one, but you know, we're off to a good start here. And you know, I think in the fullness of time, as the President said, We estimate over 15 years it could transfer 3 to $4 trillion of wealth from people who have it to the people who would otherwise have zero.
- [148:37]
John
Yeah.
- [148:39]
Brad Gerstner
And you know, the president said he thinks it's going to be his biggest legacy. To me, I think it'll be more impactful in the fullness of time that Social Security Security. Because the difference is you actually own this. You actually own. It's not a government program. This is a private account and private ownership that can compound through your life.
- [148:57]
John
And you have to imagine that if you get to that place where there's a whole new generation that's becoming an adult, starting a family with 50, 100, $200,000, that's a down payment on a house all of a sudden that can underwrite more building of houses because there's more buyers in the market. There's, there's a whole bunch of market forces that I think will knock on from this in 20 years that could be incredibly positive. So I'm extremely excited about it.
- [149:24]
Brad Gerstner
Indeed, no doubt about it. It's a, you know, you're Going to, you're going to hear a lot of, a lot out of us over the course of the next several months. But it's, you know, listen, I also should mention I've got the best partner in the world on this. You know, Michael Dell joined me, he and Susan joined me on, on, on this journey. Really helped me over to get it over the last 1 inch line with the administration and then made the biggest philanthropic gift in history. $6.25 billion $250 to 25 million kids. And you know, frankly, I think for Michael and Susan they're just getting started and I think their example that they've set for everybody else, you know, if you have, if you, you guys look at the amount of wealth that's being created here in Silicon Valley, I mean it's, it's really. There is no historical precedent. There is no historical precedent. And the fact of the matter, our charitable, our charities are not prepared or equipped to take 10, 20, $50 billion. Like and a lot of people want to give away this money during their lifetime or you know, within 10 years
- [150:28]
Jordy
of dying and targeted too.
- [150:31]
Brad Gerstner
Right. And in a way, in a way
- [150:33]
Jordy
that there's no scales up or down. It's like you can do the whole state, you can do your county, you could do school.
- [150:40]
John
Yeah.
- [150:40]
Brad Gerstner
And there's not 30% overhead on the charity where somebody's getting paid $10 million. And you know all this stuff happens after you pass away. 100% of it goes directly to the kid.
- [150:50]
John
Yeah. Charity was so vague for so long, it was like great, okay, you gave away half your money but you're actually not transferring until you die and then it's going to go into this charity that will deploy it later. It gets so abstract that I think people, all of those big donations that happened in like the previous era sort of fell on deaf ears and they weren't, didn't feel like they were moving the needle. And so this is just an entirely new way to do it. I love it.
- [151:13]
Jordy
The chat is asking if you have any surf trips planned.
- [151:16]
Brad Gerstner
Wow, I wonder who that's must be checking out my Twitter picture which by the way was at the surf ranch with Raimondo. And the picture, actually some people think it's me. It's not me. That was my then 11 year old son getting barreled at the surf ranch because Raimondo was like telling him how to get into the barrel.
- [151:37]
John
That's awesome.
- [151:38]
Brad Gerstner
But I have to say, I'm 55 guys. I just had a birthday, I'm working hard, I'M working hard.
- [151:47]
Jordy
I feel like. I just can't imagine you being like, yeah, now's a good time to take a surf trip. I feel like maybe a trip to surf Ranch. But, yeah, we gotta stay locked in.
- [151:56]
John
There's a lot of work.
- [151:57]
Brad Gerstner
We ought to get. We ought to get together and do that. By the way, I'm currently signing up somebody who's going to adopt all the kids in Los Angeles. We've got San Francisco already covered. We've got Oakland already covered. And we're going to announce some big things here in the state of California. I'm not giving up on California. Right. We're going to defeat. We're going to defeat the unconstitutional taking tax some people call the wealth tax or the billionaire tax. Like this attack on success, you know, trying to divide wedges, drive wedges between Americans. We're uniting people with the Trump accounts, with the investment accounts. We're raising the floor and getting everybody into the game. And this whole idea that we're going to demonize success and drive Elon out of the state, et cetera. Shout out, by the way, to my junior son, Lincoln Gerstner, who published his first paper this week. And I show up at home, and it's on the economic impact of taxpayers policy in California. I show up at home and he said, hey, Dad, I finally posted that paper I was writing. He's doing it with Josh Rowe, the incredible professor over at Stanford. And then he says to me, he's like, has Marc Andreessen ever retweeted you?
- [153:09]
Kyle Kuzma
I said, no.
- [153:10]
Brad Gerstner
I was like, no, I don't think so. And he goes, I think he retweeted me. And I was like, no, he definitely didn't retweet you, but Mark did. So shout out to Mark.
- [153:20]
John
That's awesome.
- [153:21]
Brad Gerstner
And that's, you know, I think that we are, what people. There's a lot of despondency in California. Yeah, I'm going to take a contrarian position here. Spencer Pratt's going to be the new mayor of Los Angeles. The wealth tax will be defeated. We will pass the Retirement and Personal Asset Protection act as a referendum in California, which will prohibit people from stealing your retirement money or your personal assets. That will get passed. Okay. That will send a shocking message to the rest of America. The rest of America thinks that California is as blue as it gets. It turns out California is pretty purple. Right. And I think that common sense initiatives are going to, you know, reassert themselves in, you know, in the election in November. And I think it's great because we're the fourth largest economy in the world. I know some of my friends moved out and said, listen, California's got it coming to him. My own view is this, as California goes, so goes the country. We cannot see California. It is where we're going to battle for the best ideas that are consistent with the founding of the country. And we're going to, you know, win on those ideas. And so I think we're seeing a lot of progress. Shout out to Sergey and building better California and the incredible work that they did to get us moving in the right direction.
- [154:38]
John
It's fantastic. Well, we've kept you way too long. Thank you so much for watching show and hanging out.
- [154:43]
Jordy
This is. And excited for your next project.
- [154:46]
John
Yeah.
- [154:48]
Brad Gerstner
How much did you sell this for?
- [154:50]
Jordy
Let's go for. Let's go for it. Let's go for a serve.
- [154:53]
John
Yeah. We can only say far away from the microphone.
- [154:55]
Brad Gerstner
I'm going to turn this into a little BG2 and turn the tables on you guys. I need to get some more. Some more the other way. Great to see you. Have a great week.
- [155:01]
Jordy
Great to see you, Brad.
- [155:02]
John
Thank you.
- [155:02]
Jordy
You're the man.
- [155:03]
John
We'll see you.
- [155:04]
Jordy
Cheers.
- [155:04]
John
Goodbye. What a performance. I'm so excited about those accounts. I really can't. I really can't.
- [155:12]
Jordy
Oh, it's so cool being able to scale it up or down. Just going, hey, everybody. At the. Where you went to elementary school, you
- [155:19]
John
know, this was how I first saved money. I had a physical safety deposit box at a bank. Every time I'd get paid, I'd go take out a couple hundred dollars in cash, put it in the safety deposit box. Couldn't really access it on the weekend when people were, oh, you want to go spend money? You want to go to the bar? So save the money. Watch it physically grow. This is kind of a similar example because you'll put money in, but you won't be able to pull it out until you're 18. So it'll just compound and compound and compound.
- [155:43]
Jordy
Brad Hunt asked John about his new basketball.
- [155:47]
John
So is the car here? We have the basketball. Nick, can you go get the basketball that's in my driver's seat or in the passenger seat? Because we were at Laurel Supply yesterday. Which makes Erewhon look like a 7 11. It makes. It makes Erewhon look like a 7 11.
- [156:05]
Jordy
So above no Oral supply is the new Erawan in. In la. That is not.
- [156:12]
John
It's very nice.
- [156:13]
Jordy
Not an actual Erewhan.
- [156:14]
John
Food was good.
- [156:14]
Jordy
Everything is a one to One copy of Erewhon.
- [156:17]
John
They didn't.
- [156:19]
Jordy
It's like dis. It's disorienting. They did not try to differentiate a single thing. They copied every item on the menu. They copied every delicious food. Every. Every single item. In my culture, that's very offensive because if you're gonna go through the process of creation.
- [156:35]
Michael
Yeah.
- [156:36]
John
You think people would be able to do something differently. Okay. But outside of Laurel Supply, I receive from. I get stopped by a person who I believe is in the chat, and he says, here's a basketball. I got this for you because he's raising money for a company, Punter, and it says, invest in the future of sports. Punter us Invest. And he had this basketball with a QR code on here. What a unique way to draw attention to your company. What a unique way to pitch someone. And you know, we love a basketball
- [157:12]
Jordy
in the studio, although we use a software.
- [157:14]
John
We love playing basketball because there's a lot of camera gear. So we don't throw a full size basketball. We use a foam one. But thank you to the Punter team for making this possible. Very interesting drop. Very fun. Very fun way. What a great way to end the show. We had an NBA star on the show and we finished with a basketball.
- [157:34]
Jordy
That's right.
- [157:34]
John
Anyway, have a great weekend. We'll see you on Monday.
- [157:37]
Jordy
Have an incredible weekend.
- [157:39]
John
Have an incredible weekend. Leave us five stars on Apple, podcasts and Spotify. Sign up for our newsletter tvpn.com and we will see you on Monday. Goodbye.