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- [00:01]
Jordy
You're watching TBPN Jordy's in front of the horse. Today is Thursday, October 9th, 2025. We are live from the TVPN Ultradome, the temple of technology, the fortress of finance, the capital.
- [00:10]
Tyler
The capital of capital.
- [00:12]
Jordy
Today I want to tell you about ramp.com Time is money, safe, easy use, corporate cards, bail payments, accounting and a whole lot more all in one place. That's why the horse is wearing the yellow hat. Also, the show is made possible by restream 1 livestream 30 plus destinations multi stream reach your audience wherever they are. Dylan Patel took to the timeline to say he's going to be dropping something huge in 24 hours. This was what this was 19 hours ago. We have 5 hours left to go. 4pm Pacific on October 9th, he will drop something that will reshape how everyone thinks about chips, inference and infrastructure. It's directly supported by Nvidia, AMD, Microsoft, OpenAI, Together, AI Core Weave, Nevius, Pytorch, Supermicro, Crusoe, HPE, Tensorwave, VLL, Use who, Sglang, etc. If you are press. I went to this. I'm very excited for him to drop it. I got the whole briefing and it is very cool and I do think it will be huge. And it's, it's in classic semianalysis fashion. It is very rigorous and detailed and I think will be very, very interesting to dig into when it drops. In the meantime, I have something that's the opposite of rigorous. It's completely, it's the other side of the, of the mid width curve. It's just complete slop analysis. But I think it's a useful, it's.
- [01:32]
Chris
A good thought exercise.
- [01:33]
Jordy
Yes. So I said token adjusted EBITDA, of course, a nod to WeWork's community adjusted EBITDA. To be clear, no one's doing this. This is something you should not do. You should not value AI companies as a multiple of the total amount of tokens they're generating. But as soon as I saw that OpenAI news, they're generating 6 billion tokens a minute. They're worth 500 billion. I see 500, I see 6. I start dividing those. I gotta know what the valuation multiple is. How much am I paying if I'm buying a dollar of stock for a stream of tokens? Of course this is nonsense analysis because tokens have various values. Different growing, different profit streams, different costs. Exactly. There's a whole bunch of things, a whole bunch of reasons why you shouldn't do this. But I thought it was interesting to do it Anyway, because I like silly things. And so I think of this more as like, there's a lot of bubble talk. We aren't yet in the eyeballs phase of this.com boom. But if we start seeing this. Yeah, if we start seeing this.
- [02:34]
Chris
If we say bubble so much, we just call it bubtalk.
- [02:37]
Jordy
Bubtalk, exactly. But I wanted to give a little bit of history on the 1999 bubble and how valuations were processed then. It's pretty fascinating. So back in the late 1999, in the late 1990s, Eyeballs became a hilarious but deeply important KPI for tech companies. It's a very funny name, but it.
- [02:59]
Chris
Was basically just eyeballs.
- [02:59]
Jordy
It was basically just audience size, unique visitors page views, time spent on site. These were all non financial, non GAAP metrics that were meant to serve as proxies for eventual earnings and value creations. Revenues were tiny and earnings were always negative. So eyeballs were the best metric that folks had to understand who was growing.
- [03:19]
Chris
At least relative to other dropout posts back then. Somebody sends around physical mail, they're like, I'm dropping out of College. I have 10 eyeballs.
- [03:30]
Jordy
10 eyeballs, yeah.
- [03:31]
Chris
$100,000.
- [03:32]
Jordy
I mean, we see the charts now. Fastest $200 million in revenue. Obviously that's a very good, very strong business metric that assumes that you will be around for a while if you're generating a lot of revenue very quickly.
- [03:43]
Chris
Time to 102 is also very old news. Obviously everyone's focused on time to a billion. A billion in fact was recorded reported that Cursor will be somewhere around there by the end of this year.
- [03:53]
Jordy
Yeah. And so that's like what, two years, maybe three from.
- [03:56]
Chris
Was it 20, 22?
- [03:57]
Jordy
They were technically any sphere before, but really you should start it as like the launch of Cursor, the product, probably, but they've been on a tear. But it's way different to look at the size of a business as if I'm buying a dollar of stock. It's tied to a stream of revenues which could be very profitable versus just eyeballs. But this is audience size has been around for decades, Even in the 90s at that point in the marketing world. And so it was just kind of pulled over. And a lot of this came from Mary Meeker. She's now at Bond Capital. She was the hotshot analyst of the day at Morgan Stanley. And this is what's interesting. So we think of Eyeballs in the dot com bubble. We think of it as a 1999 phenomenon. In 1996, she wrote what's the value of an eyeball or an ear? Three years before the 99 bubble got crazy. You can read her whole Internet trends report on scribd, which is pretty cool. And then three years later, she was profiled in the New Yorker. We actually read the whole profile on this show about a year ago, and that was a really interesting piece. And the name of the piece in the New Yorker was called the Woman in the Bubble. So the New Yorker, like the bubble talk was not like you think about the bubble talk right now on X. And it's like it's bubbling up really quickly. But like, the New Yorker is not writing profiles on the AI bubble yet. They'll probably get there a few months, just like what we saw with French tv. Like, like the legacy media takes a little bit longer because they do a lot more research to write a profile. It just takes months to write a profile.
- [05:29]
Chris
Yeah. It's interesting how, I mean, social feeds just are perpetually months ahead of headlines. Exactly right. And so we're seeing every single day, I see somebody outside of X, outside of TPOT or the tech community on X calling it a bubble, saying, when this thing blows up and you guys crash the global economy, it's all going to be so obvious.
- [05:53]
George
Yeah.
- [05:55]
Jordy
It's just starting on the most bleeding edge. It's still not in the pages of the New Yorker yet. It was in 1999. The title of the article about Mary Meeker was the Woman in the Bubble. And this is what's extra interesting to me. It took 11 months more after that article for the stock market to actually peak. And so in that article, in that profile of her, of Mary Meeker in the New Yorker, she's saying it's a bubble. It's crazy. I've never been seen anything like this in my career. And she's kind of grappling with the fact that it's her job to analyze these.com companies. But everyone can tell, even her, she can tell that it's a bubble. And so you're in this weird dynamic where people can. Can say we're in a bubble, but they don't know. Exactly. You can't stop it because it's a. It's animal spirits and it's a force greater than any one person. So 1999 eyeballs were highly valued. Let's get into some numbers. The market was pricing traffic at around $700 per monthly unique visitor. So if you got a million unique visitors on your website, you could sell that company for $700 million. And I know people that did, and they're venture capitalists now and they're retired. And they got extremely lucky by some concerns. They sold the top, basically, and they did very well.
- [07:17]
Chris
$700 per visitor.
- [07:19]
Jordy
$700 per monthly unique visitor.
- [07:22]
Chris
And that's not even somebody that has an account. Yeah, that's just somebody that visited, chooses.
- [07:26]
Jordy
To go to the website. I mean, you could do the math for us. It'd probably be around there.
- [07:32]
Chris
But no, it's worth noting that we haven't gotten there yet.
- [07:37]
Jordy
No, not at all. Now, to be fair, that's $700 per monthly user. That analysis was heavily weighted by Yahoo, which was by far like the largest platform that was driving this metric. If you pull Yahoo out, you get a much lower number, around 400 per unique visitor, but that's still high. And then for M and A for smaller companies, it's not like everyone is actually comping to the Yahoo number. It was more around. It was closer to $150 per monthly unique visitor. But still, you know, you get a million unique monthly visitors and you sell the company for $150 million in 1998. That's pretty good.
- [08:17]
John Quinn
Yeah.
- [08:17]
Chris
And it's worth noting how much harder it would have been to get a visitor back then. It's not like you could just run if you were getting value. If your business was being valued at just getting somebody to your site and they were putting a value on that. Today you run traffic to it like crazy through all of search engines, through social media, through organic content, through TikTok. So it was much harder to get somebody to your site.
- [08:38]
Jordy
I don't know. There were a lot of crazy. Like there's a toolbar that's installed that automatically routes traffic.
- [08:44]
John Quinn
Sure.
- [08:44]
Chris
I'm just saying it wasn't quite as programmatic.
- [08:46]
Jordy
A lot of people would pay Yahoo for higher ranking because it was a portal, not necessarily a search engine.
- [08:52]
Chris
But I'm just saying everybody didn't have a mobile device in their pocket.
- [08:54]
Jordy
I agree, I agree.
- [08:54]
Chris
Where now they're probably visiting an order of magnitude, you know, multiple orders of magnitude more websites on a daily basis.
- [09:00]
Jordy
Yeah, you're 100% right. If you. If you apply this metric to OpenAI. I had to. OpenAI has 800 million weekly active users and is worth 500 billion. So that's.
- [09:13]
Chris
And I believe. But I believe they're counting this as, like, people that have created an account for sure. Not. Not just a website visitor.
- [09:20]
Jordy
Wildly different, Way stronger, way stronger audience. And that's still at $650 per eyeball. That's way lower than what the Yahoo number and the average number was in the in the dot com bubble. And you could also use the estimated 6 billion estimated visits for OpenAI and get $83 per visit if you're trying to get a little bit closer to the comp so you're still off by an order of magnitude there. Again, these are all nonsense estimates. I did want to flip them around and go towards token generation instead of like if you thought about a dollar of OpenAI equity as buying a stream of token generation instead of a stream of in future cash flow, which you should not do, you could estimate something like a 22x ratio between valuation dollars and tokens generated per minute. You could also flip this around and estimate that for $100 of equity you're the owner of an annual stream of 2.3 million tokens that then need to be sold and eventually drive profit from that. Doesn't seem that crazy to me. I don't know, a lot of it depends. 2.3 million tokens right now would sell for what is it, 10, 20 bucks or something? It's $10 per million tokens for the.
- [10:34]
Chris
Higher somewhere around there. Yeah.
- [10:36]
Jordy
So, so like. And of course like this is extremely silly because tokens are sold for a variety of prices, token volumes are growing exponentially, token generation cost is falling. This is funny math, but I like funny things and so I hope this doesn't show. The most important thing is that I hope this doesn't show up in sell side analysis and also I also hope that I don't here that's the founder.
- [11:00]
Chris
That I saw posting in the last 24 hours that was trying to get people to focus on site visits, which I don't think is. And I'm not going to name the person but well, but again sophisticated investors today, or even not so sophisticated investors today are not going to put a lot of value on just pure site visits.
- [11:22]
Jordy
Yeah, well that's healthy. Before we move on, let me tell you about Privy Wallet infrastructure for every bank. Privy makes it easy to build on crypto rails, securely spin up white label wallets, sign transactions and integrate on chain infrastructure all through one simple API. In other data point about the incredible growth of these properties. Bill Peebles, who's coming on the show tomorrow from OpenAI said Sora hit 1 million app downloads in less than 5 days even faster than ChatGPT did. Despite the invite flow and only targeting North America, working hard to keep up with surging growth. More features and Fixes to over moderation.
- [12:01]
Chris
It's worth noting. So if you look at the charts on the app store, in the top three apps you have Sora, ChatGPT, Gemini Tea, Dating Threads and McDonald's. McDonald's and the top paid apps are Shadow Rocket, Hot Schedules, Anki Mobile, Flashcards, Procreate Pocket, Tonal Energy Tuner and Auto Sleep Track Sleep.
- [12:25]
Martin Casado
Wow.
- [12:25]
Chris
I feel like six apps you've never heard of and then, and then again it's still worth noting. T Dating just still in the top five is actually insane.
- [12:37]
Jordy
I see them as like wildly different markets. I almost see them as the free apps are venture backed, hyperscaler, multi billion dollar, multi trillion dollar company efforts and the paid apps are much more like lifestyle businesses. They're probably generating cash flow. I feel like all of those founders, they might be part of a roll up or something but they're thinking about it in much more financial terms than just go go operate in some winner take all market.
- [13:02]
Chris
Seems like there's alpha right now being a venture backed business and just making a paid app. So if you want it seems way easier, 10 times easier to I wonder.
- [13:11]
Jordy
How cheap you can make your app. Can you make it a dollar? Can you make it $0.01?
- [13:14]
Chris
$2.99 I think is what the few of these are. Anki Mobile must be printing. Their app is $25 and it's top three paid apps in the world, right?
- [13:26]
Jordy
If you're looking for an app that you can get started for free with, get Figma. Think bigger, build faster. Figma helps design and development teams build great products together. Greg Brockman was talking about Move 37. This is the big question in AI when will we see a Lisa doll, Move 37 a truly novel strategy and go that DeepMind was able to achieve. When will we see that in text? When will we see that in image? When will we see that in scientific research done by LLMs? And Greg Brockman was on a podcast and said on move 37 I do think next year we will have some incredible models. The milestone I am most excited about is having models that can solve hard problems. And the analogy that I like to make is think back to AlphaGo. You know, move 37 that changes people's understanding of the game. Imagine that in coding, imagine that in material science. Imagine that in medicine having real breakthroughs that are either potentially the AI by itself or the AI assisted with top humans. I think we'll start seeing that. And so we've seen a few examples of now, you know, top tier mathematicians kind of going to GPT5 and saying that there's breakthroughs. Tyler, what's your read on how close we are to a move 37 like breakthrough in a non, you know, perfectly simulated environment. Like go.
- [14:46]
Tyler
Yeah. I mean it's hard to say. I think first what we'll see before we see like completely novel breakthroughs is just like being more helpful to the top people. So like you saw Scott Aronson talking about this a couple weeks ago. He said GPT5 like helped him get past some roadblock that he said, you know, he would have figured it out if he spent another hour or two or maybe as one of his grad students, but it just like helped speed him up. So it's always hard to figure out, especially with these novel breakthroughs because people want to like take credit for them.
- [15:16]
Martin Casado
Right.
- [15:16]
Tyler
If you're going to, if it's something that's worth a Nobel Prize, someone is going to want to like take credit. So they might try to like hide the impact that.
- [15:24]
Jordy
Yeah, maybe.
- [15:25]
Tyler
So I think it's hard to see, hard to figure out the exact like attribution that you can do to LLMs.
- [15:32]
Jordy
Yeah, yeah. It's interesting that he's kind of not drawing a super clear line between AI by itself versus AI assisted with top humans because you have to imagine that a vast majority of modern Nobel Prizes are computer aided. Just in the sense that the lab notebook was digital and the pipetting machine was automatic. And anything that you're doing to win a Nobel Prize, you're going to be leveraging computers now just to speed up your workflow. That's very different than just prompt. I did get a figure out a novel science.
- [16:06]
Chris
I got a, I got a lunch with, with a physics professor right after the GPT5 launch and he was able to one shot. A problem that he felt he, he estimated would have taken him three months to complete if he was just doing it himself. Which.
- [16:25]
Jordy
Yeah, yeah, like that's interesting. It's just, it's not move 37 because move 37 was something that Lisa Doll felt that he would never have come up with, not in three months. It was not something that was even on his radar. Totally.
- [16:39]
Chris
So I'm not putting it in the same bucket. And neither was he, but it was again, it was, it wasn't doing anything especially novel. It was just doing a massive amount of work in, you know, 20 minutes.
- [16:50]
Jordy
Yeah, the. But the impact is still massive. Like if you even if you're just like, okay, we're going to speed up the level of scientific discovery by 2%. Like that's just massive. So we don't necessarily need move 37 to justify all the work that's going into AI. Be super excited about AI. Like it's fine if it's just if it's if for a long, long time. It's just an assistant because why not? Why not speed things up?
- [17:15]
Chris
Yeah.
- [17:16]
Jordy
Anyway, if you want to speed up your development workflow, head over to Cognition. They're the makers of Devin. Devin is the AI software engineer. Crush your backlog with your personal AI engineer.
- [17:26]
Chris
Spike is sharing. There's nothing happening in America besides AI. And there's an article that says without data centers GDP growth was 0.1% in the first half of 2025. Harvard economist says that is brutal and not super surprising. At least we're able to admit that here that you know, AI CapEx is driving GDP growth. Yeah, and there's again that just massive disconnect between the real economy and our little bubble.
- [18:00]
Jordy
Yeah. I wonder, I would love to know more about breaking down how they're counting like data centers in this GDP growth number. Is it specifically like the data center construction? Is it chip production? Is it energy production? Are any of the like revenue streams from the foundation models actually moving GDP at this point? It seems like maybe not. I don't know. This does seem like a, like a higher level analysis, but certainly I don't know, it'll be interesting to see.
- [18:35]
Chris
Well, Ludwig says had a, had a great post that we got a chuckle out of this morning. He said wearing my TVPN jacket and thinking cap from Anthropic. Look at my OpenAI coin. I'm such a good boy. Did you know I got an OpenAI coin? It's because I gave them lots of money. Anyways, I'm a 15 year old dropout and I'm building the first 1 billion dollar evaluation solo company in the world.
- [18:59]
Jordy
Evaluation.
- [19:00]
Chris
Anyways, having a lot of fun here. The anthropic cap and TVPN jacket combo is pretty on the nose.
- [19:10]
Jordy
Ludwig is a master of the the wojack.
- [19:12]
Chris
He really is.
- [19:13]
Jordy
This reply to you is remarkable. Not like the rest. Part 1. Where did you find that yellow token? Where did you find that jacket thinking cap? The, the cap with the helicopter wheel on top is under utilized.
- [19:26]
Chris
Yeah, underutilized. Nobody. We don't know how to make these hats in America.
- [19:30]
Jordy
Yeah, that was kind of the, the, the, the, the, the most iconic tell of like the I don't know, 2005 nerd is very like I don't know Just kind of like you're hanging out on some sort of corporate campus, like at Google. It's multicolored. It's very sophomoric. No one's brought that back and reappropriated it. So maybe someone should. Maybe someone should make it trendy. The spinning wheel cap.
- [19:58]
Chris
Well, in other news, Francois Chollet is very impressed by the new tiny recursive model from Samsung. A tiny 7 million parameter model just beat Deepseek R1, Gemini 2.5 Web Pro and O3 mini at reasoning on both Argi 1 and Arc AGI 2. And the model 10,000.
- [20:20]
Jordy
It's Arc AGI 1.
- [20:21]
Chris
Oh, okay. Okay. I was like, I'm not familiar with that.
- [20:23]
Jordy
Yeah, it is odd because I felt like at the end of this, it looked very AI generated because this isn't just scaling down. It's a completely different, more deliberate way of solving problems. So it feels like AI generated text. But the typo there is a little bit odd.
- [20:36]
Chris
But it's cool to see Samsung getting in the game here.
- [20:39]
Jordy
Yeah, it is unexpected. I feel like a lot of the labs are pretty excited about ARC AGI. Obviously, Xai did very well with Grok and it seems like the level of respect for performance on ARC AGI is pretty high right now. Tyler had a chance. Are you still at the top of the leaderboard or have you been unseated on rkgi? If you're just tuning in for the first time, RKGI is a benchmark for AI systems. But we put Tyler on the task and he was able to defeat all of the systems.
- [21:14]
Chris
Actually one of the top humans.
- [21:16]
Jordy
And I think he was in the top 10 at the time, but he probably should have fallen at this point because so many people.
- [21:21]
Chris
I would hope so. Liquidity says prime might need to rebrand to subprime. Apparently in 2023, they sold 1.3 billion in product. It's on pace to do only 300 million in 2025. I don't know how this happened. Yeah, this has happened. I mean, I do know. So. So what prime did, which was genius, is they created a. A sports drink and then they also created an energy drink. They look exactly the same. And so I think that children were buying the energy drink. Their parents think they're just buying like a Gatorade alternative.
- [21:55]
Jordy
Yeah.
- [21:55]
Chris
And meanwhile, the kid is getting ramped up on hundreds of milligrams of caffeine, which, I don't know. Back in my day when I was a kid, my parents were like, don't do caffeine. And I pretty much abided by it until I was probably, you know, 18 and started.
- [22:10]
Jordy
Yeah, I didn't really have caffeine until I was in college. But I remember being maybe a freshman or a sophomore in high school and a friend's older brother had access to Red Bull and was talking about the experience of drinking Red Bull like it was hard drugs. It was remarkable.
- [22:27]
Chris
But yeah, I don't know. I mean it's still. $300 million is more than respectable.
- [22:32]
Jordy
Insane.
- [22:33]
Chris
But I've never seen a brand go. I don't. We should actually look at the history do brands going to north of a billion dollars in sales and then retracing down to this level.
- [22:46]
Jordy
I mean I worked in consumer packaged goods for a long time and with my first company, like it was a rough go, but that the pattern of that rough go was very fast revenue ramp and then plateauing and the curve.
- [23:00]
Chris
It was not a falling off because.
- [23:02]
Jordy
Because once you have a customer on.
- [23:04]
Chris
Board and they're subscribed, well, it's also, it's about distribution. So I think in this case they basically when you have these influencer brands, it's when you have KSI and Logan Paul, they effectively probably put like $200 million worth of like marketing firepower into growing the brand initially. And even the biggest influencers in the world are not typically enough to sustain a brand. You need to branch out. Right. Because eventually the ads just become less effective. And so again, I think this was a number of factors contributing here.
- [23:41]
Jordy
So you think it might have been a lot of trial that was driven where somebody sees Logan Paul viral video explaining that he launched the brand. They try it and they're like, ah, it's not available in my local store to churn.
- [23:53]
Chris
They just try it and they don't love it, don't stick around. I mean the number one more so than like influencer partnerships. CPG brands work in the for the most simple reason because the product is great and people love the product and they come back and they buy it again and again and again and it becomes a part of their life. I'm not like a DAU or a weekly active user of Red Bull, but I probably have consistently had like 10 Red Bulls a year for my entire adult life randomly.
- [24:22]
Jordy
How real do you think that 1.3 billion number is? Because you could imagine that this was like in 2023, Logan or KSI like leaked a number that was crazy as like a stunt and it was taken.
- [24:35]
Chris
Out of revenue, multiplied it by or.
- [24:38]
Jordy
Even someone leaked a number and then they multiplied it and it wasn't even on Logan and KSI. It was in fact on someone downstream. Some, some, you know, want somebody who wanted to go viral just said, oh well, I saw that my Shopify order number was this. Multiply it by that and come up with some crazy number. That was never really what they actually did that year. Because I am, I am shocked because typically it's like we talked about this with Create. Once you get the target distribution like you should be able. You wouldn't necessarily just see a massive spike. You might see some trial and then some drop off.
- [25:13]
Chris
It's a Bloomberg fall off by Bloomberg Is who reported 4.
- [25:17]
Jordy
They reported Wow. 1.2 billion in sales, not valuation.
- [25:22]
Chris
Yep.
- [25:22]
Jordy
That's a lot. That's crazy. Well, I mean still, if you're, if you're, you know, just thinking about this from like an influencer perspective, launch, launching a brand, winding up with Something that does $300 million a year is nothing to laugh at. So still impressive run for the folks over at Prime.
- [25:41]
Chris
In other news, Delta had blowout earnings and guided up.
- [25:45]
Jordy
Oh really?
- [25:46]
Chris
While highlighting bookings have actually accelerated the last six weeks into Elliott Capital. This is confusing because if usually you would see a recession in the real economy impacting bookings. Right. But Delta's not seeing it.
- [26:09]
Jordy
Let me tell you about Vanta Automate Compliance, Manage risk, Improve Trust Continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation.
- [26:19]
Chris
Well, I think, I think it's time, I think it's time to have an absolute legend.
- [26:23]
Jordy
We have John Quinn from Ultra Dome in the.
- [26:27]
Chris
Very excited, we're very excited to bring.
- [26:28]
Martin Casado
Him onto the show.
- [26:30]
Jordy
And I have here printed out. Good to meet you. Welcome to the show, John. Welcome to the show. Thank you so much for joining. I have here printed out one of the greatest out of home advertisements in the history of California. Burbank Airport, I believe is where I saw this one for the first time. It says Quinn Emanuel trial lawyers. Justice may be blind, but she still sees it our way 88.4% of the time. Did you think of this marketing copy? Was this some genius on your team? How did this come about?
- [27:02]
John Quinn
It was within our firm. It wasn't some outside pr. That's great but you know, we came up with the copy.
- [27:08]
Jordy
Yeah, it's amazing. Talk to me about a little bit of the journey. How are you defining the firm now? Has anything changed over your career? I mean it's not exactly a non traditional path you know, you went to law school, built the firm. But what were the key decisions along the way?
- [27:26]
John Quinn
Well, I started out at a big firm in New York that's very well known, Crevasse, Wayne and Moore. But you know, I'm from the west. I grew up in Utah, went to college here in la. Really liked la, I like New York. But I decided I wanted to come back to la. Came back here, bounced around a little bit. And we started this firm in January 1986 and we started with four lawyers downtown LA, not too far from here. And along the way we decided to focus just on disputes work, litigation work. So most large firms, we're now 1300 lawyers almost in 34 locations around the world. Most firms of that size are so called full service firms. So they'll have some deal lawyers, corporate. Yeah, they'll have corporate lawyers, they'll have some tax lawyers, trusts and estates and somewhere they'll have some litigators. And we thought we got, we came to realize that this model of only doing litigation, arbitration, disputes work, government facing kind of dealing with legal risks in all its different forms was a very powerful model. And so we decided just to stick with that. We're not going to try to be.
- [28:37]
Chris
And historically people would diversify because they wanted the stability of variety of different businesses or they wanted to be able to add kind of contractively like add hours to existing relationships, you know.
- [28:49]
John Quinn
So if you had a. I'm sure.
- [28:50]
Chris
You would have had pressure over time from people that say I love working with you. Can you do more for me?
- [28:56]
John Quinn
You know, I think the thought is you want to be able to service all the clients needs. So a client may want to do some M and A work, they may want to raise some capital. They may. And then they may have need tax advice from time to time they'll have a litigation. So the thought is to cover all those. And by the way, that's how our industry is organized. We're one of one.
- [29:18]
Martin Casado
Yeah.
- [29:18]
John Quinn
I mean there is no from. I don't know what the next largest litigation only firm in the world is, but it's probably not more than 50 lawyers wherever it is. And we're almost.
- [29:27]
Chris
So you started in 86. How long did it take you to become the most feared lawyer in the world?
- [29:33]
John Quinn
Well, so what you're alluding to is there's a consulting firm, BTI Consulting. We had nothing to do with this. They called us up one day and told us they were doing this survey that they survey the general counsel like 350 large corporations around the world. And they asked them, what law firm do you least want to see on the other side in a dispute? And they were publishing a list, and, you know, we've always been on that list of the top four they call the fearsome foursome. And a few years ago, we got them to tell us, okay, of the four, which one actually got the most votes? And they told us, and for five years running now, we have been. We say, we characterize it as the most feared law firm in the world.
- [30:20]
Chris
It's good to be feared.
- [30:21]
John Quinn
Well, in our business, we don't find clients very often. They're looking for shrinking violets to represent them, to stand between them and trouble. Yeah, they're looking for lawyers that will cause the other side to think twice. Yeah, you know, there's a settlement here. This can go away for this amount, or you can. You see what's behind door number two.
- [30:41]
Martin Casado
Yeah, yeah.
- [30:42]
John Quinn
And so, you know, we think we can get resolutions that other firms can't because of our reputation and our record.
- [30:48]
Jordy
What's the secret win rate? Is it. Is it case selection? Walk me through all the decisions that make sure that you're.
- [30:56]
John Quinn
We don't. We don't just select winners. Yeah, we don't select just winners. I mean, we're. We're. We're in for the hard cases, the tough cases to win. And what's behind that is, frankly, there aren't shortcuts. Doing what we do at the highest level is labor intensive, and it requires people who are not just smart, but truly dedicated.
- [31:20]
Jordy
What's the hardest case? What's the long shot that you actually wound up winning?
- [31:26]
John Quinn
Well, early in my career, I mean, I'd be embarrassed to kind of tell you the facts. It was an employment case, and it was. We were defending a discrimination case where there were two plaintiffs. They were both African American. They were both over 55 years old, I think, and they were both let go. And there was evidence. I mean, the plaintiff had some evidence that the motivation behind the. They had both been terminated from their jobs, that the motivation. You could argue that age entered into it, maybe race entered into it. And it was a very, very tough case. And I'm kind of embarrassed to tell you, almost these 30 years later, I mean, we won the case.
- [32:12]
Jordy
Yeah.
- [32:13]
Martin Casado
Yeah.
- [32:13]
Jordy
What about. What about in tech? You've been a part of some of the biggest tech cases. Is that something that took you a while to get up to speed on? Is there anything different about working with a big tech company from any of the other work that you Do.
- [32:33]
John Quinn
So we noticed 25 plus years ago what was going on up in the Bay Area and in Silicon Valley. And we made a decision that we wanted to be part of that and start doing some intellectual property work, patent litigation work, tech work. So we're there for the conflicts. We're not raising money, we're not doing the M and A work. It's primarily patent litigation. We now have the largest patent litigation practice in the world. But we sent a lawyer up there to start an office. And frankly, it was a little bit difficult to get traction in the beginning because there was then, I think it's diluted somewhat now, kind of a Silicon Valley culture. And people wanted to know, how much time did you, how much Valley experience did you have? And we were kind of outsiders. We did recruit some people locally, but it took us a while, frankly, to get some traction.
- [33:24]
Chris
What's different about Silicon Valley? There's so much about Silicon Valley that is weird around ip. It's like in software, there's a world where if somebody developed a unique user experience, you would have been able to really enforce that in the scale of time. If a big platform creates some incredible feature, it's going to get copied by every big company that it's relevant to. How did that kind of evolve? Because I think early on you maybe would have expected that you could have. If somebody like a Snapchat creates a stories feature that that could have been. There's another world where that could have been ip, but it didn't play out that way.
- [34:03]
John Quinn
There is kind of a culture. There's a feeling in many circles, especially among the biggest companies, the hyperscalers and the like, that you should compete based on your business. Don't compete on ip. Yeah, I mean, there is a reluctance.
- [34:19]
Chris
Which is completely different than like almost every other industry in the world.
- [34:22]
Jordy
Biotech would never say that.
- [34:24]
John Quinn
Well, I mean, you don't, you don't see the big automobile companies suing each other either. You don't see the big airplane companies. There'll be trade disputes between Airbus and Boeing, but not so much technology disputes.
- [34:38]
Jordy
Interesting.
- [34:39]
John Quinn
And there is kind of a feeling, and you know, Elon Musk has been outspoken about this, that, you know, anybody. We're not going to. Anybody can use our inventions. He said things, he has said things like that in the past. So you don't see the big players going after each other so much. They will. There are examples, but there's kind of an ethos that you compete on the business, you compete on your offering, and you don't Compete with IP lawsuits.
- [35:05]
Jordy
What lessons did you take away from working with Elon? Is he different than other clients? Is there something that you were coaching or advising at various points in time?
- [35:16]
John Quinn
Well, we've represented Elon in a number of cases, including cases that have gone to trial here in California. There was that defamation case, the British cave driver diver, where there was a tweet about whether this was a pedo guy, and the case about wanting to take Tesla private for $420 a share, funding secured. We tried both those cases. I was not on either one of those trial teams, so I have not. We have a team of people that work very, very closely with Elon. So what I know about him and our experience working with him is secondhand. I do know, you know, he values his time. He closely guards how he spends his time. I don't. I think it's fair to say that based on what I've heard, that spending time with lawyers, preparing for depositions and trial at the like is not the top of his list of things that.
- [36:09]
Chris
He likes out of priority.
- [36:10]
Jordy
I can imagine.
- [36:12]
John Quinn
So he's a busy guy and obviously he's got great instincts himself.
- [36:17]
Jordy
Yeah.
- [36:17]
Chris
What about.
- [36:18]
John Quinn
I can say just one story. So in that defamation case, he had tweeted that, I assure you, this British guy as a pedo guy, and he came into Elon, then lived in Los Angeles, sued him for defamation here. We didn't have a lot of time to prepare him for trial. And when the trial started in federal courthouse downtown, the plaintiff called him as their first witness. You can do that. You can call the adverse party, put them on the witness stand and immediately start cross examining them. So the jury, the first witness they see is your adversary being cross examined. And the question to Elon was, when they put him up there was, this is a defamation case. You're Elon Musk. So the world really cares about what you say. Not a bad question. What's he going to say?
- [37:11]
Chris
Yeah, it's hard to deny.
- [37:13]
John Quinn
There's kind of a beat. And he says, well, I'm not so sure. I don't know. I've been talking about our need to get away from fossil fuels for so long now, and it just doesn't seem to be happening. I'm not sure people aren't listening to me at all. People don't listen to me at all. It was like genius.
- [37:33]
Jordy
That's remarkable. Yeah, that's a good argument. That's very funny. I mean, we're tracking like a crazy AI boom, crazy tech boom right now. Mostly from the financial markets. We have founders on, I'm sure we have seven people on today that are raising a lot of money. Is there a boom in tech litigation?
- [37:51]
Chris
Well, maybe even before that, talking about kind of the dot com era, you saw this craziness. We opened the show talking about how people were just valuing eyeballs, right? And there was, aside from that, there was like, you know, these round trip effective commercial agreements that ended up getting litigated in the years following after the crash. What kind of stood out from that era? What was just, I guess what were the takeaways from that era? Did you ever think we would repeat that kind of cycle? Because I'm sure you were in your job even after the crash just got busier and busier.
- [38:31]
John Quinn
Yes. Whenever there's a crash, as in the financial crisis, for example, 2008, which we weren't very involved in, that plays out in the courts. Of course, there'll be people who've lost a lot of money. There'll be claims of fraud and misrepresentation. You know, in the dot com boom, there were down rounds. There were class actions of all kinds, securities class actions. So every deal gets scrutinize in retrospect, in AI where we are. Look, I'm not an economist and I'm not a prognosticator about where we are in terms of whether this is a bubble or not. I can tell you in our world, the disputes world, litigation, we're seeing a lot of AI related disputes.
- [39:17]
Chris
And is that around primarily today? I can imagine the trajectory is like right now it's a lot around ip. Right. We saw case against anthropic around their usage of, I forget Reddit. Well, there's Reddit getting litigated, but then the books where they, they just did a huge settlement. It was a big settlement. And so right now it feels like we could be in the era of like litigating around ip and what, what even is IP in, in the, in the world of generative AI. But no, but then no one spent money. But then it feels like the, the next wave could be around just rehashing and litigating. It's going to be a lot of lawyers looking over, you know, this announcement that went out. It's like, yes, in the fine print, it said that it wasn't an actual deal yet. It was just a kind of a general sentiment from the two companies. But yeah, where do you think, do you think we're at all close to having some, like, precedent around AI and ip or is this going to Take years.
- [40:20]
John Quinn
I mean, AI is throwing up so many novel legal issues. I mean, IP for sure. Everybody's heard about the cases that have been brought relating to music, literary works, visual works, using copyrighted materials to train large language models, and whether that's copyright infringement or what's called fair use.
- [40:44]
Chris
Yeah.
- [40:45]
John Quinn
So we have dozens of those cases. We finally have a couple of decisions now out of the federal court in San Francisco, where the judges in those two cases, one case involving meta, another case involving anthropic, decided that it was fair use, that it was not copyrighted infringement to use copyrighted materials to train large language models. Although both decisions were kind of qualified and there were some unique facts in both cases. But, yeah, we're starting to have those. Those decisions on various issues. But there's so many things. All this money is going into large language models and AI, and there's.
- [41:27]
Chris
You think a lot of founders are just running the calculus of. I know that I'm going to have to eventually pay out something for what I'm doing, but I'm just going to run with it because I'll be able to eat the cost later. And if I wait, then my competitors will.
- [41:44]
John Quinn
I don't know, Losing one of these cases, the copyright cases, there's so much involved, the price tag could be very, very big. So I don't know that people are sitting back saying just the cost of doing business.
- [41:56]
Chris
Yeah. But at the same time, if your competitor is willing to take the risk and they can ramp their market cap up into the hundreds of billions, they know that. And the alternative is being safer around ip, and then you just lose the race, then you're a zero anyways. So I think a lot of people are. It feels like a lot of people are willing to just roll the dice and say, we'll figure it out later.
- [42:20]
John Quinn
Well, Apple in its early years had a reputation for not being very careful with its ip. You know, they launched the iPhone knowing they did not own the name iPhone.
- [42:31]
Jordy
Oh, yeah.
- [42:32]
John Quinn
It was owned by, I think, Oracle. Oracle. Oracle. And so as soon as they launched it, there was a lawsuit filed, Cisco versus Apple. And it was immediately settled. I've never heard what it settled for, but, you know, that was Steve Jobs, you know, driving ahead and kind of doing what you're saying. I think they've gotten. I think they've gotten a lot more careful, but there's just a host of issues. Like you have all this money going into AI and AI inventions. How are you going to protect it? You cannot patent an algorithm. You cannot Patent, a mathematical application. You know, it's the. These come under the rubric of general ideas.
- [43:10]
Chris
Yeah. And again, laws of nature. Yeah, yeah. And then in the talent. The talent wars are a whole other thing. I'm curious if what your kind of view on. You know, over the summer we saw all the labs kind of poaching, pulling talent from different places, and people realizing that in this person's brain is like potentially 100 million.
- [43:30]
John Quinn
You think that's. They're not being hired for what is in their brain?
- [43:33]
Chris
They know.
- [43:34]
John Quinn
Of course they are. And that's an example of what I was referring to earlier, where the major players are very reluctant to sue each other. I'm kind of surprised there hasn't been more litigation over this poaching. But I think it's this phenomenon that.
- [43:50]
Chris
Yeah, our view is that they were very much like acqui hires, just unauthorized acqui hires where it's like this team knows how to do something really well that they've learned through spending tens of millions or hundreds of millions or sometimes even billions of dollars. And we want what they know how to do. We want the process that's in their head, basically.
- [44:10]
John Quinn
Yeah, there's no doubt. I mean, some of the. What you're referring to is trade secrets, trade secret law, which is another area of intellectual property. And that's an awful lot in the AI world. What we're talking about, mathematical applications, algorithms and the like, they can't be patented. They can be trade secrets and they can be protected as trade secrets. And if somebody has access to those and goes to work for a competitor, it's not lawful for them to be using that information when they go to work for the competitor. But then proving that actual use is another thing altogether.
- [44:45]
Chris
How often would an issue pop up and you have multiple. Let's say it's Mag 7 on Mag 7 and you're getting calls and texts from both of them, racing to work with you guys. Have you ever had to make a.
- [44:58]
John Quinn
Call in the morning in that world? We never encounter that because we always and forever have been adverse to Apple, Meta, Amazon and Microsoft. We've always represented Google, Nvidia, Qualcomm, Salesforce and some others. In our world, it seems like you come to a fork in the road and you decide we're going to go this way and you never come back because people know you will. You're the firm that will be adverse to Apple. It's like being the firm in Seattle, they'll be adverse to Boeing. Yeah, I mean, that's kind of A job in itself.
- [45:30]
Chris
Yeah, that makes sense.
- [45:32]
Jordy
What about.
- [45:35]
John Quinn
I mean, it does happen in other areas of practice, like in private equity. I mean, we had a situation just within the last couple of days where two global private equity firms who were opposite each other with respect to a particular transaction, both of us called us and we accepted the engagement from the one that called us first. Okay, so that does happen.
- [45:57]
Jordy
Is being litigation only an advantage in being able to create this patchwork of clients, that you don't have conflicts because you're, you're also already doing their contracts or anything. So you can be a little bit.
- [46:07]
John Quinn
More, you know, I think as a litigation only firm, we have fewer. Fewer conflicts.
- [46:12]
Jordy
Yeah.
- [46:13]
John Quinn
So for us, the world is divided into companies and individuals we represent and those we don't. And sometimes a party, a company or an individual moves from one category to the other, but we don't have, we have very few sort of lasting conflicts vis a vis the business world in principle, where deal lawyers, you know, there might be some industries that they know well, we just can't be on this other side of this issue or represent a competitor or the like because it's a little bit different in the deal world.
- [46:47]
Chris
Where's your firm getting leverage from AI today?
- [46:52]
John Quinn
We're using it, we're using it a lot. We're using it to, you know, not only to manage documents, the things that are produced in discovery, because we've been able to do that for a long time, but to be. If you can imagine, we tried a case in Delaware a few months ago and we had loaded into the database all the deposition testimony, all the documents and the trial testimony. As the trials going down and as somebody's on the stand, I mean, you can imagine you can query this database. What is the best evidence as so and so just lied about that.
- [47:27]
Jordy
Yeah, yeah.
- [47:28]
Chris
In real time.
- [47:29]
John Quinn
Yeah. You know, you press a button and it'll give you a list of things in rank order.
- [47:34]
Jordy
Yeah, yeah.
- [47:35]
John Quinn
Now if you had before back in.
- [47:36]
Chris
Back in the day, in 90s, early 2000s, 2010s, you had to be back.
- [47:40]
Jordy
To the filing capture.
- [47:41]
Chris
Yeah. I mean, you're relying on your memory.
- [47:44]
John Quinn
And what you know and what you know about the case. And still that's the most important thing, I think. And mostly it's kind of a backstop. You know, it's a check things you would have thought of anyway, but it'll also come up with things that you wouldn't have thought of or maybe you would have thought of if you just had more time.
- [48:01]
Jordy
What are Your thoughts on resolving co founder conflicts? There's been a number of really high profile cases around. A group of people came together, started a company. The company grows and grows and grows. Some people leave. And then there's Winklevoss twins. That was one example.
- [48:16]
John Quinn
We settled that case.
- [48:17]
Jordy
Yeah.
- [48:17]
John Quinn
And we didn't file the case. We were brought in to settle it. Snap.
- [48:22]
Jordy
Yeah.
- [48:23]
John Quinn
There was a third guy in the garage.
- [48:25]
Jordy
Yes, yes, yes.
- [48:25]
John Quinn
Who got kicked out.
- [48:26]
Jordy
Yes.
- [48:27]
John Quinn
And he brought a claim.
- [48:28]
Jordy
Are there any, like, common pitfalls that you see on the incorporation documents or the safe note or specific people start.
- [48:37]
John Quinn
Working on these projects. Sorry. All the time. And they're not thinking about this might become super valuable today. Maybe they're more sensitive now in the tech world.
- [48:49]
Chris
It's easier than ever to create. You can create a C corp in a few clicks. You can see.
- [48:53]
John Quinn
And they don't think to lay out, okay, who owns what? What's my share? What's your share? We're friends. Right. So they don't think to document it. And it's not till later that. And suddenly it's super valuable and they're getting all these views and followers and realize, wow, this is super. Now remember, this is 1/3. 1/3. 1/3rd. Right.
- [49:10]
Jordy
Yeah.
- [49:10]
John Quinn
No, no, no, no, no. That was not my understanding. Yeah, yeah, yeah, yeah.
- [49:14]
Jordy
How much in a case like this, is it worth pursuing a settlement, taking it to trial? Like, what are the, what are the key decision points where you realize, okay, this is going to trial?
- [49:27]
John Quinn
I mean, usually. So there's a, there's a stage called summary judgment where a party can go to the court and basically say, look, on the undisputed evidence that's been developed in the course of discovery, I'm entitled to judgment as a matter of law. It's basically, you're arguing to the court, no reasonable juror could find for the other side. They could only find for me. And there has to be no disputed evidence. The judge has to find, okay, on the law. And yes, the evidence is undisputed. You win if it gets in. A lot of cases are dismissed at that level. If it gets past that, then there's the prospect this case is going to go to trial. There's nothing really going to stop it because that's kind of the last court off ramp. A lot of cases are resolved in mediation. In any significant case these days, the courts will expect you to go through a mediation, that is to say, engage a neutral, professional mediator, spend some time with the mediator and see if you can resolve the case and that happens. Sometimes it happens right at the beginning of the case or even where there's a dispute and no case has been filed. You get a mediator together. Sometimes it happens on the eve of trial, but a lot of times it happens in the course of a mediation. So if it's gone past summary judgment, if you've gone through a mediation and that hasn't been successful, then that looks like a case that may go to trial.
- [50:52]
Jordy
And is that a function of total settlement? How much is at stake relative to the legal bills? Am I more likely to settle a case of it's $1 million at stake, but $500,000 in legal bills that I'm looking at versus there's a billion dollars?
- [51:08]
John Quinn
I would certainly think so. The legal bills are more than what you would get out of winning the case. Sure, sometimes there's other things, you know at stake, whether ego or whatever, reputation. But it's usually a calculus. I think most clients, it's pretty much an economic calculus. What are my chances of prevailing at trial? What do I get if I. What does prevailing mean? What will I get if I prevail? And obviously what's the cost to get me there, including primarily attorney's fees?
- [51:40]
Chris
Do you think that AI will speed up cases? Or is there some element to litigation that just because maybe one side realizes the longer this goes on, the better for me, I'm just going to drag it out? Even though a lawyer could now do two weeks of work in an hour, maybe if they're properly using some of these AI tools, it might still just take the full however many two weeks in order to.
- [52:11]
Jordy
Because the other side's going to be using AI, right?
- [52:14]
John Quinn
Yeah, look, I mean, case to settle, when parties realize the strengths and weaknesses of their case and the strengths and weaknesses of the other party's case, and they assess that in the discovery process, everybody's cards are basically put on the table. And you have a basis then to make a judgment about am I going to win? What does winning mean, what am I likely to get in damages? I think AI will accelerate that process. There'll be more disclosure and more ability to handicap the potential outcome sooner. So I do think there's a potential for resolving cases sooner. However, I think AI is going to result in much more litigation.
- [52:57]
Jordy
More cases.
- [52:58]
John Quinn
More cases? Why? There are already early stage companies out there who are putting cases together. They have put into databases all records about permits, licenses, advertising, what party's claim is in their product, what they say their product can do. All this information and information about what is actually in the real world. What's the experience there? They'll put that together and they will serve up to lawyers. You can subscribe to these services and they'll come to you to say, I've got these great class action lawsuits for you. And so they're finding cases. So I think there will be more cases, but I think there's a potential they'll be resolved sooner.
- [53:39]
Jordy
Do you think the legal profession is a mentorship business? Like when you bring on. Do you see young lawyers needing to find a mentor to establish a full career? Is that how you think about it?
- [53:53]
John Quinn
I really think the best way to learn is working with more experienced people. That was certainly true in my case. Whether you call them mentors or just senior people in the firm who you work with, go to court with and see how they examine witnesses and the like. So I do think that's really important in terms of learning what it means to practice law.
- [54:12]
Jordy
What advice are you giving to young lawyers today that want to be where you are in 30 years or so?
- [54:20]
John Quinn
Well, as I said earlier, I tell people, you know, this is practicing law. Litigating high value cases at the highest level is there's no shortcuts. So you have to be prepared to sacrifice. Sacrifice and work super hard. It's an hour's commitment. There really are no shortcuts.
- [54:38]
Jordy
Is it thrilling though? Do you love it?
- [54:40]
John Quinn
I do love it. I do love it.
- [54:43]
Chris
Is the case more thrilling or is it who you're working on behalf of? Is it the partnership between you and the client?
- [54:48]
John Quinn
Because I can imagine the partnership with the client can be very, very satisfying.
- [54:53]
Chris
This is a team sport, right?
- [54:54]
John Quinn
Exactly. It's definitely a team sport. The team within the firm, the team with the client. What I love most about it is we're constantly learning. We have to be able to cross examine experts, whether it's on Biotech, steel manufacturer A.I. i mean, you name it. We have to get to the point where there's an expert on the stand, somebody maybe has a PhD in something and we're going to cross examine them. We have to learn. That's what I love about my job.
- [55:19]
Chris
We're always learning something new. Yeah, an expert can make something. You sound really silly. What do you mean by that? Like, I don't understand what you're even asking in this. And they could just be.
- [55:29]
John Quinn
You sound like an evasive.
- [55:30]
Chris
Yeah, exactly.
- [55:32]
John Quinn
That's not gonna be great for your credibility.
- [55:34]
Chris
There you go.
- [55:36]
Jordy
What about how the media characterizes law? Is there a book or movie that stands out to you as kind of telling the story the correct way. That resonates with you. That's something that you don't feel like. It's a mischaracterization of how you work.
- [55:53]
John Quinn
You know, there are a number of good books about trial lawyers. And perhaps my favorite was written by a trial lawyer who recently passed away. Jerry Spence. I don't know if that's a name. You know, famous trial lawyer from Wyoming. He did the Karen Silkwood case that uranium. She claimed that she was injured by exposure to radiation. He represented Imelda Marcos in a trial in New York City. I mean, but he was always kind of this Wyoming, buckskin clad country lawyer, a character. And he. Yeah, and he wrote a book called Gunning for Justice.
- [56:36]
Jordy
Yeah.
- [56:36]
John Quinn
That was about his own life.
- [56:38]
Jordy
Okay.
- [56:39]
John Quinn
And it's a very, very moving, moving book. That's one that I really enjoy.
- [56:43]
Jordy
I will have to pick it up. Well, thank you so much for coming by.
- [56:46]
John Quinn
Thank you.
- [56:46]
Jordy
And doing this interview.
- [56:47]
John Quinn
Thank you, John. Enjoyed it very much.
- [56:49]
Jordy
Thank you so much.
- [56:50]
John Quinn
Thank you very much.
- [56:51]
Jordy
Thank you. Yeah, you're welcome. Anytime.
- [56:54]
Chris
What a legend.
- [56:55]
Jordy
That was a lot of fun. We have our next guest in the Restream waiting room. Let's first tell you about graphite.dev code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. You can get started for free. And our next guest is Martin Casado from Andreessen Horowitz. We have a bunch of breaking news. We're very excited to talk to you. How are you doing?
- [57:20]
Chris
Welcome, Martin.
- [57:22]
Jordy
Good to see you. Can we adjust the levels? Make sure that we're hearing him? Okay? How was your day? Just tell us how you're doing.
- [57:30]
Martin Casado
I'm doing very well, thank you. It's great. It's actually a pretty chill morning because I had a couple meetings canceled, which is kind of the best gift you can give me.
- [57:36]
Jordy
There we go.
- [57:36]
Chris
Paradise.
- [57:37]
Jordy
Canceled meetings. Hop on. Tvpn. What more could you want in the Silicon Valley Life?
- [57:44]
Chris
How's your Q4 been? Pretty mellow.
- [57:49]
Martin Casado
Most of my companies are still in Q3 because we shift by a month, but pretty good. Thank you.
- [57:53]
Chris
There you go.
- [57:54]
Jordy
Why by a month? Is that standard now? Is this thing.
- [57:58]
Martin Casado
It is. Well, it is very standard. I mean, listen, so I did, you know, enterprise sales for my company for 10 years and I don't remember a Christmas or a New Year's where I could be home because we were like deep enterprise sales. So 50% of the year came in in the last month and and so everybody realized that, you know, if you're pushing to the end of the quarter, it's probably better to do it when people are still working. And so most will use the end of January. And so that's the majority of the companies I work with by a month. Yeah.
- [58:24]
Chris
How often are you investing in a company and they haven't made the shift yet? Are you going that early?
- [58:31]
Martin Casado
Honestly, if they don't, I recommend them to.
- [58:33]
Chris
Yeah, I imagine that's the first. You like the holidays at the end of the year. You like spending time with your family?
- [58:40]
Martin Casado
I would say 2008 to 2012 of my life. Maybe 2016 was me on the phone, like, in a beach somewhere, trying to close a deal.
- [58:49]
Jordy
It paid off. And here you are reviewing the infrastructure practice. I want to get to robotics in China, but first, I'd love just an update on how you're thinking about infrastructure. At Andreessen, you have 1.25 billion under management for that fund and infrastructure. I mean, we're seeing deals for energy. Sam Altman's doing stuff with sk, Hynix and hbm. There's the Neo clouds, there's the hyperscalers. There's so much in infrastructure. And then there's also just like, dev tools, which I think could maybe be in there. So how do you define it? What's interesting? Where are the key themes these days?
- [59:23]
Martin Casado
Yeah, so we do primarily software infrastructure and things that directly relate to software infrastructure. So everything from, like, let's say chips to AI models, to your point, dev tools to the traditional compute network and storage. A very interesting thing about this AI wave is, like, it's very hard to distinguish between, like, a, like a deep infrastructure model company and, like, say, an application company. And so we're having kind of a renaissance in the field where everything has to be redone. Like, you have to redo networking, you have to redo compute, and you have to, like, build new dev tools. And so, you know, we're just trying to keep up with all of this change that is coming from. From AI.
- [59:55]
Jordy
How are you thinking about competition from the hyperscalers when you're looking at a startup? We've talked to a bunch of founders who they're going up against. Aw. And Andy Jassy's not asleep at the wheel, but at the same time, there's this meme of like, you know, a VC would always tell you, what if Google does this? And then we have, you know, Cloudflare and like, you know, GitLab, and there's like a million Companies that we could name off that are, you know, decacorns, public companies that successfully went up against the, you know, the, the public clouds and won or at least saw, you know, massive businesses built. So is there, is it all about the founder? Is it about the particular market or the technology or lock in or being programmer record or being, you know, some sort of system? Like, how are you thinking about it?
- [60:39]
Martin Casado
So listen, I've been an infrastructure investor for 10 years and listen, in that entire time, the public cloud has been incredibly dominant. Right. And so I would say after Re Invent, which is the AWS show, I have to like move into therapy mode. Actually, I'm actually on the other side of this. I'm never the one that actually worries about the public clouds. I'm always telling like the founders and I, I have this line, my line is like, like, can you name one company that AWS has put out of business? One. Just one.
- [61:06]
Jordy
It's a good point. Yep.
- [61:07]
Martin Casado
Like they literally have copied everything, they've hosted everything. And like, and so the reality is, is that if you have an entire, if, if the market is large enough and you have an entire company focused on it, you're going to win. And that's just the reality. And AI in particular is a new behavior which, you know, you know, companies, incumbent companies are terrible at new behavior. So like, this is definitely an advantage to startups. Like, like, it's like a new buyer, it's a new use case, it's a new way of thinking about things. So they don't have the incumbent institutional momentum. And so I think that like, you know, we're free of a lot of the trappings of the cloud. And I think the future is very bright for startups. So I don't spend a lot of time thinking about the incumbents. That said, I have to say one thing is, Listen, Anthropic and OpenAI are startups really in the classic sense. And they are incredibly dominant. And so I would say I'll put them in a different class. There is a class of these new types of incumbents. Think like Stripe, figma, where the founder is still there, they're still hungry, they're executing very well. I think those are much more dangerous than, you know, Google or Microsoft.
- [62:13]
Jordy
Yeah, I was talking to a founder who was going up against an AWS point solution that was rolled into stuff. And I was like, you are going up against Angie Jassy, but you're really going up against the particular product manager who's on that particular product and that product Manager might not be taking calls on a beach in, on December 25th. You know, like they might be taking a vacation. And so if you're going to outwork them, it's possible you could beat them.
- [62:37]
Martin Casado
Totally. And, and like this is a company that you know, is famous for bragging about two pizza box teams. Right? Okay. Yeah. So fine, you've got, you know, the 12 people on this product is dying on the vine. Like if you can't beat that, you kind of deserve to lose.
- [62:50]
Jordy
Yeah, yeah, yeah, that's a great point. Well, I'd love to go into robotics and China. You recently published a Wall Street Journal op ed, which I love.
- [63:01]
Chris
Read the journal every day before we dive in there. One question around. When you're evaluating how you think about revenue ramps specifically, there's always this question. If a company's ramping revenue just at an ungodly rate, there's a question of like how durable that revenue is. Is it going to be possible for another company to come into the category and sort of pull off the same type of, pull off the same type of growth? What are you evaluating for these software infrastructure companies on whether they have actually done the hard work to figure out, develop something that's unique and proprietary, or they're just capital or they're just like a, we talk about as like a, a barnacle on the side of a whale. Like OpenAI.
- [63:50]
Jordy
Yeah, we're into the barnacle economy. Yeah, we love the barnacle economy, where you just naturally grow at the growth rate of anthropic and you're like, it's a miracle.
- [63:59]
Martin Casado
Yeah, yeah. I mean, listen, so there's always this concern of easy come, easy go, which is kind of like what you're asking about. Like, you know, you got this revenue so quickly, how hard could it be? But you know, listen, we're three years into this and we've got a lot of data points that this stuff is actually pretty durable. Right. I mean, mid journey, bootstrap to actual scale. And it still is very much a leader in image. You know, OpenAI roared into dominance in text and it's still the leader. Anthropic roared into this. I mean, cursor roared into this. And I think that these revenue ramps are much more of an indication of the size and the growth of the market, which, I mean, these things have just been so large and growing so fast. And of course like the leader that becomes the brand monopoly will follow brand effects and then people will know the name and then they'll go ahead and adopt. So I think that, you know, like there is no indication, just because the revenue ramp was quick that it's not durable. That said, I don't know of any endemic defensibility in AI. I think companies have to figure out traditional moats. And there's a lot of traditional modes we know about, right? Integration modes, two sided marketplace, brand modes, like whatever the moat is, they've got to get to that. So when we evaluate the company just because it grew quickly, we're not like, oh, easy come, easy go, right? I mean, that's kind of like intellectually lazy. On the other hand, we do look for what actually is the moat, right? If you're basically just reselling TPM tokens per minute from anthropic, that's probably not as durable as if you've got a workflow and a bunch of users that use it and they save configuration in this and you've got good retention numbers, etc. So we do kind of full fledged investment like we always do. But I don't think it's correct to just say just because the growth is high, it must not be durable.
- [65:45]
Chris
How quickly can a brand moat emerge in infrastructure?
- [65:51]
Martin Casado
Yeah, I mean, it's a good question. The last time I remember brand moats like this was the Internet. I think when markets grow incredibly quickly, education is always kind of out of date and so you default to brand. Remember, Netscape was largely a consumer phenomenon and very quickly everybody was talking about Netscape very early on and we're seeing a very similar thing. So I think it's been probably 25 years since we've seen brand effects dominate adoption, especially for highly technical projects. I think the last time was probably the Internet and before that like maybe the PC, like Windows 95 again was very much kind of a brand name. And so I think it's more again an indication. The market's very large, it's growing very fast. There's so much confusion in the market, so that a few leaders end up becoming brand monopolies and then the adoption is literally because people can't keep up, so they just kind of adopt the one that they know about.
- [66:40]
Jordy
Yeah, speaking of brand, there's actually a comment in the chat. A16Z blows my mind. How can they be a venture fund and a brand at the same time? And I feel like there's like Andreessen really is focused on brand in many ways. Both the Andreessen brand, but also partnering with brands on the consumer side or, you know, Internet consumer side. But do you have thoughts or advice for infrastructure founders on brand, is there an equivalent of like make sure you have your.com or make sure that you have a specific brand package. Like do you spend any time thinking on that or is that at all relevant or is it just something that, you know, kind of check the box, make sure it's converting customers and think about it in more quantitative terms.
- [67:19]
Martin Casado
Yeah. So quite frankly this is a pretty new phenomenon. Like I am part of the nerdiest part of industry. Don't really think about brands. Like that's not the conversation we have normally. It's either talking about like the mechanics of you know, inbound, bottoms up growth or the mechanics of enterprise sales or something like that. That said, we've all had to, all of us, the founders and the investors had to become students of this because like you'll have model companies that'll be consumer companies and those are very much brand led. You'll have. I mean, you know I mentioned Cursor before. Like you know, Cursor is a devtools company but it's got so many users. Like brand effects are at play. Brand is really important. And X now because this stuff is proliferating so quickly has become a primary distribution channel. Like X is its own way of propagating information. That's very, very different than going to like traditional press or doing like a press release or writing content marketing or whatever. Like we're in a very different world. And so I would say, you know, historically I personally, while the firm has, I personally have not been very focused on brand like the opposite. But I've had to learn a lot more about it.
- [68:22]
Jordy
It used to just be make the docs dark mode.
- [68:26]
Chris
Do you think some of the.
- [68:28]
Jordy
But now, yeah, now we are emerging.
- [68:31]
Martin Casado
Sell the thing and be technical. Correct.
- [68:32]
Jordy
Exactly.
- [68:33]
Martin Casado
That was kind of my.
- [68:34]
Jordy
Yeah, exactly.
- [68:35]
Chris
Do you think public SaaS is generally oversold or people too bearish or is the, is the, is the conversation we keep coming back to? Brett Taylor was on the show talking about how it's easier to change the your tech stack than your business model. And he was referencing, you know, the dynamic between you know, seat based.
- [68:58]
Jordy
But that's, but that's kind of not as relevant in public company infrastructure companies that might be disrupted by, because of public. I imagine that most of the infrastructure competitors, the incumbents are already on consumption based models. And so you're not seeing a dramatic shift in the business model of the companies you back. It's more of a technology shift or am I mischaracterizing that?
- [69:21]
Martin Casado
Okay, so I definitely think we're seeing a pricing shift, shift from seed based to usage base. And listen, we saw that, listen, when I was doing my company, we saw the shift from perpetual to recurring, right? To SaaS recurring, right. And so we're seeing that type of shift and that's being accelerated by AI. It was started by the cloud, but it's being accelerated by AI because the tokens are so expensive. I don't think that alone is depositioning anybody. Right. I think that the SaaS companies are very good at adopting that and using that. I really think a lot of the story of AI is actually kind of of new capabilities and new use cases. And like that's kind of like the untold story. I mean these things now speak English, right? They develop an emotional connection. They can create something from nothing. Like that's cool, that's net new behavior, that's net new budget. And you can see this in this dramatic growth now of course budget has to shift to cover that. Right. And so I think we are seeing a slowing down of traditional SaaS spend, as you would expect when you have something super cool and new and whatever. But I don't think that this spells the demise of, of the traditional sector. I mean it's just, it's actually not even good at things like systems of record yet. Now over time that will change and maybe it'll change the consumption layer and once you have the consumption layer, you can change the back end. But I really think the story we should all be talking about is like what are these net new use cases? Like what is it enabling? Where does that budget come from? Yeah, as opposed to like who is this necessarily going to kill? Because the zero sum thinking I think is the biggest mistake we all make in this AI wave.
- [70:48]
Chris
Totally. All right, well, let's switch gears to robotics.
- [70:52]
Jordy
Yes, there is a. What's the major robotics company out of China?
- [70:57]
Chris
Unitree.
- [70:58]
Jordy
There's a Unitree for sale on Walmart.com for like $20,000. I'm hovering over the buy button. How un American am I if I pull the trigger? Take me through the landscape. Yeah, I think we're going to, we're maybe going to try and hack it and do something weird. But yeah, yeah, take me through the current understanding. In general, it feels like maybe I'm wildly wrong, but it feels like tension between China and America is calming down almost. I don't know, just maybe that's just the news cycle and people have shifted to other geopolitical topics. But I mean polymarket has the chance that China invades Taiwan by end of 2026, down at 14% from 25%. And we're doing more trade deals. There's crazy news today, but walk me through how you're understanding the geopolitical landscape.
- [71:49]
Martin Casado
So, listen, I'm not an expert on geopolitics. I will say today, China put expert controls on rare earth metals that are useful in things like lithography. That's clearly, I would say, not a detente. That clearly is more of an aggressive posture. Probably this is because Trump is meeting with Xi Jinping. Probably this is just kind of for negotiation. I don't know. Right. But I would. You know, again, I am not an expert on these things. From my perspective, which is through the lens of technology, like, there is not a detente. I think that things tend to be escalating now. That said, you know, the. The tactical collaboration between China and the US Is the strongest it's ever been. I mean, you know, half the founders I work with are Chinese. Chinese. Half the teams I work with, half the papers I read, half the models I use, half the models the companies I work with use. I mean, like, I think from a technical, academic standpoint, it's the strongest I've ever seen in the industry. And so in that way, there's very much a positive. But politically, there's clearly some jockeying. And I think we're trying to all understand what that means. And I'll just tell you, my very quick view is like, I don't think anybody wants a generational struggle with China. Right. I mean, like, the. The hope is that both of us collaborate together and take over the solar system. These are two just phenomenally great countries with a tremendous amount of talent, but there is some level of Pollyanna in that belief. And so then the question is, to what extent do we want to depend on China? It's not about being aggressive. It's not about being proactive. It's like, do we want to depend on them for critical infrastructure? And I would say my position is the answer is, no, we don't want to depend on them. In which case it's important to understand what they're capable of, what we're capable of, and what we can do to develop local capabilities.
- [73:35]
Jordy
Do you read anything into the fact that Xiaomi was able to be a phone company that launched a car, and Apple was maybe rumored to be working on a car and never got it out? Is that just a market structure thing I'm interested in understanding? Where is China behind? Where are they ahead? It feels like, like, Tesla was way ahead. In electric cars. And China's catching up there, but now Tesla's playing catch up in humanoid robots. And I'm interested in the landscape of what each country does best.
- [74:10]
Martin Casado
Yeah, okay, so I mean, listen, this is going to be very polarizing topics. I just want to say up front that I'll send some opinions. These are not rooted in fact, there is no agenda here. Just, you know, as far as your first question on, on the structure of companies like show me in the car and Apple, you know, Asian companies just tend to do more, right? I mean, think about the Korean Chae Balls. There was like, for a long time there was five companies that did everything, like everything, everything from the cone to the car. So like, I don't think that that is like a China versus us thing. I think that's something quite a bit different. You know, that said, we've seen China be like, you know, very, very effective at a number of areas in recent memory, right? I mean, 5G China basically won, which is critical infrastructure, communications, right? I mean for solar they've been dramatically good. And then I wrote this post on robotics where they're very, very good. And so it's clearly a country with a ton of capability. On the other hand, like, listen, like the United States continues to like do two things that I think are pretty distinct from China. One, they're very good at complex software systems, right? Like not building a model, but building kind of like the open AIs and the anthropics and everything around. They're very, very good at complex software system. And two, this is going to sound funny, but the US is actually really good at building stuff people like. And I know, but I think there's a. I think there's a specific reason for that which is we're more like the rest of the world than China is. Like, China like caters to a local market and the local market is just different behaviors, different buying behaviors, different political behaviors, different economic behaviors. And so like the stuff that they produce is just weirder. And so in some way I would think, like, you know, there's two areas where they're just not as strong. It's very complex software systems which we historically have just not seen come out, especially for B2B but also like software that the rest of us can use and adopt outside of like these viral consumer y things.
- [76:01]
Jordy
I was about to say, yeah, they boo boo, right?
- [76:03]
Martin Casado
Like this consumer thing. But I'm not a consumer guy, man.
- [76:06]
Jordy
There's these cars that have like LED front dashboards and karaoke machines inside and they float and they're all very cool. But I don't if the American consumer actually wants that necessarily, I think you.
- [76:19]
Martin Casado
Could reduce it to like, you know, listen, people are people and whatever, but like enterprise buyers are very different in China than they are in the United States. And like, can you name one large Chinese enterprise software company? No software. Yeah, it's impossible.
- [76:34]
Chris
I mean, does ByteDance get into enterprise in China?
- [76:38]
Jordy
Does Alibaba Quinn like count or like does Deep Sea count? I know Deep Sea is getting inferenced a lot.
- [76:44]
Martin Casado
I mean, I'm like, well, it's a databrick. Snowflake Salesforce, Microsoft.
- [76:47]
Jordy
Yeah, yeah.
- [76:50]
Martin Casado
U.S. enterprise companies. And then in China you're like, well, you're kind of trying to look. Well, it's a consumer company, but maybe they do enterprise.
- [76:55]
Jordy
Yeah, like there's kind of these weird.
- [76:56]
Martin Casado
Telco companies that people will mention. Sure, sure. It just, you know, listen, I, you know, I built a team, you know, I ran a team in Beijing, I ran a team in Shanghai when I was working at VMware after they acquired my company and we sold software in China. It's just different. It's totally different. Like the consumption patterns are different, how you sell, it's different. What they expect from, from the software is different. And, and, and the market is large enough and localized enough that any local company is going to focus on that. And if they focus on that, they're just like through Darwinistic focus. Forces of acceptance are not going to build something the rest of the world really understands. And so I do think this is an area that the United States has a tremendous advantage is like, do you think, you know.
- [77:33]
George
Yeah.
- [77:34]
Chris
Based on your experience selling software, enterprise software in China, do you think in our lifetimes we will go back to American companies trying to sell enterprise software into China? Or is that ship sale? Because I briefly lived in China, I studied abroad there. I worked out of the China Accelerator office in Shanghai. And there was a lot of international companies that were trying to sell into China. This was 2016 era. And there was a sense that the Chinese market sort of wanted to learn about what was being sold, but they didn't actually want to adopt it. And it was more like, how do we learn about this so that we can just build this ourselves and utilize our networks locally to just kind of out compete here.
- [78:22]
Martin Casado
Yeah. So listen, I think behavior follows business. I think that there are some systems that are pretty straightforward to reverse engineer. Like a actual hardware system where you can pull out the embedded software and you can. And look at the chip like what like, you know, like let's say network routers. Right. You know, classically, you know, Huawei copied Cisco routers early on. I think for very complex software it's just, you know, it's like all the operational, like know how is just a very tough thing to copy. You can look at the code all you want, but what you want to know is what it does when it's actually running. And that's just not something like the state space is too large. And so no, I think behavior follows business. I think there's a lot of business between the two countries. I think they're both commercial countries, they're full of commercial entities. I do think we're going to go back to like having a market between the two. But I, I do think like the landscape is shifting. Like, I do think like, listen, like right now, you know, we buy, you know, the majority of, you know, our kind of hardware parts for robotics from China. And I would, you know, assume, you know, we sold a lot of software in, in China that a lot of the business software like they're adopting, adopting from us. And what that looks like may shift over time, but I don't think it's going to go to zero.
- [79:32]
Jordy
Do you think humanoid robots are going to start as an enterprise product or consumer product? And how confident are you that it will start where you think it will start?
- [79:43]
Martin Casado
I mean, listen, I'm not an expert. Maybe. Can I just talk about the piece that I wrote? Very quickly put this in context because I want to show the area where I am expert versus not expert, experts.
- [79:51]
Chris
So like you're a vc, you're an expert in everything.
- [79:54]
Martin Casado
I know politics. Yeah. I know humanoids, I know. No, it's not. So, so listen, the area I'm expert is, is, is infrastructure software. Right? I mean, that's what my PhD is in. That's what my company was in. That's what I, you know. And so in order to, you know, know what is impacting enterprise software and software infrastructure, we do these market studies, right? So we'll study like what's going on with energy, we'll study what's going on with microchips, we'll study what's going on with robotics, like these. And we did this study on robotics and it was in service to our software investing, which we do. Even though like a lot of, you know, the groups in Andreessen Horths do hardware investing. Right. Like I've said on the board of hardware companies, like we do it, but like the purpose of this study was Software investing. And we got the result of this and like, oh, damn, China's kicking ass. We're like, wow, they like got the supply chain locked up. They're doing incredibly sophisticated stuff. I think something like 50% of all deployments for the last three years were done in China for the globally. And so the purpose of the piece that we wrote was just to say, listen, you know, we do these studies normally we did tons of studies like this, but like, this was so dramatic. Like, maybe we should kind of make it a little bit more apparent to everybody, like, you know, you know, how China is doing. And so I don't. Listen, I am not an expert on any given robotics market. Like, if it's an enterprise industrial thing, I'll have more of a sense to it where, like from a humanoid standpoint, I think there's huge expert on, on that. But I will say that when it comes to China and the United States, they're a very, very real contender when it comes to the full supply chain, all the way up to the hardware. It's the software where I think things start to differentiate.
- [81:34]
Jordy
How do you characterize the opportunity for America to catch up? Should we be more bullish on the hyperscalers, the mature companies, the Teslas of the world stepping up and taking it seriously, or completely new startups from scratch building solutions and then kind of integrating, creating their own keiretsu, if you will.
- [81:56]
Martin Casado
So here let's talk about the areas where I think that the US has an advantage. Like I mentioned complex software. The United States does a great job of when it comes to building products that people want. I think the United States does a great job of. And so I think that right now, when it comes to, you know, Chinese hardware, I think we have to really look at ourselves and say, you know, do we want to like, start putting like import restrictions and tariffs on those? Not to penalize China, but to kind of incur local capability building for these things. And I think that would be an important thing for us to consider as a nation doing. And there's another very interesting area which is, you know, for a lot of AI, you want big GPUs. And so you can do a lot of robotics with smaller microcontrollers, but you kind of want the big GPUs for the heavy processing, like certainly for AV. And it's pretty well known that China doesn't do anything below 9 nanometer very well. You know, like 7 and 5, they can do it, but the yields are pretty low. And of course they'll be subsidized by China, but they're well behind. So I think at some level, like we should continue our export restrictions on SME, like you know, ASML lithography machines. Like I think we should do that, that just because it does slow them down. I think we should do import controls and tariffs so that we can do local capability building. But again, I have no interest in a generational struggle with China. I just think that we need to understand where we're weak and then we need to put in the controls necessary so that the United States can catch up. And these are the areas, I would say. So I would say it's not the big chips. I think we're pretty good about that. It's not the software, I think we're pretty good about that. But I think actually a lot of the hardware supply chain, I do think that we should put our finger on the scale.
- [83:39]
Chris
Yeah, to me the interesting thing seeing unitree robots selling on Walmart.com when everyone in the tech community realized probably starting about a couple years ago that letting DJI flood the American market with cheap drones. Yeah. Killed our internal, you know, they were willing to sell products at a loss in order to, you know, subsidize these products in order to make it impossible for American companies to compete. And now we have, you know, millions of drones here in America that are flying around that we don't own and they're going to continue that. And allowing them to do the same thing with humanoids feels like an even bigger national security risk to me and would again just set us back in an entirely new yet it's critical.
- [84:27]
Jordy
Crickets. It's crickets. I haven't heard.
- [84:29]
Martin Casado
I mean the implications. Yeah, yeah, Imagine it, right? It's like, it's like healthcare, it's like economics, it's like industrial capacity, it's defense. I mean it's like basically as broad basis software, if you take the generalized form of robotics. And so it's incredibly critical that we.
- [84:45]
Chris
Have a geopolitical rival and we're going to allow them to put a human sized robot that can probably do human things like wait, I did a movie about this. Yeah, yeah, they could do laundry. If they could do laundry, they can do a lot of other things that maybe we don't want them, you know, so, so anyways, I think this is something that I hope, I hope it gets more attention before it's too late because they're already selling again on Walmart.com.
- [85:09]
Martin Casado
I will say one last thing too is like we kind of sometimes hope that, oh, like listen, this is an issue of scale and like, you know, we want to work with our partners and our allies and so like what about eu? Can they help out here? But like if you actually look at some of their dominant robotics companies, like, like Kukos, I think it's 100-year-old company like that's now owned by China as well. And so I mean even on the global footprint of industrial robots, China is incredibly dominant. And so I think now is the time for us to map it out and figure out what we do to enable local capability building. And again, the point is not to penalize anybody or to have a lifelong struggle. The point is to not depend on them.
- [85:42]
Chris
And, and what's happening in India on the robotics side? Obviously Apple is trying to shift a lot of iPhone production to India. Is that an area that you're.
- [85:54]
Martin Casado
I don't have any expertise on that now.
- [85:56]
Chris
Let's go in India.
- [85:57]
Jordy
What about open source LLMs? Have you changed your thinking at all? I know that you were pro open source generally. We had the deep seq moment. Now OpenAI has GPT OSS. Metalama is sort of, you know, declining in favor, but there might be a new generation of models for meta. They're certainly staffing up for it. And so do you think that that market has resolved? Is it calcified in any ways? Is it heating up? Is it something that people should be paying attention to?
- [86:31]
Martin Casado
Yeah. So, you know, I generally think AI is following open source as we've historically seen it, which is the closed source models get 80% of the market and open source mops up the remaining 20%. And that's happening now. I think open source is incredibly important to the broader dynamics of markets, like kind of anti monopoly stuff. It's good for startups, it's good for pricing, it's good for academia, it's good for research. So I maintain that position. I think the Chinese models are phenomenal. I think they're leaders. I think we should keep having the academic partnerships. I feel very strong about that. I think any sort of import or export restrictions on software is stupid. It just doesn't really work to begin with. And so my view is, is software kind of, you know, let it all play out? The US is dramatically ahead. I would say end to end when it comes to capabilities and capacities for oss. The Chinese models are fantastic. You know, we use them, it kind of will keep us honest. I think that's great. Where I think that we should be more serious is important. Export restrictions on hardware and We've done them as them in the past. We've done them incredibly effectively. I mean, you know, especially when it comes to critical infrastructure. And I don't say this from an economic or, or even from a job standpoint. I literally say from a national security standpoint. Do we want to run Chinese hardware infrastructure for our Internet backbone? Probably not. And if you know what has happened in the last few years with the telcos in China, you can see why this is the case. And so I do think having an aggressive posture when it comes to what we run nationally, what our capabilities are.
- [87:57]
Jordy
So are you not worried about the national security risks of, of running an open source model from a near peer competitor? There's this idea of the Manchurian Candidate hiding inside of the weights of an LLM. It all seems fine when you benchmark it, but once it realizes that it's inside of the NSA or something, it phones home. Red Star Linux from North Korea does that. It phones home. There's rumors that TikTok and capable of.
- [88:31]
Chris
Having our physical infrastructure, whether it's in manufacturing like robotics in a manufacturing context or even a humanoid in somebody's home. Having that not be something that is a.
- [88:43]
Jordy
No, I get that. Hardware. I'm asking about software. If hardware is like a 10 out of 10 risk, where is running an open source model from a near peer competitor that might want to sneak something in? I don't know if technically they can but, but is it, is it a one, is it two, a five? How would you think about it?
- [89:03]
Martin Casado
Yeah, super legit question. So first off I'd say like I'm much more sympathetic to like import restrictions and export restrictions. I think it's, it's just a net good for the rest of the world to use US technology and to have that footprint. Right. And so like when you talk about export restrictions I think that like when it comes to software like we should never have any. When it comes to import restrictions, I think that you should differentiate between what we use for like the government and critical infrastructure versus like what you have access to academia. I think for example if we, if we did import restrictions of like the latest greatest models, we would be handicapping our research in a very significant way. And I don't think that that would justify whatever gains we might have given the fact that like half of what we get is from China.
- [89:42]
Jordy
Yeah, like there's also like a free speech like math is should be legal argument here where yeah like the government and critical systems and Maybe our Fortune 500 companies should be very careful with what they run if they're running a Chinese open source model. But if you're just as a libertarian, you know, you could think like, yeah, if you want to go and run this on your local hardware in the cabin in the woods, like, that's pretty American in my opinion.
- [90:05]
Martin Casado
Yeah, yeah, yeah. I'm very, very much about never do kind of export restrictions and import restrictions when it comes to software. It's strictly. And listen, I used to work for the intelligence community back in 2001-2003 and this is kind of the height of concerns around Huawei. And so maybe I'm just a little bit more sympathetic to arguments of not having these components in our critical infrastructure.
- [90:26]
Chris
That was the height of the concern around Huawei and it took us how many years to actually act on it. That makes me concerned about.
- [90:32]
Martin Casado
It was one of the many. One of the many peaks of that.
- [90:35]
Chris
Makes me concerned about it. By 2045, we'll get around banning unitree in the United States. After they get a robot in every.
- [90:44]
Jordy
Home, we'll finally be like, you have to pay us 10% tax on this. That'll be the resolution. As long as we're making money from it, maybe we'll be fine with the result. Anyway, thank you so much for coming on the show. This is fantastic. Always a good time.
- [90:57]
Chris
Good to see you, Mark.
- [90:58]
Jordy
We'll talk to you soon. Have a great rest of your day. And let me tell you about fall generative media platform for developers. The world's best generative image, video and audio models all in one place. Develop and fine tune models with serverless.
- [91:14]
Chris
GPUs and on demand infrastructure AC16Z.
- [91:18]
Jordy
Oh, really?
- [91:19]
Chris
Used by Adobe Canva. Probably used by Shopify.
- [91:24]
Jordy
Did you see this post by Jacob Rintamaki?
- [91:27]
Chris
He said truth Nuke. What are you scared of? Oracle being 500% leopard and not a thousand percent because Larry isn't AGI pilled enough. And tell us something tangible you want. Porsche 911 that comes with a signed copy of the new Dwarkesh striped press book. We should be able to make this.
- [91:46]
Jordy
Those are fantastic answers. I believe that's a screenshot of the Thiel Fellowship application. Maybe something like that.
- [91:51]
Chris
That's hilarious. Yeah. Jacob, just post more. Post your way to being able to cover a 9 11. You can get it. You can get a 997 for like.
- [92:02]
Jordy
Yeah. What's the. Yeah, yeah. The monthly payment beyond that.
- [92:06]
Chris
My first 911 was $32,000. Bought it on bring a trailer.
- [92:10]
Jordy
Yeah, yeah, yeah. You finance that, you Pay for it with the X post.
- [92:13]
Chris
I think he's harder to finance a997, but yeah, just post your heart out for 12 months and you'll be in business.
- [92:22]
Jordy
Oh, we of course have a substack now. You can go to tbpn.com, drop your email and you can get a summary of the show, some posts that we like, some important links, the run of show and sort of my take my current thinking on whatever the the current topic of the day is. I'm also posting those on my personal X account. And yesterday we got a quote post from Zephyr, who kind of answered the question that I was asking, which was, you know, we have to trust the Sam Altman plan. What is the Sam Altman plan? Are they building their own chip, their own data center, their own everything? Like, how mature will this be? Zephyr says is OpenAI building its own chip? Yes, they are in collaboration with avgo. Fab by TSMC will be available in the second half of 2026. That's forever in singularity terms. In my opinion. The second half of 2026 feels like it's a decade away, but obviously it takes time to actually design and fab these chips. But I want to know more. I want to know more about the plan.
- [93:24]
Chris
What were you doing on August 7, 2009?
- [93:28]
Jordy
August 7, 2009. I was in college. I was. Where was I?
- [93:35]
Chris
Well, instead of having a couple beers, you could have bought broadcom at the IPO. It was $1.64 a share. It's now sitting at 345.
- [93:44]
Jordy
There we go.
- [93:45]
Chris
There we go.
- [93:45]
Jordy
That would have been good.
- [93:46]
Chris
Go back in time, John, and figure it out.
- [93:49]
Jordy
Indeed. And I could have gone back in time and signed up for Turbo Puffer and been searching every bite. But you can do it today with the power of the Internet, serverless vector and full text search built from first principles and object storage, fast 10x cheaper and extremely scalable.
- [94:04]
Chris
A Wordle game show is in the works at NBC. Jimmy Fallon is set to produce a get that size gong ready harvester. Stallone says, well, you know what they say, strike when the iron's cold and has been stored in the cupboard for several years.
- [94:22]
Jordy
Yeah, wordle. Was that a Covid phenomenon on? I believe it was 2020. Everyone was doing wordles. I still hit him up every once in a while. I like a good word game. I like a puzzle. The New York Times has been on a tear. I like that's not true, but I like the meme that people Will. New York Times makes a lot of money from their games and they have a separate subscription for games. And they. And everyone kind of says, oh, the New York Times is journalism on life support by games. And it's kind of. It's kind of evolved to the point where like, they make 99% of their revenue from games.
- [94:55]
Chris
Like, that's not true. They got into gambling.
- [94:58]
Jordy
They should get into gambling.
- [95:01]
Chris
They have an insane user base.
- [95:03]
Jordy
Yes.
- [95:03]
Chris
And you know, they're a $9 billion company.
- [95:07]
Jordy
Yep.
- [95:08]
Chris
So basically the New York Times is valued the same as polymarket. And what, you know, what could the New York Times do with. They could do mail order gambling.
- [95:19]
Jordy
I would love that.
- [95:20]
Chris
Mail order prediction markets.
- [95:22]
Jordy
I would love a daily gambling.
- [95:24]
Chris
The Daily Gamble.
- [95:25]
Jordy
The daily Gam.
- [95:28]
John Quinn
Imagine.
- [95:28]
Chris
The New York Times betting podcast.
- [95:30]
Jordy
Yes. I have another idea for them. Since they're into games, they're into wordle, they should do a first person shooter.
- [95:37]
Chris
There you go.
- [95:38]
Jordy
Don't you think it'd be good? You know, we have Call of Duty, we have Battlefield. Yeah. Team Deathmatch. You go to newyorktimes.com it just preloads a vibe code.
- [95:45]
Chris
You get to play as the legend of Mike Isaac.
- [95:48]
Jordy
Yes, exactly.
- [95:48]
John Quinn
Yeah.
- [95:49]
Jordy
Yeah.
- [95:50]
Chris
Love it.
- [95:50]
Jordy
You get my guy's.
- [95:53]
Chris
Russell Paulson quoted our post. We were talking about the anthropic ad campaign. He added some insight. He says, this is all about values based marketing. It's not about the hat or what Claude does. Technically, it's about how it makes us feel and how it elevates our inherent humanity. It's a breath of fresh air to feel like an AI tool makes us better rather than replaceable.
- [96:13]
Jordy
Yes.
- [96:13]
Chris
Very well said.
- [96:14]
Jordy
I like that a lot. And it does feel like.
- [96:16]
Chris
Although I do think this feels a little bit written like Claude, it's not about the hat. It's about.
- [96:21]
Jordy
You can't. When I write now, I actively think, like, okay, if I'm going to try and put something in a. It's this. Not that I'll just completely rephrase the sentence to just be. You know, just wildly different structure. Because it can just. It just has a tinge to it these days.
- [96:39]
Chris
Yeah. But Anyway, Ball says OpenAI plans to detect underage users and give them a model with more safeguards. This may clash with Colorado's SB205.
- [96:48]
Jordy
Crazy.
- [96:48]
Chris
Which prohibits algorithmic discrimination based on age. What is Colorado doing? One of literally millions of pro social AI uses plausibly rendered illegal by that stupid law. Very. Yeah. Very interesting that a single state is going to be able to potentially create policy, nationwide policy around AI.
- [97:14]
Jordy
I think David Sacks has been kind of ringing the alarm bells about this. And there's been a number of folks we've, we've talked to on the show who have said that like the state by state stuff is going to make it really, it sort of turns us into Europe where you have like one cookie policy that then cascades all over the place. At the same time, I feel like, is it not possible to just like geofence a feature still?
- [97:39]
Chris
I mean, you have 50 states if they all have different laws. Colorado only has 6 million people. Yeah, 40.
- [97:46]
Jordy
I'm not worried about the technical burden. Should be able to one shot that with Kodaks. Come on, we're in the future. But I am worried about some weird situation where one of those Colorado inns is on the border and the cell phone tower that they connect to says that they're in a neighboring state. And then that creates a liability and there's a class action lawsuit or they're using a VPN and the VPN doesn't count as actually leaving Colorado. And so there's a lawsuit there. And if it just becomes a legal precedent that that requires you to treat the entire United States populace like the folks in Colorado, that could be very, very annoying and kind of just dampen everyone's experience. Because when I think about, we have kids, when I think about if they're using AI tools, I like the idea of more safeguards. I like that if you open up the Disney app on Apple TV, you can choose, don't show anything R rated or PG 13 and just, you know, content filtering, adult parental controls. Like, these are good tools that should be in the hands of parents and they should be in and they should be surfaced by the tech companies.
- [98:56]
Chris
Also, I don't really want if, you know, my son's very into dinosaurs and if he's someday talking with ChatGPT about dinosaurs, I don't really want, I don't feel like it's necessarily fully appropriate for, for him to feel like he's becoming friends with the dinosaur machine.
- [99:14]
Jordy
Yes, I would.
- [99:15]
Chris
Also, I think we're probably years and years and years away from him using LLMs.
- [99:20]
Jordy
I would also just be worried about annoying syntax leaking into his vocabulary. He's like, dad, this isn't a Tyrannosaurus rats. It's the king of the jungle.
- [99:31]
Chris
He's like, come on, dude, it's not bedtime. It's playtime.
- [99:34]
Jordy
It's playtime.
- [99:36]
Chris
Which is basically the constant debate anyway.
- [99:41]
Jordy
Did we Mention profound. Get your metal, get your brand mentioned in ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. You always gotta mention them.
- [99:50]
Chris
PE Cooper hit the timeline, built his own TBPN meme template and he's putting it to use.
- [99:57]
Jordy
What is this picture? Is this just how he sees himself, as a royal lord? I love the very base. I love the enthusiasm to just hardline that you're an 18th century or 15th century king or something. I like it. It's very royal.
- [100:15]
Tyler
Very.
- [100:16]
Jordy
You can go check out. He has a meme maker. You can make your own. People have been adopting the TVPN trading card aesthetic. Thank you to Tyler Cosgrove for, I believe, inventing that whole strategy or something like that. I think you made the first one of the AI researcher that got 5 million views on X and then was shared all over the Internet and wound up getting us on French tv. Did you wind up talking to the French journalist, by the way?
- [100:43]
Tyler
I talked to them, but I don't think they wanted me as like an actual interviewee. Okay.
- [100:47]
Jordy
They didn't film you.
- [100:48]
Tyler
I think they want people that work.
- [100:49]
Chris
They're not real fans of the show. Clearly a true fan said.
- [100:55]
Jordy
Yeah, a heavyweight in the industry. We tried to pitch them this idea that Tyler was beyond the Metis list, the zeroeth AI researcher, since of course lists are indexed at zero.
- [101:08]
Chris
Bill Ackman says in one week, Jared Kushner pulled off the biggest LBO of all time, that is ea, and then negotiated one of the biggest peace deals of all time. A pretty good week. That's wild, really. Just running the art of the deal playbook.
- [101:21]
Jordy
We have been so behind on our EA coverage. Would love to have Jared on the show. In the meantime, you can listen to his interview on Invest like the Best if you want to understand more of his investing philosophy. The EA take Private is fascinating. It's a massive deal. EA has so many interesting properties from Battlefield to. They have Madden. Right. And FIFA. They have all the sports and it's just a very interesting business. We've talked for a long time about what it takes to pivot a business model in the public markets. How difficult that is. Will they be pivoting the business model to what if so will they be doing that? Is that the point? Or is there some other restructuring that will happen while the company's private? That's fascinating to me. Ben Thompson had an article in Stratheri today, which of course you should go subscribe to all about the basically the failure of Xbox game Pass Because Microsoft paid something like $70 billion for Activision. They got Call of Duty, and the idea was they would put people on a Netflix like subscription and you'd be able to play any game you want. And according to some rumors and talking to some Microsoft employees and some leaked data, it seems like the LTV went down. So it seems like it was actually better to get people to shell out 60, 70 bucks a couple times a year for the big games that they want, as opposed to putting them on a $10 a month plan. And then they're playing all these games for much cheaper. And so it's been, you know, the conclusion is that it still isn't working. We'll have to keep checking in on it. But it'll be interesting to see. Does EA go private and then find land with Sony or something? Land with another gaming platform? Does it create its own store or pivot into buying other companies and getting into mobile gaming? Is there some sort of other monetization, microtransactions? What are they going to ramp up? They've tried a lot of stuff, but it'll be interesting to see where it goes. We'd love to talk to the folks over at Silverlake and Jared Kushner's firm.
- [103:31]
Chris
Understand that Manitis says it's genuinely nuts that if you get good enough at New York City real estate that the only other place where those skills are useful is negotiating world peace.
- [103:40]
Jordy
I didn't realize that these two were connected, but of course it's about Jared Kushner. That's.
- [103:45]
Chris
Yeah. And Trump, of course.
- [103:46]
Jordy
Yes. Oh, yeah, Trump. That's very funny. Should we cover the China news today? So Dmitri Alperovich says huge escalation by China. MOFCOM Mon Ofcom announces new export controls taking effect after December 1st of rare earths to anyone anywhere in the world producing chips or equipment to make chips below 14 nanometer and 256 layer memory due to military applications. And so Dean Ball had a big take on this that we should probably read through to get up to speed. I'm not an expert on this, but I hope to be after talking to Dean. Dean, we're hoping to have him on the show soon. Dean says this is a very big deal. China has asserted sweeping control over the entire global semiconductor supply chain, putting export license requirements on all rare earths used to manufacture advanced chips. So we have the design firms with Nvidia, we have TSMC kind of on our side. We have asml, there's a whole bunch of American IP that goes into the Western Semiconductor supply chain. But, but China's upstream of all of that with their rare earth supply chain. There was a comment in the chat earlier about what does China control all of the rare earths? I think the common cited metrics are that they control a huge portion of the rare earth supply today, but they don't actually have all of the rare.
- [105:17]
Chris
Earths in more processing than supply.
- [105:20]
Jordy
Exactly.
- [105:21]
Chris
Rare earths aren't as rare.
- [105:22]
Jordy
We just call them earths.
- [105:24]
Chris
Yeah. And around here we call them earths.
- [105:26]
Jordy
Because they are in fact all over the place. And you hear about these rare earth deposits being found in Ukraine and in various parts of the United States. We have them. We just haven't actually gone built the mine and processing and that takes years. And so in the short term putting an export restriction on the actual processed rare earths is very geopolitically significant. So Dean Ball continues. He says if enforced aggressively, this policy could mean lights out for the US AI boom and likely lead to a recession slash economic crisis in the US in the short term.
- [106:00]
Chris
Remember this wouldn't be the first time they tried to. I mean the deep seek moment felt at the time very calculated. Let's ramp this app up the charts that I still didn't know a single person that was using Deepseek. It felt entirely, the chart run felt entirely manufactured. And the immediate effect on markets was insane.
- [106:24]
Jordy
Remember Counterpoint? Maybe they were just trying to take a little bit of air out of the bubble to create a bull catalyst.
- [106:30]
Chris
I mean everybody rip after markets go down. That's a bullish catalyst.
- [106:34]
Jordy
Yes. It also inspires us to grind harder. Tyler, do you know Ball?
- [106:39]
John Quinn
Dean Ball?
- [106:41]
Jordy
Dean Ball.
- [106:42]
Tyler
Oh, I know of, yeah.
- [106:44]
Jordy
Oh you do? Okay, cool.
- [106:45]
Chris
Oh, he knows.
- [106:46]
Jordy
Okay, good. Do you know Linear?
- [106:48]
Chris
That's why we hired you.
- [106:49]
Jordy
It's a purpose built tool for planning and building products. Meet the system for modern software development, streamline issues, projects and product roadmaps. You can start building for Linear. Some thoughts and recommendations from Dean Ball. Many things are unclear, including how intensively they will enforce this. This is a cost costly decision for them too, and not without risk. These controls are being imposed on the whole world, not just the United States. My current assumption is that China is doing this to gain leverage over the US in advance of the President's upcoming meeting with Xi Jinping at apec. It would be very funny if they just put the controls on the United States and then you had a bunch of startups that were like I'm going to do diversion and I'm going to go set up a rare earth buying and selling operation in Dubai or Malaysia or somewhere. That'd be very interesting. Number three, I do not think they are doing this to get the US to relax its export controls on Nvidia Blackwell chips. In fact, my guess is that they want us to think that's their goal. We buckle by relaxing Blackwell controls and then the PRC shrugs and says no thanks, we're very confident in our domestic chip industry. That is a message I'd want to be delivering to APEC if I were advising the PRC. 4 Further relaxation of export controls is therefore unlikely to be a useful policy lever here. Instead, it is time for the US to get serious about export controls on semiconductor manufacturing equipment. 5 Because we have been mostly unserious about this issue, China has stockpiled most durable equipment needed to make semiconductors, so most controls will not have an immediate a fact. 6 He really ran through this. This is great. 6 however, there are some consumable materials needed for semiconductor manufacturing that China cannot make domestically. Even better, those consumables are often degradable, meaning one can only stockpile so much. These would be on the top of my list if I worked at bis. I would strongly. I would retaliate strongly, but in a targeted manner. The ultimate route to de escalation here is terra tariffs and broader trade war policy moves, not AI compute. This only underscores the urgency for the US plus allies and partners to accelerate domestic efforts to mine and refine rare earths. Let's hear it for that. The Trump administration has been especially strong here and Congress allocated serious money to this goal in O3B. But all options must be on the table, including the Defense Production Act. Policy will be important here, but remember that these rare earths are essential to the functioning of the global economy. It has heretofore been hard to solve with markets alone because China already supplies these commodities in abundance and at low cost. But they are fundamentally just commodities. We can make them. And 10 to the extent China enforces this policy, they will have made the price of these essential goods infinitely high. Remember, most of all that supply is elastic, not on arbitrarily short time cycles, but faster than most people. So we if the price is infinitely high, there will be a huge incentive to go start mining rare earth elements in the United States.
- [109:55]
Chris
Interesting. MP Materials is actually down 0.6 of a percent in the last five days, which is of course the company that the Trump Admin took roughly a 15% stake in. Yeah, in rare earths.
- [110:09]
Jordy
Well, Peter Hague says Sir, a second whispering to the president meme has hit the timeline. Is this a recent? This feels like something that someone would have AI generated, but it looks real to me. It's from Reuters. And sir, a second ad read has hit the timeline with numeralhq.com, sales tax on autopilot. Spend less than five minutes on sales tax compliance. I screenshotted that one twice. It was so good. Andy Jassy says Joseph Carlson, the current CEO of Amazon, has been with the company for 28 years. Wow, Andy Jassy, what a run. In 2003, he played a pivotal role in creating and scaling AWS, which is the most valuable part of Amazon. A significant portion of the modern Internet is powered by AWS. Amazon today is worth $2.4 trillion and is one of the most critical companies to the United States and the world. Yet the CEO makes less money than many YouTubers, comedians, podcasters, professional athletes, and actors that don't manage or guide anything nearly as important or critical to the US or have millions of employees. We need to stop pretending that the CEOs of Fortune 10 companies who have helped build trillions of dollars worth of value for investors should have their salary compared with the delivery drivers working their way through college. This trope is old and should be retired.
- [111:27]
Chris
Yeah. Josh Hawley, Senator for Missouri, is firing shots at Jassy, saying why? How is it pro worker or pro American that he makes at least 40 million a year while the average American Amazon worker makes less than 38k a year?
- [111:47]
Jordy
Well, he needs to go on a campaign. Bobby in the chat says Andy Jassy doesn't even have 200,000 Twitter followers. That's rough. He's also never streaming on Twitch. Get on Twitch. Andy Jassy, we'd love to see that's your product. I know they own it. Amazon owns Twitch, and so that's where he should give his press releases.
- [112:05]
Chris
This is dog food Wild Chip Wilson, Lululemon Founder, takes He set a full page ad in the Wall Street Journal to roast the brand that he started.
- [112:13]
Jordy
When was this in the Journal?
- [112:15]
Chris
Lululemon in a nosedive, he says. When I founded Lululemon in 1998, it was built on a relentless focus on innovation, product culture, and customer experience. We invented a quote unquote technical product business model, created a new apparel category, pioneered community marketing, and developed system processes so simple a refrigerator could manage them. By its 25th anniversary, Lululemon should have been a $100 billion market cap company. Instead, its trajectory has declined. Why? Lululemon directors have systematically dismantled the Business model and lost employees who held the institutional knowledge that made the company great. Like a plane crash. Decline rarely happens because of a single failure. It's a series of mistakes. He's adding some different sections here. 1. The founder leaves. When a founder leaves, boards tend to fill committees with operators or finance focused directors who are behold into quarterly commitments. A company bereft of a visionary loses its singular voice for product and long term strategy. A strategy that builds a mode around success. An operations slash finance driven board lacks the moxie to understand the market pulse. Gap, gap iation. Loss of creative to the merchants. Every few years a design team will stumble. When that happens, merchants and MBA swoop in claiming to be the adults who can deliver consistent quarterly quarterly projections for Wall Street. To meet those projections, merchants follow algorithms and double down on what sold the year before. This kills risk taking and prevents new innovative product from emerging. As a result, innovation dies, the brand becomes predictable, customers drift and the best creative people leave. The domino effect. As top talent leaves, short term results often look strong. The board harvests brand value by rapidly growing store count while margins expand through economies of scale. Wall street is ecstatic and the egos of directors and managers management soar meanwhile operate. Owner operated competitors seize the opportunity producing better product. Lululemon's institutional knowledge walks out the door, often to competitors and is replaced by Nike executive shots fired who import failed business model. Desperate for growth, Lululemon squandered 1 billion on Mirror and wiped out 10 billion in market cap with a wildly, wildly inappropriate Disney collaboration. To squeeze margins further, directors cheapened store design and shifted to non technical fabrics, eroding the brand's premium positioning. Cultural erosion. New executives from old school companies chase short term margin growth in resume building. Directors unwilling to confront their own role in the decline and attempt to replace the CEO only to realize for the third time that they failed to develop an internal successor. With the brand faltering, no capable candidate wants a CEO job. The nominating committee struggles to attract directors because no great leader will wants to join a sinking ship. Loss of cool. The board insists on Operator Finance CEOs who can speak Wall street rejecting the idea of a product driven CEO. These types of finance focused CEOs don't know how to attract or motivate creative talent. Or even worse, they think they understand how great product when they don't. Without an eye for outstanding design, the company dies a slow death. Lululemon forgot its muse, the woman who inspires culture, not just follows it. By drifting toward the mainstream and trying to appease everyone. Lululemon lost 50% of its market cap earned from brand power. It lost its edge and with it the ability to hire the best people. The result? On paper, Lululemon still looks good, but it's losing its soul. The deeper issue, $20 billion company that is getting absolutely smoked by aloe in their core segment, which is the muse that he described above.
- [115:42]
Jordy
And founders back at Outdoor Voices too.
- [115:44]
Chris
Yeah, so he says. The deeper issue is not just management. It's a disengaged nominating and governance committee that has failed to safeguard the company's long term vision. The path forward. I believe Lululemon can recover, but survival requires courage. Put product and brand back at the center. Rebuild the knowledge and systems that deliver product in nine months, not two years. Bring entrepreneurial ownership back onto the board. Three, Empower creative leadership over merchants. Four, stop chasing Wall street at the expense of customers. Five, recommit to the muse, the woman who inspires the brand. The world doesn't need another bland, quarterly, driven apparel company. It needs bold vision. It needs Lululemon to fly again. Lululemon can keep growing, but growth alone is not a healthy measure of success. The true measure must be innovation and brand reputation. When those are strong, growth comes naturally. When they're not, growth halts the plath. The path is clear, but only with a revitalized board of directors with diverse capabilities. Sincerely, Chip Wilson, Founder, Lululemon.
- [116:39]
Jordy
Chad Wilson.
- [116:40]
Chris
When. When did he actually step off the board? No, when did. When did this actual article come out?
- [116:47]
Jordy
It feels like. I mean, it's not. It's not in today's paper. I checked every page, so.
- [116:51]
Chris
But I think it must be recent. I think it came out. I'm on the journals. Yeah, Yeah, I think it came out yesterday.
- [117:00]
Jordy
What's interesting is like, I'm surprised he had to pay for this. Like, this would just be a good op ed to throw in there. But it does hit.
- [117:06]
Chris
It's kind of. It hits harder that he's paying out of his own pocket.
- [117:10]
Jordy
And the layout also just feels very, I don't know, iconic. It looks a lot different.
- [117:15]
Chris
So we should get Chip on the show.
- [117:17]
Jordy
I'd love to talk to him about that.
- [117:19]
Chris
Yeah. I mean, they're just being competed from every possible angle. There's new brands popping up all the time that are more catered to the early kind of core Lululemon customer. You have aloe, you have vori, you have skims from Kim Kardashian. Right. And all these brands are just better serving that initial cohort, so.
- [117:42]
Jordy
Yep. Well, let's get him on the show. Let's pitch him fin AI, the number one AI agent for customer service.
- [117:49]
Chris
More savage chip.
- [117:51]
Jordy
Number one in performance benchmarks, number one in competitive bake offs. Number one ranking on G2. Did you see Wagey Capital taking a shot at Samuel Gibson? Well, hold, Rick. We'll hold our judgments until we actually meet him. So Wagee Capital says incredible things are happening in the nuclear grift space. Meet Samuel Gibson Zoomer, who graduated from college in 2023.
- [118:19]
Chris
Let's give it up for Zoomers.
- [118:20]
Jordy
Yes. And is now co founder and CEO of Hadron Energy, a nuclear vaporware company going public via SPAC at a $1.2 billion valuation.
- [118:32]
Chris
They have, according to LinkedIn, between two and 10 employees.
- [118:36]
Jordy
Okay. But 11,000 followers.
- [118:40]
Chris
Everybody starts somewhere.
- [118:41]
Jordy
I don't know. I mean, you got to get the money to build a nuclear reactor at some point.
- [118:46]
Chris
And they raised a $900,000 pre seed, according to Crunchbase. That's also.
- [118:51]
Jordy
You went from 900k pre seed to $1.2 billion spac. I mean. Oh. Built different Gen Z. Really? On a tear. He had a 3.4 GPA at University of Nebraska, Lincoln.
- [119:05]
Chris
Not bad at all.
- [119:06]
Jordy
I don't know. Get the bag, get the cash, build the thing. Hopefully. Gotta build.
- [119:12]
Chris
Yeah.
- [119:13]
Jordy
You can't purely cash out and then write it down. You gotta turn it. You can spack it, but you gotta. On their website, deliver the actual energy.
- [119:21]
Chris
On the website. They just have. They have like a bunch of renders.
- [119:24]
Jordy
Yes.
- [119:25]
Chris
And one of the renders just says Data center one on it. Okay, so they got data centers. Yeah. But they're saying the world's smallest, lightest, most versatile micro modular reactors.
- [119:38]
Jordy
Yeah.
- [119:38]
Chris
And the design is awesome. The renders are awesome.
- [119:41]
Jordy
Yeah, A lot of work. I mean, I feel like.
- [119:46]
Chris
And they have a Tesla Cybertruck render pulling a render of their micro reactor. So it's. I mean, it almost looks kind of like Fortnite.
- [119:58]
Jordy
Huge question on who's actually underwriting the spac? Who's running this thing? How did the cap. Who's. How did the capital go into the pipe? Like, what. What actually happened here? You know, there's. The SPACs are not inherently bad. You can raise money in a variety of ways, and if you go and actually deliver and generate a lot of cash flow, at some point, you'll be worth way more than what you spacked at. So good luck to him. But it does seem like a tall order.
- [120:26]
Chris
Well, I think most heavily regulated Gig Capital Global is putting up how much? Some of the cash here. And they also, you might remember, they are investors in Big Bears AI.
- [120:42]
George
I don't know.
- [120:43]
Jordy
Big Bear AI.
- [120:44]
Chris
I didn't think you would.
- [120:46]
Jordy
Okay.
- [120:48]
Chris
But anyways, we'll see here. I think. I think we should withhold judgment. The renders look cool.
- [120:55]
Jordy
Plug it in there.
- [120:56]
Chris
Plug it in.
- [120:57]
Jordy
Plug it in.
- [120:58]
Chris
Plug it in.
- [120:58]
Jordy
Just plug it in. Plug it in. The reactor. Generate some electricity profitably.
- [121:02]
Chris
Time to plug Tyler. You should talk to him and see how real it is. Yeah, I mean, I've been thinking about.
- [121:10]
Tyler
Getting to the spac game.
- [121:11]
Jordy
Oh, yeah? What are you gonna spac?
- [121:13]
Tyler
I think I'll probably figure it out later on. Kind of started the motions already, but.
- [121:18]
Jordy
Just empty shell for now.
- [121:19]
Chris
Yeah, Self spac Tabula rasa.
- [121:21]
Jordy
Could go any direction.
- [121:23]
Chris
Yeah. I'm surprised somebody hasn't tried to spac themselves with some type of income share.
- [121:28]
Jordy
Agreement yet during the NFT boom. Someone did. Was it an Alex token? Am I getting that wrong?
- [121:34]
Chris
Yeah, but a lot of that. He definitely, I think, started a trend of people.
- [121:38]
Jordy
Isn't this the Ben Pasternak thesis as well? Everyone will have a coin attached to them or their project.
- [121:45]
Chris
Nathan Summers in the X chat. Are you guys hiring for a narrator intern? I have great cadence. He's a drummer. And tonal variety for an exciting viewer experience. I also would hate to see a vocal cord strain cut down on your ability to run the live show. DMs open.
- [121:59]
Jordy
Imagine being able to.
- [122:00]
Chris
Tyler, reach out to Nathan. And we gotta talk to this guy.
- [122:02]
Jordy
Okay.
- [122:03]
John Quinn
Yeah.
- [122:03]
Jordy
He's just sitting here. And we say, read me this Wall Street Journal article.
- [122:06]
Chris
Yeah, narrate.
- [122:09]
Jordy
And we will just do the reaction. But we want you in person, live to read us this story from the Wall Street Journal on can Ferrari persuade the super rich to buy an EV sports car that won't rev. We're gonna read this article, but first I'm gonna tell you about Adeo. Customer relationship Magic. Adeo is the AI native CRM that builds scales and grows your company to the next level. So the brand and Ferrari is planning to unveil its first all electric model next year. It's a bold move. It's a bad time. Probably something that was greenlit years ago. But we will dive into it in this Wall Street Journal article.
- [122:46]
Chris
And some backstory here, please. Ferrari just updated guidance. They had a capital markets day. Wall street was not excited about it.
- [122:55]
Martin Casado
This is not.
- [122:56]
Chris
Stock is down 18% in the last five days. Okay, let's get into their next vehicle, which I think Is something no one wants.
- [123:08]
Jordy
We will see. Extravagantly powerful and noisy engines helped make Ferrari the ultimate sports car brand. Now the company wants to persuade the super rich to buy a model with no engine at all. The Italian carmaker this week started lifting the hood on its first electric vehicle. A years long project that has cost the brand hundreds of millions of dollars and promises to set a benchmark for how battery powered sports cars should look. And look, sound and drive. At a glitzy launch event at its headquarters in Maranello, Italy, Ferrari showed off the technology that will power the ev. Including a new electric axle, motor and battery pack set to be made in house at its factory. While going vertically integrated all the way down to the battery on day one. That's bold.
- [123:52]
Chris
Which is wild because Ferraris have always been known to have electrical issues. Including the Ferrari that I owned, that I think I replaced the battery. Forget exactly how many, but I had to replace the battery multiple times in a single quarter. So.
- [124:10]
Jordy
Skill issue, it said. The vehicle called the Ferrari Electrica. What do we think of that name? It's not quite there. The Dolce Trellindi hits, you know, the.
- [124:22]
Chris
Electrica maybe it feels like a name that somebody that was like trying to come off as an Italian maybe brand would use.
- [124:31]
Jordy
Well, it'll be able to go from 0 to 62 miles an hour in 2.5 seconds, which is fast, but not as fast as a model S plaid that you can get on. Bring a trailer for 50k now. So it has a top speed of 193 miles an hour. The range on a single charge will be at least 329 miles. That's not bad. The company won't reveal what the model looks like until next spring with deliveries slated to start later.
- [124:59]
Chris
Apparently the model s plaid does 1.99 seconds.
- [125:02]
Jordy
Although 1.9999-9999.
- [125:06]
Chris
I wouldn't up to try that out to be honest. You wouldn't or you would maybe on a. Maybe on like a Runway.
- [125:12]
Jordy
Yeah.
- [125:12]
Chris
But on a. On a normal road. I wouldn't want to. I wouldn't.
- [125:15]
Jordy
You wouldn't want to go that fast.
- [125:16]
Chris
I just.
- [125:19]
Jordy
Maybe when you're an adult. When you're. When you're a man.
- [125:21]
Chris
Yeah, then you could do it when I finish growing.
- [125:23]
Jordy
Yes. The debut comes as a. As the global auto industry adjusts to a slower transition to EVs than expected when Ferrari announced the project sales. So when Ferrari started working on this, everyone was saying everything's going to be ev. Ev's going to dominate. It's not just going to be some subcategory of the market. It's going to be everything. So you got to get in on it. And of course, other sports car makers such as Porsche, Lamborghini and McLaren have delayed plans to build electric models, citing weak demand. While Ferrari is committed to launching its first EV on schedule, it has scaled back its wider bet on the technology. At an investor day Thursday, which you mentioned, the company said EVs would account for 20% of its vehicle lineup in 2020, 30, half the share previously indicated. We know that this path is not easy, ferrari chief executive Benedetto Vigna said in an interview. But we also know that we as a leader need to show the entire world that we can harness this technology. At the same time, the company plans to release many new vehicles with traditional engines. According to its latest product, Roadmap, the Ferrari Electrica is one of 20 models set to launch through 2030, more than previously planned. Despite the new models, Ferrari issued a cautious sales forecast, 5% annual revenue growth through 2030, and the stock fell 12%. Since being spun out of Fiat a decade ago, Ferrari has become Europe's most valuable carmaker by persuading uber wealthy gearheads to splurge hundreds of thousands of dollars on meticulously crafted sports cars. EVs pose a particular challenge for luxury sports car brands, which say roar and rumble are central to their identities and appeal. Ferrari, perhaps more than any other automaker.
- [127:04]
Chris
Imagine Nathan in the chat narrating this right now.
- [127:08]
Jordy
I know it could be so much better. The brand is known for its noise. The Dolce Trilindri is naturally aspirated, meaning it doesn't rely on a turbocharger to push air into the cylinders, an old school approach credited with a more natural open roar. Ferrari said its EV wouldn't mimic engine sounds as some competitors have have, like the Kia EV6 GT. I forget what it's called, but yeah.
- [127:32]
Chris
That was an engineer from the M series, right?
- [127:35]
Jordy
Oh, that's Hyundai, actually. So the engineer who created the M division at BMW went over to Hyundai and created the N division because N comes after M and tuned up a bunch of the Hyundais to be performance cars and. And one of them is the Hyundai EV6 or something. I'm getting the exact model name wrong, but it has not only engine noise that comes through the speakers, but a simulated dual clutch transmission that you can operate via paddle shifters that are entirely digital. And so you can essentially be rev limited and be redlining the car even though it doesn't have A real redline. And a lot of the super old school car lovers tried it. Doug demuro and a bunch of other folks, Matt Farah from Smoking Tire, all tried it and they were like, this is amazing. Like I forgot that I was driving an electric vehicle after just a few minutes in the car. And so the prediction at the time was that every electric vehicle car maker would adopt that same simulation technology because it was popular and it's a pretty easy feature to add. Seems like Ferrari won't though. They're going natural EV instead. It will pick up the sound of what it calls the electric engine and amplify it into the cabin to give the driver feedback when required. So you'll hear the electric engine whirring. The company compared the difference between its conventional sports cars and the EV to the difference between an acoustic and electric guitar. Ferrari also faces the risk of EVs losing value faster than traditional models as the battery degrades. The promise of timelessness is a selling point for Ferrari buyers. The company leans into the economics of the luxury industry, carefully limiting supply to ensure that its top models retain their value over time, like Rolex watches or Hermes handbags. And if you want a Rolex, head over to getbezel.com, your Bezel Concierge is available to source you any watch on the planet. Seriously, any watch. So Elkann also recruited Jony I've to work on the brand's first electric model. Oh, interesting. Interesting. I didn't realize that we talked about this with love from having a Ferrari partnership. This is the car that was designed by Johnny I've. That's fun. To make its electric cars, Ferrari built a state of the art factory which became known as the E building. After heavy investment. The question now is whether Ferrari's wealthy clients will want to drive the new model.
- [130:04]
Chris
Imagine, you know, spending your whole life, you know, being obsessed with the Ferrari brand, learning to work on these engines and then getting the tap on the shoulder and saying you're actually going over to the E building.
- [130:18]
George
Yeah.
- [130:19]
Jordy
And I think there's also this factor that it feels like the really highly engaged Ferrari buyer maybe doesn't care about straight line speed that much. It's never been a muscle car. The more exciting numbers that folks track is like the Nurburgring time and the gas cars are still performing extremely well.
- [130:41]
Chris
So just the feeling. Yeah, the factors feel for sure. Yeah. Just the feeling of driving the car. What the, the ownership experience. Right. The, the main critique of Ferrari from some of the more I would say casual clientele is like the depreciation recently, the cars are just losing value far more quickly than they historically did. Part of that is already because the hybrids. Right. The SF 90s, the S, the 296 is also a hybrid.
- [131:13]
Martin Casado
Right.
- [131:13]
Jordy
Is that depreciating? I thought that one was kind of holding its value a little bit more.
- [131:16]
Chris
A little bit better. But I mean, you can buy them for less than sticker with like three, you know, way less than sticker for like 300 models. I would have expected for our to try to go more towards something like a Nissan Cross Cabriolet.
- [131:31]
Jordy
I would love that. Take the Purosangue. Given a drop top.
- [131:35]
Chris
Yeah.
- [131:35]
Jordy
Iconic silhouette, a ragtop Purosangue might be the move for them.
- [131:40]
Chris
This is interesting, though. Canadian collector Luc Poirier, who owns 38 Ferraris, said he was open to the idea of buying the ev, having found the company's hybrids engaging and emotional to drive. See, the SF90 is a wild driving experience. I was in Dubai and rented an SF90 and took it out. It's pretty funny. They. They give you tickets in the UAE based on you'll get. They have cameras, they'll. They'll give you tickets without you even having any sense of it. So you can actually go out on a drive and get multiple tickets if you're not safe. I was. So the rental service was they keep like a deposit long after you've returned the car and ensured that they're like, okay, the car is good, but you might get. But you might have gotten like five tickets. And so we need to hold this. But Luke says my only hesitation is reliability, since it will involve so much new technology. Ferrari started dabbling in hybrid technology on the racetrack track in 2009, and hybrids now account for almost half its output. Vigna said Ferrari would apply lessons it has learned from hybrids to its ev. We will not sell an electric car without considering the expiration date of the battery. Many EVs and hybrids haven't performed well in the secondhand market, a problem typical of fast moving technologies. SF90 and SF90 Spider, for example, have depreciated faster than comparable models with conventional powertrains, according to Hagerty. Again, there was a lot of people that bought SF 90s at the top for way over sticker.
- [133:16]
Jordy
It also came out during the zero interest rate sort of bubble. So the auto loan rates were really low and a lot of people were flush from various crypto schemes and all sorts of froth in the market.
- [133:27]
Chris
Oh yeah, everywhere.
- [133:28]
Jordy
It was easy to buy it over sticker. Do you know, David Lee, the Ferrari collector, he has over 40 Ferraris, I think are all in red. He has all the supercars, the F40, F50, the LaFerrari, the Enzo. He says to be a top client of Ferrari, you buy every car that they introduce. And he says he's planning to buy the ev. Yeah, but I wonder how many of those collectors will stick around if they just took a bath on an SF90. They're not doing well in their 296.
- [133:57]
Chris
Yeah, but the. I mean, so city analyst Harold Hendriksky says it is somewhat surprising that Ferrari is going ahead overall. Overall demand for those cars is minimal. We were talking earlier off the air, just saying they had such an amazing opportunity to let the rest of the automotive industry go heavy. You know, Porsche went heavy into EVs, is now pulling back. Ferrari could have said we never wanted to go into EVs. We like, you know, naturally aspirated V12s. We're going to continue to focus here.
- [134:29]
Jordy
If they were the one that never.
- [134:31]
Chris
Did the ev, it would have been crazy.
- [134:32]
Jordy
It would have been a very special thing to the brand. And now they're, they're still, yeah, they're still like in the same conversation as Porsche and Lamborghini, McLaren.
- [134:40]
Chris
But again, if you're a client and you want access to the F80, you can better, you better believe that you are.
- [134:48]
Jordy
Pick up a couple of these, get.
- [134:50]
Chris
Go into your dealer, get pre order a few of the Ferrari electricas.
- [134:54]
John Quinn
Yeah.
- [134:54]
Jordy
At the same time, like I feel like if you're David lee, you own 40, like you definitely want to own the first deal EV, just because it's going to be interesting to see what Ferrari does with an ev. Like it will be a different experience. It will be. There will be a Ferrari twist or take on ev.
- [135:09]
Chris
Even though that's still so interested to see what happens with the Pursangue. From a depreciation standpoint, they're holding up well. Now it's a naturally aspirated V12. I think it looks. You know, people debate the, the looks all the time, but yeah, you can.
- [135:22]
Jordy
Always put a Monsore body kit on it and get the pogonator and then you're good.
- [135:27]
Chris
But yeah, we'll see how these hold up. Make it off Road Edition having a. I don't know. The URUS has held up incredibly well because it still looks exactly the same as it did in 2019.
- [135:40]
Jordy
Yeah. Hasn't been refreshed.
- [135:41]
Chris
People will happily buy. Happily, you know, continue to purchase a older Urus and use it to sell courses or whatever, whatever they do. But I don't know about the it's hard for me to imagine people paying half a million dollars for a Ferrari SUV or even $400,000 in a few years, right? So.
- [136:09]
Jordy
Well, if you want a Ferrari for your bedroom, get an 8 sleep pod 55 year warranty, 30 night risk free trial free turn free returns, free shipping.
- [136:16]
Chris
I'm back on a roll. I got a 938 hour hours 23.
- [136:19]
Jordy
Minutes let's read this post from SMB attorney who says Wait, what'd you get?
- [136:24]
Chris
I got a 93.
- [136:25]
Jordy
Oh I got 99.
- [136:27]
Chris
Two 90s back to back SMB attorney.
- [136:30]
Jordy
Says people keep telling me the American dream is dead. But every day I meet entrepreneurs who know more about SEC football than accounting, drive trucks and think getting dressed up means a good pair of jeans, who've made millions running businesses that clear land, trim trees and install equipment. The American dream is alive and well. It's just hidden behind hard work and a little bit of sweat.
- [136:52]
Chris
We have to get a plumber or an electrician on the show that's cashing in on the data center boom. There has to be some guys that are that are on their way to at least getting a PC12, you know turbo prop.
- [137:08]
Jordy
I wouldn't be surprised. But I think that this post is more just about like you don't you don't need to be a janitor at a data center to experience a boom. If you're just running a well run operation, have scaled it. There's a reason, you know the meme is the private equity guys will come and buy these companies but the reason they do is because they're good companies and so maybe there's still an opportunity there. And there's also opportunity in the public markets. On public.com investing for those who take it seriously. They got multi asset investing industry leading yields. They're trusted by millions.
- [137:39]
Chris
They now have direct indexing. Yes, I am playing around with well what do you got?
- [137:45]
Jordy
Will Menidis on the timeline with a longer post. Take us a minute to read through this but should be fun.
- [137:51]
Chris
Get started. I'll be right back.
- [137:52]
Jordy
He says you can leave the kingdom but you're still paying tax. Incumbents realize their industry is too regulated and too consumer unfriendly for growth so they build a parallel less regulated often cash pay alternative next door. The parallel system is easier but causes massive consumer harm. I've seen this myself. The prime example of this over the last five years is the rise of telemedicine Pill mills in health care Think of the healthcare industry as defined by two factors. One, extremely limited supply, medical doctors are scarce and costly, and two, a principal agent problem with payments. Your insurance pays and you don't. This has allowed the industry to behave in incredibly weird ways. Costs can constantly grow, patient experience can constantly degrade, and clinics will still fill up with wait lists because patients trust it, need it, aren't paying for it, and have no choice. As a result of this, we saw a world where patients replace their primary care doctor with a fleet of telemedicine pill mills for lifestyle drugs. Further, lax regulations during the 2021 era allowed for these telemedicine services to offer things the traditional system could never offer. Fund lifestyle drugs with limited medical supervision. Sure, it was a better experience, but that patient went from having 75% of their care subsidized by insurance to having 0% of their care and drugs subsidized. The parallel system passed costs on to the consumer. Furthermore, the consumer is likely harmed in the form of lower coordination and regulation, opening the door to all kinds of harm. Bad drugs, conflicting drugs, etc. How many people do you know that are now on four, five, six or seven drugs of dubious medical need? I actually don't know that many people that are on that, but I certainly hear stories about it. Flip a coin. Either way, the percent of your income spent on healthcare is going up. That seems true. We see this playbook across industries. When the kingdom was built, the merchants paid taxes, coordination, regulation. They hated paying taxes and boxed themselves in via regulatory capture. So they pushed it onto the consumer. Unable to conduct business, both the merchant and the consumer leave the Kingdom. Things are easier outside of the kingdom walls, but the merchant gets richer faster and the consumer gets harmed. You see this in options markets today. You see this in defense procurement, which I don't know what he's talking about. I've never heard of defense procurement happening outside of a regulated environment. I do see it in healthcare. You see it in crypto. That seems like a great example. You see this everywhere. I would love to know what he's thinking on defense procurement. Specifically, we build palaces of regulation to prevent consumer harm and force consumers into unregulated legal gray area systems in order to conduct business. It's easy to see why this is a durable economic effect we see across economies. You can simply squeeze more growth out of an unregulated market. Look at rising Asia. And the US has allowed for a continuously developing set of emerging economies by its glacial pace of gray market regulation. We should View this as an incredible indictment of a regulatory state. The solution is to overregulation of essential industries isn't to allow the progressive construction and delayed regulation of legal gray areas. The solution to overregulation is to remove regulation on existing industries. Parallel construction of regulated system harms consumers. And I have a great example of this that I've lived for years, but I can take you through if you'd like. So Juul started 10 years ago, got immensely popular and was so regulated by the FDA that at one point they were banned and then they finally got got approved and all of this was justifiable in the micro. But during the time that they were banned and going through all this, guess what happened? There was an entire massive gray market of illegal vapes that weren't even trying to be approved by the fda. They weren't participating in the regulated structure. They were not in the kingdom. They were just out in the gray market. And they gave us.
- [141:59]
Chris
You saw that video of a child testing the vape. Like they were coming off the line of child and China's hitting them all to make sure they're working and then before they ship them out to America.
- [142:09]
Jordy
Yep. So crazy. So the market moved to gray market. And I don't know what the stats are most recently, but at one point, illegal vapes, mostly imported from China, were the second largest category of nicotine consumption after cigarettes. So it was much, much bigger than Juul and the companies that were trying to be regulated. There's obviously regulation that needs to happen in this category, but if it takes 10 years, yes, there is a gray market that's going to develop. And so I firmly agree with Will. I've seen it in the business that I know best, and he's obviously seen it in the medical space. I have no idea what he's talking about in the defense space. But do you have any thoughts on Will's latest long post? The Yuga, as he puts it.
- [142:51]
Chris
The Yuga. I don't know. I think it's interesting that we haven't seen more about the pill mills and all the telemedicine shops from the 2021 era.
- [143:02]
Jordy
We were hearing rumors.
- [143:03]
Chris
Working through the courts.
- [143:05]
Jordy
Yeah, we were hearing rumors of like ATF getting involved or the government getting involved. Some of these companies going bust. A lot of them, they kind of had legal problems and then they just kind of melted away and they just became quiet. And I haven't heard from these companies. Maybe they still exist. Maybe they just kind of quietly stopped doing the bad thing.
- [143:23]
Chris
Yeah, I'm sure they're all doing it again or they're being reborn to do various peptides and semaglutide and all those.
- [143:32]
Jordy
Well, we heard about a fantastic company, biotechpeptides.com or something. Do not go there. I don't know that that's the website.
- [143:39]
Chris
We saw someone saw somebody friend of the show, friend of the show shopping for Chinese peptides off top offline. The website was just called Biotech Peptides doesn't seem like the most legit.
- [143:55]
Jordy
It seems extremely legit. I love biotech. It's the most important technology.
- [144:02]
Chris
It's like reliablemedicine.com no, it's called medicinemedicine.com yeah, basically we haven't talked about this First Brands bankruptcy. Did you see this? I don't know anything about this. I'll read read through a piece in the Journal yesterday. So First Brands auto parts supplier First Brands crashed into bankruptcy last month. Now banks are sifting through their exposure to the company and its chain of customers and suppliers. Jeffries on Wednesday said funds run by an asset management unit, Point Bonita Capital, are owed 715 million from companies that bought First Brands parts. UBS in bankruptcy court filing said funds it operated rates, including through its o' Connor hedge fund unit, which the bank agreed to sell earlier this year, have around 500 million of exposure. The exposure is also mainly to customers that owe First Brands money. A person familiar with the matter said the twin disclosures from the banks illustrate the tangible the tangle of financing that flowed through First Brands, which collapsed in late September owing more than 10 billion in a messy and sudden unraveling. Newly appointed directors have said they are probing irregularity and its financing arrangements. Jeffrey said it doesn't have any information yet on what the probe has found and it would also act to enforce investors rights. UBS also said in a statement that it was working to protect investors interests. Of course they are. Neither firm indicated any significant direct exposure. Analysts at Morgan Stanley calculated Jeffrey's possible total exposure as an investor in the funds at 44 million. So the timeline is getting into A junk bond analyst on X says Jeffries is in the crosshair as the main investment bank behind First Brands. With a history of bringing risky capital markets deals, new facts are coming to light. The unraveling of first brands comes just one month after Jefferies was pitching investors on a $6 billion debt refinancing deal. Investor investor concerns caused the refining refinancing effort efforts to fail as Jeffries struggled to get diligence information from First Brands Chapter 11 bankruptcy filing followed weeks later. New information about Jefferies level of involvement. First Brands set up a so called side letter with Jefferies for an additional trade financing facility which enabled First Brands to raise funds at an interest rate above the limits permitted by its loan documents. The workaround First Brands paid Jefferies a supplemental incentive incentive fee instead. This new disclosure caught investors by surprise, increasing financing costs and breaching rules on existing loans which Jefferies helped arrange and syndicate.
- [146:36]
Jordy
On their website they have a list of brands. I don't know that many of them but I do see the Michelin logo. They don't actually own Michelin. I was thinking that they might also own the Michelin guide but they do license Michelin in tires I suppose or wipers Actually Michelin wipers, they don't sell the tires. Interesting. I was not familiar with this company.
- [146:59]
Chris
Before we pulled out Anyways, still sort of unraveling. There's a bunch of different groups, there's other reporting that says 2.3 billion has simply vanished from First Brand's account. So again people, there's an email here from someone at ORIC that says Wheel team, thank you for your help yesterday. In respect of the orders and our clients comments we would like to set up a call with you today to ask two question which our clients needs for informational purposes. First, do we know whether FBG actually received 1.9 billion no matter what happened to it? So like we got almost $2 billion is missing. Second, would you tell us how much is in the aggregated accounts in respect of the factored receivables as of today? And they answer one we don't know two zero dollars in their accounts. So big multi billion dollar mystery here and yeah, we'll see how this, how this turns out.
- [148:12]
Jordy
Well Clark in the chat says is talking about the example I gave about vapes. He highlights that something similar happened in THC with Delta 8 and THCA. I completely agree. It was the same thing for a decade or longer. People were saying oh there's going to be like a federal bill on where does America stand on thc and it's just kept being kicked to the states and was legal and medicine in some areas and then recreational in others. And in that time basically you go to one of these trade shows and every gas station owner is there buying like basically whatever they want and it's just like a complete failure to just have clarity around what the market structure should be. So lots of work to be done on the regulatory side unfortunately.
- [149:02]
Chris
Well without further ado I think we have our first guest seems in the mainstream waiting room. Let's bring them in.
- [149:10]
Jordy
Let's bring in Preston.
- [149:10]
Chris
Here we go. Welcome to the show. Preston from Relays.
- [149:15]
Jordy
Hey guys, it's great to be on.
- [149:17]
Chris
Great to have you Give us a quick introduction on yourself and the company and then we'll get into the news.
- [149:23]
Preston
Yeah, of course. My name is Preston. I've been working on Relays with my co founder Eitan Borgna and we've recently raised $23 million.
- [149:34]
Chris
There we go. When John gets back, we'll hit the gong. But how did you get into building Relays? When did you start it? What were you doing before?
- [149:43]
Preston
Yeah, that's a great question. Before this we were both PhD students, so I was doing my PhD in physics. My co founder Aytan was doing his PhD in machine learning.
- [149:53]
Chris
Same college?
- [149:56]
Preston
No, I was at Harvard and He was at UChicago, but we went to Caltech as undergrad school together.
- [150:02]
Chris
Very cool, very cool. So straight from PhD program into relays, did you drop out or did you guys actually get your degrees?
- [150:11]
Preston
Yeah, we dropped out.
- [150:12]
Chris
There you go.
- [150:14]
Preston
ChatGPT had just come out and we were like, this is the time to do it.
- [150:17]
Chris
Amazing. What? Obviously hyper competitive category, tons of activity. What's been your guys initial edge and focus? This.
- [150:30]
Preston
Yeah. So we've been really focused on approaching the developer experience from but from the experience of the agent itself. And so we don't consider ourselves like competitors with like cursor or cognition or anything like that. We're building the infrastructure that someone would want to use when they're building AI agents. And so what we've focused on to start are all these auxiliary models that make these agents more reliable. For as an example, if I'm a human, I love my autocomplete. I love my TAB autocomplete. If I'm an agent, I have a different set of models that are really useful to me. So this is like what we've started out with. This is like our fast supply model which applies diffs and our embedding and re rank models which is able to find the relevant code in your code base in less than a second. And this is used by 40 companies including like Lovable and Figma, et cetera.
- [151:27]
Jordy
How do you think OpenAI's agent builder product is going to play out? It seemed like a cool new capability, but I'm not sure. I haven't had the poll like the other products that they've released in the last couple weeks to just jump in, try it, play around what's been your read on agent builder from OpenAI?
- [151:49]
Preston
Yeah, I've heard good things. It looks very beautiful. It's definitely a different category than what we. But I think the launch went really well.
- [152:02]
Jordy
Yeah.
- [152:04]
Chris
What does success look like over the next 12 months?
- [152:09]
Preston
Yeah, for us, we really want to now with this raise, optimize the infrastructure along with the models itself. I think as an example, like Cursa has done such a great job of optimizing the product with the models. And so all the models that you have within your ide, the Apply model and the TAB autocomplete make this product work very seamlessly. We want to do the same thing for the infrastructure. And so we recently also released Relays repos along with our Series A announcement. It means that you can now have retrieval embedded directly into your source control. And we're really trying to reimagine like, hey, like what does source control look like when you have access to models to make it better and when you're like exclusively focused on building it for the agent?
- [152:57]
Jordy
What's the biggest company that you've pitched or talked to in customer development? I'd love to know the mood and the receptivity. We've seen some news about like the Fortune 500 trying a bunch of AI stuff and then kind of pulling back from it. Have you talked to any big companies and can you share any context on how bigger companies are thinking about adopting AI broadly?
- [153:20]
John Quinn
Yeah.
- [153:20]
Chris
And have you even been focused there? Are you focused on scale ups like Lovable and sort of founder mode companies like figma?
- [153:28]
Preston
Yeah, I mean we're talking to all of the big vibe coding companies. Lovable, figma are some of the examples. I think the way we think about this is that that these LLMs are going to continue to increase in capability. We're seeing kind of what dominoes fall in the first say like year, year and a half of models that are reasonably good at coding. And so already if I need a marketing website or a simple presentation, I can actually buy code that on Replit or Level 2 pool. I think over the next year, two years, three years, as we continue to see the capabilities increase, more and more things that are now traditionally software will be able to express encode. And this is like what we're very interested in. This is why we're saying that we're building the Rails for software on demand. It's because things we've seen people build like PowerPoints and decks in TypeScript and react instead of using PowerPoint anymore, we've seen people use like consumer TikTok filters that are entirely expressed in code. This one of our customers Gizmo and we think that a lot of what we might not consider software today will end up being software and the thing that runs and creates it is going to be a coding agent.
- [154:55]
Jordy
Well, congratulations on the round.
- [154:56]
Chris
I'm going to hit that gong.
- [155:00]
Martin Casado
Boom.
- [155:02]
Chris
Congratulations on the raise. I'm sure we'll have you back on again soon for the B. Yeah. With the way things are going currently and congrats on all the initial traction.
- [155:12]
Jordy
Have a great rest of your day. We'll talk to you soon.
- [155:14]
Chris
Cheers.
- [155:14]
Jordy
We have a review from Tripp Carolyn that we got to read through. He says, and of course as a reminder, if you leave us 5 stars on Apple Podcasts or Spotify, put an ad for your business in that review. Review. We'll read it on the show. Gulf Streams Wrist Hitters. Impeccable ad reads the daily coverage of technology news. What more could one ask for between John and Jordi? They have the height and the hair to revolutionize technology and private capital commentary putting the TB in capital G journalism. I have been an avid fan from the inception and will be for life. Cannot recommend more to anyone interested in business technology or loud opulence.
- [155:56]
Chris
Wow. He really And I'll take over now, he says. TVPN is 100% electric just like Flux Marines. 100% electric outboards. Great transition. That's a true fan. Escape the noise fumes and maintenance of traditional gas engines with a Flux outboard now offering our high performance 115 horsepower outboards as well as complete boat packages with industry leading hull partners.
- [156:18]
Jordy
We got it.
- [156:19]
Chris
Only outboards suitable for recording podcasts at full throttle. Visit fluxmarine.com and tell them the technology brothers sent you.
- [156:27]
Jordy
Thank you.
- [156:28]
Chris
We love you Tripp. Tripp truly has been on the show fan of Technology Brothers since the very beginning. Thank you for riding with us and excited to get the update on Flux you guys have been cooking over the last nine months or so.
- [156:47]
Jordy
And without further ado, our next guest is in the Restream waiting room. We'll bring Scott in to the TVPN ultradome. How are you doing Scott? Good to see you.
- [156:56]
Tyler
Fantastic. Thanks for having me.
- [156:59]
Jordy
Give us an introduction on yourself and the company and then we'll get into the news.
- [157:04]
Tyler
Sure. I'm Scott Stephenson, co founder and CEO here at Spellbook. We launched one of the first gen AI products for lawyers back in the summer of 2022 a little before ChatGPT. We're an AI contract review tool so we allow 4,000 law firm and in house counsel teams to draft and review contracts with AI. My background is in engineering. My co founder Daniel is the lawyer of the team and yeah, we're based in Canada.
- [157:32]
Jordy
Give us the news.
- [157:33]
Tyler
Today we've raised 50 million led by Keith Raboy Ventures.
- [157:40]
Jordy
Oh yeah, Keith. He's a lawyer, right? Yeah, he was a lawyer. He was a former lawyer.
- [157:47]
Tyler
Yeah, he knows the love to admit it.
- [157:49]
Jordy
Yes.
- [157:52]
Chris
What's it like building a point solution these days? I feel like this month that there's just been so many different announcements for different legal AI tools. Some are legacy platforms that are launching AI features and have a bunch of different workflows across the law firm. We had Crosby on yesterday who's taking a different approach, obviously building the entire firm.
- [158:16]
Jordy
And then we got other. We had someone on the show last week who was building, you know, AI legal but just in ambulance chaser agents, basically personal injury, which is a very small niche. So when I hear cursor for contracts, that makes sense. But it's like a different slice of the market. How do you settle there? Why are you confident about that? So slice.
- [158:37]
Tyler
Yeah, sure. So I guess there's a couple questions there. Like one, yeah, we like being a point solution. So we think of our product often as like a toaster. Like there's a lot of broad AI solutions for enterprise right now. From the beginning we're like we're going to be a toaster for contract reviews. So really easy to use, really easy to adopt. You know, we don't even do a sales call most of the time. It's just like, welcome aboard, let's get you using Spellbook in five minutes. I think there's a bunch of advantages and I think there's a lot of opportunity to build these kind of, I would say like point solution products. And there's a lot of very broad AI solutions out there. Why we chose contracts specifically? Yeah, I mean the story of how I started the company is I had a small business before this and then one day I had a legal bill that took like half the cash out of our bank account to do some like very minor things. I didn't have much cash. I was like a new grad. But you know, I thought that it was hugely painful to just do like simple transactional work as a small business. And I thought, you know, we could do it much more efficiently. But then the reason we settle on contracts is because the contract market size and the contract pain goes way beyond just lawyers. Like 30 trillion is estimated to flow through contracts in the US alone every year. It's happening very inefficiently. There's a lot of risks, there's a lot of litigation from bad contracting, which you know, Keith used to clean up as a litigator. And you know, when, when you look at the actual overall size of contract pain in not just for lawyers, but in procurement and HR and sales, that market size ends up being really, really big. Whereas if you, if you just look at the market size of you know, X number of lawyers times Y dollars per month, it's actually a much smaller market than when you look at like the, the overall PA and you know, I see like the millions of transactions that happen around the globe every day and contracts often being the bottleneck. And you know, what is it worth if we could speed up all those transactions, if we could remove that bottleneck? I think so much of commerce of the last 20 years have spent has sped up. Like we have credit card networks, we have, you know, we have stripe, we have digital payroll. But contracts have largely remained the same except for Microsoft Word. And so they've become a bottleneck. So our mission is to make contracts move at the speed of commerce so we can all transact and work together much more efficiently.
- [161:03]
Chris
How often is a lawyer or firm signing up for spellbook when they have like, when they're bringing basically like hey, we have this contract that we're working through right now we're trying to create or provide feedback on. We want to use spellback book like this afternoon. Are you what's like the time to value between signing up and actually being able to leverage the product?
- [161:27]
Tyler
Yeah, I mean it's, it's, it's close to zero. And that was our design philosophy from, from day one, is that a lawyer should be able to adopt this almost instantaneously. So yeah, I mean they can adopt it in almost five minutes without having to do a big rollout or a ton of training. And we've optimized almost the whole company with that in mind.
- [161:51]
Chris
Nowadays, engineers at every software company have the ability to just sign up for tools themselves. Are law firms at that point yet where they have some amount of discretionary software budget that they can allocate as they see fit? Or is it still maybe like Silicon valley engineers, the 2000s?
- [162:15]
Tyler
It depends on the segment. So 70% of lawyers work for small and mid sized law firms. So when you envision lawyers you usually think of big law. But actually 70% of lawyers are working at these much smaller firms where they actually have a lot of autonomy they have access to a credit card. They might be one of the founding partners of the firm. So in that segment, yeah, it's very much you can do self sign up and then we also serve in house counsel teams on, in house counsel teams like we have customers like Nestle and ebay. You know, the decision making power is still very concentrated. I think like with, with Wiz, one of the reasons why they cited it was such a great motion is because, you know, the buying, the decision making power for was like with the CIO or chief security officer and you know, they're sort of the technical buyer. They're also the user, they're also the check signer. Similar thing happens in these in house legal teams where there's often a GC who the user, they're the check signer, they're like the sort of the domain expert and they're the champion all in one. So you still get these, I think really fast buying cycles in these large enterprise in house legal teams as well.
- [163:24]
Chris
What does growth look like?
- [163:28]
Jordy
We are growing very quickly. Yeah.
- [163:30]
Tyler
So we launched.
- [163:31]
Chris
Let's give it up for very quickly.
- [163:34]
Jordy
Quickly. Yeah. Put in your Excel model.
- [163:38]
Tyler
Yeah, we launched, we launched in 2022. We have 4,000 customers today. We're tripling this year. We're over tripling this year for sure. You know, hopefully even more. Yeah, it's been, it's been pretty wild. Yeah. I think, yeah. Over the last two and a half years I think we did something like 7,000% growth. Something like that. So yeah, it's been, it's been.
- [164:01]
Jordy
And up and to the right.
- [164:03]
Chris
Up and to the right.
- [164:03]
Jordy
Well, congratulations.
- [164:05]
Chris
Well, I'm sure we'll have you back on again soon for the sea. Have fun out there.
- [164:08]
Jordy
Thanks very much. Thanks for having me on the show.
- [164:10]
Chris
We'll talk to you soon, Scott.
- [164:11]
Jordy
Bye. If you're looking for cursor for billboards, head over to adquick.com out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising Only Adquick combines technology out of home expertise and data to enable efficient seamless ad buying across the globe. We are joined by George, George from Monk.
- [164:28]
Chris
Next, the Monk himself. Welcome to the show, George. What's happening?
- [164:33]
George
Hey guys, how are you? Thanks for having me.
- [164:35]
Jordy
Good to have you kick us off with an introduction. You launched the company. How are you positioning the value proposition? The business. How are you explaining the business these days?
- [164:45]
George
Yep, we're monk.com we help businesses save time and make money by solving invoices. And collections, which, now that I say this in the show, kind of sounds like ramp.
- [164:55]
Jordy
Yep. Wait, what is the typical collection. Collection process? Is this like just automated emails? Is that an important part of getting paid as a business?
- [165:06]
George
Yeah, it's a huge part. It's a huge part. I mean, most of it is email.
- [165:09]
Martin Casado
And.
- [165:10]
George
And up until now it's all been like these very boring dunny emails that get sent and then get ignored.
- [165:15]
Jordy
Yeah.
- [165:16]
George
And then like, statistically a big piece of delays is just an error in these emails. It's like a tiny thing that we accept, but it's like a $3 trillion problem, right?
- [165:24]
Jordy
Yep.
- [165:27]
Chris
What were the legacy solutions in the category? Why start this business now? What was kind of the key unlock when I saw the launch? Made a lot of sense. But at the same time, you look at a business like this, I think every business owner can go to monk.com and think, okay, I'm having these problems. This feels like an elegant solution for it. But. But why was this not a solved problem yet?
- [165:55]
George
Yep, it's a good question. And it's. It's a red ocean. Like there's a ton of players before olm and now every person with a WI FI connection is going to rip a competitor.
- [166:06]
Chris
It's just diving into. You're a real shark. It takes a real shark to dive into a red ocean.
- [166:11]
Jordy
I like the honesty. I appreciate this. This is much better. We're the only person that thought of this capitalism.
- [166:17]
George
It's an it look, you know, a few things. A, the selling into the office of the CFO changed twice since the zerb. So like a, there was a zer and like it was super frothy. And then, and then, and so, and then, and then there's a lot more financial rigor. And then now with post lm, there's just a lot more appetite to experiment. So like I think the, the GTM motion got easier. And then the onus on the CFO or like the business leader, even the founder, the solo founder, get like a.
- [166:46]
John Quinn
Lot, a lot harder.
- [166:47]
George
Like they have to do a lot more with less. And then B, when Sam Altman and Satya compete and they pour billions in capex and opex and R and D, we at the app layer just get to rip that into advantages. And so we are applying LLMs in three parts of this workflow and it just works. And every week that they improve, we improve before. Obviously not possible.
- [167:09]
Jordy
How'd you get monk.com, that's a great domain. What's the story?
- [167:13]
George
One at a poker game.
- [167:14]
Martin Casado
Game.
- [167:14]
Jordy
You wanted a poker game. You're a pro poker player, right?
- [167:17]
George
No, I'm kidding.
- [167:18]
Chris
I'm kidding.
- [167:18]
Martin Casado
I bought it. I bought it.
- [167:19]
Jordy
Okay, but you made money in poker, and then so you paid for it, so you kind of wanted it. A poker game. I like that.
- [167:25]
George
Kind of wanted a poker game. Kind of SHIELD and BTV gave me some money. No, we used to be called Atlas because I think Greek philosophy is cool. And I thought, you know, a science function, like, holds up the world, but then there's like 50 atlases.
- [167:37]
Jordy
Oh, sure. So, yeah, Stripe Atlas. There's a bunch of other.
- [167:40]
Chris
What makes poker players so elite? Elite at. At the sport of business. Yeah, I know a buddy of mine still plays like pro am pro poker.
- [167:53]
Jordy
This is basically degenerate gambling professional. I was just kidding.
- [167:58]
George
I mean, don't you think you can sort of like, cross supply from. I mean, you ran a business and now you run a very popular. You just cross supply. Like a lot of the same principles govern all these domains, right?
- [168:10]
John Quinn
Right.
- [168:10]
Jordy
Yeah, totally.
- [168:11]
Chris
Totally.
- [168:13]
Jordy
Is this founder bluffing or will they come on the show? Will they come answer hard questions in the TVP ultradome? Will they have a poker face on.
- [168:23]
George
Expected values, thinking, you know, risk, discipline, et cetera, et cetera, et cetera.
- [168:26]
Jordy
Totally, totally.
- [168:27]
Chris
Awesome.
- [168:28]
Jordy
Take us through the round real quick. What happened?
- [168:31]
George
You mean like the money?
- [168:32]
Jordy
Yeah, I want to ring the gong. How much? Dollars from who?
- [168:35]
George
Greenback or led by Sheila Nihar on btv.
- [168:42]
Jordy
Thank you, thank you, thank you. We love Sheila. Is this from his new fund? He came on the show just like a week ago. He's already deploying, ripping checks. Or maybe you were the last one in fund too.
- [168:51]
George
I think I'm the last one in the fund too.
- [168:52]
Chris
Last one in front too.
- [168:53]
Jordy
Okay.
- [168:55]
George
GTM Fund and Vrail also helped Buddy Ashiel and Nihar led.
- [168:59]
Jordy
Very cool. And tell us about the last company. Company. Super interested.
- [169:04]
George
The last company.
- [169:06]
Jordy
Streamlabs 1.
- [169:07]
George
Oh, Streamlabs.
- [169:07]
Martin Casado
Yeah.
- [169:08]
George
Yeah, it's a big business. It's a creator economy business. It's like we're a big developer for Twitch and YouTube. So like if you're a content creator and you live stream on Twitch, YouTube, or like back then when Facebook was Facebook, you're using our tools. So live streaming, patronage, moderation, et cetera, et cetera, et cetera. And we sold because we're a developer and Twitch was just ripping our roadmap, which is fine.
- [169:34]
Jordy
Yeah. Who'd you sell to?
- [169:36]
George
Logitech.
- [169:37]
Chris
Okay, Logitech. There you go. Awesome. Well, yeah, congratulations on the raise and yeah, it seems like there's quite a lot of demand. So good luck keeping up with it.
- [169:48]
Jordy
Awesome.
- [169:49]
George
Thanks for the support.
- [169:49]
Jordy
We'll talk to you soon. Our next guest is in the restream waiting room. But first let me tell you about Wander find your happy place place book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning and 247 concierge service. It's a vacation home, but better. We have Zach from Meanwhile coming in to the TVP and Ultradrome. Zach, how are you doing?
- [170:08]
Chris
He is welcome.
- [170:09]
Martin Casado
Great.
- [170:10]
Zach
Happy to be here.
- [170:11]
Chris
Great to have you.
- [170:12]
Jordy
Please kick us off with an introduction on yourself and the company. We'd love to learn something. Yeah.
- [170:17]
Zach
My name's Zach. I'm a longtime fintech entrepreneur. I've built Meanwhile. Meanwhile is the world's first bitcoin life insurance company. But our intention is to build the world's largest life insurance company.
- [170:30]
Jordy
How does bitcoin and life insurance fit together? How's the normal life insurance market work? How is this different? Walk me through just the like, one step deeper in the thesis or the product.
- [170:43]
Zach
Yeah. So the normal life insurance market, this is about 3% of global GDP. You've probably never talked about it once on the show, but it is gigantic. It is not just life insurance, it's about retirement savings. It's about, you know, protecting your family when you die, but what also happens to your family when you live longer than you're supposed to. That's deferred annuities, it's insurance bonds, it's all sorts of saving products. It's a huge, huge market that is completely untouched by technology. And the reason it's untouched by technology is because you need to be big for technology to matter. So that is why you have a bunch of companies who have built marketing engines on top of the global life insurance ecosystem. What we've done is we have built a full stack vertically integrated life insurance company in Bermuda. It just happens to entirely be denominated in bitcoin. And what that means practically is if you want to save for the long term, you can now do it in bitcoin. And there are tax advantages and there's estate and tax planning reasons to do that. But fundamentally, what we see is that if I bought a life insurance policy in 2018 when my son was born, I've seen the purchasing power of that dollar policy go down 25, 30%. Whereas if I had done that in bitcoin, I've seen the purchasing power go up hundreds of percent. And we want to bring that not just to everyone in America, but if you're a middle class person in Argentina, you don't save for your retirement because you are going to live longer than the Argentinian peso. So that person should save in bitcoin.
- [172:21]
Jordy
Okay, so you want a million dollar life insurance plan to run your life, actual 10 bitcoins by paying in bitcoin. Because most people think about their life insurance policy as okay, it's going to be $100 a month. I have a job, I can pay that. If it's in bitcoin, it goes up and then all of a sudden I can't make the payments. How does all that flow?
- [172:45]
Zach
Yeah, so the current product that we do direct to consumer, but this round's actually about all this other stuff we do is it's called whole life. So it lasts your whole life. It's very well named. In our case, you might pay. I'm going to use big round numbers. You might pay one bitcoin a year for 10, 10 years. So you've paid us 10 bitcoin and then whenever you die you get 15 bitcoin. Okay, but yes, you're absolutely right in a way, you're short bitcoin. So I suggest do not buy a policy bigger than your existing amount of bitcoin.
- [173:15]
Chris
Interesting what you mentioned. You just raised 82 million, so we should acknowledge $82 million from Spain, Apollo, Northwestern Mutual, that's Big Han Ventures and Pantera, a couple others. What, what was the catalyst for this round? What are you working on outside of the direct to consumer product that you just mentioned?
- [173:39]
Zach
Yeah, so actually we raised a Series A in February that was $40 million from framework and Folger and Wensys. And what happened after that round is that a ton of the largest life insurance and retirement companies in the world approached us and asked us if we could work with them to bring these products to their markets, if we could help them do indexed annuities index life insurance that had exposure to bitcoin. And that is how this $82 million round came about, is that Han and Baincap, crypto in particular, they had sort of been hovering around. They reached out to us in the summer. They said, you're one of the most important companies going to be one of the most important companies in crypto. Can we invest? And I said, for a large enough check, you can do anything.
- [174:33]
Chris
I love the, love the honesty. What is it about? Give us the Bermuda lore. I've only been there on vacation, but.
- [174:43]
Jordy
It sounds un American to me, but I'll let you defend it.
- [174:46]
Chris
Well, it's. It's long been a sort of financial hub, and it has some deep history and ties between Wall street and Bermuda.
- [174:57]
Jordy
You're not winning me over. It's not in America.
- [174:59]
Zach
Yeah. So the fundamental history is that Bermuda used to be a tourist destination when you had to get on the boat to go to your vacation spot. And once there was an airplane, you're like, I'm going to go to the Bahamas or I'm going to go to Jamaica. Bermuda is actually way out in the middle of nowhere in the ocean, and it's just not as hot as you can like.
- [175:15]
Chris
Right.
- [175:15]
Zach
So.
- [175:16]
Chris
And it's the Bermuda Triangle out there.
- [175:20]
Zach
Not a great history on boats. So basically, they had some really enterprising people in the 50s and the 1950s and 60s who decided to make it an offshore financial hub. And now it is like the insurance capital of the world. So I'm surprised you went there on vacation, because there is about as many actuaries, lawyers, and accountants on Bermuda as there are Bermudians.
- [175:43]
Martin Casado
Wow.
- [175:43]
Zach
You walk around and it's like, Munich Re, Chubb, Swiss Re. It's like huge financial institutions. And I guess the next huge financial institution there is going to be meanwhile.
- [175:53]
Jordy
Congratulations. That's amazing. Is the Bermuda Triangle fake news, or are you taking a wild route when you go there? Are you avoiding that?
- [176:04]
Zach
I'm going to call it fake news, but they're actually. Bermuda has this really crazy history. They did a lot of things. They ran a ruthless salt monopoly over the Caribbean. They were like gun runners in the Civil War. They ran a penal colony.
- [176:19]
Chris
They're like, why not find it?
- [176:20]
Zach
They have found ways to be innovative for hundreds of years.
- [176:27]
Jordy
So if me and you are flying in a Cessna to Bermuda, you're not telling me to fly around the train. Say, fly right through the. Through the Triangle.
- [176:37]
Zach
That's right. I've only been there on commercial jets, so I'm not prepared to support the Cessna plan.
- [176:42]
Jordy
But you're fearless, generally around the Triangle.
- [176:44]
Zach
Generally fearless.
- [176:45]
Jordy
That's great to hear.
- [176:46]
Zach
That's what it takes to take on a $3 trillion industry.
- [176:49]
Jordy
I like it. I like it. You shouldn't be afraid of the Triangle. You shouldn't be afraid.
- [176:52]
Chris
How are you financial markets? How are you innovating on the direct, like, the actual experience? I got life insurance through my neighbor who happened to be an agent. It was kind of this weird, you know, it's not a. It's not a. Didn't feel like the Most seamless digitally native process. So there's also, I think a lot that you can do on. On the actual.
- [177:15]
Zach
Yeah, fundamentally look, we want to do with a thousand people what allianz does with 100,000 people. We didn't mention it, but Sam Altman actually led our seed round. And our pitch to Sam was this is a once in a century opportunity. Opportunity that we can use digital money in the form of Bitcoin and Stablecoins to reach billions of people with these savings products and then we can use AI and automation to serve them profitably. So we have built everything from the ground up. We are a fully vertically integrated life insurer. So yeah, the experience of filling out the application is quite seamless. People can get underwritten and we can close policies in a single day. We do all our actual. We close our books. This sounds so boring, but we close our books in like two and a half hours at the corner end. Most insurance companies, we're talking like 45 days. But we do all of that. Like we have a chief risk officer, we have an enterprise risk manager, we have all this boring stuff. But because we built it, you know, feature by feature, step by step, system by system, we are building a durable advantage in the life insurance space.
- [178:24]
Jordy
Fantastic. Well, congratulations on the progress. Hope you're out in Bermuda one day. Have a great rest of your day.
- [178:32]
Chris
Thanks for coming.
- [178:32]
Zach
Happy to host a show there sometime if you'd like.
- [178:34]
Martin Casado
Gentlemen.
- [178:35]
Chris
Sounds cool. I would love that.
- [178:36]
Jordy
Awesome Bermuda shorts.
- [178:37]
Chris
Thanks for joining.
- [178:38]
Jordy
Have a great rest of your congrats.
- [178:39]
Chris
Progress.
- [178:40]
Jordy
Speaking of life insurance, Dylan Patel over at Semianalysis says life insurance in Taiwan is delaying Nvidia's expansion in Taiwan. Remember, Sam Altman was talking to Ben Thompson just earlier this week about wanting TSMC to ramp up. He obviously wants more chip production. And so Semianalysis tells the story they say at Computex. This May, Nvidia announced plans to establish its Constellation headquarters in Taiwan. However, the project now faces uncertainty. The proposed site for the Taiwan headquarters was the T17 and T18 plots in the Baitu Shilin Technology Park. Nvidia has signed a memorandum of understanding an MOU with this life insurance company, a Taiwanese company with total assets exceeding $100 billion USD. But the MOU expired on September 30th and is no longer valid. The key obstacles are as follows. Shin Kong Life completed the registration of building rights for for the T17 and T18 plots in February of 2022, securing a 50 year leasehold. Shin Kong expressed willingness to directly transfer the rights of T17 and T18 to Nvidia. However, the Taipei City government opposed this, arguing that Shin Kong must first construct the buildings and obtain an occupancy permit before transferring the rights. The government is concerned that if Shin Kong gains additional benefits from Nvidia through a direct transfer, however, that may be seen as favoritism. So furthermore, Nvidia requested that the road between the two plots be incorporated into the site. They want the road as well, not just the buildings. And that would require changes to the urban planning regulations. And it would increase the value of the land rights and again, the concern of favoritism. So Chiang Kong proposed constructing the headquarters for Nvidia and transferring it afterwards. But Nvidia said no. Nvidia wants full control over the design and construction of its headquarters. You got to get a nice corner office for the big man. Who knows what Ching Kong is going to do if you let them build it?
- [180:40]
Chris
A closet for leather jackets?
- [180:42]
Jordy
Yes, a massive walk in closet that makes entirely the same lots of leather jackets. And the jackets come flying out of every possible closet. The Taipei City government suggested terminating the existing contract and signing a new one directly with Nvidia. Shinkong opposed this, citing its 50 year leasehold and expected rental rental income. The city's proposal did not account for Shin Kong's anticipated future revenue. Regarding rumors that Nvidia may abandon its Taiwan HQ plans and move to India, Semianalysis has the following view. Taiwan supply chain remains more concentrated and efficient than any of the other countries. And with the MOU expired, Nvidia is free to seek alternative locations or quit the site entirely. Therefore, we believe Nvidia will not give up on establishing its headquarters in Taiwan. That's where they want to be. The city government is reportedly leaping toward persuading Nvidia to give up sites T17 and 18 instead and instead accept a different site, T12 along with surrounding private land. Discussions with Nvidia are expected soon. They believe the likelihood of Nvidia accepting the T12 proposal is low as the site is similar and surrounding private land involves many owners which would drive up costs. So Nvidia is duking it out with life insurance provider in Taiwan.
- [181:58]
Chris
Other news. REI announced it's shuttering its SoHo flagship. It's also closing flagships in Paramus, New Jersey and Boston. Its shores will shut down in late 2026. Also, apparently, OpenAI is opening an office in the same building. Wait, really? SoHo flagship? I think Michael Miraflor was saying that on X. Something about that being like very symbolic. I have a lot of happy memories of being and Visiting rei's as a kid. It was a wonderful, wonderful place. So hopefully this isn't a sign that it's so over. And hopefully someday soon we can be so back. I did want to close out. There's the Figure three robot released today.
- [182:49]
Jordy
We have a video that we should.
- [182:50]
Chris
Pull up the video.
- [182:51]
Jordy
I'd also like to pull up the video of Mark Zuckerberg talking about the barbecue. Because isn't it the anniversary of that video at some point? Let's watch those two videos and then we'll get out of here.
- [183:05]
Chris
But first, while you pull it up. Yeah, apparently. So Mark Cuban went in. Sora.
- [183:10]
Jordy
Yes.
- [183:10]
Chris
And said. Said Free for all with his likeness.
- [183:14]
Jordy
I went Free for all as well.
- [183:15]
Chris
But he did something that was even smarter than you, which you prompted it to always depict you as a bodybuilder. Cuban added a tag somehow that says, brought to you by Cost plus Drugs.
- [183:27]
Jordy
I was gonna do that with the ramp logo on my forehead. He did that.
- [183:29]
Chris
Yeah. That's amazing. And it looks. Yeah, it works very funny.
- [183:33]
Martin Casado
Beautifully.
- [183:34]
Chris
Dylan posted a couple different screenshots.
- [183:36]
Jordy
Very few. Clever. Okay, let's watch this video. Thank you for pulling this up. We were just talking about humanoid robots with Martin Casado from A16Z.
- [183:47]
Chris
Nobody does.
- [183:48]
Jordy
Trying to do it.
- [183:49]
Chris
Nobody does videos like figure. Gotta give him credit.
- [183:52]
Jordy
Fantastic launch videos where this is the third. So this is version three, but they're still in alpha and they haven't. They haven't shipped these. Or. Or they. They installed some into a demo plant with BMW. Right. But.
- [184:06]
Chris
So what's notable here is they're not that. I. I scanned the video. I don't think there's any. They're not just depicting it in a factory setting at all.
- [184:13]
Jordy
Okay.
- [184:14]
Chris
It seems like this is a pivot.
- [184:15]
Jordy
Away from going more consumer commercial, which was one of my questions for Martin. What do you think, Tyler?
- [184:21]
Tyler
Right. At the end of the video. It's in a factory.
- [184:23]
Jordy
Oh, it's in a factory at the end.
- [184:24]
Chris
And the other thing here that's notable. They followed One X robot.
- [184:27]
Jordy
That's right.
- [184:28]
Chris
Doing the flag fabric covering.
- [184:30]
Jordy
Fabric looks way better, I think, than the hard metal. It just looks. Yeah, it looks.
- [184:34]
Chris
I can see why.
- [184:36]
Jordy
Oh, there's a house. Okay.
- [184:37]
Chris
I can see why. The retail army just loves Figure.
- [184:42]
Jordy
It's not a retail army. We're seeing the emergence of a new army. The private markets. Retail.
- [184:46]
Chris
Private market. Retail army.
- [184:48]
Jordy
We need a new word for it. It's not. It's not retail necessarily if it's private, but people have been Pumping figure, special.
- [184:55]
Chris
Timeline, special purpose vehicle.
- [184:57]
Jordy
Army people have been asking questions about how much pumping is going on on the timeline and whether it's too much. But I mean, it's a great video.
- [185:06]
Chris
$39 billion company.
- [185:07]
Jordy
John, is it still?
- [185:09]
Martin Casado
Wow.
- [185:09]
Chris
Still? Yes.
- [185:10]
Jordy
That's remarkable. Hey, look, that dog. That was an opportunity to make that a robotic dog. It is interesting that they're not. They're only focused, you know, straight shot to humanoid robot. No Boston Dynamics project. No, no. Four legged friend first. A lot of the other robotics companies have kind of taken a more incremental like progress.
- [185:36]
Chris
Do you think they trained on Biden's?
- [185:40]
Jordy
It does, it does seem like the walk of an elderly man, but it's a start. It's not. It's not. Yeah. I mean the Boston Dynamics demos are always like way more agile and same with the unitree.
- [185:52]
Chris
So the question here, really flip it over to the home base is going to come down to one, how effective is it?
- [185:59]
Jordy
Right.
- [185:59]
Chris
If we both have kids, kids tend to like destroy the living room, create.
- [186:04]
Jordy
A lot of chaos.
- [186:05]
Chris
You got to clean it up and stuff.
- [186:07]
Jordy
Humanoids should be able to clean it up, you'd think.
- [186:09]
Chris
The question is it's a little slower how effective and what's the cost, right. Are people going to buy. Can they come in anywhere near unitree at 20k for a comparable robot seems unlikely.
- [186:21]
Jordy
The big debate here is just how much does this stuff generalize? Because we've seen in all sorts of other AI applications like it's simple to rl on one certain problem and get really good at it. But then does that learning generalize? And so you can have a model that's fantastic at IMO level math, but, but can't complete ARC AGI, which is so simple that a 10 year old can do it.
- [186:48]
Chris
It's doing dishes.
- [186:50]
Jordy
And so, you know, if it's, if it's trained to be really good at this one dish with this one, with this one faucet system, can it generalize to your faucet system or when will that generalization happen? It certainly happened in LLMs, so you would hope that it happens in humanoid robotics very quickly. It's interesting time.
- [187:10]
Chris
Brett shared that none of this is tele operated.
- [187:13]
Jordy
Okay. Yeah. None of this is teleoperated, which I.
- [187:15]
Chris
Still think tele, even a teleoperated humanoid would be very cool. That would be.
- [187:19]
Jordy
Yeah. I mean you're still paying by the hour. More than just power, there is something that's very important economically about getting away from teleoperation over the long term. But I don't see a problem with teleoperation as a data flywheel as a way to actually get these into people's homes. You're teleoperating them, you're collecting more feedback and data and you can train that and roll that into reinforcement learning. I do, yeah. The, the, the, the question is like, did he comment on whether or not this is scripted? Because it could be recorded motion. Right. Because that would not be tele operated. It would be running on the robot locally. But it could have been, you know, teller operated at point one, one point and then memorized and then, and then, you know, played back effectively. Like, is this. There's a big question about like, how long has this robot.
- [188:11]
Chris
Yeah, I think for figure environment. Yeah, for figure to develop like legitimacy within like our bubble, like people are going to need to be able to do some type of live demo setting where they can be in the house with it and they can task it with doing things that aren't necessarily pre planned. Right.
- [188:32]
Jordy
Yeah. There's something about like with the other AI companies in the LLM world, like the models go out, the APIs are available, the benchmarks are because if, if.
- [188:42]
Chris
You can just walk into a room with a figure robot, dump a bunch of laundry on bed and it just folds it and puts it away, that is going to be mind blowing. But I don't know how, how, I.
- [188:53]
Jordy
Mean, to be fair there, Gnome Brown, I think at OpenAI was, was saying like, okay, like this is a nice example of the robot folding laundry at a table. What happens if you raise the height of the table 6 inches and Brett Odcock raised the height of the table 6 inches and posted another video and said it still works. It still works. So he is, he is duking it out on the timeline.
- [189:16]
Chris
There it is. More commercial setting. Delivery robot. They have had it at the opening of a hotel.
- [189:23]
Jordy
I wonder what makes it so much slower than the Boston Dynamics example. It feels in some ways more advanced than what Boston Dynamics does. Certainly the demos here are more generalizable. I haven't seen a video of a Boston Dynamics robot doing any of these useful tasks. It's always just dancing and doing parkour, which doesn't seem very commercially viable. But the Boston Dynamics, like the actual motion just feels so much smoother and so much more fluid. And same thing with the unitary robots. The unitary robots, you kick them over and it does a360 to jump back up. That doesn't feel very economically useful like folding laundry or delivering packages. But it's certainly impressive.
- [190:08]
Chris
PhD responded and said, I have so many questions. I wonder, how long do you think until MKBHD can do a review?
- [190:19]
Jordy
He did a huge review of the Boston Dynamics dog. He got one. I think he might have even paid for it himself and been able to really play around with it and really put it through its paces. And I love that. I would love for him to do a proper review on a figure robot. That would be very cool. There was something else that was top of mind on the MKBHD thing. Oh, yeah, did you see that? Somebody posted their product and MKBHD responded with a meme that said interesting. And it was like a funny just gif or image. And the company took the text out of the meme and put it in quotes on their website and attributed to mkb. It was like he said, it looks interesting and it was like a meme that he sent. And then MKBHD was like, this is ridiculous. Like, I didn't give you a quote. Like, you can't just use me on your website. And the founder of the company was like, oh, well, we also emailed with your team and they said, like, it looks interesting. Like, we'd love to, you know, like, like, hear more about it. And then they took that as an example and it's like, that's not quite the same as, like, we'd love to.
- [191:27]
Chris
Hear more about it.
- [191:28]
Martin Casado
Yeah, yeah.
- [191:28]
Jordy
It's like they were just being nice.
- [191:30]
Chris
In the chat right now. AV says it's slow for dramatic effect.
- [191:36]
Jordy
Yeah, it's actually moving it five times. They filmed it with a slow motion camera. They filmed it with a slow motion camera to make it look more sci fi and cinematic, for sure.
- [191:48]
Chris
But anyway, no more information on when it'll be available for sale, but I'm sure somebody at the right point will pit the. I mean, the first thing somebody's going to do is pit the unitri G1 against a figure and just make them compete in a variety of contests. Looking forward to that.
- [192:07]
Jordy
I mean, Christopher Mims does a whole deep dive on America's manufacturing resurgence and the robots that are doing that. More focused on cobots, which we've talked to some companies around, less on the humanoid side, but it's a fascinating deep dive. If you want to go check that out, maybe we'll cover it on the show at some point. Is there anything else you want to react to?
- [192:25]
Chris
That's it. Okay, that's it. We can react to this iconic video.
- [192:29]
Jordy
Let's head out. Let's head out.
- [192:30]
Chris
On this day, friend of the show.
- [192:32]
Jordy
Mark Zuckerberg, tvp. Hey everyone. We are live from my backyard where I am see smoking. Imagine Andy Jassy doing this on Twitch. It would be so much better. Then another conference call for earnings.
- [192:47]
George
It's smoking.
- [192:48]
Jordy
So is this the edit where they just show the smoking meats?
- [192:51]
Chris
Yeah. Someone asked me, do I smoke meat?
- [192:53]
Jordy
Smoking meat. This is. This is the least shared one. You could edit any video. You could edit us to look like idiots too. If you took our 15 hours a week of content and dialed it down to all the times we say something silly.
- [193:10]
Chris
He's smoking.
- [193:11]
Jordy
Smoking. Well, he went so much farther. He has his own cattle ranch. He didn't. He vertically integrated his meat smoking operation. So cheers to Mark Zuckerberg.
- [193:20]
Chris
Thank you for tuning in today. We hope you have a fantastic afternoon and evening wherever you are in the world.
- [193:26]
Jordy
And we will see you tomorrow here in my garage.
- [193:29]
Chris
Sam Altman live on TBPN noon Pacific.
- [193:32]
Jordy
Tune in.
- [193:33]
Chris
We'll see then.
- [193:33]
Jordy
See you tomorrow. Goodbye.