A (2:34)

So is there a network effect there? Because if I'm on Erebor and Jordy's on Erebor and we can both have 24. 7 settlement but someone else is on a different bank and they don't have 24. 7 settlement, we're going to have a good experience and then maybe to get out of the network. How does that work?

C (2:51)

I think that there will be network effects but to be honest, whatever network effects are will probably be pretty short lived. I think that pretty quickly everyone is going to realize that they need to support these things. And I think that when like seeing this administration's support for using specifically dollar backed stablecoins. So not saying we're going to move everybody off of the dollar, we're going to move them off of the United States currency as the reserve currency for world. But I think probably most banks are going to get drug into this. The difference is that we are trying to do it from the start. So is there a network effect? Probably, but I think most of the forward looking companies that would value that network effect, that one in particular see that in the next few years probably all banks are going to be forced to adopt this to be competitive.

B (3:34)

So what is the ideal banking experience for you besides stability and low risk? Is being able to talk to somebody. Is that a bug? Should we just. Is Erebor just going to be, you know, a chatbot that you say talk to a human and it says unfortunately I cannot do that, I am an AI.

C (3:53)

I think it's going to be a long time before we hand things off to the chat pods, if only for regulatory reasons. Like you set aside the risk, which is a huge factor. You set aside the fact that we have our own banking rails which are extremely efficient and that we can settle at any time. I mean those are huge factors on their own. But even if you knock off kind of all of these, all of these obvious advantages, there's a lot of other things that you get from having a bank that is strongly aligned with the United States, strongly aligned with US interests, strongly aligned with the US Department of War and also the intelligence community. And there's a lot of ways that that manifests. For example, one of the things that we're doing is rather than working with the intelligence community only under court order to kind of go and respond when they think there's crime going on on the platform, we're preemptively going out there and saying, no, we're going to work with them from the very, very beginning to help make fraud almost impossible on our platform. Which is great for me too, because it means that people who want to engage in fraud are going to go to other banks. It means that people who don't want to engage in fraud are going to be thrilled about being on a platform that doesn't have that type of activity on it. And to the extent that it exists inside of their own platform against their will, they know that they have a willing partner that is willing to work with the government rather than hide these, you know, hide these things. I would say maybe think of it as like the opposite of hsbc, where they were banking the cartels and desperately trying to. To avoid any sort of government intervention that would make that clear to the public markets. Put Arab or way at the other end of that spectrum. I think there's also a lot of other banks that whether. Whether they're good or bad people is irrelevant. You might have good people who nonetheless are very beholden to European markets, Chinese markets, other foreign markets that they need to keep happy, either because they want to keep them happy and make money, or because they don't want their executives in those jurisdictions to get arrested. Erebor is taking a very different approach. We're saying, you know what, we're an American company. We're an American bank that supports American companies, and we will comply with U.S. law, but we will not comply with spurious rulings from people who have no real jurisdiction or authority over us. And you'll find a very hard time finding a bank that takes that position. I'm not aware of any other than us.

A (5:55)

How do you think about rolling out products? A bank can do everything from mortgages to equipment financing to venture debt to capital raises. Take someone public. That's kind of what, you know, you go to a big bank, they're going to help you. Ipo.

C (6:09)

What do you want to do first? I think that right now, look, we've just barely opened, so give us a little bit of time. The products that we are prioritizing are based entirely on the customer feedback that we're getting, the things that they tell us they need, the things that they tell us that we can most help with. In a way, the existence of a bank, to me is almost this antiquated thing, like you would hope that companies could really just do all of this stuff themselves, or at least most of it themselves. But the regulatory climate, the way that the banking system works requires that you have this intermediary in the form of a regulated bank to make these things happen. And so I kind of think of our business as part and parcel of these companies that need us. And we're going to work very, very close, closely with them and focus on the things that they care about. That's probably not going to be, for example, you know, residential mortgages, but things like equipment financing. Very conservative, you know, very conservatively played where it's not going to turn into a risk management problem. Allowing them to work with the legacy banking system and plugging into that in the least painful way. These are things that we have a lot of customers who are very interested. Oh, and we need to not lose their money. If we can do that, we'll be doing better than many other banks.

A (7:20)

Yes, yes.

B (7:23)

Talk about the trade offs of going the charter route. You know, the last 10 years, most of the banking products that founders have used were built on top of existing charters or spreading deposits across multiple people.

C (7:39)

Just avoid getting a charter at all. You know, they want to be a fintech company and they basically will dance around the fact that realistically what they're doing is basically being a bank. Look, there's a lot of things that you can do without having your own charter. There's things you can do partner with other companies. There's a lot of things you cannot do without having your sort of a risk.

B (7:58)

If you cannot anti anti hyper growth. Like you can't just scale to 50 billion of deposits tomorrow even if there's the demand. Right?

C (8:07)

So maybe we decided that, we decided that we needed to get our own charter because of the type of bank we were going to try to run and the ability to have the buck stop with us the moment that you're dependent on somebody else for the key infrastructure, the key risk management, the key licensure questions. They can kick you off the platform. They can be forced to kick you off the platform. Maybe they're doing it for good reasons, maybe they're doing it for bad reasons. I mean you've seen this play out, for example, with Steam and their payment processors and their banks and their payment processors. Banks where they're basically censoring games because there's some circle of people who all claim it's not them pointing down the chain, it's that guy's that guy, that guy's that guy. But they all agree, even if they can't agree, who's causing the censorship that if you don't censor, they're going to drop you, they're going to drop your account, they're going to debank you, they're going to depayment you. And so one of the things that you have to ask yourself when you're making yourself dependent on another bank or another payment company is, am I setting this up where they get to make my decisions for me, and are they making their decisions for me? Or is the Chinese Communist Party making those decisions? Is some political party that is extremely hostile to some business on our network, the one actually making that decision? So if you don't control your own charter, if you don't control your own destiny, the buck doesn't stop with you. And you're always going to have to keep other parties happy. And I think that was not something that we were interested in. We wanted to be able to run the bank the way that we think it needs to be run. And if we are debanking somebody, we are going to have to take responsibility for that. And I think that actually leads to much better behavior. I would love to see that type of behavior across the industry.

B (9:39)

Physical branches, how are you thinking about that?

C (9:43)

I think we're going to start with Fort Knox and then we'll expand from there.

A (9:48)

Yeah. Maybe actually dive deeper there. Like, what is a bank these days? I think most people can conceptualize, like setting up a crypto wallet that holds coins, but when you want to hold real dollars, you don't actually have a physical bank vault, I imagine. So once you get the charter, does that just give you the ability to, like, maintain a database and a ledger? Like, what is a bank?

C (10:14)

What is a bank? I mean, there's lots of forms that can be. I think if you want all the details, you can actually read through a lot of our applications. Some of it's actually a matter of public record. And you can see that Anduril will. Sorry, not Andoril Erebor, will have a physical vault and we will have a lot of treasure in it.

A (10:28)

So.

C (10:29)

So we are not trying to be a pure digital, pure, you know, pure ether company. And in fact, a lot of the companies that are very interested in working with us want us to have secure, actual vaulted storage. I'm not saying that that's going to be the first thing that we focus on. That's our key differentiator. But we are not a bank of the ether. We are of Terrafirma.

A (10:49)

Yeah. Last time you came on, we talked a lot about mod Retro. I'd love an Update on the M64. What makes that product special. Where did you go further with this project than with the Chromatic and just general like how you're thinking about the M64?

C (11:04)

Well, for people who aren't familiar with that, the M64 is a tribute to the Nintendo 64 that I'm building one of the greatest multiplayer consoles of all time. We're building console that is compatible with all classic N64 games. We're rereleasing a lot of classic N64 games so that you can buy them if you don't already have them. We're actually doing new releases of canceled N64 games that never even made it to market. Either because they were canceled and ported to GameCube or because they ran out of money or because the studios imploded for interpersonality reasons. There's a lot of cool stuff coming out the M64. I guess the main update is that it's in mass production right now. It is not eventually coming. It is in mass production right now. We've decided we're not going to launch it until we build up sufficient stock to meet the demand. One of the mistakes I think we made with the mod retrochromatic, which was a tribute to the Game Boy and Game Boy Color, was that we started selling them and then all of a sudden we sold out. And then you have people who hear about it, they read about it, their friends are all talking about it, they go to try to buy one and they can't buy one because it's sold out. And there's a question, will they remember to come back and buy it some other time? Will they still feel like going and immediately buying it? Exactly. So you kind of end up with this dead end call to action. And so we've decided this time, by the way, this is especially bad for the game publishers that we're working with. Let's say that it's someone who's re releasing a game or somebody who's doing a brand new game. Some of the indie developers we're working with on the Chromatic, they're out there promoting their game, they're trying to market their game. They're doing a whole marketing activation, trying to convince people, hey, come and buy my new Game Boy game. Come and buy my new Nintendo 64 game. Well, what happens if you can't buy the console? A lot of people are like, oh, I'll come back later and buy it. And then they don't. And so what we want to do is not letting down our developer partners this time and make sure that we maintain stock so the goal is that the M64, no matter how many people hit our website, is not going to sell out. And so we are mass producing. We're stockpiling, I think tens of thousands of them so far, more and more to come.

B (13:01)

What is the, what is this going

C (13:03)

to be launching soon?

B (13:04)

What's the supply chain actually like? Right now we've covered the, the gamer rebellion against, against AI memory.

A (13:11)

Gamers are rising up.

C (13:13)

You know, the supply chain is okay because of the type of hardware that we're building. There's a lot of consumer hardware right now where people are trying to buy memory and it's a huge problem. But remember that the Nintendo 64 doesn't have exactly a lot of memory. You know, it had what, 16 megabytes by default, 32 megabytes with the expansion pack. And so it turns out that you don't need that much memory to perfectly replicate the Nintendo 64 original hardware. Can you maybe. It might be, it might, it might, it might be actually the least less, the least memory impacted consumer electronics product of the year.

B (13:50)

And so this was, this was your plan then all along.

A (13:52)

Yeah.

B (13:52)

You saw this guy, boom was coming and you said, I'm going to make the final console.

A (13:57)

Yeah.

C (13:57)

Now we got to return to monkey. We got, we got to go to go back to the beginning. I mean, really, what am I doing here with something with 32 megabytes? I mean, you remember what, you remember what Bill Gates said, right? What was it? 64 kilobytes of ram ought to be enough for anyone. Yeah, let's, let's, let's, let's figure out how to use AI to. Yeah, let's figure out how to use AI to build applications that fit within reasonable memory footprints. I'm only half kidding. I think you might have seen me going back and forth with Chamath on Twitter a couple of weeks ago talking about how this AI software platform for building, building software using AI should definitely support export to Windows XP Service Pack 3 compatible applications. And I really am only half kidding. There is actually a lot of government hardware that is still running those financial hardware that's still running these mostly offline stuff. And so having apps that can run on those is actually useful. But man, it feels crazy to need a few gigabytes of RAM to have a start menu. It feels pretty crazy that you need 16 gigabytes of RAM to take 30 minutes to search through a bunch of text files. Surely we can do better than this.

A (15:02)

Can you talk a little bit about how you think about gaming and the concept of just raising the next generation kids. I have three kids and I think I could probably get an emulator and run it on an iPad and slam that over to my kid's face. He might not know the difference. But is there another angle to the M64 that is about like some of the things that you can't do with it are actually good for the world? Maybe.

C (15:34)

I mean, you have to remember that the gaming industry, like many industries, figured out what actually worked a long time ago. They figured out how to make fun games. They figured out how to make things that people keep coming back. But it's moved from innovation to extraction. And I will note I stole that line from Nirav Patel, founder of Framework, because he put it so much better than I did. But there's these industries that have moved from innovation to extraction and they're now in the extraction phase where they try to make tons and tons and tons of money and actually pushing the limits is not the top priority for some huge majority of the dollars that are in industry. And so there's a lot of stuff that you can learn, especially when you're learning it from the ground up by going back to. To when people were just getting the basics right, when they were still innovating, building things that were really compelling to people. I recently had a kid. I might have a second on the way. I'm planning on starting them with. I wouldn't even if I'd say the classics. This isn't like a vintage play. It's starting them with a good foundation. That foundation happens to be largely old games, but I'm not going to be throwing them into the slot machine microtransaction Gamblerama that is dominating kids games today. It just seems like a crazy thing to do.

A (16:43)

It's a Skinner box. Yeah, don't go in the Skinner box. Talk about Vibe coding. What would your life be like if Vibe coding existed when you were 20? Advice for people who are 20 now. In the world of Vibe coding, you went into hardware very early. That feels like a great move. Is that still a great move? Walk us through all that.

C (17:04)

I mean, the biggest beneficiaries of Vibe coding are going to be the hardware nerds like me. It's going to be, it's going to be the shape rotators, not the word cells. Everyone's focused on how the words on the word cells are going to be wiped out by AI. But, but, but for the shape rotators, it's going to be incredible. You know, I was always a pretty terrible software Engineer I am. I'm not a programmer by trade. I've taught myself enough to glue things together and make them work, Work. But when I started my first company, Oculus, or actually when I started Mod Retro when I was 14 or 15, I knew just barely enough about software. If I would have been able to build crappy stuff by outsourcing it to a computer, I actually would have been able to accomplish things a lot faster than trying to do it myself. People might say, palmer, you should have just learned to code. You should have just learned to do it yourself. But I think it's pretty easy to look at my track record and realize I started Oculus When I was 19, after building prototypes since I was 15, I was only able to accomplish what I accomplished because I focused on what I was good at, which was optomechanics, a little bit of electrical, and then the product integration of all of these different components. I didn't have time to learn to program. If I had spent another year or two learning to program at even a reasonable level, I would have been two years behind on everything else. I am a big fan of vibe coding. Even if everything that comes out of it is slop, even if it is all shit, it's better than I was able to make.

A (18:30)

How are you thinking about VR these days? I recently watched the Matrix from start to finish in an Apple Vision Pro. I enjoyed it. It feels like the only real thing that you can do these days is just the home theater, if you don't have a home theater. But it doesn't feel like the industry's embraced that at all. And everyone's sort of writing down their investments and pulling back at a time when the display technology does seem to be good enough for that narrow use case, if you cut out the weight and move things around. But where do you see this?

C (19:01)

Where do you.

A (19:01)

Where do you want consumer VR to go? And then where do you think it actually is going?

C (19:07)

So I will challenge your premise there, which is that people are pulling back. I think that's driven mostly by people sensationalizing meta, firing a bunch of people. But you have to remember they got rid of 10% of the reality Labs team in one layoff. Remember that they have something like 8 or 9% annual churn naturally and organically, not including firing. So, sure. I mean, what you're really talking about is basically pulling six months of churn forward into a single month. And they're still spending more on VR than anybody, by an order of magnitude. They've said they are not spending less on content. They're just not putting it into first party stuff like Facebook Meta Horizons. You might have seen they've announced Metal Horizons is no longer a VR app as of yesterday. It is now a mobile focused app only. So what they've done is they basically killed a few of these failing efforts that didn't make sense and they're now putting those resources into things that are working. And so I wrote a, I wrote a, I wrote a bit about this on, on Twitter where people need to understand this is not the end of VR. It's not, it's not collapsing. They are still spending an enormous amount of money. They're bigger than anybody else by an order of magnitude. And I think if you pay attention to what's going to be coming out from Metta and others over the next 12 months, you're going to see a lot of progress. Like Apple Vision Pro. Yes, they. So yes, Apple Vision Pro was ahead of everybody on visual quality, on display quality. But let me tell you a short story. Imagine that an American company went to a Japanese display vendor and they said, we want you to sell us your new 4K micro OLED displays. The company gives them samples of those micro OLED displays. The samples cost about $1,000 each because the yield on that production line is only about 10%. In other words, 90% of the displays coming off the production line are not up to par. They're not working. And that's because these are engineering samples. They're not meant to actually be a working product. And they said, listen, here's our engineering samples. Just wait two years and the yield is going to be up to 90%. We'll be able to sell these to you for a couple hundred dollars. And then imagine that that American tech company had a guy named Tim Apple call them up and say, no, we're going to build a product with this right now, today, using your engineering samples. They said, but Tim Apple, that's crazy. That means that your headset was going to cost like $3,000. He said, I don't care. I'm going to sell a headset that should launch in 27, in 2024, 2025, and I'm going to do it for $3,500. That's what Apple Vision Pro is. It was never intended to be a product of the times. It's a product of the future, hauled into the present by spending enormous amounts of money. And so Meta and Sony and Apple and Google and all of these other companies, they are going to be hitting that level of visual Fidelity, they're going to be doing it with headsets that are far smaller, far lighter than what you see from Vision Pro. And I actually remain very optimistic.

A (21:49)

That's great.

C (21:51)

I think things are going pretty well.

A (21:52)

I'm extremely optimistic. It's mostly just that when I try and pull stuff out of Meta, they're like, no, no, no, we're not ready to talk. And I think that they're just being cold shouldered me because, like, they don't want to leak it yet, but I am very upset.

C (22:05)

Well, you know, the problem is they don't have a charming, charismatic pitch man who knows how to talk about this stuff with you. They got to solve that. They need to figure out what they're doing. It reminds me of something being here. I'm on the floor of the New York Stock Exchange behind me. And back in the Oculus days, when we sold the company to Meta, one of the first things that happened was New York Stock Exchange emailed our contact email and they asked if I would come and ring the bell of the New York Stock Exchange. Sounds pretty cool, right? Like, hey, like you've been acquired by this major public corporation in the form of Facebook. Come and ring the bell. Maybe, you know, maybe someday we'll do something else with you. And unfortunately, I didn't see that email for about seven years because another Oculus executive intercepted the email, said, oh no, Palmer can't make it, but I would love to come. And he came and he rang the bell without telling me about it. And so I found out about it later in unrelated litigation. That email came up in discovery. And anyway, I've not had a chance to ring the bell yet. Maybe when Anduril goes public, I'll finally be able to. To, I'll finally be able to ring that bell. But I got to admit, I have a long memory and a long memory grudges, and I won't say who it was, but there's probably a handful of people out there who can guess.

A (23:20)

You have a lot of co founders now, a lot of executives that you work with. How do you select for folks who won't do that to you? How do you select Extreme loyalty. Extreme loyalty. Trust.

C (23:30)

I don't know.

A (23:31)

I mean, it's important. Remember, we just kicked this thing off.

C (23:34)

Look, I started Oculus when I was 19 years old. And I mean, you also got to remember the story of who is a founder, who is a co founder. It's fluid and dynamic and always changing with the ebb and flow of history. One of my ideas is to Have a blockchain company where everyone agrees what the founding story is and who the co founders are, and then it goes into the blockchain so that nobody can come back and say that they're a co founder. There's a guy running around now who says that he's a co founder of Oculus who was very much so not a co founder.

B (24:07)

And in fact, I swear, I think I met this guy. I told you this story off air. A guy I was at.

C (24:13)

Tell me the story.

B (24:15)

I was at a dinner party at my friend's house, and my buddy was like, hey, this guy works at. I'm not gonna name the company, but you guys probably have some tech stuff in common. You guys should meet. And I go up to him, I said, hey, hi. I hear we should meet. And he's like, hey. I was like, what's your story? He's like, I started a company called Oculus now now at Meta. And I was like, oh, interesting. Like never heard of you before. And so maybe this guy, we won't put him on blast.

C (24:41)

Here's the crazy thing. I don't even know who you're talking about.

B (24:45)

And I told him.

C (24:45)

I was like, no, because there's multiple people who are saying this, including a guy who literally has a documentary being made about him how he's the founder of Oculus. So it's all.

B (24:55)

You'll appreciate. You'll appreciate. I was like, oh, that's. That's awesome. Like, Palmer comes on the show all the time. And then he completely back, back, backtracked. It was like, well, yeah, yeah, yeah. You know, I joined like, you know, you know, and. But I was on the founding team. Like, he, he, he backtracked.

A (25:12)

But

C (25:14)

the point you asked me, how do you select these people? Carefully. I was 19 years old when I selected the first people that I was working with. I've learned a lot. I've been stabbed in the back a lot. And I'd probably make very different decisions if I were doing it today. And it's worth noting, remember that I started Oculus on my own with no co founders, nobody involved in a lot of like, I brought on people that I am happy to call co founders, even though they didn't join the company until months later. Who I had never met when I started the company. That said, I'm happy. There's some people I'm honored to share the title of co founder with, and there's other people that I'm not, which is why I really want this blockchain thing. Somebody needs to vibe code this slop and get it out there.

B (25:54)

Super important question. Have you played Federal Reserve Simulator yet? New game.

A (25:59)

It's on Steam.

B (25:59)

On Steam. You got to try it out. You're a banker.

C (26:03)

Heard of it.

B (26:03)

You're a banker.

A (26:04)

You got to get the reps in.

B (26:05)

Enjoy this.

C (26:06)

You got to do it. Reserve Simulator. It's right there on the side screen. It says Trump says we have an incompetent Federal Reserve chair who loves high interest rates. Very, very, very interesting.

B (26:20)

What, what hardware are you collecting? Recently we just learned you can buy a steam powered car and drive it around.

A (26:27)

Jay Leno has one that's 120 years old.

C (26:30)

What hardware am I buying? Am I buying?

B (26:33)

Collecting? Not just buying, collecting.

C (26:35)

Yeah, I know. What am I, what am I? Well, so I have a. There's a few things I could bring up. To be honest, I've been too busy to buy really good stuff. But I recently got delivered one of the first Jetson Jetson ones, which is a small EVTOL aircraft. I was one of their first customers and their first delivery. I also have a collection of motorcycles. The theme of the collection is commercial failure. All of my motorcycles were huge commercial failures. The more of a failure, the better. I've been buying some, some failed two wheel drive motorcycles. I've had failed military motorcycles.

B (27:10)

How do they ride?

C (27:12)

Oh, incredible. Look, there's really bad failed motorcycles. There's those that failed because they're too good. One of the crown jewels in my collection is a Honda Roon. It was basically a personal project created by the CEO of Honda. The document that they used when they were creating it has actually been leaked now. And at the start of the document it says performance is the only object, price is of no importance. And so they wanted to build the ultimate cruising motorcycle. And the story goes that they lost over $100,000 per bike in the end. And so I've got one of the handful of Honda Runes that made it out of that program. A beautiful Honda Honda room with a couple thousand miles, metallic purple and chrome. And it's. It's one of my favorite motorcycles, if not the favorite. So commercial failure doesn't mean a product's bad. It just means they couldn't figure out how to make a business out of it.

B (28:02)

Back to your Jetson one. Have you been flying it? Are you taking it like half a foot off the ground and then a foot off the ground? What is the path to commuting to work in it?

C (28:12)

I think given the regulatory climate around Evtol aircraft, it's best that I not say one more word.

B (28:21)

Perfect. Perfect. Where do you. Where do you get your shirts?

C (28:25)

Where do I got my shirts? Well, it depends. I buy Tommy Bahamas. This one is a rain spooner and oral Hawaiian shirt. So I've got a sentry tower, I've got a ghost X on it. And they're headquartered on Catalina Island, California, in Avalon. So I buy from a whole bunch of different places. I'm an equal opportunity Hawaiian shirt purchaser.

B (28:50)

I like it.