Sam Altman LIVE on Sora, Hollywood, & the Future of Ads | Bill Peebles, Dylan Patel, Elad Gil, Robby Stein, Morgan Housel, Misha Laskin

Summary

TBPN — Sam Altman LIVE on Sora, Hollywood, & the Future of Ads
Date: October 10, 2025
Hosts: John Coogan & Jordi Hays
Featured Guests: Sam Altman, Bill Peebles, Dylan Patel, Elad Gil, Robby Stein, Morgan Housel, Misha Laskin

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Episode Overview

This lively, multi-guest episode of TBPN explores the AI-fueled innovation race, focusing on OpenAI's Sora product, AI in Hollywood, the deluge of capital and leverage in the tech economy, AI infrastructure, and the evolving relationship between technology companies, brands, and consumers. Sam Altman and Bill Peebles headline the show, discussing Sora's creative features, future of ads, Hollywood engagement, compute allocation, and the imminent creator economy on generative video platforms. Additional segments cover markets, prediction market wars, AI infrastructure (with Dylan Patel’s InferenceMax), Google’s AI search roadmap, advice from top investors, and the psychology of spending money.

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Major Segments and Key Discussion Points

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1. Opening Remarks: Bubble Talk and the AI Leveraged Economy

• Hosts express both excitement and skepticism about the ongoing "AI bubble"—likening it to historic bubbles in tech and finance.
• The market is highly levered; tech giants and startups are raising record capital, with $1.2 trillion debt tied to AI investments.
  • “Bubble made of steel. Hopefully a steel bubble... What about a diamond bubble?” —Jordy & Joe ([02:12])

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2. OpenAI Sora & Featured Interview with Sam Altman and Bill Peebles

Timestamps: Intro [56:32], Main segment [57:02–83:14]

Sora's Creative Leap

• Sora is positioned as the "GPT-3.5 moment for video," with transformative physics IQ and steerability.
  • “This model is a huge leap forward in terms of physics IQ... able to do things that were not possible a few months ago.”
    —Bill Peebles ([60:03])

Cameo Feature and Product Innovation

• Cameos allow users to inject themselves and friends into AI-generated videos.
• Altman welcomes cloning/copying of product features but stresses ongoing innovation:
  • “The key is not any one innovation, but being first to come up with them and put them into a cohesive offering.”
    —Sam Altman ([64:22])

No Ads Yet, but the Future is Open

• “It's hard to get anything to work at all... We don't assume success... and then we can think about monetization.”
  —Sam Altman on the lack of ads in Sora ([59:17])
• Cameos already prompting new ad dynamics: Mark Cuban’s self-promotional “bodybuilder” cameo.

Human-AI Content Blending

• Altman predicts that “tool-assisted, human-driven generation” will become the norm and that users care more about good content than its provenance.
  • “What you care about is good, original, thoughtful, new, helpful... whether by a human or AI.”
    —Sam Altman ([66:08])

Hollywood Engagement

• Initial Hollywood anxiety over AI, but Sora’s opt-in cameo process is soothing concerns about misuse of likeness.
  • “We’ve been designing Sora from the ground up to put users in full control of their likeness end to end.”
    —Bill Peebles ([75:03])
• Predicts a shift from celebrities fearing unauthorized appearances to demanding more Sora visibility.

Creation vs. Consumption: Social Network Dynamics

• Over 70% of Sora users are creators (as opposed to the typical 1% in social networks); Sora blurs boundaries between video games, creation, and passive consumption:
  • “It's going to feel much more immersive in a way video games kind of do.”
    —Bill Peebles ([71:03])
• Altman: AI entertainment will move along a spectrum, from lean-back (movies) to lean-in (games), with new forms in between.

Allocation of Compute/AI Infrastructure

• Altman is focused on securing compute, scaling up supply chains, and comments on the practical challenges:
  • “Buy 10 gigawatts of power for delivery next year—it's not so easy.” ([74:50])

Creator Economy and Monetization

• Sora has ambitious plans to financially reward creators, celebrities, and rights holders, with flexible, broad cameo capabilities forthcoming.

Notable Quotes

• "70% of our users are actually creating content even to this day... vastly higher than any other social media platform." —Bill Peebles ([68:41])
• "People will always demand more and better... and the world will just make ever more amazing videos." —Sam Altman ([63:20])

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3. AI Infrastructure, Hardware, and Benchmarking — Dylan Patel Interview

Timestamps: [178:03–192:46]

• InferenceMax: A new open benchmark for real-world cost and energy efficiency of running AI models on different GPU/CPU hardware.
  • Supported by Nvidia, AMD, Microsoft, OpenAI, Oracle, and more.
• Key Takeaway: “It turns out Nvidia is not the only game in town... There are certain use cases where AMD is actually better.” —Dylan Patel ([184:14])
• Hot topics: cloud capacity constraints, labor/skills bottlenecks (skilled construction/engineering labor now a limiting reagent), and the risk of over-leverage if depreciation assumptions for rapidly obsoleting GPUs prove wrong.
• Depreciation debate: 6-year useful life standard for GPUs, but obsolescence could be much faster; the business risk for cloud providers with shorter payoff windows.

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4. Investor Perspective & The Bubble: Elad Gil Interview

Timestamps: [88:26–116:59]

• Lessons from past bubbles: Of ~2,000 tech IPOs in 1999-2000, only a handful survived.
• Durability in the age of AI is hard to assess because of model improvements and potential for forward-integration by foundational model companies.
• The markets have begun to solidify in areas such as coding assistants, legal, and healthcare vertical AI.
• On AI’s diffusion speed: “It’ll probably take a decade... The biggest impediment to adoption isn’t the technology, it’s organizational process and workflow management.” —Elad Gil ([101:09])
• Discusses AI "roll-ups" (acquiring traditional service businesses and transforming them with AI) and durability of SaaS vs. labor-replacing AI.

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5. Google’s Vision for AI Search — Robby Stein Segment

Timestamps: [117:42–137:18]

• Google is fully deploying frontier LLMs (Gemini) into search, now active in 200+ countries, 40 languages.
• Search is increasingly multimodal: text, images, voice, video integration.
• AI Mode enables agentic tasks—users can ask for recommendations and book services directly through Google.
• Content SEO advice: Top Google results (high authority, trust) are more important than ever as AI/LLMs increasingly scrape and summarize the entire web.
  • “One of the best things that every AI model now does is search the web.” ([131:28])
• Publishers have opt-out and granular controls over participation in AI-indexed content.

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6. Tech Markets, Macro, Trade & Prediction Markets

Throughout – see esp. opening, [09:41–14:02], [33:07–35:16]

• Escalating U.S.-China trade tensions: Rare earths, Trump’s tariffs, and volatility in global markets; market turmoil after Trump’s "100% tariffs" announcement ([195:03])
• Debt-fueled AI buildout: Market fears of over-leverage and potential mispricing of risk in AI-related debt and hardware investments.
• Prediction market wars: Kalshi and Polymarket both raise substantial rounds, supported by ICE, a16z, Sequoia; category expected to undergo intense “capital wars.”
• “When you’re in this duopoly world in a capital fight... it’s painful to be number three.” —Joe ([34:27])

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7. Consumer Brands, Spend Psychology, and Book Launch — Morgan Housel Interview

Timestamps: [137:50–164:34]

• Housel launches his third book: The Art of Spending Money.
• Process: A year of note-taking, 3 months of part-time writing, 3 months of focused writing.
• On AI writing tools: “If we can have more books because [of ChatGPT], awesome... But I want to write every single word myself.” ([140:24])
• Tech vs. Wall Street: Tech wealth is less ostentatious due to illiquidity and different markers of status.
• The “things vs experiences” dichotomy is overblown.
  • “If nobody was watching how you lived, what would you spend your money on?” —Morgan Housel ([156:09])
• “Writer’s block is actually a symptom of your idea sucks.” ([141:41])

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8. Open Source Foundation Models — Misha Laskin (Reflection) Interview

Timestamps: [164:45–174:42]

• Reflection has raised $2B to build American, open, state-of-the-art LLMs — “Frontier open weight models that we train here in America and export to the rest of the world.” ([167:07])
• Strategy: Meet compliance needs (data provenance, not China-based), address large enterprises/government demand.
• Business model: Core open intelligence + full-stack tools, targeting big enterprises, sovereigns, and high-volume startups.
• Open models allow cost savings or adaptation to specific, unrepresented data distributions.

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9. Throughout: Show’s Signature Chatter & Community Lingo

• “Leverage up,” “aura farming,” “true zone,” and tongue-in-cheek gong sounds mark milestones or celebrate breaking news.
• Community engagement with live chat, frequent humor, and meme references.

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Notable and Memorable Quotes with Timestamps

• "It's gone great so far. It's still very early and there's still a lot of work to build something people are going to love."
  —Sam Altman, on Sora's early trajectory ([59:17])

• “This is like the GPT-3.5 moment for video.”
  —Sam Altman ([62:07])

• “70% of our users are creating content... vastly higher than on any other social media platform.”
  —Bill Peebles ([68:41])

• "We're never going to build every cool use of the technology and we want the world to get all that stuff."
  —Sam Altman ([86:17])

• "$1.2 trillion debt tied to AI—it’s the largest segment in the investment grade market."
  —Jordy ([23:15])

• "Nvidia is not the only game in town. There are certain use cases where AMD is actually better."
  —Dylan Patel ([184:14])

• "The more you buy, the more you save."
  —Dylan Patel, channeling Jensen Huang ([188:54])

• “If you have a really specific question, people are doing that more and more because you can get AI to go deeper, multimodal... 70% year over year increases in those kinds of questions.”
  —Robby Stein ([136:11])

• “If I can predict all your spending habits based on your income, there's a very good chance you're not doing it right.”
  —Morgan Housel ([147:46])

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Episode Flow & Timestamps for Key Segments

• AI Bubble/Economic Context [00:00–15:00]
• Softbank, Masa, ARM & Leverage [16:10–24:34]
• Sam Altman/Bill Peebles Sora Interview [56:32–83:14]
• Elad Gil on Markets and AI [88:26–116:59]
• Google Search AI (Robby Stein) [117:42–137:18]
• Morgan Housel on Spending Money [137:50–164:34]
• Misha Laskin (Reflection) on Open Source LLMs [164:45–174:42]
• Dylan Patel on InferenceMax/Infrastructure [178:03–192:46]

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Takeaway Themes

• The AI boom is reshaping not just technology, but finance, infrastructure, and culture.
• Both core technical innovation (Sora, Gemini, InferenceMax) and peripheral effects (new ad models, prediction markets, spending psychology) are rapidly evolving.
• Risks of leverage, debt-fueled bubbles, and physical infrastructure bottlenecks are top of mind.
• Generative AI is driving a creator renaissance, changing the economics and dynamics of both attention and content.
• The integration of AI into daily consumer and business life is far from complete—plenty of cycles remain in adoption, monetization, and societal adaptation.

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For more: Visit TBPN.com, and explore Sora, InferenceMax, and the books mentioned in the episode.

Transcript

[Joe]

You're watching TBPN. Today's Friday, October 9th, 2025. We are live from the TBPN. Oh, it's October 10th. I forgot to change the date on my sheet. Good. Thank you for catching that. We are live from the TBPN ultradome, the temple of technology, the fortress of finance, the capital of capital. And we wanted to open with this post by Jira Tickets. Gat says don't worry about the bubble. If it pops, we'll just make a new bubble. We got some guys who are really good at making new bubbles. Bubble talk is we used to pray.

[Jordy]

For a bubble like this.

[Joe]

We did. That was how we started the show. We said, lever up. We said we're praying for a bubble. Well, it's here. People are starting to lever up and it's time to double down and support our strongest soldiers, those who are holding up the global economy. And we are joined by some folks who are going to be holding up the global economy. Sam Altman's joining in just 55 minutes.

[Jordy]

Bill Peebles.

[Joe]

Bill Peebles is joining Sora. We also have a lot. Gill Robby Stein from Google, Morgan Housel coming on, talking about a book. We have a couple other.

[Jordy]

Misha Laskin, which was a $2 billion round that got yesterday.

[Joe]

And we have Dylan Patel from Semianlysis talking about Inference Max, which is already putting the timeline in turmoil. Folks are taking shots at amd, but Dylan Patel says he has the data that shows that AMD in some cases can be a lower total cost to own. There are certain models that favor amd. GPT. OSS might be one of them. This is all from his new benchmark called Inference Max, where he's going to take us through it. It's a fascinating project. I think something like $50 million of capital was kind of marshaled just to run the GPUs, to run the test, to run the benchmarks because they run them every single night and they vary different models.

[Jordy]

It's cool that Dylan's been able to marshal this amount of resources for effectively a test.

[Joe]

Yeah. And he makes no money from it. It's free. Obviously, people will work with semianalysis at some point. It's amazing. But basically all the different AI companies are in helping out with this. So we'll dig into that.

[Jordy]

Boston in the chat says bubble made of steel.

[Joe]

Hopefully a steel bubble.

[Jordy]

What about a diamond bubble? Yeah, diamond bubble.

[Joe]

I like it.

[Jordy]

Something, something there.

[Joe]

You can still see through it. In the meantime, let me tell you about ramp time is money. Save both easy use corporate Cards, bill, payments, accounting, and a whole lot more all in one place. Mark Cuban. Dylan Aberscotto on our team says Mark Cuban is the greatest marketer of all time. Every video generated from his cameo includes brought to you by cost plus drugs, even when it's not in the prompt. He baked this into his cameo preferences. So every Sora post he appears in is an ad for cost plus products.

[Jordy]

I love how sh. Shameless Cuban is about promoting cost plus drugs. A lot of people become a bean air. They lose the ability to just be shameless. Not Mark Cuban. He at every possible chance. Even on our show, I think he was promoting cost plus drugs. And I do think the beautiful irony here of him not too many months ago saying we need to make sure that ads aren't in LLMs. He's the first person to incorporate ads into Sora. Of course not a language model, but still brilliant.

[Joe]

I. I had this idea too. I'm. I'm bummed that he scooped me. Did it first. I did go into my prompt and I put always depict me as a bodybuilder and it works really well. Yeah, I didn't really, except to your.

[Jordy]

Credit, you don't look that much different.

[Joe]

Thank you.

[Jordy]

The OpenAI team was playing around. They made a video with John and Bill yesterday and they texted Ben. They were like, by any chance, did John like do some type of prompt that depicts him as having very large muscles? Because I guess they were trying to.

[Joe]

In a suit and they're trying to make it as accurate as possible. Of course represent me appropriately. And they just keep getting results of this like extra burly businessman. But it's having a lot of fun. So yeah, I mean if you're playing around on cameo, I highly encourage having some fun with that, with that prompt. Throw a brand in there, throw a description. I saw someone that said that they always want to be depicted with an Adamar Piguet watch on the wrist.

[Jordy]

There we go.

[Joe]

So no matter what you prompt, they get an AP on the wrist, which I love. If you want an AP, you can go to bezel.com get bezel.com your bezel concierge is available to source you any watch on the planet. Seriously, Anyone?

[Jordy]

Tom Osman in the chat says. Gents, how's the horse? The horse is fantastic. Can we pull up the horse cam? Checking in on the horse. Never been better folks. Thriving after its first full week in the ultra dome with us.

[Joe]

The horse is streamed live to all platforms thanks to restream one livestream, 30 plus destinations, multi stream and reach your audience wherever they are.

[Jordy]

Lots of good questions coming in from the chat. Fanis says there's a downgrade on the quality soar it generates the last few days. Have you noticed that? It's hard to really tell.

[Joe]

I haven't. I generated a few collabs with Sam and Bill last night. I thought they were fine. They were good. They take a minute but it's not noticeable. To me at least. Interestingly, I have noticed that the Sora app sometimes can't just load normal videos. The generation actually works fine for me. Interestingly, it feels like they're CPU poor because just the loading, the actual feed sometimes loads and then just doesn't play. So there's something going on there where they're just scaling all parts of the system, I'm sure because I've seen some videos on Sora that now have like thousands of likes, which is clearly an indication that there are a lot of.

[Jordy]

People consuming video on the platform. Palantir says that the channel Palantir of course says OpenAI dropping 25 billion on a data center in Argentina deserves a trip. I hadn't seen this. This came out this morning. OpenAiser Energy WA a $25 billion Argentinian data center project.

[Joe]

Wasn't there also a bailout of Argentina or something?

[Jordy]

Well, yeah. So while OpenAI and SIR Energy are working on a $25 billion data center project, Besant is like figuring out how to bail out the Argentinian government for just 20 billion.

[Joe]

Yes, yes. There's this hilarious post by AlphaPix. This was sent into our group chat like five different times. Says Bessant Wake up. Espresso shot 13th on Bloomberg Quiz Bailout Argentina and it just says It's a shot of a screenshot of Bloomberg Terminal and I guess this is from the quiz that goes out. He got a 242 score. He's 13 and just says anonymous US Department of Treasury. Of course it could be someone else, but it's very funny to imagine that it's him. I like that a lot.

[Jordy]

Anyways, this I guess news leaked of opening I Insert Energy. They signed a letter of intent and loi yes, let's give it up for Lois. Carrying a lot of weight these days for a data center project in Argentina requiring an investment of up to 25 billion. The project would involve a large scale facility with a capacity of up to 500 megawatts to support advanced AI computing, according to a government statement structured under Argentina's RIGI Tax Break scheme, which went into effect last year. The project, if completed would be one of the largest technology and energy infrastructure initiatives in the country's history. So I'm sure we'll get more news here. But another day, another multi billion dollar announcement from There was a There was.

[Joe]

A moment when Whoa.

[Jordy]

Taylor Hodge in the chat Buenos Aires AI race nominative dynamism is going crazy.

[Joe]

There was a moment when the Sovereign AI initiative was very much about building a data center and then running open source software on it. But I do think that it's not that unreasonable to say that it is critical to your geopolitical strategy as a country to just have an OpenAI data center in your country because then you have access to the OpenAI API at lower latency. Potentially ChatGPT runs better in your country. That could be not just profitable from a business perspective, but it's also a matter of going where the energy is. If you're a country that has cheap energy, it makes sense to set up infrastructure there instead of trying to manufacture all of the energy America, build all the data centers in America and then just have all of the tokens flowing over the Internet backbone. I don't know, it doesn't seem that crazy to me, but the the market is selling off. It's very sad. I wish we could be wearing white suits today, but it's a rough day in the market. The dow is down 1.25% and the Nasdaq is down like one member of.

[Jordy]

Our team who we won't name was using leverage and opened up their brokerage this morning and immediately said I'm chopped and cooked in a very Gen Z way. At the team breakfast this morning, everybody got a good laugh, so hopefully he'll be so back very soon.

[Joe]

Yes.

[Jordy]

Rough one out there.

[Joe]

Yes. And the reason that most people are describing why the stock market is falling is because of a news from Donald Trump. Before we get into reading Donald Trump's statement, let's tell you about Privy wallet infrastructure for every bank. Privy makes it easy to build on crypto rail securely spent white label wallets, sign transactions, integrate on chain infrastructure all through one simple API.

[Jordy]

DJT should put ads in these posts so long. I mean he's really actually maxing out the word count on some of these. But. But yeah.

[Joe]

So S and P we talked about this yesterday. Made it to the front page of the Journal today. Yesterday China Squeezes the United States in Rare earth move so China's newest restrictions on rare earth materials would mark a nearly unprecedented export control that stands to disrupt the global economy. That does not sound good. Giving Beijing more leverage in trade talks and ratcheting up pressure on the Trump administration to respond. So we talked about this yesterday. We went through some of the Isaac.

[Jordy]

Foster in the chat. Just needs more leverage. Come back 100%, get the intern more leverage. Make it all back.

[Joe]

Always, always lever up. So, yes, yesterday we read through Dean Ball's analysis of the rare earth move by China. There's some green shoots there. We do have. America does have some leverage. But it's all in the backdrop of this larger trade negotiation. Now, the United States government has responded, Donald Trump has responded with this letter or this post on Truth Social. I think they're just called truths over there. And Kobe. And the Kobiesi letter kind of breaks it down, breaking The S&P 500 falls 70 points in seconds after President Trump publishes the below paragraph about China. Trump says he is calculating interest, increased tariffs on Chinese products. Trump also says there is no reason to meet Chinese President Xi Jinping anymore. And so we can read through a little bit of this. It's a very long post. He's become a thread boy over there. Trump says some very strange things are happening in China. They are becoming very hostile in sending letters to countries throughout the world that they want to impose export controls on each and every element of production having to do with rare earths and virtually anything else they can think of, even if it's not manufactured in China. Nobody has ever seen anything like this, but essentially it would clog the markets and make life difficult for virtually every country in the world, especially for China. We have been contacted by other countries who are extremely angry at this trade hostility which came out of nowhere. Our relationship with China over the past six months has been a very good one, thereby making this move on trade an even more surprising one. I have always felt that they have been lying in wait. And now, as usual, I have been proven right. There's no way that China would be allowed to hold the world captive. But that seems to have been their plan for quite some time, starting with the magnets in quotes and other elements that they have quietly amassed into somewhat of a monopoly position. A rather sinister and hostile move, to say the least. But the US has monopoly positions also, much stronger and much more far reaching than China's. I have just not chosen to use them. There was never a reason to do so until now. He says. The letter they sent is many pages long and details with great specificity each and every element that they want to withhold from other nations. Things that were routine are no longer routine at all. I've not spoken to President Xi Jinping because there was no reason to do so. This was a real surprise, not only to me, but to all the leaders of the free world. I was to meet President Xi in two weeks at AIPAC in South Korea. But now there seems to be no reason to do so. Pulling out of the talks. The Chinese letters were especially inappropriate in that this was the day that after 3,000 years of bedlam and infighting, there was peace in the Middle East. I wonder if that timing was coincidental. Putting on the tinfoil hat, just noticing coincidences. Depending on what China says about the hostile order that they have just put out, I will be forced as President of the United States, to financially counter their move. For every element they have been able to monopolize, we have two. I never thought it would come to this, but perhaps, as with all things, the time has come. Ultimately, though potentially painful, it will be a very good thing in the end for the usa. One of the policies that we are calculating this moment is a massive increase of tariffs on Chinese products coming to the United States. There are many other countermeasures that are likewise under serious consideration. Thank you for your attention to this matter. And so it's a. The trade war is returning, and we will continue to monitor the situation.

[Jordy]

And again, don't need to freak out. The S&P's record high was just a couple days ago.

[Joe]

Yeah, so. And with all these, you know, the tensions can ratchet up very quickly. We saw this with the tariff tantrum, the liberation day, the massive sell off. And then quickly things were negotiated and largely reversed. In many ways, a lot of companies got through that. I mean, we just experienced this with base power, where we were like, so you're in a lot of trouble. And then they got through it entirely very quickly. And raised a billion dollars.

[Jordy]

Yeah, raising a massively oversubscribed ramp. And I don't necessarily think that it changed their strategy.

[Joe]

That was rough.

[Jordy]

Well, yeah, I don't think it changed their strategy. I think they always intended to set up the factory in Austin, of course, but I'm sure it certainly accelerated.

[Joe]

They have to get certain the supply chain is so global, all over the place, that it was certainly cause for concern.

[Jordy]

But, well, speaking of energy, Oklo, the nuclear company that Sam Altman backed years and years ago, I think he's on the board now 2014, but Oklo is up almost 10% today. So a little green in the midst of a lot of red.

[Joe]

Well, let me tell you about cognition. They're the makers of Devon Devin is the AI software engineer. Crush your backlog with your personal AI engineering team. Pedro Domingos has a chart from the Financial Times showing the number of years after release to scale the Internet versus just scaling. ChatGPT. And the Internet took 13 years to get to 800 million users. ChatGPT took a little over two, maybe three. So really remarkable.

[Jordy]

The Internet is the greatest distribution engine for products in history.

[Joe]

ChatGPT.

[Robby Stein]

Yeah.

[Joe]

So it is a very acceleratory effect. Effect.

[Jordy]

Tron ARES is getting some reviews. The Telegraph had a headline today. They said, tron ARES is so bad, it makes you wish AI would hurry up and destroy Hollywood.

[Joe]

Long case for Sora.

[Jordy]

1 out of 5 stars. I was so excited for film populated by some of the most aggressively charmless characters ever seen in a blockbuster. Almost makes me want to see it now.

[Joe]

I agree. I agree. I want to see it. I love the first Tron. I'm optimistic that the second Tron will deliver in one way or another. Either way. Should we go to SoftBank? Matsuyoshi Sohn is seeking $5 billion in a margin loan backed by ARM stock. We know that he's flush with ARM stock. It was the way he made his second $100 billion. He made his first with Alibaba and his second with Army. So SoftBank Group is in talks to borrow 5 billion from global banks refilling its coffers at a time Masayoshi Son is accelerating the Japanese investment firm's bets on.

[Jordy]

We gotta pause for one second and give Masa credit for not top ticking OpenAI. He invested earlier this year somewhere around a $330 billion valuation. A lot of people were saying this is crazy. They thought it was bearish. Now OpenAI just closed.

[Joe]

Yeah.

[Jordy]

A secondary or a tender offer at 500 billion. So nice little markup for Masa. Hopefully he's been able to actually fund the entire investment. I think there's a number of OpenAI investors that have been working to pull capital necessary together.

[Joe]

It was also a. It was a big jump in valuation at the time. I feel like it was more than like a 2x step up or something from the previous round that everyone was talking about. And so it was like, oh, okay, this is a big jump in valuation. But of course the business had grown. And there was also that funny picture of Masayoshi Sohn holding a crystal ball and then dropping it. And you could read all sorts of things into that. But if you read too much into it, you would be wrong because it's been on tear and he's done quite well, but now he is levering up further. So SoftBank is close to signing a deal with a handful of lenders for a margin loan secured by shares of its chip. Of its chip unit, ARM Holdings. The capital will fund additional investment in OpenAI this year, the people said, who asked not to be identified. A margin loan is a type of facility where you borrow money using your investments like stocks as collateral. A representative for Softbank declined to comment. Softbank shares slid 4% on Friday, the.

[Jordy]

Most since September 26, and ARM is down 8% themselves.

[Joe]

I wonder how much that is tied to the other stuff.

[Jordy]

Part of it's. Morgan Stanley lowered their price target based on the 2027 for SoftBank or Arm Arm for 2027 guidance. So that's a factor.

[Joe]

But yep. So Sohn has embarked on a spending spree this year to try and position the firm as a linchpin in the global AI boom, most recently pledging as much as 30 billion towards OpenAI and buying ABB's robotics arm for 5.4 billion. I had no idea he bought an entire robotics division. That's. That's pretty cool. ARM's 38% rally this year has in turn granted SoftBank the confidence and leeway to grow its investment war chest. Has raised a total of 13 billion in margin loans from ARM shares, with 5 billion still undrawn. I wonder how much Elon took in margin loan during the Twitter buyout because I feel like some of that was backed by Tesla stock. He was saying he wasn't going to sell Tesla stock, but then I think he got a margin loan against it. Maybe, I'm not exactly sure.

[Jordy]

All I know is that X, the social media platform or Twitter, what was originally Twitter's annual interest payments were north of a billion, which was part of what. What created urgency to, you know, merge with X. I had a. Had a obviously larger valuation and again still putting pressure on the combined entity. But at least the equity overall is marked up substantially. Yeah, I think if I remember correctly, yeah, there was like something around. I think it was like very levered. It was like something like that, like 30 billion, something like that.

[Joe]

There were a couple different tranches and I don't remember the exact details, but I mean he was able to roll it into XAI and raise more money. And so these things can kind of like you can move the chips around the board for years and try different things to piece together value. Well, if you want something that you won't have to need, you won't have to go into debt to sign up for because you can sign up for free. Figma.com, think bigger, build faster. FIGMA helps design and development teams build great products. Together, the group had secured about 8 billion in margin loans ahead of ARM's initial IPO in 2023. Eleven banks, including JP Morgan, Barclays, BNP, Credit Agricola, Goldman Sachs provided the facilities by linking mandates for ARMS IPO to loans. Earlier this year, the group also raised a $15 billion one year facility to help fund AI investments in the United States in what is among its largest borrowings raised. Son's insatiable appetite for deals has extended far and wide.

[Jordy]

I thought I was going to say insatiable appetite for leverage for capital. This is also true deals.

[Joe]

I mean, when should you have a satiable appetite for deals? Everyone should have an insatiable appetite for deals centered on ideas to capitalize on the on the expected exponential growth of AI technologies. His most ambitious projects include the $500 billion Stargate Initiative that aims to build data centers across the United States. In partnership with Oracle and OpenAI, SoftBank is also exploring the feasibility of large scale industrial manufacturing hub in the United States. That's cool. Which would encompass production lines for AI powered industrial robots. That's probably a little bit further out, but pretty cool. SoftBank joins a wave of big tech firms and investors plowing unprecedented amounts of capital into a technology with the potential to transform industries and economies. But the flurry of deals and partnerships, many involving Nvidia Corp. And OpenAI, are escalating concerns that an increasingly complex Internet.

[Jordy]

Something that I want to understand better is how much chatter there was about the circular telecom deals in like 1999 and early in the first quarter of 2000 because, oh, by the first quarter.

[Joe]

Of 2000 it was like front page everywhere.

[Jordy]

Well, things didn't really correct until March.

[Joe]

Yeah. But in 1999, the New Yorker ran a profile of Mary Meeker that's called the Woman in the Bubble. So like the New Yorker, which isn't in the business of like calling bubbles early was just describing it, you know, like everyone agrees that this is a bubble and we're profiling someone who's at the center of it.

[Jordy]

Yeah.

[Joe]

In the New Yorker, which I guess.

[Jordy]

Still, I guess months below, you know, over the last couple of weeks, you can't scroll three posts.

[Joe]

Yep.

[Jordy]

Without seeing somebody, you know, posting some type of graphic or meme or just general concern for the circular nature of some of these transactions.

[Joe]

Yep.

[Jordy]

The, you know, and Doug's point is like from some analysis from Monday's interview is that, you know, the next leg up in the bubble is leverage. But here, Morgan Stanley in this article is estimated the amount of Debt tied to AI has ballooned to 1.2 trillion, making it the largest segment in the investment grade market. So remarkable.

[Joe]

Yeah, we were talking about like when does the number actually get big in terms of total debt? Because if you look at like the market for Treasuries, that's obviously way bigger or the market caps of all the hyperscalers combined, that's you know, 10 to 20 trillion. It's really, really big. But 1 trillion of debt feels like a lot. That feels like a lot. And so I wrote and it.

[Jordy]

But, but the notable thing here is, is understanding who is actually on the hook for the debt.

[Joe]

Right.

[Jordy]

A lot of, I think OpenAI broadly has done, has, has made a extremely, made it had a focus of not tying the debt to the actual for profit entity and then obviously not the nonprofit itself. Right. So the question is they can be at the center of all this, but they're not necessarily directly on the hook for any of this, you know, 1.2 trillion.

[Joe]

Yeah, yeah, yeah. Where, where does the actual debt live? What is it entitled to? Does it have warrants over equity? Like all of that matters a ton. I wrote about the bubble talk in today's newsletter. You can sign [e-mail] and I was reflecting on 10 years ago in 2015, Sam Altman was also being, you know, talked about. A lot of people were talking about the bubble. Vanity Fair ran an article at the time that said something to the effect of like, we talk to multiple experts in financial bubbles and they say it's going to pop any minute. And so Sam formulated this bet and said that like, look, I'm the, I think he was the head of YC at the time. He was like, I don't think we're in a bubble right now. And he framed it in three propositions that all had to come true. So the first one was Uber, Palantir, Airbnb, Dropbox, Pinterest and Space X. They were worth under 100 billion at the time in 2015. By 20, 25 years from then, he said they have to be worth more than 200 billion. And second, he said mid sized company, Stripe, Zenefits, Instacart, Mixpanel, Teespring, Optimizely, Coinbase, Docker and Weebly together had to be worth over 27 billion. They were worth less than 9 back in 2015. And the brand new YC winter 2015 batch needed to be worth over 3 billion. And what's crazy is that if you just think about those three buckets. Which one? So Sam got two of them, right? He missed on one. Which one do you think he missed on? The big companies. Uber, Palantir, SpaceX. Those ones needed to double the mid tier companies Stripe.

[Jordy]

Well, I'm not going to pretend I know that he missed on the big, the public company.

[Joe]

He missed on the big companies, which is crazy because Today Uber's a $200 billion company. SpaceX and Palantir are both at 400, 500. So you have over $1 trillion now. But he missed because a couple of those companies had kind of traded down that. But he hit on the second one. Coinbase obviously went huge stripe as well. And in the third, in the YC winter 2015 batch, there was a company called GitLab that's already worth something like seven or $8 billion in the public markets. And so he hit on basically all of them. I still regard it as like, he was very, very close to being just completely correct. He did lose the bet. But as we talk about another bubble, I was thinking about, like, should we have another framework for like where we expect things to go in years to assess it? And I feel like energy is where we should go with this. So in the newsletter you can go read it. I tried to formulate like, how much energy OpenAI will be consuming in five years, in 2030, how much energy data centers globally will be consuming and how much energy will the United States be producing. And there are obviously linear projections of all of these. But I think Sam is bullish on the idea of like, we're going to destroy those, those estimates and we're going to see significant build out. And he's certainly doing deals to make that happen. But I wonder how he would quantify it. So I'd like to dig in there. But first, 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, replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program.

[Jordy]

There's an article in the New York Times today on a Singaporean firm called Megaspeed. The CEO has socialized with Nvidia's Jensen Huang. Now the company is being scrutinized by U.S. officials for its ties to China. So on a humid June night last year, Jensen Huang, the chief executive Nvidia, held court with several of his company's Major Asian customers. At a bar with sweeping views of Taipei, they stood and toasted the booming artificial intelligence industry. Next to Nvidia chief was a woman named Huang Lei or Alice Huang, an executive of Singapore based data center company called Mega Speed. Great name. Which was poised to buy 2 billion of Nvidia chips. Though Ms. Huang and mega Speed are little known players in the AI industry, their association with Nvidia and its CEO has recently become a preoccupation in Washington, Commerce Department officials have been investigating whether Mega Speed, which has close ties to Chinese tech firms, is helping companies in China sidesteps American export restrictions, according to more than a half dozen current and former officials and other people familiar with the companies who spoke on condition of anonymity to discuss an examination that is not public. The inquiry inquiry, which is active, calls into question how closely Nvidia is tracking where its AI chips end up and highlights the possibilities of American export laws easily being sidestepped. Mega Speed is also facing scrutiny from Singaporean police, who told the New York Times in a statement that they are investigating the company for breaching local laws. Without elaborating further, as the dominant provider of AI chips, Nvidia's annual revenue has soared. I'm going to skip over this because I know you already know this.

[Joe]

Yeah. So while you skip over that, let me tell you about graphite.dev code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. Continue Jordy.

[Jordy]

Megaspeed illustrates the challenges facing US Government officials trying to keep China from assessing powerful AI chips. After splitting off from a Chinese gaming company in 2023, Megaspeed set up a subsidiary in Malaysia that quickly snapped up nearly 2 billion worth of Nvidia's most advanced products. Most of those ships came from the US branch of a Chinese company that has already been sanctioned for providing technology to the Chinese military, according to records obtained through Import Genius, which is started by Ryan from Flexport.

[Joe]

Yes, that's right.

[Jordy]

And his brother David.

[Joe]

That was his first. Yeah, that was his first company. It's so funny that the whole pivot to AI is not just a Silicon Valley American meme. It's definitely happening in China too. They're like, yeah, we're doing gaming, but this AI stuff is way better. Let's just pivot to AI or high flyer being like, we got to get on the large frequency.

[Jordy]

Trading is cool.

[Joe]

Yeah, it's cool, but let's focus on AI.

[Jordy]

Yeah. So anyways, this story is evolving. I'm not surprised to Hear that? That. I mean, I think it's actually good that the Commerce Department is trying to figure out what's actually happening here. I think there's been a lot of rumors floating around, like, you know, datacenter companies in Malaysia and Singapore, you know, having, you know, an extreme demand for chips and this sort of uncertainty of like, okay, who's actually paying.

[Joe]

Remember one of our first episodes, we read a Wall Street Journal article on Malaysia, the Switzerland of AI because everyone was building a ton of data centers there so that they could sell inference or build token factories that would sell to both American companies, Singaporean companies, Chinese companies. And it was kind of like this neutral territory. But as the trade war heats up, people are going to want more answers, more analysis. They're going to want to understand exactly. Are any of these things. Does every deal fit perfectly within the current restriction framework?

[Jordy]

Right, yeah.

[Joe]

Because obviously diversion is a natural thing. I mean, we've heard stories of this in the Ukraine, Russia conflict, where companies will go, entrepreneurs will go buy DJI drones and then go deliver them. And what are the actual restrictions on that? It all gets when the economic stakes are high and things are trading at a premium. You can literally. I mean, we've heard this from. There was one account of someone loading the training data onto hard drives, flying to another country, doing the training run, saving the weights onto hard drives, then flying back. And it's like, that's kind of hard to predict. That definitely is a runaround on the chip controls. It's not the stated goal of those chip controls, but, you know, when there's huge dollars on the line and training runs are extremely valuable, and I think it's.

[Jordy]

Figure out a way it's fair to kind of try to understand. Ms. Huang, the CEO of Mega Speed's background, she spent much of her career in mainland China, including working as a television reporter in Chinese state media.

[Joe]

Let's hear it for television reporters. One of us. One of us. From one of us.

[Jordy]

From being a television reporter to creating a new hyperscaler.

[Dylan Patel]

I love it.

[Jordy]

To do anything in this world, who knows?

[Joe]

I think we'll stay out of that game. But good to see that you can.

[Jordy]

Leave it to our.

[Joe]

Anywhere.

[Jordy]

We'll leave it to our friends. Yeah. Good post here. From High yield. Harry says a 16Z and sequoia leading around.

[Joe]

It's the Crips and the Bloods uniting. Uniting. Is that what's happening?

[Jordy]

This is about Kalshi Referencing. Referencing Kalshi, who followed Polymarket, who announced their $2 billion financing earlier this week from ICE. Not the immigration branch of the.

[Joe]

And not the international commodities Exchange. The Intercontinental Exchange.

[Jordy]

That's right, that's the name. But Kalshi raised 300 million backed by Andreessen Horowitz. And the prediction market wars are heating, heating up dramatically. Coinbase, Google's capital G, a16z and paradigm. We're investing in this new as well as Sequoia investing in this new round. And so by this point everybody's sort of picked a. Picked aside.

[Joe]

Yep.

[Jordy]

And I would not want to be a net new prediction market company getting started today. I think there's going to be an insane. The capital war is just starting in the category.

[Joe]

I mean do you remember the capital war between Lyft and Uber? There were like three or four, probably 10 other companies that were in the ride hailing industry and they aren't public companies today. They either sold or pivoted or found some other niche. But when you're in this like duopoly world and this capital fight and there's maybe one that's running away one way or another, it, yeah, it's painful to be number three.

[Jordy]

Kalshi is on track to do 50 billion in trading volume. Trading volume says and they did 300 million last year. So a pretty wild jump. So yep, competition is certainly heating up. This will be an interesting one to watch.

[Joe]

Yeah. Brandon Jacoby is putting another app in the truth Zone. What happened here? Brookwell launched a. An app I guess. And Brandon Jacoby says hey, Brookwell app, great design. I was proud of it when we designed it for capital.

[Jordy]

Yeah. So I guess this company, so this company, Brandon and I obviously worked together to design the app that you can see here. Brandon is an incredible designer and spent hundreds of hours developing this experience and ultimately I think Brookwell seemingly same pretty much copied it to a T and then even doubled down and said like yes.

[Joe]

And wait, really?

[Jordy]

Like the.

[Joe]

The founder replied was like yeah, yeah.

[Jordy]

Basically saying yeah. I mean I think it's like it's sort of fair if it's not like it's fair game.

[Joe]

Yeah. Fair game for to pull a design off the shelf that's not actively being used as much like you know, but it's still, it's still go further back in time.

[Jordy]

Like you can still bring your own ideas to it. You know. I think Brandon's frustration is probably just that you didn't bring many new ideas. Just kind of copy and paste it.

[Joe]

Yeah, a lot of that going on.

[Jordy]

John Titor is quoting a post that says this is a camera it's 200 by 200 pixels, 30 frames per second. I didn't know they made cameras this small. John says there are certain things you just can't learn about if you're prone to paranoia.

[Joe]

This is actually crazy.

[Jordy]

Yeah.

[Joe]

So the. I mean, the camera. The community note gives a little bit more context here. It does say that this is the camera module. It is capable of producing an analog video output, but it needs a power supply, battery, or storage. And so.

[Jordy]

Yeah, and the concern here is the implication is that this camera could be built into effectively just like a dot on the wall, and you could store the power.

[Joe]

Oh, it's only 200 by 200 pixels. I was saying, should we get these and put them all around the set? And so you just walk into the TVP and ultradome and you don't see any cameras. Mo we have a slider cam now we have a lot of different cameras around, and you kind of trip over them and, you know, you gotta cable manage them. But imagine if we could just put one little dot on that turbopuffer fish there. One little dot on the microphone. You can just get any image from any place, maybe.

[Jordy]

Big debate on the timeline over whether you should have shoes on or on in the office. Ben Lang over at Cursor says no shoes at cursornyc. Will o' Brien says, if Ulysses ever ends up like this, you have permission to shoot me in the face. Very aggressive response. I can see why companies that are just, you know, want to be cozy, want to have. I think wearing shoes in your home is insane. Yeah, I'm very against walking around the house with shoes that you wear out in the world.

[Joe]

Sure.

[Jordy]

Plenty of studies that just show you're just tracking in all sorts of things.

[Joe]

Makes sense. Do you do slippers in the house then?

[Jordy]

I enjoy slippers.

[Joe]

I feel like if you don't do slippers, then you need to keep the whole house warmer. You need more carpets. But I wonder what else went into the plan to make sure that Cursor HQ in New York City is fully cozy? Because you don't just want to take off your shoes and be around. Like, we have concrete floors here. We are shoes on facility. No one takes off their shoes. But if we were to go to shoes off, I think we would need to get some carpets, keep the place a little bit toastier, or maybe give everyone a pair of slippers.

[Jordy]

What's going on here? This account toys. XYZ is sharing a nano banana watermark. Do you know how this works functionally?

[Joe]

Yeah, you have to.

[Jordy]

Basically increase the saturation of the photo in order to.

[Joe]

Exactly. So this pattern that you see are subtle changes in the saturation. And if you go to the next image, you can see what it looks like on an actual nanobanana image, not just the watermark. And so this is a black and white image. This was generated as black and white. But nanobanana uses slight variations in the colors to just have a little bit of saturation. So normally if you're looking at like a grayscale image, basically the saturation is turned down to zero and there is no color whatsoever. There is only brightness. Right. You're going from zero to one, just on the black scale. Nanobanana, even if you ask for a black and white image, it will output an image that does have a little bit of color and it will vary this pattern. So there's little bits of red, little bits of green, little bits of red, little bits of green. And so this is being put in every nanobanana image. Of course, as soon as you discover this pattern, there's probably some ability to remove it. Even just a slight edit might change this. You could just go in and actually reduce the saturation to zero and then the watermark's gone. And I'm sure people will do that, but it's.

[Jordy]

Yeah, there will be. Somebody will make an app where you just upload an AI photo and then it figures out which model generated it and then figures out how to remove whatever hidden watermark is included until you have a clean image.

[Joe]

Totally. There's already a ton of Sora watermark remover tools out there. I think this is still just more useful for having a reality check on was someone dumb enough to not even remove the watermark? At least you can just automatically flag that. And at least it injects an extra step, an extra cost into generating spam images or whatever you would want to do that's malicious, that you'd want to discover the watermark. But fortunately I feel like even with Nano Banana, you can still just look at the image and tell. But if you want to generate some generative media, head over to fall the world's best generative image, video and audio models all in one place. Develop and fine tune models with serverless GPUs and on demand clusters. Let's fall Jared Kushner.

[Jordy]

Jared Kushner. Matt Stieb said an article a while back, Jared Kushner claims he can solve Israeli Palestinian conflict because he's quote, read 25 books on it. And of course seems like that was.

[Joe]

Hopefully, no, the real reason is what Will Menaitis said.

[Jordy]

New York real estate.

[Alad Gil]

Yes.

[Joe]

Yes. He's been doing New York, New York real estate deals. And so he's ready to broker another real estate deal effectively. But I mean, we haven't really covered the, the peace deals. The Journal's writing about it a little bit. There's, I guess there's going to be a vote, but there's plenty of. There's plenty.

[Jordy]

In other news, Barry Weiss asked everyone across CBS News to send her a memo by next Tuesday explaining how they spend their workday and what's working, not working.

[Joe]

Is this a. What did you get done this week?

[Jordy]

Basically, it's a. What exactly do you do here?

[Joe]

You think it's that.

[Jordy]

I think, I mean, it's great asking, hey, what's working, what's not working? But as a manager and you're coming into a new organization or a leader, you're coming into a new organization you want to get a pulse on, okay, what are people actually doing here? Because I think the question is, with everything that David Ellison is doing, is he trying to turn these into media companies that can create massive cash flow or are they strategic enough? Like, I don't think when Jeff Bezos was buying the Washington Post, he was thinking, I'm buying this to make money necessarily. And so the question is, I think Max Taney here, the way that this has been written, I think the question is like, are they going to let a bunch of people go, oh, interesting. That's kind of how I would read into it.

[Dylan Patel]

Yeah.

[Joe]

I mean, at the same time, like, if you're coming into, if you're coming in as CEO or editor in chief of a new organization and you're like, my view on it is that they're actually severely understaffed. And the first thing I'm gonna do is triple headcount. It's still reasonable to ask what everyone does. So you understand, like, oh, okay, this person's doing five different jobs and they're working 200 hour weeks. Maybe we need to get them some extra support. But I agree with your general assessment and it certainly would be a little bit stressful to get this email from Barry. But she says, please be blunt. Just break it down. Recommendation. Don't use AI.

[Jordy]

Any EM dashes.

[Joe]

There is an EM dash, but we know Barry uses EM dashes. She's been using them for decades. So there's. No, maybe not decades, but for, you know, her career. It is, it is. The reason that it's in the model is because It's a popular writing tool. Anyway, Cloudflare did a new rebrand powering.

[Jordy]

20% and I guess Ty, former member of the Party Round team.

[Joe]

Oh really?

[Jordy]

I guess was behind this.

[Joe]

Oh no way.

[Jordy]

Why else he'd be sharing it? He also was co founders with Dylan on CTG which they.

[Joe]

Oh, no way. That's very cool.

[Jordy]

Ty is a legend. Extremely talented designer. When he, he was, he had reached out to us at Party Round. Yeah. And we didn't. We. I talked once with him, if I remember correctly. We didn't immediately make an offer. We were just kind of like, yeah, let's keep talking. And then he built an entire game, like a simulation of a, of a, of a Game Boy game that you could play on your phone. And he just sent it to me. He like built it. This was like pre vibe coding. Just built it and sent it to me.

[Joe]

And it was web based basically.

[Jordy]

It was. No, it was mobile based. And I just immediately called him and I was like, okay, we're bringing on this team. This is amazing.

[Joe]

Very cool, very cool. I mean it seems like good response. A thousand likes. No one's people are very opinionated about branding launches, you know, launch videos, all sorts of stuff.

[Jordy]

So yeah, he. It was. I found the original post. It was a Pokemon style game where you could build like a cap table. Basically perfect collect investment.

[Joe]

Exactly what you want for sure.

[Jordy]

Great stuff, great stuff.

[Joe]

If you're just tuning in, Sam Altman will be joining in about 10 minutes. He's on for half an hour and then we're talking to Elad Gil. Before we move on, let me tell you about Turbo Puffer search. Every byte serverless vector and full text search built from first principles on object storage. Fast 10x cheaper and extremely scalable.

[Jordy]

You see this Reddit post circulating that lists OpenAI's top 30 customers by token consumption. And apparently Duolingo number one second is OpenRouter. But of course their platform doesn't really count. Yeah, Routing. Routing consumption. Surprising to see indeed at the top of this list.

[Joe]

Do you see number nine, baby, number nine, let's go.

[Jordy]

It's ramp.com see warp dev on there? Shopify.

[Joe]

Sure.

[Jordy]

Also.

[Joe]

When this came out because of their. I don't know if there was this table is like a leak or something, but at Dev Day OpenAI put up a list of names of people that had been using over a trillion tokens. Right. And people kind of reverse engineered that to understand what these, what the people who like what companies they work for. Right. And I was trying to Make a meme that I was sending you. And it wasn't quite hitting, but it was like the atlas holding up the world meme. And it was like the entire global economy, but Instead of like OpenAI, which is the current meme, it's like 30 companies in wildly different markets that are all using AI. And so that, like, you would be more worried, I think, if this was more circular. And this is the Martin Shkreli take, which is that if it was. If you looked at the top 30 customers and it was all like AI Chatgpt wrappers or something, something very circular, you would be worried. But instead it's companies like Indeed and Duolingo and Ramp and Shopify and all these companies that are touching very different pieces. These aren't competitors. Like, Duolingo is not a competitor to Shopify. And so it feels like. It feels like evidence that this is like, less circular.

[Alad Gil]

I don't know.

[Jordy]

Yeah, I mean, the. It is the Groq C of Grok. Groq recently said that 35 to 36 companies are currently responsible for 99% of token spending in AI right now. Even among those 35 companies, two are by far the most significant spenders. And they're open AI and Anthropic.

[Joe]

So it's crazy. That's generation. That's buying inference. I'm talking about the companies that are buying from OpenAI and buying from Anthropic. That is one more step. One more step. Because it's like, if I'm fine with, like, it's scary when you hear, like, OpenAI is buying 99% of AI stuff. But then when you look under the hood and you see, like, Duolingo and Ramp and Shopify, it's like, okay, well, that's actually like, pretty diffuse in the economy. Yeah.

[Jordy]

So, yeah, there's two significant spenders, but in those spenders are thousands of other companies.

[Joe]

Exactly. Yeah. And I wonder just this idea of, like, there's a. There is a trend. We're in a trend right now, the AI wave, and it's holding up the global economy. Like, has. Have other trends held up the global economy successfully? Like, if we go back to industrialization, was that. Was that holding up the global economy? Did it successfully hold up the global economy or like, global trade, that containerization that held up the global economy. And. And like, there were certainly, like, ups and downs, but, like, it kind of successfully held up the global economy.

[Jordy]

Yeah, and certainly the. I mean, going back to that clip from Ken Griffin earlier this week, he was basically saying that in 1999 and 2000, it was incredibly obvious that the Internet would change everything.

[Joe]

True.

[Jordy]

But that still took 15 years. Right. So I think even I would say most of the bears, like, true AI bears, still believe in the potential of the technology. They just believe there's going to be some sort of winter, like a hiccup.

[Joe]

Yeah, winter, yeah. We haven't heard a lot of talk about AI winters. There's been many of those. And we. I had a hot take that 2023 was an AI winter, which is like, of course, like the most bullish, insane time possible. But I, but my, my, my riff on it was that, like, ChatGPT launched in 22, Waymo launched in 22, and then 23 was more just like the adoption of ChatGPT. And I think at Dev Day, they launched maybe GPTs. And it wasn't like a wild use case. We didn't have reasoning models yet. And so it was like this magical technology that launched in 22 and in 23, everyone was kind of like processing it. But there wasn't like a massive jump in 23. I mean, I guess we did get GPT4. What do you think, Tyler?

[Jordy]

LG, by the way, is quizzing you in the chat. John Coogan, how many total tokens have been used on OpenAI years to date? Name every token.

[Joe]

Name every token. Well, it's odd. It's 6 billion a minute. I think we did the math on this. It's in the trillions.

[Jordy]

It's a lot. So, yeah, when I calculated it, I.

[Bill Peebles]

Had like, around one quadrillion a month.

[Joe]

One quadrillion a month.

[Bill Peebles]

That was also the number, I think, Demis, a couple of weeks ago, he said one quadrillion.

[Joe]

Wow.

[Bill Peebles]

But, yeah, because OpenAI was like 6 million per minute. But that's just on the API. So if API is like 25% of the company.

[Joe]

Exactly, yeah. Yeah. Do a lot of, like, dancing.

[Bill Peebles]

But yes, in 2023, I mean, GPT4, I think is like. Yeah, I don't think you should be following product releases you should be following.

[Joe]

But GPT4 was, was trained in 22 and was released in Bang in 22, so it doesn't count. I'm kidding. Of course. 2023 was a phenomenal year for AI. Not, not, not a winter at all. But it's, it's, it is interesting to see like, like where the growth spurts come. How much of it is just a smooth curve of adoption and diffusion into the economy. What's the rate at which diffusing. Where are companies and individuals actually getting value. Should we move over to the huge news in creatine?

[Jordy]

Yes.

[Joe]

Dan McCormick says work with your brother. Go into debt if you have to because Packy McCormick is giving a shout out to Dan, the founder of Create. He says, my brother Dan has been writing the Weekly Dose of Optimism for three years. That's Packy's second newsletter, aside from the one that he writes. Last week was his last. Dan McCormick is stepping down from writing the Weekly Dose of Optimism because his company creates absolutely ripping $85 million run rate.

[Jordy]

I swear, gummy vitamins are just an infinite money glitch.

[Joe]

There's a couple categories that are just doing so so well. Stick packs and powdered supplements. What's hard? Hard is liquids, right?

[Jordy]

Hard is do not try to sell.

[Joe]

Liquids liquids on the Internet. That's hard. But gummies must have a good Great.

[Jordy]

I invested in, invested in Create. I think at a 6 cap. I met Dan before the launch. He was raising it even less than that. I didn't, I didn't see the vision right away and his execution in the first like five months was absolutely wild and I capitulated and it's been a wild ride. The execution is insane.

[Joe]

Well, Dan, if you want to keep a hold on that, you create Team Monopoly, you got to get on profound and get create mentioned in ChatGPT.

[Jordy]

That's right.

[Joe]

Reach millions of consumers who are using AI to discover new products and brands.

[Jordy]

This post from Frog is a banger. Please make sure you are only drinking as much water as you really need. We need that for the data centers. If you're thirsty, Grok is thirsty too.

[Joe]

Completely agree. I completely agree.

[Jordy]

Reply here. Installing a low flow shower head out of concern for Grok.

[Joe]

I love it. I saw someone else was trying to put the yes, this is it. Andy Massley. A couple slides later he said, every day I find a new way of trying to get across just how ridiculously fake the problem of AI water use is. We've talked to a number of Neo Cloud CEOs, data center builders on this show who have built data centers and they've told us, yeah, we use a decent amount of water, but once we have the water, we actually have figured out how to just recycle it in the system. And so we're not actually using that much water.

[Jordy]

Even the new iPhone has a single.

[Joe]

Drop of water and they sell a lot of iPhones. So I mean millions of drops of water. You got to answer something.

[Jordy]

No, but it just proves the point.

[Joe]

That oh yeah, you can recycle it for heat. Yes, yes, that's a great point. I hadn't even thought about that.

[Jordy]

It's not like you're, you're. I got to go refill.

[Joe]

Refill my iPhone. Can you imagine how upset people would be? It was like, yeah, I need to charge my iPhone. Oh, I forgot to refill it with water at the gas station. So he, he, he shares some data here. So this is a quote post from someone else.

[Robby Stein]

Yeah.

[Joe]

But the form of AI that uses the most water and electricity by far is ChatGPT. You can start somewhere. The whole I can't do it because I got cut off is just an excuse I don't care for. And so here is some evidence, some new ways to think about the amount of water used by AI. Have you ever worried about how much water things you did online used before AI? Probably not, because data centers barely use any water compared to most other things we do. Even manufacturing most regular objects requires lots of water. Here's a list of common objects you might own and how many chatbot prompts worth of water they used to make them. Leather shoes are 4 million prompts worth of water. Smartphones are 6,400,000 prompts of water.

[Jordy]

Jeans.

[Joe]

A single pair of jeans is over 5 million prompts of water. This is such a silly metric, but I love these silly metrics. T shirt is a million prompts. Single piece of paper is 2,550 prompts. If you want to send 2,500.

[Jordy]

Imagine trying to give up all the things on these on this list because they use water.

[Joe]

But you'd have Grok. You'd just be naked using Grok, but you'd have. You'd have. You need a smartphone and that's 6 million prompts.

[Jordy]

Chad is going crazy right now. We're being told to not ask him anything about Trump or crypto. He's got money on it. It's because there's prediction.

[Joe]

Oh, no. Okay, we are not paying attention.

[Jordy]

We haven't looked at any markets.

[Joe]

Prediction markets. We will not be steering the conversation if you happen to have a bet one way or another. Well, I believe we have our guests in the Restream waiting room. But before we bring them in, let me tell you about Julius. What analysis do you want to run? Chat with your data and get expert level insights in seconds. Julius is the AI data analyst that works for you. Connect your data, ask questions.

[Jordy]

Data superintelligence it is.

[Joe]

And we are joined by Sam Altman and Bill Peebles. Sam, Bill, how are you doing?

[Jordy]

What's Going on.

[Bill Peebles]

Hey guys.

[Alad Gil]

Hey guys.

[Jordy]

Welcome to the show.

[Joe]

Congrats on all the progress. I've been enjoying Sora a ton. Personally, I've been enjoying making them. I had a ton of fun making the collab post yesterday and I was.

[Jordy]

Imprompting your cameo feature. John made it so that he always appears as a bodybuilder, if anybody is cameoing him.

[Joe]

So you guys got to experience some chaotic results. Do you have favorite Sora posts that you've been coming back to or that have stuck out to you as particularly creative uses?

[Sam Altman]

I mean, definitely all of the ones of me stealing GPUs or doing other crazy things to get GPUs have been funny in the last few days. At least in my feed. There have been these very beautiful, fantastic scenes that are just not things that could have ever existed without something like Sora or wouldn't have been easy to make. And watching people build those and watching the trends flow through that has been pretty awesome.

[Joe]

What about you, Bill? Any favorite uses of Sora so far?

[Bill Peebles]

Oh man. Mark Cuban came on the platform a few days ago and there have been some hilarious Shark Tank memes. Those are probably my favorite. Pitching some Sora features to Mark.

[Jordy]

Also leveraging the prompting function to always include an ad for Cost plus drugs I thought was especially hilarious considering he's been one of the most vocal opponents of of advertising in AI. He is leveraging the feature to the max.

[Sam Altman]

Yeah, I think they're going to be all of these weird new dynamics that we see emerge that just weren't possible in previous kinds of video. And this is like a fun period because it's all going to be so different every few days. Man, I'm watching this polymarket ticket go by, ticker go by, and it's so tempting to like say things to.

[Jordy]

Yeah, yeah, yeah. To be clear, now that we're don't. Don't worry about the. Don't worry about the tick. I don't think we're including. I don't think any of those markets are being, being featured in the ticker. But yeah, again, this is the new world we're in.

[Joe]

Yeah, you can move the market live on tvpn.

[Jordy]

But today people I'm sure will be happy or disappointed. We're here to talk about Sora, of course, so none of the other topics.

[Joe]

But I mean, I also want to know about ads. Why no ads in Sora on day one? I feel like you've laid out a really great mental model for how you think about ads on stratecheri on the Andreessen Horowitz podcast. I'm bought in. Is it a technical thing? Do you need scale? Do you need to think about it more? Why no ads on day one?

[Sam Altman]

This is like a 10 day old product, right? Like it's hard to get anything to work at all. And we don't assume success. We gotta like go hard earned success and then we can, then we can think about monetization for it. But this is like it's gone great so far. It's still very early and there's still a lot of work to build something that a lot of people are going to love.

[Joe]

First, what about surprising capabilities of the model? You mentioned that you've seen some fantastical scenes. I'm interested to know about specific breakthroughs that you've noticed that Sora to the model is particularly good at. I noticed one about Reflections being great. Obviously people love the cameos. But what has surprised you in terms of just like, like technically the model can do something now that it couldn't do before.

[Bill Peebles]

This model is a huge leap forward in terms of physics iq. Pretty much all past video generation models really struggled with prompts that involve backflips, gymnastics routines, et cetera. And this is really the only model that exists today which can reliably handle these kinds of really complicated dynamics. One of the big features that people have really loved on the app so far is the steerability of the model. If you give it a really simple text prompt that's maybe even only a few words. This model is really good about telling a coherent story with a beginning, middle and end, and doing this automatically in a way that doesn't require a lot of direct steering from the user. If you want to go into a ton of detail about exactly how your prompt should be laid out and how the story should unfold, it supports that too, so it can meet you wherever you're at in the creative process. But really this model is just so hyper scarable and it's just vastly higher physics IQ just makes it able to do things that were like not possible a few months ago.

[Joe]

Is that all within the model or is there some sort of reasoning step where you're hydrating or unpacking my prompt and writing a bigger prompt or breaking down the problem in some way. Can you share anything about that?

[Bill Peebles]

Yeah, it's a good question. So you know, the intelligence for these text conditional video models kind of lies both in the core model itself, like Sora, and some amount of it also comes in through the text prompt. So however, the User decides to kickstart a prompt. You can have a language model under the hood, add some details in. But for example, when it comes to things like, again, doing these backflips or any kind of physical interactions, how refraction is modeled when you're pouring water into a glass, all of these details have to be captured by the core video model itself. So that's intelligence, which is really innate to Sora, and certainly you can supplement it with intelligence from a language model as well. But it's not necessarily a prerequisite to get kind of amazing results out of these things.

[Joe]

Are there any areas on the physics where you think that the model falls down and you want to improve? I mean, we went through the era of like six fingers. It seems like reflections and water are solved, but someone was saying something about doors being hard. I haven't noticed that one personally, but a lot of the stuff's great. But what have you noticed is, like, the next version is going to be even better at.

[Sam Altman]

This is still very early. A thing Bill said that I appreciated is this is like the GPT 3.5 moment for video.

[Joe]

I agree.

[Sam Altman]

And if you went back to use the actual GPT 3.5, you'd be like, okay, signs of great promise. Can do the occasional impressive thing. But it was really not until GPT4 where these text models started providing real value for people. And we know how to go make the GPT4 equivalent of video models and we will do that. And then a lot of these things that are currently annoying, like doors, or once in a while something goes through something else it's not supposed to. In the same way that the world loved to complain for a brief period of time about where 3.5 fell down and oh, it's never going to be useful, it's never going to do this, it's never going to do that. And then we were able to just keep making it better and better and better and better. The model physics IQ is certainly the best I've ever seen, but it is nowhere near as good as it will be in the future versions. And I hope we'll see a similar thing to what happened with the GPT text models, which is people will always demand more and better and they will always find new and better things to use it for and the world will just make ever more amazing videos.

[Jordy]

How quickly.

[Bill Peebles]

Oh, sorry, we're still on the curve for video here. GPT1 really was SORA1 for this modality and the progress we've made in the last 18 months getting to this 3.5 moment, right? It's really compressed compared to how long it took to go from GPT 1 to 3.5 in the language domain. So we're really expecting progress to continue to be meteoric here in the near future.

[Jordy]

How quickly do you expect the cameo feature to be cloned? That feels like an equally important part of the, you know, the models made a leap, but the product is in the experience and the experience of creating these assets is wildly innovative. We saw stories get cloned, we saw, you know, algo video, short form feeds get cloned. I expect many other platforms to be looking at this functionality and realizing that this might be the future. You guys certainly believe that it could be important. So how quickly do you think we're.

[Sam Altman]

Actually totally okay with a world where we do the product innovation and everybody else copies and I don't think it works for them as well as they think it does. Like a lot of people have tried copying ChatGPT in you can go look at some of our competitors apps and they even copy the mistakes. They even copy the design decisions we really wish we hadn't made. And maybe it's worked well for them. I guess I kind of hope it has, but it's been fine for us. I think the key to this is not any one innovation, but it's repeatedly putting them out again and again and being first to come up with them and put them into a cohesive offering. And you know, that's what we want to be good at. And if other people want to clone the stuff that works, we also sometimes clone stuff that works. That's fine. But mostly we want to be able to drive the innovation. And I think Bill and his team have done an incredible job of figuring out how people actually want to use these video models, what the models need to do really. They've approached this as a full stack problem from how do you train the video model to how do you make this enjoyable for users? But, but cameos are one out of many ideas they have from here on the journey to the product that we hope to eventually build. And so if people take some inspiration from us and copy us along the way, I'm sure they will. It's fine.

[Joe]

How do you think about the like popular claim that we want AI detection? I want AI content flagged. Is that a stated preference? That's not a revealed preference because personally I don't want bad AI content, but I don't want bad human made content either. I want great both. And I'm fine when someone comes up with something Genius. And they instantiate it with a video model. How do you think about it?

[Sam Altman]

I think that is the real thing is you don't want slop. You want great content, different people. One man's slop is another man's treasure for sure. But what you care about is good, original, thoughtful, new, helpful, whatever content. And whether that is generated entirely by a human or entirely by AI or what I expect will mostly happen in the future, which is tool assisted human driven generation. I don't think you care that much if the content is great. There's a lot of stuff that is technically written or drawn or filmed by a human, but is completely derivative and much less original than what an AI has generated. And I think that will be what people really care about long term. You just want great content now. I also do want some human connection with it. When I read a great book, first thing I want to do is read about the author that wrote it and what life experience went into that. I don't think that'll go away. But if they're using an AI as a tool to help them make the writing better, sign me up. That sounds great. Similarly, I would rather watch a video about someone I know than some random AI generated character. Which is. Which is part of why I think this was cool to offer. One design decision the team made that I thought was really great and I was actually pushing them in a different direction earlier on and then I decided they were totally right and I thanked them and dropped it. Was the fact that the feed is AI only and not a mix of AI plus some uploaded videos I think is a subtle but extremely important design decision in how people are relating to this.

[Joe]

Yeah, it was a very weird experience for me. I was thinking about the collab post that I was making announcing this interview and my initial thing was like, well, I'm going to have to think of a script or I'm going to have to think of what I say, or I should record a piece of this and then I'll use it. And it was like, no, I just typed the prompt in and then I get the front facing video. It's remarkable.

[Jordy]

What kind of indicators are you guys looking at? As Sora can transition from what it was the second it launched, which was a creative tool, into something that's more of a consumption platform, traditional social media platform. Talk about what you guys are pushing forward because obviously you're seeding the network with the tool, but it's certainly much harder to turn it into something that people are spending hours a day in. Purely Consuming content and not creating content content.

[Bill Peebles]

You know, we really wanted to design this from the ground up to be centered around creation. And a lot of the metrics that we've been focused on optimizing here are really aligned with making sure as many people as possible are actually, like, getting their hands on the Sora 2 model itself and, you know, able to create content with their friends and, like, for the rest of the world. One metric that we're really proud of with this launch so far is that 70% of our users are actually creating content even to this day, a week and a half after launch. And that's like, vastly higher than on any other social media platform. And I think it really speaks to just how fun creation can be with the right tool set. Right. If you look at any of these kind of legacy platforms, there's just so much friction from getting off the feed and into some creative flow state. You have to put the phone down, you have to go get a camcorder, start recording yourself, find your friends, do a dance, et cetera. It's just like a lot of work, right on Sora. Like, you can just pick up your phone, find, like, any video you like in the feed, remix it, you know, cameo any of your friends. And I think one insight that was not obvious to us at first, but we've kind of clearly seen as an emergent behavior of this product is just like there's all these people out there who would not necessarily want to be like, you know, influencers or something, or have like a big social media presence, but the fact that, like, all of their friends can just access their cameo, right, Put them in all of these crazy situations actually gets them into the playing field in a way that felt really high friction before. And so we're closing in on close to like, 2 million weekly active users now. We're really excited that such a huge percentage of that user base to this day is still creating with Sora, and we're going to continue pushing on that direction and making sure people have even more powerful tools in the Future.

[Joe]

Yeah. So 70% of Sora users are creating content. The typical benchmark that people kind of quote randomly is like 1% creation, 99% consumption, something like that. And that certainly feels like my experience on Instagram. I post a photo every once in a while, but most of the time I'm just kind of scrolling. And I'm wondering if you think that that 1% will be much higher on Sora in terms of actual time in the app, Time prompting versus time scrolling. If you have any data that'd be super interesting. But then also does that make it more of like a competitor to video games than traditional social media because it's such a lean forward experience versus just lay back. What do you think?

[Bill Peebles]

Yeah, it's a great question. We still need to study this more. Exactly how creation versus consumption habits kind of change over time. For folks on the platform, it's still pretty early days. I do agree with your point though that I think over time this is going to feel much more immersive in a way that video games kind of do. You have more agency when you're actually using the platform, not just kind of mindlessly scrolling a feed like hours a day. And one interpretation of this product which I think is kind of interesting, especially from the research perspective, is cameos in some ways, the simplest way where you can kind of inject yourself into the model, it's a very low bandwidth communication channel. Right now you're only giving a few seconds of video footage of any given individual into the app. But over time you can imagine these models know more and more about your life. They really deeply understand your friends, how you want to show up in the world. And over time this can almost become a little mini alternate reality. You're not just generating videos of yourself with your friends, you actually just have digital copies of yourself running in the model on this Sora platform, interacting with other people, with agency. I think over time we're really going to see this platform evolve into something that feels familiar today, into something that really leans into the full intelligence of Sora 2 in the future and like really leverages all the world simulation capabilities that we're working on internally.

[Sam Altman]

Yeah, I would add to that that if, if you think of this like spectrum of the kind of entertainment you can have in front of a computer at one end you have like watch a two and a half hour movie and you hit play and then you lean back and you don't do anything at all. And then at the other end you have like a very intense video game and you're like, you know, sweating and your heart's racing and it's like super, super active AI is going to push things to be more in between there. So you'll have, maybe you're still watching that movie but now you can say something a few times throughout the course of it and it changes what happens as the movie plays out. Or with Sora, you're seeing this amazing new phenomenon where most users are creating in a world where traditionally only 1% of them did and so yes, you're watching a video feed, but you're, you're doing a little bit more. And it at least for me, really changes how fun the whole thing is and how I feel about it. Then maybe you'll do what Bill said and you'll have like, you'll be way more actively participating in the Sora feed. And I think you're just going to see that continuum blur a lot more.

[Joe]

Did you see Bandersnatch by any chance? Sam, have you seen this Netflix? It's like a Netflix. Choose your own adventure. And it was really cool idea, but ultimately people, it never really took off and became like something they do again and again and again. And I'm wondering if it was because it was like not customizable enough or people just want to just sit back and see a director's vision. I don't know.

[Sam Altman]

Anyway, I never heard of that, but it sounds cool.

[Joe]

Yeah.

[Jordy]

How do you think. Question for Sam. How do you think about allocating compute to SORA versus the rest of the business? I imagine Bill is constantly in your.

[Dylan Patel]

Ear.

[Jordy]

Every other hour. But how are you thinking about it?

[Sam Altman]

You know, my real answer is I've entirely changed my focus of how I spend my days to just go get more computing rather than have to make the compute allocation decisions. I still do have to make some short term compute allocation decisions, but I hope we are heading to a world where I am instead telling people, you got to find a way to use more compute. And we're going to be very aggressive here.

[Joe]

It feels like you're doing a great job of bringing things within your control, within the supply chain. What is outside of your control at this point?

[Sam Altman]

I mean, most of it.

[Joe]

But I feel like you have great partners all up and down the stack, multiple partners in different parts of the chain. When I think about scaling up Sora, I feel like it's crazy to bet against you. You're going to get the chips, you're not going to be GPU, try to.

[Sam Altman]

Buy 10 gigawatts of power for delivery next year. It's not so easy.

[Joe]

It's funny.

[Jordy]

How are the conversations going with Hollywood?

[Joe]

Oh, yeah, actually.

[Sam Altman]

Yeah, you take it.

[Jordy]

Yeah.

[Bill Peebles]

I was going to say we've been chatting actually with a few very notable folks in Hollywood over the last week. I think people's first reaction to this is very understandably going to involve a lot of trepidation and anxiety. When we've gotten to just sit in a room with these folks though, and really explain what we're building. I've actually been pretty struck by how excited folks in Hollywood are about this. We were chatting with, with one actor recently who mentioned that on Twitter a year ago, saw a deep fake of her generated with one of these open source models which really had a lot of nasty content created. And when we really walked her through all of our safety mitigations, how we're making sure that we have this very well defined model spec which dictates the behavior that we allow on this platform and how we are really leaning into like full control of likeness. Right. More so than any other platform. Like, you have to come in through the cameo process. You can't just like upload an image of yourself and just like generate a video of it of like any person. You have to come in through cameo. I think it became clear that, you know, we're really setting the right standard here in terms of making sure people are in full control of their likeness. In Pollywood, I think that's where like a lot of this anxiety comes from. Right? It's this feeling that, you know, some random person can just kind of take videos or images of you and do whatever they want with them and create all of this terrible content that's outside of your purview. But we've really been designing Sora from the ground up to put users in full control of their likeness end to end, from the moment you sign into the app to needing cameo permissions to access any of your friends, generations. So I think we need to engage more with Hollywood and we're going to continue to do that. But once we really explain the story of Sora, they're very receptive to it.

[Joe]

Do you think there's a way to.

[Sam Altman]

Add something to that? The team asked me before launch if they could put my cameo in there, open access. And I of course thought about it for a second and said absolutely yes. I had all these Hollywood celebrities then messaging me on the first day, being like, you're absolutely crazy. This is insane. This is the dumbest thing I've ever said. And then by about the third day, they were like, that was really smart. You got a lot of free publicity. Maybe we need to be doing that. And I think you're now seeing actual celebrities say, okay, I'm going to do this. And I expect a lot more of them will similar thing on other kinds of characters in ip. I can totally imagine a world where our problem in a year or six months or maybe even less is not that people don't want their cameos or their characters appearing, but they think we are not fairly having their characters or cameo appearing often enough. Yeah, this may turn out to be a really big thing for fan connection now. It may be that kind of the previous generation of celebrities don't want to do this, and the influencer celebrities all do. I don't know how that's going to go, but. But I bet this will be like a pretty deep kind of new connection.

[Joe]

Yeah, it seems like it's been good for DiCaprio in the memes. Like, he's not directly monetizing those when you show the champagne meme or him pointing at the tv, but, like, you know, it builds his aura in some way.

[Jordy]

A friend of ours posted something yesterday. This is Jeremy Gafon. He said the reason we're so upset about Slop is because it's obvious we're all going to be going to love consuming it in two to three years. It's not going to be slop for long. Do you agree, Sam?

[Sam Altman]

I mean, some of it will be slop to some people and some of it won't. I remember, like, there was a real reaction like this in the early GPT days where people were like, I can't believe anyone reads this. It's like, total crap. It's full of hallucinations. It's not useful to anyone. And then it became more useful to some people, but they said, I can't believe anybody ever thinks this thing writes a beautiful sentence. That's insane. And then with GPT5, you have authors saying like, wow, this is a useful tool. It sometimes writes a beautiful sentence. And I kind of think it'll follow a similar trajectory.

[Joe]

What do you think about the fact that people feel at least. I don't know if they actually can, but it feels like you can still clock GPT5 writing. It's not this, it's that the M dash. Like, will we still see these artifacts in three years in Sora 5? That people are like, oh, if you know, you know, you can tell, but most people can't.

[Jordy]

Yeah, it's like, what's the EM dash of video? Because I don't think it's like six fingers.

[Joe]

No, no, definitely not. That's the typo. Which doesn't happen anymore.

[Bill Peebles]

Yeah, I think right now the EM dash is like this, like, slightly wired speech pattern in Sora, where it likes to say a lot of words very quickly. You know, these generations definitely have, like, a style to them. I think analogously to GPT, we really want to give users a lot of control over exactly how their videos show up on the Platform if you really want a very soothing experience. Not a lot of shot changes going on. We want to give users the ability to generate that. We're going to continue to give more optionality to people. There'll be some default behaviors and quirks of Sora for sure. But we definitely want power users to be able to be in full control.

[Joe]

Random question, where did the name Sora come from?

[Bill Peebles]

Yeah, this is a fun one. So the original Sora came out in February 2024. The OG blog post. We did not have a name for it. I think up to two days before we revealed the model to the world, we just could not agree on the team what it should be.

[Joe]

Did you at least have a code word or something?

[Bill Peebles]

We just called it like videogen.

[Joe]

Okay.

[Bill Peebles]

And so at some ungodly hour, I like just started pumping a bunch of crazy ideas into ChatGPT and then we basically ran out of like English words. So then we switched like Japanese words.

[Joe]

Wow.

[Bill Peebles]

And then Sora came out. I was like, wow, that sounds really nice. It means sky linked with like imagination, like all the possibilities of creation. And so then we just like last minute ship Sora. So yeah, it was kind of a mad dash.

[Joe]

Okay. Speaking of Japanese stuff, Sam, you said you were looking for Acura NSX a while back. It's kind of this throwback car. Very. It's not a Waymo. What do you think the piece of content or format will be that remains loved in an age where everyone's taking the Waymo of video, the Sora of video generation? What do you think is like.

[Sam Altman]

Well, first of all I got that NSX and it lived up to all of the childhood hype. I mean just incredible. Like that car is so fantastic. And I, I don't know, I kind of think there's going to be a lot of stuff like that for people that generated or not, where you still, you want the real thing, you want the thing that you have the kind of childhood connection to. You know, someone like a kid today is not going to want the nsx. But whatever the a cool car like that is, they will want and at some point like the fact that they can have like a crazy VR experience, they'll still want the real thing and the connection to it and everything they have. So I think there will be a huge amount of that. In fact, I think the future looks like much more of that kind of stuff, not much less.

[Jordy]

How quickly do you want to create an economy on Sora? It feels like there would be a number of ways that you could Create incentives for creators to create things, for IP holders, for individuals to just be passively monetizing their likeness.

[Joe]

True.

[Sam Altman]

Bill, what do you think for timing on that?

[Bill Peebles]

I mean, this is like a top priority for the team. You know, there's clearly such an incredible value proposition for celebrities, for rights holders across the board here. We think cameo is like a great entry point for this. Right? You can imagine right now we have cameos for people. Maybe you have cameos for like, you know, your character or like your brand or something. And so we're actively working on the team right now coming up with the right monetization model here to get this rolled out. But it's really important to us that our creators on the platform are rewarded and that there are clear financial incentives, the incredible work that they're already doing. So this is top of mind for us and we'll have updates here over the coming weeks. This is something we're actively working on.

[Sam Altman]

I think it's super important and awesome. I will say I would like to know how many hours of sleep Bill has averaged for the last few weeks, but I bet it's not enough. So we got a lot of stuff. The team's got a lot of stuff they have to do in a short period of time and it's going to take a little while.

[Joe]

Okay, let me put one more thing on your plate, Sam. I mean earlier, like years ago you built looped location based product. Have you thought about how AI and location based content fits together? Like on most of these social apps you can tag a location. That wouldn't even make sense in the current Soar app. But what does the AI Maps product look like?

[Sam Altman]

I haven't thought about AI and location that much, but I've thought about how AI can really change the social experience for people. We don't have a for sure answer yet, but we have a lot of interesting threads to pull on. And I have thought back to my days running that startup there more. My instinct is it is possible to make a very interesting new kind of social experience, connecting you to people, helping you find people that is intermediated by AI in an interesting way. But we'd have a lot of exploration to do there.

[Joe]

What advice are you giving to startup founders these days? I remember in the GPT 3.5 GPT 4 days it was like don't build a company that assumes model stagnation. How do you think about in the Age of Soar?

[Jordy]

That's been really great advice.

[Joe]

It really has it planned out. It played out exactly like that. There's a bunch of great companies that aren't built that way and they've done great. But if you were just, oh, I have a special prompt that tunes up GPT4. Yeah, bad times. But how are you thinking about it now in the context of video and Sora specifically? You obviously do have an API. You have dev day. There's people that will build on top of this. Is it a different shape of the problem?

[Sam Altman]

Totally. The reaction to the API has been nuts, positive. At least the fastest ramping revenue I've ever seen for one of our new models in the API. I mean maybe there was something faster than I'm not remembering, but congratulations. The demand there has been just incredible and people are doing awesome stuff with it. Bill and I have not had a chance for a one on one since launch because it's been so crazy. We're doing one later today. But one just to him was that we, given how much excitement there is to build on this stuff, that we do something we don't usually do and put out our intended roadmap of the things we're going to prioritize. Because I can imagine really cool new startups that simply were not possible. That will be possible at each of these new things will ship.

[Jordy]

So I had a question when you guys released the Sora 2 via API, which was that if Sora has the potential to be a Instagram or YouTube scale business, why release part of your edge for the entire world that they can integrate into other creative tools and then use the model to generate content that doesn't have a watermark that's not in your feed that you're not able to get that feedback loop on that you guys do with the Sora app for ChatGPT.

[Sam Altman]

We also put out a great model in the API and people can theoretically compete with us on ChatGPT and some try to, but we are willing. We're never going to build every cool use of the technology and we want the world to get all that stuff. We're delighted to also get paid on people using our API, but we just want AI to flourish out in the world. We're not going to build every great use of what you can do with video models either. We'll build one and I think it's pretty awesome. But people have a lot of other ideas of business and products to go build and we'd like to enable those.

[Joe]

Okay, last question. Back to cars. What's wrong with the Porsche 911?

[Jordy]

Yeah, you said earlier the timeline was in turmoil. You said if you were worth. Somebody said, if you had 5 million, would you buy a 911? You said no. You agreed with PG. What did you mean by that?

[Sam Altman]

I mean it was maybe it was like a tasteless joke. It was kind of like late at night I was, you know, whatever, but I have an unfortunate proclivity for expensive cars. And the response was like, would you ever spend 250k on a car? And I took that literally.

[Joe]

That's amazing.

[Jordy]

It's the size gong for taking it literally. No time for 250k cars. Not necessarily, but I probably.

[Sam Altman]

That was not my best tweet, you know.

[Jordy]

We enjoyed it now. We all enjoyed it.

[Joe]

I enjoy it now that I have the context. Congratulations on all the progress to both of you. Thank you so much for taking, taking the time to stop by the show. Really appreciate the update and very excited to see where this goes. Thank you so much.

[Sam Altman]

Thank you.

[Joe]

We'll talk to you soon.

[Jordy]

I don't think anyone read it.

[Joe]

No one? No one got it that way. That's amazing.

[Jordy]

250K? How about 200?

[Joe]

Anyway, we have our next guest joining in just a few minutes. In the meantime, let me tell you about linear. LINEAR is a purpose built tool for planning and building products. Meet the system for modern software development, streamline issues, projects and product roadmaps. We have a lot.

[Jordy]

You all know that OpenAI builds on linear, yes?

[Joe]

Oh yeah, that's right. They're a customer. Well, we have Aladd Gil coming into the TBPN ultradome from the Restream waiting room. Let's bring him in now. Thank you so much for joining us a lot.

[Jordy]

How are you doing? Finally?

[Alad Gil]

Thanks for having me. Good to see you all.

[Jordy]

We have wanted to do this interview since probably the very first week that we did. Guests took us a while, but you have your own show.

[Joe]

Yes, but thank you so much for taking the time. What this week has stuck out to you. I'd love to just get a State of the Union on how you're thinking about the market broadly and then we can zoom in on individual startups and trends and subcategories that you've been focused on. But have you had a reaction to this bubble talk that's going on? Have you been thinking about this? How have you been processing the information? How do you even research whether or not when something is going viral like that?

[Alad Gil]

Yeah, I mean, I've been looking at this stuff for a while because if you look at the 90s as a sort of precedent or antecedent, the 90s Internet bubble yeah, I think there was something like 450 companies that went public in 1990, 1999. There's another 450 that went public in the first couple months of 2000. And so about 2,000 companies went public. And then you ask how many of those are still alive, how many survived? And there's probably a dozen, two dozen that, that are still up and running. There's probably two or three of those that are really important to Amazon as an example, et cetera. And then 1980, out of 2000, probably died, went to zero.

[Jordy]

And they were being priced on eyeballs. They were being priced on eyeballs. Not even account creation.

[Joe]

It was such a different time. Ipoing was like doing your Series B. I remember there was a guy, Bill Gross, out of Idea Lab in Pasadena, my hometown, and I believe he took 100 companies public and he ran an incubator. It was like the Y combinator of the day. One company I believe was AdWords that went to Google and became the backbone there. And he had a bunch of great outcomes, but it was like a bit of a machine. If the IPO is no longer the metric that we should be watching, is it these revenue ramps, is it churn? Like how can we dig into understanding where true value, durable value moats are accruing versus froth? We often call it like the barnacle economy. Like if you're, if you're a toilet cleaning startup, but you have anthropic as a customer and they 10x their office footprint, you 10x revenue. That's not exactly the type of business we want to see long term.

[Alad Gil]

Yeah, I think durability is a great question and it's a really hard one for this era for two reasons. One is things are changing so rapidly from a model and underlying capability perspective that if you look at every prior technology wave, you look at, for example, Microsoft os, right, they forward integrated into the Office suite off of using Windows os or Google Ford integrated into vertical searches. So they killed a bunch of companies or really hurt a bunch of companies that are providing those services. So we should see the same thing with the foundation model companies, right? It's most likely if they're going to forward integrate, they're already doing it in code. Maybe they end up doing it in customer support and sales or all the big categories. There'll probably be some effort at some point. Now they may or may not succeed with that, which is a different thing. But there's durability in the face of competition from the big folks. There's durability in terms of like, will people keep using your product? Or we get subsumed by a startup and then there's just things that are just running up that clearly are never going to really work. And the real question is, you know, how do you identify each one of those classes of companies and how do you think about them as either a founder or an investor?

[Joe]

Right now we've been noticing there's sort of like three types of three buckets of companies that are trying to like, you know, craft an AI narrative around whatever market they're in. If we're talking vertical markets, smaller markets, not the foundation model layer, you have the legacy Fortune 500 company, career CEO in the seat who's maybe paying a consulting firm for some AI transformation plan, and maybe the stock's not doing so well. Then you have the startups that are. We go to YC Demo day, we talk to five companies that are building the same space, and it's their complete greenfield project. Amazing place to be. Must be super fun to just have be puppeteering 25 Claude code instances and Codex agents to build your thing. But then we talk to a lot of founders that have. They started their company five years ago, 10 years ago, they have a serious business, but they're still in founder mode. And we always find it a little bit hard to bet against those guys who are like coming back in re energized. They have the balance sheet, they have the customers, and they can kind of take a second crack at it. What nuance would you add to that framework? Do you think it's on a per industry basis? Is it all about the founder? How do you think about that?

[Alad Gil]

Yeah, I think there's basically three viewpoints on that. I think there's a very small number of singular founders who just make amazing things happen. And that's Elon Musk. Right? Like, who else would go to space and build cars and do all these things? Honestly, I think Arvind at Perplexity is one of those where in anybody else's hands, I think Perplexity would be a dramatically smaller business. And I think most other companies in his hands would do better. He's very good.

[Robby Stein]

Right.

[Alad Gil]

But that's very rare. So I kind of put, you know, amazing founder aside because even great founders, if they're a terrible market, tend to get crushed. And so I think there's a second piece of it, which is there are a bunch of these markets that have recently really crystallized where, you know, I used to say a year and a half or two years ago that the more I learned about AI, the less I know. It was the only market that I ever felt that way because, you know, you learn new stuff and you know more. Right? You do better, you can predict stuff. And I think that changed over the last six to nine months where suddenly, at least for certain areas, it's really clear who the finalists are. We may not know the winners, but we know who the final contenders are. We know that for the foundation model market we know it's anthropic, OpenAI, Google, perhaps XAI, meta, a few others, Mistral, but you know, it's a small list. We know for coding it's cognition, Cursor and then the foundation model companies and Microsoft and you can go through sort of vertical by vertical. There's a bunch of verticals now we know a bridge for healthcare and maybe come here. There's a handful for each thing, but then there's a bunch of markets where it's clear the market's going to be important and there's tons of players, but we don't know who the winners are. That's financial tooling, maybe that's sales enablement, maybe that's accounting. You can come up with a list.

[Jordy]

Legal feels like it's already solidified, except a handful of these more vertical specific, you know, specifically we were joking. There's people doing injury, you know, personal injury, law agents, you know, ambulance chaser agents. But it feels like the categories are solidifying. I guess the question I have is you've backed winners and basically all these categories. Where do you feel underexposed from an investment standpoint? What do you think you didn't quite anticipate? Is it like energy? Possibly. I'm sure you have better bets there. But where do you feel underexposed?

[Alad Gil]

That's a really good question. I feel like the two big trends of this era so far have basically. And by era I mean like two years, you know, of recent last two weeks.

[Joe]

The modern millennium.

[Dylan Patel]

Last two weeks.

[Alad Gil]

Yeah, exactly. The last two weeks.

[Sam Altman]

Yeah, exactly.

[Alad Gil]

I think that there's. The two big things are basically defense and I was very early involved with Anduril and Leather D and have participated basically in every round of that company. And then I'm an investor in Sironic and in Helsing and then Kayla and Israel, but very, very little defense actually over like a 10 year span of investing. Right. I did Ender only for like seven years because it was like the only company that I thought was just going to keep going forever. And I think it's the, you know, a Generational winner there, but. And then there's AI. And AI means everything now. It means consumer, it means roll ups, means electricity, it means. Yeah.

[Joe]

Natural gas turbines.

[Alad Gil]

Yeah, exactly, yeah. Trains have to move GPUs across the country.

[Joe]

Yep. Yeah, that.

[Alad Gil]

Yeah, I love it.

[Dylan Patel]

Yeah.

[Alad Gil]

FedEx is my favorite AI company. So I think, you know, those are the, the sort of two obvious trends now. Six or seven or eight years ago they weren't obvious, now they are. And you know, honestly, obvious trends often go longer than you think. I remember with the social networks there was a bunch that didn't work out in the MySpace and Friendster and eventually had Facebook and LinkedIn and Twitter. And then at that point everybody said it's over, everything in social saturated. But then we had WhatsApp and we had Instagram and we had TikTok and you know, just, it just kept going. AI is in a much earlier version of that right now where I think we're at the very, very early days of this massive wave. And so to some extent I'm underexposed to AI in general because I think it's the biggest thing that's happened in 20 years or longer.

[Jordy]

Says he's underexposed.

[Joe]

You're very, very humble to chat that says everything important. A lot is in.

[Jordy]

What'S not AI. When do you get a pitch where they use the word the letters AI on their website a lot, but you're just like, hey guys, this is, this is just regular sass.

[Alad Gil]

Well, I actually bring this back to like what's durable in the face of AI And a good example of that is rippling. Right. Rippling is a amazing company. They cross sell a dozen different HR products and I can make some stuff better, but nobody's going to do like the AI first rippling and suddenly when right now the main threat maybe to a rippling or deal or sort of related companies is if company headcount actually goes down because of the AI, then they have fewer seats, they sell. Right. And so that's maybe how there could be a headwind for me for these companies.

[Jordy]

But, but maybe that means more companies, maybe that means we just get a lot more companies, smaller teams, right?

[Joe]

Yeah, it's quite possible, yes.

[Alad Gil]

So I just think like that's the. When you see that, you're like, okay, this is very durable in the face of AI and that's great. Right. And so a lack of AI means AI can't displace it. And so as long as it's working, it's actually more interesting in some ways.

[Jordy]

Yeah. The question I sort of ask myself is, you know, using a company like Rippling, for example, even if companies start needing less people, there's still they can they. I could see them transitioning to kind of value based pricing around what is it? What's the value of like running your HR department? Right. Is it 3% of revenue, is it 5% of revenue, is it 1% of revenue? Like either way they're going to make money if they're providing infrastructure for that function.

[Alad Gil]

Yeah, it's a great insight because I think there's two or three things that are underappreciated about this AI wave. I think that the first thing is that the capability set has shifted dramatically not just in terms of what these models can do, but the fact that you can just ping them with an API and something that's accessible to everybody. And I think that's actually very under discussed.

[Sam Altman]

Right.

[Alad Gil]

Relative to the prior world. I think a second thing is that the markets are oddly open. Like Legal never bought any software. It was really hard to sell into Legal. But because of AI, suddenly Harvey can exist. Right. And then the third thing is that a lot of this is about what you're saying, which is the tams of markets are shifting from seat based pricing or seat based value to labor. You're replacing human labor. And so you're looking at, for example, customer support. It's not Zendesk, how many seats can you sell to customer support reps? It's how much can you augment and do work for customer support reps. It's the labor market versus the software market. And I think that's very underappreciated. When you think about market size for some of these things, you're really going to miss the size of these markets and how big they are. You know, the services economy that we looked at on my team in terms of like where I could intervene is about $5 trillion.

[Robby Stein]

Right.

[Alad Gil]

So it's a lot of GDP is accessible to this. And so then you ask, okay, is it, is it a workflow that's specialized to customer support, like, or whatever, is it a roll up where you're buying assets and changing them? Is it a different approach? Like how do you sort of span all the change that's coming because of this?

[Jordy]

Ken Griffin gave a talk earlier this week and he was saying that in 1999 and 2000 it was very obvious that the Internet was going to change the world, change the way that our economies run. Yet it still took 15 years for it to actually have an impact and he was comparing that to today. The difference of today is that we have the Internet so we can deliver these products instantaneously to the entire world. Do you think that. But do you think that this time can be different and we can, as an industry, unlock the value of this technology on a shorter timeline than the Internet took? Because we just didn't have. The Internet is the greatest distribution engine in history.

[Alad Gil]

Yeah, that's an excellent question. And I think both things can be true simultaneously, which is we're seeing real revenue for these companies. Cursor is rumored to be in the high hundreds of millions of revenue. You know, Azure added something like 2 or 3 billion of AI revenue recorder from sort of a cold start two or three years ago.

[Robby Stein]

Right.

[Alad Gil]

That's amazing. That's like $10 billion run rate plus just off of AI revenue. Right. So it is working. It is being adopted. But the flip side of it is it'll probably take a decade. Right. And so I think both of those things are true. And I think the biggest impediment to adoption isn't the technology. We could do so much stuff with the technology right now. It's organizational process, it's workflow management. It's all the stuff that happens when a big enterprise use anything and they're like, you want me to change my tooling, you want me to change my people, you want me to, you know, my processes, and that's what's going to slow it down. And that slowed down every technology way. But to your point, we have massive distribution. It's already everywhere in some sense, right? I don't know that. You guys probably know the number. You just talked to Sam Altman, right? What's the number of people using ChatGPT per month? But that's a huge impact already.

[Jordy]

Yeah, it's interesting. They haven't said that yet. It has to be north of a billion because they're Already, they're reporting 800 weekly active.

[Joe]

If you have 800 weekly, you have to have over a billion. And that feels like such a news cycle. But maybe he's just keeping it in his back pocket for when needs a good news cycle.

[Jordy]

Bit of a wild card question. And I didn't plan this, so I didn't mention it beforehand, but no, it's not. It's not bad. But I just think it's interesting. If you couldn't be an entrepreneur and you couldn't be an investor, what hyperscaler would you want to work at, where, you know, be an executive.

[Joe]

That's interesting.

[Alad Gil]

Oh, that's so interesting. I don't know, I could make arguments for two or three of them because I think there's such different problems to be had and different assets. You know, Google for example, just has such amazing assets relative to this era. Right. They have the most data, they have the most compute, they, they have amazing cash flow. I mean they're just like TPU spot deep.

[Joe]

Yeah, it's a, it's a really crazy stock over there.

[Alad Gil]

Yeah, yeah, amazing stack. So there's amazing things they could do, obviously. There's crazy stuff Microsoft can do on the business side, plus with GitHub and Copilot and everything. So they should really be driving a lot of the coding future in my opinion, if they make the right moves over time. And so you can kind of go through one by one and say there's really interesting things. Opportunities, meta in terms of social, I think there's opportunities everywhere.

[Jordy]

Give us an update on AI roll ups. You have some investments here from my understanding, but how do you see the category evolving? We see new teams coming together to attack various markets with this strategy almost daily now. But what's your view?

[Alad Gil]

Yeah, I think so it's back to. If you look at services in the US it's 3 and a half to 5 trillion of. It is sort of labor that to some extent could be augmented or displaced by AI. And so the idea is, can you. There's certain types of companies that are going to be very slow to adopt software or AI. And so there's two things you can do with that. You can wait and build a software company that will take a really long time. You can actually buy those companies, implement the AI changes and dramatically change their margin structure. And that doesn't mean letting people go. It could just mean you make people five times more productive for certain types of roles. So you can look at different businesses where 80% of the cost of that business is repetitive white collar labor. And so you can help augment or automate stuff for people. And so I looked at a few dozen of teams or companies doing this. I ended up backing two of them. And really you need three things to make this sort of strategy work, which is truly transforming a business with AI and then scaling it up. The first is you need a great AI person obviously, right? You need to be able to build the technology. Second, you need a great PE person. You need to buy assets, properly understand your envelope. Just like a SaaS company has its ICP or like customer profile that goes after you almost have like your M and a profile like what Fits in my pocket of stuff that I want to go after. And then lastly you need somebody who's operationally great, who can rework the organization against the AI because that's often the hard part.

[Robby Stein]

Right.

[Alad Gil]

You actually have to get people to use this stuff in order for it to be implemented. And so very, very few of these teams have all three of those things. And many of these teams are basically doing traditional PE roll ups or not really using AI, but they're raising at AI prices and then they're buying at PE prices. And so this arbing and so I've tended to avoid arbitrage.

[Jordy]

Yeah, it seems like a great deal with the founder. In another world they'd be doing a private equity fund with 2 and 20 and then here they can go out and dilute 20, raise 20 on 100 and then they own 80% of the business.

[Joe]

Yeah, remarkable.

[Alad Gil]

Yeah, it's a very smart thing to do. And if I was a PE person, I totally could do that same doing AI. But most of these things aren't doing AI right. But a handful of them that are going to be massive. Right. Imagine an AI danaher. Right. It's just, it can really be transformative to big sectors and it changes something from a services margin to a software margin business with software leverage. So it changes the characteristics of the business.

[Joe]

Sort of flashing back in your career. One of my questions I've always had on my mind is that you kind of like created the solo capitalist idea. People have kind of put that label with you. Was that just a happy accident? Were you deliberate that you didn't wrap what you were doing in a firm? There's obviously people that start with similar scales but wrap it in a firm with a brand and how thoughtful was that? What were the considerations? Do you like how that.

[Alad Gil]

Yeah, I think for a while it really was just me. So it wasn't some strategic move to do something. It was just I was on my own doing stuff. And then eventually I brought on people for back office and finance because I think that's really important. You want compliance, you want things to be proper and all that. And then I got this moniker and I never asked for it. Right. Like I actually am happy to be called whatever, as long as I get to be involved with the most interesting technology and technologists in the world. You know, they could call me, I don't know what a carpenter.

[Jordy]

I don't care what they could call you. Big vc, big venture capital.

[Alad Gil]

That's the one thing I don't want to be called other than that.

[Joe]

But I mean I imagine what you.

[Alad Gil]

Do is different from like traditional VC too.

[Joe]

Sure.

[Alad Gil]

You know, like I don't, I. We do traditional investing and we do traditional venture, but I actually think we do a bunch of other stuff and we do interesting projects around.

[Bill Peebles]

Things.

[Alad Gil]

Like one person on my team who's working as an investor as a technical background is actually driving AI driven translation of the world's thousand most important books that are off of copyright. And we're working with a few really big foundation mobs on that. So we do stuff like that too just because it's interesting. So I hope it's never just a venture fun.

[Jordy]

But do you think, when do you expect AI to transform venture capital? I think it's, it's notable that the firm today and the activities of the firm look quite similar to pre ChatGPT. Maybe you can write an investment memo faster. Maybe you can seem like you prepped for a board meeting better, you know, if you just drop the deck in and ask for a summary. But it doesn't feel like it has changed the profession at all yet. It's still finding and winning allocation and, and you know.

[Alad Gil]

Yeah, I think it can help with some aspects of diligence to your point. Like it can pull competitors and things like that to some extent. It depends on the market. You know, there may be weird uses that nobody's done yet. So an example would be have you ever done the prompts where you ask the AI to like cold face, read somebody and tell you about their personality?

[Joe]

No. You upload pictures for this?

[Jordy]

Yeah. I mean just analyzing somebody's personality with a picture, even just any picture of their face. Yeah, it's pretty. I mean this is like the schizos call this physiognomy.

[Joe]

Sure, sure, sure.

[Alad Gil]

Yeah. But there's stuff like that where I've done that just for fun with my friends, right. I'm like, hey, what is this person like? And my friend's sitting there with me, right. I'm not secretly trying to psychoanalyze them or something. And then I'll ask it to give me a detailed breakdown of those characteristics and why. And I'll say, oh, this person looks like they have a genuine sense of humor and they're warm because of the way that the crow's eyes around their eyes exist in this way versus somebody who fake smiles because it doesn't get to the eyes so there's no wrinkling. And you're like, wow, that's actually like super interesting.

[Robby Stein]

Right.

[Alad Gil]

And so it'll break down the sense of humor, it'll break down how likely that person is to be loud or quiet, the likely aggressiveness. Like all this stuff.

[Jordy]

Yeah, you can imagine there's a. Somebody could create an EQ copilot for the new, like meta display glasses. You can just walk around. And if I. Maybe I'm really high iq, but I don't read people that well, I could look at John and say. Which is probably inverted, but I could look at John and be like, oh, John is. Because John's very interested in the conversation and he clearly wants to be friends. So I think there's more to build there. Give us the update on your company with Jared Kushner. I know he's been very busy, but I'm excited to hear the latest.

[Alad Gil]

Oh, sure, yeah. So we recently launched a company that's called Brainco, which is focused on using AI as basically a platform to help transform the world's largest institutions. And so we've been working with a number of large enterprises, some private equity and other firms around this. And so it's just been a fun project to do with him and with Eric Wu and Louis Vitigre and a few other people. Eric was the former CEO of Opendoor, and then Louis is the former finance minister and foreign minister of Mexico. So it's kind of this interesting group of people coming together to try and solve really big AI problems. So that's been really fun.

[Jordy]

So is this realizing how much the accentures and the McKinsey's of the world we're getting paid to make pitch decks on, Basically, here's what you should know about AI for your business and realizing, hey, we could probably do that a lot better. And then ultimately build software within these organizations. Like, what is the actual stuff?

[Alad Gil]

Yeah, it's much more focused on the. Yeah, it's more focused on the software side of it. So basically, there's a common platform that's involved in terms of dealing with different forms of data, dealing with evals, dealing with a lot of the things that every enterprise needs to build in order to really adopt AI. And then we build vertical specific applications on top of that, or in some cases, horizontal applications that can be reused over and over by similar companies in the same vertical. So you could imagine, for example, for a financial industry company, there's like a dozen things that every single one of them needs to build, and there's some customization around it. It's kind of funny because if you look at very large deals, right, if you're dell or your VMware or your Oracle and you do like a tens of millions of dollar deal with, with a customer, you're going to have customization against that customer. You can afford to do it, but also it's important enough to do that for them. And so it's similar in that regards where we have common infrastructure, common platform, the same vertical applications, but then there's going to be some customization per client just like any other giant enterprise company.

[Joe]

Have you thought about slicing the target customer either across vertical, like, like we're not doing healthcare because of HIPAA just yet or we're not doing defense because of Fedramp just yet. Or we think we have a lot in industrials that we can go after. Or are you more focused on slicing by market cap or size of business? Like yeah, we're not gonna work with mid market companies. How do you think about like where the wheelhouse customer will be?

[Alad Gil]

Yeah, it's very much the goal is to work almost solely and there's gonna be some counter examples of this with companies that are truly the world's biggest institutions in terms of revenue, market cap and then potentially impact. Which means sometimes you work with somebody a little bit smaller. But the goal is to ask how can you use AI to really get leverage on things that are important at sort of a massive scale?

[Jordy]

Yeah, there was a report that JP Morgan is spending $2 billion a year investing in AI to effectively save $2 billion a year from automating. It's like, like when there's that much break even. Yeah, yeah, they're breaking even basically. I mean presumably like some of those savings are terrible but, but certainly there's a lot of money. What do you, how, how good do you think you've gotten at clocking AI pilot revenue as non durable? Because there you. I'm sure you saw that headline. An MIT study came out that said basically 95% of pilots are not durable, not actually delivering in value. This, this felt like the year, the year of the pilot. Next year is maybe the year of reality. But I don't know how you see it.

[Alad Gil]

Yeah, I just view that as a standard technology cycle. I thought that was a very overstated article. So you know this happened with mobile. You do the kind of crappy mobile app. I don't know if you guys remember the first B of a mobile app. It was basically like a. Yeah, it was just like a webpage.

[Joe]

Yeah. But everyone was just wrapping it.

[Jordy]

Well, the current B of A app is still, still pretty rough.

[Alad Gil]

So I actually think it's pretty good. Good like you can go to atm, you can take out cash. I think I'm the only person who still does that. You can take pictures of checks, you can pay with Zell, you can do all these things right, that you can do before, but you started off and you tried to log in and the thing would crash. So I just feel like we're kind of in that era of implementation. People will get it, it'll take a decade to fully sort of propagate to your earlier point. But it really is the big wave that we're living through right now and I think it's truly transformative.

[Jordy]

Would you ever, would you ever have you ever considered an LBO of any of these companies that are in the SaaS apocalypse, in the public markets that clearly have some super meaningful customer relationships and a ton of potential important place in their market, but just aren't evolving their business model quickly enough?

[Alad Gil]

Yeah, we've looked at that actually. I think there's a few really interesting things to be done at scale. And to your point, I think part of it is just driven by can you actually implement AI? And I think if you look at the private equity industry in general, they've talked a lot about tech transformation. That was a prior wave, right? Like 10 years ago and you had all these tech based roll ups like Compass was supposedly a technology company and it's a great company, but it's not really a tech company.

[Robby Stein]

Right.

[Alad Gil]

And so I think we've kind of lived through this cycle before where people do almost like fake tech implementation where they claim they're doing it, they get a higher valuation and that doesn't quite happen. They still load up the company with debt, they still run it a certain way. You know, the drivers are different, the CEO is the wrong person, etc. I think there's a good version of that to be done. I don't think it's easy, but if you do it, I think you can unlock an enormous amount of potential in companies that won't make it otherwise or won't go there. And so yeah, I think that's a super interesting area and we've looked at a few things over time and part of the decision sometimes is like, do you want to try and do that or just fund a startup that you think will get there instead? And it's a little bit of that. It's kind of easier to just fund a startup because buying a company and transforming it is quite hard.

[Jordy]

Yeah, it has to be a company that is, I mean, is at a sufficient scale. Obviously we just saw that the EA lbo, you don't need to go that big but finding something that's like really a whale.

[Joe]

Can't hurt to go that big though.

[Jordy]

Yeah. We would like to see you go that big.

[Joe]

I would love to see.

[Jordy]

I feel like that's the next. I feel like you've done it all at the early stage. You've done it all in growth. Like just get into the.

[Joe]

How about an Activision spin out? Activision spin out. Take Microsoft game pass X File.

[Bill Peebles]

I know.

[Joe]

Moving too slow.

[Alad Gil]

Mother, you're putting all this pressure on me.

[Jordy]

I know that's. That's our small ask is set the record.

[Morgan Housel]

Wait, wait.

[Joe]

Do you have. Do you have any note we like to ring the gong for people around here when they share a number. Do you have any number you can choose?

[Jordy]

What's your favorite number?

[Joe]

Number of deals? Number Aum. Number of. I don't know anything. Do you. What's the number that. That quantifies your corpus of work? Number of startups founded.

[Alad Gil]

My corpus. I've started. Well, I've started two companies directly and there's two I've incubated.

[Sam Altman]

So four, I guess.

[Robby Stein]

Ish.

[Joe]

That's a lot of business.

[Jordy]

A relatively modest amount for the amount of EV created.

[Joe]

Yes.

[Jordy]

It's a good hit rate.

[Joe]

Well, thank you so much for stopping by.

[Jordy]

This was super fun. This was a lot of fun.

[Joe]

I'd love to do it again. We'll talk to you soon.

[Dylan Patel]

Have a good day.

[Alad Gil]

100%.

[Dylan Patel]

Take care.

[Joe]

Before our next guest joins, let me tell you about numeral hq.com sales tax on autopilot. Spend less than 5 minutes per month on sales tax compliance.

[Jordy]

I hate to pick favorites. I hate to say it. I was more engaged for a lot than.

[Joe]

A lot was great. A lot was great.

[Jordy]

But his book, High Growth Handbook.

[Joe]

Yes, fantastic.

[Jordy]

It's a series of interviews is my favorite favorite business book.

[Joe]

Yeah, no, it's a great high growth.

[Jordy]

Handbook scaling startups from 10 to 10,000 people. Timeless bunch of great interviews and yeah, you should go pick it up. I need a re listen to it.

[Joe]

Well, without further ado, we have Robby Stein from Google in the Restream waiting room. Welcome to the show. Robbie, how are you doing?

[Jordy]

Welcome.

[Joe]

Good to see you.

[Robby Stein]

Hey. Hi. Can you guys hear me?

[Joe]

We can hear you. We can hear you. I know people are going to be confused so why don't we just get out in front of it and explain your role at Google relative to Gemini, relative to AI Take us on a little Game of Thrones HBO Intro of the map of Google and where you fit in.

[Robby Stein]

Sure, yeah. So I work on the Google search team. So that's the. A search bar you type things in. Yep.

[Jordy]

Yeah. I was going to ask, could you, could you.

[Joe]

What is Google?

[Robby Stein]

Yeah, it's a thing you could type a question in. Sometimes you could use a camera. I don't know if you've used Google Lens. Oh yeah, Google that way too. There's this app, it's also called Google. All that kind of stuff is where I focus my time consistency.

[Jordy]

And the don't forget about the I'm feeling lucky button. It's still on there, right?

[Robby Stein]

Yeah.

[Joe]

So how do you think about integration with, with the DeepMind team? Integration with the Gemini team. How do you think about bringing AI to search?

[Robby Stein]

Yeah, so we work very closely with the Google DeepMind team, Demis Core I that whole group and what you think about it is we want to have frontier models right in search so you can really ask anything and have the ability to use all of search's incredible knowledge, real time information systems and context of the web to help give people this incredible information. And that's really where the two come together.

[Joe]

Yeah, there was this question, this like, you know, chattering class being like, oh well Google's, you know, it's such a different paradigm, chat versus search. 10 blue links. But have you drawn on the fact that Google search started with two modalities? The I'm feeling lucky button was a different way to interact with Google search. The 10 blue links was one way. How are you thinking about how you like kind of level up or educate the consumer to use all the different tools since now there's not just search results and AI overviews, but there's so many different things. How do you think about ramping those up?

[Robby Stein]

Yeah, so there's always been many ways to use search. Actually Google Lens is a good example. You can take a picture of something, you can ask what is going on with this plant that seems to be dying and you can get information from that right from the camera and that happens in the app. So there's always been different ways that you could access and tap into this search knowledge base. But I think increasingly it feels like you want to go to search, ask whatever you have in mind. You only want to think about where you're going to ask that question and then if you have something where AI is really helpful, get this little AI preview starting to show up now around AI overviews and if you click into that, you're in this AI driven experience. And we've now through a new project we launched called AI Mode, allow you to follow up, go deeper and have a full generative end to end chat like experience right within Google Search.

[Joe]

Yeah, walk me through the international expansion. I'd love to know if legal or engineering is more rate limiting there. It feels like it's got to be incredibly complex to check all the boxes. When you want to expand you obviously expand really fast. So what's the secret to taking over the entire world so quickly?

[Robby Stein]

Well our newest product AI Mode and it lets you really ask anything within Google Search using frontier state of the art models. You know we launched in the US and then quickly in India, a couple countries UK over the summer, May, June, July, timeline and then just a couple months later now we're at over 200 countries, 40 languages. We moved really fast to ship that and so we're now basically everywhere except for a couple countries. And there's certainly a bunch of considerations. Policy.

[Morgan Housel]

Sure.

[Robby Stein]

And infrastructure. Honestly they both affect the timeline.

[Joe]

Oh yeah. Because there's actually inference going on. So you need local compute basically more than.

[Robby Stein]

There's also there's, there's, we want to make sure to quality checks because in every language you have different permutations or you have multilingual people moving between English and other languages. Just want to make sure everything is doing what you expect it to do. You know this is also a multi turn conversational experience. So when you evaluate it you want to make sure that it's dialed before you go. And so each of those just takes time. I know everyone's always frustrated like why can't I use it today? It's the main thing I see on X. But hopefully now almost everyone can.

[Joe]

How are GPUs allocated at Google? You have TPUs, you have TPUs in the cloud, you're selling them now obviously DeepMind wants every member just gets rack. Everyone gets one rack. You're split it equally. But I imagine that is there a spreadsheet? What's the process to actually figure out where to allocate GPU or TPUs?

[Robby Stein]

GPUs? Yeah, I mean there's an allocation process. Everyone needs TPUsc. It's just compute is by far the most important thing in driving infrastructure right now. And there's lots of needs but they're, they're important things. We want search. The search is one of the largest ways people interact with AI. So that's like a very important one. Obviously we're doing frontier modeling work. We've got a bunch of things happening in cloud. So that, that's. There's a process by which you do those. It's funny. I did an event and a Google team actually gave me like an old Ironwood, like gen prior gen single TPU in this little case.

[Joe]

That's cool.

[Robby Stein]

I was joking. If somehow I could like crack it open, plug it in and like refurb it and like get it and running, I can somehow like improve my, improve my standing on the team. But I don't think it's going to happen.

[Jordy]

How, how often do you guys come back to Google's mission when. When thinking about product decisions? We've talked about this on the show before. There's always, you know, you, I'm sure you wake up every morning, there's a new headline. What is Google doing in a. In AI? Why haven't they released this faster, et cetera, et cetera. But, but we never really stressed about it too much because when you look back, I have a AI overview here. I said, what is Google's mission? My AI overview says Google's official mission is to organize the world's information and make it universally accessible and useful. And it feels like LLMs are just so aligned, that's the perfect technology to carry out the mission. And so it's like, relax, everyone. I think this is, this is like a natural evolution for the company.

[Robby Stein]

Yeah, I mean, we talk a lot internally actually about how the mission has never felt more relevant. And it is really incredible to work somewhere. I worked at Google in 2007 for a while, did some startups and you worked in some other companies too. I'm back now and it feels that same level of entrepreneurialism in 2007 where it's like you're building all these new things for the first time, except you're kind of building them again. Because AI allows you to say, what does search look like? If you could really ask literally any question and have created an AI that's the most knowledgeable AI out there that could understand all of Google's information, the context of the web, and you could talk to it. And by the way, you could talk to it live. Like we just announced Search live, that's available. So if you're driving, you could just talk to Google literally like on. In your car, you could take a picture and have this multimodal conversation back and forth. Now, like this is all stuff that talked about a long time ago but was limited because of technology. So that is incredibly exciting. It's very motivating and I do feel like it's One of the reasons people on the team are fired up.

[Joe]

How do you think? I mean, it's so interesting that as LLMs boomed, AI search overviews made a ton of sense, were baked in, adopted, loved. But now we're already in the next phase, which feels like agentic purchasing. Agentic checkout. How do you think evolving. How do you think about evolving the product even further to go from knowledge retrieval to taking action?

[Robby Stein]

Yeah, we have a bunch actually active there and we recently launched in the US an agentic experience where you can book restaurants and local services through agentic. So it's actually really neat. Like you through AI mode. Now you can just have a conversation, hey, what's a good date night place? It'll do all the thing. It'll tap into the knowledge of Google, it'll look up Google places, it'll do research, it'll do whatever. But then if you want to start a task, it'll also go bring back availability across talk and OpenTable, like right in the experience and you can just book it and it's awesome. Yeah, I've been using that. It's just a small example of what's possible. You know, people come to Google not just for information, but to get things done. It just materializes itself as a query. But you're not like, I don't like want to just know restaurant reservation availability and be like, oh sweet, I'm glad to know there's a table available. I'm gonna go back to my day. Like, you're trying to do something. We think about that a lot and that's just the, you know, the surface that there's so much people are trying to do, but they're just kind of getting started with those journeys on search. What could we do to really help you? Shopping is a big one. So we have an app. We just launched a new visual way to do AI, which feel like is one of the first ways where AI can be helpful with inspirational tasks. So now in AI mode, if you ask to design a bedroom or look up landscape lighting, it actually finds you beautiful inspirational imagery and products in a grid. You could click on it. You can imagine getting much more help finalizing those purchases, being reminded of price changes, and it's much more of this interactive version of search that can do things for you and you can really connect with versus just a pure informational experience.

[Joe]

Right now my mental model is google.com, the search bar, then AI mode, almost as a vertical product, like flights, like images, like shopping, where it's sort of a portal or sub product that I get. You know, I go down a funnel and I wind up in. Do you see that holding or do you think that AI mode acts as a wrapper on top of all the different sub search products?

[Robby Stein]

Yeah, I think what's going to happen is you have this AI mode which is going to hopefully be this most knowledgeable AI possible. It knows everything in Google. Billions of products, million hundreds of millions of locations all over the web and has access to all of it, knows how to use Google as a tool. And it's super powerful, but not necessarily the best thing for all things. Like if you just need a specific phone number, you probably get that in like 50 milliseconds right at the top of the page. You just want to know a sports score. What's. What's literally the sports score right now just works. You just, you know, you put it in Google. Or if you're just looking up a musician's name for the first time, you're trying to get a browsier experience like you actually want to, to kind of see images, you want to see what's going on on what are people saying on X which shows up in the search page. So I think what happens is you have this incredibly knowledgeable system that we feel like is designed for more complex tasks, more of this. Like, how do I do this? What's my advice for this? I'm doing this trip, I need this restaurant, I'm trying to buy some jeans. How do I get started with that? And that if you have knowledge baked into that, that's really powerful. But then people need, how do you, how do you bring that to people? And there's basically two ways. One is you just search and through AI overviews we will show AI where we think it's useful. And for many queries, it's not useful actually, which is why it doesn't show up. The system learns that. But for these longer queries we have a specific question typically shows up there. Then the other way is for power users, we feel like they kind of have this mental model of like, oh, like this I'm doing this planning thing. Like, oh, I'm like, I'm really curious to know like what a stock price difference between these three stocks are over some period of time. You wish you could just type that in natural language and have the thing generate a chart and look at use Google Finance as a tool, which it will do. And for that you can go right to AI mode. So if you can do that through the mode, you can do it on mobile through those direct kind of buttons to go right to AI mode. You can go through Chrome now. We announced like a way to just type and go right to the AI mode in Chrome. And you could also just go to google.com AI now, which is kind of fun.

[Jordy]

What anomalies are you seeing? Have you seen any of these screenshots of. Of Google trend data? People are posting. People forever have been posting screenshots of effectively search data and using them to infer what's happening in the world. Right. And so over the past few months we've seen people posting search queries like Help with my mortgage and it's just like a crazy ramp up and to the right. My, my intuition is that it's potentially a bunch of different keywords are seeing these crazy ramps because there's potentially agents sort of like leveraging Google search to drive a higher volume of searches on potentially a search that's happening maybe in an LLM. Have you seen any anomalies there? Is that something you're aware of?

[Robby Stein]

Haven't personally seen any anomalies there. I haven't really heard of that before, so I wouldn't buy too much into that. We do have protections for those kinds of things. I think in general what we're seeing is people who are using Google very differently and at a very fast growth. So people are asking very specific questions of Google, they're using Google Lens and asking multimodal questions, they're asking follow ups. I mean those are kinds of things that we're just seeing. We're seeing in such a broad way that I think that's the thing that we mostly focus on. But yeah, I can't speak more to some of the trends things that you're mentioning.

[Jordy]

Yeah.

[Joe]

How do you think about advice for brands? I've run brands and grinded my way up the SEO rankings. I never did a ton of optimization. Most of my strategy was just try and make something eventually that people talk about and it gets written about and those websites have ranking power and then you kind of rise to the top of that keyword. Is any of that changing in terms of in the AI shift? What advice are you giving to brands that want to perform on Google these days organically?

[Robby Stein]

But what's really interesting is I think the core Google search ranking is more relevant than ever because it turns out that one of the best things that every AI model does now is they kind of like search the web. It's like, I don't know, like, what are you trying to do? Oh, I don't Know, I'm trying to figure out if like I should go to this hotel. All right, well like parametric knowledge. Do you like know the rates of those hotels? Like can't. Okay, I'm going to search the web. Right. And even AI mode is special in that we're Google and so it uses Google really effectively and it creates these query fan outs, it does dozens of of queries, but effectively is googling stuff. Right. And everyone's googling stuff all the time. So for a given question, what are the things that show up as highly relevant to a given question? Those end up getting absorbed into the context window and have a high probability of being displayed to the user. And so if you are just thinking how do I build great original content that's trusted and authoritative for that kind of query? Turns out that's still going to likely be very valuable. And you can go read the Google guidelines on content and human raider guidelines. I think they're super interesting. There's lots of detail in there on how Google evaluates trustful, high quality content and scoring systems that are used. Turns out that's really good investment because every other system is kind of proxying for the info that's most useful for a question. Yeah, so that's my main advice is to kind of like dig in more on understanding how those systems work because it's largely going to apply later. And then the second one is what are people using AI for? Those are the growing kind of needs.

[Joe]

Oh sure.

[Robby Stein]

And there's a disproportionate amount of use case in different types of domains now with AI because it allows complex needs and it allows for things like advice, it allows for things like really nuanced troubleshooting with stuff. It allows for these emotional needs to be satisfied differently and mental health. So those are areas that are probably growing markets of use cases and I would be, I would be a student of those as well.

[Joe]

What about. Sorry, can I have one more on that? So what about content that was previously buried to Google that is now available for search rankings because of artificial intelligence? I'm thinking about like literally this show will be a three hour video on YouTube that, you know, a buried mention previously probably wouldn't be perfectly translated, indexed, et cetera, et cetera. But I would imagine that the strength of like video content and audio content gets relatively better over time in the AI era. I mean, honestly, you guys have been doing this for probably a decade, but take me through a little bit of that. Is that, is that a reasonable thesis?

[Robby Stein]

Actually we are. It is A reasonable thesis. We have been seeing an increased diversity of the kinds of pages and sites that show up within AI because people are asking these nuanced questions. A lot of times there isn't even like a single web page that has this information. But if someone, I don't know, sometime in the future this, this video gets segmented and scanned and understood by Google and someone asks for like, I don't know, an interesting conversation on Google's AI journey. Recreating search for the AI era.

[Joe]

Oh sure, sure.

[Robby Stein]

Maybe it's like here's a cool conversation you could check out and this, this like clip will show up now in.

[Joe]

A way that would be very difficult.

[Robby Stein]

For that to happen unless you search for like tvpn, like interview of whatever, which was like very specific keyword.

[Joe]

Yeah.

[Robby Stein]

Based on.

[Joe]

Or. Or we'd have to go manually, create a transcript and then get that into like the text SEO world. So yeah, very different era. Sorry.

[Jordy]

What are the plans around giving, if there are any, giving publishers control over whether or not their content is used in various AI functionality?

[Robby Stein]

Yeah, we have a bunch of publisher controls, what we have. So there's an overall opt out training side on search. You can opt out of crawling, you can opt out of this other thing called snippets where you can show up in Google but you won't show up in these rich experiences if you want. And so there's a bunch of things that publishers can do and can look at there. But I think ultimately the belief I have is that to the prior conversation, AI should be this massive discovery engine over time because if you think about it, these complex needs, we're getting growth, like we're seeing 10% growth for instance in large markets like India and the US for these really specific questions, which at Google scale is like enormous, enormous number where if you have a really specific question, people are doing that more and more and more and more because you can get AI to go deeper, multimodal. Right. You're actually taking a photo of something and you want to shop it, seeing 70% year over year increases in those kinds of questions. And these are huge, billions and billions of queries. Like so these are huge numbers.

[Joe]

Wait, how many queries? Billions.

[Jordy]

Billions.

[Robby Stein]

Billions.

[Joe]

The sneaky guy.

[Morgan Housel]

Sorry.

[Robby Stein]

That was totally worth it. I'm glad you did that.

[Joe]

Thank you.

[Robby Stein]

So like these are big numbers and each of those generate AI experiences with links to go deeper on stuff, every single one of them. And so theoretically you should have this like unique opportunity to say, oh, did you take a picture of your Bookshelf, go. What book should I read? Oh, well, here are cool reviews of other books that are like things you've liked. It's like I could never Google that before. And so theoretically you should have. Because it's such an expansionary moment. We're seeing that this is an expansion more than anything. Like the old, like the way people Google, they're googling and they're using it in all of these new ways. And so hopefully over the long term that's. That produces great growth.

[Jordy]

I have a lot more questions, but.

[Joe]

We'Ll have to follow up. Yeah, yeah, we could go way deeper here. I would love to even just dig into how TBPN shows up on Google. It's such a fascinating content because we create so much content all over the web. But thank you so much for taking the time to hop on the show.

[Dylan Patel]

Thanks.

[Joe]

This was fantastic and congratulations on the progress. We'll talk to you soon.

[Jordy]

Cheers, Roger.

[Joe]

Have a great rest of your day. Before we bring in our next guest, let me tell you about Fin AI, the number one AI agent for customer service. Number one in performance benchmarks, number one in competitive bake offs, number one ranking on G2. And we have Morgan Housel in the restream waiting room. We're gonna bring him into the TPPN ultradome. We're very excited to catch up with you again. One of our earliest and just most enjoyable guests. I had such a fun conversation ever.

[Jordy]

Across a thousand plus interviews.

[Joe]

Remarkable. So thank you, thank you so much for taking the time to hop on.

[Jordy]

Especially on a huge, huge, huge week. Yes. Congratulations on, on the launch.

[Morgan Housel]

Big shoes to Phil. Thanks, guys. Nice to see you.

[Joe]

Yeah. Give us the, give us the updates. Set the table. What's going on this week?

[Jordy]

Get that going. Ready?

[Joe]

Get this going.

[Morgan Housel]

I, yeah. So my, my third book, the Art of Spending Money, came out this week on Tuesday. You know, it's a tough thing with. There it is. Thank you.

[Dylan Patel]

Thank you.

[Morgan Housel]

It's a weird, it's a weird thing with books, I think. I feel like it's almost like a startup where I've been a writer for 20 years, but you get like three shots on goal when, when a book comes out and when, when, when, when, when you're writing a blog post.

[Joe]

Yeah.

[Morgan Housel]

If it sucks and at times they do, there's always next week.

[Jordy]

Yeah.

[Morgan Housel]

It's not, not that big of a deal when, when, when, when you write a book, you really got to be like, this is, this is it. You really got to put your best foot forward. So there's it's always a stressful thing to go through.

[Joe]

Was the process different for this book from the other ones? Do you. We've heard from authors who like go lock themselves in a cabin. Like, what's your process like and has it changed?

[Morgan Housel]

It's usually roughly this. It's about a year of very informal noodling where it's like, I'll be going for a walk and be like, oh, that would be a cool chapter and I could use this story. It's a year of that, like just no effort and then three months of part time writing and three months of full time writing during the last two weeks of the full time writing. The world does not exist outside of my keyboard. That's usually how it works.

[Joe]

Yeah. And are you like combing like front to back of the manuscript like every day? Are you focused on like a single chapter for a full day? Like how do you actually like chop through, like what becomes a full book?

[Morgan Housel]

It's usually the latter. There's not much going through everything end to end until the very, very end of the process. So it's usually just focusing on one chapter. And very roughly, this is not a hard and fast rule, but when I was writing it, it was like, I want to focus on one chapter per week. And normally I'd say if there's one thing that I've gotten a little bit better at over the years, just a little bit better at not perfect by any means, is that I think my first draft is closer to my last draft than it used to be. Not necessarily because I'm a better writer, but because I'm better at knowing what writing is not going to work and then stopping it very quickly. And so I think when I, when I go through a chapter, by the end of it, I can go back and scan it and be like, oh, this is pretty good. I'm going to set that aside. And then when I do my little self edit at the end, that's usually where most of the work happens.

[Jordy]

So it's much easier to write a book now that we have AI. Is it?

[Joe]

Yeah. What was your prompt?

[Jordy]

I'm kidding, I'm kidding.

[Morgan Housel]

Here's the thing.

[Joe]

Share the prompt.

[Morgan Housel]

I've talked to. Just share the prompt.

[Joe]

Just give me the prompt.

[Jordy]

Yeah, come on. I'm scared to share your prompt.

[Joe]

Come on.

[Morgan Housel]

I was talking to a guy the other day who just finished his manuscript and he said without ChatGPT, he would not have been able to write the book. And I'm like, I love hearing that, that I Love that. If we can have a tool now, we're going to have more books being published. Because I think there are people who have very good ideas who have a story to tell but are too intimidating to write a $50,000, a 50,000 word manuscript, which is not an easy thing to do. So if we can just get more people out there because they have chat GBT to get them through writer's block. Awesome. I think it's wonderful. I'm still. I'm still old school because I've been doing it for long enough that I want to write every single one of my words. For better or worse.

[Joe]

Worse.

[Morgan Housel]

Even if I could have done a better job with some LLM getting me through those blocks, I'm still going to try to power it through myself.

[Jordy]

I'm sure you saw David Simon, the creator of the Wire. There was a screenshot from an interview. Someone asked him, okay, you've spent your career creating television without AI, and I could imagine today you thinking, boy, I wish I had that tool to solve those thorny problems. David Simon says, what? And the interviewer says, we're saying. David Simon goes. You imagine that. The interviewer goes, boy, if that had existed, it would have screwed me over. Simon says, I don't think AI can remotely challenge what writers do at a fundamentally creative level. And then he says, I'd rather put a gun in my mouth.

[Dylan Patel]

There you go.

[Morgan Housel]

Yeah, just get right to it. Here's what I think. I've always thought that writer's block is actually a symptom of. Your idea sucks and it's not working. And the reason you can't find the words to get through is because you know in your soul that this idea is not working well.

[Sam Altman]

Yeah.

[Jordy]

You fundamentally don't. You don't care about what you're writing about. Right. And I think as a. Like, when I think about the points where I've been writing that I cannot get. Get myself moving, it's like writing that essay. I had to take a class in college about dinosaurs.

[Joe]

Yeah.

[Jordy]

I had to write a paper about dinosaurs.

[Joe]

You studied dinosaurs?

[Jordy]

It was an actual class that fulfilled some sort of, like science. Some sort of.

[Joe]

And now your son is obsessed with dinosaurs. Apple doesn't fall far from the tree. That's incredible.

[Jordy]

But you're writing. You're writing about a topic that you don't care about, that words do not come easily. You're not. If you don't care.

[Joe]

Of course, Jordy's secretly a PhD paleontologist. I'm finding this out for the first time. Sorry.

[Morgan Housel]

No. I would say the flip side of that is when you know you have a good idea and it's a right idea, the words just tend to fall right out, and it's no problem to get them on the paper. And so I bring that up because I think if you have writer's block and you're like, oh, let me use ChatGPT to get me through, will find a road through, and it'll help you onto the next paragraph, but then you're probably ignoring the signals of your idea not working, and you're much more likely to get to the bottom and finish the essay or whatever it is, even if your idea sucks and it didn't work.

[Jordy]

Yeah, I've noticed writer's block is just this divine presence that's telling you, you don't need to make this this.

[Joe]

Yeah, yeah.

[Jordy]

It's not needed. It's not needed by the world, and you can force through it. But what did you actually. What did you actually do?

[Joe]

I've been writing. I think there's a. Oh, sorry.

[Morgan Housel]

Oh, sorry. I was gonna say, I think there's a similar analogy with music where I've heard from many musicians, I am not one of them, of course, that their best songs were the easiest to write. And, like, the tune, the lyrics just flowed right out. And if they are struggling to figure this out, figure out the tune, figure out the lyrics, it's probably because the song's not working. It's usually the same.

[Joe]

Yeah. I've been writing a daily newsletter for this and to prep the show, about 500 words. And I've noticed that I haven't been using AI for anything other than knowledge retrieval. If I have to look up what's the market cap of this company, of course, I go to ChatGPT, and then I also notice that a lot of times I'm kind of just reiterating, like, a discussion that I had with Jordy earlier in the morning. And so I'll use dictation sometimes to just. Just get some of the words down, and then I'll kind of write from there. But I'm never crafting a prompt for what I'm writing, which I think is just interesting because the models have gotten so much better, and yet there's still something about, like, I gotta come up with the own idea or, like, the seed of the debate.

[Jordy]

Yeah.

[Dylan Patel]

What do you think?

[Morgan Housel]

Yeah, I think it's very difficult to really make it right in your voice. Yeah. So you can prompt it and say, write it. Like, Jordi. Like, do it Exactly. But it's not, it's just, it hasn't, hasn't gotten there yet.

[Jordy]

I feel super grateful that, that it's still easy to clock AI generated text because if I'm scrolling on social media, maybe I see a post and then I'm in the comments, like interested to see what other people think about it. And I can just easily clock, okay, AI generated. I'm just going to skip it because it's probably just like summarizing it and asking a question. But I worry we'll lose that ability to filter in the next iteration of the model.

[Joe]

It's definitely made me a sloppier writer and I'm like deliberately not trying to craft the perfect sentence structure constantly because I feel like the rigidity is just an extra layer that I impose on myself and if I take that away, it just kind of feels more stream of consciousness and is just actually a better product. I don't know.

[Jordy]

Shifting gears.

[Joe]

Yeah, yeah, sorry, go ahead.

[Jordy]

I was going to say shifting gears to the book.

[Joe]

Yeah, yeah, I went thesis.

[Jordy]

And do you think, well, maybe a kickoff question. Do you think tech has figured out how to spend money? Because there was always this, there's always this critique that tech people don't know how to spend money. And I think part of that was the, the tech uniform was not maybe like the, you know, the west coast tech uniform, jeans and a T shirt and sneakers. People sort of of came, you know, participated in this industry in a very sort of plain way.

[Joe]

Patagonia jack. It's like 200 bucks. Okay. It's reasonable.

[Morgan Housel]

Well, let's, let's compare tech spenders to Wall street spenders. The major difference is most tech wealth is not liquid and Wall street was paid in cash every year.

[Joe]

Sure.

[Morgan Housel]

So, so I mean, that's, that, that's the, that's one of the biggest, like tech wealth is a lot of paper wealth relative to Wall street wealth that was so much more liquid. You can go buy the Rolex, you go buy the house in the Hamptons. And so I think that was, that was probably, that was probably part of it.

[Jordy]

But yeah, there's a culture of like buying the watch based on the, you know, a banker buying, deciding what watch to buy based on the size of their Q4 bonus. Right. Of just like it's going to be some percentage of that. So the watch I get, well, you know, maybe it'll be a Submariner or maybe it'll be Daytona. I don't know yet.

[Morgan Housel]

Yeah, I do think there's something to be said that on Wall street, your value and your success was how much money you made. And in tech it is much closer to, towards the product that you built and the intelligence that you have and whatnot. And so there is less desire to show off wealth in tech because that's not what people get valued for. And I can't think of hardly anyone in Wall street outside of maybe Warren Buffet, who is very well respected and admired and wears a T shirt and lives in a modest house. It doesn't happen. But you can name 100 of those people in tech who do that because they're valued for their ideas, not just their annual bonus.

[Joe]

On that illiquidity question, Paul Graham had a take recently that a lot of tech people, they're locked up and then by the time they can afford art, they struggle to get up to speed on the art world or something. Does that resonate with you at all? Just the fact that if you come on Wall street and you can afford the Rolex and then the AP and then the FP Journe, eventually it just ladders you up the luxury ladder. Easier than just having all this money and being like, well, do I really want to jump to the top of this luxury ladder that just put the hedonic treadmill on 15 miles an hour on the first run?

[Morgan Housel]

Yeah, I think it's very difficult for people to know what they want. Yeah, they're very good at knowing what they need and they're very good at knowing what they don't want. Knowing what you want is actually very difficult. And, and part of the reason is because what I want might be totally different from what you want. People have completely different needs and whatnot. I think if you are thrust into wealth very quickly, there is knee jerk reactions of what you think you should want. I want a mansion, I want a fast car. I want art. I want the plane, whatever it might be. And sometimes it's true and sometimes it's very not. And I think if I can predict all of your spending habits based off of your income, there's a very good chance that you're not doing it right. Because there's a very good chance that you are just buying and spending your money in the way that society told you to do. If you earn this much money and your net worth is this, you should have this house and this car and this art and travel this way and whatever it might be and, and most of the time it just doesn't work that way. People have very unique spending preferences. The people who I've seen the Wealthy people who I've seen who have done the best have a lot of really extreme quirks in their spending, where they spend. They're very wealthy, but they spend no money on. On cars or no money on travel, no money on food, whatever. It's very unique to them, whatever it might be. You're. I'm. I'm not a wine person in. In the slightest. I'm not. I'm not even necessarily a travel person, but a lot of people would be the exact opposite, and that's fine. So I think it takes a lot of looking in the mirror, so to speak, to figure out who you are and to go down the path of trying to figure out what you want, which is not easy.

[Jordy]

I feel on a personal level that my relationship with money has been very distorted because the business that I started building in college ended up as cash flowed every month for my entire adult life, which has been a tremendous benefit. But it's also completely. It's just distorted the way that while in tech, the primary way you generate wealth is you get a measly salary for a long time and then you get a whole lot of money at once. Or maybe you sell some secondary along the way and get some liquidity. But it's been this weird dynamic where it's like. I remember, well, so the first time I took a meeting, full profit share from. From my company, I bought a 9. I took the entire amount and I bought a 911 because I was just like, well, I'm going to get the same amount next month, and then I'm going to have this 911 for a long time. And so I had to kind of like, it's taken. It took me a few years to kind of like learn such a fascinating psychology, learn that lesson. Whereas I wouldn't think like, oh, that's a lot of money. I would just think of money in increments of basically months of cash flow.

[Bill Peebles]

Basically.

[Morgan Housel]

I think there's good mental accounting there of like, rather than thinking about the 911 costing 120 grand, you think of it as one month. It cost me one month or something like that. I think that's actually a smart way to do it.

[Jordy]

And even I value a month even more now, even though monthly income has increased throughout my adult life because I'm like, as a kid, you're like, I got all the time in the world. Now I'm turning 30 at the end of this year. I'm like, oh, time is a real thing thing. It goes by, you know, it's not, you don't have a infinite supply.

[Joe]

Do people come?

[Morgan Housel]

How do you, how do you think that makes me feel when you say times, times like running out because you're turning 30?

[Joe]

How.

[Morgan Housel]

How does it make everybody else feel? I would, I would kill almost 30.

[Jordy]

Well, are you, are you, are you, are you spending a lot of money on your health because you look younger than the last time you came on the show?

[Morgan Housel]

Maybe I just hadn't showered last time I was on. On, on, on, on, on the show. I don't know. No, I do think there is a real thing where it's a fine balance between spend for today, live for today and save for tomorrow. Both of them are really great ideas. And it's never as simple as yolo or save and save for the future. It always just comes down to what are you going to regret? What are you most likely to regret at some point in your future? And it goes both ways for people. You could easily imagine looking at yourself 20 years from now and regretting the trips you didn't take, the 911 you didn't buy, the house you didn't buy. You can so easily imagine too, looking back at some point in your life when you're tired and your career's not working out, whatever it might be, and saying, I am so grateful that I saved the way that I did. It gave me a sense of independence that I value more than anything right now.

[Jordy]

What are your quirks?

[Joe]

What's your take on the. Oh, sorry.

[Jordy]

You said a lot of successful people have. Have quirks in their spending. I imagine you understand your own at this point.

[Morgan Housel]

Yeah, I mean, this is a trivial and small thing, but I love this heuristic by Rob Henderson. He's a great academic and he says rich people food looks better than it tastes and poor people food tastes better than it looks. And on that spectrum, I love cheap food. I love Taco Bell, I love Jimmy John's. I can't get enough of. And I've had some very expensive meals whatnot, and I have enjoyed them marginally at best. The best meals I've ever had tend to cost the cheapest. And so it's such a trivial thing. But never would I want to be like, oh, I can afford to eat this way, so let me abandon all the food that I love and go eat some food that is subpar because I'm supposed to like this stuff better when I don't.

[Joe]

Yeah.

[Jordy]

Did you cover private aviation at all in the book? We had a funny conversation with a friend this morning. He basically said, my House is going to be paid off by the end of this year, and after that, I'm giving all my money to NetJets.

[Joe]

He's not getting a second.

[Sam Altman]

I love it.

[Jordy]

Which is a quirk in itself. It's very quirky. He finds commercial aviation to be very dehumanizing.

[Morgan Housel]

If you had a choice between two houses and commercial or one house and netjets, a thousand times out of a thousand, I would do the latter. Absolutely.

[Jordy]

Totally agree.

[Morgan Housel]

Two houses are a giant pain in the ass anyways. But to answer your question, I do cover private aviation in that. Because I made this observation that having a private plane is the ultimate luxury. If you talk to wealthy people, they're like, that's the only thing that you get pleasure out. The house, the yacht, the car doesn't do you much. The plane will change your life forever. And I think part of the reason we love it so much is because the vast majority of people in that situation remember what it was like to fly commercial. Now, here's the observation is nobody thinks it is an ultimate luxury to have a private car, but virtually all of us do. And the reason we don't think about it is because we've always had private cars, and so there's nothing to compare it against. Now, you. You could imagine that if you spend your entire life on a train, on a public train or a public bus, and then you got a quote unquote private car, it would feel like the ultimate luxury, but we have nothing to compare it to.

[Jordy]

Well, another. Another example.

[Morgan Housel]

So much of their lore.

[Jordy]

Yeah.

[Morgan Housel]

If you're.

[Joe]

If.

[Jordy]

If you. If someone's lucky enough to be born into a family that only flies private, can you imagine their experience of flying? They're like, I don't want to fly. It's gonna. You can imagine they don't even have a positive feeling associated with flying private because it's all they know. Because if you actually, you know, it's like, okay, I'm gonna be up in the air, and, like, the bathroom's small, and I don't have that much access. There's not that much. There's some food, but it's not my favorite food.

[Joe]

Kick at Taco Bell delivery.

[Jordy]

Yeah, exactly.

[Morgan Housel]

Exactly. Right, right.

[Joe]

Do you think people. I want to hear your reaction to Jordi's take that buying physical things is actually an experience. False dichotomy between. I just want to spend money on experiences.

[Jordy]

Yes. So growing up as a kid, I always loved brands, and I would get obsessed with different things, whether it was mountain biking or Snowboarding or surfing or anything, and I would get fixated and obsessed with, like, a certain kind of surfboard. Right. As a kid, I wanted to surf Mayhems, but I couldn't really afford them. They were super expensive. And I worked at a surf shop. I could get these other boards for a lot cheaper, so I'd always get them. Now as an adult, I only surf Mayhems. And I always. We grew up in this era. Our generation was told constantly, don't spend money on things, spend money on experiences. I never understood that because in my view, I was like, when I put on a jacket that I love and it's a thing and I wear it for the day, it's an incredible experience. Or if I take this surfboard that's incredible and I go out surfing with it, that's an experience in itself. So what do you. What's the verdict on things? Can things make you happy? I've found that things have, have, and continue to make me happy in my life.

[Morgan Housel]

Yeah, totally. Because I think. I think what you broke down there is if nobody were watching and nobody could see your surfboard, nobody could see your car, you would still buy them, and therefore you're doing it for something that actually makes you happy, rather than trying to signal for the attention of strangers. If you use, like, a fancy sports car, for example. There are some people who own Ferraris because they love the artistic engineering of it. They love the line, they love the beauty of it. They love the growl, they love the engine, they work on it themselves, they wax it themselves. They love the art of owning it. They love the acceleration, they love driving it. That's one group. Another group just wants to get the attention of strangers and they just rip it down the road, just trying to turn as many heads as they can. Y. The former is going to get way more happiness out of it than anyone else, because they would still do it if nobody was watching. I think that's the. The framework is like, if. If nobody was watching how you lived, what would you spend your money on? And as you just described it, I know you would still buy that surfboard. And so it's. It's. It's the right thing to do. I think the stuff versus experience tends to go astray, too, because particularly in the social media world, a lot of experiences that we want to spend money on are literally just to impress other people. It's, where should we go on summer vacation? That's going to generate the best Instagram pic.

[Jordy]

This is. This is Johnson Europe. He's like, I don't need to go to Europe. We have lakes here, we have ocean, we have mountains here. Why would I leave the great United States?

[Morgan Housel]

You know what my example of this is? Bali. I don't know if you've ever been to Bali.

[Jordy]

It's a dump.

[Morgan Housel]

Thank you.

[Robby Stein]

Thank you.

[Morgan Housel]

My wife and I took our honeymoon to Bali and it's a dump.

[Jordy]

So I went there on multiple surf trips and I only cared about the waves. But the funny thing is people go there on surf trips and like, the actual best surfing in Indonesia is really not in Bali. There's a handful of solid waves. The downside is there's actual trash in the water. You are just swimming in this, like, supposed, like idyllic reef break and you're just swimming through plastic bags. It's just absolutely disgusting. On half the island, the water's just like brown dirty.

[Joe]

And people surf in America too.

[Sam Altman]

Yeah.

[Jordy]

If you want to say that, you want to take the picture. Picture and say, I look, look at me, I'm in Bali in my trash water.

[Morgan Housel]

I think that's it. I think that's. No, I think, I think Bali becomes a popular tourist destination because people love to say, I went to Bali and post that on social media. The whole time I was there, my wife and I kept saying, we could have flown to Maui, which is a five hour flight. Instead we flew 20 hours to Bali and it's 97% worse.

[Joe]

Yeah.

[Morgan Housel]

And like, why would it. But I think honestly we were attracted to it back in the day before we knew better because it sounded like a cool thing to do. Like, oh, we get to tell our friends we're going to balance. We didn't know anything else other than it was a cool. It sounded like.

[Jordy]

I don't want to say too hard on Poly. Part of why it's not as great as the hype is that there's too many people there.

[Joe]

Oh, sure.

[Jordy]

Hype sort of like created the problem. I think it is, you know, probably is as nice as Maui just physically. But the challenge is again, the infrastructure, the traffic is. A number of times I've almost died on a scooter in Bali too. I'm so. Yeah, I'm surprised I'm here on this podcast.

[Joe]

Safety is real.

[Morgan Housel]

Right? And so then it's like if nobody could, if nobody got to hear where you're going on vacation, you can't post it and you can't tell anyone else. Never would I want to go to Maui. I'd be like, let's just go to Santa Barbara. Or let's go to Maui or something like that. It's so much better and easier.

[Joe]

Yeah, totally. I want to talk about like the, the maybe the frame is like, do people ask you more questions about. Or how do you see the job to be done by the book? Is it more about how to. Is it better about money or just happiness?

[Morgan Housel]

It's definitely more about happiness. And one of the big points in the book is there is no formula for how to do this. And so that's why when you have a formula like spend money on experiences, not stuff, it tends not to work. Because I'm different than you are. And people from different generations, different countries, different backgrounds, totally want different things. And I think it is immature to say that because I like spending my money on this, you should too. Or because I don't value this, you shouldn't either. It's not, but it's, it's an innocent mistake to make. And a lot of people make it in finance. The assumption that there is a right answer to earning, saving, spending, investing, when it's like, it's a very individualistic endeavor. And so a lot of this, when the question you asked, like, do people ask me for advice on this? The advice I have and people don't like to hear this is like you need to figure it out for yourself. And so the book is about the psychology of envy and contentment and social aspiration, which tend to be universal. But there's nothing in this book that says you should spend your money like this. And so it's not called the science of spending money, because I don't think that exists at all.

[Joe]

Yeah.

[Jordy]

What about, what do you, what kind of things that you can spend money on have the worst value? Because when I talk about when you look at luxuries like maybe staying at an Amman property, amman is maybe 10 times as expensive as like the average four seasons, but I think it's probably like five times better in my opinion. Yeah, so. So it's not, it's not, it's not per, like a perfect trade. But, but it's at least if you only have a limited amount of vacation time a year and you want to have the best possible experience. I think it's a, it's a trade worth take, you know, a trade worth making. But where, where do you think maybe is on the opposite side of that. Things that are 10 times. You think it, do you think it's you. You mentioned food. Is there anything else?

[Morgan Housel]

I'll tell you one, like little spending quirk that I have. This is slightly off Topic. But I think it's when, when, when I grew up, I, I was a. I was a, A ski racer. And I always felt that everyone else on my team had better gear than I did. They had, they had, they had nicer skis, they had a nice, nicer jacket. They had all of that. And it drove me crazy. And so when my son, he's nine now, when he started skiing, to kind of make up for the hole in my soul that I had when I was a kid, I was like, I'm going to buy you the best of everything. You're going to get the nicest skis, the nicest everything. And the quirk is he could care less. He could not care less about any of that, about having the nicest stuff. And so that too was like a realization of, like, that would have meant more to me than anything that I could have ever had. And he could not care less because everyone has their little spending quirks about them.

[Jordy]

Totally.

[Joe]

Last question from me. Obviously, we're here. I want to celebrate the book. I want to promote this book. But I'd love to know about another book that you think serves as just something you enjoy, something an author that you respect, maybe someone from the 20th century or 21st century author, someone who you've pulled influence from or just have respect or just a book that you keep coming back to.

[Morgan Housel]

Yeah, I mean, two nonfiction authors that I think are the greatest of modern times, they're both still living, still writing. One is Erik Larson and the other is Robert Curson. They've both written some very famous books and some very successful books. And I think their ability to craft a sentence and tell a story is unparalleled. And even if I were to compare them, of all the writers of the last 200 years or so, though, I'd put them near the top there. It's just so. It's effortless to read their work. Never do you have to reread a paragraph and say, what are you trying to say here? You can just kind of glaze your eyes over the page and completely understand what they're saying and what I love about what Erik Larson in particular does. So he's a non fiction writer, writes books about like World War II and all these different events. Some of his chapters are half a page. And so some of his books can have 200 chapters. They're each a page or two. Because he's so good at just being like, here's my point. I'm gonna make the point, use an example, and boom, I'm Done. I don't need to ramble for another 17 pages. I'm just gonna move on. And that, to me is the key of good writing. It's like the person who can say the most in the fewest words wins. And he's the best at that.

[Joe]

Yeah. I read Devil in the White City a while, maybe a decade ago. Fantastic book.

[Morgan Housel]

Loved it.

[Joe]

Very good and perfect example of that. Thank you so much for coming on the show.

[Jordy]

So fun.

[Joe]

Always a great time.

[Jordy]

Do it again soon. We're gonna this time we're just going to send a recurring slot calendar. You can move it if you want, but we love talking.

[Joe]

It's always fun.

[Jordy]

Hit the gong for being number one in the business section on Amazon. Business decision making. See you at number one and I'm sure many other charts to come.

[Morgan Housel]

Thanks. It's fun as always.

[Joe]

We'll talk to you soon.

[Jordy]

Great to see you.

[Joe]

Before our next guest joins, let me tell you about Adeo Customer relationship Magic. Adeo is the AI native crypto that builds scales and grows your company to the next level.

[Jordy]

CRM started for free. Super intelligence.

[Joe]

And we have another gong worthy guest. Let's bring in Misha from Reflection. How are you doing?

[Jordy]

Boom.

[Robby Stein]

Hey, guys.

[Misha Laskin]

Good to see you again.

[Joe]

Good to see you again.

[Jordy]

Good to see you. You've been busy raising billions.

[Joe]

Jordi has this habit of telling people when they come on, they do a great interview. We'll see you soon. But you delivered. I think you're the first person that if we roll the tape, Joe Jordy probably said, we'll see you back.

[Jordy]

We got to roll it back. I bet you called it knowing. Knowing the progress you've made and the progress you will make. I bet you'll be back on here with more news.

[Joe]

But quickly give us a reintroduction to the company. And of course, give us the news.

[Misha Laskin]

A quick reintroduction to the company. I'm Misha. I'm the co founder and CEO of Reflection, together with Giannis. We started the company about a year and a half ago and we were formerly at DeepMind. Giannis was one of the founding engineers at DeepMind, contributed to a lot of projects like Alphago and Gemini and recruited a team of about 60, I would say researchers and engineers from Frontier Labs. And the charter of the company has opened up since we last spoke. We've raised this capital to really build out the Frontier open intelligence based in America and exported to the rest of the world.

[Jordy]

So before we get.

[Misha Laskin]

That is kind of the focus of the company.

[Jordy]

Yeah. Before we get into the details. How much did you raise and who did you raise it from?

[Misha Laskin]

We raised in total of $2 billion from a syndicate of investors. Oh, this, this has a gong hit from a syndicate Investor.

[Joe]

Everyone's excited.

[Misha Laskin]

DST17B capital, a bunch of existing investors as well, like Lightspeed, Sequoia and CRV and so forth. So it was quite, you know, we're very grateful for the support from the syndicate.

[Jordy]

Okay. Get even more kind of granular with what the focus is today. My read on it is, is open source is the focus.

[Joe]

Is that putting deepseek out of business?

[Jordy]

That's what I want to hear finally.

[Misha Laskin]

That's right, yeah. Maybe the short of it is that it's us, deepseek.

[Morgan Housel]

Yes.

[Joe]

That's what we want. Thank you.

[Misha Laskin]

Frontier open weight models that we train here in America and export to the rest of the world. So this is meant to be a global technology. We have a big presence in the uk, we have a team there. And so this is not just even though it's American built, it's really built for the world more broadly.

[Joe]

Can you share anything that you think you'll be able to do to outfox deepseek and GPT oss? We're having Dylan Patel from Semi Analysis come on next. And he's talking about Inference Max, he's benchmarking. And I learned so much that, you know, it's not just the model, it's how you run it, the batching, the different GPUs. Sometimes Nvidia is better, sometimes AMD is better. Like how are you understanding? Because I imagine it's not enough to just say it's American deep sea, it's got to be better. So what's your plan to actually beat them?

[Misha Laskin]

It's a really good question and I think it actually falls in two parts. First, actually just having an American compliant Deep SEQ would go a really long way because a lot of enterprises are basically locked out from using those models because of various legal, marketing, provenance, data provenance risks that are associated with Chinese models. So from a commercial standpoint, just having something that is as good but kind of compliant and built here would be really powerful. But of course there is, you know, an aspect that you want to leapfrog and really be the leader in open intelligence across the world. And we do have some tricks up our, up our sleeve.

[Joe]

We can't share them, but I can't share them yet. But I mean, hopefully eventually they'll be out.

[Misha Laskin]

Yeah, yeah, yeah. But we have some great work happening on Reinforcement learning within the team. The other thing that the Chinese labs don't have access to is obviously the same level of chips that American companies have access to. And so what I think Deepseek did really well is co designing their algorithms together with the chips they had access to. And so there's some really interesting stuff that you can do with co designing algorithms with, with Frontier chips that are gonna be accessible to us as well.

[Joe]

Interesting. Quickly talk about the business model. I could imagine this turning into sort of like a red hat Linux play where there's an open source model but you're implementing it working with enterprises, working with the government and there's a contracting piece, a SaaS layer on top. Is that logical or are you thinking more like you nail open source and then you can do a closed source model, sell API, you could go and own the whole token factory. The inference stack, where do you see the business looking in a couple of years?

[Misha Laskin]

I think that the primary thing you need to set first is how do you build the open intelligence open models and the sets of tools around them for you? Partner with some inference providers you set up, make it easy to customize things, you make it easy to build agents out of these models and ensure that that kind of spreads like wildfire. So I think that having an open some sets of open models that are really fully permissive is really important. But the pull from, from, you know, for this kind of model really comes from large enterprise. That's when does it make sense for you to move from closed to hybrid to open models? It's really once you're a very big consumer of intelligence and that's basically large enterprise, sovereign and scaled up startups that are spending crazy amounts of money on closed APIs. And so the way you kind of commercialize it, yeah, you want them to be building on top of your models and there's all sorts of services and products that you can build out on top of it to effectively solve their problems end to end. Because just providing an open rate model is not enough. These things are very hard to customize, these things are very hard to build evaluations around. They're very hard to, to do anything useful with if you don't help a customer end to end. So I think that there's a lot of opportunity for commercialization, but you really need to be the core intelligence that others are building on before you can really be useful at the next layer as well.

[Jordy]

Why do you think the dialogue around open source OpenAI models went from up to a fever pitch? People demanding it and then they release it and then now you don't hear it talked about really, at least online in the timeline much at all. Clearly, clearly. And I would say, like, what I'm trying to understand is clearly there's massive demand for open source models, but I have a feeling that developers would like to be leveraging the technology of a company like Reflection who's wholly dedicated to open source and dedicated to commit, you know, and really committed to it. Whereas it's hard to, you know, we had Sam on today, we've had a bunch of people on from OpenAI. It'd be hard for anyone at OpenAI to say like open sources are top three priorities, right? Maybe it's in the top five.

[Misha Laskin]

Exactly, exactly. It's really hard for you to both be the world's open model and open intelligence provider and for it to be the number two, number three or number five thing that your company is focused on. And the reason is that what matters is capability. You want highly capable open models and the only way to get that is if your commercial incentives are fully aligned with, with open intelligence as the first and primary thing that you're doing. Now when you release something like this, you can't just release the model. I mean, I think that that's one part of it. And then, you know, inference providers can take that model and optimize their stack around it. But these models are so big and hard to do anything with unless you are an expert that you really need to help with that as well.

[Joe]

The models seem to be exhibiting spiky intelligence. Where are open source models particularly best or demanded to be best like the customers of open models? What did they want to do that might not be as relevant in a closed source ecosystem? I could imagine that Agentic Payments is maybe not the hottest thing in open source models or, or IMO level math that might be. Maybe that's really important in open source. But what is unique about the customer of the open source model? What do they want it to be best at?

[Misha Laskin]

Yeah, there are basically two things that as customer you are looking to do and achieve when you adopt an open model. The first thing is suppose you have good performance on something from a closed model, but it's ludicrously expensive, which is very common. Then you want to drive down the cost while keeping the performance. So you want to customize the model for those tasks. The other way around is that yeah, you have some finicky data distribution that was not represented when the closed model was trained. And the closed model is spiky, but not on the data that you need it to be good at.

[Joe]

Sure.

[Misha Laskin]

And so then you want to drive performance on that. And so then you want to post, train and customize for that. So it's really. You're customizing for driving extra performance or you're customizing for driving down the cost. But it's really important to have control over both.

[Joe]

Yeah, that makes a ton of sense. Well, thank you so much for coming on the show. Congratulations on the huge raise. I'm sure we'll see you back here in a couple months.

[Jordy]

Yeah. I'm so curious. I imagine you guys are thinking about how you can create your own deep seek moment.

[Joe]

Yeah, I'm looking forward to it.

[Jordy]

The time is right. Come back on, we'll pump it looking.

[Joe]

Play that eagle sound. Thank you. Have a great rest of the.

[Misha Laskin]

Well, thank you so much for having me.

[Joe]

Of course.

[Jordy]

Great to catch up.

[Joe]

Talk to you soon.

[Jordy]

Congrats to the team.

[Joe]

How did you sleep last night? I woke up way too early. I woke up, I woke.

[Jordy]

I'm physically unable of a three.

[Joe]

Oh no, this is so bad.

[Jordy]

I have not gone. You're still getting back to back with a 90.

[Joe]

What you got?

[Jordy]

I got a 79.

[Joe]

I got a 69. You beat me.

[Jordy]

There we go.

[Joe]

You've beat me almost every day this week. Or maybe the last two or three.

[Jordy]

But I got, I got.

[Joe]

So you got your three peat. You got your three peat and got cocky. Play some sound effects. Do something. Let me also tell you about public.com investing. For those that take it seriously, they got multi asset investing, industry leading yields and they're trusted by millions.

[Jordy]

Please take them seriously.

[Joe]

Did you see that? Marginal revolution is calling for Vitalik Buterin, the co founder of Ethereum, to win the Nobel Prize in economics. I think that'd be very, very cool. It's a wild card. Tyler Cowen's mentioned it a few times that Vitalik would be kind of the outside the box pick. But in terms of advancing economic theory, designing Ethereum, I mean, it would be remarkable. And he also advocates for Robin Hanson, the father of prediction markets, to win the Nobel Prize. I don't know. We'll see. It'll be fun to track the super bowl for economics graphics. I guess. I want your take on this. Luke Kawa is quoting the Pepsi CEO. I think fiber will be the next protein. Consumers are starting to understand that fiber is a benefit that they need. We put creatine in everything. We put protein in everything. Is fiber the next thing?

[Jordy]

We put caffeine in everything.

[Joe]

I mean, why not just add them in?

[Jordy]

So the thing here is that fiber gummies.

[Joe]

Is that a thing?

[Jordy]

Lollipop already leaned heavily into fiber.

[Joe]

Okay, so it might already be happening. And maybe the Pepsi CEO is a little behind the times.

[Jordy]

He might also be. Did Pepsi buy Olipop's competitor?

[Joe]

I don't know. I mean, Kyle Scanlon in the. In the reply says, didn't we already do this with the rise and fall of fiber one? So I don't know. Maybe. Maybe it's too late.

[Jordy]

So Pepsi co acquired Poppy. I think Poppy includes fiber.

[Joe]

Yes. Oh, I have a reaction for you want to keep going on that?

[Jordy]

You have anything else?

[Joe]

No, I have a reaction to Rune who put us in the Truth Zone. So on a previous show we said that. We said incorrectly that during the AlphaGo game between Lisa Doll and DeepMind, AlphaGo dropped the 37th move, move 37. That iconic moment that kind of scrambled Lisa Doll's brain. We told the story such that move 37 happened. Lisa doll was so racked by it that he stepped outside to smoke a cigarette. Apparently that's not true. Apparently he smoked a cigarette before move 37. And so it's just more cinematic to tell it that way. I think it's. I think it's actually maybe even more dramatic because potentially move 37 was so crazy that he couldn't even bring himself to smoke a cigarette. You think that's what happened?

[Jordy]

Maybe.

[Joe]

No, I don't know. But thank you R for doing the fact check. Obviously you are correct. You know story more. And we always appreciate the Truth Zone. Well, we have our next guest, Dylan Patel from semiannalysis with some massive news. Dylan, how are you doing? That is a cinematic shot. Is this AI or something?

[Morgan Housel]

Where are we?

[Jordy]

That's called.

[Joe]

This is aura. You're aura farming.

[Dylan Patel]

I'm literally in America, bro.

[Joe]

That's amazing.

[Dylan Patel]

Out of the back of the truck.

[Joe]

You're the bald eagle. You're the bald eagle. He's not a China hawk. He's a bald eagle.

[Jordy]

This is proof of work.

[Robby Stein]

You're out.

[Joe]

You're out at cluster maxing. You're inference maxing your podcast. Maxing. Thank you so much for taking the time. Give us your breakdown quickly on the launch today. Inference. Max, the launch yesterday. I went on your zoom call at 10:30. I was laying in my bed listening to you. It was very interesting, but I'd love to hear you kind of break it down first.

[Jordy]

Wait, first chat wants. Can we get a. Do you have cowboy boots on or what?

[Joe]

We need the Full fit chat the full fit check.

[Jordy]

Oh, okay. Looking good. But cowboy boots. Cowboy boots next time.

[Joe]

Okay. Anyway, sorry, please give us the, give.

[Dylan Patel]

Us the high level. So I'm gonna. This is a fire station behind me by the way, just so you know, but in Tennessee anyway is yesterday we launched Inference Max, which is a humongous release for us. It is running. It is a benchmark that's doing cost per million tokens and how many cost per tokens per megawatt across all major infrastructure, AMD, Nvidia, all the newest GPUs and on all the latest models, GPT, open source, llama, deepseek, etc. Right. And so the reason why this is so important is throughout the industry people are always like, oh, our chips are great at cost this way. Our chips are more efficient that way. Well, it turns out to actually measure inference, you have a variety of different metrics. It can always just cherry pick something. It's some vendor saying some bs. And so there ends up being a cherry picking. And then it's also on some super hyper optimized software stack that's not real. It works for that one specific cherry picked use case. But guess what? When I'm running inference at a major company, sometimes I have big requests, sometimes I have small requests, sometimes I'm outputting a ton, sometimes it's like an agentic workflow, sometimes it's this model, sometimes it's that model. So what really matters is the real software that people are running and it's on, you know, the latest drivers, the latest open source, you know, Pytorch version and latest vlm, latest SG link. All these things matter because at the end of the day, software changes every day, performance changes every day, models change all the time. Right. And to actually get, hey, there's trillions of dollars of infrastructure investments being made over the next few years. How do you actually measure what's the best hardware, what's the most efficient hardware, what's it cost? And that's what we're aiming to do with InferenceMax. And so we're supported by Nvidia, AMD, Microsoft, OpenAI, Oracle, Core Weave, Dell, Super Micro, HPE and all sorts of vendors that I can't remember off the top of my head.

[Joe]

Well, you're not making, making any money on this, right? It's all open source, but there was a ton of capital that came together, a ton of people that did put up money. What's the scale and the scope of the project?

[Dylan Patel]

Yeah, so Semianalysis has multiple engineers that I'm Paying full time. So I'm losing like, you know, a million dollars a year on this, or a bit more, obviously, because engineers are expensive. But on top of that, it's, it's, you know, the vendors are contributing and the cloud companies are contributing tens of millions of dollars of GPUs, and there's no congratulations.

[Joe]

That's fantastic news.

[Dylan Patel]

So, you know, the thing is, I'm not necessarily, like, sure how I'm going to make money on it, but I am aura farming as I am with this background. Right. All that matters is, you know, how do we deploy AI efficiently across the globe. And perhaps by aura farming in this way we'll figure out how to people will buy our other stuff.

[Joe]

Right.

[Dylan Patel]

Is the hope. Not exactly sure. But this needed to exist and there was no way for it to exist unless we did it.

[Jordy]

What's your life been like the last few weeks? How often are billionaires calling you, asking you specifically for financial advice, saying, hey, I'm thinking of putting a billion into this one.

[Dylan Patel]

What do you think?

[Jordy]

Should I do it? Do you find yourself having to push back and say, I think you'd have.

[Joe]

The second trillion dollars of debt to flow into this? Yeah, what do you think?

[Dylan Patel]

You know, the, the, the crazy thing over the last few weeks is that, you know, companies that you would have never expected to need debt are in the debt markets. Right. You mentioned debt. You know, people like Meta and Oracle, you know, who three years ago you'd been like, these are the most profitable companies on the planet. Well, they're in the market for debt because they're, they're building. As far as, like, how often are people in the DMs or calling me, you know, that's what the company does. We provide services around them. This. So, you know, I'd like to say the company and business is taking off like a rocket. And so, you know, the whole point is inference, Max. Aura will increase the aura of like, other people, like, you know, you know, doing this. But I will say it's just like we've hit terminal velocity, right? It feels like we're building a motherfucking like, like Matrioska brain, you know, like, I don't, I don't know what people.

[Joe]

Are trying to do. That's great. What's the biggest debug that's come out of the results of inference, Max? Is there some narrative out there on the timeline or in the AI community that you feel like you've kind of, you're able with this data to turn things around?

[Dylan Patel]

Yeah. So I Mean, there's tons of people like, oh, AMD's best. Oh, Nvidia is the best. Oh, this is better, that's better. It turns out like everyone's statements are sort of like, you know, there's gotta be a lot more nuance to it. And so my favorite thing is yesterday I saw Twitter war between two accounts of like 5,000 followers each. So these weren't like small accounts per se and they were going back and forth posting data from inference max saying no, you're wrong, you're cherry picking. No, you're wrong, you're cherry picking it. It's like the reality is it's a little bit more complicated and they're debunking each other.

[Joe]

Yeah.

[Dylan Patel]

But I think what's relevant is that, you know, Nvidia is not the only game in town. A lot of people thought that they were, you know, between the OpenAI AMD deal that happened and then the results that we've shown and we've been working with AMD and Nvidia on this for many, many months. It's clear OpenAI. I mean Nvidia is definitely ahead. Right. But there's certain use cases where AMD is better.

[Robby Stein]

Right.

[Dylan Patel]

If you're running GPT open source, that model is exploding in usage, then hey, guess what? Actually AMD may be a better hardware for on a dollar basis. It's not better on a watts basis. And you know, those are the two things. Right. So maybe I'm in 10 C is, you know, there's a lot of watts here that we could put on AI infra. But it's a challenging sort of thing. Is sometimes your capital constraint, sometimes your power constrained and what you should do, maybe you do actually think maybe you should deploy amd, right? Maybe you should deploy Nvidia. The default is Nvidia. But actually in many cases it makes sense and the software works, the open source software works. It's not buggy completely. It is if you're training and doing other things, but if you're running inference on specific models, it works.

[Jordy]

What's the biggest risk to the overall buildout? Is it energy capacity? Like what's top of mind for you over the next 12 to 24 months? All these deals have been announced, but a lot of people are asking where's the energy going to come from once you start talking about gigawatt scale clusters?

[Dylan Patel]

Yeah, so it's, it's, it's not even, it's not even, you know, like you've got all of these like dudes in suits like you, you know, in, in their little cushy little offices signing these big checks of fake money on bank accounts. But the reality is, is like, hey, I can buy the GPUs, I can get them made and import them from overseas. I can buy, you know, like the sheet metal, I can buy all these different things. But you know what you can't do is there's not enough motherfuckers in cowboy boots in middle America deploying and building these things, right? Like it turns out electricians, wages are skyrocketing, right? It turns out, like plumbing, wages are skyrocketing because data centers need liquid cooling. And so like how I think that's the biggest risk is, you know, where's the skilled labor going to come from in, in the West. Interesting, because the west has not built at this scale before.

[Joe]

Yeah, chat says that Raghav in the chat says you're the only 10. I see. So he's having fun that you're out in Tennessee. Is there any. What does the long term vision look like? Is it relevant to think about adding tpu, Grox, Cerebras, other system? What is the shape of the roadmap? Are you sharing that yet or is that even relevant?

[Morgan Housel]

Yeah, yeah.

[Dylan Patel]

So Inference Max is amazing because it runs every single day on the latest software. But right now we've only got tens of millions of dollars of GPUs. You know, we got it, we got to hit the 100 million number to actually get everything right. So, so what that means is more models are being supported and we've got that in the works. We've got adding TPUs and trainium. This is a real big, difficult engineering effort. Google and Amazon are excited. You know, we'll see how long it takes us. But it is a difficult thing. But you know, they've got to put up the capacity, we've got to get the capacity somehow and add those chips. And then if you do that, over 99% of the flops are around the world. Maybe we add Huawei, maybe we add Grok or Cerebras. It's really. A lot of engineering is going to be required. And so that's all on the roadmap is to add more hardware quality. It turns out there's a lot of innovations that people are doing on model inference beyond just quantization, right? You can do eight bit or you can do four bit, but let's say everyone's doing eight bit. You can still do certain innovations that make performance better but quality worse. And so there's These tricks that people are implementing that actually it's completely unknown to people. And so measuring quality as well is really, really important. And continuing to run it every single day in an automated basis and continuing to get more people pushed behind it so we can get TPUs, trainiums, GPUs on as many models as possible with quality as well measured.

[Joe]

Well, that's fantastic. Jordy.

[Jordy]

One more question from my side. It seems like the debate is heating up around depreciation schedules for GPUs. What's your framework on that front? NeoCloud wants to say five to six years, but maybe that's not realistic. How are you thinking about it?

[Dylan Patel]

So every company, major company in the world, the Googles, the Microsofts, Amazons, et cetera, do six years, right? That is the industry standard. But that may also be erroneous. And the reason why it may be erroneous is because the reason it got pushed up from four or three years to six years over the last decade was CPU storage. That sort of stuff was not advancing that fast. Now we've got AI, we've got it advancing like a rocket ship and it's faster than ever. And so the question is, there's two points on useful life, right? One is, does the thing still work in six years? And the other one is, is it even useful to run it in six years? Right? And there are two very, very different questions, you know, for will it still run in six years? The answer is most likely. But these things are running super fast. GPUs, TPUs, et cetera, are way less reliable than CPUs in memory. So it's a very high likelihood that may not work in 6 years. Whereas CPUs servers, they'll actually run like 10 years. It's fine, but may not last the full 6 years. Especially the new ones that are super hot, liquid cooled, et cetera, right? A lot more complexity, a lot more likelihood it could break down within the six years. The other side is economically useful. Well, if Nvidia is releasing a new GPU that times as fast for 50% more money every year and a half, well then in six years you're at like 20x improvement in performance, right? And it maybe only costs like three times more. So you're like, okay, well, yes, the old GPU still, even if it still works, is it even useful or should I throw it out and with that power, should I feed the new thing, right? And so that's the big question, is, is it useful to keep using the newest GPU or the old GPU or should you buy the new thing? You know, as Jensen says, the more you buy, the more you save. Right. And so maybe his argument is correct.

[Jordy]

Right, yeah. And does that present a real risk? You know, a lot of people are levering up and raising debt against GPUs and assuming that five, six year useful life. How big of a risk is that? Is what I'm trying to understand.

[Dylan Patel]

It depends entirely on the company. Right? So for example, Oracle is raising debt and they're building out Stargate and all these things, right? They've got this $300 billion deal with OpenAI. Their biggest risk. Risk is not that, hey, you know, our depreciation schedule is six years and OpenAI's contracts are five years, right? They still make money. If they don't, they aren't able to last year. Right. Because they've got the contract with OpenAI. The real challenge is where the hell is OpenAI going to pay $300 billion, right? You know, I'm a believer, I'm a believer. I think you guys are believers, but a lot of people aren't. For other folks, it's like, hey, I'm out here deploying GPUs, I'm just putting them out there, right? Hey, anyone want to rent them, please rent them. And maybe you only sign a six month contract, maybe sign a three year contract. That's where it gets more risk because at the end of the term I haven't paid off my GPUs, I haven't paid off my debt, where am I going to sell it? Does the price fall? Where does the price end up being in that after, after a year? And so we saw that with Hopper GPUs, right? The people who signed the long term deals initially weren't making as much money because they were selling them at $2. Whereas you know, other people were out there like, oh yeah, six months, I'll sell it to you for $3. That was amazing money for that first six months. And then on renewal it's like, oh shit, it's only 250. And then on renewal it's like, oh wait, now I'm selling it for less than $2. And who knows, as Nvidia's Blackwell comes out, as Ruben comes out, as AMD's new chips come out, as Google starts selling TPUs, all these things keep driving down the cost, performance and how many tokens you can get per dollar and per Watt. So then all of a sudden, is a hopper still worth $2? Is it worth $1? $0.50? Is it worth a dollar. For the people that are locked into a five year contract, that's one thing. For the people who are, you know, just yellowing and, and don't have a long term contract, it's very possible that, you know, the GPU works, but it's not able to produce economic value worth what you actually put into it. So that's the big risk.

[Jordy]

That makes sense. Oracle sold off earlier this week based on reporting from the information. Any what was your immediate reaction to that piece? There was a lot of pushback on it.

[Misha Laskin]

Yeah.

[Dylan Patel]

So they said that Oracle's margins were low. Oracle's margins are not that low, they're higher than that. At that exact point in time, their reporting is accurate. Right, but what they deduced based on the reporting, what the numbers they saw were not accurate. Right, which is that Oracle's margins are low for the deals they've signed, that's not accurate. What's accurate is that Nvidia's GB200 NVL72 has a lot of issues, right? They're mostly being solved and have been solved, but there are a lot of issues. It can be unreliable because of how complicated of a thing it is. So, so much power, liquid cooling, it's got the back plane. So there's a lot of difficulties with the hardware because of how complicated and how fast it is that are being solved, solved already. The other one is, hey, Oracle has to rent these massive data centers before they fill them up with GPUs. So Oracle is paying all this money for these data centers for Stargate, right, Like in Abilene, Texas, that aren't necessarily generating revenue yet. And when your revenue goes from like this to rocket ship up because you've got Stargate, what happens is you've got all this cost right before the revenue comes in, right? You've bought the GPUs, you're trying to figure out how to make them to work because they're a little bit unreliable. You're replacing things, you're building out the data center, you're renting the data center. All these costs are hitting their books, right? That doesn't necessarily mean that they can rent them. I might be getting kicked out.

[Joe]

You're all good. This has been a pleasure. Dylan, next time you're in Los Angeles, we'd love to have you at the TBP Ultra Dome in studio. Everyone's a huge fan here. Congratulations and thank you so much for stopping by.

[Jordy]

Yeah, massive launch. Excited to see how it plays out.

[Dylan Patel]

All right, see you folks.

[Robby Stein]

See ya.

[Dylan Patel]

Thank you so much for having me.

[Jordy]

We got to get Dylan. Nick, reach out to Dylan, get his shoe size. We'll get him some cowboy boots.

[Joe]

That sounds great.

[Bill Peebles]

I'd love that.

[Jordy]

Good use out there.

[Joe]

You got something on your mind? There's some big news going on. Oh, yeah.

[Bill Peebles]

So one is about 30 minutes ago, Trump put out a truth. He said 100% tariffs on China starting November 1st.

[Joe]

What?

[Bill Peebles]

So since then, I think broadly today, 250 billion has been wiped out from crypto. Okay.

[Jordy]

Yeah. Bitcoin is down 5%.

[Joe]

Oh, no.

[Jordy]

Yeah.

[Joe]

We have to check in on our retail traders. Retail trader in residence.

[Bill Peebles]

Another white pill though.

[Jordy]

Demis just said they did.

[Bill Peebles]

Last month they did 1.3 quadrillion tokens on Gemini.

[Jordy]

That'll fix the global economy. That'll fix the congratulations. Absolutely wild. Our retail trader in residence is probably put a whole through the wall by now. Thankfully, the markets are closed for the week. But my portfolio on public is looking. Looking rough.

[Joe]

It's a rough day, but we're happy to see that.

[Jordy]

Hey, it's a rough day, but Monday will probably be rougher.

[Joe]

Maybe we'll see. It might. Might be a white suit day. Everything could get resolved over the weekend.

[Jordy]

You never know. Figure out what our bear market suits are. Maybe suits that are like, actually look like bare, kind of like fur.

[Joe]

Ooh, fur suits. That would be good. Yeah. You know, in Hollywood they have. There's a certain synthetic tears. It's like propylene glycol or something. That's what's in vapes. That's not it. But there's some sort of eyedropper that you can put in your eye. They put in eyes of actors when they have to cry. And so maybe we should just be applying those the entire show so that we're just crying constantly. Well, in some much better news, of course, if you want to get away from all the chaos, you can. You can book a wander. You can find your happy place. That's right. Book a wander. With inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, 247 concierge service. It's a vacation home, but better.

[Jordy]

Joey in the chat says Fartcoin is down 73%. I don't know why.

[Joe]

No, no, no. That's got to be a joke.

[Jordy]

That's.

[Joe]

That's impossible.

[Jordy]

I looked it up. I mean, I'm looking at a chart right now.

[Joe]

It says 6% today.

[Jordy]

So maybe it's rallied a bit today. Yeah, I mean, I guess.

[Joe]

I can't believe that some of the household name in Tech is actually down that much. That's absolutely crazy. Well, in some more serious news, we have a new partner at tvpn. We're partnered with Gemini, Google AI Studio. The fastest way from prompt to production with Gemini AI Powered coding, ease of use. It's built for everyone. You've been a power user. We're friends with Logan. We're very close to.

[Jordy]

Logan is a dear friend of the show and works around the clock to make this.

[Joe]

He's done a fantastic job over there. Supercharge your creativity and productivity chat to start writing, planning, learning and more with Google AI. So you'll be hearing more about Gemini in the coming weeks, in the coming.

[Jordy]

Shows, not tomorrow, because tomorrow's a Saturday. We're staying off, but I can't wait for Monday. John.

[Joe]

Yeah, what else? Oh, Shiel had a take on Sora, which is interesting. He says he personally got bored of Sora after a day, but a surprising number of my friends are still posting 10 plus videos a day. Maybe this AI slop thing has legs. I haven't been consuming a lot of Sora. I've been generating a lot, but I haven't been posting a lot. But I started posting and once I got over that threshold of like, yeah, I'm just gonna put my cameo. Yep, I'm just gonna post. It's gonna be fun. I think I'll be experimenting with the actual feed. I only have 20 followers now, but I think that there is some fun, creative stuff that you can do there. It's definitely a different tool to pull off the shelf than the video camera or the text post on X or the email. But I've been having fun and I think I will.

[Jordy]

Apparently. I didn't catch this when you said it, Tyler. The 100% tariff on China is on top of all current tariffs.

[Joe]

Wasn't it already at 100% or something like that? We had Ryan Peterson on a few times and the tariffs were like up.

[Jordy]

And down and up and down to the ultra dome. Ryan.

[Joe]

Seriously? We got to check in with Ryan.

[Jordy]

Turn back on Buco Capital says, I legitimately cannot believe we are doing this again.

[Joe]

Tremendous nukes have hit the cryptocurrency chart says Joe in the chat. Did you ever read that? It was very funny. Thank you, Joey, for your service as the resident crypto bro. One last note. You know what hasn't changed with a tariff? Out of home advertising in America, baby out. Adquick.com out of home advertising made easy and measurable. Say goodbye to the headaches of out of home Advertising.

[Jordy]

Do not tariffing our billboards.

[Joe]

Do not tariff our billboards.

[Jordy]

That is my. You are on notice.

[Joe]

Yeah, single issue voter on billboard.

[Jordy]

Sonic, honestly, Liquidity says there won't be a second date. But at least she now understands why the AI circle jerk deals are quickly becoming a major systemic risk.

[Joe]

Can we pull up this picture of this eight year old building in Kazakhstan from off site? This post made me laugh out loud. It's page 70. Do you see this? Jordy? Look at this picture of this eight year old building and the bar and off site that quote posted and says that MF on Roblox left hand on awsd because if you look at his hand it's like caught gaming handed for sure. Very funny post. But that would have been me at eight gaming. And you know, who knows if he's on Roblox now, maybe he'll build a Roblox game, maybe he'll build a startup. But yes, eight years old might be a little bit young young to take a company public. Unless you're a 23 year old and then apparently you can spac a nuclear company. Be fine. Anything else you want to cover? Any other breaking news before we log off for the weekend?

[Jordy]

No. I'm going to miss being here at this table with these mics.

[Joe]

Yes, this team we miss Dave Portnoy's mansion Dave Portnoy made the Mansion section in the Wall Street Journal. I'll read you one line of it because it is iconic. Dave Portnoy after record breaking home to his $95 million property portfolio inside the Barstool Sports founders collection of luxury houses. They break down all of his different houses. They're all beautiful. But this is what made me laugh out loud because it's printed in the Wall Street Journal in the Mansion section. Barstool Sports founder Dave Portnoy has been dogged by champagne problems at his Miami mansion. From construction delays to losing his coffee because the waterfront home is too big. Last year a more serious issue emerged and we've talked to some founders about this mold. And as he often does, Portnoy turned to social media. Quote, I need the best mold company in the history of Miami to come look at my moldy ass house. Any wrecks he posted on X in August of 2024. I just thought that was hilarious that he that one of his X posts made it into the Wall Street Journal. So you can post your way onto a property private plane, you can post your way onto the Wall Street Journal. You can post your way on this show. So enjoy the weekend and stay locked in on the timeline.

[Jordy]

Citrini says, can we change the channel? I've seen this movie before. Oh, our retail trader just posted his portfolio. He's down 12% on the day. He says, I'm so cooked.

[Joe]

I'm so cooked.

[Jordy]

You're cooked and chopped.

[Joe]

Cooked and chopped. But we love you.

[Jordy]

The Dylan camp. Get the Dylan camp.

[Joe]

No, he doesn't want to be on tv. Thank you so much for tuning in.

[Jordy]

We're going to set up. We're working on setting up a retail.

[Joe]

Corner here at tv. We're thinking about it.

[Jordy]

We're going to give him. Give Dylan. Not Dylan, Abrascada, the other Dylan. We're going to give him a public account, some funds and he'll just. He'll just trade.

[Joe]

This is just crazy enough to work.

[Jordy]

He won't be cooked or chopped.

[Joe]

Thank you everyone for tuning in. We will see you on Monday. Have a great.

[Jordy]

Have a great weekend, folks.

[Joe]

Bye.

[Jordy]

Bye.