Sama's BG2 Appearance, Ilya Sutskever Deposition, Porsche 911 Turbo S Reactions | Mark Gurman, Daniel Roberts, Erica Brescia, Benjamin Witte

Summary

TBPN Episode Summary

Episode: Sama's BG2 Appearance, Ilya Sutskever Deposition, Porsche 911 Turbo S Reactions | Nov 3, 2025

Hosts: John Coogan & Jordi Hays

Featured Guests: Mark Gurman, Dan (CEO of Iron), Erica Brescia (Redpoint Ventures), Benjamin Witte (Recess)

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Overview

This dense, fast-moving episode of TBPN dives head-first into several of tech's biggest ongoing stories: the fall-out from Sam Altman and Satya Nadella’s joint appearance on Brad Gerstner’s podcast (dubbed "BG2"), the market’s skepticism of OpenAI’s trillion-dollar infrastructure commitments, fresh revelations from Ilya Sutskever's deposition on the OpenAI boardroom saga, the shifting ground of data center build-outs (including haunted house conversions), hot takes on Porsche’s newest 911 Turbo S hybrid, and deep dives into Apple’s AI and hardware strategies with legendary Apple reporter Mark Gurman. The program wraps with sharp founder/investor commentary, plus spotlights on consumer brands scaling in a shifting macro landscape.

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Main Themes & Key Segments

1. The Haunted House → Data Center Pipeline (00:01–07:27)

• Trendwatch: John and Jordi open with a Bloomberg story about Pennhurst Asylum (a haunted attraction) being converted into a data center to ride the AI boom.
• Analogies & Perspective:
  • Comparing seasonal businesses like Spirit Halloween to data center "pop-ups."
  • Discussion of Atlanta soundstages and Hollywood studios being turned into server farms, reminiscent of the crypto mining boom.
  • Rumors: Studios leveraging Georgia’s film tax incentives to build tech infrastructure under the radar.
• John: “I do hope a lot of the OpenAI documentary takes place in a data center... Were the GPUs seated properly? Was the power continuous? That’s where I want most of the tension to occur.” (03:07)
• Jordi: “I'm all in on AI, right after spooky season.” (01:00)

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2. BG2 Podcast: Sam Altman & Satya Nadella’s $1.4 Trillion Question (07:49–41:46)

• Background: The timeline is abuzz after Sam and Satya appeared on Brad Gerstner’s (BG) podcast, with investors and press fixating on OpenAI's exponential revenue growth and eye-popping spend commitments (up to $1.4 trillion).

Media Analysis – Audio vs. Video Perception

• The hosts compare the “body language” narrative to JFK vs. Nixon’s televised debates, noting how Altman and Satya’s physical comportment altered the perceived tone compared to the podcast audio alone.
• John: “In one medium, you win; in another, you lose. When you watch the video... there’s a whole extra layer.” (10:41)

Sam's Viral Answer & Investor Reaction

• Sam’s (widely panned) response to how OpenAI can spend $1.4 trillion with only ~$14bn revenue: essentially “sell your shares if you’re worried.”
• Key quote:
  • Mark Gurman, summarizing Sam: “People who are talking with... breathless concern would be thrilled to buy shares. If you want to sell your shares, I’ll find you a buyer.” (29:23)
• The hosts note zero defense for Sam’s answer from any OpenAI investors except Brad Gerstner and Altimeter colleagues.
• Jordi: "If CEO of one of my holdings spoke to me like that, I wouldn’t be a buyer, I’d be a seller of all my shares." (41:51, quoting timeline)

Steelmanning the Bullish Case

• Rebuttal: OpenAI’s historical revenue ramp (3.5M → 28M → 200M → 1.6B → 3.7B → >14B) is “insane” and if compounded, could justify huge commitments.
• John: “Do you understand the value of compounding?... What happens if you compound OpenAI’s revenue at 300% for a decade?” (17:16)

Bear Case & ‘Glut Theory’

• Scenario: If OpenAI’s bets (agentic commerce, hardware, ads) don’t all hit, partners (Amazon, Oracle) with huge CapEx might be left holding the bag.
• “Sam actually wants to create a massive overbuild so he can benefit from a compute glut.” (22:45)
• Skepticism: Much of the total commitment hype may mask flexible contract terms or press-release gamesmanship, not real future liabilities.

Comparison with Elon Musk’s Style

• Elon as “better showman” with a retail army, more benefit of the doubt, and a longer track record of big promises at scale.

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3. Ilya Sutskever Deposition & The OpenAI Boardroom War (159:09–166:02, plus throughout)

• Background: New details from Ilya Sutskever’s legal testimony on board dysfunction leading up to Sam’s brief ouster.
• Highlights:
  • Ilya and Mira Murati plotted for over a year to remove Sam; Dario Amodei (now Anthropic CEO) wanted his own coup; Ilya wrote a 52-page anti-Sam memo.
  • “The process was rushed because the board was inexperienced… in board matters.” (160:44)
  • Legendary table-read segment dramatizing the transcript, underlining dysfunction, uncertainty, and “how the world actually works” in AI governance.

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4. Infrastructure & CapEx Speculation (Throughout, esp. 07:27–24:19)

• Impact on Partners:
  • Discussion of the “press release economy”: timeline memes about OpenAI’s CapEx driving the stock market, whether Amazon/Oracle/others are overbuilding datacenters for vaporous demand.
  • Industry guests (e.g. Dan of Iron) assert some deals are “real” with binding revenue, but acknowledge hype.
• Jordi proposes overbuild thesis: “I believe there’s a chance that Sam actually wants to create a massive overbuild so he can ultimately benefit when everyone else is stuck with too much compute.” (22:45–23:48)

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5. Guest Interviews & Industry Insights

A. Mark Gurman – Apple, AI, & Hardware (88:00–124:22)

• Apple’s AI "Catch-up":
  • Apple was “completely caught off guard by ChatGPT, Gemini, Copilot... It’s sacrilegious that a company like Apple could have had that bigness [miss].” (101:08)
  • Siri’s brand damage may be irreparable; upcoming improvements powered by Gemini under-the-hood.
  • Apple’s M&A strategy: small/strategic AI bets, Perplexity/Mistral considered but not acquired.
• Hardware Trends:
  • Foldables, smart glasses, Vision Pro/VR—what matters is keeping people in the ecosystem; Apple as a likely “fast follower” to whatever hits.

B. Dan, CEO of Iron – Building the Next-GEN GPU Cloud (76:14–84:16)

• Iron’s $9.7B+ deal with Microsoft:
  • Thesis: “The real world can’t keep up with the digital world.”
  • Advantage: Early moves to secure power and permits. Compute demand is exponential; businesses must balance power, grid, land, and flexibility.
  • Dan: “As society, do we believe we’re becoming more digitized? That’s going to drive this appetite for high-performance compute.” (80:52)

C. Erica Brescia, Redpoint Ventures – The AI VC Playbook (125:04–140:31)

• Evolving Founder Archetype:
  • Velocity, storytelling, aggression > traditional founder-market fit; basic advice is “don’t worry about margins, win now.”
  • Confidence that the ‘compute glut’ is overblown: demand and power/supply constraints are real, vertical integration is smart, “direct labor replacement” companies can grow 10x faster than classic SaaS.
• Media leaks/anonymous scooper "R for Rock":
  • “Perfect information spread—everybody knows everything instantly.”

D. Benjamin Witte, Recess (142:18–158:20)

• The DTC beverage journey:
  • Category vision: "Red Bull for relaxation," betting on durable needs (mocktails, magnesium) over CBD trendiness.
  • Smart omnichannel expansion, viral brand moments, and why the best marketing is only now being turned on.
• Brand platform & AI: Current relevance for CPG is limited, but potential seen for content and customer service.

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6. Tech & Product Quick Hits

• Porsche 911 Turbo S Hybrid (64:13–73:18):

  • Jordi: Disappointed hybrid strategy (“not what customers want”), fears added weight and regulatory-driven sacrifice of “purist” driving feel.
  • John: Track cars deliver a fundamentally different (superior) experience to street-legal sports cars.

• Elon Musk’s Roadster "Flying Car" Tease (74:06–75:41):

  • Did not deny, heavily hinted: “If Peter [Thiel] wants a flying car, we should be able to fly one.”

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Notable Quotes & Moments

• John, on OpenAI’s financial ramp:

  “They’re tripling revenue every year. Do you understand the value of compounding?... They get into the quadrillions.” (17:16)

• Jordi, on AI buildouts:

  “I believe there’s a chance Sam actually wants to create a massive overbuild so he can... benefit from a compute glut.” (22:45)

• Mark Gurman, on Apple’s AI errors:

  “It’s sacrilegious that a company like Apple could have had that bigness [miss].” (101:08)

• Dan (Iron), on building infrastructure:

  “The real world can’t keep pace with the digital world... you can’t just plug a computer into a high-voltage line.” (78:28)

• Erica Brescia, on investing now:

  “I don’t care about margins at all right now—I care about winning in the market.” (132:49)

• Benjamin Witte, on beverage branding:

  “I always thought of [Recess] as a relaxation brand, not a CBD brand. Bet on a feeling humans will want for a long time.” (148:36)

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Selected Timestamps for Key Segments

| Segment / Topic | Time (MM:SS) | |--------------------------------------------------|-----------------| | Haunted House to Data Center discussion | 00:01–07:27 | | BG2 podcast reactions (Sama, Satya, Brad G.) | 07:49–41:46 | | Clip of Sam’s “sell your shares” viral answer | 29:09–29:49 | | OpenAI steelman bull/bear debate | 14:27–19:24 | | “Glut theory” and CapEx deal quality | 21:01–24:19 | | Mark Gurman interview (Apple, AI, foldables) | 88:00–124:22 | | Dan/Iron on the new GPU cloud paradigm | 76:14–84:16 | | Erica Brescia on founder advice, AI, contracts | 125:04–140:31 | | Benjamin Witte/Recess on beverages, CPG, brand | 142:18–158:20 | | Ilya Sutskever deposition table-read | 159:09–166:02 | | Porsche 911 Turbo S hybrid hot takes | 64:13–73:18 | | Elon “flying car” Roadster tease | 74:06–75:41 |

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Tone & Delivery

• Sarcastic, irreverent, hyper-current: The hosts toggle between playful meme culture (“press release economy,” “diet TBPN,” tinfoil hats), robust financial/modeling analysis, and insider industry banter.
• Guest insights are sharp but casual, with a mix of humility (“I was an Apple fanboy!”) and directness (e.g., “this was real revenue,” “direct labor replacement”).

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Useful for Listeners Who Missed the Episode

• You’ll get all sides of the OpenAI deal math, understand why $1.4T of CapEx has the internet in a frenzy, hear Wall Street’s bull/bear tension on AI infrastructure, and see how the world’s largest tech companies are maneuvering in a time of exponential platform change and expectation.
• The episode blends wide-ranging humor (“sell your company in Guyanese dollars!”) with unique access to industry players shaping the next decade in tech, AI, and hardware.
• The OpenAI/Satya/Brad G. podcast drama serves as a lens for understanding the “fake it till you make it” element still critical in Silicon Valley’s big bets.

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Endnote

“Sell your shares” may go down as a legendary meme in the bull market lore of 2025. TBPN continues to be the unofficial water cooler for tech’s biggest headlines, busts, and inside jokes.

Transcript

[Jordy Hayes]

You're watching TBPN.

[John]

Today is Monday, November 3rd, 2025. We are live from the TVPN Ultradome. The temple of technology, the fortress of finance, the capital of capital. The timeline has been in turmoil over the Brad Gerstner podcast with Satya Nadella and Sam Altman. Interesting dynamic, lots of hype. You know, people continue to call tops on bubbles. And there's a whole bunch of other stuff on the topic of bu. You know, if you want to get ready for the collapse of a bubble, you got to save time and money.

[Jordy Hayes]

That's right.

[John]

Go to ramp.com easy as corporate cards, bail payments, accounting, and a whole lot more all in one place. Get started for free. There was this article in Bloomberg. The AI buildout is so big, even a haunted house owner wants in. The co owner of Pennsylvania's Pennhurst Asylum has big plans for a data center about an hour's drive northwest.

[Jordy Hayes]

We gotta get through Halloween. And then I'm all in on AI.

[John]

It is funny that Halloween is.

[Jordy Hayes]

You gotta get through spooky season.

[John]

I mean, that's basically going all in. I think that's basically what's happening because what's that famous Halloween store? You know what I'm talking about?

[Tyler]

Spirit Halloween.

[John]

Is it spirit? Like it pops up? It pops up. It comes into town for like a day or a month and then it disappears. And it's always like, how do they even set up a store so quickly? But they're clearly just really good at, like, short term leases.

[Jordy Hayes]

You ever been to a Spirit Halloween, like at like 6pm On Halloween?

[John]

No. Is it packed?

[Jordy Hayes]

It's an absolute nightmare.

[John]

Oh, it's probably crazy because they just.

[Jordy Hayes]

Let it get destroyed, basically. Like, the employees are just like, all right, it's basically over.

[John]

It's over.

[Jordy Hayes]

We're just gonna stop and leave tomorrow. Looks like a stampede of horses just through it.

[John]

It's interesting that they can't ride that into, like, spirit Thanksgiving, spirit Christmas. They just got to get in and out around Halloween. But apparently haunted houses are converting into data centers. We actually heard this. We heard a rumor through the makeup artist that did the makeup on the Friday show that there are a number of Hollywood sound stages studios that have been set up in Atlanta, I think she said Georgia. And they're not monetizing well as studios. And so they're converting them into data centers. And it's sort of the same crypto boom.

[Jordy Hayes]

She basically said she knew somebody that was walking around one of these lots and poked her head in the door and he was all Server racks.

[John]

Or maybe they were filming the social network too. You don't know. Or the OpenAI movie.

[Jordy Hayes]

But the greater conspiracy theory there is they were using the tax incentives provided to the film industry in order to just.

[John]

Well, I mean if they're generating sora, that should count as filming tax deductions. You're like we need to film it. We need to film the social network too. I do hope that a lot of the OpenAI documentary takes place in a data center. I hope it's about the minutia of racking the servers to do the GPT3 training run. That's the core drama. I want to know were the GPUs seated properly, were the racks working, was the power continuous, was the delivery continuous? Or were the their brownouts, were their blackouts, what was going on in the data center? That's where I want the most of the tension to occur. And then I want them to take the movie and restream it. I want them to put it on restream 1 livestream 30 plus destinations multi stream reach your audience wherever they are. So it's here where real estate developer Derek Strine has been scaring locals for years. His haunted attraction Pennhurst Asylum every fall hosts tens of thousands of visitors for a well controlled fright. But Strine has a new idea for the property. One that some locals even more that has some locals even more disturbed. He wants to turn the nearly 130 acre grounds into a world class data center. The kind of massive server facility that is central to the artificial intelligence boom. Never mind that his first foray into Nevermind that this is his first foray into such an investment. One that would require more cash than any of his past projects. He's also not fretting about corralling the necessary electricity which would be enough to power as many for as as many as 400,000 homes. And he can even see past the.

[Jordy Hayes]

So I was a little bit skeptical of people just hardcore pivoting and we're having the CEO of Iron on today. He was doing bitcoin mining, had a lot of energy.

[John]

Yep.

[Jordy Hayes]

And now just signed a nearly $10 billion deal with Microsoft that got announced this morning. Stocks way up CEO will be on the show around in about an hour so I'm excited to meet him.

[John]

Well, let me tell you about Privy wallet infrastructure for every bank. Privy makes it easy to build on crypto rails, securely spin up white label wallets, sign transactions and integrate on chain infrastructure all through ones that play. I think he knew that people were going to take Shots at him. Oh, what are you doing? Pivoting from a haunted house to a data center. And he said, how do you eat a whale one slice at a time, right?

[Jordy Hayes]

Is that a common phrase?

[John]

It's a real quote. What I've heard is how do you eat a dinosaur one bite at a time. That was the SpaceX motto when they were saying they're going after the legacy industries and it's going to take a huge amount of time to actually unseat NASA or if you're Andrew, to unseat Lockheed. Like, it's just, it's not just going to happen over, like, it's not like the Internet distribution where you're trying to displace all of these systems and structures and political incentives and voting blocks and certain contracts and manufacturing prowess. Like, it's just, it's just not an overnight, it cannot be an overnight success. Even if you have a stacked team, we're still going to play for you. So you have to eat the dinosaur one bite at a time. But I just think it's funny eating.

[Jordy Hayes]

Whale one slice at a time.

[John]

One slice at a time. It's much more visual. It's very funny. A horde of investors, developers and speculators are racing to put picks and shovels in the ground for a technological revolution they are betting is here to stay. Artificial intelligence infrastructure spending could surpass $3 trillion in the next three years. By one measure. Trump hailed more than 92 billion in AI and energy deals from the likes of Blackstone and Brookfield during a visit to Pennsylvania this year. Many say there's too flooding in, but our intrepid haunted house proprietor sees the challenge as part of the value proposition. His bet is that if he does the grunt work getting a grid connection and securing the town's blessings, another developer will pay a premium to come in alongside him that he expects will bring in new equity and expertise. We're going to de risk for the deep pocketed guys, he said. The big value play is getting this ready for a hyperscaler to go vertical in less than a year. So he's just setting it up. He's just setting it a little layup.

[Jordy Hayes]

I've seen enough. He should expect based on his Halloween revenue for sure and then use that capital to go all in.

[John]

Ooh, some of this stuff's crazy. Anyway, very, very fun story. He should also be vibe coding. He should also.

[Jordy Hayes]

He's gonna need to get over to Google AI Studio.

[John]

He should, he should head over to Google AI Studio, create an AI powered app faster than Ever. Gemini understands the capabilities you need to automatically and automatically wires up the right models and APIs for you. Get started at AI Studio Build. Let's go through the timeline. Bugo Capital.

[Jordy Hayes]

Yeah. Did you want to read your post to give some context?

[John]

Yes. So my question was, how sticky are these deals? So the timeline's going pretty crazy on the BG squared. Although is he going to rebrand the Brad Gerstner bg? Yes. Maybe just bg.

[Jordy Hayes]

Or he could. Or he could mirror. He could just have two videos of himself and then the guest.

[John]

It was good that. It feels like a sequel. He can do the prequel, just the BG one, maybe. But he had Satya Nadella and Sam Altman on the show. And everyone is debating whether or not a $14 billion revenue company, OpenAI, can afford to pay 1.4 trillion. And Brad asked this question directly, and it was kind of a crazy moment because a lot of people were saying, like, well, he's an investor. This should be like, the softest ball interview possible. He's, like, deeply conflicted. Like, a lot of journalists were like, how is this happening? How is it that Sam Altman's like, getting. It's like a harder interview with a direct investor than with a traditional media journalist, which is just interesting. But.

[Jordy Hayes]

Yeah. And I don't. I don't think it was. I don't think Brad meant. Meant for it to be a tough question.

[John]

Yes, I agree.

[Jordy Hayes]

Like, the whole interview was a layup. You could argue. You could argue that it was. It was.

[Mark Gurman]

Yeah.

[Jordy Hayes]

Brad is, like you said, he's heavily aligned with OpenAI. This wasn't meant to be a gotcha. And Sam just might have woken up in a bad mood that day because the answer that he gave was absolutely horrible.

[John]

Yeah. Well, so what's interesting is that I think that. Are you familiar with that story of JFK and Nixon, the debate?

[Jordy Hayes]

No.

[John]

So there's a presidential debate between JFK and Nixon, and it was right around the time. Tyler, do you have the actual date or details of when this happened? But it was right around the time that they first started televising presidential debates. And so.

[Tyler]

So this was 1960.

[John]

1960. So 1960, JFK, Nixon, JFK and Nixon are going at it at the presidential debate. But what happens. Nixon didn't want makeup or something.

[Tyler]

Yeah. So, yeah, it's like one of the first televised ones. Nixon doesn't want to wear makeup because, like, I think he just seems like, anti makeup.

[John]

He's anti makeup. Okay.

[Tyler]

But he, like, looks really bad because he had been doing. He had some speech that like that day and he was like, tired. He like, looks not great.

[John]

Okay.

[Tyler]

And then JFK is like this very, like, preppy guy. He looks very nice.

[John]

Yep.

[Tyler]

And then so it's like the whole thing is like some people hear the debate just on the radio or just. Or on tv.

[John]

Yep.

[Tyler]

And then their ideas of who won is like totally different based off like, jfk, like, looks way better physically.

[John]

Yep. And so. So it was this famous moment where, like, JFK mogged in the visual medium, but Nixon mogged in the audio. And when I first listened to the BG Squared podcast, I was just listening to the audio and I was like, oh, like that's like a totally reasonable answer. But when you watch the video and you see the body language and you get into all that, I feel like.

[Jordy Hayes]

Issue is a whole extra layer. Sam got press. He went, see, you don't.

[John]

You don't hear that on the audio. You don't hear that on the audio. And so you see what I'm saying, how like, you can win in one medium but lose in another.

[Jordy Hayes]

Anytime I don't like something you're saying, John, I'm just gonna go, well, the.

[John]

Audio listeners won't know. Yeah, Won't know.

[Jordy Hayes]

Shout out to the people on Apple Pod.

[John]

And the timeline was also fixating on this fact that at some point, Brad takes a step back from the microphone. They were reading into that. Like, that's something that just doesn't come across in audio. And so you hear it and you're just like, okay, yeah, this actually sounds like pretty reasonable.

[Jordy Hayes]

And Satya. Satya's just sitting back laughing.

[John]

Yeah, yeah, exactly.

[Jordy Hayes]

It was like. It was the one strange. I was actually surprised that. That they released it. I was surprised that like, nobody basically caught or at least like they could have easily edited or killed it. I think it's good that it was released.

[John]

Yeah.

[Jordy Hayes]

Because this is the question that is on everyone's mind.

[John]

Yes.

[Jordy Hayes]

Yes, everyone's mind. Right. And Sam's answer, I summed it up by saying his answer. He says, how will you afford 1.4 trillion in spending with only 12 billion of revenue? And Sam was like, actually, we have more revenue than that.

[John]

Yep.

[Jordy Hayes]

Of course, they lost 10 or so billion dollars last quarter. So they have a lot of revenue, they have a lot of losses. Sam's answer was basically, sell your shares. We're automating science and we're going to release a hardware device and we're going to need a lot of compute for that.

[John]

Yep.

[Jordy Hayes]

Which was like, you know, obviously I'm summarizing and he was more drawn out than that. But. But I can't think of a more poor answer when people deserve to have, I think a bit more clarity around.

[John]

Does feel like it's getting, the timing.

[Jordy Hayes]

The timing of that with the new deal with Amazon that got announced this morning. Right. I think the question that even all these different partners are running the calculus on is like, how real are these commitments? Right. Because I don't think that like Sam is smart enough to not sign up for $1.4 trillion of like liabilities. Right. He, yeah, there is a world where he can thread the needle and spend all this money that he's sort of soft committing. But everything has to go perfectly. Agenda commerce has to be massive. Ads need to be massive. Subscriptions need to keep growing at the same rate. People need to not turn off of their $200 a month plan because they realize they can get a very similar product experience for $20 a month elsewhere, free elsewhere. And so a lot of things need to go right. And it was just a really weak answer.

[John]

Yeah.

[Jordy Hayes]

And here's the other thing. The only person that I saw defending the answer and the whole interaction was.

[John]

Brad and one of his colleagues.

[Jordy Hayes]

Two people at Altimeter.

[John]

Yeah. Not a lot of people I did not see.

[Jordy Hayes]

There was not even a single other OpenAI investor that was like, that's willing to stick their neck out and say like, here's how we actually can.

[John]

Okay, well, you know, it's that time. We gotta steel man this thing. We gotta steel man this thing. It's the only way. This is how the show works. We can't, we can't be, we can't be one sided. This is, this is a, this is a bull and bear show.

[Jordy Hayes]

Can you bring me the tinfoil hat?

[John]

We're strapping this in. Okay, so first off, Cognition, makers of Devon, the AI software engineer, crush your backlog with your personal AI engineering team. Okay, So I really need to get a better like strap because this thing just flips back like this the more.

[Jordy Hayes]

I just put the strap on.

[John]

I guess I could if I balance it. Maybe it feels better. Okay. Anyway, so first off, okay, so Sam said that the revenue is incorrect. It's not 14 billion, it's higher. That's point one, point two. Dallas said that it's open. I never miss projections. They've never missed projections.

[Jordy Hayes]

It's worth noting that the losses are dramatically greater than the revenue.

[John]

Yeah, but that doesn't matter for the, for the deals because you pay the, you pay the deals from the revenue. Like, like the, the. When you bring in the revenue.

[Jordy Hayes]

Yeah, yeah, sure.

[John]

That's what you need to pay.

[Jordy Hayes]

Factoring in stock based.

[John]

Well, the losses are from the, are from the contracts. Like, like, like you, you don't need to find new money to pay your cloud bill because, like, that's the reason there are losses. The losses exist because they're paying these deals. Like, so it's not really fair to be like, like, yes, of course, if you're a shareholder, you want higher, you want profits, obviously, like, that makes total sense.

[Jordy Hayes]

Yeah, but I think.

[John]

But if you're Amazon, like, or if you're, if you're Azure and you're like, and you're like, how are you going to pay me $1 billion? It's like, well, if they bring in 2 billion of revenue, like, I'm at the, I'm at the top of the capital stack. I'm at the top of the. I'm higher than the, than the debtors. I'm higher than the equity. Like, I get paid out first because I'm, I'm a supplier.

[Jordy Hayes]

I'm sending you real cogs.

[John]

I'm cogs. Yeah, I'm cogs. So I'm, I'm above everything. So, So I think that, that, that matters a lot less. Genuinely. Satya Nadella said that OpenAI's never missed projections. They've never, they've never put a projection forward that they haven't beat. So if history repeats, you're good. Also, OpenAI's revenue growth has been insane. Look at this ramp. Look at this ramp in 2020.

[Jordy Hayes]

This is, this is, this is the thesis that I, that I like.

[John]

This is the bullish. This is the most bullish thesis I'll run you through. Extrapolate, extrapolate, extrapolate. So look, in 2020, how much did OpenAI make in revenue? 3.5 million. What they do next year? 28 million. What they do the next year? 200. Then 1.6 billion. Then 3.7 billion. Now north of 14 billion, what are they doing? They're tripling revenue every year. Do you understand the value of compounding?

[Jordy Hayes]

I do, John.

[John]

So what happens if you compound OpenAI's revenue at 300% for a decade?

[Jordy Hayes]

They get into the quadrillion.

[John]

They get into the quadrillions. That's right. And so the question you should be asking is not, how can a $14 billion company pay for 1.5 trillion of.

[Jordy Hayes]

How can a multi. Quadrillion. How can a multiple revenue not pay.

[John]

For 0.1% of the revenue will go over there. It's not a big deal. It's not a big deal. If you get into the quads, you're good.

[Jordy Hayes]

And they're automating science and they're automating science and they're going to launch a hardware device.

[John]

But, but, but, but truly like, like the, the revenue ramp has been insane. It really has been insane. And so it's not that crazy to actually think that like it will continue to grow. And so a lot of it is like how fast will it grow relative to how fast do these contracts grow? And so if the growth continues, like the cloud deals really can work out. But the question is how perfectly do the next few years have to go? Because interestingly, revenue growth right now is accelerating. They are growing faster, at least according to these basic numbers. Like 2025 will be higher growth revenue wise than 2024, because in 2024 they went from 1.6 to 3.7. That's like 200% growth or like, like they basically like a little over doubled now. They're more than tripling and so they've actually increased. They're actually accelerating revenue now if that, if they're continuing, if they're, you know, expecting continued acceleration forever and there's a hiccup could be an issue. But it's not that crazy because they have so many irons in the fire. There's a whole bunch of things that could hit, you got chatgpt could grow. API business can get big. It already is, can get bigger. Sora, agentic commerce, scientific discovery, new hardware. Some of those feel crazier than others. Like the API business. You're not like, oh, there's no way they can make a billion dollars off of API. It's like, yeah, they're going to, no problem. They're making more than that now. New hardware, it's like that could be three years out and it could be very slow. It could be a complete flop.

[Jordy Hayes]

Yeah, I didn't like the saying we were going to have a hit consumer hardware device doesn't make me feel that comforted totally. When you're becoming too big to fail, right. When you have so many different businesses where their market caps are riding on their partnership with you and you're just saying like, yeah, we're going to just hit a grand slam with a new consumer hardware device and every other attempt at it so far has not manage to make anything even really that useful. And so I'm excited, I'm excited to, I'm excited for OpenAI's hardware device. I think it will be. I expect it to be somewhat like Sora and that you're taking not necessarily the most transformative like Sora was an app, but at least it had. And it was a feed and you could create content with it. But at least it had some like novel, some novel things about it. Specifically the cameo feature was like novel and great and viral and cool. And I expect their consumer hardware device to be like a fresh take on an somewhat existing form factor and I expect it to be cool the hardware brand. But saying like so hard. Don't worry about a $13 billion, given the benefit of the doubt, like $20 billion revenue run rate company committing to 1.4 trillion of spend. Don't worry about it because the product that we haven't launched yet is gonna be such a smash hit that we're good for it.

[John]

Yes, yes. If there really is a scenario where all of these other bets have to hit in some epic parlay like that is extremely nerve wracking. I agree with you. But the question is, how solid are these deals? Like I remember we were live on Liberation Day, remember April 2nd of this year, like it was the largest global market decline since the COVID era 2020 stock market crash. And at the time it seemed like a complete disaster. Remember Jordan from ChinaTalk coming on being like, this is the end of the world, basically. And I was like, but what if Trump just reverses it? And he was like, oh no, no, this trade war is gonna be way worse. And like he was kind of right. Like the trade war was more significant this year than the previous administration. But at the end of the day, it really was possible for Trump to just roll back a lot of the tariffs and he did that. And so if, if, if, if OpenAI doesn't accelerate to a trillion dollars in revenue or quadrillion dollars in revenue, and all of a sudden there's a whole bunch of folks who are like, wait a minute, like how are you going to pay us for our cloud stuff? And they're able to say, okay, well let's actually wind this back or let's stretch this contract out, let's make this five year contract, let's make it a ten year contract. Like if all of that can happen smoothly and efficiently with just the stroke of a penny, like it's not that big of a deal.

[Jordy Hayes]

It can, except if you're Oracle and you spend tens of billions of dollars building infrastructure that you ultimately can't monetize in the way that you thought you were going to monetize.

[John]

And if you have reason to.

[Jordy Hayes]

And they have massive debt. And so the reason I'm wearing the tinfoil hat is I would like to propose the. The glut theory, which is that I believe. I believe there's a chance.

[John]

Yeah.

[Jordy Hayes]

That Sam actually wants to create a massive overbuild. So he can. He can ultimately, he predicted a glut because he controls the demand on the show. Yeah.

[John]

Glut pilled.

[Jordy Hayes]

He's got pilled, he said. And he's going to.

[John]

He's going to know if it's going to happen in 26 or 27 or 28 or 29 or something. But he was like, it's coming.

[Jordy Hayes]

And I would just say, like, I think OpenAI will be a beneficiary of a compute glut.

[John]

It certainly seems like that. It doesn't seem like they have a lot of debt. It doesn't seem like. I. We don't know. That's the thing is that we don't know how these contracts are written. Like, there could be an easy mutual out. It could just be like, for convenience. These contracts can be revocable for convenience.

[Jordy Hayes]

Yeah.

[John]

And it's like, okay, well, then it's completely different conversation than if you don't pay your AWS bill. OpenAI, there's 37 billion. If you don't pay it, we own the company. You go into receivership, you go bankrupt. Like, they're wildly different contracts. And we don't know. There hasn't been any reporting on where.

[Jordy Hayes]

I think Sam is smart enough to know that. He's like, I'm gonna give you this commitment.

[John]

Yep.

[Jordy Hayes]

And your stock's gonna pop massively.

[John]

Yep.

[Jordy Hayes]

And you're gonna be able to use that to raise this is the tail is always more debt.

[John]

Everyone loves press.

[Jordy Hayes]

And because I know what I'm gonna do for you, you gotta give me an out.

[John]

Yeah. Everyone loves press releases. That just doesn't.

[Jordy Hayes]

It doesn't tell you press release economy.

[John]

But it doesn't actually tell you anything about where the risk sits. So we don't actually know. We don't actually know. We just know that, like, you know, if the revenue. If AI revenue slows down, it's going to be bad for somebody.

[Jordy Hayes]

But it's worth noting that OpenAI, I believe, will be a massive beneficiary of a glut and an overbuilt.

[John]

Maybe not in the case where they're on the business. Yeah.

[Mark Gurman]

Yeah.

[John]

Where they go into receivership and Oracle and.

[Jordy Hayes]

Yeah. And I just, I think the people around the table are smart enough to know how much leverage they have right now and wouldn't be signing up deals that require the company to burn 100 to $200 billion a year and not have any way to get out of that, like, eventually. I don't know.

[John]

I don't know. I mean, Sam has a lot of leverage, so these could be very favorable deals for OpenAI. At the same time, it could just be a very rough deal and it could wind up being a situation.

[Jordy Hayes]

I think Sam went from having low leverage, pre chat GPT, which is how you get these, and, and, you know, needing $10 billion, needing to do a $10 billion training run, yet low leverage. That's how he gets into this deal with Satya, right? Where he's giving. Not only is he going to spend $250 billion or says he's going to spend $250 billion with Microsoft, he's got to give Satya 20% off the top first. Right? So that was the interesting. This interview was just absolutely wild because they're both, they're both, you know, you know, you have Brad in the middle who's like, I'm, I'm friends with both of you guys. I'm sure he's invested in both companies.

[John]

Clearly one of them, someone in on that podcast is the crying wojack with the smiling wojack face.

[Jordy Hayes]

And it was Sam.

[John]

Maybe. I don't know.

[Jordy Hayes]

I mean, I mean, it certainly wasn't Satya.

[John]

It might be Brad. You don't know. It all depends on how it plays out.

[Jordy Hayes]

And Satya said one thing Ben Thompson.

[John]

Take is that it is Satya. That's the Ben Thompson take right now. The Ben Thompson take is that, is that Microsoft should not be winding down this partnership. They should not.

[Jordy Hayes]

They're not winding it down.

[John]

They are getting out of it. They have all these clauses that allow them not to have access to the technology in the future post AGI or post 2032. Like, they can just wait. Like, even if, even if the tech just plateaus and, and there's no AGI and expert panel never says AGI. Like in 2032, it just becomes OpenAI's property. And, and once they pay their 250 billion cloud, which is crazy, but let's say it happens, then Microsoft is just a shareholder on the cap table. And from Ben's perspective, he's like, there is an opportunity for Microsoft to have a much deeper relationship with this company and have them be like a really solid r&d.arm for the business, like forever. That was on the table and that was not taken.

[Jordy Hayes]

So yeah, remember that was a scenario during the coup which we'll get into the table reading of some of the deposition, but that was a scenario where it seemed like a lot of the OpenAI team and Sam were going to land at Microsoft and just keep working on a lot of the same things.

[John]

Oh yeah, that was a crazy moment.

[Jordy Hayes]

A couple other things that stood out. Satya had a quote. I wrote it down. I may. It may not be perfectly accurate, but it was something to the effect of how he was deciding which of OpenAI's compute kind of wishes they would prioritize. And he said something, he basically was like, there's certain requests that make sense for OpenAI that doesn't make sense long term for Azure. And so these are. He gave the example of building a data. Building a data center for a specific training run, which he has done in the past. But as you scale these things up, he's like, I want fungibility of the fleet, I want diversity across geographies. Right. He's trying to set up Azure for the long term. He's clearly extremely ROI focused.

[John]

Super interesting.

[Jordy Hayes]

Yeah. What I read into that is like there's a very real scenario where Oracle is massively levering up doing things that are to get in the AI game because they were somewhat sidelined and they're going to do things that are really good for OpenAI and maybe not so great for Oracle over the long term.

[John]

But yeah, it's the job of the CEO to be the fox, not the hen. This is the job. Should we play any clips from the actual podcast? I realized we should.

[Jordy Hayes]

Let's play this, let's. Let's pull up this post from Buco Capital right at the top.

[John]

That's just a reaction video. Right. What does this guy say?

[Jordy Hayes]

He says, Sam Altman, if you ask him how I'll afford 1.4 trillion in spending with only.

[John]

This is rude. Let me go to an ad read. Figma, think bigger, build faster. Figma helps design and development teams build great products together. You can get started for free. Let's play the actual clip. I want to play the one that compound compound 248.

[Jordy Hayes]

How can the 13 billion in revenue.

[Mark Gurman]

13 billion make 1.4 trillion of spend commitment, you know, and, and, and you've.

[John]

Heard the criticism, 1.4 trillion.

[Mark Gurman]

Well, more revenue than that.

[John]

Second of all, that's not such a red flag.

[Mark Gurman]

I'll find you a buyer.

[John]

This is sort of a like, you know, People are.

[Mark Gurman]

I think there's a lot of people who would love to buy open AI shares.

[John]

I don't, I don't think you would.

[Mark Gurman]

Including myself.

[Jordy Hayes]

Including myself.

[Mark Gurman]

People who talk with a lot of like breathless concern about our compute stuff or whatever that would be thrilled to buy shares. So I think we could sell, you know, your shares or anybody else's to some of the people who are making the most noise on Twitter, whatever about this very quickly.

[Jordy Hayes]

We do plan for revenue to grow steeply.

[John]

Yeah. The step back is growing steeply.

[Mark Gurman]

We are taking a forward.

[Jordy Hayes]

So pause. Pause for a second. One thing is, I think it's possible to still have a lot of questions on the 1.4 trillion of spend and not be bearish on a OpenAI at 500 billion. Totally. And so I think when I, when I. Sam is entirely right. He's actually smart to say focus on, let's focus on demand for the stock. Yeah, right. If you want to get out, I'll help you get out.

[John]

Yep.

[Jordy Hayes]

And I think there's some people on the timeline that are seeing this answer and they're bearish on OpenAI 500 billion. When. I don't think that's, I don't think that's necessarily.

[John]

I mean, like, if you comp open AI to Palantir, it's like remarkable just on terms of top line growth and market cap, like you get to 500 billion, no problem. No problem.

[Mark Gurman]

Yeah.

[Jordy Hayes]

And Palantir is trading at 666 times.

[John]

Earnings and OpenAI is losing money. So Infinity PE.

[Jordy Hayes]

There we go.

[John]

So it's like, it's terrible, but I mean, it's just like a crazy, crazy revenue ramp. And I think that, I think that's what has everyone like so excited. And, and there's like, even if people are just so, like underwriting the 500, the 500 billion is like pretty, pretty simple because you can just say, okay, if it just keeps growing.

[Jordy Hayes]

Yeah. And I think if you're an investor of, with, in any of the companies that Sam has announced these spend these like press releases with, it's totally fair to say. I'm not bearish on you, Sam. I'm bullish on OpenAI.

[John]

This is the interesting hypothetical.

[Jordy Hayes]

I'm bullish on OpenAI, but I have capital deployed in all the companies that you've committed spend to. And I want to know.

[John]

Oh, yeah, yeah. Brad's a big Nvidia holder too. Right.

[Jordy Hayes]

I'm sure he's invested in all these.

[John]

He's probably invested across the board.

[Jordy Hayes]

So it's a fair question to say. What's the. Like, there were so many other ways to answer this question.

[John]

Oh, that is interesting. Yeah, yeah, yeah, yeah. It could be like, are you going to nuke my portfolio? And I'm going to be fine on your deal, but the rest of my portfolio is getting cooked. That's kind of a funny outcome.

[Jordy Hayes]

Yeah, that is the.

[John]

That's the risk. That's one risk.

[Jordy Hayes]

That's why people want to know about this.

[John]

Sure, sure, sure.

[Jordy Hayes]

How real is the backlog? Right.

[John]

Sure, sure.

[Jordy Hayes]

Like, is this Oracle 300 billion commitment? How much actually comes through?

[John]

I mean, no one knows. It's predicting the future.

[Jordy Hayes]

Like, I know usually when companies would come together.

[John]

Yeah.

[Jordy Hayes]

And announce a deal like this.

[John]

Yeah.

[Jordy Hayes]

There is, is, is a lot more. Like, you could have done a few of these press release. Press releases and there wouldn't have been as many questions. Like, there's a lot of big numbers that you could throw out.

[John]

Sure.

[Jordy Hayes]

Before people are like, would say, like, OpenAI's revenue ramp is insane. They have the biggest consumer product created in the last 10 years.

[John]

Yeah.

[Jordy Hayes]

Everyone. People love this product. Right. It is, it is entirely mainstream. It is magical. It's the first real thing that can compete with search. And I just think that it's still like, when you announce $100 billion deal, a $200 billion deal, another $100 billion, a $50 billion deal, and then less than 72 hours after this interview releases, there's another $38 billion deal announced. And now is an appropriate time, I think, for people to just press them harder on this because the joke of, like, OpenAI is holding up the stock market is incredibly real right now.

[John]

I mean, I don't know what more people want, though. Like, it is like, the logic is there, which is just like we've been growing three acts every year we project that we're going to continue to grow 3x. The quadrillion number is a joke, but clearly they backhead the envelope to being a hyperscaler.

[Jordy Hayes]

So say that. Don't say, we're automating science. Sell your shares.

[Erica]

Like.

[Jordy Hayes]

Yeah, you didn't have to answer. Like, I, I think that the fact of the matter is, is Elon.

[John]

There might, there might have been a better way.

[Jordy Hayes]

Elon does very similar things, Right?

[John]

Yeah, totally. We're going to go to Mars and we're gonna have a flying car and.

[Jordy Hayes]

We'Re gonna, we're gonna do data space.

[Tyler]

The thing.

[Jordy Hayes]

The difference is that Elon. Elon is probably 10 to 50 times more likable Than Sam.

[John]

Mm.

[Jordy Hayes]

And I'm just saying that based on.

[John]

The timeline, like, it is Elon's app.

[Jordy Hayes]

But yeah, like, I think in general, yeah, people like, you know, yeah, yeah.

[John]

I mean, it's hard to tell. Like, you could go in the comments of the Rogan episodes because they both done Rogan. I mean, Rogan clearly likes Elon more than Sam. Like, if you listen to the Rogan interview with Elon, Elon's been on a bunch and he's like, he's echoing that sentiment. There are certainly people that like Sam more than Elon, but sure, sure, sure, sure.

[Jordy Hayes]

I'm just saying, like, yeah, in general, Elon is more likable, and so people give him the benefit of the doubt. He also has a longer, longer track record of delivering on. You know, there's a thing of, like, Elon, you know, gets the timing wrong, but he delivers.

[John]

Yeah, yeah, yeah, yeah. And so, I don't know, it's weird because, like, I do feel like there's a benefit to not going, like, private equity guy mode on this answer and actually doing the Elon mode and saying, like, curing cancer and new hardware device, and we have these really grand ambitions. There is a different flip on this, which is just like, yes, revenue's been growing. We expect that it'll compound at 50% and then 40%, then 30%. And so we projected our revenues and we projected our cogs, and it looks like in five years, our revenues will be 500 billion and our COGS will be 300 billion. And so where are we going to get the cogs from? We're going to get the cost of goods sold from Amazon and Oracle and AWS and Azure. And so we went and did deals to supply, you know, our infrastructure for those. Like. Like, that's a totally reasonable, like, spreadsheet answer. But, like, it's just going to be.

[Jordy Hayes]

I just think. I just think that we're. We're going to cure cancer answer, we're automating science answer. Yeah, isn't good enough anymore at this scale, when there's this many trillions of dollars on the line.

[John]

I mean, yeah, it does. It does feel like a pivot away from just like, hey, we're just going to make a ton of money off of ChatGPT. Because I feel like there's a world where it's like, hey, yeah, actually ChatGPT is going to make the same amount of money as Google Search. It's going to be at that tier, in that league. And that justifies the investments Google spent A ton of money on Capex. I mean Google's spending, all the Hyperscalers are spending 60, 70, 80 billion a year. So he could have just. There is a world where he just says hey look, the reason you're seeing all these numbers is because we're building a hyperscaler and our products are going to make the same amount of money and get the same amount of attention, have the same amount of users as Facebook and family of apps and Google and all the different Microsoft products. And so we need servers to serve those up. And so we went around and got all of those. And you know how all those other hyperscalers spend 50, 60, 70, 80 billion a year? Yeah, we're going to do that too. And so you add that all up and you get to 1.4 trillion over the next decade and that's the plan.

[Jordy Hayes]

But he's projecting more spend than that.

[John]

1.4 over the next five years, something like that.

[Jordy Hayes]

We don't even know he's growing faster, much lower revenue base.

[John]

I mean it's like how much are they on the hook for some of these? Like I was looking at the, I was looking so that one of the breakdowns, the thing included, included in the 1.4 trillion is Stargate, which is like straight up, not on OpenAI's balance sheet. Yeah, it's like just a new, it's an entirely new company, new thing, new project. Like OpenAI has some, some, some loose structure to it.

[Jordy Hayes]

Counting. Counting. Yeah.

[John]

But basically we are at, we are at a like I agree with you on the assessment of the timeline but we are definitely in a moment where every single time one of these deals gets announced they just, everyone mentally just takes the headline number and puts it as liability on OpenAI's balance sheet.

[Jordy Hayes]

Yeah.

[John]

And that's just like not the way these things are structured because they can be like they can have get out of jail free clauses.

[Jordy Hayes]

I think it's, I think so. So here's one thing, it's certainly going private equity guy answer and just laying out all the numbers.

[John]

Yeah.

[Jordy Hayes]

Then there's the kind of more product oriented answer. Not the hand wavy like we're automating science and we're going to have a hit consumer product. But there's like hey, like agentic commerce we think is going to be, is a multi trillion dollar opportunity and we're not monetizing there yet, but we will be soon. That kind of asks the follow up question of like okay, well like what if it doesn't pan out? And I'm not betting against agenta Commerce. Like I think that people are going to buy a lot of products through ChatGPT. But it opens up a follow up question of like okay, well what if that doesn't happen? Are you on the hook for all the spend? And then Sam can say like if he answered honestly he'd have to say, well I imagine it would be something to the effect of like we have certain minimums that we have to hit but we're not on the hook for, you know, the full deal sizes and that's what people want, nukes. I'm just saying like every, every hyperscaler involved, every company.

[John]

Yeah, because you don't get credit for fake PR for fake press releases. Right?

[Jordy Hayes]

Yeah. So the Amazon deal. Amazon. Amazon announced a deal. It's $38 billion over seven years.

[John]

Yeah.

[Jordy Hayes]

Stock went up 150 billion.

[Mark Gurman]

What?

[Jordy Hayes]

So that's the press release?

[John]

Yeah.

[Jordy Hayes]

Wow.

[John]

Okay. So. I don't know, it's. Yeah, it's, it's odd because it's like these games are clearly working in the public markets. Like there are investors. Like the marginal investor on Wall street apparently thinks the value of $1 of OpenAI revenue is $10 or something like that. What was the ratio you said it went up 130 bucks or something for, for 40. So, so they're applying like a three or four times multiple on a dollar of open eye revenue, which again is only 30% margin. It's only 30% margin. Like it's not, it's not 99% margin. I think it's like 30, maybe 40. So, so it is very weird to apply.

[Jordy Hayes]

Let's pull up this post from Grant Hawkins. How can a, how can a company with 13 billion in revenues make 1.4 trillion of spend commitments? Brad, if you want to sell your shares, I'll find you a buyer.

[John]

Low tam banger, 13 likes. I'm going to throw a like stuff.

[Jordy Hayes]

Grant 12.

[John]

We're liking it. While we're.

[Jordy Hayes]

Hey man, how are you going to pay for the 1.4 trillion of spend you've promised proceeds to crash out.

[John]

I mean the timeline. The memes are fantastic. They're impeccable today. You know what else is impeccable? Vanta? Automate compliance. Manage risk and accelerate trust with AI. Vanta helps you get compliant fast. And we don't stop there. Our AI and automation power everything from evidence collection to continuous monitoring.

[Jordy Hayes]

Compound 248 was just going off.

[John]

Oh yeah.

[Jordy Hayes]

Can we afford it? Who knows? But what I do know is you can sell your shares it's so ridiculous.

[John]

What a bizarre. What a bizarre club. Yeah. I don't know.

[Jordy Hayes]

Les Shrub says. I'm sorry, Brad, but if CEO of one of my holdings spoke to me like that, I wouldn't be a quote buyer. I would be a seller of all my shares.

[John]

That's a weird like vibes based analysis.

[Jordy Hayes]

Yeah.

[John]

I don't, I don't like that one.

[Jordy Hayes]

I. I've invested in a lot of companies.

[John]

Yeah.

[Jordy Hayes]

Post investment I have realized that some of the CEOs.

[John]

Yep.

[Jordy Hayes]

I don't like.

[John]

Sure.

[Jordy Hayes]

But that doesn't mean I'm actually bearish on the company.

[John]

True.

[Jordy Hayes]

Sometimes it's just like kind of a personal judgment. And I think, I think it's okay to be invested in a company with, with a, with a management team you're not necessarily a fan of.

[John]

But I don't think, I don't think Brad was offended by how Sam answered the question. Not at all. Like, I think, I think they were kind of. I don't know. They're trying to have a public conversation about the relationship of a CEO with an investor. Like, and they're. It's almost like they're. They're like there's some realness there, but then there's also some. Like we're trying to show what our perception of each other is. It's a very complicated dynamic. It's an invariant. It's very. It's ultra Neo media. It's Neo corporate media. I don't know. There's something weird. It's a very. It's unprecedented. It's a very interesting, interesting piece of content. Do you want to read any of Brad's breakdown? It's pretty interesting. He says people are reading too much into Sam being feisty. Yeah. Who would spend 30 minutes on a show talking about this? It's like not that big of a deal. I love that about him. And in our founders, we laughed about it afterwards. If you listen to his words, here's what he said. A lot more than 13 billion revs in 2025, which is insane considering they were doing less than 4 last year. They're going to quadruple revenue. Quintuple revenue off of a $4 billion base. That is crazy. But so are the spend commitments. 100 billion revs sooner than people expect. So they got to get there pretty quick because once they get to 100 billion, that's still. They have to do 14 years at 100 billion to pay for 1.4 trillion, if that's what they were actually on the hook for. Spending commitments aligned with revenue expectations. Risk of too little compute far greater than risk of too much. At that growth rate, could be 200 billion revs in 2030. Match that against 200 billion of capex and you have an absolute juggernaut. Agree. If revenues come in slower. Okay, Tyler, we need to map these against our different projection, our different timelines. So we need the Brad Gerstner tab of the spreadsheet next to Leopold Aschenbrenner's projections next to what We've heard from OpenAI in the past. You know what I'm talking about?

[Jordy Hayes]

Yeah, yeah.

[Tyler]

AGI 2027 has that too.

[John]

Yeah. I think we also need a quick exchange rate between dollars of capex to gigawatts to flops and be able to exchange rate between all of them to really understand in Apples to Apples, is this more bullish than what we were hearing before? Because I feel like the general vibe is a deleveraging of the bullishness in the AI economy. Every time I hear a new number, it's always like pushed out a year and like a little bit less than the previous projection. And so we're getting. And we saw this first with like the. We could reach super intelligence in a few thousand days. Soft singularity. Right. Like that felt like a stepping back in the aggression. Right. And so I feel like there's a lot of these things where the actual read on this could be. Oh, yeah, like they're going to hit. They're going to hit 200 billion revs in 2030. Like that could be way off of the previous projections based on like exponential fast takeoff. Right. What do you think?

[Tyler]

So AGI 2027 has $100 billion revenue by June of 2027.

[John]

Let's make it happen. It's got to happen. Wait, 100 billion across all the labs.

[Tyler]

No, that's just like.

[John]

Well, that's like a big.

[Tyler]

It's like open brain or 100 billion.

[John]

Wait, 100 billion rev 2027.

[Jordy Hayes]

Yeah.

[John]

That actually seems pretty doable.

[Tyler]

It's totally reasonable.

[John]

Yeah, I know you're bullish.

[Jordy Hayes]

Yeah.

[Mark Gurman]

Because.

[John]

Because if they're tripling, if they're tripling this and they're going to close 25 at 20 and then they're going to close. They're going to close 2026 at 60. They're going to be at 180. Yeah. Extremely bullish.

[Tyler]

Yeah, it's.

[John]

I mean, it's take pretty. Take 500 days off the singularity clock. The singularity is only 2,000 days away now.

[Jordy Hayes]

Yeah. I mean what it comes down to is that whether or not, like, whether or not Brad. Like, Brad obviously is.

[John]

Yeah.

[Jordy Hayes]

Like, from what I know about Brad, he's not. He's not. He's. I can't. We would be in such a dark place if Brad was trying to offload OpenAI shares pre IPO. Like, things would be so bad, right?

[John]

Yeah, yeah. I do think this.

[Jordy Hayes]

But it has nothing to do with. But the question is not. Again, the question is for people that are not invested in OpenAI, but invested in all the companies that they're partnered with.

[John]

Sure. Yeah, yeah, yeah.

[Jordy Hayes]

So sell your shares is just not.

[John]

A good game of musical chairs. Yeah, that would have been an interesting way to flip it around. Would be like, hey, Sam, I'm still bullish at 500 on OpenAI. I'm still a buyer, but should I be bullish on Broadcom or Oracle?

[Jordy Hayes]

This just goes back to my overbuild thesis of like, who's a beneficiary of the overbuild?

[John]

Yes. The Jordy Hayes overbuild thesis. Trademarked Right now when it happens.

[Jordy Hayes]

We're gluttonous.

[John]

We're taking a.

[Jordy Hayes]

We're gluttonous.

[John]

We're also going to tell you about graphite.dev, code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. Not gonna lie. If a CEO's response to hey, how are you gonna pay for all this stuff you don't have cash for is, you're welcome to sell your shares. You should probably take them up on that offer. Lots of the timeline is just going crazy. Gotta give it to Altman. Very forward thinker. Itching to go public for the sole purpose of crushing the hypothetical short sellers that don't exist yet. Can't wait for the S1. I love that. I mean, I. It's a. I thought the short seller thing was fine. It was good. Good point, people. This wojack. This is all crazy. Who is this Kenneth Dread? So you're doing 11 billion or 13 billion in revenue, but making $1.4 trillion in spending commitments? How does that work? First of all, we're making 13.1 billion revenue. And second of all, short seller, seller. That's hilarious.

[Jordy Hayes]

Yeah. There was not. There was not. No one came to Sam's defense. Yes.

[John]

Okay. Okay. So from a media perspective, I am interested in this because. Do I have this right? That Altimeter is a hedge fund. They're not like long only buy back the founder. Like never sell your shares. Hold Forever. It is a different type of fund. And so there is like if you do a podcast with a portfolio company and you're a series a founder and you walk into a podcast that's run by a venture capital firm, like there's no scenario where they like walk out of that podcast and they're like, we gotta sell this. I mean, maybe a little bit, but like not. There isn't that, There isn't that tension. Like in general, the critique of fund media is that they're long only and so they'll never. They're only.

[Jordy Hayes]

They'll never give you an accurate view into the company.

[John]

Exactly. Because they're just always, they're always. They're turbo bulls or turbo longs or whatever the word permabulls. They're perma bulls. But Altimeter is not right. And so you could wind up in.

[Jordy Hayes]

A situation if you're a podcast and.

[John]

You actually walk out of that meeting and you're like, oh wow, like he sold after that.

[Jordy Hayes]

Like figure that out. So Altimeter and it's many other funds there's going to. Yeah. So I love Brad, I love Altimeter I and, and there is a class of funds right now that there are going to be plenty of funds that don't make it through the AI CapEx trade. We're in the midst of the AI CapEx trade. If you get this wrong and you get this wrong enough, you just won't. There will be funds that shut down over being long into a correction. And so I view this question in my view is, is for more so for the hedge fund community to try to get a sense of like okay, what, what actually happened? You know, and obviously they have other sources besides listening to. To a podcast.

[John]

Yeah.

[Jordy Hayes]

But what happens in a scenario where open I can't. Can't meet the meet the kind of soft commitments it's made to all these partners. Like if OpenAI growth.

[John]

Like so. So I believe that if OpenAI came out and said, hey guys, actually everything, all of our special bets, we're not going to do the hardware device we don't like that soar is not really working. We're taking it out of the App store. We're doing the $200 a month plan, the $20 a month plan. We're basically guidance for next year we're going to do 15 billion and then maybe next year we'll do 16 and then 17 and like it's going to be like an 8, 20 billion run rate business. And so we're canceling all the spend Commitments. I believe that the market would just retrade right back to where it was. And I believe that Amazon, if they got 130 billion of credit, they just lose that. And we just see exactly what happened at Liberation Day.

[Jordy Hayes]

Yeah. So Oracle traded up 30%. Yep.

[John]

And I think it trades down 30%. I don't think it trades down 60%.

[Jordy Hayes]

But now they have 5x the debt.

[John]

They don't have 5x the debt. That's just not true. They didn't actually go into.

[Jordy Hayes]

Maybe it's not 5x but they have significantly more.

[John]

No, no, no, no, no. It's not even significantly more yet. Like it will be like little a drip of debt like every quarter more and more and more. It's not just going to pop up all of a sudden. Like it's not just like if you go and you have 300 billion. Yeah. Basically saying you're not just getting it like overnight. Like, I mean there's this news about, about Meta, like Meta is also doing this and, and they, and, and like so they metta increased spending on capex 71 billion up from 69 billion previously. And their guidance is that they will be notably larger in 26 than 25. And so like yes, that's like a couple more billion. That's significant. But it's a big company and so they're doing this bond deal. It's 30 billion. That sounds huge. It's a $2 trillion company.

[Tyler]

It's like 10 AI researchers.

[John]

Exactly. It's like nothing. It really is like not that big. Bank of America tallies 75 billion of AI related public debt offerings in the past two months. So in the past two months, 75 billion of AI related debt offerings total like it's a lot. But it's not like it's not like destroy the global economy yet. It's just not there.

[Jordy Hayes]

I Morgan Stanley had it at AI. Capex related debt is already between like 1 and 5 trillion. So there's over a trillion dollars of debt already tied to.

[John]

I think people are reclassifying. It's like when people change their dot com to AI and they're like okay.

[Jordy Hayes]

I'm an AI company, I'm an AI company.

[John]

It's like actually this is an AI loan. This is an AI debt instrument. This is an AI debt Instrument. Okay, I have a few more things. One, I got some bad news from polymarket. There's a 36% chance of a US recession by the end of 2026. So we could be looking basically 36% chance that it's 1999 right now, which I don't.

[Tyler]

What's the definition of recession?

[Jordy Hayes]

Yeah, what's their definition?

[John]

Because it doesn't seem to be. It's seasonally adjusted. So you have two consecutive quarters of negative economic growth. So less than 0.0 GDP growth. So GDP goes negative in real GDP terms. So not inflation adjusted. So inflation adjusted. Basic. Basically. So you're taking economic growth for two consecutive quarters in real terms, not in nominal terms. It needs to be negative for two quarters. And it also is seasonally adjusted so you don't get like a little Christmas bump. And this data will come from the National Bureau of Economic Research and they will publicly announce that a recession has occurred in the United States at any point during 2025 or 2026 with the announcement made. So the nber they just, they call it when they call it but it's based on economic economic contraction basically. And you can't contract for just one quarter. You get one free one before you get called a recession. So you can have a little blip in your economy for 1/4 as long as you make it back the next quarter, you double down, you parlay, you do something crazy to get out of the hole, then you're good. But if you go down two quarters in a row, you got a gambling addiction and you're put in the recession hole and you got to get back in anyway. I wanted to share that. Then I wanted to talk about Buco Capital blokes assessment of this. Sam breaks people's brains just like Elon.

[Jordy Hayes]

There's been lots AB in the chat says don't believe the recession hype until the pandemic price of a nautilus drops to sub 100k.

[John]

I think that is a great analysis ab. Welcome to the stream. New name but fits right in here honestly. Thank you for chiming in. Also if you're looking for a nautilus for under 100k you got to go over to getbezel.com your bezel concierge is available now to source you any watch on the planet. Seriously, any watch might be able to.

[Jordy Hayes]

Get a boys size nautilus for under.

[John]

100K but ladies nautilus, that could go.

[Jordy Hayes]

Yeah.

[John]

So Sam breaks people's brains just like Elon. There's a thin line between grifter and visionary and creating true believers to harvest their capital requires rhetoric that makes non believers recoil. Sam hates Elon. Hates Sam. Not just because he stole his company but he stole his whole playbook. And so I always like this idea of is Elon Barnum and Bailey, the circusman, or is he Thomas Edison or Nikola Tesla? Well, he's both. And why he has such a power loss, such an incredible impact on the economy is that not only is he the inventor, and not only can he lead engineers to invent the thing and build the thing, but then he can also promote it and he can promote it really, really well. And so he's both the grifter and the visionary. He's both the real deal and the fake guru. And when you put those together, it's really, really powerful. Sam seems to be doing something similar. The question is in the Tesla, and this is my question for you, maybe it is different. I know that your position is that it is different, but in the build out of Tesla, in the build out of SpaceX, there was never a moment where it was like, if Elon goes bust, everything is dead. Right. It was never like if Tesla doesn't hit earnings or continue to grow like Ford and all these different supply chain.

[Jordy Hayes]

Companies will automate, will collapse.

[John]

Yeah, exactly. Elon has never.

[Jordy Hayes]

The other big difference between the two is like one going back to the likability thing, like, you know, not, not saying this from, from like speaking generally, timeline assessment, Elon is more likable than Sam. He has also made tens of thousands of retail investors so much money for believing in him. Right, that's true. And so not only is he just generally people listen to him and they like listening to Elon talk more. But so many people believed in the Elon crazy vision and a lot of it has come true, some of it hasn't. But at least tens of thousands, maybe a hundred thousand of people have like made money because of Elon's vision and believing in him. And so Sam doesn't have the benefit of having like, there's no retail army defending Sam even the thing that was notable is retail army. Brad is a one man retail army.

[John]

Retail army.

[Jordy Hayes]

And so there was not a single other VC that I saw that stood up and said, no, actually they're good for their 1.4 trillion. Here's how they're going to hit it.

[John]

Yes.

[Jordy Hayes]

Like nobody put their.

[John]

So Sam actually did say that one of the reasons why he maybe wants to go public is to actually have a retail army to basically. Is that what you were going to say? Yeah, yeah, yeah, yeah. Break it down.

[Jordy Hayes]

Yeah.

[Tyler]

I mean basically they were talking about IPOs. And then because there was that thing I think from Reuters about how they were maybe planning on IPOing mid, 2027 or late 20, 27. And then Sam was like, oh, that's just like, maybe in the future. But one of the reasons we don't.

[John]

Know why people write those pieces, and it's like, dude, everyone knows when they write them. It's amazing. It's so entertaining.

[Tyler]

Yeah, but basically he says, like, one of the reasons he would want to IPO is so that he could basically bring, you know, not just venture capitalists, but the entire economy with him. You know, so he wants the retail army.

[John]

Yeah, I mean, it is UBI. Everyone should get one share of OpenAI.

[Jordy Hayes]

If the IPO gets priced too high.

[John]

He'Ll get a. Yeah, everyone just needs to be riding with him. Anyway, let me tell you about Julius the AI data analyst. Connect your data, ask questions in plain English and get insights in seconds. No coding required. The undefeated king of the application layer, Rahul from Julius. Go use it. They have a Slack agent so you can ask your data questions in Slack. Highly recommend, Julius. Elon and Sam were also beefing on the timeline. This is interesting. So Elon says you stole a nonprofit. Sam Altman says I helped turn the thing you left for dead into what should be the largest nonprofit ever. You know as well as anyone, a structure like what OpenAI has now is required to make that happen. You also wanted Tesla to take over OpenAI. No nonprofit at all. And you said we had a zero percent chance of success. Now you have a great AI company, and so do we. Can't we all just move on?

[Jordy Hayes]

Somebody was pushing back a little bit of the can't we all just move on? Because Sam, like a day earlier was.

[John]

Oh yeah, was posting this.

[Jordy Hayes]

Was saying a tale in the next post.

[John]

Yeah.

[Jordy Hayes]

Vittorio posted 911, I'd like to report a murder. And it's basically giving shit to Tesla not being able to do a refund. And so the follow up to you stole a nonprofit and you forgot to mention Act 4, where this issue was fixed and you received a refund within 24 hours. But that is in your nature. So again, Elon refunded him.

[John]

Refund confirmed.

[Jordy Hayes]

Yeah.

[John]

So Sam obviously keeps poking the Dark Souls overlay. Refund granted of Elon paying Sam? No. Why this was interesting to me was that the nonprofit I was told that OpenAI was going to convert from a nonprofit to a for profit. And I feel lied to because what we actually got was the nonprofit is still in existence and there's now a new for profit and they're actually separate. I wanted the nonprofit to fully convert. And now you have this nonprofit that's sitting there with $136 billion of OpenAI shares. I want to finish the job. Let's go back to the nonprofit. Let's convert it to a for profit. Let's take that public as an OpenAI holdco. So you have 136 billion in the Treasury. Let's get that ripping in the public markets while we wait for the real OpenAI IPO. What do you think?

[Jordy Hayes]

Two IPOs.

[John]

Two IPOs. You could have two companies and then they could merge and they could demerge. It is interesting.

[Jordy Hayes]

Two is a bigger number than one.

[John]

So there's this funny thing that Sam keeps saying, like the nonprofit is going to be so well funded. It's the largest nonprofit ever. But he hasn't really unpacked. Will it be a. What kind of nonprofit will it be? Will it be a good nonprofit or a bad nonprofit?

[Jordy Hayes]

There's some bad nonprofits out there.

[John]

I really think that people are skeptical of nonprofits now. Like people do not just assume, oh, it's nonprofit. Everything's going to go perfectly for sure, 100% oh good, it's a nonprofit. Nothing bad can happen. It's ridiculous.

[Tyler]

I think the best case for the nonprofit is they kind of create some sort of like research arm and then they start making products and then, you know, maybe, maybe it'll become like a consumer product.

[John]

Yeah. Yes.

[Tyler]

Just the nonprofit.

[John]

I love it. I love it.

[Tyler]

And they can turn into a for profit.

[John]

Yes. The nonprofit is basically just spinning out endless for profit companies. This is.

[Jordy Hayes]

That could be the greatest nonprofit of all time.

[John]

That would be the greatest nonprofit of all time.

[Jordy Hayes]

Yeah, a lot of. I mean there's so many.

[John]

They really should wind it down like I was promised. A for profit conversion. I feel lied to. Anyway, get over to fall the generative media platform for developers. The world's best generative image, video and audio models all in one place. Develop and fine tune models with serverless GPUs and on demand clusters. Oh, speaking of cars, there's a review for the new Porsche 911. It's a hybrid and the review in the Wall Street Journal in off duty says yes. And it's the fastest, most powerful, best handling 911 yet. And Jordy Hayes, as a former Porsche 911 Turbo S owner, I want your review of this review and I'll read you some of this. So It's a hybrid 911.

[Jordy Hayes]

A review of the review.

[John]

Still seething now. Smoother, more refined. A few days before I left Spain, I got a note from my Name from my friend Dave Scrivener, a producer for the television show Motor Week. Did I want to share a car on Porsche? Did I want to share a car in Porsche's 911 Turbo S test drive? I'd love to. I knew from past outings that Dave is not only an excellent is. Not only is Dave excellent company, he's a father of 12, funny as hell, but a superb driver. Let's hear it for Dave. And on this trip, he put on a masterclass with me in the right seat, looking like Chewbacca in the asteroid field, Dave utterly thrashed the Porsche 911 Turbo S Cabriolet assigned to us, attacking the granite toothed switchbacks of the Andalusian hill country like he hated them. We actually went faster and harder getting to the Circuto Ascari racetrack than we did when we were on it. I have pretty good car control. I can generally get this drive. Yeah, it's crazy. But Dave, the senior driver for the television show Motor Week and Produce and pro level road racer, is fearless, death defying. Even. I might have preferred not to test the Turbo S's biggest ever carbon ceramic brakes while pointed over a cliff at 100 miles per hour. Dave reasons, when else would they matter? To the untrained eye, the Turbo S might look just like another 911, one of dozens of variants with inscrutable nomenclature. GT2 Carrera 4S Cabriolet. But this, dear friends, is the big one. The quickest, most powerful, most versatile, most luxurious car in the 911 lineup. The legend, the proverbial gorilla in a tuxedo. Did you ever refer to your car as a gorilla in a tuxedo? Maybe. What?

[Jordy Hayes]

It was black. It was black on black on black.

[John]

We never introduced it as the gorilla in the tuxedo. And that's why you were like, I gotta get out of this thing. Now it's a hybrid. Notwithstanding the 200 mile an hour top speed, the goal.

[Jordy Hayes]

I'm actually about to crash out.

[John]

You are?

[Jordy Hayes]

Okay, break it down because I was not aware until we were reading this that they were making the Turbo S a hybrid.

[John]

Okay, and why are you crashing out? Why don't you like it?

[Jordy Hayes]

I thought we were going to have it. I mean, no Porsche owner is sitting there being like, I want them to make the cars heavier and I want them to depreciate. They hold their value so well. I want them. I want them to depreciate. I want you to make it give. Make it a hybrid.

[John]

Okay.

[Jordy Hayes]

Anyways, continue and Then I'll give you.

[John]

More thoughts so I can give you some more details on the actual impact of this move. So it still has a twin turbocharged 3.6 liter flat six and it's a brand new engine. It has fuel injectors all the way up with no belt driven accessories. The unit is a few inches more compact. The turbos themselves are also smaller. These adjustments make just enough room on top of the engine for the pulse inverter and the DC DC converter. I don't know why, I don't know enough about engines to understand what's going on there. But I will tell you that Porsche invented an entirely new flat 6, different bore, diameters and everything just to clear 11cm under the engine cover. But it's not like the engineers had a choice. Nobody was going to tinker with the Turbo S's silhouette, were they? Likewise, the 8 speed PDK transmission is totally changed. Wrapped inside the transmission housing is an electric motor. 80 horsepower, 139 pound feet of torque connected to the crankshaft via a dual mass flywheel. There's some more information here. These can add up to. There's also electrically powered turbochargers. These add 38 horsepower of electric boost on their own, as well as recovery energy from engine braking. The car's 590 pound feet of electrified torque is sustained from 2,300 rpm to 6,000 rpm. The acceleration is terrifying. It can get up to 701 horsepower shaking its fist at the sky. The E turbos. So this is the point that I want you to react to. Purists. That sounds like you, Jordy. Are you a purist? Purists may sniff that the hybrid turbo S weighs 187 pounds more Fair point. But what is also staggering, it's 14 seconds faster around the Nurburgring and they say, hell, the audio system probably weighs more than 187 pounds. So what do you think? You get 14 seconds faster around the track, but you get 187 pounds heavier. Why is this so upsetting to you?

[Jordy Hayes]

I think you just feel the weight as a driver. It doesn't matter if it's like slightly faster in a straight line or improved in a number of different ways. Like driving a super heavy car fast.

[Mark Gurman]

Yeah.

[Jordy Hayes]

Is just, I don't know, it's less, it's less enjoyable. I, it's hard because this, this is the most dentist coated car I've ever seen in my life. A white Turbo S pulling the top.

[John]

Down while you're driving though that's pretty sick.

[Jordy Hayes]

So I mean I really dislike the. I, I really dislike cabriolets in general.

[John]

If this is the car that getting.

[Jordy Hayes]

A dentist gets you, I think no shade to dentists. But this is a great car. If you were. If you're buying a sports car to drive to work at your dentist's office, this is a great option. But in general it would have been cool to see them test something.

[John]

Dude, if I pull up to the office cabinet I'm like, this is going to be a good teeth.

[Jordy Hayes]

So. Yeah, I guess. True. But my issue here is that this is not what customers want.

[John]

Well, we'll see how it sells. We'll see the depreciation. I don't. I think I disagree with you in that like the depreciation shouldn't be nearly as extreme as it. With like the fully electric cars. Like.

[Jordy Hayes]

Yeah, but. But we've already seen that hybrids depreciate horribly compared to SF90.

[John]

True. Yeah, good point. Yeah. I mean, yeah, it does feel like it's. Is the rationale here some sort of blended emission standard? I've heard that's a big thing in Europe where you need to have a variety of cars. Do you see that? So it's like 10% of your cars that are on sale need to be electric or, or 30% need to have better than 20 miles per gallon. Something like that. So like.

[Jordy Hayes]

No, they are certainly getting.

[John]

And it's.

[Jordy Hayes]

Regulators have a gun to their head.

[John]

Yeah.

[Jordy Hayes]

And they're saying ruin, take away everything.

[John]

So you realize that this is just an option. Like, like the, the 911 is not a hybrid. Now the 911 has what I'm saying.

[Jordy Hayes]

The turbo.

[John]

The Turbo S. You can just get it. I'm pretty sure you can just get.

[Jordy Hayes]

A normal turbo refreshed. 992.2 introduces a hybrid powertrain.

[John]

So you cannot get it without one.

[Jordy Hayes]

Is hybrid. The new Turbo S is hybrid only.

[John]

Oh, that's not.

[Jordy Hayes]

So this is not an option. You're forced into doing this. And so I'm sure it's still going to be amazing driving experience.

[John]

Yeah.

[Jordy Hayes]

Like it's one. It's probably the greatest car in history. That's rough all around. But it's not what customers want. And it's unfortunate that you know what customers do want.

[John]

They really want Turbo Puffer. They want to search every byte. They want serverless vector and full text search built from first principles and object storage. They want it fast, they want it 10x cheaper and they want it extremely scalable. That's why they go to Turbo cover.

[Jordy Hayes]

Yeah, we will. We'll see on this run. We were at the track yesterday.

[John]

Yes.

[Jordy Hayes]

And seeing. There was a. There was an interesting group that was also at the track taking a different approach to their track day. It seemed like they were. I mean, they were having fun, but watching that Turbo S go around the track, it made me never want to buy a Turbo S again.

[John]

Interesting.

[Jordy Hayes]

It just didn't look cool. It was. Somebody had a red Turbo S that they were tracking and it just was the most.

[John]

I mean, it was one of the craziest. Like, okay, I've put a decent amount of value on, like, sports cars and just like having a fun car to drive daily or on the weekends and seeing a track car truly was like, there is no value in sports cars at all. Actually, track cars are the only thing that matters.

[Jordy Hayes]

Yeah.

[John]

They are 100 the only thing that you should ever get if you want a fast car or have a fast car experience.

[Jordy Hayes]

Yeah. The Jeep. Just comparing. There was a. There was also GT4Rs that was going around at some of the same times as the Turbo S. And it looked and sounded remarkably such a half measure.

[John]

Even the. I was talking to our new friend about the Formula Mazda series where Mazda makes the engines, and he was saying you can get one of these race cars for. I think it was like 20k and the entire season is like 10k to run or something like that. And it. And like, just the speed, the actual handling, like, the track times are just way better than any streetcar.

[Jordy Hayes]

Yeah.

[John]

It's. It's just night and day, so. Yeah. But speaking of cars that might be able to do well on the track, I want your review.

[Jordy Hayes]

YMWLM says play it. Play a clip of a GT3RS with a Gintani exhaust. I would love to. To. I think it might blow out everyone's ears. We'll save that. Save that for later.

[John]

Anyway, the. Speaking of cars, Elon Musk teased on the Joe Rogan Experience that the Tesla Roadster will be a flying car. He danced around it. He didn't say that exactly, but he did say, my friend Peter Thiel says we should have flying cars, and I think we should give him one. Which is about as clear an indication. Let's play the clip. I want to hear. We got to get better about playing the clips before we just run into it, but let's play the clip from the beginning. Full audio. Are you still doing the Roadster? Let's go.

[Jordy Hayes]

Yes.

[John]

Let's do it. Eventually. Eventually.

[Jordy Hayes]

We're getting close to demonstrating the prototype. And I think this will be.

[John]

Look at that.

[Jordy Hayes]

One thing I can guarantee is that this product demo will be unforgettable.

[John]

I love it. Unforgettable? How so?

[Jordy Hayes]

Whether it's good or bad.

[John]

Whether it's good or bad. Unforgettable Stakes for bad. Or it could be really bad.

[Jordy Hayes]

Well, you know, it could crap. You know, once reflected that the future was supposed to have flying cars, but we don't have flying cars.

[John]

Amazing. So you're going to be able to fly?

[Jordy Hayes]

Well, I mean, Joe's face. I think if Peter wants to fly.

[John]

A car, we should be able to fly one.

[Jordy Hayes]

Okay, pause it right there.

[John]

It's like the PR team. I don't even know if there is a PR team. But like whoever's Andy LED orbit is like, please don't leak the full roadmap right now.

[Jordy Hayes]

What if it just actually is a flying car?

[John]

It could be. It could be totally.

[Jordy Hayes]

Okay, I want to keep talking about.

[John]

Get your brand mentioned in ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. What do you want to talk about?

[Mark Gurman]

Jordy?

[Jordy Hayes]

We got to talk with Dan, CEO of Iron coming in right now.

[John]

Let's bring him in from the recent deal. Dan, how you doing?

[Jordy Hayes]

What's happening?

[Dan (CEO of Iron)]

Hi, guys. Good to see you. Thanks for having us on.

[Jordy Hayes]

Great to see you. Short notice. Massive, massive day today. We saw you a pretty big deal and said what better day to have you on the show.

[Dan (CEO of Iron)]

Yeah, yeah, that was a big weekend. So a lot of sleep deprived iron bodies around, but it's, it's super exciting.

[John]

Give us the headline number. We like to ring the gong around here when there's a big deal that gets inked. All right.

[Dan (CEO of Iron)]

Iron and Microsoft, 200 megawatts, $9.7 billion in revenue.

[Jordy Hayes]

Two billion. Absolutely massive. Absolutely massive break down the year for us. We've covered Iron's rise a little bit. We kind of figured you had some type of deal like this in the works. But catch us up to speed on the last sort of six months.

[Dan (CEO of Iron)]

Yeah, look, it's been super busy so AI popped up really in force probably last April. And since then we've been building out our GPU cloud business which basically involves us buying the GPUs and providing access to those via cloud rather than an alternate model which is co location where you build the infrastructure and you allow one of these tech giants to lease it back. So we believe in owning the compute and providing that to the end customers. It's been a journey talking to a number of the large global technology companies, but really happy to consummate it with Microsoft.

[Jordy Hayes]

Yeah, I remember it was earlier this year Satya had a line that something to the effect of I'm happy to be a leaser. And so I'm sure you guys picked up on, picked up on that.

[John]

Can you give us the.

[Jordy Hayes]

What? What?

[John]

Sorry.

[Jordy Hayes]

So. So yeah, one thing that Satya's I guess been saying over the last couple years is maybe not a couple years, but over the last years he feels like he's more energy constrained than he is GPU constrained. What kind of advantages has iron had on the, on the power side that, that made a deal like this possible?

[Dan (CEO of Iron)]

Yeah, that's absolutely right. And I think it's almost a little bit more nuanced than just power constrained. I think it's actually data center constrained as well. But let me come back to that. I think when my brother and I set up this business seven years ago, our underlying thesis was that the real world can't keep pace with the digital world. So the digital world is driving all these exponential demand curves. Adoption goes from zero to one overnight, whether it's Bitcoin, nothing 15 years ago to $15 trillion day, whether it was AI not really spoken about two years ago to the latest humanity defining technology. And at the center of that is these exponential growth and demand, but the ability to service that is constrained and limited by the real world. So when we started this business seven years ago, we explained to people it sounds simple. You can't plug a computer into a high voltage transmission line. It takes years and years of permits, approvals dealing with risk adverse utilities giving you access to that network. So yes, having access to power and having put in the groundwork very early is now paying dividends. But it's actually going a step further than that where you might have access to power. But do you have the framework to go and build the data center? Do you have the governance regime and the flexibility of a corporate to give you that decision to go and build and start building ahead of the curve? Do you have the internal know how on how to build these new generation data centers? Because fundamentally they're a different asset class. These are not metropolitan data centers providing corporate shared drives, doing cat videos. They're fundamentally different.

[John]

How do you think about the predictability, about the shape of compute workloads going forward? How important is it for you to project those out? I'd love some history of like what was the first compute workload that you were doing? Because I imagine it wasn't LLM Inference there was probably crypto mining in the business. There's all these different workloads that were super valuable at certain times, then changed. Now we're in the reasoning era. We might be in a completely different paradigm. How much do you want to bake onto Asics? How much do you want to use Nvidia GPUs? More generalized chips versus flexibility. How do you think about projecting out the future?

[Dan (CEO of Iron)]

So I would just bring it back to a really big picture and say as society, do we believe that we're becoming more digitized? Do we believe that we're going more online and that's going to grow? And again, during our seed investment round we quoted movies like the Matrix like Ready Player One, Wreck It Ralph and directionally I think humanity is heading that way which is going to drive this appetite for high performance computer. None of us have a crystal ball. We don't know what's going to be next. We had AI in our seed deck. We also had a whole heap of other stuff that hasn't eventuated.

[John]

Sure.

[Dan (CEO of Iron)]

But what it means for us from a business perspective is a number of small scaled bets along the way. Creating optionality to go and pay an option fee on 500 hectares of land in West Texas is a really, really small exposure. To go and pay 10, $20 million to get the grid connection is now a relatively small exposure for our business. So it's right size in your bets to a point where you get to sign a Microsoft deal underwriting $9.7 billion of revenue. You go okay, that justifies more capex.

[John]

Yep, yep, that makes a lot of sense.

[Jordy Hayes]

What other are. Are. Are you looking at other opportunities and sites in, in other areas or is Texas the focus going forward?

[Dan (CEO of Iron)]

Look, Texas was the focus early on because we did the lap of the world worked out the best place to get power, low cost, excess re, lots of land, cheap power, ease of grid connections, lots of fiber backbones and now the world's there. We do have additional sites. We've publicly announced 3 gigawatts but we don't talk about development sites that aren't 100% secured by virtue of a connection agreement. So there is a multi gigawatt pipeline behind that outside Texas and globally.

[John]

Yeah. How, how do you think about the like the current playbook for companies that are doing partnerships with hyperscalers or OpenAI? Like what are the do's and don'ts of announcing a big partnership? Because we're hearing so many of them and I think a lot of people.

[Jordy Hayes]

Are in somewhat of a Press release, economy right now.

[John]

Yeah. People are having trouble handicapping them. Like you can just throw out a big number. You could date it 100 years in the future and get really crazy numbers. Like what does the market actually want to get out?

[Jordy Hayes]

Yeah. And this deal feels significant.

[John]

Yeah.

[Jordy Hayes]

In some ways because Satya has been so much more conservative than other. Let's say like an oracle is Totally, totally, totally.

[Dan (CEO of Iron)]

Yeah. Look, I think it's good to be skeptical, Right? The world works in memes and headlines and public markets. I come from a private market background. Infrastructure, funds management. And going into the public markets, there is a lot of narrative, there is a lot of hype. We've tried to keep it very limited to binding contractual deal announcements. So this is binding? This is real revenue.

[John]

Sure.

[Jordy Hayes]

Just like we don't give it up for real revenue.

[John]

That's amazing. I honestly think that needs to be clarified. But thank you, that is very, very helpful.

[Jordy Hayes]

Yeah, we're in a. There's so much incentive for two parties to announce the biggest possible number without any real underlying commitments. And so, yeah, I was excited to see you guys get this done and announce it with such a great counterparty.

[John]

Yep. Well, we'll let you go. We know you have a busy day, but thank you so much for stopping by the show.

[Jordy Hayes]

Yeah, congrats to the whole team. Massive, massive milestone.

[John]

We'll talk to you soon.

[Dan (CEO of Iron)]

Thanks, guys.

[Jordy Hayes]

Goodbye.

[John]

Elon Musk says a large solar powered AI satellite constellation would be able to fix him. Would be able to prevent global warming by making tiny adjustments in how much solar energy reached the Earth. That would be. I wonder how much Capex does that cost? Yeah, it's interesting that Elon Musk, I don't know, there's just like when he says something like that, it hits just as like sci fi, techno optimism. And it doesn't hit as like, I mean, people still trade the stock off of this like news. People will look at this and be like, oh well, like, you know, like maybe Tesla will get a piece of that.

[Mark Gurman]

Right.

[John]

And it becomes a little bit of a narrative. But people don't dig in that far.

[Jordy Hayes]

We have one thing that was super notable to me or standout kind of section of the Elon Muson all in Friday. And he was talking about the shareholder vote around his compensation, but also the voting power that he'll have. And one of the things that he said was, I don't want to create a robot army if I don't have, if I can be fired by ISS or anything, these voting groups. And I Thought that was, I mean it's just like the most Elon Musk way to who should control the robot army?

[John]

That's a good question.

[Jordy Hayes]

He's like, yeah. He basically was saying I don't want to be fired for political reasons.

[John]

Typically armies are controlled by democratically elected leaders. Like we have a system for electing who is the commander in chief of the army. Very interesting question. If you actually wind up with a company that has control over a robot army, that's, that's an interesting philosophical question also. You know you're going to need to manage that army. You got to get on linear. LINEAR is a purpose built tool for planning and building products. Need the system for modern software development, streamline issues, projects and product roadmaps.

[Jordy Hayes]

So we have Mark Gurman coming on in just a few minutes but we had a question message to us. I thought it'd be good to get into kind of break it down. So here is the question advice for my friend's company. He has around 400 million DAU but he's been diluted by 90% since the IPO. He still has full control of the company, but he can't sell because of antitrust. Should he bail?

[John]

I think no, I think it out, I don't know, there's nothing about that that's identifiable. I think that you stick with it. I think it's gotta be fun to run such a big company with that many dau. Even if you've been diluted, you know, you're probably rich, you've sold a lot along the way, you're post economic. But it's better to be post economic and have control over an interesting organization than post economic and just kind of retired. That's my take.

[Jordy Hayes]

My mind's just racing on what company could this possibly be? And it feels like at 400 million DAUs it's gotta be Snap maybe could be something. Somebody should look into it and see if, see what the dilution has been like over there. I think Snap is a company that, I think if you run the numbers it's like every 10 years they just give away the entire company to the team.

[John]

It was a billion in stock based comp last year, something like that.

[Jordy Hayes]

And it's a, what is it?

[John]

A billion dollar company. So giving away 10%, absolutely crazy.

[Jordy Hayes]

Well, we have Mark Gurman, the legend, the germanator in the waiting room.

[John]

Welcome to the show.

[Jordy Hayes]

Welcome to the show.

[John]

Mark Gurman. How are you doing?

[Mark Gurman]

Thanks for having me.

[John]

Thank you so much for joining.

[Jordy Hayes]

You know we, you know this has been you're kind of like our. Like, this is the guest we've been waiting for since the very beginning. The best moment. You were. We were like, we've been waiting for this moment for so long. So we're super excited to have you on.

[Mark Gurman]

Yeah, here I am.

[John]

Thank you so much. Maybe since this is the first time we've actually met, I'd love to go back a little bit back in time, just to set the table. Like, how did you land on Apple? How did you become so focused on Apple? Was this like a gradual thing? I mean, I know you from your reporting, it's been fantastic for as long as I can remember. But I imagine that there was a time when you had to make a decision.

[Mark Gurman]

Well, I was an Apple fanboy back in the day. I remember when I was very young, I wanted an MP3 player for the holidays that year. And I was lucky enough that, you know, my parents were able to get me one. And the local mall, there was a mall in LA called the Westside Pavilion. It's actually closed now. And Google, I think, actually bought the mall to turn into headquarters in la. And then that whole place fell apart. The whole deal fell apart. But it's neither here nor there outside of, I think, Bloomingdale's or Macy's or whatnot. They had a cartoon, a Dell cart, believe it or not. And they were touting at the time what they called the Dell DJ. And that was the MP3 player of. Of note at that time. And so I wanted a Dell DJ for Hanukkah that year. And so I was going to get a Dell dj. And so my dad, you know, went to Best Buy. What? Now he's like, I forget the Dell dj. He got me a blue ipod Mini instead. And I got that ipod Mini. It was my first Apple product and I fell in love with it. So over time, became an Apple family, got an Ibook, then it became an iMac and MacBook Air and whatnot. And so I just fell in love with Apple. I was a huge Apple fanboy, always glued to the forums and the rumor mill and whatnot. I was a commentator and sort of fell in love with it and started wanting to do my own reporting on it. And I joined a website back in the day called 9 to 5 Mac. It still exists. I left that at when I graduated from Michigan in 2016 and joined Bloomberg. And I guess the rest is history.

[John]

That's amazing. How do you think you're perceived by the folks at Apple? Because in one way, like, you know, you're promoting Apple. You're a real fanboy. But at the same time, it feels like every time you get a scoop, I'm like, oh, they must not be happy.

[Jordy Hayes]

Yeah, it's a hard company to be a critic of.

[John]

Yeah, Even.

[Jordy Hayes]

Even a critic that wants the best for the company.

[John]

Yeah.

[Jordy Hayes]

Because I feel like I just have this sense that. That they're like, they kind of want you to ride with them no matter what. But I think they love me, personally.

[Mark Gurman]

I mean, they should love me. I mean, I'm here talking about their products all the time. I think I usually have a pretty good attitude about it. I think I'm balanced and realistic. And, you know, I try not to go down the angle of, you know, the sky's on fire, everything is burning. Tim Cook should be out of there, as, you know, some other news outlets like to do, whether it's fair or not, talking about their products, keeping people interested in their products. And, you know, clearly some people there like me because, you know, this information just doesn't come off trees. Right. So definitely, I think it's nuanced.

[John]

Do you think Tim Cook's underpaid?

[Mark Gurman]

Do I think Tim Cook is underpaid?

[Jordy Hayes]

So he barely makes about the same amount as this baseball player that plays for the Dodgers. Rangers.

[John]

Yeah.

[Jordy Hayes]

Annually.

[Mark Gurman]

Well, maybe the question is, are athletes overpaid?

[Tyler]

Right.

[Mark Gurman]

I mean, LeBron is getting, like 55 million a year on his contract. And then you think about how much money do they bring in from ticket sales because of him. They're probably making, I don't know, 2 or 300 million a year because of him. So, you know, what's the margin? What should a margin be? Right. And you have Tim Cook. He's. What is he making, 70 million a year?

[John]

75.

[Mark Gurman]

He was make 75. He was making 100 million a year a few years ago. Then everyone flipped out, and he had no choice but to cut his pay because they were kind of sick and tired of the backlash. Right. So he was making 100 million. I mean, what is the value that he brings to the company? I mean, obviously, it's multiples of billions.

[John]

I completely agree.

[Jordy Hayes]

We. We were very close to taking a break from the show and going and just doing a hunger strike outside in Cupertino would get his pay up. Because we're on your side. We think he's clearly created just the trade war.

[John]

Just the fact that he's been so masterful in not becoming a target or staying out of politics, that level of.

[Jordy Hayes]

The only real critique you could make in My view is the way he waved the F1 flag, it just wasn't somewhat lackluster.

[Mark Gurman]

I saw that.

[Jordy Hayes]

It was just a rough wave. You know, he was.

[John]

Maybe he's off there thinking about supply chain. You know, maybe he's focused on work. His mind's at work. He's not.

[Jordy Hayes]

His mind was.

[Mark Gurman]

He's thinking about. He's thinking about how was that flag produced?

[John]

Yes.

[Mark Gurman]

Could have I gotten better pricing on it?

[John]

Exactly.

[Jordy Hayes]

Exactly. Okay, what's your updated take on the new suite of iPhones? John and I, I had a very funny experience because I ordered my phone. I tried to just order a phone online, walk into the store, be able to pick it up immediately. Wasn't able to. I paid and they said they were gonna ship it to me. John, like a week later, just walked in the store and bought one here in la. I was like, what is going on? And we've both been. We're not really case guys, and we've both just been amazed at how they could release a phone that just gets damaged so intensely so quickly.

[John]

Wait, wait, so you have a case. What case is that?

[Jordy Hayes]

That?

[Mark Gurman]

It's the Apple clear case. I rotate between the case and not using case. So here's what happened. So last year, they effed around and found out, launched this terrible AI service, Apple Intelligence, that didn't really work well. And what they found out is that it didn't resonate with customers as much as prior iPhones. This year they did not F around and find out they did exactly what customers want. Market research, data, man on the street conversations tell you what customers want. They don't want their phone to overheat. They want the camera to be incredible. They want the processing speed to be fantastic. They want battery life to be better. And so what Apple did for the phone this year is they focused on the core competencies. Battery life is through the roof. The phone doesn't require you to use an oven mitt to hold it for extended periods of time. The camera is amazing. I think they hit right on target with the colors. I think the new design is terrific. They did everything the consumers wanted. They did everything customers want in a phone upgrade. It came at the right time, which is five years after the COVID influx. You know, I get a new phone every year. You guys might get a new phone every. Every year. Your viewers may get a new phone every year or two, but vast majority of people aren't getting new phones for every four or five years. And so they set themselves up for a pretty nice upgrade cycle. And you're going to see that with their first $140 billion quarter when they report at the end of January, early February. So I think all things considered, it's terrific.

[Jordy Hayes]

What about that?

[Mark Gurman]

The iPhone is still the center.

[Jordy Hayes]

Yeah. What about the iPhone air? Did you expect it to sell better than it has or were you always kind of bearish?

[Mark Gurman]

I have been extremely bearish on the iPhone air. I don't think that there's a significant market for it. See, Apple, because of their large numbers, have reinvented what a significant market is for Apple. The iPhone air is not a significant market. If that was a Google phone, I mean, Google would be doing a lot to, to sell pixels in the numbers that the iPhone air is selling. Samsung would be happy if their iPhone edge sold in the quantities the iPhone air is selling. It's a beautiful piece of technology, but that's what it is. It's a technology exercise to really set the stage for an eventual foldable iPhone. They have to create thinner form factors, thinner batteries, more advanced materials like titanium for the casing in order to create something like the foldable phone to compete where Google has been for three years, where Samsung has been for seven years. And so the iPhone air gets you on that trajectory. But in terms of overall sales, they didn't even really mention the iPhone air as a key driver and nor is it mentioned in their 10k.

[Jordy Hayes]

That makes sense. The follow up question would be, how important do you think the foldable market is?

[Mark Gurman]

I think it's tbd. I think they don't know yet. I think Apple is in a position right now where they basically have to pull every lever possible to keep people in the ecosystem. If you somehow have a market of, I don't know, 10, 20 million people who demand foldable phones and they're willing to leave Apple to Google or Samsung because they want a foldable phone, that is a bad thing for apple. Not because you're losing those 20 million customers on that one device, but because Google has an excellent ecosystem now with all sorts of peripheral products and operating systems. Samsung has the same, the Chinese players have the same. So if you lose a customer because of one product, you risk losing them across the board. You risk losing them for entertainment services, you risk losing them for your laptop, your tablet, your smartwatch. Because everyone has everything now. You kind of need everything.

[Jordy Hayes]

Yeah.

[John]

How do you think about the change from titanium to its aluminum on the new phones? Does that fit within the framework of revealed preferences? MAN on the STREET interviews People say they want it an iPhone that doesn't scratch, but in practice, they'll just put on a case. Or is there more thought to that?

[Mark Gurman]

Okay, so people aren't asking for aluminum, but aluminum is tried and true. They've used it on laptops for many years. The benefits of titanium is the durability. If you've seen a bend test of the iPhone air, that thing does not. You can't manipulate that.

[Jordy Hayes]

Wait, I have a story. I have a story you'll appreciate. We were having dinner with a group a couple weeks ago, and one person in the group had an iPhone air and was bragging to the whole room of how strong it was. They were saying, this is the most durable iPhone ever made. It's impossible to break. And he's going like this. He's like. He's showing the group. He's like, I can't even bend it. He's like, I dare anyone in this room to try to break my phone. And this guy raises his hand and takes the phone and puts it down here. And just in a second, and the guy's just sitting there in disbelief saying, like, I'm gonna. I'm gonna email Tim Cook right now.

[John]

This is.

[Jordy Hayes]

This. This is ridiculous.

[Mark Gurman]

But. Well, first of all, I. I love that story. I'm all for stuff like that, but to your point, you know, aluminum dissipates heat so much better. And it was like a big mistake. They moved to titanium with the 15 Pro and 16 Pro lines a couple of years ago. You could do some interesting color treatments on it. They had some cool colors, like the natural titanium, the gold titanium stuff, they're not doing with the. I personally look nice.

[Jordy Hayes]

I like that I could drop it without a case onto cement and it would be so durable. It was absolutely incredible.

[Mark Gurman]

The durability was great.

[John]

Yeah.

[Mark Gurman]

And that's why they used it for the iPhone air. But if you have to make that trade off, which clearly there is a trade off. Yeah, titanium, more durable. Aluminum, you know, it's not as durable. You drop this thing, you're going to get a big gash in it. The way the color is anodized, it doesn't stick like it does on titanium, but it's not going to overheat. And as the performance of these things improves, as the chips get better, you need better and better heat dissipation. And so this was a reversal that they had no choice but to make.

[John]

We had this framework for Apple's strategy right now, which is do nothing win with regard to the AI race. Like, because people have said, like, yes, they lost and you mentioned it with Apple Intelligence and I agree with you. I've taken that, I've been like Siri doesn't work as well as I want. It doesn't even, it doesn't even have whisper APIs, like it can't even take.

[Jordy Hayes]

The main thing was, was promising this magical experience and everyone being underwhelmed. The one thing they over delivered on was humor. They're the first AI company to reliably make people laugh through the summarization of.

[John]

Summarization is very funny. But basically they didn't get over their skis, they didn't invest a $trillion dollars in capex and it's a $4 trillion company now. Like they've done nothing in AI and they've won basically. But is that narrative click with you? Is that taking hold in Cupertino? Are they happy with the way it's played out?

[Mark Gurman]

I think they recognize that it's been a disaster. I mean still the biggest thing to me is they were completely caught off guard by ChatGPT Gemini copilot back at the end of 22 into 2023 and a company that does this much research, a company that has supposedly this kind of understanding of where the world of technology is going to just completely like, it's like they had no idea the Internet was coming. It's completely unbelievable to me. It's sacrilegious that a company like Apple could have had that bigness. Apple Intelligence, like they brought it out and their marketing scheme is always just like we're the best, we're Apple, we're going to do it better, we're correct, everyone else is wrong. And that's sort of the message they put out about AI when they launched Apple Intelligence. But it turns out no Apple, you are completely wrong. And I think any observer would have understood that people want chatbots, they like chatbots, it is a winning formula and to date they have been completely anti chatbot, which I think has been a very big mistake. The integration of ChatGPT into Siri is very much subpar still. They support all the chatbot apps but they really need first party stuff. The big AI thing for Apple is the revamped Siri coming out in the spring. They're using a Google Gemini model to power it, which I think is going to make it pretty top tier. I mean Gemini's models are pretty excellent as we know for anyone who's used the Google AI services. But what really you have to understand is that the brand damage that has been done to the Siri name over the last 15 years. There's a big question whether or not it's insurmountable in my viewpoint. If they've gotten Siri to a point where this thing actually meets the promise of this AI voice assistant, they have to change the name. On the other hand, Siri, as damaged as the brand is, it is still a ubiquitous name. So I'd be curious to see. I don't think they're going to make a name change, but they should.

[John]

So Gemini powering Siri under the hood. Who pays who in that scenario, Apple is paying Google. Do you think it stays that way forever? Because Google provided a wonderful search engine in the Safari iOS browser and Google paid Apple for the right to do that?

[Mark Gurman]

Well, it's more of a revenue share for the payments there on the search engine. So this is completely separate. This is like you're developing something for me. You're my supplier and I am paying you for it. Like I'm paying you for it. Whereas it was revenue share because Google is making a ton of money by getting people through the Apple interface.

[John]

But won't that be Apple's devices? Won't that be the long term state of affairs with these?

[Mark Gurman]

I don't believe so.

[John]

You don't think so?

[Mark Gurman]

This is. No, I think what I know is that this is an under the hood, white labeled model. They've developed the model here, but if it wasn't for my reporting, no one would probably know that this is, this is a Google model. You can be pretty sure that Apple's not going to advertise this as a Google model. You can also bet at some point they'll probably figure out their own model to replace the Google thing. So I don't think it's a long term bet.

[Jordy Hayes]

Yeah. How competitive was that process? I remember it was probably your reporting talking about how Anthropic was in the running as well. And they wanted, it was a bake off. Anthropic wanted a huge number for it.

[Mark Gurman]

Anthropic wanted multiples of billions, I believe starting in a billion in year one and doubling every year thereafter, at least for the next three years. OpenAI wanted things like an investment and a stake and all sorts of stuff. And so, you know, they originally were talking OpenAI then they were talking to Anthropic and they were talking to Google. They did a bake off of all three. I think they kicked OpenAI out of the running pretty early on. Until about two months ago it was going to be Anthropic. And then once they got into the Financial terms, it quickly pivoted to, to Google. My belief is that the quality of the Google engine and the Anthropic engine are pretty much on par. So I think, what do you think?

[Jordy Hayes]

Is the, is this in your view a threat to ChatGPT usage? Is the ChatGPT Siri integration going to exist after this next release? Are people going to be using this as, as a replacement for web search and browser?

[John]

Because Even though the ChatGPT Siri integration is a little weird, if there are people that are love that, then you take that away.

[Mark Gurman]

That's like they're not, they're not taking that away. They're not taking away. So again it's an underlying under the hood model to enable the existing Siri functionality and the new Siri functionality. So Apple, let's look at the new Siri.

[Jordy Hayes]

Yeah, so the new Siri is what I'm getting at because if I can suddenly use Siri to do deep research and do web searches and stuff like that, that feels pretty significant.

[John]

Yeah.

[Mark Gurman]

So, so what is, what is the new Siri? Well, the new Siri so far what Apple's announced is three things. One is on screen awareness. So you see something on your screen, you can ask the voice assistant about it. The second thing is personal context. So the ability to ask questions and have it search through your personal data in order to answer those questions. Like make an itinerary based on conversations I had with someone who's visiting me in town. And there's a few other bells and whistles related to the new Siri that Apple has previously announced. What they haven't talked about is AI web search. And so the new Siri is also going to have a ChatGPT perplexity competitor for things like deep research and summarizing search. That is going to be an Apple built and Apple powered system. What is that?

[Jordy Hayes]

That's just a little sound effect we use that feels significant when there's something super dramatic.

[Mark Gurman]

Your significant button.

[John]

Exactly. You play it again. It's like we're going to war.

[Jordy Hayes]

We're going to war.

[John]

The companies are fighting.

[Jordy Hayes]

Yeah.

[Mark Gurman]

So this is Apple going after ChatGPT perplexity, at least for web search. I think it's going to be pretty useful. It's very necessary. It's one of the main use cases and you'll see them eventually embed things similarly in the to Safari and other parts of the iPhone operating system. So it's going to be a big year for Apple AI. And that's just the beginning with the rolling out In March, April, do you think able to pull it out? Do you think.

[Jordy Hayes]

Do you think there's any world where Apple wants to monetize commerce off of this assistant? They obviously. Because. Because that's. I can see the exact same thing that chat GPT wants to do me.

[John]

A new pair of shoes. Order me some.

[Jordy Hayes]

Yeah, find me, find me, find me. Yeah, exactly.

[John]

Book me a hotel. Book me a flight.

[Mark Gurman]

Yeah, it's just not good enough. You're not going. So it comes down to this. Will Uber postmates, Uber Eats, Amazon, whatever. Right now you can integrate all of those apps. It's called an extension into Siri. In fact, this has been a feature for 10 years. Nobody uses it because it's unbelievably terrible and unreliable. You cannot trust your iPhone to call you an Uber via Siri. Like, you'd have to be out of your mind to need to call an Uber in a pinch and use Siri versus using the app. And so there's really.

[Jordy Hayes]

Take me from point A to point B with Uber.

[Mark Gurman]

Yeah.

[Jordy Hayes]

Taking you to Antarctica. You cannot cancel.

[Mark Gurman]

There's really no way for Apple and these companies to come to some sort of financial agreement around that. That's why they haven't yet.

[John]

Sure.

[Mark Gurman]

But when this new series starts working, when it has those upgraded technologies that mean that I can call an Uber from my phone and know that it's actually going to happen, then they'll be able to come to those financial agreements because people are going to start using it right now. There's no point in monetizing $0. But once the real money starts flowing through in Siri, you're talking about a big business for Apple and AI and really what the future of apps and services revenue is for the company. Yeah, I'm pretty bullish on this.

[John]

Yeah. No, that makes a ton of sense. I guess the question is just like it feels like Apple, the reason Apple is paying Google is because they don't want a situation where I click the Siri button and say, hey, order me some paper towels. And then Gemini under the hood says, yeah, we'd love to process that through Google Payments and Google Shopping and all of our under the hood stack. And then they start monetizing. Yeah, that's not what's happening.

[Jordy Hayes]

How it's.

[Mark Gurman]

It's like. Hold on one second. It's like you guys are really, really good at what you do. So I'm paying you to. To. To. To write my. To create my podcast for me.

[John]

Sure.

[Mark Gurman]

But you guys have. Nobody knows I paid you to do it and I'm the presenter and everything.

[John]

You're pure white label. Yep.

[Jordy Hayes]

How what's your been your read on Apple's kind of M and A strategy? They've bought a number of companies this year. Almost all of them are I think to very small companies that are probably talent focused. There had been some rumors that I have to imagine were were kind of like leaked by Perplexity that Apple was like taking a look at that that never felt real to me. When you look at Apple's history in M and A they'll buy they bought Beats for like one or like two times revenue like they when they buy comp. The only times that I've seen them buy a company that for a large price was like relatively conservative.

[John]

We don't just take swings at $20 billion companies with like 100 million in.

[Jordy Hayes]

Rev with no underlying.

[Mark Gurman]

Here's what I can tell you. First on the Perplexity. When I was the one who broke that that was real. That did not come from Perplexity. The idea there was Apple was sort of scared out of its mind that it was going to lose this Google search deal. There was a very real possibility the judge was going to tear that thing up and Apple would be out of billions of dollars. And so buying Perplexity when it wasn't as big of a price tag as it is today for that company would have made sense. It could have been a pretty easy plug and play to replace Google search on the iPhone and have an Apple revenue stream there. Oh yeah, that's out of the picture because a where would.

[Jordy Hayes]

Where would the revenue have come from?

[Mark Gurman]

Oh they would just integrate their Apple.

[John]

Ads in Perplexity.

[Mark Gurman]

Yeah.

[John]

Ads in Perplexity. Yeah. You go to default search on iOS it hits perplexity and then there are a whole bunch of advertisers that are buying to be at the top of those results.

[Jordy Hayes]

So similar to the App Store, you.

[Mark Gurman]

Know it would have been a pretty buying Perplexity would have been a quick plug and play painless replacement for Google Search. But that deal wasn't torn apart giving Apple more time to build its own in house AI web search product in terms of the M and A strategy. So they really to your point, have not veered from their strategy. Biggest acquisition to date, even post inflation appears to be that $3 billion beats deal back in 2014. I do believe they continue to be on the hunt for smaller AI M&A deals. In addition to Perplexity they looked at Mistral which developed their own LLMs and related technology out of Europe.

[Jordy Hayes]

But Mistral would never. I can't imagine France would be like, yes, buy our national AI Champion. We love to sell.

[Mark Gurman]

Yes, well, stranger things have happened. But given the situation with the eu, I'd be shocked as well.

[Jordy Hayes]

Yeah. What about. What can you say about their reaction to the new Meta Ray Bans release and VR? Broadly?

[Mark Gurman]

Well, the Apple Vision Pro. Have you guys used one? Do you guys have one?

[John]

I had one for two weeks and then I returned it. But I did find it like it was remarkable in terms of screen fidelity, but content library wasn't there and weight wasn't there. I like that they put the battery in a pack. It was a mixed bag and at five grand it was like, why am I doing this?

[Mark Gurman]

So I got the Vision Pro on the day it came out back In February of 2024, a friend of mine for the first time got one. Does that make sense? It's been a year and a half and finally a friend of mine got one.

[John]

Totally.

[Mark Gurman]

And so I had my first Vision Pro to Vision Pro facetime experience actually a few nights ago.

[John]

Oh, wow.

[Mark Gurman]

And we tried out this new Personas thing. You can literally like turn on a movie and sit side by side and see the person sitting next to you watching a movie together. It's freaking unbelievable.

[John]

It's crazy.

[Mark Gurman]

Here's the problem. Most people don't want to put a pound and a half helmet on your on their head. Right? And so Apple is limited by a combination of price as well as people just not wanting to use that form factor. I also think they've done a pretty terrible job marketing it because I'm ingrained in this ecosystem more than anyone else I know and probably most people in this world. And despite the fact that I've had a Vision Pro, despite the fact that I'm totally tuned into this, I had no idea what that experience was like that I experienced the other night. And so all that tells me is they've just done a terrible job marketing these features. Obviously they've done some executive interviews about Personas in the last few days or whatnot. People don't really care about that. They care about TV ads and they care about demos and what have you. So they need to up their game anyways. Long story short, they're full steam ahead on smart glasses. The first version won't have displays like the older Metal Ray Bans or the base level Metal Ray Bans. Those are coming out in 2027.

[Jordy Hayes]

I think they'll be, wait a non display. Smart glasses without a display will come out in 2027.

[Mark Gurman]

Yeah. Early. And I think it'll be early enough in 27 where there's a possibility. They haven't decided yet. There's a possibility they'll be able to announce it before the end of next year.

[Jordy Hayes]

And people will want to buy that because the Apple Assistant is so good that it's so.

[Mark Gurman]

Well, I thought you were going to say because of the Apple brand. People are not going to want to buy it because the Apple Assistant. But no, but theoretically unlocks that.

[Jordy Hayes]

Yeah. Because if it's not good, like, I don't need to wear a pair of glasses.

[John]

But it's a pitch. You don't need to wear AirPods anymore. It's like a substitute for AirPods potentially.

[Mark Gurman]

It's like AirPods with souped up battery life. Cameras. With cameras, yep. You know, they've also been working on AirPods like I'm wearing with cameras in there as well. And so I think there's actually a bake off going on internally too.

[John]

Yeah. Between the two form factors.

[Mark Gurman]

Well, it's only from four factors or if you need both, I would bet that they'll do both.

[John]

Weird.

[Mark Gurman]

And then.

[Jordy Hayes]

Well, yeah, because if you, if you need, if you need glasses, like for your vision, a pair of smart glasses that have a speaker built in, you can do phone calls, you have a camera and you have prescription lenses like that. There's a, over a billion people that wear, that need prescription eyewear. And those people will probably be like, this is amazing. I get to wear, I get to fix my vision and I get all these added features. I'm already wearing glasses. I'll pay the $2,000 to have another kind of like device on my person.

[Mark Gurman]

But the bet is that the Apple brand is stronger than the Ray Ban brand and I would guess the Apple brand is stronger. And if you had to choose between Ray Ban glasses and Apple glasses, especially with the context that Apple has severely limited the ability for the Meta glasses to sync with your iPhone and the iPhone and the Apple glasses will sync perfectly. I think most people are going to lean in the, in the Apple direction. But Meta deserves so much credit for creating a category and making a category so terrific. I have the Ray Ban displays that Meta gave me to test out. Those are amazing. And they're like two, three years ahead of whatever Apple's going.

[Jordy Hayes]

Yeah.

[Mark Gurman]

Do you?

[Jordy Hayes]

Do you. So I was with the Ray Ban displays, I could imagine that being having like pretty real product market fit for people in the world that are dependent on WhatsApp and already need glasses. Like they need to wear glasses for their eyesight. Because if you have those two things and you can get WhatsApp messages just like popping up, you can do phone calls like that feels like pretty compelling. And so I can imagine the kind of person that is. Maybe it's a European executive or some Gen Z person in Europe that's just a WhatsApp power user. But. But what's your read on it? I know it's not your kind of.

[Mark Gurman]

COVID Well, they feel like a prototype. No, I cover all hardware too. They feel like a prototype, if I'm being honest. But like a good prototype. I think they're priced perfectly. I think $800 is totally reasonable for what their features are. You give it a generation or two, they're going to be amazing. The trick for Meta is beating Apple by ear on something that's a bit lighter and better displays. And what have you see the current Metas, they have one screen in them. The second generation version will have displays in both eyes, maybe making them a little bit more expensive. But metazont is something they have a multi year head start. What you're going to see is Google come into this space too. They're going to launch their smart glasses with Samsung in a few months, their glasses with Warby Parker and a few other glasses brands in a few months and there's going to be a lot of competition in this space. I think this is going to be really hot. Across 26 to 28.

[John]

We have a question from the chat. Could you get us up to speed on the John Prosser situation?

[Jordy Hayes]

We haven't.

[Mark Gurman]

This one I'm not. This one I'm not terribly read up on.

[John]

Okay, yeah, we'll need to revisit it at some other point.

[Mark Gurman]

How about this? Put it this way, I lied. I'm very read up on it. I don't want to get into it. It's not my problem to deal with.

[John]

That's totally fine.

[Jordy Hayes]

That makes sense. What did you read into? Maybe this was your reporting. This is why we were so excited to have you on the show. There's been so many stories that you originated, but Evan Spiegel and Snap were saying that they might be spinning out specs and raising capital for it. I was a bit surprised to see that given that I haven't seen a pair of specs out in the wild in years and if I'm an investor kind of looking at this category and you can, you can get exposure to smart glasses through Meta, Google and Apple, it would be hard to Kind of underwrite. But I'm curious if you're more up to speed on what they've been cooking on.

[Mark Gurman]

I like Evan a lot, I'll just tell you that. And I think that they're trying some pretty cool stuff. And their big differentiator there is what these glasses are going to be used for in the social integrations. In my mind, they might be just better off sort of lowering their R and D on these things by focusing on their hardware, partnering with a company like Google and putting their own social layer over Android xr. But obviously they have their own Snap os. They're trying to get this consumer version of the glasses out on the market next year. They look quite a bit different than what you've seen from Meta and Apple and some of the Google prototypes. So we'll see what happens. It's going to be a multiverse race here.

[John]

Is true VR just kind of dying or something? Because you have like camera glasses at Snap, it seems like all the focus is on camera glasses at Meta. And then Apple may be pivoting away from Apple Vision Pro. And then Google's really focused on the Samsung glasses that are again, see through with a camera on there. Maybe a little overlay, little hud. But is there anything exciting going on in just like vanilla VR? I want to watch an IMAX movie on my face.

[Mark Gurman]

Well, vanilla VR is just incredible. There's no better video watching experience than what you get on Apple Vision Pro. I've tried all the VR headsets. I've had all of them. I have all of them. It's just a remarkable category. But it's only a remarkable category for the people who want it. I mean, there's very few people where VR I think works. I'm out and about all day. I have a family. I go to an office too. And when do I have time to put this thing on my head to watch a movie? The answer is almost never. Because I have people in my life. I have needs around me, I have things I need to do, and it just does not fit into my life. For people who can put on a headset and be secluded from the world for two hours, there's nothing better. Glasses, you can wear them and use them throughout your day, really, no matter what you're doing. That's the big difference. So there's nothing wrong with VR and it's just the use cases and the people who could use them is just quite a bit more limited.

[Jordy Hayes]

Last, last question. I know we're over time, but do you think Apple thinks about OpenAI and their hardware ambitions a lot. Sam was pressed pretty hard on. On his spend commitments on Friday and one of the justifications that he gave for why, like, basically, like, how they were going to be able to spend that kind of dollars was something to the effect of like, we have a consumer device coming up and we need a lot of compute for that. I'm kind of botching the exact language that he used, but he was seeming to imply like, we have a hit consumer device coming and just kind of be ready. Like, I can't say more, but he's, he certainly is telling the market that they're really cooking. But I wonder what Apple's read on it is.

[Mark Gurman]

Based on what he's saying, this device has to be so amazing that he's confident that they're really going to need that compute. And to date, we have not seen a single AI device that has either not been a failure or has needed the kind of compute that these dollar numbers are talking about.

[Jordy Hayes]

That's what exactly what I said is exactly what I said earlier. I'm like, every single crap like, like you can have the. Every single crack at this so far has not managed to be remotely as good of an experience as like an iPhone with even a physical headset. Like, I use wired earphones.

[Mark Gurman]

Like, all right, that's ridiculous. But the Meta Glasses are far and away the most successful AI device brought to market in this era over the last two or three years. And in terms of the users, Raleigh's using what, 1% of the amount of compute that Sam Altman is talking about here. So we will see in terms of Apple worried. I think Apple looks at this as something where they can be a fast follower. I think there are hardware products that OpenAI can bring to market that are innovative before Apple, but I don't think there's a product out there that if Apple wanted to copy that, it can't copy. So let's see.

[John]

It's fascinating. Well, this has been a fantastic conversation. Thank you so much for the time. We would love for your reporting show soon.

[Mark Gurman]

Anytime.

[John]

We could have spent another 25 hours talking about. This is fascinating. I hope you have a great rest of your day.

[Jordy Hayes]

Yeah, I really enjoyed it, Mark. And thank you for.

[Mark Gurman]

Thank you.

[Jordy Hayes]

Thank you for all your hard work.

[John]

Tireless work.

[Jordy Hayes]

Yeah, thank you.

[Mark Gurman]

Yeah. Do you guys do in person? If you do in person, maybe we can.

[Jordy Hayes]

Are you in la?

[Mark Gurman]

I'm in la.

[John]

Come by. Yeah, let's get. We're in la, we're in Hollywood.

[Jordy Hayes]

Yeah.

[Mark Gurman]

Great. Okay.

[Jordy Hayes]

Next time. Yeah, come by next time. We have a seat here.

[Mark Gurman]

I'll get the center seat.

[Jordy Hayes]

Yeah, yeah, can't wait.

[Mark Gurman]

All right.

[John]

Okay.

[Mark Gurman]

Mark Gurman. All right.

[John]

See you guys. Equivalent yappers. We love it.

[Jordy Hayes]

Love it.

[John]

Thank you. We'll talk to you soon. Let me tell you about numeralhq.com sales tax and autopilot spent less than 5 minutes per month on sales tax compliance. You can get started for free. Up next, we have Erica from Redpoint Ventures. Very excited for this. Welcome to the show. Erica, how are you doing?

[Jordy Hayes]

Welcome.

[Erica (Redpoint Ventures)]

Hey, Monday, guys. Same to you. I have to tell you, I was watching the show from Friday this morning, and I can't and see your costumes rocking, like, very impressive.

[John]

Having the hairline back is.

[Jordy Hayes]

What was your read? Did you think that John looked much more like Ilya than I look like Mark? Because that was our read. I kept John.

[Erica (Redpoint Ventures)]

I think so. I think so. But I saw it start to crinkle up over time and I'm like, starting to.

[Jordy Hayes]

That is very surprised.

[John]

It wasn't just falling off.

[Jordy Hayes]

It's a very weird thing to be under, like, 10 layers of just stuff.

[Erica (Redpoint Ventures)]

Crazy and just be inside this wearing makeup every day. As a woman, what must that feel like?

[Jordy Hayes]

No, this is a level. This is a level. Beyond that, we were in the chair for like three and three hours, three and a half hours. Where they applied. It was like they basically had spray paint. They were spraying, doing a layer, doing.

[John]

Another layer, literally spray painting. Anyway, thank you so much for hopping on the show. Could you. Could you give us a little bit of. A little bit of backstory on how you wound up at Redpoint? And then I have a bunch of particular questions about Red Point and the current markets.

[Erica (Redpoint Ventures)]

I. I call myself an accidental vc. I do think venture is the best job in the world, but I actually had no interest in being a venture capitalist. I met my partner, Satish Dharmaraj, like 17 years ago. He was building this company called Zimbra. I had a startup that was trying to sell. We're trying to close him as a customer. It was like our first year of sales, and he was the only customer we didn't close, which really pissed me off. And we became friends, stayed in touch. Funny enough, he introduced me to Satya Nadella, who I know you had on last week, who was awesome, too. And that changed the trajectory of my company years and years ago. And then he called me and said, hey, I want you to come to Redpoint. And I was like, no, no, no. That seems like a terrible idea. And he'd done so much for me. He convinced me to come and hang out with the team I fell in love with. I left GitHub. I was COO there for a couple years and never looked back.

[John]

Incredible. You were COO at GitHub right around copilot launching, right before you saw Glimmers of Copilot launching.

[Erica (Redpoint Ventures)]

Oh, yeah. I was there when we launched. Yeah. So I came in following the Microsoft acquisition. I was there with Friedman, was there through launching Copilot and then specifically to. To join redpoint and had a couple.

[John]

You saw what was happening internally and you were like, the big tech approach is doomed to fail. I gotta go fund startups instead. Is that what happened?

[Erica (Redpoint Ventures)]

It was amazing.

[John]

To be part of everything here is a zero. I'm going out into the private markets.

[Erica (Redpoint Ventures)]

Startups are so much more fun. Early years, so much easier.

[John]

Notoriously easy, too.

[Jordy Hayes]

But yeah, I was saying, I still. I mean, I still think Copilot is. So I was saying that on the show, it's under hyped because they're not announcing a funding round.

[John]

Yeah, yeah. You don't realize how big the business.

[Jordy Hayes]

Is because people have no idea of. Like, that was when Carpathy was on Dwarkesh and saying, this isn't the year of Agents. One argument against that point was that you see this explosive growth of products like Copilot, and in many ways Agents are working, even if it's like primarily in a. In a coding capacity.

[Erica (Redpoint Ventures)]

Yeah, yeah. It doesn't get the credit it really deserves for the reason that you mentioned. But I also think there's just been so much innovation in the ecosystem since then, a lot of changes on the. On the GitHub side too. But it was a pretty remarkable thing to be a part of. And honestly, after we shipped it, I went through like a little bit of a darkness. I have a son who's 12 who's like super into coding. And I'm like, what is my son going to do? Like, what is. What are his jobs going to look like in the future? It's been really transformative. It was very cool to get to be a part of, like, the early days.

[John]

Yeah. We were spending the early part of the show reflecting on Sam Altman and Satya on Brad Gerstner's show. And just this question of the 1.4 trillion in spending commitments versus 14 billion.

[Jordy Hayes]

And I'm wondering, what did you think of Sam's answer?

[John]

Yeah, I mean, that's a great place to start, but I do have more questions about impact for Startups, but yes.

[Jordy Hayes]

Not to. Yeah. Do you want to. I was looking for just one person besides Brad and the Altimeter team to defend Sam.

[John]

What are you talking about?

[Jordy Hayes]

John? John defended it. He put the steel man helmet.

[Erica (Redpoint Ventures)]

Yeah.

[John]

I mean, I have a steel man helmet. I can defend anything.

[Erica (Redpoint Ventures)]

Look, we are going through such an extraordinary period in human history. I think with every other shift we've ever seen, we tend to like overestimate how quickly it will change things and then underestimate the long term impact that it will have on society. I think there's a bunch we don't understand. I'm certainly not betting against Sam right now as being one of the major players in this space. And I guarantee you there's so much detail in these contracts about like, you know, outs and rolling things back and everything I've seen with these things.

[Jordy Hayes]

Yeah. And I just thought the question was not you could ask that question without being bearish on OpenAI. And like I look at that as I. If I'm an investor in any of the company, any of the counterparties to OpenAI.

[John]

Yeah.

[Jordy Hayes]

I want to know like, how, how are you, how are you going to do, how are you going to do this?

[John]

Let me reformulate this. So if, if, if the, if there is like risk of OpenAI not hitting 1.4 trillion, there's tactics that you could do. If you're hyperscaler, who's on the other end? Right. Like the outs of the contracts, maybe you don't build as aggressively if you don't think that the demand's actually going to materialize. Even though you have a contract, there's a bunch of strategies that you could do if you're running those companies. What's less clear to me is what are you talking to folks in your portfolio about? What advice do you have for founders where you say, hey, the future's a little hard to predict how this compute build out. There might be this big gluttony. You don't want to get caught in front of the steamroller. You want to be drafting and riding the big wave and catching the wave at the right time. How are you thinking about that with founders in the portfolio? Because we've interviewed some folks that you've backed. Lagora came on. It's incredible. The growth rates are so fast.

[Erica (Redpoint Ventures)]

Yeah, look, I don't believe there's going to be any kind of material glut. I think there's just too much happening. Look at what Poolside is doing. Right. Building out their own data center. This was like A plan from the day zero. You know, a lot of people think those guys just like got caught off guard, oh, we need to go build this to get, you know, control over our own destiny. That's totally not true. Like they have seen this coming for a long time. I think, you know, if you're at the model layer, the smartest thing to do is to have control over the full stack. And the reason I believe that's to be that's true is because people, there's going to be so much demand and it's so hard to get access to not just the chips but the power that you need. Like, I am just not worried that we're going to run into any kind of a glut. And at the application layer, what we're telling people generally is like, I know this is such a cliche. I don't care about margins at all right now. Like, I care about winning in the market.

[Jordy Hayes]

Let's give it up for not caring.

[John]

About margins, up for growth. Let's give it up for aggression now.

[Erica (Redpoint Ventures)]

I never, I never, I never thought I would be that person, but I genuinely believe that. I think like, it's very clear that we're at like day zero at figuring out how to build these super powerful instruments. The costs of inference are going to come way down. We're getting better at building more efficient models for like task specific models. I think what you need to do is figure out like, what is the UX like, how are humans going to get work done? What does that look like? How can you build some kind of defensibility in your product? And I think we're seeing a lot of king making happening across the market in different categories where companies are just getting out in front of the market, raising a bunch of money, building their brand and being seen as the winner, even if the product is really early. And you know, I know there's a lot of folks that are talking about the recklessness that's happening across vc and on the one hand I get it, but on the other hand, I think in a market shift like this, you've got to play to win. And like, you know, some of these are going to flame out, but if you get one or two, that really makes it. All of your crazy wild bets are going to have paid off.

[Jordy Hayes]

Yeah, the CEO, the CEO of Fireworks AI came on the show last week and said she was worried some people were going to scale into bankruptcy.

[John]

Scaling into bankruptcy was the quote, which is hilarious.

[Jordy Hayes]

It's probably a skill issue.

[John]

Yeah, I mean, yeah, let's keep it focused on the advice for founders. I've been interested in this question of like in the previous era of Silicon Valley, like the founders, the founder archetype that you were looking for was somebody who could find a problem, build a solution, learn to code and it feels like increasingly one of the skills, maybe not the only skill, but one of the skills that we need to add to the portfolio of great founders is deal maker, is deal guy, deal girl. Like becoming really good at aligning incentives. We see this with Sam Altman, but we see this up and down the stack. Are you seeing that in your portfolio? In the founders that are seeing breakout success, just the ability for them to walk into a much bigger company or much bigger financier and marshal capital or resources, get people around the table and get everyone to say yes to whatever the plan is?

[Erica (Redpoint Ventures)]

I mean yes to some degree. I think it depends on the category. I think go to market muscle and just sheer velocity matters a lot. And so from that perspective, the folks that can go out and start closing customers and like the storytelling behind it and the trust building I think is super important for most people above the model layer. Like I don't know that like deal making in the, at least in the Altman sense of like hey, we have to go secure data centers and chips and like control our own supply chain. I think that's less important for most people. But I will tell you we are more likely to back like really young, just insanely like high velocity founders that we think will like run through walls to win, that just have such dogged determination and are willing to go at it so hard that they might not even have like the founder market fit that we, we used to look for pretty consistently in founders and we're seeing these crazy, you know, 20 something founders who have never really had a job before that are building these companies that are scaling like crazy just because they're in at the right time, they can tell the right story and they just, they just ship so fast.

[John]

Yeah.

[Jordy Hayes]

And so our you guys, I've always enjoyed red points reporting on SaaS specifically and multiples and at times a disconnect between multiples in the public markets versus the private markets. What's your view on that? How much do you guys read into traditional SaaS companies in the public markets being? I think it's like the average right now is like a 7x revenue multiple versus private markets. Obviously if you're an AI native company, you're getting some massive multiple on top of that. Is that nerve wracking does that make sense?

[Erica (Redpoint Ventures)]

But I mean, I'm on the early side and so we're not looking at multiples as much as perhaps the growth folks that are coming in at later rounds. But I think the really key difference here is most of the companies that we're investing in are doing like direct labor replacement. Right? This is no longer just like SaaS software that's going to make people X times more efficient. It's literally, you know, replacing an entire chunk of your workforce. And I think that those companies are able to grow so much more quickly because of the value that they can capture, that the velocity of the businesses ends up priced into the rounds and they're just growing to your earlier point so much faster than a traditional SaaS company. I think that's justified. We try to be very first principle thinkers in terms of how big can this business get and how quickly do we think it can get there? We value companies based on that, not based on what's happening right now in the private markets with like legacy SaaS companies.

[John]

We have to ask. Redpoint has been accused of manning the anonymous X account. R for Rock. Is it true? Are you behind. Are you personally behind the R for Rock account?

[Erica (Redpoint Ventures)]

Maybe we're all R for Rock. No, it is not. Somebody at Red Point, we would not take kindly to that. But yes, the conspiracy theory.

[Jordy Hayes]

Yeah, I would, I would appreciate.

[John]

I think it's to be accused of having that much insight into the whole market.

[Jordy Hayes]

It could be, it could be a shared account. Right. It's like a handful of.

[Erica (Redpoint Ventures)]

It's got to be junior folks, it has to be associates because nobody senior would be that good and reckless. And I will tell you one thing that has shocked me getting into venture from, you know, the builder side is like there's almost perfect information spread like everybody knows everything instantaneously. It's absolutely wild. I don't know if we've ever been surprised by something that ended up on Art for Rock, but we have been quite irritated when things have been leaked when they weren't supposed to be.

[John]

Yeah, it does feel like it's a little bit of a hassle if you're a founder and you're planning to do a specific PR push. But also there's this weird dynamic where it kind of of takes some of the energy or some of the leverage out of the existing scoopers in the tech ecosystem because they're losing scoops to R for Rock, then they don't have as much cache or power, soft power in the ecosystem.

[Jordy Hayes]

It might inspire some media companies to try to basically plant spies. Maybe like plant a spy at each tier one. And then you can just leak every single round.

[John]

Yes. I don't know. That might be. That might be against.

[Jordy Hayes]

Probably extremely illegal.

[Erica (Redpoint Ventures)]

I think you'd be better off like hosting a party and I think so punch or whatever.

[John]

Yeah, yeah. Just. Just grab some drinks with some people, get them to open up and you'll have your scoop in no time.

[Erica (Redpoint Ventures)]

Something else lives. Yeah.

[John]

Well, thank you so much for hopping on the show.

[Jordy Hayes]

Yeah, great to meet you.

[John]

We'd love to talk to you again soon and.

[Jordy Hayes]

Yeah, we'll talk soon.

[John]

Have a great Monday.

[Jordy Hayes]

Wait, wait. Before you leave. Before you leave. You haven't hung up yet. What are you in, like a tower in a castle?

[John]

Yeah.

[Dan (CEO of Iron)]

Whoa.

[John]

This is awesome. What is this?

[Erica (Redpoint Ventures)]

My home office.

[Erica]

Home office.

[Erica (Redpoint Ventures)]

It is not a turret, though. People think it's a yurt or a turret. It is. It is neither.

[John]

It's just the corner of a castle. I just live in a castle. I am a venture capitalist. I've done very well. And you know.

[Jordy Hayes]

It'S somewhat of a dome, so it makes sense to call it.

[John]

It's. It's a great sign of respect. We also. We also record the show from a dome. The ultra dome.

[Erica (Redpoint Ventures)]

There you go. I did this in deference to you guys.

[John]

Yes, that makes sense.

[Erica (Redpoint Ventures)]

Waiting for this moment.

[John]

Fantastic.

[Jordy Hayes]

Amazing. Well, so, so great to chat.

[John]

Love the background.

[Jordy Hayes]

Yeah. Come back on again soon.

[John]

We'll talk to you soon.

[Erica (Redpoint Ventures)]

Have a good seeing you guys.

[Mark Gurman]

Bye.

[John]

Let me tell you about Fin AI, the number one AI agent for customer service. Number one performance benchmarks. Number one in competitive bake offs. Number one ranking on G. Don't get in a bake with Benjamin Witty from recess. Coming in the studio. How you doing? Good to see you.

[Jordy Hayes]

What's happening? Welcome to the show. We don't have audio from your side. Let's check in with the production team.

[John]

Let's check in.

[Jordy Hayes]

Could be our phone.

[John]

Let's tell you about customer relationship magic. Adeo is the AI native CRM that builds scales and grows your company to the next level. You can get started for free at Adeo.

[Jordy Hayes]

Good opportunities. Tell Ben about Adio.

[John]

We got to tell him. He's got a $30 million Series B. He needs a CRM. Let's get him on that. Maybe he needs an Eight Sleep too.

[Jordy Hayes]

I believe Coca Cola, another beverage company, uses Adio.

[John]

Wait, really? That's awesome. Okay, Eight Sleep dot com. We can hear you.

[Jordy Hayes]

Yes, we can.

[John]

How'd you sleep last night? You sleep well?

[Erica]

I Slept well, but I could sleep better with an eight sleep.

[John]

So thank you.

[Jordy Hayes]

That's right. Thank you.

[John]

There we go.

[Jordy Hayes]

Great to finally meet. We share the day job. Guys, fun fact.

[John]

This is our second podcast together. Your first time on TVPN? Didn't we do a podcast together like 10 years ago?

[Erica]

Yes, but I forgot what.

[Tyler]

But what?

[John]

It was like Lucy, like me and David were in town, hung out with you. We did like five episodes of this thing. It was a total flop.

[Jordy Hayes]

That's right. No way.

[John]

I was early on neo corporate media.

[Jordy Hayes]

Strategy, never stop podcasting didn't work.

[John]

But yes, we showed.

[Jordy Hayes]

Great to hang on the show. Why don't you give a quick intro on yourself and the company if anybody's been living under a rock.

[Erica]

Yes, I'll start myself. I didn't come from the food or beverage industry, actually started my career in Silicon Valley. So I was in San Francisco in the early stage tech world from 2010 to 2016, but knew I wanted to start a company in the consumer space. I went on my own around that time and was led to the origin of recess. My observation in that 2016 era was we were entering this new period in history driven by technology and was going to leave us all kind of stressed out and anxious. And so I had this thesis that kind of led to recess that in the future that we were entering, people would be prioritizing their mental wellness and looking for healthier ways to reduce stress and relax. And I kind of saw the rise of these new types of functional ingredients such as magnesium, adaptogenic herbs, CBD at the time, even thc. And kind of my conclusion was that they were going to kind of serve as the inputs into this fundamentally new space of products that would emerge on the other side of kind of caffeinated beverages and alcohol focused on relaxation. And I didn't know it's. And so the kind of the light bulb moment was like Red Bull for relaxation. But I took a much more expansive view of the space that would emerge in the different kind of subcategories that, you know, the I could create a brand that could ultimately kind of extend into.

[Jordy Hayes]

And I remember hearing you on a podcast back, it must have been in the kind of 20, 2018 era where you talked about how Red Bull, I believe you talked about how Red Bull, like distinctly. They didn't necessarily want to make a drink that just tasted the best, but they wanted it to have like this specifical, sorry, specific flavor that just was like, like extremely identifiable and like made you feel something and how you leverage that With. With Recess, which I think you. You did well from the very beginning. But yeah, I feel like, you know, looking back, it's interesting that there were so many. There were so many brands created during that. That, that initial boom, whatever, 2016 to 2020, kind of, I look as like the heyday when you had everyone was like, reading lean lux and 2:00pm, you know, and it was just like this. So much investment in the category. And to me, Recess stands out because it's the only. The only brand in that era that, like, was kind of riding the same wave but didn't look like everything else at the time. And. Yeah, just obviously. Yeah, like, even. Even the fact that, like, whatever pop up you did in New York during that era, like, still sticks out in my mind when I can't remember a single. I can't remember any of the other kind of marketing that was happening during that period.

[John]

Yeah, the Instagram sticks out to me like crazy. I remember the Instagram. Did that ever grow? Like, is that like the corner of the cornerstone of, like, the community? Is that still. Because I remember, like, the Instagram just popped up so quickly and grew so fast. Was there, like, did that turn into, like a whole flywheel of the business?

[Erica]

So the twist in the business was like, our first product line included CBD in it. And so we got off to this. You know, I never thought of the brand as like a CBD brand. I thought. I always thought of brand as like a relaxation brand. And we did a lot of, like, I'd say, kind of groundbreaking kind of marketing activities in that first year in 2019, you know, from our content strategy, which we can talk more about the pop up in New York, you know, brand collaborations. But what happened was, you know, I saw the writing on the wall that the regulatory clarity for CBD was going to take a lot longer than everyone thought. And so I'd never. So I basically accelerated the vision of becoming a brand platform and bet on magnesium as this ingredient that we could use that could deliver the same effect in a fully compliant way, which was this incredible bet. Our Recessed Mood line, which is what leverages that ingredient, is kind of seeing velocity, is, you know, on par with Poppy and so that lines, you know, national at Target, Kroger, et cetera, et cetera.

[Jordy Hayes]

Yeah, you were early. You were. CBD was an interesting category because there was so. The growth of the category was so insane that even though you guys were early in terms of like a CBD beverage, I'm sure you just like, I remember you guys so noisy yeah, it was so noisy. You guys did such a good job marketing that a bunch like something about CBG is fascinating because people just think like you make a drink and sell it and it's going to work and you just put it on a shelf and people buy it. And obviously the actual logistics of scaling a beverage brand are so much harder than that that so few of the companies ever really even crack a couple million of revenue. But yeah, the timing on magnesium as well. I thought I was supplementing magnesium magnesium like in that sort of 2016 beyond era. And then it was only like a few years ago that people started talking and saying like hey, did you know that the average like you know, 70% of Americans are deficient in magnesium? And to me that had been just like I knew that because of our food system and there's way less magnesium content and even vegetables and stuff today than there were, you know, decades ago. But it feels like nice and early to that. And that's like a hero ingredient that was quite a bit more durable in my opinion than this like initial CBD boom. And I don't, you know, I could call it a bust maybe because there's, I know a lot of people that have built brands, saw great revenue growth and then didn't figure out a way to kind of like center themselves on a more durable kind of hero ingredient.

[Erica]

Yeah, I mean I just, just to double click on that a bit. Like I think beyond the market, the smart marketing that we did in the early days that were about to re accelerate in a big way, I think I had the right kind of category view of how this space was going to emerge. And just a simple insight I'd always say. I've never heard anyone call Red Bull a caffeine company. It was an energy company. Just like we weren't a CBD company or not a magnesium company or not even a mocktail company. The other amazing bet we made was on the RTD mocktail opportunity. And so we launched mocktail line in 2023. What I saw there was when athletic brewing was recatalyzing the non elk beer space. My observation was beer was flat to declining in alcohol. So it's fighting for share of a shrinking pie. What was growing it was RTD cocktails and hard seltzer. My thesis was there's going to be an RTD mocktail category on the other side of RTD cocktails. Just like not enough beer existed on the other side of alcoholic beer.

[Jordy Hayes]

And you want to bet on a feeling that humans are going to want for A long period of time versus a single ingredient, right?

[Erica]

Yes. And so I had this one framework I had is stimulation, intoxication, relaxation, that this really represented the emergence of this fundamentally new kind of value proposition, kind of in feeling that people would be seeking. And when I had the light bulb moment for what became recess, Red Bull was started in 1987, right? Like Red Bull, Monster, Starbucks, All Road, this kind of secular tailwind of kind of consumers seeking stimulation. And again, my thesis was in the future that we were entering, people would be basically figuring how to relax in the crazy world that we were living in. And that all these trends, whether it's focus on alcohol, moderation, stress relief, enhancing sleep focus, are all kind of connected and a part of consumers prioritizing their overall mental well being. And that's kind of why the recess platform strategy has been kind of successful. And I think there's a lot more we can do beyond this in the next phase of the business.

[Jordy Hayes]

How do you think about marketing and brand building going forward? I don't know if I have this correct, but it feels like over the last few years the focus has been distribution, getting the right assortment of products, like laying the foundation so that you have the ability to scale. Because one of the challenges as a beverage brand, if you're doing people like to buy beverages in stores. If you're doing like viral Internet marketing, that doesn't necessarily translate to the sales growth that you want unless you have the distribution. And the grocery store closest to my house has recess, so I'll grab some from there. But I'm assuming it took a while to get the kind of saturation from a distribution standpoint so that you guys can have the confidence to like do a big celebrity partnership or do a TV campaign and start doing these things that just are kind of a waste of money unless you have that distribution.

[Erica]

That's right. And I think that's one actually the best parts of the recess story. As I've been kind of transitioning the business beyond the original CBD line with the addition of mood and mocktails, I've been focused on basically performance marketing to drive the Amazon business. And we're still 50% E comm. And then we just get so much organic kind of word of mouth, you know, viral, you know, basically testimonials. We probably get, you know, 100, 250 organic tag posts a day across, you know, Instagram and TikTok. Primarily women, which is our kind of core kind of consumer spreading, you know, the word on recess. And that is super powerful. And So I look at this round, this next phase is fundamentally about, you know, scaling the team, scaling distribution and you know, really re catalyzing brand marketing. Because, you know, John, what you guys are alluding to earlier, you know, the kind of groundbreaking content, the pop up stuff like that, I really have turned off. And again, if you compare, you know what we've where we are, you know, compared to where poppy, liquid death brands like that, we've done really no levers on brand marketing yet. And so you're going to start to see a lot more of that in this next phase. And you know, just to talk about Red Bull a little bit, like, I always kind of thought of Red Bull as like a media company that monetizes through selling cans. And I do think beverage is this very kind of underappreciated category. You know, especially it has some similarities to even, you know, tech companies. Like when I, you know, when I had the idea for recess, I discovered this amazing fact which is, you know, Monster Energy was the best performing stock of the past 20 years. Right.

[John]

It was a incredible, incredibly well too. It's happened like four times in beverage and energy specifically. Like great outcomes.

[Erica]

Yeah, exactly. And so it does have these like, you know, if you bet on, especially if you're creating a category or writing like a very large secular tailwind like as is compounding, you know, effect to it. And you know, obviously brand marketing plays a critical role in that and I think there's some, you know, a lot of new opportunities to do stuff in new ways in this area with the role of Amazon and digital experiences even. I think there's a lot of cool stuff we can do in the next phase of recess. So I'm excited to turn that back on.

[John]

Yeah, yeah.

[Jordy Hayes]

I don't know how much you still work with day job, but if you sat down for an hour, brainstorm with Ryan and Spencer, you could probably come up with at least 100 ideas that would unlock that next stage of growth.

[Erica]

Yeah, they'll be back in the mix for sure.

[Jordy Hayes]

We got to talk about the fundraise. We got a gong here that we would love to hit on your behalf. How'd the round come together? Who participated?

[Erica]

Yeah, so the round was led by Kavu. It's a $30 million Series B. Kavu IS.

[Jordy Hayes]

Voice drowned OUT by the gong. You said you were getting into Kavu.

[Erica]

Yeah, so Kavu was the main investor. And Poppy, which they just sold to pepsi for about $2 billion earlier this year. And kind of where their next.

[John]

It's Rohan Oza. Right, yeah, yeah, he's a legend. He, he was like top guy at Vitamin Water. Sold that to Coke for 4 billion. Like truly the crowning achievement of the CPG beverage industry at the time. And still today, one of the greatest Bev deals ever. And then he's been on Shark Tank. He's just like a legend. Legendary consumer packaged goods investor.

[Erica]

Yeah.

[Jordy Hayes]

Quick lightning round of questions. I'm assuming that Kavu is not underwriting this, underwriting the business from, with any type of AI lens. But are you getting, are you getting any leverage out of AI? I would say like we at this show unfortunately get very little. I would say it helps with some research and we build software internally that's, that's helpful. But I'm curious if the chat was wondering if it's been helped move the needle at all?

[Erica]

Not yet, but I'm starting to have conversations with different groups building AI driven content production and I'm very excited to figure out how we can leverage that. You have to pump out a lot of content running a beverage business or any consumer brand today. I think there's an interesting way for us to use it in a kind of a tongue in cheek way. I mean the whole recess story and antidote to modern times is kind of, you know, was in response to the implications that I would have.

[Tyler]

Right.

[Erica]

I think so, like incorporate it into the content strategy.

[John]

I feel like you could do something really fun with a customer service where yeah, the AI, like you need some customer service. People are going to have questions about the product. Generally there's going to be a lot of back and forth. But you could probably do some crazy stuff with like fine tuning the LLM, bringing a unique brand voice in and kind of like go. That just feels like recess day job.

[Jordy Hayes]

There's also, I can imagine, like, I would imagine a lot of your distributor relationships today are still like somebody has to call somebody on another line and a grocery store has to call the distributor when they're, you know, and it's still like kind of analog. So I can imagine some opportunities there. Another question from the chat, they're asking about the potential, like are you excited about drone deliveries? I can imagine like beverage is something that people like. When people want to drink, you've built a big E comm business, but when people want to drink, they don't typically think, let me go on my computer and order a drink. And we saw there was, I don't know if this company is still around, but there was a company that was started in the same era as Recess that Tried to go really all in on, on E Comm. And I, I don't, I think they, they partner with Coke at some point and I don't, I don't know that they're still around.

[Erica]

What are we talking about? Names escaping, isn't it?

[John]

Lemon something Lemon.

[Jordy Hayes]

Lemon Perf. No, not Lemon. Perfect. Lemon Perfect was like dirty Lemon.

[Erica]

Dirty Lemon. Dirty Lemon.

[John]

Yeah, they text messaging. They were like insanely good at e commerce.

[Jordy Hayes]

But yeah, theoretically, if you can just, you know, say like I want a six pack of recessed mood and hit a button on your phone and a drone just drops and into your backyard, that should increase velocity. But curious.

[Erica]

I mean, I'm a big believer in just Omnichannel. I mean Instacart's a huge channel for us. GoPuff DoorDash increasingly kind of anywhere where kind of consumer products are sold. You know, we want to be. And so, you know, when that becomes a real, a real channel, I think we'll, we'll explore it for sure. But it's not, it's not something I spent a huge amount of time thinking about.

[Jordy Hayes]

Yeah. Got to stay focused. Awesome.

[Erica]

Well, Walmart and Costco next before.

[John]

Yeah, I mean you get those and it's just like, okay, you've kind of won and then the, like, you'll just be in the place to take advantage of whatever thing comes next. So. Yeah, yeah, lots of opportunity. Thank you so much for stopping by the show.

[Jordy Hayes]

Yeah, great to find me.

[Erica]

Thank you for coming on.

[John]

We'll talk soon.

[Jordy Hayes]

Congrats to the team as well. Cheers.

[John]

Have a great rest of your day. Let me tell you about public.com investing for those that take it seriously. Multi asset investing industry leading yields trusted by millions.

[Jordy Hayes]

Let's go Palantir. Speaking of stocks paler earnings paler according to cnbc tops estimates boost fourth quarter guidance on AI adoption. They issued a strong guidance attributing growth to adoption of its AI. Government sales which have been central to Palantir's ascent grew 52% from a year ago. And again, stock is not up a ton after hours. But we can dig into this more probably tomorrow. Did we want to try to do.

[John]

Yeah, we got to go through a little bit of this.

[Jordy Hayes]

We got to do a little bit of a. I mean we're just going.

[John]

To go through sort of like random segments I guess, but basically a. The Ilya Sutskever who I dressed up as coincidentally for Halloween last Friday. He's the co founder of OpenAI. They have shared new details on the internal conflicts that led to Sam Altman's initial firing, including a memo alleging that Altman exhibited a consistent pattern of lying. There's a deposition transcript that is going around that is now public from the Ilia deposition. Toucan kind of summarizes here. Ilya plotted for over a year with Mira to remove Sam. Dario wanted Greg Brockman fired and himself in charge of all research. That's Dario Amadei, I believe, from Anthropic. Mira Muradi told Ilya that Sam Altman pitted her against Daniela Amade. Ilya wrote a 52 page memo to get Sam fired and a separate doc on Greg. And there are some. There are some clips here that are absolutely crazy. The witness, I believe the witness is Ilya, correct?

[Tyler]

Correct.

[John]

And the witness says, one thing I can say is that the process was rushed. And the attorney says, I was rushed. And Ilya says, I think it was rushed because the board was inexperienced. And the attorney asks, inexperienced in what? And Ilya says, in board matters.

[Jordy Hayes]

Let's go through a little table reading here. I'm on page 17 of the deposition. Tyler is going to be playing the attorney, Agna Lucci, and I will be attorney Molo.

[John]

And what's the number in the top right?

[Jordy Hayes]

168.

[John]

Okay, so let's pull this up.

[Jordy Hayes]

Tyler, kick it off.

[John]

You're the attorney Agno Lucci.

[Tyler]

Correct.

[John]

Okay.

[Tyler]

Okay.

[John]

And I'm Ilya.

[Jordy Hayes]

You're Ilya. I don't even know if you're going to be.

[John]

And you're Molo.

[Jordy Hayes]

I'm Molo.

[John]

Okay, let's go. But first, let me tell you about iquik.com out of home Advertising. Easy, measurable. Say goodbye to the headaches of out of home advertising. Only Add Quick combines technology out of home expertise and data to enable efficiency in this ad buying across the globe. Okay, Tyler, go.

[Tyler]

Okay, Jordy, I think you should actually start because it starts a little bit down the page. So start at line five.

[John]

Okay.

[Jordy Hayes]

Line five. It certainly does matter how much.

[John]

Keep going.

[Jordy Hayes]

What do you think the value of Your equity at OpenAI was at the time Sam Altman was fired?

[Tyler]

And I have the same objection and I'm instructing him not to put a number on it.

[Jordy Hayes]

What did you think the value was?

[Tyler]

You can answer the question that he is saying is relevant here, which is whether you thought you were going to lose value.

[Jordy Hayes]

It isn't my question. I have the right to ask a question. You can object to the question. My question is, what did you think the value of your equity in OpenAI was at the time of Sam Altman's.

[Tyler]

Firing, and I'm instructing the witness not to answer. As to the money, money value.

[Jordy Hayes]

Are you going to not answer? I mean.

[John]

What is this?

[Tyler]

John, that's you.

[John]

Oh, I. I'm answering. Okay, so. So you say, are you. Are you not.

[Jordy Hayes]

Are you gonna. Are you. Are you going to not answer?

[John]

I mean, I have to obey my attorney.

[Jordy Hayes]

Okay, so you're not going to answer.

[John]

I'll do what my attorney tells me to.

[Jordy Hayes]

Okay. Were you concerned about possibly losing your equity at the time that I withdraw the question?

[John]

Eventually. Keep going.

[Jordy Hayes]

Eventually, the board agreed to resign and restore Sam Altman, didn't it?

[John]

Yes.

[Jordy Hayes]

When was that?

[John]

Later in the week.

[Jordy Hayes]

And why did they do that?

[John]

Tyler?

[Tyler]

Objective 4.

[John]

There was a question of why the board did it, correct? Or is this a question of why.

[Jordy Hayes]

I supported this first, I'm asking you why did the board decide to resign and reinstate Sam Altman?

[John]

Right now, my view is that with very few exceptions, most likely a person who is going to be in charge is going to be very good with the way of power. And it will be a lot like choosing between different politicians.

[Jordy Hayes]

The person in charge of what? AGI and why do you say that?

[Tyler]

Objective form.

[John]

That's how the world seems to work. I think it's very. I think it's not impossible, but I think it's very hard for someone who would be described as a saint to make it. I think it's worth trying. I just think it's like choosing between different politicians. Who is going to be the head of state?

[Jordy Hayes]

Looking back at the process that preceded the removal of Sam and Greg from the board, what's your assessment of that process?

[Tyler]

Objection.

[John]

Vague calls for speculation.

[Tyler]

Okay, that's the end of that scene, I think.

[Jordy Hayes]

End scene.

[John]

We should have rehearsed this. Okay.

[Jordy Hayes]

This is a table reading. We're. We're riffing it out.

[John]

Okay. Should we go to 26? Because we already did the board experience. Okay, let's go to 26. Where's 26? 26 starts the witness. At least at one point. I express support.

[Jordy Hayes]

After Sam was removed, do you recall Helen Toner telling employees that allowing the company to be destroyed would be consistent with the mission?

[John]

I do recall.

[Jordy Hayes]

And what was the context of that comment?

[John]

The executives. We need to be southern. Every law executive is southern when it's in a southern twang. The executives. It was a meeting with the board members and the executive team. The executives told the board that if Sam does not return, then OpenAI will be destroyed. And that's inconsistent with OpenAI's mission. And Helen Toner said something to the effect of that. It is consistent, but I think she said it even more directly than that.

[Jordy Hayes]

More directly than you've related here?

[John]

Yes.

[Jordy Hayes]

Okay. And what was your reaction to that?

[John]

I don't remember my reaction at the time.

[Jordy Hayes]

Did you think that would be consistent with the mission?

[John]

Objectiform. Objectiform.

[Jordy Hayes]

Objectiform.

[John]

Objectiform. I could imagine hypothetical extreme circumstances that answer would be yes. But at that point in time, the answer was definitely no. For me, it would not be inconsistent with OpenAI's mission to destroy the business. Is that what he's saying? I'm kind of lost on what his actual stance here is. What is he saying? He says, do you think that was. So what was the original criticism?

[Jordy Hayes]

Let's go to 28.

[John]

Do you know, Tyler, do you know what he's saying? Is he pro destroying. So the executives, they were just meeting with the board members. Okay. The executives told the board that if Sam does not return, then OpenAI will be destroyed. And that's inconsistent with OpenAI's mission. And Helen Toner said something to the effect of that. It is consistent, but I think she said it even more directly than that.

[Mark Gurman]

Yeah.

[Tyler]

So it doesn't have anything to do with Ilya's position on whether the company being destroyed is consistent with the. With the mission.

[Jordy Hayes]

And you say here there's reason to believe that Sam was removed from YC in the past for reasons similar to the one that you identify in this document.

[John]

Hmm. Who else has summarized this? I'm completely lost on the actual deposition. Let's go back to the timeline. Typed female, has a screenshot here. Says, this is some social network type stuff.

[Jordy Hayes]

The movie's gonna be incredible.

[John]

We can go back into reading these because they're a little bit more digestible. And what was your response to that? Ilya says, I was very unhappy about it. And the question for the long why? Why?

[Mark Gurman]

Why?

[John]

Because I really did not want OpenAI to merge with Anthropic.

[Jordy Hayes]

Why not?

[John]

I just didn't want to. What? That doesn't. This is creating more questions than answers. GDP calls it the worst coup ever planned for a year without any PR strategy. As they say, if you go for the king, better get his head. First and foremost skill that any leader needs is to be able to survive. No feel good management book will tell you that Ilya is a great scientist and great human being, but not a practical leader. Ilya didn't have the skill to plot and survive and come out on top. Sama is the right leader. From OpenAI employee perspective, you couldn't go this big without Sama. Or I guess he typed. It's so bad in so many ways, says Rune. I really hope one day Sam gets the credit he deserves. So they're saying that like if you can't pull off the coup, you probably can't pull off the Act 2 of the company. And so that's a pretty reasonable. That's a pretty reasonable stance. What else? We talked about the Amazon deal. We didn't get a chance to talk about Wander. Find your happy place. Book a wander with inspiring views, hotel, great amenities, dream beds, top tier cleaning and 247 concierge service. It's a vacation home, but better. I like this post from Buck. We almost kicked off the show with it. OpenAI the Compute purchase order press release company.

[Jordy Hayes]

I think startups should start just announcing their planned cloud spend. Just, you know, startups always need like the more, the more times you can launch, the better.

[John]

Definitely go through YC, get $100,000 in credits and then project out, spend. Spend 10,000 of those credits the first month, then spend 20,000 the next month, then spend 40,000 the next month. You're almost out of credits. You've spent 90,000 of your hundred thousand credits, right? But you have exponential growth in your credit spending. You project that out a decade and then you announce that based on the trend, we will be spending a quadrillion dollars with AWS if the trend continues. And then just share the data. Hey, we had 10k one month, 20k the next month, 40k in the third month. Do the math folks. It's exponential growth. That is a good hack. I have another hack because Sampar is in the timeline. Put the timeline in turmoil over whether he is a $40 million gigachad or a pauper at 17 million. That's the debate basically, right? Someone, he, he has said that he sold the hustle for 40 million. Someone quote tweeted him and said it was actually only 17 million and everyone was debating the nature of his acquisition. I thought it'd be interesting to dive into some of the claims. I don't really care that much about whether it's 17 or 40. Both are big numbers. Congrats to him. The interesting thing is just the nature of acqui hires acquisitions, how these different things can play out and how funky they can get. He's in a unique position because he has to talk about his business credentials for his business, right? Yeah, but, but the more, the more interesting thing is like if you're negotiating with to sell a business. What are all the levers you can pull? Because there's a ton of them. So the headline number, I believe was.

[Jordy Hayes]

Strangely like the hustle acquisition was kind of. It was like two deals rolled into one. There's like the core hustle, I guess it's seven deals.

[John]

There's so many deals.

[Jordy Hayes]

Well, yeah, there's the core Hustle business. There's the podcast, which was my first, a decent chunk of the revenue. Then there's the talent. Like, the podcast is not really valuable without the talent.

[John]

Totally.

[Jordy Hayes]

So there's a talent deal. And I think he was adding up, like, adding up a bunch of those numbers, rolling them into one and talking about that headline number. And he broke it all down and explained it.

[John]

Yeah, there's no real established way to calculate. There's no real norms around how headline numbers and acquisitions are accounted for. Like, if you get acquired for, you know, $100 million, but half of it's on an earnout and you don't hit that earn out, like, you probably should go back and say, like, hey guys, I know I sold my company for 100 million, but it's actually, it was only 50 million because we didn't hit the earn out or vice versa. And what it feels like happened was he sold the company for 17, but grew my first million so much that he kept making a lot of money from it. So the thing that he built wound up generating.

[Jordy Hayes]

He was getting a lot of stock.

[John]

And the stock went way up.

[Jordy Hayes]

He was counting some of the appreciation of that stock to get to the headline number. And I can. Yeah, he, he has, he created a podcast that is entirely focused on talking about wealth.

[John]

Exactly.

[Jordy Hayes]

So I think he got.

[John]

Oh yeah, the Hampton show.

[Jordy Hayes]

Yeah, he got a little carried away.

[John]

The Hampton show.

[Dan (CEO of Iron)]

Yeah.

[John]

You have to, you have to show the number it is. I mean, it's like headline grabbing. Like, if you want to go Viral, especially on YouTube, saying, like, I sold my company, there's this guy whose like whole shtick is he sold his company for or he's like $100 million entrepreneur. Alex Hermosi is like really big into like the hundred million dollar branding. I think he has like a patent on it or, or a trademark on hundred million just because, like, that's a round number and so he will throw out. I have $100 million. I sold my companies for $100 million. Collectively, I have $100 million this or that and that really, it really works to get clicks. Like, it really works to get attention. If you Want to sell your company for 40 million? 17 million. I have a hack for you. So this is what you do. You. Oh, Tyler's locked in. He's ready. This is the number one resume builder right here.

[Jordy Hayes]

Okay, so Tyler's not just listening, he's studying.

[John]

You work maybe at some sort of podcast or something. You get together, like, $5,000 or something. Then you lever up to get to, like, you need to get to, like, $400,000. I think once you get to, like, $400,000 in debt, it doesn't really matter. You go and you sell your company, but you don't sell it. If you sell it for USD, the value of your bank account is only 400,000. And that's not going to be like, oh, turning heads. So what you have to do is you have to sell. You know where I'm going with this? You got to sell your company in a different currency. In a different currency.

[Jordy Hayes]

Maybe like Guyanese dollar.

[John]

Yes, the Guyanese dollar. So the Guyanese dollar trades at 210 Guyanese dollars to 1 US dollar. So if you have $400,000 US dollars, if you've created $400,000 of assets here, and you can sell that in Guyanese.

[Jordy Hayes]

Dollars, an amazing multiple.

[John]

So 400 times 210 is it's $84 million in Guyanese dollars. So $400,000 in cash in US dollars is 84 million in Guyanese dollars. And so what you do is you build your business to the point where you can sell it for 400, maybe with a bunch of leverage that'll have to get paid out. But you sell it. The press release, we sold it for $84 million. And you don't specify.

[Jordy Hayes]

No, but you can put in the fine print at the bottom of the press release. Super, super fine print.

[John]

Guianese dollars.

[Jordy Hayes]

The transaction occurred using the Guianes dollar.

[John]

This is actually just a hack for everything. If you want to become like a.

[Jordy Hayes]

OpenAI should start doing that. They should start announcing all their deals in Guyanese. Wait, maybe they have been this.

[John]

What is 1.4?

[Jordy Hayes]

Maybe that was the answer that Sam needed. Is he just.

[John]

He's pushing up on 300 trillion Guyanese dollars?

[Jordy Hayes]

Yeah, maybe. Maybe he should.

[John]

Sam, how is a company with only 14 billion in US dollars of revenue gonna spend 294 trillion in Guyanese dollars? 294 trillion in Guyanese dollars is his liabilities.

[Jordy Hayes]

Raghav says Zimbabwean dollars are the real unlock. That's how you get in the quadrillions.

[John]

Yeah, the other thing, he should be like, oh, how am I gonna pay for, how am I gonna pay for 1.4 trillion? 1.4 trillion. How am I gonna pay for it? Well, guess What? I got 2.9 trillion in revenue coming in right now, buddy. 2.9 trillion right now. That's my revenue right now.

[Mark Gurman]

Dollars.

[John]

But OpenAI will cross 3 trillion in dollars. 3 trillion revenue dollars this year for sure.

[Jordy Hayes]

70 guany.

[John]

7 trillion Guyanese dollars. The Guanese dollars, you can't get onto any other platform. It is such good alpha because you can go do a press release and just take whatever you, whatever you did, whatever you achieved. Maybe you're making six figures for the first time in your life, convert it to Guyanese dollars. Now you're making 2 million a year. You know, oh, oh, you cashed out, you made a million dollars. How'd you make your first million? How'd you make your first 200 startups?

[Jordy Hayes]

Startups I like to, like to, you know, flex how quickly they got to a hundred million dollar run rate. Huge opportunity to get there with the.

[John]

Guai, make it 210 times easier with the Guyanese dollar.

[Jordy Hayes]

We should acquire some Guyanese dollars and just have a, have a stack.

[John]

We should, we should. The exchange rate will work in your favor. In your favor. Anyway, there's a bunch of other posts in the timeline. We'll have to get to them tomorrow. We're on the road tomorrow but we're still doing a show. 11am Pacific. We'll see you there. I don't think we'll be doing any guests. We'll see. It might be a little bit of a shorter show, but don't worry. Please leave us five star review on Apple podcasts, Spotify. We also have Diet TVPN now which you can listen to. DietBPN is a summary show. 15 to 30 minutes, just the highlights cut down. If you don't have time for the full show, you can go listen to.

[Jordy Hayes]

Your workout, your commute and also follow.

[John]

Us on substack tbpn.com Drop your email.

[Jordy Hayes]

Thanks for tuning in today folks.

[John]

We'll see you tomorrow.

[Jordy Hayes]

See you tomorrow. Goodbye. Love you.