John (2:47)

And it's particularly relevant today because I'll read the intro. Yes, this is January 14, 2024, over two years ago. He says, I think we can all agree that GPT4 completes many tasks at human level proficiency. It is imperfect in odd ways. It can write software like a smart MIT undergrad, but can't do basic task planning like an entry level ea. It speaks all languages, but can barely do math. Suppose the progress doesn't stop. Just like GPT4 was better than 3. GPT5 is capable of basic agentic behavior that is able to accept a task, work on it for a while and return results.

Ben (3:21)

Nailed it.

John (3:21)

And of course today OpenAI has released GPT 5.4, which does exactly this quite well. The reviews are coming in and they are quite, quite good. Daniel continues, Some modest fraction of upwork tasks can now be done with a handful of electrons. Suppose everyone has an agent like this they can hire. Suppose Everyone has 1,000 agents like this they can hire. What does one do in a world like this?

Ben (3:53)

So let's go through them one by one. There's 1718 questions, something like that. First, let me tell you about Labelbox reinforcement learning environments, voice robotics, evals and expert human data. Label Box is the data factory behind the world's leading AI teams. So he kicks it off with an easy question. In a post AGI world, where does the value accrue? People were debating this at the time. Application layer versus foundation model layer versus infrastructure layer. Value has definitely accrued to the infrastructure.

John (4:25)

There's a hair layer. I mean, even post AGI, John's new haircut is paying.

Ben (4:30)

Paul Graham wrote a whole piece about how brands are important. We'll cover that tomorrow. But he compares it to the Quartz crisis and the Watch world and has a bunch of thoughts about value in the post AGI era. But just looking back in the last two years, value has clearly accrued to the infrastructure layer. So that means chips, packaging, power, et cetera. And this is the situational awareness trade. By and large, Nvidia basically captures, and did for a While, more than 100% of the profits from the AI boom because so many of the other companies in the AI space were losing money. And so the foundation labs are losing money. Nvidia's profit margin went from like 30% to 60% gross margins and it's borne out in market cap. So Nvidia added 3.2 trillion in market cap from when Daniel wrote this piece. And I remember listening to him on Strathecary talk to Ben Thompson alongside Nat Friedman and say, yeah, based on ChatGPT, Nvidia seems sort of undervalued. And I was like, oh well, if they're saying it on Ben Thompson's Stratecheri podcast, it's obviously priced in. Everyone knows this. And I was wildly wrong. Never doubt yourself. But what's interesting is that the rest of the platforms did not see 3x gains. They did not add $3 trillion in value. Microsoft from January 2024 to today is only up 4%. Amazon's up 30%. And then you do have OpenAI anthropic XAI in the private markets. The gains there, they've been huge and staggering. And it's like the fastest growing companies in private markets history shaking the venture capital world. You're either in or you're out. It's a huge deal. But you add them all up to 4 trillion.

John (6:21)

So crazy when you think Satya in many ways went on such a generational run and you got a 4%. If you hadn't looked at the stock price at all, you would think, oh, it's got to be up what, 40, 40%. Now it's up 4%.

Ben (6:38)

And so that was Daniel Gross's next question. What happens to Nvidia and Microsoft? These are the two interesting players at the time, some of the biggest companies, the most AI aligned. Nvidia absolutely crushed. Revenue tripled from 60 billion in fiscal year 2024 to 215.9 billion in fiscal year 2026. Microsoft has been far less dominant. So Azure growth actually is accelerating. It's at 40% year over year, but the stock only returned 4%. As we said, the market punished the $80 billion in AI CapEx that Satya Nadella has been telling to investors because everyone's asking why? Well, I could be in Nvidia and they don't need to really invest that much because they're a fabless semiconductor design company. Their gross margins are increasing, they're printing cash and you are saying, okay, you gotta spend $80 billion and we don't know when we're gonna get the profits from that. So there's an open question there. So when it comes to the picks and shovels trade, you don't wanna tie yourself up to an individual startup or a foundation model lab. You just want to own the the simplest thing that value will accrue to Nvidia all The way they were the clear winner of the picks and shovels trade Microsoft's infrastructure play. I think it's a good decision. It's just the bets have yet to pay off for shareholders. Much more pointed question Daniel Gross asked is copper mispriced? Was copper mispriced in January of 2024? The answer was oh yeah, majorly. Now, raw materials don't move like meme stocks. So the actual move copper was $3.75 a pound in January of 2024. Two years later it went to an all time high of $6.61 a pound. So it's not like it even doubled. But that type of move in a basic material that we've been mining for hundreds of years is remarkable. And that's because AI uses a lot of copper. Nvidia's GB200 NVL72 server rack use copper cables. There's 72 GPUs wired together, but you need 5,000 copper wires to get it all to work together. If you stretched out all of the copper wire in an NVL 72 from one side to another, it would go two miles long. And this is one server rack. Like this is like. It's not like going across the data center. This is not taking the data from AWS east to California. This is within that one server. You stretch out the copper wire, you're going two miles. It's an incredible amount. A single 100 megawatt data center, which is a data center for ants by modern standards, needs around 3,000 tons of copper. I think that's like half a million dollars or something like that. When you multiply it all out or it's data centers broadly will be using half a million tons of copper annually in a few years. And people are actually saying that copper is the new oil. But there are a bunch of things that are also the new oil. So in the AI buildout, so it's so complex, there's bottlenecks everywhere. So you got to take that with a grain of salt. But copper was certainly Today it's looking

John (9:49)

like oil is the new oil is the new oil.

Ben (9:52)

What is crude at

Tyler (9:55)

80?

Ben (9:55)

So it was at 70 before the Iran war broke out, there was predictions that it would go to above 100. Oil is another commodity that does not move in the same fashion as a

John (10:08)

meme stock or a Except for today.

Ben (10:10)

Except for today, big move today, up 8%. But typically as prices go up, the firms drill more and the prices reach equilibrium. U.S. drillers aren't rushing to increase Oil production is on the front of the Wall Street Journal Business section today. The Middle east is on the cusp of a prolonged conflict that could push oil prices to heights not seen in four years. For now, American oil drillers are sitting this one out. The US oil benchmark settled at 74.66a barrel Wednesday, the highest front month settlement since the 12 day exchange of Israeli, Iranian and American strikes last June. But West Texas oilmen it makes but to West Texas oilmen, it makes little sense to add expensive rigs and boost production when the war could be short lived and crude prices drop. So that's what's happening in the oil markets anyway. Moving over to real estate, Daniel Gross asked, is San Francisco the new Detroit? And I'm not exactly sure what he means by new Detroit, because new Detroit meaning like the old Detroit when it was Motor City and they were building amazing cars there, or the new Detroit in the sense of like Detroit today, is a hollowed out shell of what it used to be a former boom town. The one thing is clear is that SF is back. SF is completely booming. Office vacancy Office vacancy fell from 36.9% to 33.5%. OpenAI has a million square feet of offices. Anthropic is a 25 story tower. Sierra, an application layer company, signed 300,000 square feet of office space in San Francisco. The bay area received 78% of AI venture capital in the first half of 2025. And there is a flip side to this. So overall employment in San Francisco is still down relative to the pre pemmed pre pandemic. Some people left some legacy companies aren't hiring as much. All the hiring is happening at the AI Startup Lab area, but housing prices remain strong. It's certainly not a hollow shell by any means. And if you've ever visited San Francisco, you can tell that it's cleaner and safer than it has been in previous years. So AI overall was not a total rethinking of San Francisco and it did not become open source or the hub of activity. And tech didn't move to Miami or New York or Austin. Los Angeles like San Francisco is still where it's at. The next question he asked how does AI change wealth inequality? It's sort of too soon to tell. The data is not entirely clear. The data hasn't moved that much, but there are some interesting studies. So the International Monetary Fund released a working paper in 2025 that said that AI could reduce wage inequality. Reduce wage inequality. So the amount of money that people make on an annual basis could be, you know, reduced. How is that possible? Well, what they say in this paper is that high income tasks, the job of a lawyer, the job of an executive, the job of a management consultant, those will be automated before the job of the machinist, the gardener, the street sweeper. And so you will see wages at the high end fall while wages at the low end remain stable. And also at the bottom end, you have the minimum wage. And so you will see higher end wages go down, the bottom wages will stay the same and that will reduce wage inequality. On the other side, AI could worsen wealth inequality because it's concentrating capital returns into tech owners. So the OECD found that wage growth was actually the strongest in low skilled occupation assemblers. I didn't even know that was a job. But if you're an assembler, you've seen your wages increase by 11.6%.

Mark Gurman (13:58)

There we go.

Ben (13:59)

You know who's had it the hardest? The CEOs, the high skilled workers. Those chief executives saw their wages increase by just 2.7%. It's rough out there for a CEO, apparently brutal. This is mostly because of minimum wage increases, but in general we're seeing wage inequality decrease, but wealth inequality increase because there is incredible stock market concentration right Now. So the Mag7, the seven biggest tech companies in America, they now comprise 32% of the S&P 500 market cap and they drove 42% of total returns in 2025. So if you're invested in Tesla, Meta, Microsoft, Apple, Google, Amazon, et cetera, Nvidia, you did very well. Your wealth increased. But if you weren't in those and you had a broad index, or you didn't have a lot of capital to begin with, you were left behind. So that's increasing wealth.

John (14:58)

Paul Graham shared two days ago, companies grow fast now. That's the reason economic inequality is increasing, not some sinister policy shift. Yes, he was highlighting Anthropic's recent growth. He said when companies grow fast, it makes founders doubly rich. The company not only hits a given revenue number sooner, but it is more valuable when it hits it because the value of the company will be a multiple of the growth rate. People who don't understand the math of valuations can't imagine that founders would get so rich naturally. Whereas to founders and investors, it's the most obvious thing in the world. This is one of the reasons there's such a disconnect between the tech world and politicians.

Ben (15:34)

Yes. So if you want to invest in the mag 7 or you don't head over to public.com investing for those who take it seriously. Stocks, options, bonds, crypto, treasuries and more with great customer service. So this is also true in private markets. As Paul Graham mentioned. AI startup mega rounds $110 billion for OpenAI, 30 billion for Anthropic. This concentrates enormous private wealth among a small number of founders and investors. So wealth inequality AI will probably change it. At the very least it will change it as much as previous technology, technological booms. If you were the founder of Instagram, you did very well because there was a lot of wealth creation. All of a sudden in one major tech boom, mobile AI is broader and bigger already than mobile. So moving over to energy and data centers, if it does become an energy game, what's the trade? It did become an energy game and the trade was buy everything basically because every energy thing basically did very well. Anyone who got the trade correct did very well. Vistra returned 321%. It was the second best performing S&P 500 stock of 2024. You know who beat them in 2024? Palantir. Palantir mooned. They were already in the S&P 500. They did very well. But Vistra was sort of the secular energy winner. Constellation Energy tripled in size after ChatGPT's launch. NRG Energy, which is a great name. NRG gained 95% in 2025 alone, surged

John (17:12)

700% in 12 months. And that's without I think even having any producing any energy. Just the idea that they produce energy someday.

Ben (17:20)

Yeah. Nuclear went on a tear. OKLO is in more of like the startup pre revenue camp I would say, or pre product camp. But Microsoft signed a $16 billion 20 year PPA to restart Three Mile Island. Google signed with Kairos Power for 500 megawatts of small modular reactors and Meta contracted 6.6 gigawatts across multiple nuclear providers. So energy was just such a great trade from the beginning of the AGI

John (17:51)

boom in 2024 across the next step, across the entire data center supply chain, which components are hardest to scale up? 10x what is the chip on wafer on substrate of data center?

Ben (18:04)

Yeah. So chip on wafer on substrate, that is TSMC's secret sauce. That is the most gating factor in scaling TSMC's 2 nanometer chip production. It's what allows them to package HBM and the GPU all on one chip. And TSMC reported that they were sold out years in advance. It was a huge bottleneck in the data center world. The biggest Bottleneck was probably power transformers. We heard a lot about this lead time for new lead times for new power transformers reached over three years in some cases with a 30% supply shortfall. High voltage circuit breaker I remember my

John (18:45)

mom was, my mom was in escrow on a condo.

Ben (18:49)

Really.

John (18:49)

That and closing was contingent on the development getting a transformer. She waited like six weeks or something like that. They were like we don't know when we're going to get it. And she ended up just backing up. Well, just because there was, there was so much demand.

Ben (19:04)

Yeah, I mean we really got caught off, we really got caught off guard by this. I mean transformers. The cost surged 150% since 2020. It's 100 year old technology. It's not, it's not new. It's not crazy innovation. Overnight success. Overnight success. But it became the binding constraint on how fast data centers could connect to the grid. If you are running a transformer company, you're selling transformers. You got to get on shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces and now with a agents. If you're selling transformers, start running some.

John (19:42)

Imagine checking out for a transformer with shop pay.

Ben (19:46)

It'd be incredible. Incredible experience. Coal was coal mispriced, sort of, but not nearly as much as copper. Thermal coal prices actually declined 22% in 2025. But they rebounded a little bit by early 2026. Coal stocks did fine. Peabody Energy gained 34% over 12 months. Console Energy was up 37% on the operational side. US coal fired generation.

John (20:13)

I love how you're like coal stocks did fine. We're up only 34% and 37% percent.

Ben (20:20)

I mean compared to everything else that's doubling and tripling. It's like, nah, you know, okay, you know, if you were like I'm the coal guy, I, I, I believe coal is the thing.

John (20:31)

Like Peabody energy is up 73% in the last six months.

Ben (20:37)

Just kidding. Only 37.

John (20:40)

Only up 161% in the past year. Yeah, only up, only up 728% in the past five years.

Ben (20:49)

It did, it did fine. It's just not as exciting as copper and it's not as exciting as nuclear. Coal generation surged 13% overall in America, 23% in Ohio, 58% in Oklahoma where they're sort of data center hotspots. There's more data centers in those areas. So bringing more coal onto the grid allowed for more load balancing. Anyway, nations, who wins and loses, take a wild guess at who won. America, baby. America won. Next question. But it's really true. Like, the stats are crazy. The United States is truly the dominant winner of the of the last two years in the air. $109 billion in private AI investment in 2024 alone, with way more. Now if you look at 200 billion capex guide from AWS. 110 going to OpenAI, 30 going to Anthropic. Tons of money going into XAI. Like the money is truly flowing in America. In 2024, China had just 9.3 billion invested in private AI companies. There's 470 billion cumulatives since 2013, more than all other countries combined. In America, the US produced 40 notable AI models in 2024 versus China's. Now, the game's not over. Lots of countries are making big investments now.

John (22:15)

And you can't forget France's 30 million

Ben (22:18)

euros they put in. 30 million. Yeah, it's serious. It's serious. Well, let me tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. Just do it. So next up, India. What's going on in India?

John (22:35)

DG says 250 billion of India's GDP exports are essentially GPT4 tokens. What happens now? John says this is starting to take shape, but it's still early. Situational awareness is placing some short bets which map to the declines in hiring.

Ben (22:50)

I think they were short Infosys, which is an IT outsourcer. You need some software written, you will basically send a prompt and basically get back code, which is what these models are fantastic at. And so that does seem like some really, really steep competition in the near term, even in the long term. And so I think he's right to question that. Although we aren't seeing it in the overall India hiring data, the overall Philippines hiring data just yet, but it is showing up a little bit in India's IT exports center. So major Indian IT firms collectively in 2024 and 2025, they shrunk by 58,000 employees, roughly. And that's a dramatic reversal from the previous three years, 2021 to 2023, when they were staffing up, they added 360,000 employees.

John (23:45)

Yeah, the only thing here is that big tech this like, is in some way is like a proxy for big tech hiring because a lot of the labor that's happening at these firms is effectively offloaded to some of these firms in India. So it's like, in some ways it's like if there was over hiring in big Tech, there could have been effectively over hiring here. And then it's retracing.

Ben (24:10)

Yeah, makes sense.

John (24:12)

And yeah, you didn't put it in here. But it's also interesting to look at the hiring activity in the Philippines, which is not as dramatic to the downside as one might think.

Ben (24:26)

What do you mean?

John (24:28)

When we looked at the data, I think it was a couple weeks ago. It's not like there was just like jobs falling off of a cliff. It's relatively stable.

Ben (24:36)

Yeah, there's sort of these concentric circles with all of these stats. If you look at Block, what's happening at Block? Well, they lost 50% of their workforce. That's a massive cut. And then you look at tech hiring overall and it's like slowing down. You look at white collar work and it's like, we're not adding a lot. It's maybe shrinking by 0.1%. And then you zoom out to the American economy and it's like it's actually growing. And so you have these like concentric circles of impacts. And so if there's like one company in India that's doing it, outsourcing, that might be hurt. And then they're the least, they're the worst performing, but the best managed one might be able to make it through. And then you zoom out and you're like, well, the overall Indian economy is doing okay, and then overall the global economy is doing okay. And so there's all these like, like cascading effects. And I think the interesting takeaway was when somebody like Dario says 50% of white collar work might be automated. Like, it's going to be the bottom 50%. It's not going to be the, it's not going to be at random. It's not going to be, flip a coin if you keep your job or entry level. It's going to be, it's going to be. Were you not at the top of your. Where you're not at the top of your game. So the question is, if we are displacing software engineers, will software engineers become machinists? This is what Daniel Gross asks. He says, what is the Euclidean distance of reskilling in prior revolutions? And how does AGI compare? The typist became an executive assistant. Can the software engineer become a machinist? So we're not seeing this yet. Software engineers aren't grabbing blue collar jobs just yet. But there is a divergence that's starting to show up in the data between software developers and programmers. So programming jobs are in decline, but software engineering jobs are actually growing. And so I think what's happening is that as coding models and agentic systems allow for building systems at higher levels of abstraction, demand for AI engineers has grown 143%. And so if you're going to hire someone to help you build software, you want them to be like AI native. You want them to go beyond full stack or, which typically meant you could do front end in JavaScript and back end in Python. And now full Stack or AI Engineer means everything from prompt to design to product development to deployment to operations and DevOps to database migrations to front end and back end, because all of that is going to be handled by Agentix Systems. And so entry level hiring at top tech firms has dropped 25%. Maybe AI, maybe over hiring from COVID overhang. We'll see. Internship postings fell 30%. So the decision is either reskill upwards to more of a manager of Infinite Minds, I think was the quote but manager of agents role, or yes, it might be time to work on those machinist skills. I'm extremely bullish on Tyler. We watched him assemble the first iPhone ever in America. And he's also an incredible software developer, not really a programmer because he doesn't really know the programming languages that he employs, but not true. That's not true. There we go. Yes, I think Tyler makes it whether he becomes the the manager of Infinite Minds or the machinist.

Tyler (28:01)

I am pretty bullish on the light blue color thesis, which is that you'll have robotics, but you'll just have. So you'll be in the machine shop, but you're just using an iPad. You're not actually working on stuff.

Ben (28:13)

Yeah, I think we drop you in a Nike factory. You're running that place in like two weeks, guaranteed. I'm not kidding. I'm so bullish on young people who can use all the tools and actually go and understand the leverage that they're getting from the modern systems natively and not need to fall back to old habits.

Tyler (28:33)

Yeah, there was a good journal article yesterday about the Colgate head of AI and it was very interesting because I was like, oh, this is like, I feel like I could do a pretty good job at this coming after.

Ben (28:46)

But you know, he's just basically telling

Tyler (28:48)

everyone like, yeah, guys, you actually got to use AI. Like, despite what these, these random surveys,

John (28:53)

guy has had one job in his life working on a, on a podcast and thinks he could go see go dominate in the big toothpaste space.

Tyler (29:00)

Yeah, I love the Confidence athletes.

John (29:03)

You are a corporate athlete.

Ben (29:04)

You are a corporate athlete. We got to get him. We got to get the Colgate guy on the show and see. See whose takes are better. Tyler Cosgrove or Colgate AI guy.

John (29:13)

Anyway, the chat's saying you're not. They don't think you're a supply chain guy. Tyler, I think.

Ben (29:18)

I think you could pick it up. Ask. Ask LLM Cloud. What do I. Yeah, make no mistake for Cloud, right? Let me tell you about what happens if I hit. If I hit this. Let me see. Does that take. Does that take over FIN AI, the number one AI agent for customer service? If you want AI to handle your customer support, go to FIN AI.

John (29:41)

Electrification and assembly lines lead to high unemployment and the New Deal, including the Works Progress Administration, a federal project that employed 8.5 million Americans with a tremendous budget. Does that repeat so clearly?

Ben (29:55)

Hasn't happened yet. We also haven't seen high unemployment yet. So we'll see. The Trump administration did launch America's AI Action Plan in July of 2025. We talked to one of the authors of that AI Action Plan, Dean Ball, yesterday on the show, and they issued some executive orders on AI education and skilled trades. But the Department of Labor and the Department of Labor awarded $84 million in apprentice apprenticeship expansion grants. But that's like France money. That's like, not enough to do to really make an impact. Overall, US workforce development spending is at 0.1% of GDP, which is second to last among OECD nations. I wonder who's actually last. We should look that up. Anyway. No program currently approaches the scale of the Works Progress Administration or the New Deal. I think this will change very, very quickly if the data comes through that we're actually shedding tons of jobs. America's very good at creating new jobs and running the printing press. And this is the whole reaction to the Citrini article anyway. He also asks a more philosophical question that doesn't really have a detailed answer, but I'd love your take on it. Jordi, too. Is lifelong learning worth investing in something worth doing beyond the economic value of mastering the task? It's a very abstract question. It's a very personal question. I tend to think. Yes. I tend to think that on Maslow's hierarchy of needs, you need food, shelter, family, friends, clout, or whatever. At a certain point, learning a skill for the sake of learning that skill is edifying, even in a world. It's like going to the gym. I was listening to Sam Altman talk about how kids that are Born today will never be smarter than the smartest AI system. And that's weird. That's different. But I was thinking about, like. But like, I was. There was a time hundreds of years ago when you could actually be this, the. The best thing in the world, the best option for, like, carrying lumber, other than like, maybe an ox or something. But like, in general, like, before we created machinery, like, before we created the car, like, you could be the fastest person. And then as soon, as soon as the. The ZR1AX was released, you didn't stand a chance. And I had to explain this to my son at some point. He's very interested in cheetahs. And I was telling him, like, cheetahs are the fastest animal. And he was like, but is it faster than a car? And I was like, not even close. Like, me in a car, I'm smoking that cheetah. I am slower than that cheetah, but I'm way faster in my Cadillac.

John (32:42)

DG says something worth doing beyond the economic value of mastering the task.

Ben (32:46)

Yes.

John (32:47)

And the way I would kind of flip this, I feel like most of the gains in my life have come from mastering myself or understanding myself, learning about myself, and then understanding the world and then combining those two things. In a way, it hasn't been about mastering any one specific task.

Ben (33:06)

Yeah.

John (33:08)

And so I still think there's tremendous, tremendous gains to, again, understanding yourself, understanding the world. How do these two things fit together?

Ben (33:19)

So I agree with you on just the level of like. There will be not just tasks to master, but, like, ideas and combinations of skills that will be valuable economically. But even in an ASI world where there is no economic value to any task mastery, I still think it is worth investing in lifelong learning because that will be edifying. That will be satisfying.

John (33:47)

Yeah, just enjoyable.

Ben (33:49)

It's becoming a painter, becoming someone who gets joy purely out of the process of painting the landscape. When cameras exist, when generative AI exists, it can still be edifying and valuable to. To sit there and look at a landscape and paint it and wind up with the result, even if the result is not economically valuable or anywhere near what you could get with technology like a camera or Gen AI. So very abstract, but still something fun to think about before we move on to inflation, let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. So if AI is truly deflationary, how would we know what chart or metric would show it first? And you could look at AI API pricing as probably the best answer here. So you know, there are certain tasks that AI can do now. And so those tasks have moved from being limited by regulation or human output or the population workforce to the compute allowed or the compute allocated. And the cost of compute is falling. So TVs were expensive, they got cheaper as we made more and more factories that were more and more automated that could produce ever cheaper TVs. And that's why when you look at the inflation trends, you see health care, education, anything that's highly regulated. There are only so many lawyers that are allowed to pass the bar, there are only that many doctors. And so health care has increased in cost. Where TVs has been this like knockout drag out fight between the most ruthless companies all over the world and the price of TVs has fallen. And so if you start putting more of those, more of those jobs on the AI, on the AGI curve, you see deflation. Where should we see it first? We should see it in AI API pricing and GPT4 equivalent inference costs have collapsed. In late 2022 they were, which is like right before GPT4. I think GPT4 came out January of 2023, it was $20 per million tokens. In December of 2025, the same model, $0.40 per million tokens. So this is a 50x decline in three years. I think that you can even get more intelligence for cheaper depending on how you're inferencing these. You can run some of these models locally and the energy cost is even cheaper at that point. So this 50x decline in three years, this is falling faster than PC compute costs. It's also falling faster than dot com era bandwidth costs. And so this should be the leading indicator for downstream service deflation. In any example that you give of like, oh, I was just able to use ChatGPT to check my. I talked to somebody who said they, they loved ChatGPT because their check engine light came on. They were able to take a picture of it and it identified the car, told them what they needed to do. And they felt like when they went in for servicing they weren't going to get raked over the coals by their mechanic because they had sort of a mechanic in their camp in their fighting in their court. And so this should effectively act as like, okay, you have your own mechanic on your side and then you can do it yourself, but you can also just go in and negotiate and say, hey, I know that the fair price for this is 50 bucks, not 200, so give me the good price. And so you should See that? You should see that.

John (37:19)

Yeah, you can assume that tokens are going to get cheaper and more effective indefinitely. But all these new product launches, things like OpenClaw, are actually expanding the number of tokens.

Ben (37:30)

Yes. And so you are seeing deflation, but then you're also seeing Jevons Paradox and increase in demand. And that's why overall growth is increasing. So how should one.

John (37:38)

Historically it's like one person, one AI chat, you're only using so much, then you have agentic products, then you can actually multiply the number of agents that an individual can be running and the output goes through the roof.

Ben (37:54)

It's time to head to Gastown, baby. So he asks this follow up question. How should one think of deflation if demand for intellectual goods continues to grow, grow as production costs go down, AI API costs are plummeting, but AI lab revenues are skyrocketing. So prices fall, volume surges, total spend increases. And the really interesting wrinkle is we're living through a SaaS apocalypse, we're living through the Citrini article. But SaaS vendors are imposing like an AI tax of I think the stats were somewhere between 20 and 37% of renewals. So AI vendors, you go for your renewal and they say, hey, we got AI features. Now you gotta pay a little bit more. SaaS revenues are still increasing and growing even as the underlying cost to build software approaches zero. This mirrors computing's history. Under Moore's law, each unit gets cheaper, total spending grows as new use cases emerge. So classic Jevons paradox. Let me tell you about figma. No matter where your idea starts, figma make cloud code, codex or a sketch. The FIGMA canvas is where ideas connect and products take shape. Build in the right direction. With figma. So geopolitics. This was interesting because he put this question in the geopolitics section. That feels much more like a server AI buildout question. But he asks, does interconnect actually matter? And I was very confused because interconnect typically refers to sort of like the ethernet cables between servers or like NV link or what TPU is doing. Ironwood between the three Taurus topology. And I think that the answer to that is like absolutely. In large GPU clusters, 30 to 50% of training time is spent on inter GPU communication, not actually computation. And so all the hype around TPUV7 Ironwood is due to their 3D Torus technology. That topology that connects 9216 chips together. Nvidia's NVL72 connects 72 chips together. Interconnect is incredibly important. I'm wondering if the fact that Interconnect is in the geopolitics section is maybe talking about the interconnections between Samsung and sk, Hynix in South Korea and Taiwan, TSMC and America. That's obviously relevant and we'll get into that in the next question. But it is both are incredibly important. So yes, I do think Interconnect actually matters no matter where, no matter how you read this question. The bigger question and the interesting like hot take question he has in here is does node process matter if the country has more energy? So China has not been able to get their semiconductor manufacturing. Their fab champion smic. They have smic, which is the TSMC equivalent, they have Huawei, which is the Nvidia equivalent, and they have SME, which is their ASML equivalent. They have not been able to clone TSMC to the level of Taiwan Semiconductor, but they can produce 14 nanometer chips. And so the question is usually they take those chips and they put them in just random consumer electronics goods that they, they ship over here. So if you go to China and you want a co packer or manufacturer to build you something and you're like, yeah, I want it to connect to the Internet or I wanted to have a speaker inside, they're like, great, we will fab a 14 nanometer chip or something even less frontier than that. But can they just marshal a ton of lagging edge capacity and then just say, hey, you know what, we have cheap energy, we're burning coal, we have nuclear weapons, we have the Three Gorges Dam, we have hydropower, we have so much free energy, let's just spend 10 times as much energy on the lagging edge. Can we achieve AGI that way? And it seems like, no, it seems like leading edge nodes are incredibly important. You can't just throw a ton of lagging edge 14 nanometer chips at the problem. At least with current architectures. Now this might change, but no frontier model to date has been trained on hardware older than five. All the leading chips, that's Blackwell, Google's TPUV 7, AWS's Trainium 3, they use TSMC 4 nanometer or 3 nanometer process. And I think when we dig into Grok and Cerebras and some of the newer stuff that's coming, everyone is saying we want to be on the most frontier node. We don't want to go backwards on that front. So China's best effort, Huawei's Ascend 910C is on SMIC's 7 nanometer Class D DUV process. They're not. It's extreme ultraviolet lithography. They're a deep, deep ultraviolet lithography process that's competitive for inference but requires dramatically more chips and energy for training at scale. So brute forcing AI progress through disregard for energy consumption. It feels like it still hits economic walls at some point. And then there's also the question of how valuable, like are the weights, what are the nuclear weapons or is it the actual deployment? I was listening to this conversation about what are the geopolitical implications of AI. Is it that you have. Okay, yes, you have the genius, you have the 2000 IQ God model, but you can only really ask it like one question. Is that what's valuable or is it you have 1000 country of geniuses in a data center and you're able to marshal effectively 10,000 cybersecurity experts for each person on the enemy team. And there's just 1,000 people that are trying to hack your phone and 1,000 people that are trying to hack Tyler constantly. Is that is the inference. Actually what matters is the compute. Where the power comes from, from as opposed to just the training. Training is obviously important, but inference might also be important. So. So there's a. There's a big question there.

John (43:57)

And last but certainly not least, dgs. What is the likely Taiwan event and what would be a leading indicator for it? John writes, a Taiwan blockade would be the biggest trigger, but Taiwan Strait tensions are already escalating. China conducted joint Sword 2024B exercises in October of 2024, surrounding Taiwan with coordinated military operations in December 2025. Justice Mission 2025 deployed over 100 aircraft, 90 crossing the median line. 13 warships and 27 rockets fired from Fujian. 10 rockets landed in Taiwan's contiguous zone.

Ben (44:35)

Contiguous zone. Contiguous, sorry, 12 to 24 nautical miles offshore. So they're just like firing rockets and being. And like they didn't hit land. They're just. You can see them from the beach probably 10 miles offshore, 12 miles offshore. I think that it's like just over the horizon.

John (44:53)

Yep. China also recently separated peaceful from reunification when talking about Taiwan. And their 2026-2035 year plan gives you an idea of where things might be going. TSMC is planning ahead, working on a FAB complex in Arizona which Tyler visited. Should be able to handle 30% of total advanced chip production at scale. But it's on a knife's edge if

Ben (45:16)

you want to know roughly how far that is. You've seen Catalina island off the coast of LA.

John (45:22)

Yes.

Ben (45:23)

Catalina Island's, I think, 26 miles, and so imagine.

John (45:26)

So very visible.

Ben (45:27)

Yeah. You can see Catalina island from Long beach and imagine a missile coming and landing, like, halfway between where you are and Catalina Island.

John (45:36)

Crazy. Yeah. The question is, how does Iran and the conflict there update China's kind of thinking on this? There's some of the intel accounts have been sharing. Who knows if it's true that China actually has operatives in Iran, like, kind of learning in the same way that the US has learned from Ukraine specifically in regards to missile capability. So wild, wild time. And yeah, it just feels like a day hasn't passed so far since this was published that a Taiwan event feels less likely than it did the day before.

Ben (46:24)

Yeah. I think that's why Palmer has been trying to message around the blockade specifically as being like a line in the sand, because that's somewhat of an abstract concept. Because if a blockade happens, it could be very bad. It could be the start of a turning point, but it would not be a hot war. It would not be boots on the ground. It would not meet the level of, like, a declaration of war that many people would. Would wake up to. And so he's been trying to message that, like, no, blockade is the start of something bigger. We need to be aware, and we need to hold the line on not allowing a blockade to happen anyway. We will continue following that. But first, let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agents to deploy web apps, servers, databases, and more. While Railway automatically takes care of scaling, monitoring, and security.

John (47:21)

Let's head over to MouseTwitter.

Ben (47:23)

Mouse Twitter is.

John (47:24)

Mouse Twitter is on a roll. Scott Wilson from Mouse Twitter says a block of Parmesan is an elite on the go snack. This eight ounce block has 80 grams of protein and 64 grams of fat.

Ben (47:36)

I don't. Parmesan is like the worst cheese to just chomp on.

John (47:40)

Disagree. Disagree.

Ben (47:42)

It's so hard.

John (47:43)

I know.

Ben (47:44)

I feel like it's gonna.

John (47:45)

I know, but Elite snack. I agree. I haven't been snacking on Parmesan since I was probably.

Ben (47:54)

Oh, it's such an elite snack. I've never once caught you snacking like a mouse on a block of Parmesan cheese.

John (47:59)

I don't eat like a mouse.

Ben (48:00)

Stated preference versus revealed preference.

John (48:03)

I don't eat much like a mouse.

Ben (48:04)

Fake mouse.

John (48:05)

But as a kid, I'd have, like, a bunch of big carrots and some blocks of Parmesan and I'd just be going Mouse mode.

Ben (48:12)

Mouse mode. That's good. Let me tell you about Gusto Mode. The unified platform for payroll, benefits and HR built to evolve with small and medium sized business businesses.

John (48:21)

So if he says it's on Slack, bro. It's in the drive. I just put it in the notion, bro. I literally sent it to you on teams. Did you check the airtable, bro? It's in the box, bro. It's single sign on. It's on Octa, bro. No, you need the Yubikey. Check your deal, bro. It's Augusto. Check Outlook, bro.

Ben (48:38)

Let me actually tell you about Okta. Okta helps you assign every AI agent a trusted identity. So you get the power of AI without the risk. Secure every agent. Secure any agent.

John (48:47)

This morning.

Ben (48:48)

I like that riff. This is a copy pasta from the. It's on Tubi, it's on Hulu, it's on Zoobie, like all the streaming services. Anyway, what happened this morning?

John (48:57)

This morning, President Trump gave a phone interview in which he said, I fired Anthropic. Anthropic is in trouble because I fired them like dogs, which you don't fire. You don't fire.

Ben (49:12)

You don't fire dogs. I would have fired my dog years ago. He's the least effective dog.

John (49:17)

Yeah. Isn't the phrase, he died like a dog?

Ben (49:20)

Yes, yes. He's just adapting that.

Tyler (49:22)

But he sent Anthropic to the farm.

Ben (49:24)

No, if he's comparing them to dogs, it's man's best friend. This is bullish. He's saying, they're my dogs.

John (49:33)

This also coincided with Anthropic, I guess, officially being designated as a supply chain risk is again, not something that I've seen a single person in the industry actually push for. From OpenAI to Amazon to Apple, pretty much everyone across the board.

Ben (49:56)

Even Elon, I don't think has been like, outspokenly for this because he, I mean, Dean Ball was talking about how Elon sort of went through a lot of this with the. During the Biden administration. And so Elon's usually pretty opportunistic about. About dunking on competitors, but in this regard, it feels like he's. He's been sort of quiet. I don't know, maybe I just haven't. Maybe I missed the post.

John (50:20)

But yeah, I mean, it seems like part of this. I wonder. So Dario sent a memo on Friday that was pretty scathing and looks really, really, really bad. And the timing here maybe played a factor. It felt like they were still seemingly like trying to work towards a deal.

Ben (50:38)

Yeah, let's read what he let's read what he said. He said in his memo that he believes the attempted spin gaslighting is not working very well in the general public or the media. Though he added that it is working on some Twitter morons. Is he talking about the administration? I mean, they're all on Twitter, right? Like, that's the whole thing with this administration. He's talking about lots of people, obviously, but, you know, not the most politic way to handle this, I suppose.

John (51:08)

Dario says you're a moron if you believe OpenAI story around this.

Ben (51:14)

Yeah.

John (51:15)

But less than a month ago, Dario was running greenlit super bowl ads that were intentionally designed to mislead hundreds of millions of Americans on OpenAI. And so now. Now he wants to be the one to say he wants to be the most trusted source.

Ben (51:33)

Yeah.

John (51:34)

Through this whole debacle.

Ben (51:36)

And yeah, I mean, there's also the back and forth on, like, being the most leaned in bidding on one contract that's to develop autonomous weapons. But the AI doesn't run on the autonomous weapons. And there's a whole bunch of different wrinkles here. It's just such a nuanced conversation. I was digging into the question of autonomous weapons. Not only are there, apparently, according to Ukrainian intelligence, fully autonomous Russian, lethal Russian weapons that will just be sent off, and if they see a tank, they'll just go and attack it. Like that exists. And so there's always the game theory about if they have it, do you have it, do you need it? You know, what's that? Where's the line in the sand? And then also America, like the Patriot missile system, apparently has a fully autonomous mode where it can just decide what to attack. And there's a whole bunch of other nuance here that I think is lacking from these little snippets. It's. I don't know. I am glad he went on CBS and sort of unpacked a lot more of it. But I'm still left dissatisfied with the level of discussion around where the line in the sand is drawn. Even on the privacy issue, there are six levels of laws around mass surveillance. It's not just the Fourth Amendment. There's a ton more. Some of them are very precise. Some of them are more broad. And how the company interacts with that is clearly important. That's actually probably happening in these discussions. But then it gets boiled down into like, one sound bite that everyone has to interpret and read the tea leaves on, and it's left me unsatisfied.

John (53:15)

But, yeah, Dean, Dean Ball yesterday says I really cannot see how anthropic positions benefits at this stage from communications like this seems like it just pushes the Trump admin to escalate further while also alienating potential allies in the industry. So, yeah, I guess, like the, you know, seems clearly when he was writing this, seems fairly confident that this was going to stay private, but you have thousands of people working at the company and it's an insane thing to send to your whole team.

Mark Gurman (53:47)

So.

Ben (53:47)

Tyler, do you need to delete a post? What happened?

Tyler (53:51)

Okay, well, no time will tell. We'll see. But I think when the first rumors or whatever saying that maybe we'll put a supply chain risk on Trapec.

Ben (53:59)

Yep.

Tyler (53:59)

I posted nothing ever happened, so I'm looking.

Ben (54:02)

I think you jinxed it.

Tyler (54:04)

Yeah, I'm not doing well on that right now.

Ben (54:06)

Something happened.

Tyler (54:07)

Yes, something happened. But, you know, it's always unclear, like, maybe this is just another.

Ben (54:12)

I think this brings in the table. It's such a ridiculous thing. In a world where D.C. you're still

Tyler (54:16)

seeing headlines coming out, like right now that are saying Dario is still trying to get something done.

Ben (54:21)

They have to go to the table and they have to work this out because it. It just doesn't. It's just unpopular. And I think that. I just think that the actual, like, the real individuals, like the real Americans and the real AI researchers are not as far apart as the rhetoric makes it sound like. I think that there's a lot of comms and PR and bluster and ego at play between all the parties involved and. And folks are at each other's throats. But I think that if they actually sit down and try and like, I have a buddy who was on a nuclear submarine for like a year underwater. And I was like, what was that like? Were you like, finger over the button? He's like, no. It was like a ton of paperwork. Every day I'd, like, go and, like, see how many whales are there and then, like, count them up and like, with pen and paper, like, write down a report on how many whales. It was like, the most boring, least automated. No, seriously. And that was the thing that we learned from Project Maven. Like, Google had this major protest, a big walkout, and at the end of the day, Google was giving the Department of Defense just access. They weren't building killer robots. They were giving them access to TensorFlow APIs that other defense contractors would be able to use to run just classical machine learning programs to classify items in images. So how many cars are in this city? How many, like, where are our drones on the map? Like, what are we seeing? Like, basic stuff that was typically the provenance of, or the domain of like an Air Force Reserve person sitting in an office, probably in Nevada, just clicking, okay, yeah, tagging. Okay, yeah, that's a house, that's a car. Like, this is what this is. It was not the true command and control and endgame that people worry about. So figuring out where these, where these models can actually have an impact, I think that there's going to be a lot more agreement than there is disagreement. What do you think, Tyler?

Tyler (56:19)

Yeah, I do think, like, basically before this like, memo got leaked, there was a sense that like, okay, clearly, like he's positioning himself firmly against the admin.

Ben (56:30)

Yeah.

Tyler (56:30)

At least there was. Like, it seemed like the researchers, like, generally were on his side. Like, you see a lot of anthropic researchers or open researchers who were like, oh, maybe I should, you know, I don't really agree with what OpenAI is doing. Maybe I should actually go over to Anthropic publicly posting this.

Ben (56:44)

Yeah.

Tyler (56:44)

But then this memo comes out. He calls every OpenAI gullible. Gullible.

Ben (56:50)

So aggressive.

Tyler (56:51)

Yeah.

John (56:51)

He's complete crash out.

Ben (56:53)

Yeah.

John (56:54)

Oh, well, crash out.

Ben (56:55)

Let me tell you about Cisco. Critical infrastructure for the AI era. Unlock seamless real time experiences and new value with Cisco. So what did Miles Brundage have to say? So I'm not super surprised. I've said before that Anthropic has too much of their identity wrapped up in OpenAI. Bad. But this memo doesn't look great, IMO. Totally agree with the criticism of much of OpenAI's political activities. And I think people should be very skeptical of the safety stack stuff. Had a whole thread about it the other day, but this is who they are. Gullible, et cetera. Stuff is a bit much. It's getting to be ad hominem. They got to back off the aggressive rhetoric. Roon was feeling sort of gullible today, maybe due to selection effects. I love that. Have to say, I really enjoy these crash outs. It's pretty keno to read communication that's poorly calculated and wasn't meant for your eyes. So few today are able to speak in these sweeping Shakespearean terms that they hate their competitor and let it blind their calculus. That is a wild, wild time.

John (57:56)

Yeah. And I just, I just don't think Dario is in that strong of a position to be complaining about or insinuating that OpenAI is lying when he's running super bowl ad campaigns that are just lying to everyone. True about OpenAI.

Ben (58:12)

Yeah. Yeah.

John (58:13)

It's like, why should anyone trust you?

Ben (58:15)

Yeah, I do. I do wonder. This feels. I'm still very interested in, like, you know, anthropic gets a lot of credit for predicting the future, predicting how there would be a showdown between the US government and the AI labs. And I'm wondering, like, how much of this exact what we're seeing right now was predicted and is that I think

Tyler (58:42)

it was not predicted because they don't seem to be handling it, like, very carefully.

Ben (58:47)

Maybe, maybe. Or maybe this is all. This is all what Dario wants. Like, he wants to be labeled the supply chain risk. He wants to have to go his own way. He wants to be fully out. And all of this was like a ruse to force the hand of the administration to be like, I'm on the outside, I'm leaving.

John (59:06)

You're saying you wanted to inspire himself, to have to grind harder.

Ben (59:10)

Maybe. I don't know. It's just like it is. I'm still processing that idea of like the Truman Oppenheimer interaction Maze says, imagine

John (59:22)

autonomous weapons powered by this. You got a Screenshot from Claude. Opus 46 says, Tell me a color and I'll try to guess it. Claude says, blue.

Cameron Record (59:33)

Blue.

John (59:33)

Mae's guess is blue. Claude says, nailed it.

Ben (59:36)

Nailed it. I love it. You know what else nailed it? Sentry. Sentry shows developers what's broken and helps them fix it fast. That's why 150,000 organizations use it to keep their apps working.

John (59:48)

The Trump administration is drafting rules that would require U.S. approval for nearly all AI chip exports, given Washington sweeping power over companies like Nvidia and amd. The draft framework sets licensing rules based on shipment size, from simplified reviews for small orders to government level approval for massive deployments, potentially tying exports to security guarantees or U.S. investments. Officials say the goal is to make American AI the global standard while controlling critical infrastructure through delays or strict conditions. Though delays or strict conditions could disrupt international AI projects.

Ben (60:28)

Interesting. This. I mean, it depends on, like, it's so odd when someone comes out and says, like, we're going to create like a framework for control. Because if like, in the most extreme, you could be like, okay, now the government's deciding to like, send all the frontier, send Blackwells only to China, right? Like, that would be the most extreme formulation. That's clearly not what's going to happen. Ben Thompson's take is that the last the previous generation chips, that's fine to send over to China, keep them dependent, keep them from needing backed into a corner, keep them from attacking Taiwan. I still don't Know where I sit with it. What do you think, Tyler?

Tyler (61:09)

Yeah, I think even in this context, like the anthropic thing is so interesting because if you take this as saying the US is going to be more restrictive. That's what exactly it's like.

Ben (61:21)

And that's what this reads like on paper.

Tyler (61:23)

He almost like agrees with, right?

Ben (61:24)

Yeah, totally.

Tyler (61:25)

And in action, it's like completely different.

Ben (61:27)

Yeah, that is weird, right? But I mean, again, maybe there's like, you know, is this a piece on the chessboard? Is this a chip that's being traded metaphorically to Dario in some ways where it's like, how do I win over the labs? Get them to work with me more effectively? Well, I'll give on the thing we agree on, which is export, export controls. So I will be more aggressive about export controls. In exchange for yes, I want unfettered access to the best AI in classified contexts. I'm still also very, very interested in the rollout of the different models into classified context. It just feels like so crazy that Anthropic was able to get such a lead there. I know it's hard, but we have AI. Just don't make mistakes. Make it compliant with FedRamp. Please do it. Don't make mistakes. Anyway, really quickly, let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI, own the data platform that powers it.

John (62:34)

Douglas says. Why is everyone so mad at Chamath? All he did was lose billions in retail investors money by promoting one pager SPACs. It's not like he then told them to enjoy their capital losses or anything. Give the man a break. Chamath says, yes, I did the capital loss thing. He is on a rage baiting terror this morning.

Ben (62:54)

Yes, this is a hot tip. If you're going to be. If you're going to be talking about financial asset, you need to not be specific about whether you're advocating for a long position or a short position. So you just need to say, I got this company.

John (63:12)

It's a winner.

Ben (63:13)

It's a winner. Now it's up to you. Are you going to buy puts or calls? One of them is going to be correct, but I'm not going to tell you which one. But you should look into it.

John (63:22)

That's on you.

Ben (63:23)

No, there are a lot of retail investors that are, that are upset, but Chamath is in the arena fighting it out, duking it out on the timeline.

John (63:34)

Premax says the IPO market was expected to be huge this year, but so far, pricings and filings are both down more than 20% year over year. Of course, we're just getting started. We have a number of bigger IPOs lined up. There was an interesting article in the Financial times on the SpaceX IPO. Robin shared. SpaceX probably has revenues less than 20 billion and loses money after the merger with Xai, but is targeting a $1.75 trillion IPO. Alphaville explored how Musk might try to pull off what could be the biggest bag holder operation in history.

Ben (64:15)

I love it. That's such a good one. Should we read through some of this?

John (64:18)

Yeah, we can read through it.

Ben (64:19)

First, let me tell you about cognition. They're the makers of Devon, the AI software software engineer. Crush your backlog with your personal AI

John (64:24)

engineering team in Alphaville. Craig, It's a good start. Star Trek's warp drive allows a starship to bend space time and exceed the speed of light without breaking Einstein's general theory of relativity. Relativity. As SpaceX prepares to go public at a reported 1.75 trillion valuation, Elon Musk is attempting a comparable feat, defying the laws of financial gravity in pursuit of something the equity capital markets have never witnessed. The only thing I would immediately jump in on is Elon has been extremely consistent in being able to defy the financial laws of gravity. We've talked about this before, but Ben Thompson has said he won't even cover Elon companies as closely or really at all in comparison to the traditional hyperscalers, because, yeah, go for it.

Ben (65:15)

Well, I mean, what's interesting is that Ben Thompson has always kept Sritechery out of politics. And so a lot of people read him not talking about Elon now in the modern era as like a political referendum. And that's not it. He wasn't covering Tesla before Elon said anything political because it was always defying financial gravity and it was always hard to actually.

John (65:37)

Or the traditional laws of business.

Ben (65:39)

Exactly.

John (65:41)

For early investors, bankers, employees and advisors, the fees, returns, prestige and bragging rights would be stratospheric. At the mooted valuation, Even a tiny 3% float would comfortably eclipse the US IPO record set by Alibaba's $25 billion float in 2014. A rumored $50 billion raise. Sounds formidable until you consider how much larger public markets have become since Alibaba went public. Back then, Apple, then the world's most valuable publicly traded company, was worth around 600 billion. By the end of 2025, 10 companies had surpassed 1 trillion. And Nvidia today, around 4.5 trillion. The firepower clearly exists. Musk is arguably the most impactful entrepreneur of his generation and has built a remarkable company. The question isn't whether there will be demand for SpaceX stock, but rather what IPO investors should pay. Based on what has been reported, this price being contemplated is truly out of this world. The super jumbo deal promises not to be a conventional exercise in price discovery. Musk has reportedly timed it to coincide with the alignment of the planets Jupiter, Venus and Mercury. But that's one of the more humdrum features. More to the point, the SpaceX IPO looks like a carefully controlled liquidity event, a solution for a centicorn whose scale has long since outgrown the confines of private capital. Moonshots and moonshine. The fundamental challenge for any investor is reconciling the company's financial performance with the sticker price at IPO. Last year, SpaceX generated an impressive 8 billion in EBITDA on 16 billion of revenue. However, the mothership has recently docked. This writing is quite colorful with Xai, with the latter valued at 250 billion despite revenues of only 210 million and a cash burn of 9.5 billion for the first nine months of 2025. So I think they're sort of breaking out X or Twitter with this. Obviously with Twitter combined, it would be quite a bit more.

Ben (67:38)

I want to put this in the truth zone. So, more to the point, the SpaceX IPO looks like a carefully controlled liquidity event, a solution for a centic coin. Centicorn is 100 centi. Are they in the hundreds of billions?

John (67:53)

They still technically are.

Ben (67:55)

No. 1.75 trillion.

John (67:57)

No, but they're currently at 800.

Ben (67:59)

Oh, wait, really? Okay, well, anyway, once they go out, they're not going to be a center corn anymore. We're going to need a new word. Do you know the word for a thousand billions? It's going to be a kilo corn.

John (68:11)

A kilocorn, kilicorn, kila corn I guess you could do.

Ben (68:14)

Got a nice rig corn too, but kilo corn is a good one. Gigacorn is. I think a quadrillion dollar company would be. Would be something like that.

John (68:24)

We'll get Musk marked up the private valuation of SpaceX to 1 trillion, citing increases in revenue from its Starlink broadband.

Ben (68:30)

Vindicated. Vindicated. Been marked up to a trillion. It's not a center corn anymore, it's a kilo corn. Sorry.

John (68:36)

Okay, but that. Yeah, I guess you're right.

Ben (68:38)

Boom.

John (68:39)

But that was as part of the merger I don't think there was a lot of primary capital, but yeah, you're vindicated. Prospective IPO investors would be expected to back evaluation more than seven times higher than the approximately level recorded in October 2024. That would qualify as an astonishing re rating in any market. With these numbers and with SpaceX and XAI accommodation happening almost concurrently with the expected IPO, investors must make comic book heroic assumptions about sustained hyper growth. Elon is the king of comic book heroic assumptions about sustained hypergraph. The media has been guided to expect 2026 revenues of 22 to 24 billion. Given the likely mid year timing, the investors will be pointing to 2027 projections, presumably with even punchier year over year growth.

Ben (69:33)

Yeah, I wonder how much Starlink is continuing to grow. Like they're doing a lot of deals, but some of those deals are slow. Some of those deals have to be big with the airlines and whatnot. It feels like the market for Internet is so big that you're just getting more and more people. I see them in Best Buy. And so you just have to imagine that every month there's just more and more people signing up. And then once they sign up, they just let it ride for a long time or switch over full time. But that switch from they are capturing 100% of the launch capacity. I think we have the chart somewhere in here about SpaceX's revenues were basically completely flat because they were just like, yeah, we did it. We captured 100% of the launch market. If you want to launch something into space, you call us and we pay and you pay us and we have good margins. But it's not really growing because there aren't that many satellites to launch. And then they were like, we got an idea. What if we launched 1000 times more satellites than they did?

Tyler (70:31)

Great.

John (70:33)

They talk about the mother of all lockups. They don't think a standard six month lockup will cut it. They could see it being staggered. Facebook had a staggered lockup.

Ben (70:48)

There's just so many investors, so many employees. 20 years of stock grants, 20 years of investment investments going into this. Lots of people looking for liquidity, lots of people that will want to hold. But if you open the floodgates, that could be crazy for the stock. But I think that there's going to be so much excitement. The narrative is just so much clearer than Tesla. Tesla's really had to retell the story around Cybertruck and Roadster and the truck, the delivery truck and Autonomy and then the Optimus robot. Whereas like a scaled you're Going to space. If you believe in Mars, you're going to be a retail investor, you're going to buy the stock. Like, there's going to be a lot of people that are excited about this and then also the AI narrative as well. So we'll see.

John (71:34)

And then, yeah, the only other thing here that they're kind of poking around at is index inclusion. NASDAQ has already signaled the desire to accommodate mega listings by proposing rule changes for the NASDAQ 100. NASDAQ, of course, willing to get a bit more aggressive than something like the S and P, which has held back against rule changes in the past.

Ben (72:01)

AlphaVille closes with five key questions for potential SpaceX investors. If you are thinking about investing in SpaceX once it goes public, you gotta ask yourself these five questions. First, what specific growth rates are required to support a $1.75 trillion valuation?

John (72:21)

Mars.

Ben (72:22)

That's a lot of smackaroos.

John (72:24)

Mars.

Ben (72:24)

That's not a growth rate.

John (72:26)

I'm just saying that's. That is.

Ben (72:28)

Yes.

John (72:30)

Ignore traditional financial metrics.

Ben (72:33)

Yes. What is the specific schedule for lockup expirations? When are you going to see the timing, the number of shares? When are insiders going to be selling? When is there going to be selling pressure coming? And when might that affect your investment timing? Three, how quickly will SpaceX enter the indices and how much passive buying is expected?

John (72:56)

They're going to Baja Blast.

Ben (72:57)

They're going to Baja Blast directly into the S&P 500, directly into the Mag 7. It's going to be Mag 8 on day one. They're going to be in the QQ, they're going to be in every index, and everyone's going to buy it passively, potentially. Four, how much of the order book reflects genuine conviction versus marking the book, political signaling or the search for a quick flip? How many of these people are here to stay? How many of them believe in Moon? How many of them believe in Mars? What's after Mars? Where are we going after that? Alpha Centauri. You know how long it takes to get there? I think it's like, what is it? It's like light years away. So like it takes like years and years and years to get to Alpha Centauri.

John (73:35)

Yeah. The only other thing that was interesting here is they talked a little bit about retail allocations and the idea that retail would get a greater share of

Ben (73:49)

the actual 25 trillion miles away. So four light years. SpaceX isn't even close to going light speed yet.

John (73:57)

So you're looking at got room to

Ben (73:58)

run centuries to get to Alpha Centauri. The last question, how much is being allocated to unconnected institutional investors? So ask yourself those questions, then head over to Kalshi to Track. When will SpaceX officially announce an IPO? Currently before August 1st of 2026 is at 79%. So maybe September, maybe October. But it's coming. It's coming. Elon wants this one out in the public markets. Let me tell you about Vibe Co where D2C brands, B2B startups and AI companies advertise on streaming TV, pick channels, target audiences and measure sales, just like on Meta. Moving on in the timeline, Mike Solana is reacting to the size of the Pokemon franchise. Have you ever played or watched or consumed anything from the Pokemon?

John (74:51)

I had a Pikachu Game Boy.

Ben (74:53)

You had a Pikachu Game Boy? Did you have the Pokemon Yellow game cartridge?

John (74:59)

I had the goldish colored cartridge.

Ben (75:01)

Did you play the game?

John (75:02)

Yes.

Ben (75:02)

Did you finish it?

John (75:06)

Probably not. It was much more of a thing. I'd pick it up for like a road trip and then I wouldn't.

Ben (75:12)

Pokemon Red and I think I did. I think I got all the way through. I think I might have collected all 151 Pokemon or something in the original game. Then I kind of.

John (75:21)

You didn't have anything better to do when you were eight years old?

Ben (75:24)

No. I had not discovered locking in yet. But regardless, for our distaste for the Pokemon franchise, it has become one of the biggest franchises in the world. It's of the world's highest grossing media franchises. Pokemon is bringing in $288 billion over the lifetime across films, games, toys, books and merchandise. Hello Kitty is languishing at a mere 88 billion. Winnie the Pooh. Sad to see I'm a Winnie The Pooh fan. 76 billion. Mickey Mouse and friends is up at 74. Star wars is at 73 billion. How is Pokemon bigger than Star Wars? That is a shock to me, but the rest are basically Disney properties across.

John (76:11)

Is Pokemon global than Star Wars?

Dan Primack (76:14)

Is that it?

Ben (76:14)

I suppose. I suppose so. Hunter says it's kind of insane how much bigger Pokemon is than any other media franchise. And Panman, I've never heard of this, but there's a Japanese superhero made of red bean bread that's apparently very popular. And Mike Solana says what's really insane is the franchise is this popular and you still can't buy the old games. No one has remade the original with new tech and gameplay. There are no Pokemon parks and there are no major blockbusters. There's probably half a Trillion dollars on the table right now. Well, there was one Detective Pikachu did well in terms of film performance. I don't know if there's a park, but remaking the original with new tech and new gameplay, that's. There are two attempts. There's the mod retrochromatic where you can play the original. It's not remastered or built with new tech, but it is the original experience. And then you do have. They are releasing new Pokemon games on Nintendo switch, Nintendo Switch 2. But they are completely different mechanics. Like you're walking around in 3D as opposed to this top down 2D. But Pokemon is interesting because it is the best critical review of a video game adaptation film in history. And so for a very long time, Hollywood said, okay, we want to do films that have, they're bought in, they have audiences already. People know Batman, we'll just make another Batman movie and people will show up. The Avatar will make Avatar 2. People will just show up because they're familiar with it. And people thought that that would apply to video games. And so they adapted a ton of video games. Final Fantasy Doom, and they all. Some of them did okay financially, but almost all of them were panned critically. And what wound up happening was this was true for like a decade or two, like Lara Croft, the Tomb Raider, I think it did financially well. But everyone was like, eh, it's not really that great of a movie. It's not going to win awards. Then Pokemon came out, got pretty good reviews, I think like 86% on rotten tomatoes, something like that. And then Last of Us, directed by Craig Mason, who had done Chernobyl on hbo, started winning critical awards. The first season was very well reviewed. The second season is sort of half of the second game. And I don't think was reviewed as well, but is still at that level of like critical acclaim generally.

John (78:42)

So anyway, let's get into some important calculations prior to.

Ben (78:48)

I have a question. First, Tyler, do you believe in straight lines on log graphs?

Tyler (78:54)

Yes.

Ben (78:54)

You do? Okay, so we have some straight lines on log graphs here. We have graphed out the price of the cheapest MacBook and we are getting cheap.

John (79:03)

And Ethan, over at SF Computer, we

Ben (79:05)

have a graph that is log numbers. And Ethan Anderson plotted the most expensive McDonald's burger versus the least expensive MacBook over time. And the analysis projects that the most expensive burger will be more expensive than the cheapest laptop as soon as 2081. Do you think this is true?

Tyler (79:25)

I mean, like, honestly, okay, like you're not seeing exponential growth in cattle, right? But you Are seeing it in compute.

Ben (79:32)

Yeah.

Tyler (79:32)

So like I think it's possible.

Ben (79:34)

Not like, you know, I think it's actually possible. Ad Supported MacBook could be free.

Tyler (79:39)

Ad supported burger.

Ben (79:40)

Ad supported burger.

Tyler (79:42)

No one's tried this.

Ben (79:43)

Yes. Would that be you eat it and then you have this sudden urge to go buy a MacBook or are there just MacBook ads all over the container?

Tyler (79:51)

Yeah, you could kind of implement a logo on the bone or something.

Ben (79:54)

Well, we have the perfect person to talk about MacBooks getting cheaper with. First, let me tell you about Vanta Automate Compliance and Security. Vanta is the leading AI trust management platform platform. We have Mark Gurman, the Germinator. He's a journalist at Bloomberg and he's here in the TBP at Ultradome. How are you doing, Mark?

John (80:13)

Great to see you.

Ben (80:13)

Great to see you doing good.

Mark Gurman (80:15)

Wearing my Apple sweater today in honor of the conversation.

Ben (80:18)

Very nice. And what is behind you? You're in Los Angeles.

John (80:21)

Has there actually ever been a day where it didn't make sense to wear your Apple hoodie?

Mark Gurman (80:27)

Yeah, like if I go to a Google event or a Metaverse, probably not wear the Apple hoodie, you know, but

Ben (80:33)

well, so take us through your predictions. Anything that surprised you, what was actually released. Like, what have the last few days been like for you?

Mark Gurman (80:43)

Last few days have been interesting. You know, 6:00am Pacific Time they've rolled out the new products. Monday started off with the iPhone 17 and the iPad Air. Tuesday obviously was a big Mac day with the M5 Pro or M5 Pro and M5 Max. MacBook Pros, the M5 MacBook Air and the two new studio displays. Then we got the big one yesterday on Wednesday obviously the MacBook Neo. In terms of surprises, there were no surprises. These were a bunch of products that had a lot of pent up demand. They needed to roll out a new iPad Air. Sales have been flagging there a little bit. Was time for them to roll up the iPhone 17e. And obviously this new cheap MacBook has been in the works for several years. The MacBook Pros with the M5 Pro and M5 Max. Some may have expected that last October because that's traditionally done the MacBook Pro updates. But this time around the chips weren't ready until recently. They use this newer generation TSMC fabrication technology. So those rolled out for the spring. So overall a really nice set of updates. Think it'll help Apple have a really strong quarter. Remember they guided an extremely strong March quarter. We had a feeling we knew why, but now we know why for sure. Because all these products are now hitting the market and I think at 600 bucks, at 500 for education, the MacBook Neo is going to be a game changer not only for the computer industry but for Apple's bottom line.

Ben (82:06)

Was there any conversation about Mac Minis?

Mark Gurman (82:11)

No, no, just, just on Twitter every once a new or. Yeah, open claw and all the AI stuff and everything going on there. Yeah, there'll be an Mac Mini this year, but I'm not expecting it until closer to the end of the year.

Ben (82:23)

Yeah, I'm just thinking of like if you get a Mac Mini, you need to plug it into something. You need a display, you need a keyboard, mouse. Like there's a lot of extra features that drive up the cost and people aren't actually buying them for the power of the Mac Mini, they're buying it just to be able to interface with imessage. And so the MacBook Neo might actually sort of display replace the Mac Mini potentially because you have, I mean not if you're wiring them all together or something. But I'm wondering if there's any like odd, unpredictable, orthogonal purchasers of Neo or is it just like the Chromebook market? But I don't know.

Mark Gurman (82:58)

Well, I think it's a secondary computer market also. Right. Like I have this big 16 inch MacBook Pro that I need to lug around. For 500 bucks I can get something at half the weight and you know, half the volume that if I really need it to take to an event or for a flight and have Mac OS, something a little bit more formidable than iPadOS, it's a great alternative. So probably not going to do it. I'm saving my Mac budget I think for this big MacBook revamp in the fall. The touchscreen version of the MacBook Pro with OLED. I don't really need the Neo. I can get it, I really wanted it. But definitely I think it's going to do well and crush the Windows PC market. Right. I mean if you look at the

John (83:39)

price, is it, is it surprising that, that it took this long to come out with a device that was going straight for the jugular with the everyday PC market?

Mark Gurman (83:53)

I think you finally had alignment on the chip side to be able to do something like this. And the A18 Pro that just came out a couple of years ago that is on par with an iPhone or a Mac grade chip. Right. You can really run benchmarks and see that it's probably close to an M1 or M2 or even M3 in some, you know, single thread use cases so that chip coming out and Apple rewriting macOS a few years ago to be able to run on these ARM based chips as part of the transition away from intel is what allowed this to all come together. So it took a long time. This would have been very difficult for them to pull off in the intel days. Would have been very difficult for them to pull off five years ago. But once they had alignment on all of those factors, they were able to do it. One thing that they didn't really talk about yesterday with the launch is another factor. Here was a new aluminum based manufacturing process that has basically allowed them to save more aluminum, reuse aluminum, scrap metal and build these machines in volume while saving a lot of the manufacturing costs. And so that's a big part of

Ben (85:03)

should I buy a MacBook Pro or should I wait for this touch screen OLED newfangled thing that you just described? You humbled me by telling me that my MacBook Air did not have a good display. I never want to make the same mistake ever again. But at the same time I'm not really convinced that I need a touch screen. What's the trade off right now?

Tyler (85:26)

Now?

Mark Gurman (85:27)

Well, you've got the what, the 13 inch air? Remind me. Or the 15 inch air.

Ben (85:30)

15 inch air. I got the big small one. Small big one. I don't know.

Mark Gurman (85:37)

It's a good machine.

John (85:38)

It's a good computer, sir.

Mark Gurman (85:41)

Yeah, I mean, I think you just wait for the oled. I mean we're talking about screens here. You want to have the best screen. It's the oled. Whether you use the touch or not, it's a breakthrough difference. You know one thing on the, on the MacBook Neo, the screen technology that they're using is actually a different type of screen tech than what you're getting on the air.

Ben (85:57)

Okay.

Mark Gurman (85:58)

And so I would say the AIR is like pretty, like down the middle. It's pretty good.

Ben (86:02)

Yeah.

Mark Gurman (86:02)

The OLED is like huge step above. And the screen tech they're using on the MacBook Neo, it's a step below. And if you've like, if you use the Pro, the AIR is not going to look so good compared to the Pro. If you use an Air, you're going to see the NEO screen, you're going to be like, this is subpar.

Ben (86:19)

Sure, sure, that makes sense. Talk about the naming for Neo. It's the first time Apple's ever used that phrase. They had nano right there. They didn't go nano. What do you think they mean by Nio? Why that term? How's the response been I think they

Mark Gurman (86:36)

wanted something cool and futuristic. I wanted, I think they wanted something to show that this was something entirely new. And I think they were looking for a new cooler term than se. SE had sort of their term for these low cost products in the past. You have the Apple Watch SE, they used to have the iPhone SE. So they're clearly trying to move away from that SE naming and it seems to me like Nio is that replacement. So I wouldn't necessarily surprise if we eventually see them rename the low end products to all be part of that NIO family. And so what they've basically done is they have like Neo at the base, Air is the midterm and Pro is the high end. And then they've got things like Ultra and Max to differentiate further at the high end. And so I think this strategy they've always had which was good, better, best, you know, low spec, mid spec, high spec, they just have their fancy marketing names for it. And I think Neo is a really great name. And just like Air was a super catchy name back in 2008 when Jobs and Build the first MacBook Air, now that Air is across the whole portfolio has that same three letters. It's cool, it's memorable.

Ben (87:44)

But if I were Tabula Rasa in charge of naming products at Apple and I was given the iPhone lineup, I would probably go iPhone 17 Pro, iPhone 17 Air, which is not what they did. They just did iPhone Air, then iPhone 17 and then iPhone 17 Neo because I like this new term. Instead they did 17e, they did Air with no number. What's the thought there?

Mark Gurman (88:09)

Well, I feel like on the phone they've always just been completely all over the place on name, basically become like Samsung or Android. I remember when they launched the iPhone, what was it? The xs Max, iPhone XS. Right. And you have the Pro Max. Right. So you're jumbling a bunch of names together. I think over time it'll become a little bit clearer in terms of iPhone naming conventions. Those are harder to strip away because you have case makers, you have carriers, you have people around the world who are used to these naming conventions. So changing the naming structure on the phone is much more difficult than doing it on the Mac or the iPad.

Ben (88:52)

Got it.

Mark Gurman (88:52)

But I'm sure there eventually for simplicity,

John (88:54)

they're still doing what's playing out right now in the low end of the smartphone market in the U.S. well, the

Mark Gurman (89:02)

low end of the smartphone market in the US is, is. Is not so great. I mean you've got some Samsung's there. You got some of the phones made from some of the Chinese phone makers that people are importing here. But in terms of the price point, Apple really abandoned the low end of the phone market. At some point you had, I believe The SE was 350 bucks. Then it eventually went up to 430 bucks. Now it's 600 bucks. So I would say Apple is basically given up on the, on the low end of the phone market. They're playing in what we call the mid tier of the market.

John (89:35)

It's so interesting to go low end on the computer on the PC side, but not. But stop competing on the low end on the phone side. Just given that, I don't know, I mean, growing up there was just like such a big divide. It was like it was Apple PCs were luxury products. They really didn't care about the low end.

Ben (89:59)

Calling it an Apple PC is hilarious.

John (90:02)

Personal computer.

Mark Gurman (90:03)

The divide is gone now. And you know what I think this Neo is going to do? It's not only going to help with Mac sales, but it's going to sell a lot more. IPhones and Apple Watches and iPads bring a lot more people into the ecosystem. So, you know, for Apple, from a business standpoint, you know, they've always said they're not going to cheat ship, you know, cheap products to shape, to chase market share. That's clearly changed. Apple needs to do bigger and bolder things to expand its business and grow. They're in new markets, you know, Eastern Europe, developing parts of Asia. India obviously is a big focus there. I think eventually there'll be, you know, in Africa as well. So clearly they had to do this was decent timing for them. And you know, there's all these concerns about recession and war and everything going on right now. So $600 MacBook I think so, you know, pretty timely.

Ben (90:53)

Yeah.

John (90:54)

What, what's new? Since we last talked on any, any kind of leaks or insights on, on their AI strategy in the, in the rollout of the new Gemini powered Siri.

Mark Gurman (91:05)

Yeah, the Gemini powered Siri was supposed to launch this month. They were supposed to hold an event in New York about two weeks ago to walk press through the new Siri. They've continued to face delays there. It was originally supposed to come out in iOS 26.4 which is scheduled for the end of this month. Now they're still splitting the features but they've punted it to 26.5 which is supposed to come out May, June, WWDC time frame. So potentially some features then and then the rest of the features coming out at the tail end of the year as part of iOS27. My bet is that nothing significant will really probably come out until iOS 27.

Ben (91:46)

Yeah.

Mark Gurman (91:47)

Not great.

John (91:48)

Yeah. Is that good? No, that's not good. Is part of that just like the management shakeups. You have new leadership, you know, basically new leadership.

Mark Gurman (92:00)

And it's sort of like, you know, we've taken this long, it's only going to be worse if we release it and it doesn't work.

Ben (92:06)

Sure.

Mark Gurman (92:07)

Big other questions are like, do people really care at this point? People are just going to use the ChatGPT or the Anthropic app or the Gemini app anyways. Yeah, our, our AI hardware is industry leading. We can run all these third party models on the phones through applications anyways. We might as well wait until we get it right. Thing with Apple's AI strategy. If you were to say that this was a strategy, then you know, it's a pretty good look for them. But this hasn't been the strategy. They fell backwards into it, to be completely honest with you. Right. The intention was never to fail. To fail upwards.

Ben (92:39)

Yeah, but they did. It's. Yeah, it's fascinating strategy.

John (92:42)

We fail upward for now.

Ben (92:44)

For now. Yeah. But I mean, they have to be looking at the revenue curves of ChatGPT and OpenAI and Anthropic.

Mark Gurman (92:54)

That is a growth lever for them.

Ben (92:55)

Yeah, yeah, yeah. It's a huge growth lever. It's a huge market. And you can see the way Mark Zuckerberg's positioning to make a real play into Gen AI in some meaningful way. And he's taken a very, very different approach. Been honestly slower on actually releasing features, but just feels like he's taking it a lot more serious. There's a lot more DNA there.

John (93:17)

How much are you planning to cover OpenAI's hardware? Is that going to be in your territory at Bloomberg?

Mark Gurman (93:24)

Front and center. Front and center.

John (93:26)

Okay, so give us your. How have you processed the kind of. The leaks? We had the dime leak around the super bowl which looked like.

Mark Gurman (93:36)

Yeah, I don't think it was real. I mean, everyone I spoke to says this is not a real product.

John (93:42)

Yeah, but then Joe Gebbia is sitting there in San Francisco using it like this week at a coffee shop that didn't exactly look like the most organic.

Mark Gurman (93:52)

Yeah, there's a lot of conspiracy around it.

John (93:54)

And if the dime ad was fake, then it was an incredibly good model because I forget the name of that actor, but.

Ben (94:05)

Skarsgard.

John (94:06)

Skarsgard.

Ben (94:07)

Yeah.

John (94:08)

But it didn't look, it looked like, okay, leading Frontier video model.

Ben (94:12)

Yeah, yeah, yeah.

Mark Gurman (94:13)

Well maybe the teaser of their models. But here's the thing.

Ben (94:16)

Yeah.

Mark Gurman (94:16)

The hardware is gonna be beautiful. Yeah, we know. The hardware is gonna look great. It's gonna be designed by love from Johnny. I've all those guys, the former Apple people. There's no questions there. The question is who's gonna buy these things? Right. Like people really gonna trust OpenAI as a hardware company. And Apple has this ability to fast follow. Let's say OpenAI does come out with something pretty nifty. What stops Apple from copying it immediately and taking all their market share? Apple has the retail stores, they have the privacy story, they have the brand. OpenAI has this great AI brand but they don't have a hardware brand. And so it's almost like they have the opposite problem of Apple but the leg up is that their underlying technology is clearly better.

John (94:57)

Yeah. And there's this new, there's, there's rumors around their new voice model that they're working on. And so the question, the question to me is like, can they create a beautiful device and have a meaningful breakthrough on the model side that somehow makes it more difficult for Apple to just fast follow? Right.

Mark Gurman (95:18)

Well, I would say, you know, for sure, yes on point A, for sure, yes on point B, maybe yes, maybe no on Apple's ability to fast follow based on the models. But I just think the bar to sell people hardware, even if it's good and even if it comes from a big brand, it's a really high bar. It's a really high bar to sell in these Apple like quantities. I mean even look at Google in terms of their market share on their hardware. They have amazing software and they have amazing hardware and they have the best advertising for consumer electronics, for phones, at least in a very long time. Talked about the ads last time I was with you guys.

Ben (95:57)

Yeah.

Mark Gurman (95:58)

And they've made little to no dent and obviously there's big questions there that Google should even be doing hardware.

Ben (96:04)

Yeah. Meta Ray bans too. You open up Instagram and you see like a full bleed special modal ad for red array bands and they're doing okay, but it's not, you know, 80% of the population.

Mark Gurman (96:17)

The meta Ray bans are considered a smash hit and they've sold more than 10 million units.

Ben (96:22)

Yeah.

Mark Gurman (96:22)

It's not a lot.

Ben (96:23)

Yeah.

Mark Gurman (96:24)

Apple sells 10 million units of AirPods.

Dan Primack (96:29)

Yeah.

Mark Gurman (96:30)

Probably a quarter.

Ben (96:31)

Yeah.

Mark Gurman (96:31)

So the bar is just unbelievably high.

Ben (96:34)

Yeah.

John (96:35)

What's going on with the meta with the Lawsuit with Meta, they had contractors that were just able to view the recordings of Meta Ray Ban users. I haven't covered it or haven't followed it very closely.

Mark Gurman (96:49)

Great. It's crazy. This is reminiscent of when people figured out that Apple with Siri and Amazon with Alexa and Google with Gemini had these folks, they're called annotation analysts, who listen to everything you're putting into the voice assistant and they're comparing it to the outputs. So they're listening to the raw audio and comparing it to the outputs so what Siri thought they said. And so they're able to correct it manually in order to improve the underlying model. And that was a big blockbuster when everyone discovered that that was happening a few years ago. This is not audio. This is camera footage. This is people potentially, you know, intimate moments. And this is not just what you're saying or facing you. It's what you're seeing while wearing these glasses everywhere. And so I think that raises really big questions about the smart glasses category. When Apple releases their smart glasses, they're going to have a big focus on privacy, a big focus on seeing the surrounding environment for you. At the same time, though, I don't think that this changes the overall equation for smart glasses. I still think that this has been a successful pioneering product for Metta. I still think they're pushing forward here. I still think they're going to release several new models that, based on what I'm hearing, are pretty exciting there too for the Meta smart glasses. But will they need to make some privacy adjustments? Yes, but I think in this case with the smart glasses, the first mover advantage is real and Meta has that. And in terms of glasses, they've got the biggest partner with extra luxottico.

Ben (98:25)

Yeah, that makes sense. Talk about the Studio display xdr. Is this a complete replacement for the Pro display xdr? Okay, how are they pitching this?

Mark Gurman (98:38)

Yeah, well, this is pretty expensive, right? $3,300, but it's still much better than what you had before. Remember when they announced the Pro display xdr, people lost their collective minds when the stand. Right. So you got the monitor for five grand, but then the stand came separate, which is ridiculous.

Ben (98:58)

Yeah.

Mark Gurman (98:58)

And that was 1,000 on its own. People lost their minds. And now you can get two MacBook NEOs for the same price as that stand with an education discount. So now they've been able to go a little bit down market on the monitor. The resolution isn't as high as what they had before. It's not like they went up to a 7K. You have a 27 inch panel instead of a 32 inch panel. There's a lot of savings on the shipping and the logistical side and the product engineering side with those products. So I think this new Studio Display XDR is going to be pretty popular. I'm actually probably going to get one myself for my office at home. So I'm pretty, pretty pumped for it.

Ben (99:35)

So grab the Studio Display XDR, but maybe wait on the MacBook Pro.

Mark Gurman (99:39)

Yeah, you know, I need the most reference monitor, like quality, I need medical image, I need all of that. My very intense engineering work lives.

John (99:48)

But I ordered the new MacBook Pro Max. Yeah, I got 48 gigs of RAM. It was like 6:15am I was at the gym. I just went through the order flow pretty quickly because I wanted to be first in line. And then I realized I didn't max out the ram and I tried and then I was on was Apple support saying, hey, can you just switch me for the version with more ram? And they said I was not feeling the AGI in that moment because they said you have to cancel your order and place a new order and lose your spot in line. By this point it was like five, six hours later. And I was like, how do we not have the technology for this?

Ben (100:30)

Swap this.

Mark Gurman (100:30)

Yeah, it is wild. But so question for you. Why get this M5 version knowing that they'll have M6 version with OLED in touch in 6 months?

John (100:39)

I cannot stand when people touch the screen of my computer. And so I don't want to give them another reason. They already seemingly have enough reasons. People come around here at the office, they're pointing at stuff on the screen. I don't want them to even be tempted.

Christian Howell (100:56)

So.

John (100:56)

So no, I mean, I just look at. I think that computers are these amazing things that we use for something like eight hours every single day at least of the work week. And their cost relative to the value is just so extreme that if the new device comes out in the fall and it's amazing, then I would just get that.

Mark Gurman (101:23)

All right, fine. Maybe I'm going to have to get the M5 II to hold me over to the M6. But you know, one thing we didn't talk about is, you know, Samsung has new S26s.

Ben (101:30)

Yeah.

Mark Gurman (101:31)

The Ultra version. It has this privacy display on it.

Ben (101:34)

Oh yeah.

Mark Gurman (101:34)

Have you guys seen it?

Ben (101:35)

No, I haven't. I haven't actually seen the demo. I've heard of it. It sounds amazing. Explain.

Mark Gurman (101:39)

Pixels turn off in certain places. So if someone's reaching over and Looking at your screen, not touching it, but looking at your screen, they won't be able to see what's going on.

Ben (101:49)

So in Control center, if you're on a plane, you can basically, you know how you have that polarized screen protector. You can effectively turn that on in software dynamically. So you're on the plane and you say, yeah, I don't want this person reading my emails. Turn that feature on. It probably gets a little bit dimmer, maybe a little bit blurrier, but then when you're just hanging out by yourself, you can turn that feature off and get the full display resolution. Yeah, really, really innovative. That's got to come to Apple soon. But talk about fast following.

Mark Gurman (102:18)

Soon is wrong. Soon is wrong, don't forget. Yeah, this is, this is the interesting thing about Samsung, right. Where they are the component maker and the hardware maker and the component supplier to Apple, there are certain things they're not going to want to give to Apple.

Ben (102:32)

Totally.

Mark Gurman (102:33)

It's a competitive advantage for their own hardware. We saw this with OLED many years ago where it took Apple I think four or five years to get OLED after Samsung. Yeah, right. Apple basically transition a year or two ago.

Ben (102:45)

Yeah. least.

Mark Gurman (102:47)

They haven't even done OLED yet on, on the Mac they've only done OLED on one iPad. They'll have it on a second iPad this year and the others in the next couple of years. But this privacy display is I think a hot feature and it's going to be a few years at least before Apple's able to get it.

Ben (103:01)

Yeah, this is my, my overall skepticism. Like I completely agree with you on the idea that it's very hard to sell tens of millions of units of a new consumer hardware. But I just am not necessarily buying the idea that Apple can fast follow things that work because it took them a decade to get a VR headset out and it wasn't a smash hit. And like they, you know, they are like, you know, at least a few years behind on even the most basic little implementation features that happen.

Mark Gurman (103:29)

You know, let's say OpenAI does earbuds and they have these remarkable AI features. You know, Apple could cook up some new models with Google and try to get in software, you know, within a year.

Max (103:42)

Yeah, yeah.

Ben (103:42)

It's hard to imagine the suite of Apple products on your body across vision, watch phone, your pocket laptop and AirPods like not being able to satisfy like your demand for AI. So I completely agree with you on that.

Mark Gurman (103:57)

Well, the question is, are like, do people actually want these things? Right. Like, we talk about these AirPods with cameras, we talk about these smart glasses, we talk pendant, we talk about a pin. Talk about whatever.

Ben (104:06)

Smart staff.

Mark Gurman (104:09)

Yeah. I mean, none of it. They're not proven. These are not proven products. Yeah, right. Seven million units on metal glasses is really successful, but it's not proven at Apple quality and Apple caliber. I mean, there could be a situation, look back a few years from now, like say this whole AI hardware thing was just a big, you know, whatever, and people are just still glued to these things. So we'll have to see what happens. But at least Apple's gonna give it a shot.

Ben (104:36)

Appreciate it. Well, thank you so much for taking the time to come talk to you. Always great to see you. Have a great rest of your week. Cheers. Talk to you soon. Goodbye. Let me tell you about 11 labs. Build intelligent, real time conversational agents. Reimagine human technology interaction with 11 labs. Let me also tell you about phantom cash. Fund your wallet without exchanges or middlemen and spend with the phantom card. And without further ado, we are joined by Dan Primack, the legend from Axios. Dan, how you doing?

John (105:05)

Hey, what's going on? Good.

Dan Primack (105:06)

How you guys doing?

Ben (105:07)

We're doing fantastically. Thank you so much for taking the time to come chat with us.

John (105:10)

Great. Long, long over, long overdue.

Ben (105:12)

First time on the show.

John (105:13)

Crazy story. Yeah.

Dan Primack (105:15)

TV VN Virgin here.

John (105:17)

Yeah, crazy story from breakfast this morning. I was talking with John when we were looking over the schedule and I was telling him when I first got on Twitter in college, I followed a bunch of VCs as one does, and I see them every day talking about, oh, I backed this company at seed or series A. And you were the first person to really highlight like, oh, some of these numbers aren't looking back.

Ben (105:45)

Sometimes they don't beat the s and P500.

Max (105:47)

Yeah.

John (105:48)

So you were the. I initially had some cognitive dissonance, but came around to your VC returns. True thing.

Ben (105:57)

But that's a good place to start. What is the health of the VC industry? The VC market, I mean, it's not great, right?

Dan Primack (106:05)

We reported the other day that median returns are under the S&P 500. They're under the NASDAQ, they're under the Russell 3000 for 25 years. And I know there's a little bit of lumpiness because you're coming out of certain things that's coming out of kind of the great financial crisis, but that was true for the public markets as well. So it's not great. Now look, you know, top, top funds in those top 5%, they're doing great. But the reality is you've got so much more money flooding into the market now. That means more money is going to be at that median and that's not great for them. And it's, you know, you're talking, for one case, you're talking more money coming for insurance companies, etc. It's not a great place to be. It's one LP told me in this quote I use. It's kind of the story of hope over experience. And that's what venture capital seems to be right now.

Ben (106:50)

Yeah, talk about that money that's flooding into VC because there's smaller funds that had a particular playbook that have scaled up massively become growth funds. There's stuff that, there's the crossovers, there's SPVs, there's strategics. Like what is the shape of the venture capital funding boom over the last few years?

Dan Primack (107:10)

I mean, it's hard to even define what venture capital is anymore. Right? Like, I mean, can you say that somebody who's putting half a million dollars into a founding team of maybe two people in a garage, is that the same as giving, you know, $10 billion to open AI? I mean, they're not even vaguely the same industry, but they're all quote, venture capital. But there is an enormous amount of money and it's coming from everywhere. Right. You know, it used to be that if you wanted exposure to venture capital, you had to, you know, either be an institutional investor or have a friend and be very high net worth. At this point, you can get some exposure to this stuff by just having a Fidelity mutual fund. Right. You know, Fidelity Contra Fund has a bunch of quote unquote startups in it. You know, and what's coming soon out of the Trump administration is letting your 401k plan invest in private funds. Now, are they going to actually invest in individual funds? Will they try to kind of put money into pools? Unclear, it hasn't happened yet. But, but there's a huge, it's a lot of money coming. And it's the thing that venture capitalists and private equity firms have viewed as kind of the holy grail forever because they haven't had access to any of that defined contribution money.

John (108:09)

So when you saw the news, you jumped out of your chair, you said, yes, finally my 401k will be deployed into venture capital.

Dan Primack (108:17)

I mean, look, this is the moment when traditional limited partners in venture capital have been, if not getting out, at least trying to give themselves some optionality. Right. You've seen some of the kind of the biggest endowments, Yale, Harvard, etc. Do big secondary sales of their private equity and venture portfolios. They're not getting out, but they're recognizing they were a little bit too concentrated. And so it's the very minute when some of the smartest money is, if not leaving, at least hesitating, that I hate to say it, all the dumb money is about to come flooding in.

Ben (108:44)

So what does that mean for this K shaped dynamic that we see in venture capital where there's a few funds that are getting bigger, they still have solid returns and then smaller managers seem to be getting crushed. But what are you actually seeing?

Dan Primack (108:57)

I mean, I think that's what we're going to continue to see, but. And this is where the hope over experience part comes in. The best returns still in terms of actual cash on cash, are still the young funds, right? It's not the, it's not the firm that invested in Space X two years ago. It's the firm that invested in Space X eight years ago. And those are generally smaller funds. Granted it was Founders Fund, but they were small at the time. So it is, that's still where those massive, massive returns that when people think of venture capital, what they're thinking about, you know, if you invest at a, you know, half a trillion dollar valuation in a company that you hope is going to go public at a trillion, that's nice. I mean, 2x is nothing to sneeze at, right? You'd be happy that that's not a venture capital return. That's not the reason you have the illiquidity premium on venture capital.

Ben (109:42)

What's the shape of the illiquidity premium? Recently in recent fundraisers, everyone goes back to the 2 and 20. But there's obviously a dispersion around that. What are you seeing?

Dan Primack (109:54)

There is the problem is what that illiquidity is right now. Because it used to be you'd think you're invested in a startup depending on the stage, right? But say from inception, you know, seven years, maybe that sounded about right. At which point maybe it worked. And if it worked, that means an IPO or that means a sale or if it didn't work, it didn't work. And that's understood because it's venture capital now though, you've got companies, you know, decade, you know, 15 years old and you've got lots of limited partners in these companies or in these funds who are looking and saying, I've got great paper returns. These things are amazing on paper. But I Keep going to my investment committee and, you know, say you're a college endowment, right? And your job is to produce money that then gets used by the school every year, right? It's not to take money out of the core endowment, it's to produce returns that then can be used to fund operations. And the investment committee keeps looking at you and saying, yeah, you keep giving us these great numbers.

Christian Howell (110:44)

We need cash.

Dan Primack (110:45)

We gave you cash. We would like cash back. And. And the managers just kind of have to shrug and go, you know, Stripe doesn't want to go public. You know, what can we do?

Ben (110:53)

But it's changing this year, right? We might get like $4 trillion of liquidity this year. Year between SpaceX, maybe OpenAI anthropic. Walk me through the maybe. What's at stake before.

John (111:03)

Before you jump in there, I did have a story. There's a friend of mine that I, that I've invested with in the past and he started to look at some new investments and he's closer to 60 than he is 50. And so he's starting to run the numbers and being like, do I really care to make assume this goes incredibly well. Do I really care to get a 10x when I'm 75? Like, at some point he's like, I might just leave it in the market and go play another round of golf.

Ben (111:37)

Yeah, that's a real thing.

John (111:39)

How much on the LP when you have conversation with LPs. So much of the reason that I personally have invested in a bunch of startups and some funds is, is basically fomo. And there's the healthier dynamic, which is generally I meet a founder that I'm excited about and I want to support them. And usually money is the most effective way to do that, at least at scale. But a lot of it is just kind of FOMO and venture is a small part of the money that they are allocating. And they just want to be able to tell their friends or their friends Fun that they're in all the great names. And I don't actually care if it underperforms a little bit if I have something to talk about at dinner.

Dan Primack (112:31)

Yeah, I mean, look, a limited partner doesn't necessarily care about that, right? The FOMO piece, their job, they literally get paid based on if they outperform a benchmark, whatever that benchmark might be. So that's really where they care. And on the FOMO side, I mean, there is this old story going back to like, I don't know, mid-2000s, where Harvard stopped investing with Excel, the Big Silicon Valley firm. They were limited Excel for something they had done in terms of kind of splitting some funds and not giving money back. They were mad and they want to make a big point of not investing. So the next fund for Excel, the one that Harvard very loudly did not invest in, is the one that seeded Facebook, right? So that didn't work out very well for them. So the FOMO thing is real. I will say, I mean you asked what you asked about the crossovers earlier. I mean that there is this part of the market, right? The Fidelity is the T. Rowe prices of the world. And the reason they're investing largely in these companies isn't for the return necessarily on those startup stocks. It's to have a nice foothold if and when the company does go public, right. And to have a relationship with the company so then they can take a really big position. Then they can, you know, get their mutual fund clients and their high net worth clients access into the ipo.

Ben (113:32)

So is that more about context? To talk to their clients? So a Fidelity has a bunch of high net worth individuals with accounts and they can say, hey, we've been investing in this company while they were private so we can bring a more confident in thesis to bear or no, I

Dan Primack (113:49)

think it's literally access. I think it's literally access. I think, Phil, I think what this often means is because they have a relationship and if you've got a very, you know, if you've got an issuer that's oversubscribed for an ipo, it's a very popular ipo. The company's got to make decisions who gets an allocation of what those allocations are and what if your Fidelity or T row, what you really want is to be able to go to your existing clients and say we've, you know, we've got, you've got access to the open air ipo. If you want it, do you want it? And then the client's like, oh, you know, they had access to open. I like these guys, I'm going to stick with them, etc. That's what they want. They want the relationship and they want. And they can say to the CEO, look, we believed in you six years ago. Of course we still believe in you today. We're a long term investor.

Ben (114:27)

So talk about the IPO market. Is it over or are we back?

Dan Primack (114:32)

It's slow. I mean, if you look, I mean despite the fact there was this little boom in January in terms of both number of pricings, in terms of filings were down over 20% in both of those year over year from last year, which was a garbage year for IPOs. Yeah. So everybody is looking at the big dogs, right? Everybody's looking at SpaceX. Everybody, you know, coming sooner. Everybody's looking at potentially open air anthropic. I think databricks is another one that people are sleeping on that's almost certainly going to come in the second half of this year. So I think what we might end up with is a really skewed IPO market. You know, the dollar numbers are going to look good because you're going to have some huge ones but you're not necessarily going to have an enormous number of actual issuers at least at this moment. I mean, yeah, it's pretty dead. We've got one coming tonight. That's all for the week.

Ben (115:12)

Is that because tonight.

Dan Primack (115:14)

Oh, tonight's on the Call. Mini Men, not a venture backed startup. It's a diabetes management Medtronic.

Ben (115:20)

Is that because like you sort of have some sort of liquidity premium for the first name to go out in a category like Core Weave gets out and there's like the one public Neo cloud and so that puts like the bar goes a lot higher for the next three Neo clouds to get out. Something like that.

Dan Primack (115:37)

I mean I, I like, I would like to think that that that was a good argument or that that like that it's, that's that much. I think it's really a vibes thing and a cowardice thing. Kind of been writing this story now for three years which is these companies are scared to go public. Bankers are scared to necessarily bring them. Even though bankers are coin operated and IPOs are good for them, they're a little bit scared of having a lousy IPO and then having a bad reputation off of it. And also a lot of them are spending a lot of time on Space X because there's a lot of money in that for them. No, I think, I think people are scared. They're scared of, you know what if this doesn't work? It's going to be a lot more work. There's going to be a lot more scrutiny on us. And, and I think folks have just been terrified of going public for years and I don't think that's necessarily changed.

John (116:18)

Well, and of course the choppiness of, of the market this year, the sass apocalypse narrative, there's all sorts of stuff.

Dan Primack (116:28)

This is the problem. Right? There's, there's going to be choppiness every year. Right. You know, last April you obviously had the Liberation Day Stuff now you have a war, you have the sass public. There's always going to be a reason to not go public. And I think a lot of people take that reason. You know, there's always something.

Ben (116:40)

Yeah.

John (116:40)

What, what have you, what have you heard? Obviously bad, bad week to be fundraising in the middle, in the Middle East. How, how much are you looking at the war is having kind of like downstream impacts on capital flows. Do you think it's, you know, this started as like, you know, we thought it was going to be a couple days now, then it was a few weeks and now apparently it's looking like September, so who knows at that point? Yeah, I'm not hearing so many of the some. Like every time I log on to X, there's a refinery that's, you know, on fire, things like that, which is kind of the economic engine for a lot of this capital.

Dan Primack (117:23)

Yeah, yeah. I'll take kind of the counter argument, I think, on this, which is that one of the reasons that whether it be Saudi Arabia or Qatar or some of these other countries have decided to do so much venture capital, slash private equity investing, particularly in the US and by the way, it's worth noting, the folks who are doing these investments often are based in New York, they're not based in the Middle East. So it's not actually impacting their day to day lives is because they want diversification from oil. So yeah, there could be some issues in terms of actual capital flows because people are like, oh wait, we're going to have less actual money coming through to invest. But at the same time, the point is diversification and it's possible that what's happened over the past week or two is going to only kind of solidify that desire for diversification. Oh, wow. Oil is our economy. We need other stuff.

Ben (118:04)

Mm. What should we read into Michael Grimes going back to Morgan Stanley

Dan Primack (118:11)

that you don't that working for the White House is a, is a complicated thing. You don't want to do it for too long beyond that. I mean, look, he's like SpaceX is about to go public, you know, and there's going to. The thing is, the reason bankers love IPOs isn't for the IPO per se, although they like that. It's all the business that comes after that. Right. It's the secondary offerings, it's the debt offerings, it's the acquisitions because companies now have a public stock and it's easier to buy stuff. It's all that other business. It's the reason everyone wants to be the left Lead. And Grimes, you know, is an Elon banker and has been. And I think this is a great time for him and for Morgan Stanley. It makes all the sense in the world to bring him back in the fold.

Ben (118:47)

There's also the wealth management piece, I believe, like after the Facebook ipo, you have a whole bunch of potential new clients, right? And so there's.

Dan Primack (118:56)

You do.

Ben (118:56)

That's also a piece of. Of lead left. What. What actually goes into winning lead left is that. Is that. Is it sort of power law distributed in the allocation or the amount of work, or is it more of just like a symbolic title and everyone's sort of splitting it equally?

Dan Primack (119:13)

I think there is more work, I think getting lead left. And the reason, you know, that it's JP Morgan over Morgan Stanley or somebody is really the relationship usually between the CEO/board and that particular banker, maybe that banking team. It's really a comfort thing. It's the first call, right? If something's not going well or something is going well, you need to have that one person. You don't want to have to call 10 bankers at 10 different banks to give them the same information. You want one source of information, they can be kind of the distributor to everybody else.

Ben (119:40)

What are you tracking on the other lab side? There's a whole bunch of rumors. Anthropic OpenAI. What. What are you seeing on that side of the. Of the IPO market?

Dan Primack (119:51)

Market on the ipo. I mean, I open there. I do think there is perceived, you mentioned earlier, this kind of first mover in a space. I do think there is a sense between Sam and Dario that going first might have some advantages to it. I think there could also be some disadvantages. I do think, even though we all know the losses are huge, I think the market's going to be shocked when they actually see it in black and white from the companies, how large these losses are. But so I think there is a little bit of a race between the two of them. It's going to be a huge headline. It's going to be a huge story. OpenAI does seem to be a little ahead on that. When you look at, you know, they have a CFO who's done this before, and Sarah Fryer, right. She helped take Square now block public. She then ran next door. She's done this before. So I think that's going to be the story of the second half, is going to be those two companies maybe battling. And I do think OpenAI goes first again, unless there's some extraneous event.

Ben (120:40)

You mentioned that companies are afraid of going public. Obviously, like at the high level, there's completely different equations around what SpaceX, OpenAI, how they're thinking about this. But at that sort of like mid tier of Decacore and Centicore and the stripes of the world, do they see that there's now infinite liquidity in the private markets to raise endlessly or are they more aware that their current investors, their VC backers are fine rolling everything think into endless continuation vehicles so they can get profitable and operate as a highly venture backed, profitable company in the private markets for a long time?

Dan Primack (121:22)

I think it's that I think there's enough capital and they can get some. So it used to be one of the main reasons to go public outside. So there was two, right? One was get cash on the balance sheet. Well, as you say, there's tons of money in the private market. You can get cash, to be honest, probably easier in the private market than you can in the public market if you're a strong growth company. And then there was liquidity, not only for investors but, but for early employees. That was always a very big deal. Right. You know, how do you help get, you know, how do you help get money for these folks who have all these options? Well, you've got this kind of industry of secondary tenders which has happened. Stripe does one annually. They did one, what, two weeks ago. So you can satisfy both of those problems now. So there's not a real great reason to go public if you're not somebody who really wants to. There are certain founders who like the idea of ringing that bell and being that CEO who does the quarterly earnings call it to feeling, you know, it's a big leagues thing. Right? We've gotten the big leagues. It's what Bill Gurley, I'm sorry, Fred Wilson used to talk about Uber, like, you know, get in the fucking ring, go public. Yeah, but you know, some folks though, you know, if you're the Collison brothers, I'll end with if they ever do go public, I'll be kind of stunned. They don't want to. They clearly don't want to because they could have and they still could and they haven't. And I know when Sequoia Capital did kind of a quasi continuation vehicle about a year or two ago for Stripe, where they basically said to other investors, we'll buy your stock, you know, if you want to. We're going to buy your stock in this so you can get out. We want to double down. You know, I spoke to somebody over there I said how do you get out of this thing ever? Like how do you use Sequoia? How do you ever get liquidity? They said well they're going to go public. And I said what gives you the thought? What gives you any confidence in that? And there wasn't a great answer to it outside of just faith. And so, you know, I guess faith, faith.

Ben (123:00)

What about secondary fund growth? LP demand for secondary funds, even like the fee structure of secondary funds because it feels like so much lower risk. If you're managing a fund that is just going to buy secondary that's been priced by the best VCs, you're just following along, you're buying maybe at a little bit of a discount. Can you really justify 2 and 20 on that type of fund to you or to me?

Dan Primack (123:28)

Probably not, but can they to their investors? Apparently they can because that's what they generally get. Not always, but it's what they generally get. You know, the secondary market's interesting because even just probably like maybe say 10 years ago, it was still very much a cottage small industry. You had a handful of firms that did it that traded, you know, LP interest and venture capital funds or private equity funds, a very small number who did direct secondaries, which is, you know, buying actual portfolios or individual company stocks from somebody else. Now it's this massive business and big private equity firms have gotten into it.

Mark Gurman (123:57)

Right.

Dan Primack (123:58)

So a couple several years ago Carlyle bought something called ALP Invest, which was a huge secondary investor equity, which is kind of this private equity firm most people in states might not know about, but it's one of the biggest in the world. They just bought aas, which is this huge utility. They bought something called collar capital, which is one of the original secondaries firms to build up that practice. So it's becoming a really mature marketplace and it is another way that companies can stay private longer. It's also a way that, you know, institute that limited partners can get some liquidity so they can feed it back into the system. Otherwise, given the kind of lack of so called DPI distribution to paid in capital, the whole market would grind to a halt because a lot of these investors haven't been able to get their money back via traditional means.

Ben (124:40)

Do you think we will see a well known venture capital firm go public in the next three years?

Dan Primack (124:49)

Yeah, General catalyst. Yeah, I mean they're, they're the one. I mean because they're not really a venture capital firm anymore. I mean it's their core, it's still what they do and they invest you know, in series A rounds and startups, and they still do that, but they've got a wealth management business. They own a hospital.

Ben (125:04)

I mean, they own a hospital.

Dan Primack (125:05)

That is not a venture capital thing. And by the way, I have to say, and I. This is not a knock on them, man. If I was admitted into a hospital and somehow there was like a plaque on the wall that said, we are owned by a Silicon Valley venture capital, I'd be scared out of my mind about what was about to happen to me in that room. But they're not.

John (125:22)

You'd be getting a YC company. Robot would be doing your surgery. It'd be great.

Dan Primack (125:27)

That's exactly what I want. As you know, whenever you see a doctor, particularly for a procedure, you want to hear the word experimental. That's always what you're looking for. So they're not really a VC firm anymore, and they've diversified and they want to diverse. Be paying asset base, which is what they're building. Good for them. And to be honest, it's not even that different if you look on the kind of the private equity side. You know, Blackstone started as a private equity firm doing leveraged buyouts, but then they got into other stuff. Right. They have private credit. They arguably became a real estate investment firm more than anything else. Diversified asset base. Yeah. I think GC will do it. Sequoia has been talked about forever, but they don't seem to have an appetite. And the way that they operate in terms of management, it doesn't seem. It doesn't seem like it's going to be them.

Ben (126:07)

What about Andreessen?

Dan Primack (126:08)

Maybe? Andreessen?

Ben (126:09)

Yeah, maybe Andreessen.

Christian Howell (126:10)

Maybe.

Dan Primack (126:10)

Maybe Andreessen. But can you honestly imagine Marker Ben doing quarterly earnings calls? I can't.

Ben (126:15)

That'd be fun. I mean, they do a lot of podcasts, so it's somewhat similar. They got the wraps.

Dan Primack (126:18)

They do a lot of podcasts with their friends.

Ben (126:20)

Sure. What about the fact that private equity and private credit has sold off so significantly in the public markets? Isn't that downward pressure any. Any VC firm has to be looking at that and saying, like, maybe we want to stay out of this for a while.

Dan Primack (126:38)

I would think so. I mean, it's an interesting thing. You know, we were just. I was just having a conversation with a colleague before I got on with you guys about this. And this question. Is there systemic risk in the private credit market or is there not? And the argument for yes, if there's any, would be that so much of the money that's gone into private credits come from insurance companies that's been this big boom into it. That's kind of the counterparty here. And oh like, you know, if insurance companies have problems, we've seen this act before. We know what happens when insurance companies have problems. It goes bad for everybody. But that said, you know, the private credit selloff right now seems to be a reaction to the, to the sass apocalypse. And some of that we haven't yet seen. A large number really any significant defaults of private credit. People are trying to get their money out of funds. There's been big redemptions. That's a liquidity story. But it's not that, oh my God, you've got, you know, these 20 companies that have gone under that are in these portfolios. Look at those dominoes.

John (127:25)

Well, and it's different. It's different than, you know, a private credit fund that's getting a bunch of redemptions or kind of a run on the bank. They can just say like, hey, we're cutting off redemptions. This is a 10 year fund. We'll see. Basically we'll see it later. It's different than an actual bank run where you can just go and say like, I'd like my money back and then you have a collapse.

Dan Primack (127:49)

You're right. And look. And they consider that a feature, not a bug.

Christian Howell (127:52)

Right.

Dan Primack (127:52)

That's one of the arguments private credit's made for why they are stable. You can't just, you know, the funds can't just have all the money pulled out in a day.

Ben (127:59)

Yeah.

John (128:00)

How much have you tracked the volume of SPVs that have been happening over the last 12 months? I imagine it's pretty hard to actually get a lot of data, like high quality data on this. There's been this narrative that, you know, the average person has been cut off from benefiting from the overall gains in the, in the, in the market caps of a lot of the AI labs in particular, I would push back and be like everybody. You know, if you've got a 401k, you own Amazon and Nvidia and Microsoft and so you actually do have quite a bit of exposure to the labs. But and the other side of that is that it didn't feel impossible to get exposure to Anthropic over the last six weeks if you wanted it because people were posting on X, hey, I've got slug here, slug there. If you wanted it, you could probably get it.

Dan Primack (128:56)

Probably. I mean, two things about spv. To answer your first question, I don't have a great sense on the track in terms of actual volume. Except you know, this sense that it's through the roof. When people advertise an SPV or say, even forget advertise, maybe you know somebody you know personally and they send you a note about it. You don't necessarily know they actually have exposure. What they're trying often to do is build up enough money that then they can go to somebody and offer a good price. They're often putting the cart before the horse. I will say, I mean certain companies, big companies included, have tried clamping down a little bit on it. I mean CEOs and CFOs particularly hate SPV. Generally speaking, not always, but generally don't like SPV is because it complicates the cap table. It becomes even though it's a single entity, it still becomes way more investors. It becomes a lot more exposure. They would generally rather have a traditional investment firm in them than or in a traditional investment fund than spv.

John (129:47)

Yeah, yeah.

Ben (129:47)

General solicitation. Potentially overrated.

John (129:50)

Definitely overrated.

Ben (129:52)

Probably need to avoid it. Anyway, thank you so much for taking the time.

John (129:55)

Great to finally have you on.

Ben (129:56)

Dave, great to have you on.

John (129:57)

Thank you for all of your coverage and come back on anytime.

Ben (130:00)

We'll talk to you soon.

Mark Gurman (130:01)

Thank you guys.

Ben (130:02)

Have a good one. Let me tell you about App lovin Profitable advertising made Easy with Axon AI. Get access to over 1.1Billion daily active users and grow your business today. And let me also tell you about Lambda Lambda is the super intelligence cloud building AI, supercomputers for training and inference that scale from one GPU to hundreds of thousands. I'm liking that graphic.

John (130:24)

Well, Tim Sweeney. Tim Sweeney is feeling good.

Ben (130:27)

He's feeling good. He's out front of Google. He, according to the Verge, has signed away his right to criticize Google until 2032. There's some nuance here. He agreed not to criticize Google related to App Store distribution and fees. They got to a deal.

John (130:46)

Please give us Stop talking trash.

Ben (130:49)

Stop dragging us.

John (130:50)

Please. We just need a break. We're exhausted.

Ben (130:53)

The Verge put it in harsh words as Google has finally muzzled Tim Sweeney so he might be one of the most outspoken people in the history of the world. He fought two of the world's most valuable and profile and powerful companies almost all the way to the US Supreme Court. Insulting them again and again. Crooked, deceitful, insanely sneaky. Calling Android a fake open platform. Calling both companies gangster style businesses that will do anything they think they can get away with. Telling me how Google's Project Hug was An astonishingly corrupt effort at a massive scale. Wow. He does not mince words. But Google has finally muzzled Tim Sweeney. It's right there in a binding term sheet for his settlement with Google. On March 3, he not only signed away Epic's right to sue and disparage the company, he signed away his own right to advocate for any further changes to Google's App Store policies. He can't criticize Google's App Store practices. In fact, he has to praise them, the contract states. Epic believes that the Google and Android platform with the changes in this term sheet are pro competitive and a model for App Store platform operations.

John (132:01)

Two companies have also agreed to terms about a new class of apps they're calling Metaverse Browsers, according to a heavily redacted section of a revised binding term sheet. While the term Metaverse has largely fallen out of favor, Epic CEO Tim Sweeney has been talking for years about the Metaverse and how it might work in the future. And this actually isn't the first time there's been a connection with Epic and Google about the Metaverse. In court in January, while discussing a secret $800 million Unreal Engine and Services deal, Sweeney blurted out that the agreement related to the Metaverse. Unfortunately, the redactions in the binding term sheet cover up a lot of key details about what a Metaverse browser actually is. But what's from vis what's visible in the document. Metaverse browsers will have the primary purpose of allowing the navigation of X exploration of Metaverse worlds, support virtual items and identity that are portable across different worlds, and must support modern security considerations.

Ben (133:00)

Well, if you don't see me here one day, I'll be in my Apple Vision Pro playing Fortnite in the Metaverse browser. For sure. It's going to get me. Let me tell you about Gemini 3.1 Pro. With a more capable baseline, Gemini 3.0 3.1 Pro is great for super complex tasks like visualizing difficult concepts, synthesizing data into a single view, or bringing creative projects to life. And without further ado, let's bring in we the Lambda Lightning round. We're kicking it off. Let's take a look at that beautiful camera move. We got graphics. We got a. I have the gong mallet here actually. But we will kick off with the first guest of our Lambda Lightning round, Max from Vast Space. Max, how are you doing?

Max (133:44)

Hey guys, great to see you. Thanks for having me.

Ben (133:46)

Thanks for coming on the show. Give us the. Give us an introduction on yourself and the company first.

Max (133:52)

Yeah, Max out. I'm The CEO at best. So we are a space station company based in Los Angeles. Our short term goal is to have the privilege of replacing the International Space Station for NASA and its partner. There's a competition this week, this year that we hope and expect to win. And our key differentiator is that we are not waiting to get the contract. We are building right now the world's first commercial space station, haven one that we are launching in Q1 next year. The team I have the privilege to lead is a thousand people that are mostly technician and engineer and. And we are getting on, we're building it. And after that we will be launching more module and basically creating a multimodule station that can ensure American astronaut but also allied astronauts are able to be in space permanently. China is out there with a permanent space station. So we need to succeed it before the ISS is retired.

Ben (134:44)

How did you get into this?

John (134:45)

It's amazing. First step by the way. Just start by going straight to the space station.

Ben (134:50)

What were you doing before?

Max (134:52)

So I'm an intern entrepreneur. Originally I created a couple of companies that I've exited. One is called Livestream, so live video is pretty familiar to me. Also a video camera company called Mevo that I sold to Logitech. Livestream was sold to IC Vimeo in 2017. And then my first space company was called Launcher. It's a small launch company. We launched two satellite, we built an amazing engine and then the founder of Vaast, Jed McCaleb acquired it in 2013. So at the time Vast had about 40 people and my team at 80, we became 120 and then we embarked on the current strategy and grew to a thousand people and. And obviously our first external fundraising that we are announcing today.

Ben (135:38)

Yeah, going after space station.

John (135:40)

Wait, you said first external fundraising?

Ben (135:42)

Yes. Yeah. Give us the numbers. How much did you raise?

John (135:44)

What's the total history? So you guys had combined your team.

Max (135:50)

So the original investment were from our founder jet. It's pretty unusual. It's over $900 million since 2001 and then today we are announcing our $500 million.

Mark Gurman (136:06)

What is.

John (136:06)

Thank you for the gong breakdown break down. What. What the. What the. Why we need new space stations. What are the different use cases other than just having a strong presence?

Max (136:22)

I mean today if you look at the International Space Station, it's been there for 25 years. It's been amazing in safety in keeping a continuous crew for 25 years. So we've had people outside of a for 25 years. It's pretty amazing what it has not been great at is the cost. You know, it's the single most expensive object created by humans. And it's not sustainable to the taxpayer or to the NASA budget which need to focus more on exploration including moon and Mars, as you read Jared yesterday or a few days ago. And so the NASA basically wants to reduce the cost. That's why they wanted to move to commercial provider. And they also need to retire the isis. It's a partnership with Russia, obviously not desirable geopolitically right now, long term and it's also aging. So all of these reasons create the commercial opportunity to succeed it short term. You know, the main business model are international space agencies. NASA Europe with Issa Jaxon, Japan and other nations getting involved in human spaceflight. Long term it's the orbital economy. So it means manufacturing drugs, semiconductors and so on in space. And of course our space station will become more factories as opposed to government mission, but that will take a while. So today the the key opportunity is to help all the governments around the world get into human spaceflight to do important science and NASA and all the government to save money with a fast, iterative, low cost approach.

John (137:43)

Very cool.

Ben (137:44)

Where are you able to partner with the existing orbital economy, the existing space community? Because there's so much that goes into actually building and deploying a space station where I imagine that you're standing on shoulders of giants. But walk me through all the things that allow you to accelerate your mission.

Max (138:05)

I mean the first step is to go from 0 to 1. It's actually to have a space station and a crew visit it. And if you compare that effort versus the effort of having payload and from partner in science having it going beyond renders and beyond mous and dream and press announcement is to have it there, right? Whoever has it there and is profitable will figure out these applications. More concretely, we have partnered with companies like Redwire company in Europe called Yuri and other companies. And we have a laboratory on the first station Haven one which is. Which basically are companies that have already done science and are doing now on the iss. So we brought them in on our space station that we launched next year. And then our astronauts will be continuing the science and research beyond that. Right now we are in the R and D phase. Whether it's materials, semiconductors, making drugs in space that we can't make on Earth thanks to the microgravity environment. It's still R and D. There's no killer app, no product. And through being commercial, doing more flights, being commercially friendly, we're confident we will unlock it so we're super excited with what NASA did. They created thousands and thousands of experiments and have found some interesting application. And so we benefit from that, that full pipeline when all station will be up.

Ben (139:19)

How important is the next generation of reusable rockets, the starships of the world, to unlocking new capabilities in deploying space stations?

Max (139:30)

I mean if you even go back to reusable rocket, even before, right. Falcon and what SpaceX has done, we couldn't be here without the early transition to commercial that NASA and SpaceX have done with the Dragon spacecraft. You know it's pretty, you know, if we were still in the space shuttle era, I don't think I could be buying a ride to commercial space station haven one from, from NASA. And because of what they did with that program, hopefully they'll get Starliner up and running the Boeing version. You know, we can go call SpaceX and buy a ride for astronauts to our space station. Starship will, you know, take that. You know what we hope is it will lower the cost of transportation to our space station by at least an order of magnitude. It will allow us to bring up four people, but maybe 20 people. So that's really a big timing and a big unlock. You know, it still will take a little while for it to arrive. It will get there and all our goal is that by the time Starship is ready, that we have a large enough space station so that, you know, in relation to the volume inside Starship we are still, you know, four or five times larger. We have a lot more power, a lot of equipment. So we, you know, it's a key enabler why we are here and why the future is exciting for space station. The arrival of Starship.

John (140:42)

Sort of a random question, but I'm just curious, what is the planned process for retiring the current space station? Do the humans leave and it just kind of continues to orbit? Do they take it out of orbit? What is that? Do you have any idea what that'll look like?

Max (140:58)

Yeah, it's interesting. When they design a space station, they sort of panned that right? Like none. They don't have the ability to de orbit itself. And so they always had the plan to build a special spacecraft that will push it in the Pacific and That's called a US orbit vehicle. SpaceX won that contract. I think NASA is hoping to get it there, you know, two or three years before the retirement of the ISS. The current retirement date is the end of 2030. There's discussion now to extend it to 32, but somewhere in that region. So it will be there ready to go especially if there's a safety issue or something like that and to do testing and then they will just push it with some Delta V some propulsion to eventually it will re enter in a pretty interesting display if there was anyone there to a place called Point Nemo in the Pacific. I think NASA is expecting to de crew it nominally meaning not in an emergency scenario due to the aging maybe a year ahead of that. But I don't know the exact date.

Ben (141:55)

Well hopefully we can get a camera there and livestream it because they're pretty good at watching the rockets come down even when they're landing in the middle of the ocean. So hopefully we can see the deorbit.

Max (142:08)

Yeah, we saw some, some of the starship re entry was pretty spectacular. So hopefully we'll see the same.

Ben (142:14)

Yeah, yeah. In the Indian Ocean. That was a remarkable video. What dramatic ending.

John (142:18)

Is the entire team based in Los Angeles where's kind of. Where is the team dispersed and what are you hiring for going forward?

Max (142:25)

Yeah, we just over a thousand people and you know more than 900 in the Los Angeles, in Long beach specifically they are manufacturing. You know we have control room, we have integration room. We manufacture our primary structure. We brought that capability to America. For 20 years it has been outsourced abroad. You can see actually on my right our test site in Mojave. Then we have an operation in the Mojave desert where we test things. You know we're a pretty small team there. We have an office in D.C. we just opened an office in Japan where you've seen some of our investors are from Japan. The largest bank mufg, Mitsui from Japan and Nikon, the camera company. Japan is actually one of the key market for human spaceflight. They were really a co builder of the International Space Station and they want to continue with their 10 billion fund.

Ben (143:15)

That's amazing. Well, congratulations on all the progress. Thank you so much.

John (143:18)

Great to meet, so excited to follow along. Congrats on the milestone.

Max (143:23)

Thank you, thank you. And I hear John, you have watch Spacewatch fan from your interview with.

Ben (143:28)

Oh yes, yes. Do you have any recommendations if I'm going to space?

Max (143:31)

We partnered with iwc. Here you go. There you go.

Ben (143:34)

That's a great selection.

Max (143:36)

Bringing new revenue stream to commercial space. And in April we're announcing a new watch that we've designed with them that's designed for space. So hopefully check that out soon.

John (143:47)

Incredible.

Ben (143:48)

Yeah, that's amazing. Last year we were partnered with a company called Bezel where a marketplace for buying Those watches, I'm sure they'd be flying off the shelf. So thank you so much for advancing space and advancing the equally important industry of fine watchmaking. We appreciate everything you do. Have a great rest of your day.

John (144:03)

Great to meet you, Max.

Max (144:04)

Thanks guys.

Ben (144:04)

Talk to you soon. Let me tell you about Turbo Puffer, Serverless Vector and full text search built from first principles on object storage. Fast 10x cheaper and extremely scalable. Oracle has joined the Ratepayer Protection Pledge. They said we are proud to be part of the White House's mission to advance American AI leadership while protecting the communities in which we build data centers. We are committed to paying our own way on energy, hiring locally, protecting local water resources and enriching communities across the country. AI isn't just about technology. It's about strengthening communities while fueling America's future. Let's go with some GPT written they had to dog food maybe, who knows. But I mean it's a good point. Google, Oracle, Xai, Meta, Microsoft, OpenAI and Amazon have now signed on to the Ratepayer Protection Pledge.

John (145:00)

Very smart.

Ben (145:01)

That seems like a really, really important move because you have the resources, you have the capital. Go build the energy. Do not spike the local do not spike the the local energy rates because the communities will protest and they will block you. And it's just game theory 101 to just not let the negative externalities run wild in the communities of a democracy Anyway.

John (145:27)

Ben Smith and semaphore Rachel Jones are covering a new AI cost hardened data centers. They say building new data centers in underground nuclear hardened bunkers which some companies began doing recently, cost more than $2,000 per square foot in the U.S. according to Larry hall, who owns Kansas based bunker real estate firm Survival Condo. Wow, that's. We got to get Nick if you're hearing this. We got to get Larry Hall.

Ben (145:56)

We got to talk to Kansas based

John (145:57)

bunker real estate firm Survival Condo. That's twice the cost of constructing a facility from scratch above ground. And building in the Middle east can be more expensive depending on the terrain. Given the average data center spans the size of a Manhattan city block, an underground concrete shelter of that size might go for 200 million. And that's before factoring in the cost to cover energy cooling and servers. Of course GPUs the cooling seems still most of Survival Condos clients are looking for facilities smaller than that. The cheapest facility the firm has priced was for an existing 54,000 square foot bunker costing just 45 million.

Ben (146:35)

This is. There's some extra context from Matthew Shaw After Amazon's Bahrain data center was hit, this will likely be heightened. I'm sure people at CISA are looking into this issue. So in the Middle east, particularly while there are conflicts undergoing underway, I'm sure people will be looking at the future of how they build these data centers.

John (146:55)

Let's Netflix acquires AI filmmaking startup founded by Ben Affleck who will serve as advisor to Netflix.

Ben (147:04)

Very exciting.

John (147:04)

Company is called Interpositive that makes AI powered tools for filmmakers. The system builds AI models from a film's dailies.

Ben (147:13)

Dailies are the. Oh yeah, you guys want to explain?

John (147:18)

Explain dailies, Ben, that's good.

Mark Gurman (147:19)

Do you know that, John?

Ben (147:20)

Come on, film nerds. Yes, I know what dailies are.

Mark Gurman (147:22)

Dailies are when you were shooting on

John (147:24)

film, you would send the daily print to the lab and they would look at it and they could review it

Mark Gurman (147:29)

to make sure if they needed to

John (147:30)

reshoot the next day.

Ben (147:31)

Yeah, so it's basically like reviewing the film that you shot in one day at the end of the day or before you go shoot, because you might not have torn down the set, you might still be at the same location. You don't want to leave and wrap that particular shoot until you have reviewed the footage. But dailies, it just means that post production tasks like color relighting, vfx. So you're on set, you go and you shoot that one cinematic scene, the dramatic scene. And typically when you're watching it, there's no monster in the background, there's no color grade, it's very flat. It doesn't look like the final movie. If you can use AI and AI powered tools to get you much closer to something that looks like what the final movie will look like, then very quickly you can turn around that daily shoot into, okay, we got a bunch of raw footage. Let's edit it together so that if we're filming me and then we're filming you, we cut it back and forth, cut it back together, color grade it, do some basic sound design. Even if it's sloppy AI slop, it's going to be much more watchable than just watching the rock.

John (148:35)

What do you think Netflix plans to do with this tech? Is this something they'll offer to productions that they're funding? Is that the idea?

Ben (148:45)

Yeah, I would imagine that. I'm not exactly sure how much more they're going to be scaling up their in house production budget, but I could imagine that this gets deployed into projects that are being filmed and run and produced by Netflix directly. But we'll have to see. We'd love to have someone on for Netflix. Without further ado, let me tell you about graphite code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. And without further ado, we'll bring in Christian Howell, the CEO of Cognito Therapeutics. Christian, how are you doing?

Christian Howell (149:24)

Gentlemen, how are you? Thanks so much for having me.

Ben (149:25)

We're doing fantastic.

John (149:26)

Great to have you.

Ben (149:27)

Thanks so much for taking the time to join us.

John (149:29)

Big, big day.

Ben (149:29)

Big day. Please introduce yourself and the company.

Cameron Record (149:34)

Yeah.

Christian Howell (149:34)

So I'm Christian Howell. I'm the CEO of Cognito. My background is I'm a former Navy officer and a longtime med tech executive. And then the company is, you know, sort of an amazing story. It's spun out of MIT and it's developing a non invasive therapeutic for driving brain activity to promote brain health and starting an Alzheimer's disease.

Ben (149:58)

Yeah. Give me the shape of Alzheimer's. For those who might not know the scale of its impact in America or even globally today.

Christian Howell (150:10)

Yeah, it's really unbelievable, candidly so. There are about 6 million people and families in the United States that are impacted by Alzheimer's disease. There are another 15 million people that are impacted by something called mild cognitive impairment, which is the early stage of cognitive decline. What's even scarier is about 12 million of those people are undiagnosed because there just haven't been available therapies for patients and their families. And so in the last couple years, there have been a series of therapies that have come to market called the monoclonal antibodies. But unfortunately they're not indicated for patients with more advanced Alzheimer's disease. And there's some risks associated with. So, yeah, almost 50 million people around the planet are impacted by Alzheimer's disease.

Ben (151:00)

And is it fair to say that Alzheimer's has sort of like always existed, but if you go back a couple hundred years, lifespans were just so short that people would die before they had the chance to fight with their brain. They were fighting with their heart, basically. And now that we've extended lives, now we're grappling with brain deterioration. Is that roughly correct?

Christian Howell (151:24)

I think that's exactly right. I think that we have. We are entering an age where we have just made so many diseases chronic, whether it's cancer, diabetes, or cardiovascular disease, that we are now our bodies are living longer than our brains.

Ben (151:39)

Yeah.

Christian Howell (151:40)

And that is why we are moving into this space where we're seeing more neurodegeneration. And I think we're trying to remove the stigma from it. So people aren't just calling it dementia or, you know, people are, you know, they're really thinking about, you know, why am I experiencing cognitive loss? Why am I seeing, you know, why am I seeing loss of independence? But you're exactly right. I mean, I think it. I think it is because I think the next 20 years is going to be about, you know, brain health, but really thinking about, you know, how do we preserve structure and function our brain so we can. We can have our brains living as long as the rest of the, you know, the rest of us.

Ben (152:16)

So you mentioned monoclonal antibodies, you mentioned invasive techniques. Walk me through the spectrum of treatments, cures that are available and how you fit in.

Christian Howell (152:26)

Yeah, so no cures, unfortunately, today. So everyone is focused on just figuring out how we can slow the progression of the disease. And really what's happened, you know, for years, is people are sort of focused on the sort of underlying pathogens.

John (152:42)

Right.

Christian Howell (152:42)

So you hear about things like amyloid and tau, and they're actually not causing cognitive and functional loss. They are. They are biomarkers of the disease. But what's actually causing the cognitive functional loss is network dysfunction. So the brain is no longer. Think of it like a symphony. The brain is no longer able to be in harmony. And when it falls out of harmony, it's unable to drive the biology that preserves its cognition and function. And so what a brilliant group at MIT led by Li Wei Tsai discovered over the last several decades is that one, that you can actually stimulate the brain back into harmony. And that when the brain is at a particular activity rate that they call the gamma band, when the neurons are firing north of 40 hertz per second, then what you see is, you see this profound biology that is driven, that helps drive synapses and myelin and really preserve brain structure and brain function. And they then learned that you could use an external stimulation to drive that level of activity. And actually, if you stimulated the visual and the auditory cortices, that would give you the most profound sort of response. And what ultimately then they discovered is that you could use sensory stimulation, you could use light and sound at a duty cycle of, you know, 40 hertz, that would then drive the nerves to promote that type of activity in the brain. And then you would ultimately see this really profound biologic expression. So, I mean, it's an amazing.

Ben (154:14)

So for the folks with brains that maybe are not fully working, is this a fancy hat?

Christian Howell (154:23)

No,

Ben (154:26)

it's a really.

Christian Howell (154:27)

It's a good question, because I say all the time. That I think the first principle challenge of Cognito is that the science seems too simple to be plausible. Right. So you're gonna, you're gonna, you're gonna flash light and sound.

Ben (154:40)

Okay.

Christian Howell (154:40)

And you're gonna get my brain active, and that's gonna drive biology that protects the loss of cognition function.

Mark Gurman (154:45)

Right.

Ben (154:45)

And specifically the light and sound goes through my eyes and my ears.

Christian Howell (154:48)

Eyes and ears.

Dan Primack (154:49)

Right.

Christian Howell (154:49)

Because we want to, we want to stimulate optic nerve. Yeah, there you go. You want to stimulate the optic nerve and you want to stimulate the stabilococlear

Dan Primack (154:56)

nerve in the ear.

Mark Gurman (154:57)

Right.

Christian Howell (154:58)

And so light and sound are really effective at stimulating those cranial nerves.

Ben (155:02)

Yes.

Christian Howell (155:02)

But what's great is because the science candidly was perceived as being sort of so simple, it meant that there had to be this massive investment in clinically validating it.

Ben (155:12)

Yeah.

Christian Howell (155:12)

So there's been more than $1 billion invested between MIT and Harvard on exploring this science. We are currently fully enrolled, almost completed, what is the largest non drug randomized clinical trial that's ever been conducted. We're doing 673 patients across 70 sites in the United States. We're studying them for 12 months and we're looking to see can we preserve their cognition and function using this type of therapy. It ultimately becomes a tailwind for us.

Ben (155:46)

So over 12 months, that gentleman with the, the device on his head, was that Morgan Freeman? How often is he, how often is he wearing that for how long? At what intervals? Walk me through sort of what a typical treatment program might look like.

Cameron Record (156:03)

Yeah.

Christian Howell (156:03)

So the first thing we do is we, which is exciting is we confirm that the brain responds to the therapy. So patients come in, we give them the device, one, we determine they can tolerate the light and the sound. And then under an EEG, we confirm that we can get brain to 40 Hz and hold the brain at 40 Hz.

Ben (156:18)

Got it.

Christian Howell (156:18)

Then they are, they get a personalized device that they go home with. We ask patients to wear an hour a day, every day. What we hear from patients is they feel empowered, they feel like they get an opportunity. I get up, I have my coffee, 9 o', clock, I sit for an hour. I'm doing something proactive to address my disease. And candidly, that has manifested itself in one. In our study state, we have almost an 85 or 86% adherence, meaning patients are wearing it six days a week, at least 50 minutes a day. We have almost 90% of patients that when they end the study, want to stay on the therapy and go into Additional studies.

Ben (156:58)

Have you considered putting advertisements in it?

Christian Howell (157:02)

It's funny you said it. This one was designed for ad patients. But this idea that you can use light and sound to stimulate brain activity, I mean the platform opportunity here is really interesting to think about. We know we've got indication in other disease states and conditions. We're going to study those. There's the opportunity to think about it

Mark Gurman (157:22)

for

Christian Howell (157:24)

preventative or even brain health proactivity. And then there's opportunities for us in things like sleep and stroke and traumatic brain.

Ben (157:33)

But the default path will be FDA approval prescribed by a doctor. Maybe they send it home with you. It's probably expensive but insurance will cover some of that, if not all. And then patients will be able to use this sort of non invasively to treat their Alzheimer's. Hopefully for as long as it takes.

Christian Howell (157:53)

Exactly right. Right. So we will read out the study in August. We hope to go to the FDA in November. The hope is that we see an approval mid of next year.

Cameron Record (158:04)

You're right.

Christian Howell (158:04)

We'll work with CMS to make sure that it's covered and then patients will have a very sort of straight line path to be from diagnosis to getting the device personalized for them to getting the device in their homes. And you're right, they can do it anywhere. Right. They don't have to go to the hospital, they don't have to go to a clinic. If they travel. They can take the device with. I have one here. You can, you know, you can. It really makes life, it sort of bends to their life more than asking them to bend their life to a therapy.

Ben (158:32)

That's amazing. Well, good luck. You raised some money. How much did you raise and what does it allow you to do?

Christian Howell (158:40)

Yeah, so we oversubscribed the round. Look at that. We love it. The gong. We oversub the round to 100, 105,000.

John (158:50)

That's right.

Christian Howell (158:52)

Not an easy time to raise money in the life sciences. Especially when you're doing something completely sort of non, you know, unconventional.

Ben (158:59)

Yeah.

Christian Howell (159:00)

And you know, that was, it was a really interesting time. Right. Because as, as investors got more conservative, they didn't want to operate outside their thesis. And we're, we're not a traditional biotech, we're not a traditional medtech. Right. So we really had to find investors that weren't looking at it from the modality in, but we're looking at it from kind of the disease state out. But it allows, allows us to now sort of downshift. So we are, you know, going to continue on, you know, get the HOPE readout, get to the regulators, and then start the commercial work and really try to, you know, meet that urgency in the market. And we're doing it with, in partnership with big academic medical centers that are going to help us learn, you know, how do you identify the patients, how do you get the therapy to patients? How do you help them adopt it and adhere to the therapy? And then how can we explore new, new indications?

Ben (159:47)

That's amazing.

John (159:48)

Super exciting. My grandfather, my late grandfather suffered from Alzheimer's. And I remember he was doing the antibody treatments, but I just remember the frustration of waiting for those treatments and then kind of waiting to see what kind of impact that they would have. And just he was fully willing and excited to do whatever it took. And not having something outside of kind of more basic everyday health stuff to do was deeply frustrating. So very, very excited that you're building this and come back on as you make more progress. And congrats to the whole team on the milestone.

Christian Howell (160:29)

Thanks, man. I really appreciate it. I mean, it is. I say to people all the time, I got the best gig in the world, right? Because I get to see this really interesting science get delivered to families that need it desperately. And as much as I'd love for your story to be unique, and it's unique for you guys, there's not a day that I don't run into people that say my mom or my dad or my aunt or my uncle. And so it's just such a desperate need. I'm so fortunate to be the guy that gets to kind of steward this. So I appreciate you guys giving us an opportunity to talk about it and share the work that we're doing.

Ben (161:01)

Yeah, thanks for everything.

John (161:02)

Last couple questions from the chat. Ryan in the chat says suspected a few effect size if successful. How many cog points are you aiming for? I don't. Yeah, I'll give you the.

Mark Gurman (161:15)

Yes, it's.

John (161:15)

It's a.

Ben (161:15)

It's.

John (161:16)

Explain those questions for. For me. And then

Christian Howell (161:20)

what we're trying to measure is, you know, how much can we preserve cognition.

Ben (161:24)

Sure.

Christian Howell (161:24)

And how much can we preserve function? Right. So think of cognition as, like, memory and think of function as agency and independence. And so in our feasibility study, which was a study we did just before this one, we showed an almost 77% preservation of function at a 76% preservation of cognition. Those numbers are best in class by a long ways. And so if we in the big studies show something similar to that or even a little bit less than that, it will be the most significant clinical Impact in addition to, we've never had an adverse event related to the therapy and you know, it's non invasive and patient could use it in their home. So that, you know, that's kind of how we're thinking about the impact and then we'll support that through biomarkers and all the stuff that you show in these studies that you're making an actual, you're actually making a difference.

Ben (162:14)

That's great. Well, thank you so much for coming. Great to meet you. Look forward to.

Christian Howell (162:19)

Love what you guys are doing. It's such a cool, it's such a cool scene.

John (162:22)

So.

Christian Howell (162:23)

And welcome. Looking forward to coming back and talking to you guys about the work that we're doing.

Ben (162:27)

Yeah, we'll talk to you soon. Cheers, Christian. Goodbye.

Christian Howell (162:30)

Thanks guys.

Ben (162:31)

Let me tell you about console.com. console builds AI agents that automate 70% of it. HR and finance support, giving employees instant resolution for access requests and password resets. And let me also tell you about Restream 1 livestream, 30 plus destinations. If you want to multi stream, go to restream.com and our next guest is here live in person with us in the TBP and ultradome. We have Cameron record from Nominal.

John (162:55)

What's going on?

Ben (162:55)

Welcome back to the show. Good to see you. How should we kick this up? Can we just hit the gong right away? What happened? Tell us, tell us what happened.

Cameron Record (163:04)

Today we are announcing a $80 million raise at a billion dollar.

John (163:11)

Billion.

Cameron Record (163:13)

That was a loud one.

John (163:15)

He broke the mallet. He broke them out. That's a powerful, powerful omen right there.

Cameron Record (163:20)

We're announcing our latest, our latest financing led by Founders Fund.

Ben (163:25)

Fantastic, fantastic.

John (163:27)

What do we have here?

Ben (163:28)

Had you been working with them before?

Cameron Record (163:30)

We had been working with them before.

Ben (163:31)

Okay.

Cameron Record (163:31)

Yeah. So they Founders Fund have been an investor since the seed round.

Ben (163:35)

Okay. Through Delian, Trey.

Cameron Record (163:37)

Both. Delian and Trey. Yeah, both. And really, I think, really how this came about was I think Founders Fund has a really good perspective obviously on the evolving hardware landscape, broadly speaking, but a unique perspective into particularly Anduril.

Ben (163:55)

Sure.

Cameron Record (163:56)

We announced our partnership with them two weeks ago.

Ben (163:59)

Now if it's working or not exactly,

Cameron Record (164:02)

they're gonna know if it's working or not. And so I think, you know, some direct feedback from them and other FF portfolio companies. And so, yeah, we were not raising, I mean we were on the show eight months ago announcing the series B led by Sequoia, but we got approached by Founders Fund at the end of the year, really over the holidays with a pretty good offer to lead a Preemptive financing and it made its own sense.

Ben (164:27)

That's great.

John (164:28)

You're like, why not make a magazine?

Ben (164:29)

Yes, yes. So I brought props first, sort of reintroduce the, the product for those who didn't see the previous.

Cameron Record (164:37)

Yeah. So Nominal, we build a platform for hardware tests and operations. Right. So we're managing everything from the end of the manufacturing process. So then quality testing, inspection, end of line through to more like lab testing, benchtop testing.

Ben (164:54)

Okay.

Cameron Record (164:54)

Think power supplies. Dax oscilloscopes, instrumented hardware.

Ben (164:58)

Anduril's making a submarine. They need to test the battery that goes on that submarine as soon as it comes off the manufacturing line. Even if they buy it from a supplier that they trust, it comes in. They have to know that it has the right voltage.

Cameron Record (165:09)

And that's exactly. Honestly, that is a really, really like we're seeing that use case really explode in the product. I think particularly as there's been a big rush of more on shoring manufacturing. Frankly, I think quality in the entire industry is sort of going down as there's a little compression effect. So people making components, widgets servos motors, etc. When these, the OEMs, the bigger companies, the androids of the world receive them, they need to run through some initial inspections.

Ben (165:39)

And does your business grow as businesses that you work with shift from R and D and testing and prototyping to actual scaled manufacturing?

Cameron Record (165:50)

Yes. Yeah. And that's a huge part of the thesis. Like, honestly, like some of the earliest.

Ben (165:53)

Like what you want do to.

Cameron Record (165:54)

Yeah, exactly. Some of the earliest vision of Nominal is like testing is a really powerful place to start because every organization is kind of always testing. If you're iterating, there's normally some budget, there's a little bit of risk tolerance to try new software, new tools, new processes, get whatever advantage you can squeeze out. And then a lot of the thesis is like if that works, you want to use the same software when you're actually doing high scale production manufacturing and you want to use the same software again when you deploy your asset. Let's pick a submarine. Wherever it is in the world. Submarine is probably a bad example. Again, I was a former submarine officer, so know a thing or two, you're not going to get a ton of live telemetry coming off of a submarine ideally. But if you deploy an asset in the field, you want to be able to link all of that telemetry sensor data logs back to the system.

Ben (166:39)

Interesting. And is that for like testing, like the feedback loop for manufacturing? So it's like let's switch over to the sensor tower analogy. You put up a bunch of sensor towers. Somewhere there's a bunch of telemetry that's coming off that. Not just the purpose of that sensory tower, which might be object identification, but also the battery failure.

Cameron Record (167:01)

The battery is a really good example. And we'll use Sentry tower, County UAS towers as an example, often deployed in places in the world that are very hot. And so they're going to have a lot of battery issues. That happens all the time. And you want to be able to correlate if you're getting anomalous or spurious readings on the battery, you would use something like Nominal to be able to monitor that. So think like how datadog is monitoring, you know, like a server or you know, generic software. Like we'd be, you set up a conditional to monitor any weird anomalous behavior in that battery and then you want to be able to link that, correlate that with the physical assets, maybe the group of batteries that you receive from a supplier. And you want to be able to trace that backwards through your whole process and say, hey, actually those batteries that might have similar issues are deployed in these like five areas. Because I can track those assets and understand and sort of, you know, think, think that way.

Ben (167:49)

Yeah, because the battery might perform differently in different temperature conditions, even just how much the CPU is turning.

Cameron Record (167:56)

Really it's just like, and I think what Nominal is unlocking is really just like the ability to do this correlation at scale. And frankly, the way we store and organize all of this massive amounts of telemetry and sensor data is just like a much more thoughtful approach that you can query at scale and sort of make these types of connections. Really the industry status quo, which is a good segue into this stuff we brought here. I think the industry status quo is there's a lot of legacy tools in this space. So it really is, it is Excel, it is Matlab, it's PDF. You know, it's old, old pieces of software that have not really kept pace with the.

John (168:34)

Yeah, last time, last time we were at the track getting some laps in the software that the team was using to track lap times and you know, just all the different data coming off the car would literally look like 90s era software. Talk about the partnership with Pratt Miller. Yeah, so last time, is that evolving? Are you going to add more teams? Is that like a great feedback loop for maybe more traditional.

Cameron Record (169:03)

Yeah, I mean, so last time we Bryce dialed in. This is very cool being in person, but he was at the pits. And that was pretty sweet. No, the partnership is going great, I think. I'm personally very excited. We get to go and attend a bunch of these races and we get to bring our customers or potential customers, which is great because they get to see nominal in action. And so it's a really, like, nice, like, way to kind of do that. Then. Yeah, the partnership is expanding. There's. I won't say too much on that, but I think we're expanding in the automotive and racing sector kind of broadly based on the success there. So, yeah, very cool. But, yeah, I. Yes.

Ben (169:41)

Tools for progress.

Cameron Record (169:42)

Tools for progress. Yeah. Our sort of slogan for this financing has been ambition is timeless, tools are not. And so going in the history lesson, you know, used to BE in the 80s 90s, you know, software was industrial, software was serious. It was purpose built for, you know, aerospace, defense, mechanical engineering, et cetera. We then entered two decades of very unserious software.com, click optimization and pass through metrics, et cetera. And then nominal is trying to get back to serious software for the next five decades of engineering. And so what we put together here, a very tactile thing. This is waterproof, weatherproof also, which would have to be tools for progress. This is an old school catalog. This is where the best tools in the world and the best companies in the world used to write about their products in paper. It's kind of crazy to think, print it up, send it to engineers all over the world and that's how they would know the latest and greatest of capabilities. So we have our catalog here and we have some retro features for some of our customers showing a little bit of the breadth of the nominal platform. Shinkei starting that one. So robotic fish processing the fish here at the Metrodome. There you go, live on the show. And I, you know, Shinke, Antares, you know, nuclear power. We've got Pratt, Miller Motorsports, Hermeus Albedo satellites, planes, Regent. So, yeah, we've been sending these all over the country over the last couple days.

John (171:22)

Incredible.

Ben (171:23)

Yeah. How have conversations with investors been around the SaaS apocalypse? Everyone says, I mean, you know, Toby, look, he was like, I vibe coded my own telemetry data. Is this not a threat to you? What's going on?

Cameron Record (171:37)

I'd say conversations, given that you're going to hit the gong yet now, the conversations, I think, have been good. Yeah, I think we actually see Nominal. I'll frame it this way, which is we're sitting at an incredibly interesting nexus of, like, data coming off of hardware, machines, real Human enriched engineering judgment. Like people are doing this work in our platform, they are deciding that that battery is good or bad. Right. And they're transitioning that sort of engineering judgment and insight into the data and enriching it. All of that is living in our platform and it's growing exponentially. So when you actually think about, if you believe this like world where models will long tail commoditize and it just becomes about interesting access to data and sort of like moats around that I feel really good about where nominal is positioned particularly there. And then I think we talk a lot about like what we've done in, in our three and a half years so far, I think has taken a set of an industry and a set of tools from 1990 to, you know, 2022.

Ben (172:36)

Yeah.

Cameron Record (172:37)

And we've done that fast.

Max (172:38)

Yeah.

Cameron Record (172:39)

And now we have the opportunity and we've earned the right to basically bridge the industry into 2026, 2027. Right. And so a lot of talking about, you know, what will we do with some of the funding. I think a lot of it is like we, you know, we have our own sort of cutting edge, we have our own AI team. We're hiring and kind of building up and people focusing on how do we incorporate, how do we both a nominal build with AI, but also how do we operationalize this for the industry. Because right now going from you know, a spreadsheet to, I don't know, Claude, coding your own whatever is like, let's say it's not big jump.

John (173:13)

Well, yeah, it's interesting. I think of it in a race context. The car is out on the track, it's producing all this data. You can imagine a world where an AI is able to more quickly like respond and help the team make decisions than any human. Right. That's like kind of managing all these different.

Cameron Record (173:30)

I mean, I'm really bullish on that. I think like we sometimes frame nominal a little bit as like we want to be and we think we will be like a part of one of those systems of record. And so when you think about when you're using we'll just use cloud code. When you're using cloud code, it's still interacting with GitHub or whatever your version control system is for doing things like that. The same equivalent doesn't really exist in this software defined hardware world. And I think those need to be built, frankly.

Ben (173:58)

Yeah. I wonder how you think about the economies of scale with regard to effectively software as a service. Because I imagine that even if software, the instantiation of Software, the writing of software is commoditized. There are still hard won lessons and almost secrets. Like you can't go to every LLM and say, predict every problem that this drone manufacturer will have and then build software for that that will immediately generalized to hypersonic flight or nuclear power generation.

Cameron Record (174:38)

It's really good. Yeah, it's really good. We're, we're working on some of this right now, I would say. And I think like a lot of our vision is the world of hardware. Testing right now in 2026 generally looks like, you know, setting out sort of a matrix of test points, like very deterministic. My system, my battery needs, needs to be between this and this voltage under this condition and then you sort of run that out and it happens very sequentially. Like that is how all of these systems are tested. And frankly that's how, talk about the government, that's how testing happens. We are trying to bridge from a world of like what if you actually can one, do more and more in simulation and use outputs of pretty high fidelity, often physics based models of the world. That's one input and then two, what if you actually start to build like AI test agents and their whole job is to determine the next best test point to run. So instead of running linearly through this matrix like you're actually sort of in a kind of a three dimensional space where you are trying to kind of retrain and update the model and say hey, if I could put this physical piece of hardware in any condition or state space, what would I put it in to optimize and sort of knowledge maximize is my next step.

Ben (175:52)

Knowledge maxing?

Cameron Record (175:53)

Yeah, knowledge maxing. So that's where I think that's where it's going.

Ben (175:56)

I imagine like Shinkai likes that whatever you're learning from Anduril and whatever you're standardizing there applies to them. But then I was at Hermeus, the manufacturing plant and they had like a Pratt and Whitney jet engine that I don't think I've seen any Anduril products that operate at that scale. And so whatever you're doing with Hermeus is going to translate to Anduril and vice versa. And there's going to be sort of like synergies there.

Cameron Record (176:22)

Oh totally. There's a ton of, there's a ton

Ben (176:25)

of compound where it doesn't necessarily make sense for every company to have their own system. No, you mentioned, I think physics based simulation, cfd, what is off the shelf, what Bespoke systems continue to exist because it seems like the, the Messy Excel sheets, the Messy Python version 27.3 maybe goes away, but what actually sticks around long term?

Cameron Record (176:54)

Yeah, it's a really good question. In the intermediate we go to a lot of our customers and they're sometimes shocked to believe that we can actually and this is not necessarily a North Star, but we can deprecate Matlab just like people can get awesome for the effort.

Ben (177:09)

F1 fans out there. Is Matlab a tool that you could use to like visualize the airflow over a race car? Is that it's.

Cameron Record (177:16)

Matlab is more. It's sort of. Matlab is sort of like the OG like you'd use it in every mechanical engineering like master's degree. It's just like it's, it's all the. Yeah it's like just basically plotting graphing but running like actual math, just engineering analysis like and it is so much of the post post processing of this hardware generated data still happens in MATLAB. MATLAB's like a single player tool by definition.

Mark Gurman (177:42)

Right.

Cameron Record (177:42)

And so I think one of the big value unlocks we've had is just like take a tool like that and put it in the cloud horizontally scale it so a ton of humans can access it and you can actually do engineering, math and computation transformation in the cloud. Like that's not incredibly revolutionary and itself but it's incredibly powerful in what it unlocks. So when you have to your point of like I think positive compounding effects between multiple different companies, I think just within a place like Anduril, which is approaching 10,000 people, the fact that they're getting off of single player engineering and being able to do so much more in multiplayer is a huge unlock.

Ben (178:21)

Then walk me through some of like the FedRAMP ITAR compliance because if I'm running a company and I want just a cloud hosted jupyter notebook that's multiplayer, I could go to Colab like it's available but it's not designed with that use case in mind. It's a very general purpose tool. But walk me through some of the more defense tech government applications and yeah

Cameron Record (178:46)

so we call it rugged deployability. But if you come and you walk up and you say hey I want to use nominal, we can deploy deploy our entire stack fully air gapped on prem. That's something that we invested in from day zero and obviously a lot of our customers have that use case.

Ben (179:02)

What does that actually look like?

Cameron Record (179:03)

We'll ship you a server. Yeah.

Ben (179:05)

Oh, you'll ship the hardware?

Cameron Record (179:06)

Yeah, we have a bunch of servers in Austin.

Ben (179:10)

Is that Like a Dell server with like a gpu.

Cameron Record (179:13)

We have a deployability team.

Ben (179:14)

Okay. So you can kind of pick.

Cameron Record (179:16)

Yeah, we call them the deploy boys.

Ben (179:20)

Because I remember I talked to Sham Sankar at Palantir and he said that the first time that they tried to ship a Palantir binary to run on Prem, the person on the other side of the deal was like, great, but this isn't running. And he was like, you don't have nearly enough memory. And that's the birth of the Ford Deployed Engineer.

Cameron Record (179:39)

Yeah, yeah, yeah. I think it's. So we can, we can. With some customers it's easier. We'll just ship a tower, we ship a server to them, or we can just provide specs. I think, I think people are the department and these, like, if the government is your customer, I think people are getting, getting a lot better at that right now. So you can do that. We can also just deploy our software inside of our customers. VPCs that's often and so inherit all of their security and credentialing and things like that. But I do think that's been a big differentiator is like, we've invested. That would not normally be a place where I think you would spend valuable, like startup engineering points if you are not in the industry that we are in. But from day zero, essentially, we were like, we needed to be able to deploy this.

Ben (180:18)

What about like, approval, cybersecurity, compliance? Like, I imagine that even if you have the best team of engineers possible, like, you still want third parties to work with that. What does that look like?

Cameron Record (180:29)

Yeah, I think, you know, there's a long, long tail of, you know, security and compliance. I think things there. I think we're continuing, I think to work through that. Some of the basics are like, people have to trust that the tool is going to perform the things that we say it is. And so in the early days, we'd have lots of fun conversations with folks around, how are you doing A low pass filter and just explaining basic math functions, et cetera. But we're well past that now. So, yeah, I think we're continuing to burn down that we do like, we support classified work. Right. We have a facility clearance as a company. A lot of our engineers are read in. And I think all of the, not all of a good portion of the one most interesting work with a lot of our federal customers is happening at higher classifications. And I think there's a direct correlation as you go to higher classification programs of a lack of tools.

Ben (181:27)

Yeah, right.

Cameron Record (181:28)

And so I think from a business Perspective if we can get like there's, there are really big budgets, people are, you know, they're, I'll just give facts like I mean you know, $3 million a day being spent on, on test campaigns alone. Right. And so if Nominal is able to bring in some of those test timelines by you know, a day and we can do more than that, it's like it's really valuable. But when you go to some of those high side programs that are doing, you know, testing you really are restricted and what you can use.

Mark Gurman (181:53)

Crazy.

John (181:54)

Some of the most important work and the fewest tools.

Ben (181:56)

Yeah. Is aws. Sort of like the IBM of federally compliant cloud hosting these days. You remember IBM like no one ever gets fired for by IBM. Is AWS still this leader in just like the default tool that you pull off the shelf if you want.

Cameron Record (182:13)

I think we see a lot of aws, but we also see it really and this is one thing like we see a bunch, we see Azure, we see other places like that. So I think we have sort of partnerships with all of the cloud providers and they all have their own efforts I think to provide often some of the times the reason why we get slowed down is just because there isn't a environment for us to deploy the software in. The customer wants it, they're asking for it and we have to figure out ways to get the software deployed.

Ben (182:42)

But what's the team like? Where are you based?

Cameron Record (182:45)

Yeah, so we are, we're around 135 employees today. We'll probably grow to around 240 over the course of the calendar year. Headquartered in Los Angeles, Austin office as well, New York D.C. and we opened an office in, in London late last year. Yeah.

Ben (183:02)

So is that for international clients?

Cameron Record (183:04)

Yes. Yeah, I went over to, I went over to London probably six or eight months ago now. Set up a bunch of meetings and kind of clarion deal.

Max (183:13)

Yeah.

Cameron Record (183:14)

And came back basically came back and all of those opportunities like materialized into real customer traction. I think we sort of knew like this is not, this is not a US centric problem. This is a global like industrial sort of problem and there's a ton of opportunity and especially in more of the defense adjacent work. Unsurprisingly the proximity that they're feeling is like, is heightened.

Mark Gurman (183:34)

Yeah.

Ben (183:34)

What's the mix of business work with companies that sell to the government versus government contracts directly. Are you feeling pull from the Dow directly?

Cameron Record (183:45)

Yeah, yeah. So we have around 60 customers. Around two thirds of the work we do is totally commercial. It's just a B2B engagement. I mean, a company like Shinke or Antares, et cetera. And then we also directly work with the federal government. And I always say the biggest tester and validator of hardware in the world is the Department of War right now. And so I think we're very happy to support a lot of that work. And it's very needed.

Ben (184:16)

That's great, Gordy.

John (184:19)

Very insane progress.

Ben (184:21)

Where can people get these? Do you just sell these? Do you ship them to people?

Cameron Record (184:25)

We've shipped a ton out. My sense is we will. The reception's been very positive. We'll probably be printing a lot more.

Ben (184:32)

So you're printing. I love it.

Cameron Record (184:33)

Yeah, we're printing.

John (184:34)

We're printing.

Cameron Record (184:35)

Yeah, we're printing. We'll probably be shipping them out.

Ben (184:40)

What is the meaning of Y Combinator here?

Cameron Record (184:42)

Yeah, we had fun with this one. So it's graduates who became astronauts. Y Combinator doesn't have any.

Ben (184:50)

Oh, no.

Cameron Record (184:52)

We support the US Air Force Test Pilot School. Tps some of the coolest humans in the world doing amazing work.

Ben (184:59)

We got to get Johnny Kim to go back through yc. We do. Yeah. He's a legendary astronaut. Yeah, we do.

Cameron Record (185:05)

Hopefully that maybe that'll change one day, but.

Ben (185:07)

Yeah, I would believe it. But if you're on the YC track, you're probably off of the.

Cameron Record (185:11)

Off of the astronaut track. Yeah. You gotta make decisions.

Dan Primack (185:15)

Yeah.

Cameron Record (185:16)

You gotta build unserious software.

Ben (185:17)

Yeah, for sure. Well, thank you so much for. For taking the time to come talk to us.

Cameron Record (185:21)

Thank you. Always good to be here. Appreciate it.

Ben (185:24)

Congrats.

Cameron Record (185:24)

Thank you, guys. Thank you.

Ben (185:26)

And we will talk to you soon.

Cameron Record (185:28)

Okay.

Ben (185:28)

Have a good hang out for a second.

John (185:30)

Close out the show.

Ben (185:31)

Yes. Thank you for watching today. Leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter@tvpn.com and yeah,

John (185:37)

we didn't get enough into GPT 5.4am GPT 5.4. The reviews are incredible. And we'll stack the beginning of the show tomorrow with updates there.

Ben (185:49)

Lots of fun benchmarks to dig into, lots of graphs to analyze, lots of models to play with and examples to go and build or vibe code and see if they have that smell, if people like the vibes. Anyway, thank you for watching. We will see you tomorrow.

John (186:05)

Have a wonderful evening.

Ben (186:06)

Goodbye.

John (186:06)

Goodbye.