Spotify CEO Joins, Alex Tabarrok Joins, Lots of news from SpaceX, Anthropic, OpenAI, Nvidia and Meta

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The Temple of Technology, the fortress of finance, the capital of capital. >> Yeah, >> we have a massive show. There's so much tech news. People said the technology industry they were out of news. They weren't. There's plenty of tech news all over the Wall Street Journal. Uh, a AI companies are duking it out for prime placement in the journal. SpaceX got top billing in the journal with the IPO filing. SpaceX sets its IPO in motion. The SEC filing starts move to raise tens of billions of dollars in record debut. We've talked about this a lot on the show. Clock is officially ticking on SpaceX's huge stock offering. What are you laughing about? >> Ryan says, "I knew Jord was going to do two days in a row." Did I not do two days in a row? >> Nope. >> Haven't done two days in a row in months. >> We can roll the tape. I I mean after reading the uh that that that piece about us, I feel like some brand differentiation is actually to our benefit since some people can't tell us apart. And so I I I've become a fan of the the the the split in casual Friday, Thursday, >> of just a of a casual look over there, more button down, buttoned up, button left and right over here. >> Something's got to be buttoned up. >> Someone's got to do it. Uh SpaceX on Wednesday revealed new details about how it's it's a about its financials and how chief executive officer Elon Musk will try to grow a sprawling enterprise dedicated to advancing cutting edge technologies in space and back on Earth. The company disclosed the information in an investor perspectus. Um publica uh publication of the document sets SpaceX on course to potentially raise 80 billion or more from a stock sale as soon as next month. Uh the rumored date is what? Jul June July. >> Was it June 12th? >> June 12th. That's just 20 days away. Basically, um they're going to beat out Saudi Aramco that raised 26 billion when it went public in 2019. Uh Musk has touted out of this world objectives for the company from deploying a huge number of artificial intelligence satellites in the future to colonizing Mars. Texas-based SpaceX has distinct businesses ranging from rocket launch to satellite operations to a nent AI unit that its rivals uh that it's racing to catch up with rivals. Founded by Musk nearly a quarter century ago. Yeah, it has been a long time. SpaceX revolutionized the commercial space industry. The company has grown from a startup with a handful of employees that almost went out of business to one of the world's most valuable private companies with over 22,000 workers as of March 31st. It controls technologies the competitors and even nation states haven't been able to fully match. SpaceX reported its revenue last year at 18.67 billion and Dan Primac had a post saying that uh the business was smaller than he expected. He's going on CNBC today to talk about the IPO has had a couple interesting takes. People are going back and forth. The overall the reception has been uh the S1 is an extremely enjoyable read. Kevin Quac says it's the most enjoyable S1 read in a long time. reads so easy like sci-fi or fiction. And uh >> it's kind of the perfect it's kind of the perfect post or just regular >> because if you're pro tech, >> you like space, you're excited about space, that could be a positive. Yes. >> But if you're if you're a bear, you can say it reads almost like >> science fiction. Of course, the best ham slide ever. >> Probably the best ham slide ever. Uh Sawyer Merritt has the screenshot here. SpaceX and IPO filing. We believe we have identified the largest actionable total addressable market in human history. We estimate that our quantifiable TAM is $28.5 trillion consisting of 370 billion in space from space enabled solutions, 1.6 trillion in connectivity across 870 billion in Starlink broadband and 740 billion in Starlink mobile as well as additional opportunities in enterprise and government. 26.5 trillion in AI across 2.4 trillion in AI infrastructure, 760 billion in consumer subscriptions, 600 billion in digital advertising. That's massive. >> Well, is that for X? >> I don't know. >> The idea So, so everything else is more believable. >> Everything else is more believable to me than X getting meaningful digital advertising penetration. Yeah, I guess I guess the time uh the time matters here because uh a lot of these markets aren't aren't aren't this big currently. I think I I don't know. Um but I guess over time, you know, if you think about the next 25 years, the next hundred years. Uh I don't know if these are inflation adjusted, but there's lots of things that could happen. Uh for illustrative purposes of sizing our addressable market, SpaceX excluded China and Russia from global estimates. I feel like you might want to put in China and Russia over the next couple decades. Who knows? Maybe we become best buds with both company with both countries. You know, anything can happen. Um, world peace might come and that's going to expand. Tam, that's an economic incentive for world peace. I like to see it. Uh, >> there were some beautiful photos that were shared in the start of the lots of pictures to start and then it gets very text dense. But, uh, the photos were I I I liked them. I thought that they were unique. I hadn't seen them like that often and they felt like they were kept in the back pocket for a while and they I don't know they just like remind you of of SpaceX. It's like a beautiful thing. Um Dan Primac says incredible that Goldman beat out Morgan Stanley for the SpaceX IPO left lead left uh given that Michael Grimes returned to Morgan Stanley in part for this deal. Of course Morgan Stanley is on the deal. Uh but that is uh it is a big win for Goldman that uh DJ SpaceX is at the helm. Goldman Sachs and Co. LLC lead left in the joint bookr running managers, but uh everyone's getting a piece of the SpaceX IPO at this size. Uh Will Bitsky says, "Shout out to the Goldman analyst that was richly sacrificed to win this lead left IPO. It must have been an incredible amount of work. It's not just the biggest IPO of all time. It's not just this incredibly complex structure with multiple businesses. It's also you're reporting to Elon Musk. Elon Musk is your client and he's going to ask for things probably more aggressively than anyone who's a CEO of a company that's going public. So, uh, lots of lots of things, lots of winners from the SpaceX IPO. Luke Nosk is a huge one. Uh, he was at Founders Fund, co-founded Founders Fund with Peter Teal. Uh, his next role will be leading, this is from a long time ago. He left to start Gigafund which was built at the time as a new investment firm that initially will be focused on raising capital for Elon Musk's SpaceX, a founders fund portfolio company where Nosk is a director. And so, uh, David Quan says, "Today I learned Luke Nosk left FF to fund to start a fund exclusively focused on investing in SpaceX." There are a few of those that we're hearing about these days. Of course, exclusive does not mean 100% of the capital went into SpaceX. It just means that they were very, very focused on that. Gigafund has a lot of different companies in the portfolio cover. We've had a bunch of founders on the show who have raised money from Gigafund, but SpaceX is where Luke is a director deeply involved and has focused on participating in many, many rounds. And so conviction will do that to an MF says Pocket Jacks Capital. Lots of big winners. Uh Frank asks, "Codeex for SpaceX fair value based on the S1 should be an interesting buildup to the IPO." Uh what was the result from cap uh from >> said lands around 1.1 to one and a half. >> It's not badion. >> That's not bad. Bullcase gets to 1.7 to 1.9 if investors assume enthropic sticks. AI infrastructure margins are strong. Starship unlocks major new markets and public market scarcity drives demand. Uh but two trillion means the market is effectively assigning something like 80 uh 800 billion to 1 trillion to the AI orbital compute story on top of an already rich Starlink valuation. possible as an IPO mania print, but that's not what I'd call for fair. Uh so we'll see what happens. I mean uh the big the big news was the partnership with uh with Anthropic where Anthropic is spending over a billion dollars a month. I think it's ramping up >> 18 billion >> a year and that's huge for SpaceX given that they did 18 and a half or something last year. This is a huge jump up in uh in I mean they have to be one of the biggest Neoclouds like overnight with this. Yeah, I was trying to find >> huge huge uh >> I was trying to find some of our conversations from last year where we were >> uh you know X uh sorry XAI uh and Grock was was growing but maybe not at the rate that uh not close to the rate that uh would require that much infrastructure. >> Yeah. Finding product market fit on the actual distribution side obviously we love but it's not the biggest platform. >> Yeah. It wasn't it certainly you know shoot uh shoot for the stars. Yeah. >> And uh if you miss, you have a pretty great Neocloud business, right? Uh Anthropic has to pay way above traditional uh Neocloud pricing for this uh compute and so ends up being a great outcome uh for SpaceX. >> Yes. Well, uh Antonio Gracias is another investor who's absolutely printing off the SpaceX IPO. uh Antonio Gracias at Valor uh has 30 entities invested in SpaceX in case you were wondering what truly going long looks like. uh he added some corrections saying that uh pe some people were assigning like oh he's the only investor and he says no no no I have a lot of LPs I do a whole bunch of different funds like this is not just his his his windfall although of course he's going to be doing very very well personally um but uh so many different Valor for Space Holdings LLC uh Valor M336 like so many different investment vehicles because Elon has raised money so many times both for primary capital and for uh tender offers for employees who uh had worked at SpaceX for 15 years and needed to buy houses, needed some liquidity. Uh Elon was very good about never doing a down round, growing the valuation very very gradually over decades to get to this point. Uh and uh Peter Hey says, just reading the SpaceX SEC document, one thing that sticks out is the capital spend on AI is 3x that on space. It's an AI company with some rockets uh which is a wild wild pivot at the la at the it's the 11th hour you know this has been uh a rocket company for for 20 years or 15 years then an internet company with Starlink but that was still so tied and so clear and so quick to get to uh like a logical link like you needed the launch capacity to build Starlink and so uh you had this new capability satellite internet it was amazing and and it went from idea to launching the satellites to consumers actually using it when they're traveling, camping, off the grid, uh real and then showing up in in planes and all sorts of different applications. It became very very relevant, very real very quickly and uh and and and the the the Colossus XAI that felt like a different company because it was it felt like a different initiative, but it has just become so so so big so quickly. >> Yeah. And looking back at the plays Elon and his investors have made around this over the last year, right? There was that uh felt like somewhat of a coordinated effort uh at the at was it beginning of this year or late last year when suddenly everyone started talking about space data centers very suddenly. Remember Gavin Baker Yeah. >> started coming out talking about it. That's around the time when they sort of floated the uh I believe it was uh December of last year uh started floating uh floating the idea of like what the potential valuation would be started building that AI narrative started you know made a play for cursor uh you know partnered with anthropic even though you know only a few months ago they were much more combative. Yeah. uh name calling. So yeah, he you know I think this is why Elon has been able to accumulate so much capital is like he is >> the pretty much the best in the world at like making just making plays. >> Yeah. Making plays >> and doing whatever it takes. >> Yeah. So the most recent play uh unrelated to the news that made the front page of the Wall Street Journal, anthropic revenue surges set to post first profit sales seen reaching 10.9 billion in second quarter, up 130% over previous quarter. Uh truly in in the title of the uh in the in the actual URL of the Wall Street Journal article, they call it mindblowing growth uh about to propel Anthropic to its first profit. Absolutely. Uh fantastic execution. So uh Tom Brown, co-founder of Anthropic, says uh we're expanding our partnership with SpaceX and we'll be scaling up GB 200 capacity on Colossus 2 throughout June. Appreciate Elon Musk and the team helping us find find good homes for the Clauds. Is Claude plural? I thought it was all one claude and the purpose of anthropic was to build Claude and Claude will eventually build Claude. I guess you have multiple instance of the instances of claude running uh on different servers on different GB200s. Um Ray Wang over at semi analysis sort of shares a little bit more. Uh Anthropics Q2 revenue is set to increase by over 200% will post an operating profit. Uh the the uh AI will never be profitable. Uh group is in absolute shambles right now. Uh there there have been a lot of folks who have been just doubting time and time again, will this ever make money? Will this ever make sense? And uh Dylan Patel sort of laid out on the Darkh Patel show uh this idea that at a certain point uh the the leading the leading models might actually be able to raise money because they're they're or raise prices because they're driving so much economic value. Some analysis also put out a a table showing for particular workflows that would take them, you know, a thousand dollars of human time that they would have to hire more people for, they were able to use AI and actually get an equivalent result for a tenth of the cost or a 100th of the cost or even, you know, a 30% savings sometimes. Anyway, >> Lean Algeb says, "Can someone check on Gary February 23rd, 2026?" He said, "Turns out Gen AI was a scam." >> I had to check the date on this because this seems like something he would have written in like 2024. And I would have been like, "Ah, okay. Yeah, maybe the usages are a little limited. Maybe there is some sort of wall here, the data wall, or you know, maybe we won't be able to, you know, maybe we'll need new paradigm, but to write this in 2026 when we're in like the fastest period of acceleration in terms of actual value from these models is uh pretty pretty remarkable. I'm interested to see where he goes from this. Is he gonna double down? Is he gonna stick with this? It has been a couple months since >> I think I think there's I think I think the the entire crypto boom and NFTTS in particular just broke a lot of people's brains. >> Yeah. And VR metaverse too. >> Metverse is another thing that was overse metverse you know potentially even more. >> Yeah. Yeah. Yeah. There was a lot of discussion about uh this will destroy Hollywood, this will destroy movies, like every >> with the metaverse. There was never there was never a moment where you could use a product and have a mind-blowing experience. >> Well, without paying for it. Like you had to buy >> No, no. I'm just saying I'm just saying like period. >> No, no, no. The Apple Vision Pro demo, like there was a day you called me and you were like, "Why is everyone losing their mind on the timeline over the Apple Vision Pro? Do I need to buy one of these?" And I was like, "Ah, it's kind of like a preview. It's not like perfectly there. I like it, but it's even think I I think you're remembering correctly because >> there was no moment where I wanted to buy one. >> No, no, no. You didn't want to. But you recognized that it was the current thing when uh the Apple Vision Pro launched for like that week when everyone got them delivered and they tried them. There were a lot of people that were >> they had vision prosychosis. >> They had vision prosychosis. A lot of people had NFD psychosis. All sorts of psychosis. Uh we'll see how the AI psychosis uh develops. It goes both ways. >> Yeah. Uh but >> but anyways comparing it to anyone can have Yes. >> a pretty wild experience with AI. >> Yes. >> In uh you know on like a ton of different a ton of different services. >> Yeah. >> You could never do that with >> So Lissan Algib is uh contrasting Gary Marcus' Substack post with uh what's happened in the AI industry. Enthropic valuation up 173% since the start of the year. uh posting profits in Q2 according to the Wall Street Journal. Uh OpenAI valuation up 67% since the start of the year and OpenAI general purpose model solves long-standing and well-known airdoserdos problem. Is it air dish or aird dose? >> I believe it's aird do >> aird doeros problem. The the two dots over the o get me on the pronunciation without a scaffold. And so there was a lot of questions about what you know how hard is it to solve these problems? Fortunately, we have Tyler Cosgrove who's going to take us through what actually happened with this solution to this math problem that uh people are uh very excited about. Nome Brown said, "Today we are sharing that a general purpose internal OpenAI model achieved a breakthrough on one of the best known combinatorial geometry problems. Uh less than one year ago, Frontier AI models were at IMO gold level performance. I expect this pace of progress to continue. And uh Sidhar Romesh, I don't know if he was joking about this bet, but he says, "I have lost my $30,000 bet that AI would never solve the planer unit dis." But uh um no, but uh a lot of people were surprised and a lot of people were uh excited about this. So take us through what actually happened. >> Okay. Yeah. So So I can basically go through like a simple explanation of what the problem actually is. Okay. So, so, so just for some context, uh, Paul Erdos kind of this legendary mathematician um, throughout the 20th century, he basically proposes I I think the number is like a little over,200 different uh, like little problems. These are the airdos problems. Uh, people talk a lot about these as like goals for AI to solve. And you've heard like over time there's been kind of like small iterative um, kind of solutions to a lot of these problems. Yeah. um >> sort of like collaborative a mathematician working alongside AIS or an easy one just getting >> there's like a main uh kind of uh like place where all of the solutions go. So sometimes people will will find >> uh like AI will like find a different paper that wasn't actually put on the website and then they they're like oh AI solved it but it's not actually true but this is kind of the first time we've really seen kind of a big step change like this is actually a new solution. This is using like you know kind of novel >> doesn't exist in papers out there already. So, so this was um problem number 90. So, so I can kind of read uh read the question then I can explain what it means. Um so, so it's does every set of n distinct points in the real plane contain at most n to the 1 + o of 1 / log log n many pairs which are one apart. Okay, so like what does that mean? Basically um >> we have like the real plane right 2D and we have a bunch of points on it. Mhm. >> Um what is basically the the how many like pairs of those will be uh basically one unit apart and what's like the max number like how do we basically organize those points such that we have the max number of them right >> the grid >> no so so you would think that but I can basically explain why so so let's kind of like formalize this better so we have u of n right and this is basically the largest number of unit distance pairs among n points in the plane >> okay so so basically like we're thinking about like how do we solve naively it's like okay what if we just take all the points >> we have n points >> and we just put them in a line >> and unit distance apart right so it looks something like this >> right so for this example we have four points but it doesn't matter it's just n >> m >> um so 1 2 3 4 how many pairs are there there's three right >> okay yeah >> so basically this scales with n minus one right so you could have a billion points and there's 99 n99 whatever n minus one okay so now if we put it in a grid what happens right so if we have a square grid here >> okay There's uh nine points here and then how many how many pairs are there? Uh I believe there's 12. And basically as this number scales up, >> it's still linear. >> So it's 2 n. >> Okay. >> Basically, if you do uh a billion points, it's it's two billion pairs. >> Two billion pairs. Okay. >> So then um basically >> is specifically that line the line represents. Yes. Because it's one unit distance, right? Because diagonal doesn't count because it's not one. Yeah. It's not a unit distance. So So then um okay, what's the next thing we can do? Um the next kind of configuration is is what's called the the lattice construction. Okay. >> Um and so if we can pull up a picture of it, it's this kind of crazy looking grid that has all these uh super like intricate um you know lines in between. You can see it on the uh this is from the OpenAI blog. >> Um if we can pull it up here. >> Oh, I think I saw this. >> Uh so this is what it looks like. >> Okay. >> So if you can like zoom in on on any of these points, you see that you know it it somehow it looks like a grid, right? But it there's not just kind of pairs at the at the edges, right? There's like way more. >> Okay, >> so this scales at n to the 1 + o 1 / log n, right? This is this is basically the the best um kind of example that we know works. >> Yes, but not a proof. >> So, so, so, so we we know we can find this, but is this the upper bound? We don't know, right? So, this is basically the lower bound. >> Okay. So, so then the the question is like we have the lower bound which is this is the best one we found. This is the most number of pairs. >> Um and then we we've theorized that that the high bound upper bound is uh scales with n to the 4/3. >> Mhm. >> And then so the original conjecture that he thought um that that it the upper bound is still going to be less than n^ the 1 + o of one. So this means uh O of one it's like as it scales as N scales to infinity right so O of one would basically scale to zero it go to zero as N goes to infinity um and then basically open AAI figured out that this is not true >> and that um there there actually are some um uh there are some ns for which um this kind of max number of pairs is greater than the original air conjecture. M >> so so for infinitely many n this is not for every single n right so it's not like five points or whatever but there are infinitely many >> ns for which this is true >> okay >> that it scales with um that it's greater than n plus n to the one plus some uh constant >> okay so that was basically the big thing right this is like you know >> huge if you're into math >> decades old problem right this is incredible thing Terrence Tao is like wow this is incredible >> um but That's basically the overview of the problem. Okay. >> Um but yeah, I it's very exciting because this is uh not like a math model. This is just an internal model, general like reasoning. >> Yeah. >> Um >> you could say it's like generally intelligent. >> Yes, I I think you could say that. Um and then I think it's it's interesting because from like public perception, it seems like uh this didn't take like that many tokens. This was not like millions of dollars of inference time. Sure. It was like maybe something like uh hundreds to thousands of dollars of interest computing because we were talking about like Gwen's conjecture about like novel ideas coming from just like brute forcing different connections between things and uh this is more token efficient. >> Yeah, this is not just taking some solution to a different airish problem and just like spamming it on all 1200 of the problems and oh one of them works. this is like kind of a new novel idea. Like maybe this solution is the way that they found this. It's like super complex. You can read the proof. It's like 18 pages long. I don't really know what it means, but but like there's uh a lot of the mathematicians are saying, okay, this is actually could be useful to a lot of other problems. >> Um this is like a new way to do things. So I think it's it's very exciting. This is like >> maybe similar to you know alpha fold moment or something where now this is like a real kind of step change in in math capabilities. Do are people going to run out of problems? How many more problems do we have? >> Uh I I don't know the exact number. I I think so there's 1,200 in total um of just air problems. I I believe the number is around 500 600 of ones that have been solved. >> Um but there there I mean there's so many of these like famous open math problems. There's like the Millennium Prize, right? Million dollars that you win. >> How much did OpenAI win? If you get a million dollars for the Millennium Prize, how much did they get for cracking this puppy? So all every single air prize uh if you solve a problem there is a prize. >> Yes. >> Uh and so >> I'm at a million. So >> yeah. So these are going to be slightly less. I think this one was around $500. >> 500 smackaroon. >> Yeah. I I believe there scale there's $25, $100 and $500. So this was kind of the big one. >> Non-dilutive financing. >> Yeah. Non-dilutive financing. >> Yeah. Yeah. So so it could be a revenue pathway for OpenAI. >> I I have to imagine that the that the inference bill for this was over 500 bucks, >> I think. So yeah. So uh the mathematician that just works with a coffee still >> so obviously like okay what does this actually impact does this you know bring us to science maybe not but but it does show that like okay these models are not just uh you know the average of all the training data they can actually make novel ideas not >> outside of distribution outside of the training data it's not just knowledge retrieval >> yeah I think this is very much contrary to you know kind of the Gary Marcus take these are just you know uh >> parrots these are just predicting the next token these aren't actually intelligent Yeah. Yeah. I think very exciting. >> Yeah. Cool. >> Why don't you hit the gong for the researchers? >> Boom. >> Thank you for breaking that down. >> As universities, >> classes become live podcast settings, podcasts are becoming >> This is where we're going. University. >> This is where we're going. Uh well uh let's take everyone through our lineup today because we have Alex Tabarok from George Mason University and uh co-host of the Marginal Revolution podcast with good friend of the show Tyler Ken coming on >> a minute. Bill Clerico from Collective Capital's coming on. Alex Nordstrom >> convective convective capital uh from Spotify. The co-CEO of Spotify is coming on. And then we have Jordan Schneider back from China Talk. Uh going to probably spend a few minutes talking about the underwhelming summit in China and then move on to a bunch of other talks, a bunch of other topics. And then we have Christina Lee Storm from Secret Level joining at 100 p.m. Pacific. So the the other news uh rumors about OpenAI is being close closing in on the IPO fund filing and uh that pushed out Nvidia's results which is uh normally something I would expect on the front page, but there was too much AI news. Nvidia results skyrocket on rise of AI agents. We talked a little bit about it yesterday, but the big news is that uh they're doing an $80 billion share back share buyback authorization. uh and uh take him take him was bullish. People were wondering where he would sit on Nvidia. He laid out pretty convincing case. Uh you can go listen to the interview. It uh it aired yesterday on TVPN. But without further ado, we have Alex Tabarok in the waiting room. Let's bring him in to the TVPN Ultradom. Alex, how are you doing? I think we don't have audio. Can we check your microphone? Make sure it's working. >> We're good. Okay, we are. It was something on our end. How are you doing? >> I'm still doing great. >> Fantastic. Fantastic. >> Perfect. >> Um, >> it's great to have you on the show. >> It's been far too long. I'm a huge fan. Uh, I've read Marginal Revolution since I studied economics back in 2010. Uh, and uh, huge fan of the marginal revolution podcast. I very much enjoyed your debate with Tyler Cowan all about the uh, cost disease or bow effect. And uh I would I I think we should start there and then I I we can go all over the place in in AI and labor and and the the economy broadly. But uh do you want to start with an introduction on uh the Bal effect? Uh maybe why it captured your interest and some of the work that you've done around it? >> Sure. I mean probably a lot of people have seen this uh famous chart where you have a bunch of uh things going up in price and a bunch of things going down in price. >> Yeah. And the question is is why? I mean the things that are going up in price I think we all know is like you know health care uh education right and then things are going down in price often manufactured goods like automobiles quality adjusted or televisions computers things like that and and the question is like why why do we see these big differences and what BMW pointed to was that there's a problem with service industries you know like uh education you know think about what I do uh which is teaching students and you think about what Pythagoras did like Pythagoras he's got you know 10 or 12 students around him and he you know he puts a triangle you know in in the sand and you know draws some uh draw some math there it's more or less what what I do right I mean thousands of years later maybe I'm using chalk or maybe I'm using PowerPoint but basically you know it's me and a few students and productivity really has not gone up at all in that in the education industry. >> Yeah. So because of that uh prices have to go up because you take an industry where productivity is flat and you might say okay well prices are going to be flat but no no because all the other industries are improving in productivity and the education industry they have to attract labor from those industries which are getting better right so they still have to pay me as much as I would earn you know in another industry uh but my productivity hasn't gone up >> you know so that means prices have to go up >> so that's the basic bombl effect is that >> industries especially services where productivity is not going up prices have to go up >> yeah uh we have the we have the chart here uh and I imagine that there are a few logical uh push backs one is is regulation everyone will say that uh the the number of licenses to practice medicine is restricted. It's a taxi cab medallion system. It's a regulatory capture situation. Does that not play into this chart as much as people think? Uh, is that to be disregarded or is overregulation still something worth contending with if you want to avoid uh runaway inflation in or or just disproportionate inflation in important services that people have demand for but uh are maybe paying through the nose for and not happy about. >> Right. Yeah. Look, look, I'm a free market guy, you know, uh I'm anti-regulation, anti-bureaucracy, all that kind of stuff. But you have to understand with these trends we're talking about increases in prices which have happened over a hundred years right >> and you know medical care people were complaining about medical care going up in price in like 1920 1930 this is before you know uh Medicaid Medicare before a lot of government involvement education has been going up in price so I think it's deeper than just regulation And let me give you just one other example is think about uh car repair, okay? Uh you know or uh cobblers. When was the last time you took your shoes to a cobbler, right? >> Uh you know, my mother will say, "Oh, the new generation, you just don't care about repairing things." You know, >> and I'd say, "No, no, mom. I love you. But uh look, it's that the cost of repair has just gone up so much compared to just the cost of buying a new pair of shoes. >> Yeah. How would you like Yeah. How would you like to, you know, spend $70 to fix your $60 pair of shoes? >> Exactly. Exactly. So, you know, I had a uh my car had some uh I I bashed it in the in the parking lot, you know, and it was like not not a serious uh uh you know, just a service injury, but it was like a third the price of the car, the value of the car just to repair the side, you know, and that's pretty typical. >> Yeah. So uh I mean a lot of people in in the AI world are saying that uh AI will do to services what technology has done previously to manufacture to goods to manufactured products. Uh does that mean that the the bombl effect goes away? Is it more pronounced in the industries that are AI resistant uh and you see some sort of runaway uh inflation in the things that can't be automated? because when I think about teaching a college course, I I do I do see the the sort of maybe linear scaling that you're discussing, but uh we have microphones now. We have amphitheaters. You can teach more students. There's online resources. There's ways to delegate and manage teams of homework reviewers and and dis like sort of disagregate the work. And so you would imagine that technology would be a lever on services in some ways, but I'm wondering how you think it will change in the age of AI. >> Yeah. So the big question is robots, right? If you can replace labor with capital, >> Yeah. >> then a lot of the bomb effect uh uh goes away. >> Um which would be great. I mean that would be great. uh basically you know anything that improves productivity uh is good but I think people also get a little bit too upset about the the bombl effect because >> uh really why another way of putting it is why are services getting more expensive it's because manufactured goods are getting cheaper >> right yeah >> it's because what we have to pay for the services in terms of giving up other goods has gone up in price but still we're richer than ever before which is why people keep buying more education and more healthare right so that's another reason why I don't buy entirely the regulation story yeah because if it was sort of regulation and the price of health care was going up people would buy less of it >> but actually they're buying more of it >> so it's the fact that you know our productivity is going up. We can afford more of it. That's really why the price of medical care is going up is because the price of computers and other things is going down. >> Yeah. How how are you processing uh the the the latest and greatest in behavioral economics around uh maybe this concept of the vibe session? This idea that yes, we are richer than we have been in history. And yet uh I mean right now consumer confidence is very low. there seems to be a lot of dissatisfaction with the uh with the progress that the economy is making. How much of that is grounded in uh in real economic data versus psychological factors? >> I've I'm amazed at the amount of psychological factors. It's something I've changed my mind on how big the psychological factors can be. >> Yeah. Um, I mean, if you just look around the world today, no other country has done as well from globalization as the United States. >> I mean, it was it it was us which kept open the sea lanes and uh globalized uh uh the world to our benefit. And we're the richest country in the history of the world, the richest at at any point in our history. And yet somehow we're upset about free trade and globalization. And again, no other country has done as well at assimilating immigrants >> and doing well with immigrants than the United States. And yet we're upset about immigrants. >> Uh so I think it's very uh disappointing. I hope we I hope we get over the bad vibes because the US has a lot to be proud of. >> Yeah. and uh a lot to be feel good about. >> Yeah. >> Uh >> is uh is one of those psychological factors uh uh you know the average American's perception of de debt to GDP? We seem to anchor uh debt like nominal values of debt to GDP which is a sort of an income stream and we get very uh irritated or or anxious when uh debt sort of touches GDP in relative values. uh how are you thinking about the level of indebtedness that is appropriate for uh a modern economy to to sustain itself? >> I'm not happy about the debt. Um you know, we still don't know. The US has a big choice. Do they want higher taxes or do they want less spending? >> And the US voter just keeps saying, "How about neither?" you know this is sorry this is not working right you know have your cake and eat it too no you cannot do that so the American public has just not decided which way it it it >> that is what is driving um the malaise I don't know I'm not I'm not sure see I don't know whether I don't know whether it's cell phones I don't know whether it's Instagram you know um But it does seem that there is an anger, a a grievance culture in the United States. At first, you know, I thought it was just on the left, >> right? you know, when we had everyone's complaining, oh, African-Americans are treated so poorly, the women are treated so poorly, the poor are treated so poorly, you know, and then with Trump, we've just changed our set of grievances, you know, and so now, oh, it's it's it's the the uh the foreigners who are ripping us off, you know, crime is terrible, which of course it's not. >> Uh, you know, all of these things. we've just changed our set of grievances uh without actually uh focusing on >> is that yeah is that >> how much does uh the fact that you know so many people are downwardly mobile I mean I I was born in the '9s and and I remember as a as a probably an early teenager hearing like you know statistically this is the first generation where you're more likely to to do less well economically than than your parents did and I feel like Part of the challenge with that is that America's culture is so progressoriented, right? Like the American dream is just centered around uh doing uh doing doing more, doing better. You know, if your if your father was a was a cobbler, like you own a a shoe store, that that kind of thing. And and so now when you have you know still this like massive wealth and and as you said you know the richest country in history uh uh there's this constant comparison to uh to the past and I think frustration from that which is making like you know huge swaths of the country frustrated and you want to you want to blame it you want to blame it on on like you said foreigners or or free trade. etc. But uh but it's just like this sort of latent um frustration. >> Yeah, there's definitely frustration. I agree with that. Um compared to the past, we are doing better. >> Yeah, >> there's no question of that. Now, to be sure, there are some key areas like housing, right? Housing is much more expensive, you know, than it should be. You know, that's a that's a zoning problem. Um, that's a choice people have been making. I think a bad choice. Uh, I think we should ought to do something about it. But even with housing, uh, you know, houses are so much better today. They're larger. Kids have their own rooms. You know, uh, you know, parking. >> Yeah. In 1960. Yeah. >> Yeah. A large fraction of the housing stock in 1960 didn't have indoor toilet, didn't have indoor plumbing. >> Right. that was still pretty common not to have in indoor plumbing. So, so I don't think it's compar I think when if people are saying that we are worse off in the past, I think that's incorrect. Maybe what's going on is that inequality has gone up somewhat. Not as much as people often think, but it has gone up somewhat. And of course we have more access to uh seeing inequality you know Instagram and stuff like that which is sort of a fake you know the Lamborghini might be rented. >> No I completely agree people. >> Yeah. The other the other uh the other factor is that the forms of entertainment that are constantly being chosen today like doom scrolling right when you maybe had the hippie generation it was like hey we don't have jobs let's go to yuseite and just live there right and like what that what that would do to your sense of well-being versus like I don't have a job I'm going to sit on my phone >> all day long or or you know last week there >> nobody really hitchhikes across America America when they're in between gigs anymore. What happened? Yeah. >> Yeah. But like just just I don't have anything going on. I don't have opportunity. I'm going to go outside. I'm going to touch grass is like going to have a wildly different impact on your psyche. >> I know a super successful corporate lawyer today that like was in the middle of a career transition, spent a year like surfing in southern in South America and like that is unheard of by today's standards. Like that just doesn't happen. Sorry, did you have uh Yeah. Yeah. I have also been thinking about like if there was a there was an if there was an alien that showed up and had a quadrillion dollars like like if you include that alien in the genie coefficient it skyrockets it but the existence of that alien doesn't affect your perception until you're made aware of the the diamond spaceship that the the alien comes to town with and starts flexing on you on Instagram. But the mere existence doesn't change your your economic well-being or anything real. Uh, but it does change your psychology once you see them flexing on you. Um, I'm I'm interested in the housing thing though. I want to go back to Boml effect because housing seems to potentially fall in the middle. Like there's manufactured goods that go into building a house. There are also services that go into a house. Like how do we apply the thinking of the bombl effect and what you've learned to what would happen to housing? Like is there a is there a second step? Everyone when they talk about housing will say, "Let's fix the zoning rules. Let's make it easier to build." But is that enough? >> Yeah. I mean, look, with housing, it's not the construction of housing, which has gotten so much more, you know, expensive. It's almost almost 100% the land. >> Okay. >> The cost of the land. >> Yeah. So, uh, and you look, I mean, you just go to, you know, San Francisco, San Jose, uh, which ought to be, right, some glorious metropolis, you know, of the future with, you know, sky-high buildings and people traveling around in, you know, uh, fantastic, uh, >> look like a Chinese city where there's LED walls and Yeah, we have that on Salesforce Tower, but outside of that, there aren't these massive skyscrapers and it just it just has >> it's a it's a land of strip malls. Yeah. >> You know, Silicon Valley is a land of strip malls. >> It really is. >> And and trip alter is extremely extremely expensive. They're just lying on Yeah. >> Uh you know, this very valuable land that people are not allowed to build. >> Yeah. >> So, I'm hopeful of something like California Forever, you know, uh where they're trying to uh get permission to, you know, start a new city. Um I'm hopeful for things of that nature. Uh but none of this is all policy. This is all of this is under our control in some sense. This is not uh like we've we haven't been hit by, you know, or a tornado and we're all poor and have no housing is because we've said no, you cannot build. >> Yeah. I've I've I've been thinking about the the the the push into cities uh which which makes so much sense in the sense that the economic opportunity is in the cities and so we've seen uh you know successful college graduates leave their hometowns go to San Francisco, Los Angeles, New York, Miami, Austin, these these mega hubs that have been very expensive if they aren't building. Uh, but I was I was really optimistic that between remote work, self-driving cars, like faster highways, like we would get just an extension because I think as you look through history, uh, the 45minute commute is sort of a sweet spot. Before the horse and carriage, people would live a couple miles because that's what they could walk in 45 minutes. We got the horse and carriage. Once we went to 60 m hour, it became, okay, you live, you know, 30 miles away from your from your uh, workplace. But I was hoping that we would get another leg up on that. Maybe it's coming, but uh we certainly haven't seen it yet. Have you been surprised by any of the the fallout or or or lack thereof of the COVID era, the shift to remote work, any any changes uh technology or otherwise in just the the housing and and labor markets? >> Yeah, I I agree with you. I've been a little bit surprised that um we haven't seen another city really uh take off. I mean, we used to build new cities, right? you know, uh, like and you know, Chicago, you know, not that long ago was a city of 50,000 people. >> Yeah. >> Um, and Trump briefly talked about freedom cities for a while, which I thought was a a good idea, but it's sort of gone away. >> Okay. >> Um, it does tell you that there's something very strong about these so-called elomeration, the technical term in economics, elomeration effects. Yeah. that uh like people just get more productive when they're near other productive people. >> Yeah. >> And you really need this big push to try and get this uh into the new city. I mean, Miami briefly, you know, uh seemed to be jumping ahead, but that that trend seemed to have gone away. Yeah. uh Las Vegas, you know, tried it with Zapos. Um but that >> yeah, >> you know, modestly only took off modestly. I am somewhat surprised that uh we can't plant our flag and say the new city is going to be here and have a lot of companies all agree to move in at once. >> Yeah. Yeah. the I've heard it referred to as like the rainforest theory that why San Francisco is so resilient because you have so many different participants and uh the VCs can go to Miami, but uh they're just a phone call away while so many other key pieces of the economy are still chugging along and so uh San Francisco clearly made it through a trough and is on a major major upswing. Jordan, >> what uh what data are you most obsessed with following to try to understand the current moment? We see we see AI in the GDP data primarily through capex right now, but what kind of productivity data are you looking at? You know, we've been very excited about, you know, what what what we've seen from Stripe. They have this incorporation product and they're seeing companies, you know, more companies formed, growing revenue faster. That's very exciting. But it's also like a certain type of person finds themsself incorporating you know their business with with Stripe and is not perfectly uh a reflection of of the economy more broadly. So what are you looking at to try to understand the impact uh and and and uh try to ignore maybe uh the headlines from CEOs that say oh well we we we we laid off this 20% of people because of AI uh because you know as we know oftent times it's marketing. >> Yeah it's very interesting. There's a lot of theories you know about is this going to be a job apocalypse or something like that. uh not much data and of course all of the data we have so far is that AI is increasing the number of jobs not decreasing the number of jobs. What I'm most excited about and most interested in seeing is the effect of uh AI on medical care. Um so you know we just saw yesterday that uh AI had oh well you just had it on your on your show uh you know had proved a new mathematical uh theorem or counter counterproof. Uh so AI is making uh these inroads into the highest levels of mathematics. If we could do that for drug discovery, you know, if we could have an, you know, a 5% reduction in, uh, cancer mortality, uh, that would be worth trillions. >> Mhm. >> You know, that would be worth trillions. So the opportunities there for AI to make tremendous leaps in human welfare by improving medical care, health care, I think are really exciting and well within the realm of uh possibility. You know, one new drug like solving an aird dose problem. Uh that would be incredible. >> And and what does that mean in the labor market? I'm just I'm thinking back to uh like there was a time when uh there was sort of only one track for doctors. You was just like a generic doctor. Now there's much more specialization. There's a dermatologist, a podiatrist, all sorts of different doctors. Is this like uh there's a there's a fracturing and further employment creation from the administration distribution advisory around uh new treatments as it rolls out because you could imagine okay there's a new drug that's great that's that that helps everyone live longer but I'm unclear on how it interfaces with the labor market. >> Yeah. I mean I think the the the trend is uh you know division of increases in the division of labor um you know talked which Adam Smith talked about from the the pin factory. >> Yeah. And when you apply that idea of the pin factory, you know, somebody shapes the pin, somebody puts in when you apply that to the knowledge economy, then it's exactly as you said, you no longer have a physician, >> you have a podiatrist and you have an optometrist and you have an ear nose ear nose and throat specialist and so forth so forth. And yeah, I think that will um continue and they will all be using, you know, uh AI for sure. Right. Um but yeah, they're going to get more more specialized and the tasks which physicians do will differ will change. Um I but so far you know I'm not terribly worried about the job market uh per se. >> Yeah. Um, you know, look, this is a problem of people worried about people are worried about the, oh, the AI is going to do all the jobs, right? Like, uh, this means we're going to be fabulously wealthy and, you know, even without any jobs, just being fabulously wealthy, we'll figure things out. You know, this is the sort of problem you want to have, right? Again, this is not like a tornado, a hurricane, the tsunami which destroys wealth. This is a tsunami which creates wealth. And yes, it's it could be a tsunami in the sense that it's going to be very dramatic. Okay? But it's going to be very dramatic like, you know, Santa Claus coming and leaving us goods, you know, under the under the Christmas tree. So, that's drama that we can we can handle. It won't be uh it won't be without problem. Okay. But >> problems where the pie gets bigger >> are problems that we can solve. You know, it's problems when the pie gets smaller when we are forced into a zero sum society of one person versus another. >> That's when society breaks down, not when the pie is getting bigger. Like we'll figure out ways to make sure everyone gets a decent slice. uh if the pie is getting so much bigger, we can solve the problem of dividing it up uh with everybody being happy. I'm not I'm much less worried about that. >> How do you how do you think about value capture uh with this technology way versus historical technologies? you know, if you uh get really good at uh inventing engines, you can sell a lot of those engines and hopefully have a nice margin and maybe other people copy the engine and also make similar engines and and benefit from that. But we're at a moment right now where Frontier intelligence is like very widely available, right? There's certain internal models that aren't uh with the public yet. uh if you have one of those erdos uh you know moments in medicine it could just be an off-the-shelf model that helps make a breakthrough and you pay for the tokens or you pay your subscription but then right now the labs are not really set up well to capture that value at all. It could be you know some uh it could be a big company that that captures the value. It could be another startup. There's small businesses. And so how are you thinking about value capture versus like public benefit of this uh technology cycle and how it would differ to prior technologies let's say like the internet and telecom and and uh all the way back to railroads and the steam engine etc. Yeah, it's a very interesting technology because this will sound odd but it doesn't seem that hard but uh you know the fundamentals is you know this linear algebra is very surprising I don't think anyone predicted uh uh this but uh and it's true of course that the frontier models are ahead you know open AI and anthropic you know have the best uh models but they're like six months ahead, you know, of open- source uh models. Um, and for most of what you want the models to do, uh, you don't even need the frontier models. Um, and you know what today is a frontier model like tomorrow, you know, it'll be much cheaper second rate model, right? like like people are worried oh you know some people have access to you know 5.5 and other people are still working with 5.4 right but the big point is that even 5.4 you know the free model is 100 times better than 3.0 0 right which was also incredible. So uh the model seemed to be getting more powerful and cheaper at a faster rate than any other technology that I have ever seen. >> So I think the gains will be fairly widespread if not at first you know then then soon soon afterwards. I I mean, you know, some people are obviously open AI and anthropic, you know, the people who got in early and and the programmers there, you know, uh they're going to be fabulously uh wealthy. Uh no question about that. But the technology itself, uh so much of it is open source, so much of it is really quite accessible. There's no magic there as far as I can see. like it was just uh you had a few good ideas and then those ideas just turned out to be incredibly uh powerful. So I'm expecting to see really the technology being quite widespread. >> Yeah. Uh I know I know we're we're out of time but one last question. How how do you think about the part of the reason I think we feel this insane acceleration with this technology shift maybe you know more more so than certainly mobile but you know looking back to the internet and everyone in this moment wants to figure out okay are we in 98 are we in 99 are we in early 2000 trying to figure out the moment that we're in and it feels like because we have the internet today like there's this like compression in the technology cycle because >> ideas get distributed faster, products get distributed faster. If there's a breakthrough, it's instantly everywhere. There's instantly, you know, hundreds or or thousands of companies working on, you know, improving it, furthering it. And so, um, I find it hard to try to think about where where we are because it felt like in Q4 of last year, we actually did have a correction. Like we were joking uh we were joking like great the bubble popped because like there was over like maybe too much excitement around chat bots and there was somewhat of a correction and then we got agents that really worked and then it feels like in some ways we're in a new a new cycle now and and um and so I'm uh I'm curious if you have any sort of frameworks or thinking around that like compression in progress that we're getting because we're building on top of all these other uh technology cycles for this new Absolutely. And of course the AIs themselves are starting to improve the AIS, right? >> So some people worry that precisely because of that we'll get a sort of a a fume uh scenario under which uh one day uh everything is fine and the next day you have a god in the laboratory, right? >> Uh I'm not too worried about that, but it's not it's not insane. It's not insane. Mhm. >> Um yeah, so far uh my view is that I trust the technologists when they say that the technology is going to keep getting better >> uh quite rapidly. Where I think the technologists are not quite right is that uh it's going to take much longer than they think for this to start affecting you know jobs and and uh the economy at large and uh things of of that nature that'll be slower. So the economists generally are on the slow side in terms of it's going to take time to adapt to this technology. I mean we saw like with electricity for example um you know electricity was another you know incredible technology um but it took time you know it took time to uh adapt to that even when the frontier you know was very far ahead but for that to uh work its way in the economy and for people to figure out how they're going to change their production structures that took time and I think it will take time uh here as Well, um, but as far as I can see, the technology is going to keep getting better, which it does give one pause. And I will say never in my life have I felt that the window of what is possible is as large as it is today. both on the possibilities uh for super intelligence, huge gains, the boomers, and also on the doomer side. I I don't discount those entirely. My view is more in the middle, but uh those two sides, they're not they're not insane. Um so we do have to do a lot of thinking. >> Yeah. Well, thank you so much for taking the time to come chat with us. We'd love to have you back on the show soon. It was long overdue. Uh, but have a great >> Thanks for the time, Alex. >> Rest of your week. Have a great weekend and hopefully we'll talk to you soon. >> Talk to you. >> Goodbye. >> All right. H >> GMU economist. Always so much fun to talk to. Uh, well, our next guest is Bill from Convective Capital here with a new fund. Get that gong ready. And let's bring in Bill from Convective Capital into the TVN show. Welcome to the show. How you doing? >> Doing great. Thanks for having me, guys. >> Kick us off with the news. What happened today? >> Yeah. So, uh we raised a new fund, $85 million. >> There it is. Um >> congratulations. >> It's uh Thank you so much. It's up 2x from our from our last fund, and we're focused on disaster resilience. The the thesis of the fund >> is that >> the world's getting warmer, our our uh infrastructure is getting older, and that's literally a recipe for disaster. And so as as disasters rise and volatility rises in the world, there's got to be private markets that can respond and that can build solutions and services and technology to to stop that. And so we back founders that are building those things. >> Give us uh an overview of the fire give us a fire market map. What's exciting in fire? It's top of mind right now. There's a fire burning in uh LA/ I think Ventura County. Uh, and so my house has been very it's been very smoky around my house. >> Uh, and uh, yeah, I want to know this this feels like a a particularly brutal industry because there's these like insane spikes of interest and then people just kind of forget about >> you thinking watchduty for-profit conversion. >> Yes, that's got to happen. >> Yes. Lead a series A and watch duty. Please >> lever it up. >> Yeah, John watch it. He's a good friend and we started, you know, I started my company around the same time he started that and he will never take that for profit. He's a diet in the wool. It's such a good first and it's actually become the standard not just for people that care about their homes but also, you know, people in the fire service use it. It's it's an amazing example of how technology can can address this problem. So, I guess to get to get to your question around market map, you know, we think about a lot of like who's the end buyer because that's actually what's kept people out of this space historically. you know, the you know, VCs typically don't get excited about companies that sell to utilities or insurance companies or government agencies. Um, and you know, our thesis is that that is in the middle of a really big change that you know, if you see like PGD went bankrupt a couple years ago, the insurance companies have had to leave California and some of these really large markets and that's changing behavior. you know, you lose $70 billion of market capitalization and you like you respond and you do something about it and you act differently. And so, you know, we think a lot about the market in terms of who's going to buy these technologies. We've had a lot of success investing in startups that sell to utilities like Overstory, which you know, uses satellite imagery to help utilities trim trees around power lines. Um, we just invested in fund in a company called Volt Air, which does autonomous drone power line inspections. So, you know, utilities cause about 11% of fire ignitions, but about 60% of the acres burned. And so, if you can actually just help reduce utility ignitions, that's like a huge leverage point. >> Interesting. >> Interesting. >> Interesting. What What What's going on on uh disaster prevention in like more of the consumer proumer space. I uh I saw a house for sale over in Malibu and the it was uh by some actor and he had installed like fire shutters and like all this different equipment. and he was like living off grid and this was like his getaway. And it feels like I I saw after the LA fires like the autonomous water sprinkler that would be bolted to the top of the house. I think a lot of homeowners in Los Angeles at least were like, "Oh, I want one of those." And they would have clicked the button to buy it if they'd seen an ad that day, but then a year goes by and nothing happens in the next fire season and they think, "Ah, maybe not." But it does feel like there's some fertile ground in the consumer space. But is that more challenging than people might think it is in reality? I think you're totally right. Like consumer demand goes in spite. It's a very seasonal volatile business. You know, I just saw today Watch Duty is the number two downloaded app on the app store today. And you know, that probably was not the case a couple weeks ago. So, you know, it's certainly that's the nature of the beast here. Um, in terms of home hardening and things you can do to protect your home, I think that also kind of goes in waves to your point. But to me, the real unlock is going to be when insurance companies uh create incentives for people to actually install these things around their their home. So, we're investors in a company called Stand. Um, they help model homes. They use computational fluid dynamics to simulate wildfires moving through the property. They come up with a list of recommendations for the homeowner of what they should do with shutters and windows and remove certain vegetation. They remodel it and then they can actually provide discounts on insurance. I think that's going to be the real unlock that drives, you know, at scale consumer behavior. >> Yeah. It has to be a real time like you're renewing your home insurance and they're like if you do spend you know in California it could be like spend $10,000 on this new system and if you do that we'll give you a $10,000 reduction this year and you know further discounts in the future so that you end up you know um effectively you know saving real money. >> Yeah. Exactly. I think historically insurance companies have not done that, but um that's the that's the key to protecting, you know, homes in this kind of new era. And and it's it's got to happen. You know, the the California Fair Plan, which is like the statebacked insurer of last resort, uh just announced that they're going to raise rates 30% this year after the LA fires. And so, you know, if we don't actually reduce the probability of homes burning, housing and insurance is just going to become unaffordable. >> How are you thinking about uh selling to the government? uh maybe in California or elsewhere. Uh Anderl has this interesting story where they built a firefighting tank. They were trying to sell it to California firefighters, but there was push back around job displacement even though it was ideally a new capability that would actually have support staff and not really take anyone's job because no firefighter can sit in the middle of a blaze like this particular firefighting tank could. But it was still became a political issue and ultimately did not become a real product. uh is there movement there? How are companies positioning themselves as additive? When I think about drone uh review of of of power lines, there's probably someone that went up there earlier. Cost savings is good. Doing more with less is great, but also there's always that push back around job displacement. >> Yeah, I think there's kind of two issues at play here. First is like is there actually job displacement? I think the reality is no. I mean, it's just we are so underresourced relative to the scale of these disasters. they're happening three times more frequently with huge severity. You know, CalFire is the largest and best resourced firefighting agency in the world, bar none. Like, that's not going to change. Uh, and I think we're it's really about how do we get leverage out of those um investments. I do think though, you're pointing out a cultural issue though, and that's something that we've really worked at trying to bridge. Um, you know, I think it can be really harmful if like a bunch of guys in Palo Alto sipping lattes like walk out to the fire line and try to tell people how to do their jobs. You know, there's just this huge disconnect. And so one of the things that we built is this conference called the Red Sky Summit where we actually get 600 fire chiefs and other emergency managers together every year in San Francisco and we kind of create like an off thereord venue for them to talk to people that are building stuff in technology and it kind of creates this great sharing back and forth where you know the you can show the value of this technology you can have these two-way conversations. It sort of changes the tenor and that's been a real unlock. We've seen a lot of buying behavior come out of that event. Um I think things like watchd duty that show how impactful technology can be the firefighters see that and you know I think the tide and the cultural tide is really changing and so it's it's an exciting time to be building in this space. >> Yeah. H uh is there any relevance like we talked to some other sector specific funds or thematic funds? Uh and the classic example is like in in CPG they can be a harder business sometimes but there's a number of like clear acquirers for midscale companies like a unilever Coca-Cola will take out a lot of these uh a lot of these companies at a unicorn valuation and so it sort of changes the underwriting. It's worked for a lot of funds in that category. Is there a 800 pound gorilla in this category that's maybe not being disrupted but maybe can be a partner at some point in time or are are is the thinking like everything is uh IPO, it needs to be a standalone business or bust or is anything different financially about these these businesses that you see? >> Yeah, it's a good question. I I don't look at wildfire as like a market in and of itself. It's this sort of dynamic that touches these huge markets like energy, insurance, housing, real estate, forestry, you know, government, emergency response. And in each one of those categories, there are, you know, really large companies. There are, you know, contractors in the utility space or providers in in all of, you know, all of those those markets. So, I think there's certainly exit paths, but the economics here are just like immense. You know, the Bloomberg just published a report disasters cost the US economy a trillion dollars a year. That's like on par with what we pay for interest on the national debt or defense. Um and so it's like, you know, you there are really big public companies that will be built, you know, solving that because that that cost falls on these really large deep pocketed institutions. And you know, we think that there's just there's very big businesses to be built. >> Yeah. Uh, is there opportunities for wearables uh for firefighters? I was uh once the the the Sandy fire started here in LA, I was I was showing uh my son some videos on like wild uh just like wildland firefighters and I was shocked that a lot of them just like weren't wearing gear. They were wearing they'll wear something like a piece of fabric over their face. seems like there's probably opportunities there and potentially a decent size market. Um, >> yeah, I mean it's it's a travesty what we equip our firefighters with and send them out there. I mean it's like you know the the health impacts of wild and fire smoke are just terrible. I mean and so and there's really not a practical way currently to help filter that air for these wild and firefighters. So they're out there, you know, really with no masks, sleeping in smoke days at a time carrying packs. It's 110 120 degrees. You know, they're working hard with chainsaws and axes. I mean, it is it's a really dangerous, really grueling job. And I think, you know, part of the original thesis for convective was I was actually volunteering with my local fire department up in Menesino County and uh, you know, I just was watching this and I'm like, I can't believe we're doing this with, you know, trucks from the 1970s and, you know, axes and like that's the state-of-the-art. And so there's a huge opportunity there. And I think, you know, it's the and you can look at, you know, wild and fire as a as a market. It's a certain size, but it's also a path into all types of field service jobs, um, and all types of worker safety. And so, we've looked at a lot of companies there. We haven't made any investments yet, but that's that's a category we're really interested in. >> Uh, we we we jump straight into discussion of the fund, the strategy. Can you take us back a little bit to uh what you were doing before, why start this fund, when you started it, uh, sort of the the prehistory of the fund? Yeah. So I was a founder. I started a company called Weepay back in 2008. Uh it was an early fintech company. Um and we built that up over about 12 years and sold it to JP. >> How was that headquartered? >> Overnight success. >> Yeah. I wish. Um it was uh yeah it was uh it was headquartered in in Palo Alto. >> Palatoto. Okay. Uh yeah I just remember running into it in Boston I think in like 2012 or something. That was around the time I was probably see >> started in Boston. >> Okay. >> Started in Boston. >> That's right. That's right. Yeah. Okay. Got it. Cool. >> We started in Boston. We were funded by my cominator. Moved to the west coast. Um, built that up over about 12 years and then we sold at JP Morgan. Um, I left JP Morgan. Uh, and I think one of the things that really suited us well at Weepay was we were early to like the financial technology market. People thought it like banking technology at the time. Um, and a lot of the same skepticism that I hear around utilities and government, we heard, you know, we're trying to raise money from Boston VCs in 2008. And, um, you know, they were wrong. I mean, the fintech market was like the most exciting sector of technology over the next 10 years. And, you know, so as I was leaving JP Morgan, I wanted to work on something that was, you know, a market that was early and that we could be sort of one of a kind, that we could be a market leader in, um, and that also had a important mission where we're helping people and doing good for the world. And this sort of lined up all of those things. Um, my wife and I own a ranch up in Menescino County, a couple hours north of San Francisco, and a fire almost burned under the property. Uh, and you know, all the the dots started to connect and and here I am. >> Yeah, that's amazing. It's uh, it's sort of like the VC version of like build something you use yourself, like the YC ethos, make something people want. Uh, well, thank you so much for coming on the show and breaking it down for us. Congratulations. >> I'm really glad you're doing this. >> Yeah. Thank you. >> We need more. >> Thanks, guys. Love you. Have a great rest of your day. We'll talk to you soon. >> Goodbye. >> Up next, we have the co-CEO of Spotify joining, Alex Nordstrom. >> Calling in from Spotify Investor Day. Welcome to the show. How are you doing? >> What's going on? >> Thank you. Hey, John and Jordy. It's good to be here. >> Great to have you. Fantastic. >> Uh uh first time on the show. Why don't you uh kick us off with the news today? What's new in Spotify's world? Yeah, we just had a fantastic investor day 2026. Uh we talked about what we've delivered in the past four years which put us in a really great position in terms of user growth and financial metrics. >> Uh we also laid out um our four big ideas for for the future. Uh and then we also talked a little bit about how we can further monetize Spotify and grow uh grow all the sort of financial metrics and goals of the company. Uh I I want to send my greetings uh from from Gustav Sundrom who was also on your show a while ago. >> Yeah. Yeah. We talked to him at South by Southwest. Uh it was a great conversation. We're very excited to have you here. Um >> where should we start? I I'm I'm I want to jump into >> I love big ideas. >> Yeah. I mean there's so many different things. Uh maybe uh we should start with the reserve ticket access because I saw that organically promoted to me and it seems so logical. Uh and I'm fascinated by the roll out, the strategy and also um like sort of why did it take so long? Has this been in the chamber for a long time? Uh what has been the plan? What has been the go to market with this particular product? >> Great question. So I've been with Spotify for I think it's now almost 16 years and this is great. >> One of the most >> one one of the most lovely improvements to Spotify Premium that we've done I guess since the founding really. Yeah. Uh so you're right, you know, it's long overdue. It it's a great one. Um and the reason why it's so great, it's it's really that it solves a couple of different problems. One is, you know, who hasn't been sitting there in front of a website trying to get tickets for a concert. >> Like it's very hard and if you get it, it's going to cost you a lot, right? And the second second thing is even if you get tickets, it may not be to the artist that you actually listen to and love. Yeah. >> Right. So this solves that. So what we're launching is basically we're giving you uh we're holding tickets for you for a certain time window for you to just go and and pay and collect with with with our partners. Uh so really solves the problem in a unique way because we're matching the tickets and the concerts and the participating artists and tours with the the users on our platform uh that are actually the true fans of this. And we look at it from many standpoints like not just the number of streams that you're doing. So you can't just grind yourself there. Uh it's also catalog engagement and so on. Yeah. So it's terrific. This is a fantastic improvement in Spotify premium. >> Yeah. We have a new problem which was uh which will be ticket scalpers setting up you know uh infinite >> paying the monthly subscription fee for years just to try to run algorithm. Uh no but I I think it's absolutely brilliant. solves a problem. You know, even even from the artists, like being in this position where you're trying to make your ticket prices affordable for your fans, but due to market dynamics, no matter where you price it, they'll they'll go they'll go way up and then the only beneficiary in that transaction is the is the person that's just buying the tickets to resell uh and and everyone else loses. So, I think >> you're totally right. I mean this like many things that we uh do at Spotify uh we look at what organically happens on the platform and and what we do um and then when we see that there is some sort of signal or trend that actually just come by way of organic behavior on the platform then we double down on it. So we've done many events uh you know with artists and and groups and bands and so on over the years and you know on a on a on on a yearly basis probably do 150 to 200 events and um the the magic really happens when we look at who to invite to those events. And if we can really strike the balance of, you know, getting uh enough people there that are really sort of on a very very high engagement level with that artist, not only again, not only just listening to the artist, but doing it maybe on a daily basis, listening, having listened to the whole catalog and do it for, you know, at least an hour per day or something like that. It really gives the artist also like a magical experience of facing, you know, your truest fans. And this is something that uniquely we can do for for for artists. >> Yeah. Uh AI is obviously at the top of everyone's mind. The large taste model is the latest technology from Spotify in the AI world, but I feel like you have to have been embedding every song into some sort of machine learning learning model for probably over a decade. Can you take me through a little bit of the history of machine learning or AI at Spotify? And then what has actually changed? Like where are you seeing a break in the graph? like where where are you seeing okay we're we're experiencing some sort of discontinuity in the progress we were making >> yeah so you're right it was actually just about a decade ago uh when when Daniel and Gustav and I started investing into into AI then was called machine learning >> right and uh it was very basic the alos then like it was almost like okay similar to what you do on Amazon you know John uh listen to this um he's similar to Jordy also listen to this other thing. Therefore, he should listen to that too. So lookalike algorithm, if you will. >> Yeah. Collaborative filtering probably based on text, not actually looking at the waveform even. >> Exactly like that. Yeah. And so now many many years later, having continued to invest in that and just the the the the data, not just the data, but the learnings we have and the feedback loops we've had over the years, it's been compounding. So, and now um you know, you're asking me what changed lately? Well, obviously what changed is that, you know, we've got access to um, you know, large language models like general intelligence that we can use to reason over the data that we have. >> But what what it comes down to really is the unique data at scale here, right? So, you know, we we log probably, >> you know, between I think it's three and four trillion events that happen per day on Spotify. So, we really get billions of signals that are relevant to feed it to feed the algorithm with. Uh and then the the second thing that happened is is obviously because we started to sort of uh you know understand English algorithms started to understand English. So we we sort of started importing a lot of knowledge from outside from the outside world onto Spotify. >> Yeah. >> Uh and and >> yeah I've noticed that the search bar has gotten so much better at detecting lyrics. Like I used to have to go and Google or search uh a lyric and then go to Spotify and now I can just type it right in and I get it. I'm like this is an amazing experience. Um, I'm interested in uh your build versus buy versus fine-tune an open-source model. Uh, what's working? What's interesting? Music is, you know, obviously you're benefiting from transformer architectures from all the all the open source work, but I imagine that a lot of the tasks that you're doing aren't exactly okay, just fine-tune uh like a textbased open- source model. You might need to go a layer deeper. You might need to partner with someone. How have you been thinking about the way to deploy AI? >> Yeah, we we certainly believe in general intelligence and you know we've been riding that cost curve uh that's that's going to come down collapse by a thousandx over the last four or five years or so. So we believe in in this industry commodatizing more and more. So we are going to buy you know the best reasoning capabilities that out there and then we're going to use that on top of what we call our large taste model which we are uniquely uh able to using proprietary data to actually build out much thanks to the stuff that I was talking to. Uh the other side of the equation here that is important I think is also that we got a lot of feedback and data from artists as well via our Spotify for artists application which feeds us with data that's also proprietary and unique which is great. So you you ask about build and buy and so on. I think it's a great question. Uh, you know, if we see opportunities to actually build something to help, you know, bootstrap or add a capability, we will do it. And I I'll draw two examples that are quite good. Uh, I think 3 years ago, we bought Santic, uh, which really helped us create AIDj. >> Okay. >> Um, >> yeah, it really accelerated the build out of AIDj and now AIDj is all over the world and we have it in different languages and people are using it at scale. So that was a that was a that was a great I think transaction that we made. Another one that is also um it's more recent actually. Uh it was just before the end of last year we bought who sampled which provided us not with so much a capability but a unique set of data. >> So I don't know if you've used song DNA lately. It's it's been killing it. I think 50 to 60 million people are using it already. You know you can listen to a song and then you can check like which were the samples in that song. >> Interesting. And then you can also like follow the threads down like what's the original? Yeah. You can listen to the original track and then hear how they sort of flip that into the new one. You can see who was in there, the studio technicians, the artists, the composers and so on. >> And a lot of this we couldn't have done or it would have taken us much longer time without who sampled. >> Yeah. Uh structurally, how how is AI changing the work that Spotify employees are doing? Uh Matthew Prince from Cloudflare was talking about this concept of you have builders and sellers, but just the raw measurement uh that's less important as a discipline and so he's pushing more of his staff to build new things and then go and sell it. Uh do you have a framework for thinking about how your employees should be using AI in the future? >> Yeah. Uh I mean we um uh you know a couple of years ago I think we all went through that the chat GBT moment >> and uh just before the holidays of last year we had a similar moment around coding tools y >> and we all sort of got enamored with it and started adopting it but at Spotify the engineering and development uh you know teams have just >> you know done a crazy good job adopting it. So we now have I think close to 99% adoption across Spotify. >> Yeah. Um and and this goes you know beyond the engineering team but also into the marketing team that are using it not just for design but also for for better gaining insight into what type of compelling stories to to to to tell on top of the story. So we do have very many different use cases and you know people are crazy about just creating prototypes now all around Spotify just test things in a way faster way. So what you get basically is a lot of like productivity gains. Um and I I I know for a fact um one of my dear colleagues the chief co-architect of Spotify NGN um he was just at Antropic and he was uh doing a presentation for for their staff and I hear uh from Antropic that we are actually one of the the leading developers out there in adopting AI and using it to to gain productivity uh productivity improvements. >> Yeah. Have you thought about uh the I don't know there there is a trade-off you might be doing both but uh there's a world where you have some sort of engineering pod and there's an opportunity to have uh more members of that team uh pushing code shifting to individual contributor roles but of course they're managing agents so it's also a managerial role uh versus embedding more uh technically minded folks across different organizations so you have more crossf functional teams a marketing team gets an engineer who oversee agents. Uh how are you thinking about uh just spreading different uh different AI tool use across different organizations that might not previously have been in a position to build a piece of software. Maybe they're in the market to buy a couple SAS products for whatever their whatever their vertical is, but now they have the opportunity to actually build. >> Yeah. What you're seeing actually happening organically with Spotify is that, you know, as you know, adoption goes up, it's typically, you know, uh, you're by your own and you're, you know, looking at what's out there, which MCPs to connect to and how that can help your your work and and then you're basically sort of copying some other people's skills around at the company and you're just sort of experiencing how it is to use AI to do your work, your particular field. Uh but what now is more happening is that we all of our Slack groups and in our communities we see people sharing sharing you know use cases with each other and the next step really is that for instance someone um a product developer and an engineer you know sits down with a marketer starts to understand hey okay we the three of us can actually build something of a uh you know a holistic experience of not just new product and feature but also tell a compelling story about it you know in a in a much much more sort amplified and and leveraged way, which I think is fantastic when it happens. >> Love it. >> Uh, we got to talk about fan-made covers and remixes, the new deal with UMG. Super super excited about this personally. And, uh, of course, it's been >> You got a song you want to cover? You're going to do that? You're finally going to do the Gunna cover you were planning on. >> What are you listening to? What's your What's your favorite track right now? Is it a Drake? >> I I've been >> uh No. I think I I think uh I was expecting Drake to kind of grow up by this point in his career and maybe evolve a bit more. I feel like I grew up maybe faster than Drake. He's still obviously, >> you know, an incredible incredible uh superstar. >> Uh but yeah, John was talking about Gunonna. I'm a big uh Gunonna Gunonna fan. Oh yeah. >> But um so I'll be making some Gunonna uh covers and remixes. But yeah, talk about this deal. Uh certainly controversial, but this feels like one of those things that uh people will have one reaction and then they'll have experience >> uh which I'm assuming will be you know incredibly magical and and you know we've had Mikey from from Suno on the show. He's a friend friend of ours and uh you know people people fundamentally they they they say one thing on the internet but when they use the products they love them and so I think it's I think it's super exciting. So yeah, talk about this deal. What what were the factors that were most important in getting this right so that you know fans win, artists win, uh and everyone involved wins. >> Yeah. Yeah. Certainly. I am certainly very very pleased with it. I mean it's a landmark deal and it's a landmark deal from the vantage point of we're enabling something that is for the first time a legal product for users and fans to actually create these remixes and covers. Um, and what's more is that it's really the first time um, you know, in a controlled and licensed medium that artists get to partake in in in the AI economy really. So that that is like the the core of it. And then if you think a little bit about what it is that we're doing here, well, you know, people love to your point like people love remixes and covers um, and they've always done that, but there hasn't been any scaled way to really sort of tap into this opportunity. And what we're doing right now with with our product is that we're unlocking this this market. Um, so where where we think actually in the end it's going to be very additive to both the music industry and ourselves, including artists and songwriters. Um, so it's very cool. We're launching it as a paid add-on, >> which means that, you know, if you have Spotify Premium, uh, you're ellegible to actually buy into this add-on, and when you have the add-on, you can actually go ahead and create remixes it covers. And what's cool with Spotify is that, you know, we've been we're very experienced when it comes to free and premium and, you know, how to convert people and lead people up the ladder. Uh, and so what we're going to do is obviously give you a certain um, you know, limited usage on premium so you can actually try it out, play with it, create habits around it and then commit to buying add-on. Um, but the the important point here is that uh, you can think about it as you know creation is paid for and consumption is included. So basically, you know, the output that you create around the Ghana, >> uh the Ghana remix that you're going to create, you know, I'll be able to listen it, everyone will be able to listen. >> Yeah. Is there uh so so I can imagine I can imagine a world, you know, maybe six months from now where the number one track globally on Spotify is a fan-made remix. Like, you know, may may take more time, but it doesn't feel doesn't feel uh doesn't feel impossible. Um, is there is do you think this could potentially create a new category of actual artists on Spotify? Would the person that creates a remix ever be able to get, you know, some element of of Revshare? uh or is this like entirely going to be uh more like uh you know more like a live DJ where you know you're putting you're mixing and mashing and putting things together and and um maybe you can build up your brand but you're not monet you're not getting royalties or any any revenue share. >> Yeah. >> Yeah. I can't speak to the specifics of it but but I can tell you how I think about it. Um, you know, when I started at Spotify together with Gustan, like 16 years ago, uh, we had roughly, I think it was two million tracks in the catalog, and I've lost count, but I think it's in the order of 200 million tracks now, you know, 15 16 years later. So, the the catalog being big and growing is a good thing. Uh, and the problem you're talking about, a real opportunity is for us to to uh to do recommendations well. And that's always been at the heart of Spotify. If you ask them, what why do you love Spotify? Well, Most people say, "Hey, it's because they seem to know me." So, we're able to sort of help you discover by way of personalization, uh, help you kind of find your tracks again that you like and so on. Uh, so really, this is what you're talking to is is really a personalization problem, right? So, it when when this product creates more catalog, our job is to make sure that, you know, the best song gets gets to the best place. >> Last question. Uh, talk about the app icon redesign. Uh, I thought it was really cool. I loved it. He loved it. >> Uh, but I'm interested in the actual I mean I I I I want to know how you processed it internally. >> That a disco ball could get people >> people were really talking about it. But but my assumption was that uh you know it was the Spotify icon is on my home screen and I click it when I want to listen to music. But uh it jumped out to me and I feel like that would show up in the metrics of jarring people awake. But I'm interested to know like what actually happened. is are you going to be changing the icon randomly every 5 years? Is it got to be every 20 years? Like what's the what is the learning from doing something sort of bold? >> Right. So about 10 days ago uh we decided to change our the Spotify app icon or Spotify logo uh to one that is more of like a glittery disco ball version of the Spotify logo. and and you know to to your point this just sparked a massive uh conversation around the internet on on basically every major social platform and um uh and and you know what a lovely uh and wonderful uh piece of culture to have a conversation around the change of our our our logo and icon right so not only users you know have been sounding off but also other big brands in Open AI made their version suggested that they would make a version like that Kit Kat Kit Kat join in on Um, so yeah, so when you have uh, you know, hundreds of millions of people that passionate about culture and art and and and Spotify, this is what happens, right? So this sparks like a massive conversation that I think is is is lively and fun and and to be honest with you, the reason why this is happening, you know, having reflected on it a few days later now, it's pretty intense when it happens because there are two sides, right? And you know, and then there's also all of this like byproduct. You know, the internet coined a new design term around this called discomorism. >> Discoorphism. Kind of funny. I love it. >> And people have been asking for an answer to flat design. Lots of people have been lamenting how boring things have gotten. You spice it up and then people ah I didn't mean that which is a very funny way to process it. But sorry, continue. I mean I mean I just the the reason why this is happening after having sort of thought about it for a few days and discussed it internally really is because we are truly at the intersection of the humanities and technology and I think we're in a good place when it comes to that we're at scale uh you know when when when hundreds of millions of people potentially even billions are talking about you um then you did something interesting. >> I love it. I love it. Uh yeah, a a really really well executed stunt and uh got Yeah, just got everyone talking and and reminding and it's hard to break through with with something like a 20-y year anniversary with a milestone like but it's important to do something like that. So congratulations. >> We did it mostly. Yeah, thank you. We did it mostly for ourselves in the beginning, but now it turns out that you know >> should be fun. Building a company around music should be fun. like all of this like it's I I know people have their think pieces and their deep dives on uh contrast ratios and all sorts of things, but like at the end of the day, it's fun for a company like Spotify to do something fun with an app icon for a few days. I love it. >> Also, I push back on those people. I thought I thought it looked >> exactly like a disco ball would look if you were in a dark room. That's right. >> Listening to music, you look up. >> Uh so I thought it was I thought it was pure to the to the disco ball brand. >> I agree. I agree. >> That's good. Thank you. Keep it up. >> Anyway, uh thank you so much for coming on the show. Great to hang out. Congratulations on the progress. >> Congrats to the team on all the new >> milestones. We will talk to you soon. Have a great rest of your day. Goodbye. >> Uh and if you haven't been following, the stock is up 13% today. Spotify is a 103 billion company. Not too shabby. Our next guest, Jordan Schneider from China Talk. You know him, you love him. He's back on the show for the third, fourth, fifth, sixth time. who knows how many times it's been. We've lost count, but it's been too long and we're happy to have you here. How you doing? >> I'm good. I got to be honest, was also pretty confused by the Spotify. You were confused by it. I thought >> being a hundred billion dollar company can't have fun in this country. >> Yeah. >> What's wrong? >> I'm just saying it took me long to click it. I thought I had like some weird iOS update. Whatever. >> Oh, yeah. Sure, sure, sure. I just think that like the fact that you processed it, even if it slowed you down, it put you in, you know, the fast thinking, slow thinking. You were in slow thinking mode. >> Your phone enough. You're not addicted to your phone enough. >> Are they still Are they still rocking the Are they still rocking? It's still a disco ball. I like it. I think they should just keep this thing. It stands out so much from every other app on my phone right now. I love it. Anyway, >> how are you doing? Give us maybe let's start with the postmortem on last week. How is the China summit? and then we can just go into everything else. >> So boring, man. >> I I knew I knew you were gonna say that. I was like, we're gonna talk about everything but China because it was so boring. But >> and they let me down. I mean, look, I think there is a clear um period of stalemate which we've gotten into where the US has some leverage over China um which has been something that um really since like 2017 uh Trump won Obama uh Trump won Biden and then uh the start of Trump Truth thought that they could kind of keep turning the temperature up and squeezing on tariffs and export controls and investment restrictions. And then all of a sudden, China April 2025 punches back with rare earths and all of a sudden um they realize uh you know they run they run the experiment and it works that actually the PRC has real leverage over the US and is able to kind of con like meaningfully constrain what um American presidents want to do when it comes to um more course of actions on China's uh you know technological and economic expans. expansion. So, um both sides have kind of realized that and what we got is a you know uh what was my headline? Prestige on the cheap where uh the US decide where um you know you have the whole cabinet uh flying over you have every fancy CEO frying flying over just being a wowed by um >> you know their 36-hour vacation to Beijing. >> Yeah. It felt like tourism. Yeah. And look, there's an interesting debate to be had about whether the like giving them the face and giving them the atmospherics of that is actually like kind of in some level costless and maybe this like makes them feel less agrieved, less likely to start World War II. I mean, this is the argument with Putin, right? It's just like we kept disrespecting him and then he decided no, like I'm going to show you just how tough I am. So, I'm not kind of on face opposed to it, but you know, it was it was kind of just more or nothing. >> Yeah. I mean, you mentioned every fancy American CEO was there, but were you surprised or were you expecting uh or did it break your expectations that uh no Sam, no Daario, no Demis, no Sundar? Uh a sort of lack of AI representation? Yes, you have Elon and yes, you have Jensen. uh very important figures in the AI American AI buildout, but no true lab leaders from my you know rough estimate if I define it a certain way. Uh and it felt like okay uh maybe this discussion should be about AI and it's and it's they're they're not even bringing the people to let them get a word in edge wise. Not even a single line uh of of conversation will happen. Was that a as expected or how'd you process that? Yeah, I mean it's interesting because like um this is phrased this is framed as like a trade delegation almost right and so almost all of those companies like Meta excluded I mean I guess they had a person there but Zuck wasn't there. Yeah. >> Yeah. But but that person is like a Trump one person that's kind of just like keeping with the vibes and I guess Meta builds glasses glasses in China. Um yeah and they and they acquire a AI agent companies manage they they are a buyer of Chinese companies or formerly Chinese companies that have moved to Singapore >> which they're now not allowed to do. So yeah, they had some lobbying to do, I guess. But like the, you know, the asks I think are really inco. Um, look, the US government, we just had news today that Trump um 86 a uh executive order because he doesn't know what he wants to do about this uh sort of thing about AI safety. And if like you can't even figure out what you want from a domestic regulatory perspective, like are you really ready to like put all the cards on the table and have this big, you know, grand summit with the Chinese to make sure that boweapons don't kill us all in 2029? I don't think so. I mean, it'll happen at some point, but it's it's just a little premature, I think. Maybe not from the technological perspective, but from a sort of policy perspective that um you to expect much of a serious discussion between >> Yeah. Are are you uh Sebastian Malibi had an op-ed where he was sort of gesturing towards like the possibility of more collaboration on AI between America and China. You're you have your hands in your face or your face in your hands. So I assume you are uh skeptical that that will take place anytime soon. Oh, I mean also the AI 2027 folks very good at forecasting have predicted a lot of what's happened. Uh say China wakes up in 2026. >> Yeah. I mean it's not impossible. I think the sort of um look if the American political system has not yet woken up to uh an understanding that you need a different regulatory strategy in order to keep humanity safe. Um I think it is unrealistic to expect a strategic adversary who does who is you know 6 12 18 months behind where you are on the sort of technology development trajectory to come to the same realization now you know it'll happen at some point I think um this stuff is really powerful and the the sort of logic that um America doesn't want uh uh you know bioweapons to be developed by al-Qaeda or ISIS or um Hezbollah just in the same way that um China wouldn't want it to be done by you know the Fallon Gong or Tibetan separatists or uh you know uh any any group that see they see as like a non-state actor that would that would want to kind of take down the party um applies right um but China I think is deeply the Chinese leadership is deeply hardware pilt. I think they're deeply skeptical of these sorts of arguments on face because they're kind of sci-fi and um the the sort of jour the the analogy or the journey that um the US and Soviet Union went on over the course of uh the cold war to start to have real kind of discussions about strategic stability and arms control happened after you had the Berlin crisis and after you had the Cuban missile crisis. So like look, anthropic putting out a paper saying Claude mythos is really scary is one thing, but it is different at a fundamental level than like completely shaking a society and like having the entire world realize that you are on the verge of apocalypse. So >> I hope we don't need that. Um but I am I am not particularly optimistic that that much will come of this in the >> What do you before it really accelerates? >> Yeah. Yeah. How much have you read into the theories that, you know, maybe China would would fund uh data center, you know, push back in the United States? I don't know that they they would need to, but if they were, if they felt that was important enough, it would signal something about how they think about the technology. >> I think this is cope by the labs. Um, look, like won the election for Trump. Okay. And I mean, you know, it it is uh I think Ben Thompson had the right take on this a few days ago. This can be solved with money. >> Like if if you really um put it uh you know, put put the choice to a town saying, "Okay, we will pay everyone within a 20 mile radius $10,000 a year." Um like this ugly thing. people will start frantically TRYING TO BUY >> WANTED TO LIVE NEXT DOOR or like look make the data centers beautiful build a park on top of them like give me some playgrounds >> that is the one that I'm the most skeptical of in the American society I feel like they will be companies will be paying dividends and mailing checks far beyond far like long before anything looks beautiful in this country like we build massive like monolithic structures all the time it's a lot of cement over here I don't Turn the turn the turn the GPU racks into free slots. >> Every time I see one of these like beautiful industrial structures, it's always in the Nordics. It's never in America. Sometimes it's in China. They build a train. >> So you have the the data center. You got all the all the different >> racks of GPUs and you just put a slot machine attached one of them. Walk through and and you get like three or four. I wonder we I wonder what's the you know those cell phone towers that look like trees and I don't think they look any better really but I guess they do sort of blend in. I wonder what the like economic mechanism was for going that direction because when I'm driving around LA I see normal cell phone towers and I see tree f like fake trees cell phone towers and there had to be a reason like it has extra costs to make it look like a tree. Like is that just a choice? Is this like a nonprofit that's funding this? Like who's who's lobbying for this? Is there a law? I don't know. We got to dig every time I drive. >> Can we please get the TVPN segment? >> Yeah, we need to dig into this. >> The tree the tree phone pole. >> Come for the questions, not the answers. >> I'm just riffing about things I don't know and would like to know. >> I drive by and and they get me. I just start slapping and I'm like, "You got me, big telecom. You got me. I thought it was a tree." >> From the distance. From the distance. Yeah. >> No. Every time. Well, the bad ones are like when they're five times as tall as all the other trees around. You're just like >> and like the branches only start like four fifths of the way up. It's just >> Yeah. Yeah. Yeah. Yeah. It's very It's very uh half-hearted in its attempt at disguising itself. >> Ridiculous. Um >> uh on on other China issues, uh did you see there are two sort of dueling predictions? Maybe maybe I'm making them dueling predictions. Shimath Polyapatio says Taiwan not going to be a factor geopolitically in 18 months. Uh Dan Wong uh has talked about how uh technologists over represent the chip story in the Taiwan story and in fact the discussion over Taiwan goes back much further and is grounded in more of like capitalist versus communist uh decision-making and alliances. Uh where do you stand on the on Taiwan today versus in two years? >> I have to acknowledge Chamas's existence. I refuse to do that. Um uh I think that Taiwan is a place that has mattered for a while and will continue to matter for a very long time to come. I mean first only on the chips thing the idea like I don't know as semi analysis like the percentage of chips that are going to be manufactured in Taiwan uh 18 months from now is still going >> to be like 85% >> or 90%. So yeah, it used to, you know, it was 100% um for Window. I am glad Intel isn't uh a flaming pile of crap anymore. And it's like nice to see Samsung uh also starting to get their act together. Uh but if if really that's the only thing you care about, no, you will still have a, you know, global economic catastrophe if uh the lights go off in Taiwan in 2028. Now, um why should you care about Taiwan besides the chips? I mean, it's a it's a democracy. Uh people have, you know, deserve to have self-determination. Um we can set principles aside if we really have to do that. Um but look, I think from a from a sort of geostrategic perspectives, there's also this kind of concept of the first island chain. And I think it makes it it it makes the the you know broader uh Pacific architecture that America has has has built over the course of the past 75 years in Asia a lot more tenuous if all of a sudden um you know the the kind of anchor to both Southeast Asia as well as uh North Asia becomes you know a PL and base. So uh >> yeah they're wrong. >> Yeah. So, so, so many reasons that Taiwan will remain uh important into the distant future regardless of what happens with Intel and and TSMC Arizona, etc. Uh, agree with you on that. Uh, what do you think the next catalyst might be in the rare earth story? Because we're starting to see rumblings about funding for American indigenous supply chains there. Eventually that becomes at least a stocking horse if not a poker chip on the table on the bargaining table. But where are we on the rare earth stalemate that became an important uh bargaining chip somewhat recently as you put it in the intro? >> I mean it's a really interesting question. I've I've read reports saying that even five years from now the leverage is going to still exist. And I think there's a sort of broader question of like uh this is the second largest country in the world uh and largest economy in the world and it's going to stay that way for a really long time and the sort of ambition to um fully decouple such that China does not have leverage over the US um economy and can kind of squeeze it coercively seems to me to be a very tricky thing. Now, you can spend lots of money to sort of make that less acute or sort of turn it down over time or or um you know protect the particular things if you're worried about um you know individ like specialized inputs into fighter jets or um uh you know something that would be really catastrophic like insulin getting cut off or something. But it is um you know this is like a this is like a a generational challenge of shoring this up and b there's also an offensive side right of um you know escalation dominance uh in deterring an adversary from from squeezing on stuff like this also requires you to be able to sort of credibly send signals that you can take pain and cause pain in a way that would require the um you know the the other party to um uh to to back down and not necessarily use these tools. So, we're, you know, we're we're at this like awkward equilibrium. I think there's a lot of like hard thinking that still needs to be done to like like really conceptualize like what's the right way to spend money and the right way to think about this relationship. We actually just ran an essay contest on China talk um uh about uh economic security. Uh, we're going to be I have uh at 400 p.m. we're doing a uh a mega pod with three of the winners. So, um maybe I'll have a better answer for you after that, but uh it's a hard one. >> Does Xi day trade prolifically? >> Who's the best day trader in the global power in China? >> Here's the thing. I got a piece coming out about comparing American and Chinese corruption. Um, and the difference is that in China they still feel like they have to hide it. >> Okay. >> Well, it will be an interesting piece. Uh, shifting gears. Shifting gears both literally and figuratively. Cars. Have you driven any Chinese vehicles? Have you been outside in the BYD? Are you planning >> you're doing car reviews on China Talk? >> I would love to see one. Have you been in a Zeer? I keep seeing these. They look amazing. >> Zeke. I watch a lot of YouTuber I watch a lot of uh YouTube and Billy Billy reviews. Okay. >> Um I have been in a BYD in Norway of all places. They had like in the main like like park they had a giant setup. Um you know it's really impressive. I you should get some you should get some American car manufacturers on yell at them. It's pretty embarrassing. You know, one of the mo more interesting developments, I don't know if you guys have been tracking this, the um uh Whimo using a Zeer body. >> Yeah, crazy. >> And I would have thought there were import restrictions because if if Zeke is not here, BYD is not here. You would think that like the supply chain would be restricted, but they must have found a way around. >> So, the trick is that it's there. It's the chassis and the battery and literally nothing else. Yeah. Um, so they are saving money on that, but like the the rules right now are just on all of the sort of like electronics and connected anything. So, um, Whimo is filling up the entire car with stuff that they make. Interesting. Okay. Yeah. Well, that's probably like more reassuring that uh Cunping won't be TA operating. you'll have a a Whimo employee beaming in if you see a traffic cone out of >> what uh what do you how much attention do you pay to their uh like humanoid antics? Like I feel like they're just leaking out videos of just this like all this silly stuff to kind of just get us a little bit comfortable with it. But if you actually go there on the ground, it's like droid army, you know? They've got like 100,000 humanoids marching in in in unison. And then they just put out the video of it like dancing to Michael Jackson like collapsing and getting dragged off stage. >> You know, it's interesting because there isn't a market yet, right? Like these are not these are toys and these are like things you sell to universities for research. Um but at some point there will be um and then there's going to be a really interesting challenge of like whether or not uh I think there's like some level of consensus now that uh the western makers have like smarter software but if you can like you know it's it's one thing to fast follow um uh the models themselves but like if you can only if you can apply them like at a 100x scale Right. Then um yeah, it could be really dramatic. I mean, you know, I don't I'm not doing like the the episode, you know, Star Wars episode one like droid army. like well we well that might take a that might take a few more cycles but just from a >> can you imagine can you imagine a Chinese humanoid company trying to distill Tesla optimist after they have a fantastic uh data breakthrough and they're just having all the optimist work in cubes like trying to farm the data out of it like they brilliant because you have to physically distill the data for so you buy you buy a million Tesla Optimus robots and lock them in a warehouse So they can move boxes for you. So then you can distill it into your own robots or something. >> This is a company. This is an RL environment. I I love it. I should start I should start this >> in China. >> Oh no. I mean they're just like uh >> reseller >> in the US. >> Yeah. Yeah. Yeah. You need a haird dryer to remove the Optimus sticker and slap on some other sticker. That's where the money is being made these days. >> Uh but you got to hide that corruption. And it's really great that we have a software advantage and they have a hardware advantage on this, right? Like that's really bullish for us. >> Yeah, cuz software >> cuz like they would never be able to copy like software off of a hard drive and put it on their hardware, right? >> Well, and that's the thing is like this is the difference with AI, right? Is at least America has way more chips and way more compute as long as Taiwan still exists hardware. But that will not be the case for the like, you know, humanoid bodied AI takeoff is like the thing you need to actually use the fancy model is almost certainly going to be manufactured in China and manufactured at the scale that um uh could be like you know multiple orders of magnitude bigger than in the west. Now this may change like once this becomes economic. Yeah. Right. Um so >> America can I mean like like you look at you look at space like like we have multiple companies that land rockets very capital intensive. It's an industrial process. You would assume that China would win that, but they are but we have a lead in in NASA orbit still. And so it's not impossible. But uh we do tend to let our leads languish like we have in the car industry uh seemingly. >> And it'll be interesting because there'll be this lag where um China like because they already have all these humanoid companies that like have the ability to scale will scale faster um once the kind of like economic utility of these things turns on. >> Yeah, definitely. Uh if you if you believe in AI progress, do you have to believe in a Taiwan invasion? Because assuming assuming you know we keep making progress or we have accelerating progress, doesn't that just increase the prize for >> Yeah. But it might increase the defensive capabilities. >> Sure. >> Yeah. And I think there's there's like plenty of other things you can do to be obnoxious. Um and there's so much there's look this is this is why Chimath is wrong about everything is because it's not all about technology like there are other um risks and incentives at uh and like institutional dynamics and historical dynamics at play. Uh and there are a whole lot of downsides to starting something that you don't know how like you don't know how it's going to end which uh is a lesson that uh she has now got to relearn from Putin over the past 5 years. So >> makes sense. >> What uh last thing we touched on it briefly and then I I know we're over time. What happens with Manis? What's your prediction? Are they going to are they going to buy the company back from from Meta and just head home? Is there any precedent for something like this? >> I don't really understand. I mean, like all of the employee like do they have to give the tech back? They weren't really buying the tech. They were buying the it was like an aqua hire. Everyone's in Singapore except for the two founders. So like maybe the founders just get screwed out of all this money and uh you know the employees continue on their merry way in Singapore. I think it's a uh it's a messy one and uh I don't know like Meta eats a loss. >> Yeah. >> Something I hope Bill Gurley is >> Before you go, we have an answer to the question of telephone pole camouflage. Tyler, do you want to do you want to give us a little update on this? >> Can we can we do Yeah, let's cut. >> Uh yeah, telephone pole camouflage basically began after the 1996 uh telecommunications act. Uh, so it basically like restricted the ability of local communities to regulate like the actual placement of the telephone. >> So a city can't say you can't put a telephone pole there, you can't put a a cell phone tower there. But they responded, >> but but they basically made it so wait, they they made it so um the local governments would say you have to camouflage it, right? So So now we see there's all different >> forms of these. There's there's trees, there's cacti, >> uh there's like church steeples. >> Yeah. >> Yeah. Google. >> A lot of chipmunks run up and down those uh those poles too, right? >> And camouflage can add over a h 100,000 to tower construction prices, which is still cheaper than losing the sight. Tree towers can cost up to double. >> Hey, two can play this game. Two can play this game. >> You have a sound, too. >> I got my buttons. >> We have a guest with buttons. Let's see. Can he get it to work? >> Uhoh. >> Oh no. Oh no. >> Another one. That's a narrative violation. >> Will it work? Let's find out. >> Uh, your buttons aren't working. >> Anyway, >> but uh, bring them bring them next time. >> Bring them next time. It's been too long. We'll talk to you soon, Jordan. Have a great day. >> Hey, we're good. There we go. Hey, very well done. Thank you so much for taking the time. Have a great rest of your day. We'll talk to you soon. Uh, we went over time, so we will bring in our next guest immediately. We have Christina Lee Storm from Secret Level. Welcome to the show. Sorry delay. >> What's happening? >> Hey, how's it going? >> We're having a little too much fun with our sound. >> Fun with a regular playing sound cues. All sorts of stuff, but uh since it is your first time on the show, please introduce yourself a little bit. >> Hi, I'm Christina Lee Storm. I am head of studio over at Secret Level, which is an AI native studio, and I also am co-founder over at Playbook PLBK. Yeah, >> I identify myself as a producer, like an film independent film producer. >> Yeah. Uh, how are you thinking about the the blurry line of how AI works its way into uh productions these days? Uh, you know, you have Toy Story with CGI. You also have, you know, a little set extension and maybe even a little CGI creeps into a Nolan movie every once in a while. Uh, but, uh, AI is very different. People are thinking maybe it'll generate the whole movie. Maybe it'll just sort of, you know, make a green screen a little bit sharper. Uh, how are you thinking about the opportunities and and the trade-offs? >> Yeah, I mean, it's interesting because we've had technology in the entertainment industry for a while. I was a produ a consulting producer on a film called Jurassic Punk, which was at the about the birth of computer graphics. >> It was about a gentleman who was from Canada. His name was Baz Steve Williams. and he actually created the first walk cycle >> uh >> T-Rex for Jurassic Park and he was a total rebel and um in the in the documentary we talk about how he just felt like you know we could do this with computer graphics at the time Jurassic Park was like hey we're going to do it animatronics we're going to do it old school we'll do onset and there was an an ability to actually now like wait hold on a second we could create this and so when Spielberg and Kathleen Kennedy saw the first walk cycle, he was playing it on his computer screen. Um, you know, just sort of he knew when they were gonna walk by, um, it it changed everything. And that was the birth of computer graphics. So, we know that technology has always been a part of that story. And so I think you know it is quite it a lot of people like to use the headline like disruptive but I think it's just an ongoing process of how things should sort of evolve and me being my background is a traditional production producer. I've been an independent producer for a while. Um, I think it's just it's part of the process and I think >> before I think a lot of producers would just offline, you know, any kind of technology or any specialty to different departments or groups and today I think anyone who's going to really survive and thrive into uh the new world order of this, you know, everything's sort of shifting and changing, we have to actually lean in. And there's this interesting like technology storytelling, you know, um, convergence entertainment that is exciting and I think, you know, that's >> Yeah. >> Uh, on the topic of Jurassic Park, grade this grade this prediction. Uh, >> Jurassic Park massive success. The franchise is grossed, I think, billions, maybe over a billion dollars. It's it's it's a fantastic financial success. Uh but interestingly uh Jurassic Park of course is owned by uh Universal and uh but dinosaurs are not particular intellectual property. It's not like Superman. The T-Rex is not something that a studio can own. Oddly, no other studio has created like the Superman to Spider-Man. There's not the Marvel universe to the DC universe. Uh, I would have expected a reaction series to Jurassic Park in that IP library at some point. Never never really developed, but in the age of AI where it's increasingly easy to generate imagery of dinosaurs and you don't have any intellectual property concerns because you're not recreating a particular actor. I predict that there will be a massive surge in dinosaur themed movies. When you >> need to create the Dino Prize, the Googan Dino Prize, No. Is there anything here? Am I thinking about it correctly? >> I think that you're on the right track in terms of like dinosaurs are not, you know, there's not a particular IP, but here's the thing and and this is sort of where it does fall back to traditional >> methods. It's like the storytelling is everything. like >> you could have there's a there's a lot of different ways, you know, that you can tell and share stories, but it's really what is the spec, you know, what are the specific things with the character? What's happening? What's the world? And so, yeah, someone could come up with a dinosaur type movie, but what is it? Why why is that special? Why is that undeniable for someone to say, "Yes, I want to watch that and I want to and I want to engage in that." So I think the concept of that is is good. I think you know end of the day >> potentially halfbaked but we'll get >> well that's the difference between really great like no matter what the technology is you have to still be a really good storyteller. >> Yeah. Uh please >> article in the Wall Street Journal this morning about a new film called Hell Grind that's I guess premiering at can. Uh they're saying that it cost half a million dollars to make and around $400,000 of that was uh compute. >> Um I'm sure there were, you know, there with all these things there ends up being costs that aren't kind of captured uh on on maybe a napkin. >> Sort of a deepseek moment. >> Yes. Um but uh but is this the beginning of of like do you expect hundreds of these over the next year? are I I imagine you're you're hearing and seeing a lot that are in the works and and working on some yourself, but >> um >> yeah, so I mean I think there are you know can I I actually didn't go this year. I usually go every year. Um I knew that there was going to be a lot of announcements about different projects and things and at secret level you know we actually will have an announcement next week. I was like, should I come on the show today because next week there's gonna be, you know, um so >> at the uh I'm happy to come back, but at the end of the day, I think, you know, um it's it's let's just be real. Let me just be real. There's a lot of things that are being pioneered like what are the costs? What what's happening here? How do we align with even like guild related things that are issues? You know, how how can we it's not just like let me just get this out, you know? I think there's something even bigger um to to that degree. You know, I think people a lot of people could say, "Yeah, I can make a movie." But I think it's really again I'm going to go fall back on story. I'm going to fall back on what is the process in which that's going to happen. Like at Secret Level, we do we have our own proprietary workflow pipeline that really really allows us to scale. And I think those costs when those get flagged, it's like yeah, what what's the total costs in it? Um there's a there are a lot of costs. And so I don't think I think it's really I I think when people talk about like the the budget and they're just focused on the budget, I think they've missed the mark on on the bigger. >> Uh so what what is your maybe it's too early to say, but what do you think is going to be the winning formula? Obviously you're it's still an experimental time, but you said story matters a lot. Obviously technology matters a lot that what models you're using but where are you thinking of taking you know traditional film making approaches versus like reinventing your approach? Yeah, I think there's Okay, there's a couple things here. Great questions, Dy. I think that there will, you know, we had there was a time where like independent film was like on the rise. It it was awesome. We saw really great filmmakers come out of that like I, you know, going to Sundance and whatnot. And I think that that's really important to feed and and bring about like creativity, really great story. So I I do believe that with the tools we have more of an opportunity for independence to sort of bring that to the forefront. But again I you know story it's about the story like is it going to be a really great story. I think the other piece is is will we see this? You know, I I kind of share with this because I've been a former studio exe surviving studio executive and also a producer. And I think that what's neat is, you know, is the chasm going to widen? Like how do we sort of bring that do we want to bring the chasm closer together so it's not just traditional, you know, um studio fair or do we want to like really see these independent voices come out and we we can see those play out. And I think as time tells and how people will refine their storytelling abilities, I think that's really important. I think there's also to be honest there's a way in which um filmmakers who use AI tools are using it at their the best abilities is is it almost a slight um variation than maybe a traditional approach from let's let's just say like a studio you know pipeline type film I think um and that reminds me of like you know when our you know when uh L George Lucas came out like you know he was breaking new ground in technology. He was like th this doesn't exist so how do we create something that doesn't exist and I think we have to allow for that creativity to to b to be to birth totally. >> I want to take a question from the chat. What is your favorite movie? >> Oh gosh. Woo. Uh I have a lot >> or maybe something just with a great story that you think is unique. >> Inception. >> Inception. That's a great movie. Have you seen that? >> I have. >> Yeah. There we go. >> Um I like to say and I I'm going to embarrass him. Our founder Jason Zada from Secret Level. I call him like the He's like the like the blossoming Chris Nolan. >> And um he's just really creative. He the way he approaches story. Um >> does he use a phone? Christopher Nolan famously no phone. >> It's a no phone guy. >> This week he did an interview with with uh he does no email either. printed out emails if somebody needs to email him. No phone also doesn't like maps because they reorient you. They don't always face north and he doesn't consider that a map. Very interesting lifestyle. >> Yeah. >> Anyway, >> I would Inception I would say like let's go really old school. Um It's a Wonderful Life. >> Yeah. >> Um and then if I get my like um like just real old school I I love like great character based when Herod's Met Sally. I I'm all over the place. Yeah. I'm all over the place. I I like being that way so people can't say, "Oh, she likes sci-fi or she, you know." >> Sure, sure. Sure. Yeah. >> Godfather. Godfather. >> I saw When Harry Met Sally at an outdoor movie theater, one of the screenings you buy tickets to, uh, seeing an old movie outside with a bunch of people. Tons of fun. >> Last question from the chat. What is your single favorite piece of fully AI generated content? >> It could be like 30 seconds long, a minute long. I I can't really expect anything else. I think for us it's like Harry Harry Potter Balenciaga >> which funny enough was like a year year a year and a half ago maybe at this point. >> So if you haven't seen it um yes you know uh it is a secret level pro uh the heist. >> Okay. >> Watch the heist. When Jason shared his first 30 seconds I was like >> okay >> okay we got something. This is uh we're we're we're approaching some really interesting things. So, >> you can see a lot of things at Secret Level. >> Yeah, I love it. >> Amazing. Well, thank you so much for taking the time. Great to meet you. Great to meet you. >> Make sure to share uh your announcement next week with us and and we'll cover it on the show. Have a great rest of your day. Talk to you soon. Goodbye. >> Bye. >> Up next, our last guest, Eric from Modal Labs with some big >> It's been a minute. It's been a minute. >> I'm excited to catch up. How you been? Good. >> You've been busy. What did you do? >> Tell us what happened. >> Uh we just uh announced a C round today which is very exciting. >> How much? >> How much? >> How much? 4 uh 65 post value. >> Wow. Value. >> Fantastic. >> Racing uh 355 million. So general catalyst led it together with Redpoint. >> Fantastic. >> What was the specific catalyst that led to this round? There there's been a lot of stuff that's been going on. I I think one particular exciting moment in the last 12 months or really the last 6 months has been uh we've we now have a a product called sandboxes that's just growing insanely fast almost 2x every month uh for the last 6 months. So sandboxes if you don't know basically the idea is like you can take typically LM generated code and execute it in a safe environment. So it powers a lot of reinforcement learning, powers a lot of um vibe coding apps, a lot of background agents. But yeah, I mean in general we've seen tremendous growth also with inference. Moto's always been kind of we started a company 5 years ago with the idea of building pretty general purpose infrastructure. We felt that a lot of infrastructure wasn't really built for AI. And so when you look at all these companies out there building sort of AI applications, they all need different things. Some some of them need sandboxes, inference, training, bath jobs, like all kinds of stuff. and and our goal is to provide all of that and and really kind of build a new sort of almost like a new cloud in a way that that supports all these types of very cool applications. >> Very cool. Uh I feel like it's been almost a year since you were on which feel which is like you know 15 years uh 15 years uh >> October well there there we go feels like feels like feels like a year ago even though it's maybe uh maybe less. Um what yeah what have been the key kind of inflection points since then sandboxes sounds like sounds like one but I imagine a lot of this is uh the space is moving so quickly if you get a signal from two or three customers hey we have this problem can you build a solution and then you can just see tremendous growth in like a a very short period of time and so in some ways like you have an existing portfolio products that are all you know growing but are you trying to constantly ly be making you know new bets uh based on customer needs or is it is that maybe not even the the approach? >> I I I think one of the benefits of building infrastructure is like you can sort of you know look at customers of course and see what they're doing but but I think with infrastructure you can also sort of argue a little bit more from like first principles like what are the building blocks that people are going to need in terms of compute. So sandboxes was actually something we launched 3 years ago and it really started taking off like nuts in in in uh in the summer last year. Uh and and and similarly I I think with with you know in France it was sort of similar. We launched it almost uh four years ago. Uh we're working on some other really cool stuff uh around training and some other products. Uh and I think one of the benefits of infrastructure is you can have a little bit more sort of a first principle like you know let's build the right building blocks and then let our customers sort of figure out what to use them for. How how do you think about uh planning like planning planning demand? >> Add a zero to last. >> Yeah. Add two add two zeros to everything. No, but yeah, it just feels like the you know the best this is the hardest like demand planning challenge that really any business set of businesses have ever faced in history. Uh >> yeah, >> it's rough. it like I mean for us it's like we basically look at like the last couple of months figure out you know we're growing 30 40% every month you just you know take you know take the power of three that's how much you're going to need in 3 months that's how many GPUs you go out and get those GPUs >> you can typically get GPUs with like about three years of sorry 3 months in advance >> sure >> uh but yeah that's a big part of how we think about the business today is like we need to get the GPUs now that we're going to need in 3 to 6 months which is a lot >> yeah in some ways it's like you know not not too dissimilar to the challenges that uh you know consumer consumer packaged goods founder is facing. you're growing super quickly, but if you want to stay on that growth curve, it means you need to be committing to things, you know, now and and uh committing capital. Uh but but >> what's exciting to you across >> luckily we have capital now. >> Yeah. Well, what what's exciting to you across the uh like semiconductor e ecosystem? There's a whole bunch of AS6 startups that have been on the show. Cerebrus IPOed. Uh every hyperscaler is working on uh different chips at this point. um what's most interesting, what's under discussed, what's on your road map or or or uh what have you already sort of uh sunk your teeth into? >> Yeah, I mean there's some like really cool alternative accelerators. I'm quite bullish on on TPUs, AMD, Tranium, like all these things. >> We see zero demand from our customers for for any of those things to be clear >> because only the really big labs anthropic can actually go and and figure out how to run it. Is that >> exactly? Yeah. I I think the cost today of rewriting your software to run on those stacks is just like very high. Sure. >> So while I remain like very bullish on the sort of you know two three of Horizon Yeah. >> You know I do also want to like temper the expectation a little bit like this is >> it sort of has a fixed cost to rewriting for that chip stack. And if you're not doing billions a month in revenue it's hard to advertise that cost. >> That's exactly right. It's just not worth it unless you're you know operating at a very large scale. So but but I think that that cost is going to go down over time. We're gonna have software that basically lets you take existing CUDA compatible stuff and run it on other alternative accelerators. So yeah, I think it would be good for everyone to have a little bit more competition in the space, but we also love Nvidia and and that's what our customers want today. >> That's great. Uh do you have a view or any opinions or predictions about uh the compute futures market that's been talked about uh any I I've seen like these price charts of like B200's going up and down. everyone is trying to read the tea leaves, understand, you know, where we are in the various AI cycles uh based on it. But, uh, is that something that's relevant or or important at all? Do you do you look at that data? Do you have your own internal data set that's more relevant to you? >> We we we look at it a lot. I mean, also like I feel like we're very plugged into the market. We talk to NeoClass all the time. We get capacity all over the place. So, we have like a very good like pulse of the market. I I think the market's going to remain quite tight. >> Yeah. I I think fundamentally like also like that's big part of what we do is like we offer you know that as a product like don't think about capacity come to us instead. >> Yeah. >> And so that becomes now our problem is like managing that capacity for thousands of companies at the same time like we built a multi-tenant product to sort of aggregates all that demand. So if you need a thousand GPUs you can come to us and we'll give you to that give you those GPUs like often within minutes because we have like a very big pool we can sort of tap from. >> Yeah. >> But but yeah like I I you know I think GPUs are going to be tight. You look at the prices, they keep going up. At some point, obviously, I think it's going to normalize like most markets do, but it might remain tight for the next year or two. >> When I think about the big applications of uh the big pool of compute, I think uh training and inference of LLMs, coding models, agentic workflows, I think image, video, audio generation. Uh what's next? What do you think the next uh big driver of demand is? Is it world models? Do those fit in? Are those structurally different? Is there something else that you're tracking where you're seeing customers come to you with sort of like a a different product but it it fits in the same shape so you can work with them as a business partner? >> Yeah, we have a very wide range of customers. So we have everything from Sunno which generates music using AI cognition is training uh coding models using reinforce reinforcement learning. >> RAMP uses us for background agents. We have a lot of vibe coding platforms like lovable. We also have you know drug discovery companies like Chai using us to simulate you know molecular dynamics and we have weather forecasting companies, robotics. So so so we we we have you know very general you know we look at across like a lot of different verticals. Um obviously like the the the big application in the last couple years has been LM inference and that keeps growing a lot but we've also seen some really cool applications with the fusion models. In terms of what I look forward to, like I I think the probably personally the coolest thing I kind of expect to happen in the next couple years is speech to speech, like imagine just like talking to a computer. In order to to figure that out, we need to get the latency down, you know, for for all the three components of speech to speech, you know, doing the LM and the, you know, text to speech and stuff like that. So, that's something very cool, but I'm also really cool about I I think it's incredibly cool if we can, I don't know, cure cancer or something like that. >> Yeah. Yeah. It's interesting because uh I'm I'm with you on that on that timeline. Speech to speech being uh you know somewhat impressive, but you're often not actually hitting a real reasoning model. There's so much speed up. You know, we could be we probably need to be 100x faster, a thousandx faster on the response time to really have a breakout moment. And then you watch Google IO this week and you see with Omni a glimpse of okay, it's more like a FaceTime call with the AI and it's generating a video in real time and you know how long it takes to crank on video models to get an 8-second clip. It's minutes and minutes uh and and and they're still have errors and stuff and we're still not even at the the super the superhuman element. So lots to do, lots of servers to rack, lots of GPUs to set on fire, I'm sure. Yeah. Would at what use? >> Yeah. >> Any any plans to actually, you know, go full stack, get your own, you know, land powered shells, etc. Is that like not the highest and best use of your guys's, you know, talents? >> We we think of our values like adding a big software layer on top of the underlying computer on the underlying comput layer. So, we think of ourselves as almost like a cloud like one layer up from the existing clouds. The existing clouds are very good at running computers, you know, in the cloud and and offering that through an API. We we would love to keep tapping that as much as we can. If we can't get the capacity we need, we might have to build it ourselves. Ultimately, it's like, you know, it's a kind of a economics question or, you know, practical question. I I wouldn't rule out any sort of move. uh the idea of, you know, racking computers and plugging in cables and dealing with, you know, fires and data centers and whatnot, like to to me that's not super appealing, but but at the end of the day, we'll do it if we have to. Absolutely. >> Yeah, makes sense. >> Well, congratulations. >> Congrats to the whole team on awesome milestone and and uh incredible progress. It felt like a year. It's only been since October. >> Only a couple months. >> Yeah, it's like 10 AI years. >> I love it. Congratulations. We'll talk >> Thank you so much. Cheers. >> Have a great rest of your day. Let's click through the timeline. See if there's anything that we missed before we jump off. Uh DJ Cow has an idea here. Found a $10 bill. It took 5 seconds to pull to pick it up. That's $63 million in annualized ARR. This is the thinking you need to be deploying if you're going to be raising money potentially. Uh no, don't do that. Funny numbers. Messi, the football player and a prime copycat called Moss. >> Moss, >> and it's shutting down after 23 months in business. >> I wonder if that has to do with the logistics of shipping internationally because he is an international icon, but setting up distribution and retail presence across many countries uh very quickly. It's not quite as easy as dropping it on Amazon and and flying off the shelves. Uh, a lot of those are sort of won country by country and I wonder if that has a piece of what happens. So, this is shutting down fully. Moss Plus. Interesting. Uh, well, Mitchell Baldridge recommends setting up a Vanguard account, not Fidelity, not Schwab, Vanguard. Smart advice. You might think they do have the lowest fees. If you want to get up to speed on Vanguard, listen to the latest episode of the Acquired FM podcast. Uh, but he says wrong. It's not because they have the lowest fees. It's because their interface is so awful you will never trade. It's made it has made his clients millions. >> Uh let's close it out with this video. >> What you got? >> Playing katan with a billionaire. >> Yes. >> Uh I think I think you'll like this. >> What is this face? Is this a face filter or a background replacement or both? Something funny is going on here. >> Face filter. >> Okay. Face filter. >> My turn. I'm going to put down a data center. >> That's against the rules. How else am I supposed to AI generate my Christmas card? >> Not popular. >> I'm not joking. >> Do you like it? >> No. It's blocking all the land. >> Wait a minute. Are you one of those paid protesters? >> Next turn, I'm going to use seven water on my data center. >> That's not how that works. That's not a resource in the game. >> How else am I supposed to power it? The water stuff is really It's so interesting that no one has moved to energy like natural gas. There are natural gas turbines that like >> would be opposed and yet people are focused on >> giving them ideas. >> I know I'm I'm doing their job for them, I suppose. But it's like I I I don't know how I don't know why the water I think it's just because like water's delicious and electricity is is vague and abstract and you don't think about it. Like you can visualize a glass of water. It's hard to visualize a battery in the same way. Um, but uh, yeah, the uh, what what is it? It's like it's like dozens of LLM queries every day for a full year is equivalent to eating a single almond, something like that. Uh, but Matthew Ball is back at Xbox. Congratulations on the move. He announced it yesterday. We're going to try and get him on the show because he's one of my favorite people, favorite authors. If you haven't read his book or his uh his blog, he has a fantastic mind for future of technology and he uh I could not be op more optimistic about the the future of Xbox with him on the team. Tay Kim says, "This hire is a literal gamecher." Matthew Ball knows gaming and what needs to be done. This news makes me the most bullish I've been on Xbox in seven years. And I completely agree. >> And to close it out, the White House is awarding two billion in grants. >> Oh yeah. >> 1 billion quantum computing to IBM to nine quantum computing companies in taking an equity stake. So their grants, >> they're grants, >> but we're taking an equity stake. >> It's an investment. >> It's an investment. >> It's an investment. And you, American taxpayer, will now own a basket of quantum computing companies. Uh, >> computing is up. >> That's not spaghetti computing. It's regetti computing. Shadow >> spaghetti computing is up 30%. >> That who came up with that? That seems like a Trump like uh something he would say. >> I created that. >> You created that? Okay. >> Just now. >> I'm sure I'm not the first person to think of it. But uh anyways folks, >> thanks for watching. Leave us five stars on Apple Podcast and Spotify. Sign up for our newsletter at tbpn.com. And we will see you tomorrow, Friday. >> Goodbye. Smoke flash. >> Have a wonderful evening.