Ferrari EV, Enhanced Games, Pope's Encyclical, Alcohol & Podcasting

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We are live from the TVP Ultradome, Temple of Technology, Fortress of Finance, the Capital Capital. >> We're back. >> We're back. >> A lot of complaining around the office this morning. >> Oh, yeah. >> Team was upset. >> They said two days is the perfect length for a weekend. Three >> is just too many. >> Too many. It's too many. So, we're glad to be back. >> They're back. >> Uh, and Ferrari's back with a new electric car. >> Are they back? >> That's what we're going to debate. They're certainly they launched it. Uh Ferrari launches a $640,000 Johnny IV designed glass clad electric speedster. They're calling it the electric speedster. I was not uh I I journals. >> It holds five seats. I wouldn't I when I think speedster I think smaller. I think two seats. I think Porsche speed. >> It is quick. It is speedy. >> Well, have they actually released numbers on how quick it is? is I know that they mentioned that it has 1,00 horsepower. Uh we would assume that it's quick, but who knows? We don't have a Nurburgring time. We don't necessarily have a 0 to 60 time. Uh we will see, but we do have some good coverage from the Wall Street Journal. >> There is a 0 to 60. What is it? >> I think they released it. It is more performant than I believe the Model 3. I will confirm. >> Model 3 or the Model S Plaid? >> Well, that's a good question, John. Because the Model 3 is not like base model 3 >> 0 to 60 in less than 2.5 seconds. >> Okay, that's not as fast as a Plaid. >> That's uh Yeah, that's that's sort of surprisingly low. Uh or surprisingly high. Anyway, uh named after the Italian word word for light, the loose will test or is it luche? Luch luche will test the appetite of the super rich as EVs have fallen out of favor in the United States. It'll be interesting to know where when did this start because there has been a big shift and it happened somewhat quickly. It feels like it's been like the shift away from EVs happened over a year or two, but the design timelines for a project like this might be five years, might be even longer. So, uh let's let's set the table with the Wall Street Journal article and then we can go into your take uh just so we have a little bit of context here. An electric vehicle big on glass, light, and space. This isn't your father's Ferrari. on Sunday, Europe's most valuable automaker took the wraps off. >> Yeah, Ferrari has been a It's a big company. It's a It's been a successful The Market Cap's been huge. Like, it's grown a bunch. The acquired team uh did a great podcast explaining the whole history of the >> stock is down 5% today. >> 5% today, but it's still what what is it? How >> 62 billion. >> That's not bad for for I mean, I feel like a lot of other car companies are sort of beaten up and much smaller based on their uh their volumes. 30% over the last year. >> Okay. Okay. Does that make it an AI winner? Who knows? Uh so, uh named after the Italian word for light, the Ferrari Luche will test the appetite of the super rich for EVs when electric vehicles have fallen out of favor in the US, the world's top top market for luxury cars. Designed in partnership with celebrated Apple alumnist uh Johnny IV, the model also represents a leap into a new technology built uh for a brand built over decades around the size, sound, and sensation of traditional engines. The Luche will be among the most expensive Ferraris that aren't a part of a limited production run. So, it's an unlimited production run. They will be making as many as there are demand for. They'll make a bunch. People will will hopefully come and buy them. If they do, they'll make more. uh the >> production might end up being limited depending on demand. >> I think you can see where Jord's tank is going. Uh but uh the the the interesting thing here is that uh Ferrari uh typically has sort of two tiers. Limited production runs. That's the F40, the F50, the F80, the La Ferrari, the Enzo Ferrari. these halo cars, these hyperarx >> SF90 was interesting because it was a one level above the sort of base model mid-enine sports car that they've made in the lineage of the 360, 430, 458, >> 488, and then >> 296. >> 296, which is unlimited production, but at the lower end. lower end still $300,000, but it's at the lower end of the traditional mid-enine sports car, tossable, not fully track focused, but it's a sports car. >> And then the SF90 came in as sort of like this mid-tier, higherend, more expensive, twice the price of the of the 296, but unlimited production run. So, by getting one, you weren't locking yourself into a very tight allocation. And that of course led to some serious depreciation in the SF90 market which has been sort of heralded as a as a crisis for Ferrari. And uh this doesn't seem like a response to that. This seems like a continuation of that potentially. Um but anyway uh the company's starting price will be €550,000 roughly equivalent to $640,000. That's more that's a lot of money. That's more than the SF90. That's more than the uh the Dolce Tinder. Uh more than the 296. >> More than the new Tessterosa. >> More than the new Tessterosa. And also more than the Puranguay which is V12 naturally aspirated. >> And and also but the Puranguay only has four seats. This has five. >> So you're getting an extra seat for just $200,000. >> Under 200 grand. >> It's it's a wild value prop. Uh the launch event uh stadium uh took place in Rome in a stadium with a towering concrete sail that was opened for the Vatican's two uh 2025 Jubilee featured tortillini by Italian chef Masimo Buruto uh Bura clips of Formula 1 stars Lewis Hamilton and Charlotte uh racing the car and lots of lights. I want to see this what this car actually looks like on the track. I haven't seen a video of that yet. Uh, the unveiling sparked a debate among car fans online with many pillaring the design as too far outside of Ferrari's design traditions. Ferrari's Milan listed shares slumped around 6%. Uh, Ferrari has framed the shift as a chance to experiment. We wanted to do what we hadn't been able to do before, said Ferrari chairman John Elen. Uh, let's see. The Luch is Ferrari's first ever Ferrari with five seats, an option ruled out by the axle in its traditional powertrain configuration. So, if you have a family of five, this is your only option. Uh, despite the roominess, the EV accelerates from 0 to 60 uh in less than 2.5 seconds. >> If you have a family of six, you could pick up two of these for just over 1.2 million. >> Yes. >> And and you'd still have some room for friends. >> Husband and wife, his and hers. >> Yes. >> His and hers luch. Uh, yeah. Wild, wild prop. Also, yeah, I mean, uh, top speed's 190, top speed in the Plaid is 200, and top speed in in many, uh, you know, Cadillac CT5V Blackwigs maybe more than I did, I did confirm, by the way, that it is, uh, half a second slower than the Model S Platt. >> Yeah, >> which is >> I mean, yeah, it's it's at that point maybe you don't really recognize it. Maybe you can't really tell. problem. The problem is is they the the range is worse than pretty much everything BYD makes, pretty much everything that Tesla makes and a lot of these other manufacturers. >> Uh but they could always argue, no, but the performance >> and uh and I don't think for this kind of car buyer, >> yeah, >> performance matters. What is performance? Is it acceleration, straight line speed, how it handles in corners? Right. This car is not going to be >> track weapon. I don't think >> not yet. But we have some body kits that might help with that. Take it out. >> See, you put a weight on this thing. Anything possible >> to me. >> So, yeah, the range is what you were getting at. 330 miles despite an unusually large battery. Latest releases from BMW and Volvo run for more than 500 miles. The Lucid Air Sapphire is over 500 and uh many Teslas can get up into the 400 something range. 330. Totally usable for most people, especially if you're charging at home. Totally fine if this is a daily uh and you, you know, want to drive this around, but it is it is sort of in search of a like how does it fit into someone's life? Because again, it's not designed for the track. It's not designed for the straight speed. >> I overall I think it looks pretty cool. It looks unique. >> Yeah. >> I don't I don't see it and immediately want it. like uh there's been plenty of other modern Ferraris that I think look amazing. Even even many of them have gotten quite negative reactions. >> Uh so so overall I think the design is interesting. I think the interior is obviously cool. We talked about that. I was somewhat worried that the interior would maybe not match the >> um I don't like the two-tone thing, but again that's just sort of like a modern Ferrari delete. Like I like I think it will look really cool if it's entirely black, right? Murdered out. >> A lot of people are saying that will look uh quite cool. Um but yeah, the the main thing is like the this entire that angle looks great, by the way. >> Mhm. >> But not $650,000. Great. Uh it's certainly the most confusing release from a major automotive manufacturer that I can ever remember. Right. >> Who is this? Who is this for? Like coming out and significantly like right away I'm like am I am I am I crazy? This is like costs more than the Purangu 12 cylindry uh the Tessterosa all these other cars that didn't get amazing reactions but I think are like very very cool seeing them in person. They look amazing. >> They I think they they're fantastic. Um, what a confusing what a confusing >> gap between like seeing images and videos and pictures of cars and then actually seeing them in person. >> Uh, like often times when you see something in person, you're standing there and you have the sense of perspective. They can look a lot better. Sometimes they're going to look worse. Um, >> one of the other one of the other challenges is, you know, Ferrari, modern Ferraris have had outside of their halo cars have had, you know, pretty massive depreciation. >> And, uh, what have EVs become synonymous with? >> Depreciation. >> Appreciation. So, this car, >> yeah, >> like the Puranguay, I don't really know how it's going to hold up. >> It is naturally aspirated V12. It's probably going to hold up >> decently. You're still going to be able to buy Yeah, you're still going to be able to buy it. unlimited. You're still going to be able to buy one for probably $350,000 like Yeah. >> in the next couple years. But this I can imagine just getting cut >> uh getting cut in half like quite quite quickly. I expected it to come in, you know, not not a very informed uh view, but I I expected them to come in at maybe something in like the $300,000 range, right? something that is would be a very expensive daily, but something that somebody could compare. Oh, should I get Yeah. should I get a a Roma? Should I get, you know, a TYON Turbo S if you want an EV? Oh, should I stretch a little bit and get a Luch? >> Uh, and and again, I just don't know. I just don't know who this car is is for. I hope that there's enough Johnny IV fans to make this sell. My the the the sense I get is like I don't think Ferrari would have started this project and said, >> you know, we've always wanted to make a $650,000 daily EV. >> That's been the car. That's been the car. And it seems like they started this project and they're like, "Let's make an entry level ma that the closest thing Ferrari has to a mass market car, a car that you can daily, a car that is is unique, really thought through from the beginning, right? This idea of com combining EV with a Johnny interior is like a cool concept." And then you could imagine they start and they're like, "Oh, we're going to be able to hit 350 for or we're going to be able to hit three 300 for sure." Okay, maybe maybe it would be more like 350, but like still we're in the range. And then it just starts like ticking up and up and up and up and up until how do you how do you how do you just how do you justify the price? It makes no sense. Uh and it's very it's very cons >> I saw when you're laughing. >> Hunter Hunter be kind. Um uh it's it's a very it's very concerning because I just think it it's basically proving that Ferrari I don't think can ever I don't think they'll ever be competitive >> in EVs, right? >> This segment. >> Yeah, this segment I think it's I think it's completely over like really hard to compete in. You're going up against Tesla. This vertically integrated like comes with like if you want a daily you also want self-driving capabilities. You also want the oh park it auto summon like you know you want to be able to like all these like random features that Tesla puts in like take your car play the games like very functional >> the thing with the is the design like there's so many elements of the design that are super tactile very cool it's quirky >> but Tesla has done a very good job of making a a car that is very drivable it's it >> and it can be quirky if you want it to be has sound effect. >> The sound effect board. It has a sound board. Like if you want the quirk, you can get the quirk. >> Uh so yeah. So so I think it's I think it's over. I think I think >> take me through your take from start to finish. Uh and then we can do >> we we've covered we've covered a lot. I basically said like look the the peanut gallery is already very negative on all Ferrari launches. Every single time every single time they say bring back Pin and Firina, Pin and Firina is not coming back. like the whole company got sold to an Indian automotive conglomerate. Tata Motor, they they they launched the Pin and Firina Batist. >> So if you pull up the Pinuh Pin and Firina Batista, if you pull up a picture of that, you will see uh an image of an electric hypercar that looks exactly like you would expect in the sense that it's the car that would go on a poster on a kid's bedroom. Uh but it's a million dollars or more and it goes 0 to 60 in two seconds. Uh, and the reviews are kind of like, yeah, this is the max. Yeah, the pinfina Batista right there. Like that looks like a McLaren, like a Ferrari. Like, it looks like it looks like if you went to ChattyPT and just said, like, make me a hypercar. And I think it checks the box. And I think the luch does not. I think if you went to ChachiPT and said, "Design me a hyper car." It you could you could sit there for for days and not get something that looks like Lucha because it does look different. And that can be good. It can also be bad because people are expecting this. But this car, I don't think sold very well because the buyer for this design wants a naturally aspirated V12 with a manual shifter, right? Uh and they want something that's that that's more focused and more uh of an experience. They don't want something that's practical at all. Yeah. Um so >> yeah. So so so anyways, people are always negative on >> on on recent Ferrari launches. I don't I I usually don't agree. I think a bunch of them have been great. Uh and but but the anger towards the design I think is totally misplaced. You got to be you got to be like disappointed uh in the price. >> Uh the gap between what you can get from a range and performance >> from from Tesla or BYD, let's say in the $50 $60,000 range, you're looking at a 10x difference, right? Uh and and that that gap is just way too wide. So, I think that if they had been able to come in in the low 300s with this, it would have been super desirable, quite functional, right? This is a great great commuter. I we would have been seeing these all over LA. >> I think this is going to flop. And I actually think that if Ferrari wants to be competitive in this sort of like mass market EV category, even like luxury, you know, luxury um uh not not necessarily true mass market, but um but more uh high-end. I I think they would have to at this point like partner with like you could imagine them partnering with >> with someone else and effectively just saying like you know throwing in the towel. I think they still have a fantastic business focusing on the the higher end of their range. even think of what a high-end driver focused sedan four-door 5-seater sedan is because typically the when you get to five seats four doors upmarket expensive luxury you just go SUV so you have like Range Rover and Urus from Lamborghini and you know Aston Martin is pushing that way like it it feels like this is a very like the four-door expensive four-door or is is rare. >> Yeah. And I think it's very >> differentiating the Perangu. Personally, I would have liked to see something that was like like sportier >> than that. >> Uh yeah, it's very supposed to be. >> Yeah, but but it's a an SUV from Ferrari. Something a little bit more aggressive. Personally, I would have liked it. Came off very cute. >> Take out the second row. Take out the two seats. >> No, no. You can make a sporty a Cayenne Turbo GT. is a sporty >> stock carbon >> sporty fast SUV. >> I I just feel like with the the Purine way, it's like the like like the 296 is right here, sir. If you have any complaints about it being an SUV, like they do have a they do have a sports car for you if you want that. The question is just like if you want if you want performance, you go sports car. I'm just saying. >> I'm just saying I think they they they uh they kind of missed on both, right? I think if they made like a super if they made like an aggressive if they made the purangu but it was like more aggressive I think it'd be way more desirable. >> Wait, are you talking about the the stock pur or are you talking about the puganator the mansori modified pugan >> the puganator? >> I think I think >> Mansori has a body kit for the purangu that's uh called the pugan >> which is such a funny name. >> Yeah. So, so anyways, uh big >> big big big L uh and uh I think that uh that will become very obvious in in you know the the coming years they are going to sell some I expect Certino to be crawling with with Luchy. Uh but and I was thinking I was like who is when I thought about who is a buyer for this it's like >> foreign exchange student >> in the US >> that needs a car for like >> a few years >> instead of like a black badge calling in or >> Exactly. Exactly. Um and but but that's not a big market. >> Yeah. It's just hard because I understand the like the concept of like the the the when I when I imagine like the the Cullinin like driving on the sand dunes in Saudi Arabia. Uh it just has such a different vibe. It's so it's so much more regal and royal uh than this design. This this design is is so much more friendly. We can actually go and look at >> the fact that you can. It's like, "Hey, luxury car buyer, would you like a Rolls-Royce Cullinin or a Ferrari Luchi Luche?" >> Yeah. >> Which is a just extremely millennial coded car. >> It I mean, it has a lot of the Apple feel to it. Uh, a lot of people were making >> I had I had a theory earlier that maybe maybe the real cost maybe it's like a $50,000 car, but making a custom iPad and you're only going to make a very small number of them. You're only going to make like >> it's a $500,000 interior. >> No, it's a $600,000 iPad. >> Okay. >> You know, the the the in the front console. >> Yeah. >> So, it's a it's it's basically like a Model 3 >> and then a and a $600,000 iPad combined, right? because I don't think they're going to be making a lot of these. >> I really wonder how they're going to how they're going to drive. Uh you want a safari version, right? That's the ideal. >> I do. I do. Sam Sam Schaffer was sharing uh the >> like what does it look like if it's all black? >> And yeah, I went in there. I was like, make it make it a make it a safari version. Get some bigger wheels on it. >> Expand the wheel wells. >> Expand the wheel wells. Basically do another 300 grand of work to a and make it a million dollar luch. add some add some equipment. >> You know what this looks like? This looks like that. >> Pull pull um pull this up. This image. >> Um what was the uh what was the Lamborghini electric one that they were working on? The Lanzador. It was like a big car. This was like a theme for a while. I don't think it ever went anywhere. I don't know if you saw the Lanzador. I can I can share it in the thing. Um >> there it is. So, this is >> Yeah, I think looks this looks cool. >> Again, >> having a car that's designed to go off-road that only has a few hundred miles of range. >> It's kind of a crazy move. >> It's kind of a crazy move, but I could see >> people take the people take the Rivians off-road and they're very good at because you can I mean this this car has four electric motors, one in each uh wheel. >> Yeah, the Rivian can adjust the torque indep independently. So if you're losing grip on one rock in particular, >> a Rivian at the Fat Ice Race in Big Sky was going absolutely crazy. >> Really? >> It was It was It was extremely impressive. >> Yeah, it's designed for that. Uh pull up the Lamborghini uh Lanzador. This was uh the uh Lamborghini's electric concept that I think got scrapped uh but might still arrive in 2028. I just shared this image in the uh production chat um because it has this idea of like the big car. It's like have you seen this? What what are you laughing at? >> 2.6 says that looks sick. Oh wait, it's an EV. >> People don't like electric vehicles. Uh I mean great for great for daily commutes, great for you know high gas prices. This Landor, you saw this >> which they discontinued because they realized it was going to flop extremely hard. So, but it sounds like Ferrari's is fully moving forward with this. They're going with it. >> Yeah. I mean, all the EU manufacturers are >> This is this is a very high up car. Like, you're very high up. >> They're caught between a rock and an and a and a EV, right? Mhm. >> Uh they there's basically I was I was trying to was asking Chad about the um uh about like the the reg you know regulatory situation and basically the EU regulates average CO2 emissions across each manufacturer's new cars registered in the EU. >> So it's not like model by model. It's like based on all the cars you're selling in a given the new cars you're selling, >> you need to be under certain emission standards across the entire fleet. And so if you sell a handful of EVs, you can bring down the average >> a lot. >> A lot. >> Okay. >> Uh and so >> so yeah, maybe they only sell a couple thousand of these, but it's enough. But yeah, it seems seems seems tough. Uh we texted one of our buddies who has maybe 30 >> or so Ferraris this morning. Uh and uh he will be buying one. >> He made a good point. >> Whether it's >> He made a good point. Anything that's uh you know hated at launch has the opportunity like the expectations are low has the opportunity to become like a cult classic at some point. There's a lot of cars that launch and people are like this is what happened with the Carrera GT. People were like it doesn't look any different. It doesn't look as extreme. It doesn't stand out if you're stopped next to a 911. Most people will just think it's an 911. >> Think you think in in 10 years we could be looking at luch going for two three million? >> Probably not, but who knows? Maybe 20 years. I don't know. It might be like an interesting relic of a particular era. >> Pull up this post from Rhett. >> Yes, >> I like this version. >> Clear plastic. Leaning into the vibes of >> leaning. Just lean into the plastic. Yeah, there's something here. People were having fun. I mean, it's a golden age of uh Gen AI images. Uh someone else was comparing it to the >> Luca, former chairman of Ferrari, which Trey mentioned in the chat earlier in Italian. He says, "If I say what I really think, I'd be doing Ferrari harm. You risk destroying a legend. I'm very sorry. I just hope they at least take the prancing horse off that car." >> Wow. >> What should we do? This for sure is one car the Chinese at least won't copy off us. >> Wow. Those are very very harsh words. >> He of course worked under >> whatever whatever uh journalist went out and hunted down uh Luca the former chairman of Ferrari like really knew that there was like a scoop to get here because this is not a seated interview. This is not planned. This is an ambush. and he was he was struggling to not completely blow things up and yet the body language of him like touching his head he's he's not >> uh TJ >> former uh F40 360 owner has driven most modern Ferraris so he he feels uh is very qualified to chime in he says apparently an unpopular opinion but I think that it's great >> interior fully Johnny exterior totally mark see the Ford concept which we can pull up. I imagine for the OCD types, the daily interactions are going to be quite satisfying. >> Yeah. Yeah. That that is the it is an extremely unique interior and things are experiences. This could be something you get to experience >> all day long. Uh I'm excited to drive one. Uh I won't be buying one. >> I won't be withholding judgment. I won't be judging a book by its cover. Um yeah, TJ says, "My opinion is is in 10 years time the Johnny ad Ferrari design will be the main business at a price point of 150 to 250k equivalent and slowly washes out Ferrari as we know it. Launching at today's price point preserves the dying core biz while they transition to an Apple style business. Uh I would uh TJ knows a lot more about cars than I would. I would take uh but I would take the exact opposite. >> So hard to do. >> I would take the exact opposite. I think this is going to be more and more like an ultra luxury brand. Small number of cars at very very high prices. Yeah. >> For hardcore enthusiasts. >> Yeah. SP3 F80. >> Yeah. Just getting back to what >> like the next SF enthusiast limited and manual and natural aspir and like >> they're already coming back. They're making they're making a version of the 296 without the EV componentry. >> Sure. So, so yeah, I would take the exact opposite side of this unless Apple or sorry, unless Ferrari, you know, does, you know, does something like effectively a licensing deal and says, "Hey, we can't make a car >> for this cheap, but we can license the badge and BYD can make a car for 50 grand and then we'll charge 50 grand a car to put the prancing horse on it." >> Yeah. I mean, and that would be full. So, Whimo is sourcing uh the powertrain and battery from Chinese EV manufacturers, but none of the telemetry telecommunication systems, IT systems, that's all Whimo. And so, you get all of the benefits of the Chinese industrial supply chain. You get efficiencies around batteries and cheaper frames and power trains and drivetrains. uh and the batteries, but you don't have the oh like the Whimo spying on me because the cameras were made there necessarily or like the whole car was made there. And so I think Whimo's been very quiet about this. Obviously, they're not really like openly talking about this decision, but I think that they that they picked a very clear line in the sand with where with what parts of the Chinese supply chain they would go into because the whole like Whimos are Chinese cars would be like a bad headline. But if they can say, well, we're just buying things there that don't they can't have any spyware in there because it's just a bunch of aluminum and battery packs or whatever. I think that will at least I think that's their strategy. Yeah, people people people will still be suspicious of course. Um but by and large I think people will be happy. Uh we should pull up the Ford 021C concept car designed by Mark New who works with Johnny IV and did the exterior of the Ferrari Luche because this car is so cool. I think we were all looking at this and really enjoying this. Uh it's the uh the Ford021C concept car. Uh as uh TJ pointed out, Mark wanted to create a car that was simple, likable, and fun. Built at a historic uh Ko uh Koiraa Gia in Tin, Italy, Mark developed a car via drawings followed by computer models and finally created a clay model to perfect to perfect complex surfaces. um to perfect complex surfaces. Every component of the car was designed and fabricated from scratch from workshops all over the world. The tires were custom made by Pirelli in in Italy, for example. The composite exterior featured seamless shapes and deceptively simple surfaces, including a wraparound retractable trunk that opens like a drawer and a door handle and door handles that are simple aluminum buttons surrounded by translucent plastic rings which illuminate when remote locking is activated. The doors themselves open to expose a completely open pillarless interior. The windows were designed to allow as much light as possible to enter. This was done in 199. >> Absolutely hate this car. >> They hate the clown car. >> I think this would be a fun weekender. >> Yes. But this is th this should fit into like the Volkswagen ID Buzz lineup which at 60,000 at 70,000 was deemed like woefully overpriced and should have been more at like 30 or 40. And so some a design like this could be amazing but again uh price is everything here because for for something like this it it can be this like delightful utility this fun thing similar to the Volkswagen bug. I would instantly pick up the Ferrari Luche for 20 grand. >> Many people would. >> Uh Sheil asked Chad CBT to make a four-door electric Ferrari. It's pretty good at this. I bet this version would be popular than Johnny's. This thing looks mean. >> It looks like a Dolce Trind a little bit. >> Yeah. mixed with >> also it's just it it's it's so clear that it's not electric like like why would it have this big long front hood >> it looks good John >> and it looks good because this is what you're used to but this looks like a 200inch car like as a daily this seems like it would be wildly impractical in terms of parking and dealing with everything and >> it looks perfect >> and also it feels like it has a lot of downs >> the new images model is so good >> at making cars You almost think that Sam was pretty involved there >> potentially. Um, are you talking about Nikita Beer's car? >> I mean, this thing looks fantastic. Bone has got to make this. He >> They need a production version, >> I think. What do they call it? What did Bone call it? The Nikita Borgata. >> Borata. >> I mean, I mean, >> it looks sort of like a Nissan Morano Cross cab. This looks absolutely >> goodness in the front is very very funny. >> Incredible. >> Yeah, if it was the Apple car and price for scale, this thing would go triple platinum uh in all white with um with the Apple logo on there. This does feel like a little bit of uh a lot of Apple leaked in this thing. Bobby Good Late says, uh, "My theory on the luche. This is the car Johnny wanted to design for Apple. Apple didn't want to ship it, so he made it for Ferrari. this car with an Apple logo priced at $100,000 would sell extremely well. I wonder I wonder I I wonder if you can get to a place where the fit and finish and the the OCD that that that's the like the daily interactions that's the piece that uh I'm not super clear on willingness to pay for that because with a phone you're using it just as much as a car but I don't know there's something about like iteratively onboarding to the the little features in the iPhone that create this lock in. Whereas people go and they test drive a car and maybe the uh maybe like the the window switches are in the wrong space and it's slightly annoying, but they don't figure that out until much later, you know, or like the the uh the the volume knob is in slightly wrong place. It takes a long time to like become frustrated with that. Um I it would be hard. It's a harder pitch to make to a new car buyer. like, oh, this won't have any frustrations. Those minor frustrations that you experience in other cars, like that won't be a thing here. >> Yeah, I do. >> I don't know. I do find that a lot of uh my frustration with modern cars comes from the software hardware integration, right? And this dynamic that we have now where where the the manufacturer has their software stack and then they also have CarPlay and they're constantly basically competing. Yep. >> Uh and it makes absolutely no sense. It's like I'm in CarPlay. Like car I just bought like a week ago. >> I'm I'll be in CarPlay and then I'm like, "Oh, I want to change like the the heating or air conditioning. I got to get out of CarPlay to go and do it in like their software." It's very very annoying. Um, and so yeah, Apple Apple would make a uh a fantastic car, but even I just don't know with Apple part of it was like no one's been able to make a great like a truly great car business. >> Like Tesla, but yeah, you >> but it's not a good it's not a good business. The the car business is not a good business. >> Yeah. It's made 20 billion in free cash flow over the history of the company. >> Something like that. >> Yeah. for as a, you know, >> 20 years. Yeah. >> Over a trillion dollar company. >> Yeah. >> Ship a lot of cars though. It is the number one the Model Y is the number one bestselling car in like California, China, >> everywhere basically. >> Yeah. That's what I'm saying. So like insane product market fit, global hit. >> Yeah. >> And it's still >> and to be competitively great business. >> Crazy. Crazy. Crazy. And and that just feels like entirely new DNA for Ferrari to spin up. It's like handbuilt. Like that's the whole concept. And uh and you know Tesla to get to where they have on price point and distribution and scale. Like completely different. >> Uh Jack Butcher made a great point. He said make the Luch 30% wider and everybody would love it. >> Where's the >> uh >> you can see it on the screen here. It has such better road presence when it is wider. It just looks when it's it's too boxy. >> Sure. >> And it looks just a little dinky. But >> yeah, >> looks a bit more aggressive. >> It does seem like uh everyone everyone is just asking for something that it's not trying to be. Like you make it wider, okay, it's less drivable. Like it doesn't fit in garages as easily. You make it longer, like the proportions look cooler, but it's not like it's it's not going to be as easy to fit into parking spaces and stuff. Like the whole point of a vehicle like this is to be uh like accessible and usable. Uh and that's very antithetical to the Ferrari ethos, but maybe that wasn't the goal. >> Uh one car that was getting a lot of love was this special edition >> that was teased online. You can pull this up. This is the natural ice edition. >> Uh I thought I thought this looked fantastic. Uh if the team uh can pull it up here for everyone to see. >> Yeah, with the wrap. I think I think beautiful. >> People might be wrapping these for sure. I'm sure >> color matching color matching the wheels to the the the gloss and the shine of the can I think is really really nice. And I could see this being a hit on uh at least college campuses. >> Yeah. Yeah, for sure. Uh imagine having this be your college car and wrapping it. Well, the rap is usually paid for by the brand. So, the brand will be like, "Oh, we want to we want a campus ambassador." >> I know. But I was hoping that Ferrari would just take the leap >> and actually do a full-on partnership special edition. Right. >> Yep. Uh well, chat didn't like the Ford uh 021C uh uh example, the concept car in the orange, which we can pull up. Uh but I want to know if chat likes it more if it has a body kit. Let's pull up the Ford 021C right after the >> There we go. >> Does that do anything for you? >> There we go. >> If you turn it into a track weapon, are you getting somewhere? >> Look at the arrow on this. The >> arrow is so aggressive. But show show the original photo, the first one. Yeah. There we go. You're going to take that some slight modifications and boom. >> Take it away. Go back. Go back to the to John's version. >> There we go. Yeah. Uh, we should look at the Solo Cup inspired hyper. >> Oh, yeah. So, John is having went really, really deep on designing some new cars with with the Ched. >> I think I got a future here. I think I got a future. >> Look at this. >> They call this the red time. The red line. Good times. Sharp lines. >> The red line. >> Inspired by the iconic, simple, universal solo cup. >> Driving a solo cup inspired. This is really the perfect Memorial Day weekend car. >> But this is what I'm talking about where like if you saw a company come out with this, I think the reviews like take away the the joke of like the beer pong thing like just the proportions of this particular hypercar, everyone would be like, "Oh, like that looks like a supercar. That looks cool." But it looks like generically cool. It like if it can be if it can be just like one shot by an image model, it's probably >> not going to stand the test of time. I don't know. It's not taking any risk. Like this this feels like as hilarious as the the the the Solo Cup inspiration is, it's not taking any risk. Um >> when you were renting, >> the main the main the the two things like again I my my criticism was never the design, although the design is not >> for me. The criticism comes down to the price point and then positioning it as like an everyday car. Yeah. >> And then the concern that I have because Ferraris uh have always had electronic issues that have plagued the brand forever. My personal experience, I I had a had a Ferrari for a while and I replaced the the main battery like three times in 3 months trying to solve an issue and eventually basically was like, "Okay, this is always going to have electrical issues." >> Do you think all the parts on the inside are glued in like an iPhone? You have to replace the whole car. Uh, I mean, people will be doing that with Teslas. They'll just be dumping them and getting new ones. >> I really liked your version of the Nissan Morano Cross Cabriolet, turning it into a proper proper hypercar. If we can pull this up. I mean, this looks >> This one would sell. Nissan hasn't introduced a hypercar in a while. >> Could be. This >> could be the Nissan the Spider. It's crazy. >> It does look good. That was the thing is that I was like, "Oh, let's let's start with a joke and then get to something that looks ridiculous uh and is and still has some of that joke jokiness to it, but the final result just looks like a normal hypercar. It just looks like any other hypercar. Uh anyway, >> uh anyways, we should talk about enhanced games. >> Yes. So, I >> I went over to to David Center's house. Yeah. On Sat on Saturday. >> Yeah. >> Uh with uh with my friend Ben >> and uh we were all excited to watch and uh we basically turned it on and um pretty much 15 minutes in, I texted John and said, "I thought the stock would nuke on Tuesday." >> Yeah. >> And it did. It's down. Um I let's see it was 41% I saw chatter about the enhanced games on the timeline. It seemed like everything was going normal. I saw some viral clips. I saw some posts about it. I didn't notice anything out of the usual. You said that uh it it it did not like blow you away and I wanted to understand what about it was not a great like you you you come away paying for a UFC pay-per-view or or watching it on Paramount Plus now. Uh very satisfied like why was this any different? From my perspective, this looks just like any other sport on TV. It looks like something you watch sports and yay you root for somebody and you pick a team and >> Yeah. So, so first of all, >> yeah, >> you know, this company went public before they had ever hosted an event, right? So, uh, and and we've been hearing about it for years. I I said to you this morning, it it feels like we've been hearing about this for like eight years. You said it's more like maybe two years or something that it's even being talked about. >> Uh, but anyways, a lot of anticipation. People have been super excited about this. >> Uh, the the entire concept I I think is uh is just like really cool and wild, right? you take something that uh like the Olympics which you know even if you're not obsessed with swimming or or weight or weightlifting or running or any of these things like the Olympics are always like in you know an exciting cultural moment uh and I think like I I personally you know have a bunch of you know fond memories watching the Olympics right so take something that I that I generally think is very cool and you add you know steroids uh that's a that's a very fun idea should be jet fuel jet fuel >> should enhance the experience >> and uh and then as soon as I started watching uh there's a bunch of stuff I would give them a pass on right like the production value putting on an event for the first time >> it didn't feel like you were watching the Olympics it felt like you were >> watching like a someone's first attempt at hosting an Olympics >> there weren't those like crazy like drone cameras following things ultra slow-mo >> they were they were trying to do stuff but again the people doing commentary have never done it for sure uh you know the the the whole event is you know just being birthed right so uh it had an insane amount of attention on it for first event which is always tough um but then watching it I realized like the appeal >> like none of these none of these events like you can't just watch somebody run in a race and know whether or not they're breaking a record like you can see like oh that person's quite fast >> but unless there's like crazy graphics and stuff >> like an overlay of Usain Bolt of like the official. >> Yeah. Yeah. So, so it's never about it's never about like exactly how fast someone was, right? Because sure there's records involved, but >> the difference you can't noticeably see whether somebody lifted 220 kg >> or 220.1. It's not visible to the eye, right? And so >> what became really obvious to me instantly was like the appeal of the Olympics is you have these like very niche activities where athletes dedicate their entire life to to this pursuit and then >> every four years there's like a fiveminute period where they're getting like the entire world's attention and they're representing their country and they're going for glory and they either they either do it or they don't. They get the gold medal or they don't. you know, whether even getting a silver medal is like agony, right? Because like you just dedicated your whole life to this thing and you're in >> second place. And so it really is about um it really I it just stuck out to me immediately that it's about, you know, national pride, representing your country, uh you know, uh uh true excellence, right? And in watching this, there was none none of that. uh they were trying to do to basically build up the brands of the athletes ahead of time, but there was just like no I didn't feel like bought in to any of the storylines. These are a bunch of athletes that were formerly Olympic athletes and some of them had done quite well that are now basically opting into >> a like just a forprofit like the Olympics are not about making money. The enhanced games were about sure it was about the athleticis athleticism but a lot of it was just like a payday right and so like there wasn't the same I didn't feel I basically we turned it on >> and then we walked outside and we just made a fire and like hung out and it was like really far in the distance. Uh and we eventually came back came back for the very end not realizing that no records have been been broken >> the entire moment >> entire night until the last event >> last event >> and then you watch the event and I think what would have been made it more interesting like a horse race because >> is like if you had like an actual overlay of the person swimming the actual record like you they left a lane open or something like that and you could have seen the person >> who was 100ths of a second. >> Yeah. So, it was really really tight. >> Would have been neck and neck. >> Um and uh so yeah. So anyways, it it wasn't it didn't like capture me. I think that uh it's something entirely different than the Olympics. I I think it's a very clever way to market generic uh generic supplements, right? If you go on enhanced.com right now, we don't have an affiliation, of course, but you can just get testosterone and bunch of, you know, bunch of different products. But >> but yeah, it to me to me you also came away being like the human spirit is way more powerful than any peed. >> Yeah. >> Just like dedicating your life to something for decades and being absolutely obsessed. >> Yeah. >> And and representing your country is more powerful than being able to do whatever performance-enhancing drug. So major white pill for >> humanity. >> Humanity. Yeah. uh actually somewhat related to Pope Leo I 14th's uh new letter Magnifica Humanitas which we will talk about with our next guest Christopher Hail who writes letters from Leo and is joining us right now. He's in the waiting room and we'll bring him into the TV penultim. Christopher, how are you doing? >> Great yourself? >> Uh great. Yeah, I was uh I was uh reflecting on Magnifica humanitas and uh I I mean I was struck by we were just talking about the enhanced games and uh po the the pope's commentary on uh transhumanism and posthumanism. Uh and I'm sure we can go into all of that, but why don't you uh start with a little bit of introduction on yourself and then take us through uh some of the key ideas or lessons that you pulled out of this letter and how you processed the the news. >> Yes. Well, so my background is I worked in the two things that you're not supposed to talk about on dinner dates, religion and politics. So, um, I started my career, um, working with President Obama, um, after college. I ended up leading Catholic outreach, actually, ironically enough, for President Obama, um, during his re-election campaign. And since then, I've done various initiatives, uh, uh, um, representing consult consulting for companies um, on on faith and and in politics. And I've also done religious outreach once again for every every Democratic nominee uh, since 2012, in fact. Um but I I um also um spent a lot of time devouring consuming uh Catholicism and its intersection with faith and politics. I was a contributor columnist for Time magazine for about a decade uh during the pontificate of Pope Francis and um got invited by Time magazine and actually Newsweek to cover the conclave that elected Pope Francis this past year. Sorry, Pope Leo this past year. >> Yeah. And from that I started writing a Substack and it took off. Um the substack is called letters from Leo. It's about the intersection of religion, uh American politics and technology. So uh yesterday though was holiday though was Memorial Day was kind of my Super Bowl of sorts. >> Yeah, it seems like it was uh it like this particular uh news like really broke through. It felt like I don't know if it was just a slow news day. I think you mentioned that there was like bad weather in a couple media markets. Was that literal like like there was nothing else to report on or people were just inside bored and so they were reading all sorts of different stuff like what was your process on like how the actual announcement rolled out? >> I was very upset and when the Vatican announced that it would come out on Memorial Day the pope is born in the United States. I just thought it was a bad day for for media. Um there was bad weather. I'm here in DC. It was rainy. In New York it was rainy and cold. So my my my religious claim is that God opened the heavens and the poor weathers to to allow the pope uh pope's uh document to be received. But yes, it took off and I think um I think what that was really the hope of Pope Leo the 14th, he really wrote this letter and this is different from how these encyclicals normally work. We could talk a little bit about that, but >> normally these are very pie in the sky. This was definitely has pie in the sky elements of it, but um this was really meant for y'all for Silicon Valley. He he wrote this with builders in mind. Obviously, Christopher Olaf being there was representative of that, but he wanted this to take off in Silicon Valley and um you know yesterday morning Jack Dorsey tweeted out the entire so I think mission accomplished. I think he has woken up a lot of folks both detractors and supporters in Silicon Valley and I think um this pop this document's resonating and making a lot of noise. >> Yeah. Yeah. what what about it uh do you think is resonating because uh it it is such a broad document uh and it feels like he's taking sort of a middle path. Uh I I saw it as an optimistic document. I I saw it not as not as a doomer this is AI is going to you know uh you know kill everyone and this is the end of the world like AI can be useful but there are a lot of different decisions that we need to make how AI is rolled out how we uh maintain our humanity that seemed to be the central thesis which I I liked it seemed like it seems sort of like a like a middle ground is that is that the goal and then what would you expect Silicon Valley to take away or or change based on that? So, that was the goal for sure. I think Pope Leo the 14th understands that AI is inevitable. Um, let's just on this for a second. He's he's a he's 70 years old in Pope speak. That's like a baby. He's quite young. He's the youngest pope we've had in 40 years. He's the first pope to own a cell phone. He's the first pope to send an email. He's the first pope to have an Apple Watch. So, he's ingrained um in the technological revolution in the flesh. So, he's >> daily drives an Apple Watch. Yeah, >> he Yeah, he has an Apple Watch. He also has a Garmin, too. So, I'm >> Wow. Both >> and Apple Watch. So, me and him have, you know, some sympathy there. But yes, he he technology. He plays whirl every day. And most importantly, he consumes Western media. He consumes the Western media and what's going on. So, he knows what's what's happening in the world. Um, and so I think that really informed him what he wants. Um I the Catholic Church never prescribes policies. They provide we prescribe principles. Um it's really up to the policy makers to do that. It's really up to Silicon Valley and the products they make to do that. But what he wants Silicon Valley to keep in mind is this question of the human person, whether our projects are advancing the dignity of the human person or whether they are not. Um and I think that he hears language um that concerns him quite a bit. often times he's especially concerned about any time where human responsibility is abdicated uh to to machines and there's no one that you can look back to. Um and particularly he spent a lot of his document talking about war. Obviously um um what's gone on Iran has really concerned him. He was particularly affected by that first bombing on the day one of the war that killed 168 school children um in Manav Iran and he received a letter from those children's parents. So he's deeply impacted by decisions like this and he finds that to be grotesque but he thinks it would be even more grotesque if machines were killing humans without uh human uh um decision making involved. So those are the some of the concerns he has goes on the economics as well but really the underlying underpinning concern is human responsibility. Um he wants that to be at the forefront and the dignity of the person. Now it's at the Silicon Valley what that looks like. I think that there's a significant chance that a lot of people will in Silicon Valley will view this as you know um del nonsense um duper nonsense which you as you said it isn't but I hope they take the folks seriously. >> Yeah. Uh on on on the economic question um I was interested in the fact that he sort of called out that uh that GDP might not be the best development measure. Uh because I've been hearing this from all over the place. We had Doug Olaflin who uh is the president of semi analysis very deeply in the uh in in the inner workings of the AI buildout talking about how uh GDP was an inaccurate measure of certain measures of progress in terms of just economic impact of AI. Uh then you have uh Kyla Scandan has written about the vibe session this disconnect between uh the economic progress of Americans versus the perception and happiness and and we can see it right now. The economy is growing the stock market is at all-time highs yet consumer sentiment is at almost all-time lows. And so I'm I'm I I've talked to a lot of folks about this problem of like what are we measuring? What is the goal? Uh it's always been GDP. And I think it's it's it's interesting to see that the Pope is calling it out. I don't know that anyone has a really solid answer. The my my fear is that you wind up going towards like happiness optimization and then that takes you into a very dangerous territory too. Uh but but in terms of like unpacking that question of of GDP, development, progress, measures, like h how do you think the church is is reflecting on on the way we have become a very measurement-driven society broadly? >> Well, let's go back. So Leo the 14th was named after his uh he took the name his own name after the his predecessor Leo the 13th who in 1891 wrote what was called rear on the barn. If you're not a Latin expert, that means on new things. And um Leo the 13th, a lot of people in the west credit him for the intellectual force behind labor unions, the intellectual force behind a 40hour work week um and weekends, etc. I think that that is a good indicator of what Leo the 14th wants as well. Uh the word leisure is sometimes I think derided in a capitalist society, but in Catholicism it's a great thing. Um, we rest on Sundays. Uh, uh, Jews rest on Fridays, Shabbat, the Sabbath. There's something about being able to limit the time of work, expanding time of recreation, of spending time with your family and loved ones. Remember the word recreation. Um, it's its root is recreate. Um, that's actually um the the the mission, if you will, of of the Catholic Church, of Christianity, is to recreate. Um, that's what Christ does in Christianity when he rises from the dead. We're looking for more moments of recreation. So, I think the Catholic dream would be, you know, to honor the 40hour work week and perhaps maybe a little less. I don't think that's possible, but to honor the 40hour work week as sacred, to honor leisure as sacred, to ensure that people only have to work one job to provide for themselves and their families. I think that's what we're looking for. We're looking for a baseline comfort that everyone can achieve in this country by working hard for 40 hours a week. There's nothing wrong with having rest. >> Yeah. So, help me help me synthesize that with uh what the pope said about like the unique human challenges, the challenges that make us human. He said uh for an algorithm, an error is a flaw to be corrected. For a person, however, an error can be a catalyst for profound change. It was sort of a warning against transhumanism and this idea that every problem is to be solved. In fact, sometimes the problems are what make us human and our struggles are the value and and what brings you joy overcoming. But how how are you synthesizing those two ideas? >> I think that what and so it reminds me of an author that maybe your listeners are familiar with. Uh Oliver Burkeman wrote I believe it was called I can't remember the word it was 4,000 weeks. basically a a a survival guide for mortality. And for the Catholic Church, for Christians, for people of faith in general, mortality is not something to be overcome in and of itself. It's about having a dignified life. He's very skeptical of Brian Johnson. Again, of course, name check Ryan Johnson. >> Yeah. >> But for Christianity, death is a part a noble part of the equation. So I think it's really hard for the pope and for the church to understand this idea that that is something to be overcome. Just to get a little theological for a second, really the the way that Christianity uh overcomes death is by dying. Uh St. Paul says that Jesus by dying destroyed our death. So death is not something we should be afraid of. It's something that is part of the journey. It's what it creates a second life for us, a life everlasting. So um more practical levels I think um we want to do anything that can dignify the human life to make it to better live to make it um um more comfortable for people but we we shouldn't be afraid of our limitations. St. Augustine famously says that my shortcomings who by the way St. Augustine's a patron of Pope Leo the 14th he says that my shortcomings actually give honor to God because what it does is it proves the need for a redeemer, a savior. Um, let me put it in more blunt terms. We can't save ourselves. I think if Pope Leo thought there was an original sin of Silicon Valley, it's that Silicon Valley at its worst uh thinks it is God or that it can recreate God. >> Yeah, we see a lot of that. >> Uh, how how how would you guess that he feels about people sort of uh implying that AI is is alive? There were some comments at the event yesterday saying, you know, these systems mimic uh feelings like >> particularly particularly pointing out that uh Chris Ola or like Enthropic has written in the past that that they have detected like you know emotions within certain reasoning chains and then the pope said that these systems don't feel emotion in the same way. But I didn't see that much in congruity there because one is sort of a description of, you know, the flavor of a text that's being generated and the other one is like the real true emotion, I suppose. But how how did you process that? Like is there actually a divide or is there some more synthesis that can be drawn there? >> Sure. I think on the first I will say that I think Leo views this as a side issue truly in terms of you really curious about the practical first and foremost. Sure. But um what you're referring to I mean uh we know anthropic gathered 15 faith leaders um in March and asked the question is Claude a child of God. The very short answer from Catholicism from Christianity at large is that um the embiable dignity of the human person is unmeasurable. A a better way of putting it people always you hear that phrase uh the um the whole is greater than the sum of the parts. It's actually a Christian idea. the wholeness of what it means to be a human cannot be measured or recreated in a lab. Um it is a theological claim. It is a a religious claim. So I think the best way the church could understand it is that you can mimic a human being 99% perhaps 100%. But the fact that it wasn't brought to birth by God um and brought to birth by a human a human person first and foremost and created if you will in a lab I think that limits the possibility of it being divine. >> Jordy, what else stuck out to you? >> Uh what was how do you feel the church more broadly? uh sort of you know I thought I was you know seeing some of the the the clip of of Olaf talking about you know job loss and job displacement and economic disruption. I thought um I can imagine a lot of people in the church broadly were upset to have you know a representative of Silicon Valley there uh and and who who many I I don't know if this is the view but many would feel like is part of the problem at least when you look at um you know tech CEOs or lab cos specifically when they go and do interviews and historically when they've done interviews and they're saying like, you know, this is going to we think this is going to cause, you know, mass massive uh disruptions to the labor market. People look at the person, they think, you're doing this, like why don't you stop, right? Um, and uh, you know, we we don't need to talk about um, uh, maybe why it's why it's why it's worth doing, but uh, I'm curious what the kind of broader reactions to that kind of rhetoric are around job displacement because I would say the industry is like the ind industry is becoming like quite divided. I think that everyone generally agrees that there will be uh you know some uh serious evolution of certain jobs and and roles and things like that. Uh but a lot of people in the industry believe that there will be significant job creation as new companies get built and and entirely new roles emerge even if some roles and and jobs go away entirely. And of course we saw the same thing uh in the industrial revolution itself. I'll stay on Christopher Ola's remarks. I I wanted to step back very quickly uh Christopher Ola's presence there was on the result of really a 10-year effort by the Vatican to engage with Silicon Valley. And to be very blunt um that engagement was at times rebuffed uh by some not by others. uh Christopher was there because OpenAI more than any other company in Silicon Valley took these questions seriously and took the engagement of the Vatican seriously and I know for a fact uh that February dust up with the Pentagon um um and the it's the Vatican would argue at least officials of the Vatican would argue the uh the courage that Entropic showed in that um and that uh fiasco was the final was the final straw that made them the guys or or the Vatican. But very quickly, I thought Allah's remarks struck a lot of people in Rome and here in the United States as quite honest. I appreciated him saying that like we're not driven by these questions. In fact, we are driven by innovation. We are driven by profit. It was something of a it was the opposite of a pitch, you know, and I appreciated the honesty. In some ways, I saw someone arguing is actually a confession. He went to Rome and and asked for a confession. and he said, "Look, we have these shortcomings and we need outside institutions to be I don't know if referee is the right word. That's probably too strong a word, but advocates for for a for a human- centered um development of AI." >> Yeah. Um have you have you uh looked at uh uh who did we have uh who did we have on the show? Um uh Pat Gellzinger. Have you looked at any of his analyses of these different LLMs? He's benchmarked all the LLMs on uh on like how spiritual they are, how they how like how they map to uh different religious values and uh his sort of complaint is that the the LLMs are are uh overly agnostic or overly atheist in the training data perhaps because there's like a lot of Reddit in there maybe. Uh, and I'm wondering like uh if there's uh any perception of like the the the the training data like the actual products themselves uh misaligning with the views of the church. >> I would say so I would say the Catholic Church of the 14th is not looking for the uh an LLM to replace a priest or religious advice. And I think that he would have concern that people would go there first quite frankly. So I don't think he's most concerned about the bias. I think he's concerned. I mean, I think obviously Pope Leo is neither left nor right, but I think a lot of his concerns do on this really attack to what the left in the United States is saying. Um, I think that there's concern about bias in profiling, uh, bias in credit scores. He talked about that. I thought that was remarkable that he's talked about credit scores and mortgages, getting access to mortgages. I thought that was profound. So, I think that is more of his concern. We actually saw another study today that said that um when you asked um some LLMs to to um they compared like when you asked them to to compare religions, the Catholic Church uh got a nice review, a glowing review, so perhaps God's Catholic or not. But I don't think Leo cares as much about that stuff. I think he concern he's concerned more about quite frankly access to resources and and judgment calls about who gets something versus not and punishment or not. Those are really what I think overwhelms. Look, this document was long and he did a lot in it. But the thing that really kind of took most of like at least a lot of part of it, bigger portion of it was war. >> Yeah. uh can you help me understand uh his views on international governing bodies, international cooperation? A lot of the debates in artificial intelligence right now they get they sort of they they sort of run into uh problems where the different American companies sort of agree on something but then there's this boogeyman of international competition and if we don't do it, China will. And so we must continue to accelerate. And it feels like uh Pope Leo sort of gestured towards a view of international cooperation that could be the solution, but also there were some detractors who were worried about the negative outcomes of of that. And and I'm wondering like how you interpreted his uh his vision for international cooperation in the modern era. >> Sure. I think the first thing is obviously he's an American pope. Um but he is the pope of 1.4 billion Catholics. So of course he's a globalist. Of course he um is concerned. He puts global institutions um at at the forefront. He's not unfortunately to some uh chagrin not America first on these questions. Um I think that the critics uh of Leo are going to be disappointed because he he does believe in regulatory order. Um he does believe in international norms. He does believe in in governing societies. I mean, it's mo the most conservative pope we've had in the past 60 years. Pope at the 16th was very big on on the United Nations and equivalent organizations. Now, I think some in Silicon Valley might rightly argue that's naive. Um that those things don't work. But I would say that if for a practitioner um I think that what he would ask is at least allow the question of can we have more cooperation? um can we have more agreed upon constraint constraints and can we at least engage in this in in good order um he obviously um you all are profit run companies that listening today and that that that is the reality of it but I think he wants like I think he wants everyone to take to heart um what what can we do to ensure that what we're building is um for the common good of everyone um but I I very much think that JD Vance when he went to Europe and Paris in 2025 and he said, "Let's talk about innovation more and guardrails less." I think Leo's saying, "No, let's talk about guardrails as well." >> Oh, interesting. Okay. Uh, well, thank you so much for coming on the show and breaking down for us. >> Yeah, great to meet you. >> Anything else? >> I appreciate it. >> Have a great rest of your day. >> Thank you. We'll talk to you soon. Goodbye. >> Um, interesting. Uh, I am excited for more people in tech to digest the encyclical and see where all of this goes. Um, we have our next guest joining in just three minutes. Three minutes. We have time for one quick story. Uh, closing out the enhanced games, of course. Um, the next thing was that over the weekend, uh, Diary of a CEO host Steven Bartlett went viral for saying that >> Tyler, throw me throw me a beer. >> Yeah. So, this was a this is a funny clip. We can play this actual clip. Uh, Ross Ross Hendricks, a lot of people were not were not happy with this. Uh, the quote is it's uh from uh from a clipper says Steven Bartlett says a few glasses of wine ruined the next three days of his life. Let's play this clip. >> It's one of those areas where you don't understand the hidden cost until you really give it up for a while and and I think about my own relationship with drinking and I stopped drinking at 30 years old. I'm now 33 and I had just drank because I just drank. I'd never ran the experiment of just giving it up for a while and I and then like I don't know maybe I was at 31 I thought you know I'll have a drink again because now I could really AB test it. I'd had a year of not drinking decided to have a drink again. It ruined three days of my life. I had a couple of glasses of wine didn't get drunk. It ruined three days of my life because of the the domino effect it caused. So it meant that I got worse sleep that night and then because I got worse sleep that night. I ate more poorly the next day because my my dopamine system or whatever the cortisol system was all messed up >> and then I I podcasted worse. I didn't go to the gym the day after people did not like that I podcasted worse because I felt really bad. I then slept worse and I could track all of this on my hashtag ad hashtagsponsor #invest whatever. >> Yeah. And I was like, "Oh my god, >> I love that Chris is just chilling there. The perfect hidden domino effect that I must have been living with >> for my whole life. >> So, this is like a very non-controversial take that has been popular on podcasts for years really. Uh but it's but it's so pointed here and I think it uh I mean there's a bunch of interesting things. I mean a lot of people are just saying like, "Oh, you should just be able to drink and like it's gone too far with the the total abstinence culture. like you should be able to have a glass of wine and and be fine. If you're if you're completely knocked off of everything for 3 days after a couple glasses of wine, like you're not actually like, you know, strong and hearty and you like like you life will throw other problems at you and and much worse than three glasses of wine. You will lose sleep because your kid is sick and you will still be asked to perform. And so >> yeah, I think I think parents parents watching this certainly looked at it and thought If one if one night if one bad night's sleep doesn't allow you to work out for two days or throws you off so significantly, >> you probably shouldn't you probably shouldn't have kids because get ready for you know every other >> lot of crazy like life will throw all sorts of stuff at you. >> It was funny cuz when when we when we started doing the show and you saw like my various health habits, you used to joke like >> John would say, "I'm a junkyard dog. just eat everything and I just assume it's healthy and nourishing and I feel great. And you would joke that you would say if Jordy had a single inorganic blueberry, he would >> it would kill him. He would explode. He would explode instantly. The thoroughbred diet. >> Um so yeah, I I've certainly just, you know, >> battled that myself. Like the the the the point of being healthy is to be resilient. >> I mean, the funny thing is that we we we used to have Don Peran episodes where we would drink on the show and it actually did make us podcast worse. As silly as that sounds, like it was harder to maintain the flow of conversation and you'd think, oh, having a couple drinks, it probably loosens you up. Like, no, this is actually a performance. Like, even though podcasting is a silly job, like it is a job and you need to be on and another example. So, we we basically decided we decided early on to never take sick days. Yeah. >> Partially because we would >> we we spend so much time together like we're always if one of us gets sick, usually the other one gets sick. It's just part of the game. Uh and and think about moments where you just feel like completely terrible. Yeah. But because we don't take sick days, we're like, "Okay, we're gonna power through." And you end up still like we end up still having a fun time. We end up hopefully still having a good show. Um and uh and so yeah, I think I think this is this I I think we probably hit um I was I was talking with some friends yesterday and it and it it feels like alcohol is going to go the way of cigarettes where it's broadly >> established that it is very unhealthy >> but can still be quite enjoyable >> and uh will maintain some level of >> like cigars. Cigars are really >> No, but but I mean cigarettes are still widely considered >> Yeah, but cigarettes are so addictive that people either like smoke them all the time or not at all. Whereas I think a lot of people who do drink wine will have like a glass of wine on the weekends, whereas there's no one who's like, I have one cigarette a week. That's not like a thing. But people do that with cigars. They'll be like, oh yeah, I go. >> There's definitely people that are It's pretty rare though. It's pretty rare. Anyway, uh the the the last thing is that uh I I was I was fascinated by this fact that this went so viral because of this clip and uh Crypto Mickley, who is web 3 clipping at Counterparty TV, not Thread Guy, clipped this uh and I was interested in it because uh at first I was like, is this out of context? And uh this is sort of the full context from the actual show, but it does sort of change the context because this is obviously from a longer show. It's two people hanging out for an hour. They're talking about a lot of different things, but when the clip is introduced is like Steven Bartlett says a few glasses of wine ruined the next three days of his life. It's the most it's written like a press release, you know, it's like a statement and it's not necessarily what Steven would have put out as a press release. He wouldn't put it he wouldn't necessarily have done a blog with the title. >> Yeah. In the actual in the actual This is a guy that cares a lot about performance and he's basically admitting that he had a few glasses of wine and it and it threw him off. Yeah. And he's just trying to tell like a positive story of like Yeah. Just uh you know removing something, feeling healthier. It made him happy. I don't know. But it clearly uh it clearly triggered everyone because there's uh 24 million views on this and and 2,000 quote tweets. Uh, and Ian over at SYCOM, the team behind Huberman, uh, Ian is pulling up the chart of new podcasts by year. It's possible that drinking is correlated >> with podcast creation, people drinking >> because people are drinking podcasts. We should start a podcast. It actually peaked right in 2020 and this falls off a cliff right when drinking really fell off a cliff because of co too. So make it make sense. So where were all the podcasts launched in 2020? I guess is that is that where where where this line lines up because I guess during co a lot of people started shows and then it went back to sort of the baseline. I guess I I'm surprised. I'd like to know more about this data because it feels like there's been like an ongoing boom forever, but I guess not. Uh anyway, we have our next guest waiting in the waiting room. We have Sean Henry from Stored. He's the founder and CEO joining us today. Let's see if you can show him. Sean, how you doing? Good to be here. Thanks for having me, guys. >> Welcome to the show. Uh, >> very cool green screen in the background. >> Not not a green screen at all. If anyone goes by, this is this is real time. This is live. Uh, I uh I I'll blame all of my performance on my three glasses of wine from Friday or Saturday night. But >> there we go. >> Otherwise, >> there we go. >> Good. Great to see you. Been too long. You got some big news today. >> Yeah. What happened? For sure. John Jordy, good to be here. Thank you guys for having me. Well, we're announcing that store has raised $250 million at a $3 billion valuation. >> Congratulations. Thank you guys. Thank you. Uh really the power of the physical intelligence layer for commerce. We spent a decade building this at stored and we think that the scale, the vertical integration and the ability to apply robotics and AI to the massive data set we have is just transformational for for commerce and what we're enabling for our customers. So very proud to announce this round and thrilled to be here live sharing it with TBPN. >> So what's been the biggest uh growth driver? Obviously, you're expanding in your uh commerce market your offerings, but also uh is is e-commerce is commerce as a as a general category still growing? What are sort of the macro trends that are uh tailwinds for you? Yeah, if you look at our announcement, what you'll actually find is we put out a pretty public chart of revenue. And you'll find in our tweets that right around the time that AI came out about 6 months later we accelerated massively as a business which really is in part that we had spent 8 years to that point already building so much vertical integration of software from the time we're speaking to a consumer during the checkout saying order now get it on Thursday to the time we're orchestrating that network to the time we're executing it with software in a building like this across our network of nearly 100 facilities. And so when we took that vertical integration with the scale that we had maybe two years ago at that time powering about $5 billion of commerce today powering almost $17 billion of commerce. What we've been able to do is drive just faster deliveries, cheaper outcomes with all of that technology and with all of that scale combined. And so a lot of what we're using this new capital for is to keep expanding that scale. There's such a flywheel behind this business where as we get bigger, we're getting faster and cheaper to then also complete the front-end stack of software. That's been a big part of our growth the last few years is that we've built out that whole front-end consumer experience that's now interacting with tens of millions of consumers per year now that we power deliveries to over a fourth of US households. So, we're going to keep expanding that front-end software stack. And then the final big pillar of our growth is we're also announcing stored labs with this raise, which was a big part of why we raised so much capital, $250 million to apply AI and robotics to all of this realtime volume in the real physical world already running real time. And we've carved out an entire facility here in Atlanta just dedicated to testing next generation robotics and AI before we apply them and roll them out across our entire network >> as Oh, sorry, D. Yeah. What is uh what what are the different why nows that you're feeling in robotics specifically around you know in in fulfillment infrastructure? Is it like uh is it happening on the model side that that there's you know other neolabs just working on the intersection of AI and robotics all the way through you know uh you know uh new actuator technology come coming out of let's say China like what is is it and I imagine it's the combination of a bunch of factors that's creating the opportunity but what are you seeing why is now the right time to invest what sounds like you know nine figures into um your own robotics and AI products Yeah, there's really two why nows going on right now. One is why now for our business and one is why now for this investment in storage labs for our business more broadly. I think the why now comes to by 2020 consumers have been taught they wanted fast affordable deliveries and that was really what was driving commerce in today's world. Since then, for the last 5 years, brands of all sizes have fought to get that Amazon-like delivery on their own channels so that they can win and retain their consumer rather than, as one of our customers said in a quote for this round, they don't want to just be a skew on Amazon. They want to be a brand and own their channels and own those direct relationships. It's actually been a really hard five or 10 years for e-commerce when you take into account all the changes with Apple and Facebook and rising ad costs, then with tariffs, then with uh or first with COVID, then with tariffs and all of these kind of compounding challenges to where the why now for us is really that these brands have been beaten down. They've faced rising cost. They faced rising competition from Amazon, from Tik Tok shop, and more. all that are just disintermediating them with their customer and harming their unit economics. And so we want to give them those Unity economics on their own website. And we even saw 2 3 weeks ago Amazon themselves announced this kind of AWS for supply chain moment. Well, we don't see that as any different that Amazon is really just subleting some capacity in their network. What brands want is truly structurally different, which is independence. They want somebody who's not using their data against them, who is driving all the branding on their packaging, their tracking and more that keeps consumers coming back to them. But it was validating. The why now for robotics and stored labs is equally interesting which is that if you kind of look at a company like a Tesla let's say and you go to the the algorithm they often put hardware and automation last because first you have to nail the processes physically and the operational excellence around those processes. Then you have to nail the software to run those processes and kind of unify those two. And that's really what stored spent the last decade building. And then only once you've gotten every efficiency out of software, every efficiency out of process, then do you go hard code with hardware, which is physical, it's expensive, it's hard to undo. And that's really where I think stored time is perfectly. And that hardware is changing. The hard-coded robotics from yesterday are now the agentic robotics of tomorrow that can learn better, adapt better. already in this building for instance all of our cameras are equipped with AI that are telling us about productivity across the facility about safety issues about compliance issues that wasn't available a few years ago so when you take our vertically integrated software with then all this hardware and sensors and vision and how it's then feeding dynamic agentic robotics we're in this like fundamentally different paradigm in automation forward but you have to have the existing software and vertical integration to capture it >> how are you thinking about the different robotic opportunities? Like I think there's a lot of excitement about humanoid robots. We saw last week a demo of a robot sort of humanoid flipping over packages so that uh barcodes could be scanned. And when I'm in a manufacturing facility, I usually see much more purpose-built machines or robots for those specific tasks. if there's if there's a million boxes that just need to be tipped over, typically there will be a conveyor belt and some sort of device that just does that one task. And I'm wondering if you're seeing more energy being devoted to uh task specific robotic optimization or more generalist projects like what excites you? What is where's the next like couple years look like? >> Yeah, it's a great question and I think it's where we're headed which is more general. I think the task specific automation of the past is what's uh kind of causes issues because often times the task at hand changes. You implement that robot and 6 months later with a new skew variety, new production uh change, new consumer demand pattern, all of a sudden the the model you built that ROI off of is now fundamentally changed. And if your robot can't adapt to it, you've just wasted so much capital. And so we're very much focused on this kind of new generation of more agentic, more dynamic robotics. And a big challenge in the past was that you kind of either had a robot that moved the arms and could grab something or a separate robot like the KAS of the world that were kind of moving the legs and it was just shuffling something around the facility. So now you're entering this new paradigm where what could a humanoid do in a warehouse if you could move the top arms and the bottom legs at the same time and really see this new level of movement going on in a facility. But it's in part why we're so excited because our foundational insight when we began store beyond the kind of consumer trend and that every brand was going to need these Amazon capabilities was the reason brands can't do this is that traditionally physical logistics and logistics software and then the software that serves a brand and speaks to the consumer are all sold separately. and you're trying to figure out how to integrate all this together and tie it into the physical atoms moving out there in the physical world. And so our thesis was well if we build all of those together, the infrastructure, the operating software and the consumerf facing software, we will be the platform that can iterate off of these. And right now our biggest costs are essentially either decisions, labor or deliveries. And with how our decisions are going from ML to AI, we're getting faster and cheaper than our industry because of that proprietary software. With how robotics are going from hardcoded to agentic, we're getting faster and cheaper at a faster pace than the industry. And even things like dronebased delivery, it's such an awesome capability and incredible uh category of companies and what's happening there. But you still need inventory everywhere to be able to deliver from a drone which has a limited radius. And you need that front-end consumer experience software telling the consumer drone delivery is available. And storage is what controls that part of the stack that then extends out to then enable things like drones. So the shortest statement is we kind of see ourselves as the vertically integrated platform that can first take advantage of a lot of these emerging technologies because our industry is so far behind us. >> Talk about international expansion. Uh where are where are you live today? Where do you think you'll be in 12 to 18 months? Like what what what uh what international opportunities are exciting to you? >> Yeah. So, we're very large in the US, approaching 100 million packages a year to about a fourth of US households this year. >> Uh internationally, Canada's our next biggest market, followed by Europe and the UK. We're expanding with recent launches in both China and Australia and that's taking US brands internationally to say, "Hey, we can already ship your products globally to over 180 countries. We do that every single year." But what if you actually wanted to hold your inventory locally in those markets and deliver locally? So if you step back when you think of stored as saying we are the physical intelligence layer for commerce what that means is really we're trying to give all the physical infrastructure all the software tools all the robotics and all the AI that you need to sell anywhere and deliver to those consumers and so already today our platform is infused at every level with natural language AI where I only bring that up because one of the most fun questions we've seen brands asking is where should I expand globally based on where all consumers are already purchasing from. >> Yeah. Is China an underrated opportunity for independent brands? Like we were just reflecting on the fact that the Tesla Model Y is the bestselling electric car in China. Uh it's obviously an Americanmade, American developed vehicle, and I'm wondering if that's not on the top of anyone's mind, but is there some sort of opportunity there? >> I think you may be on to something. That's not necessarily why we expanded into China. uh we are very customer obsessed and so we tend to follow our customers globally and to your point we went with one of the fastest growing US brands who wanted to access consumers in China and expanded with them and so I think often times we think about the inverse which is hey if I launch a brand here my my product my IP or other is going to be quickly replicated internationally in markets like China well there may be the opposite which is the end consumer there may actually want that brand from other markets like the like the US. I think there's just this often underestimated fact of opening up more channels tends to decrease your CAC on your first channel cuz what we see is let's say a brand goes into a new marketplace, a new store, a new international market and therefore the audience just gets larger and larger and larger who's seen them at least once and so then your ad effectivity goes up and so your CAC organically continues to go down. >> Yeah, that makes a lot of sense. Well, congratulations on the fundraising update. Thank you so much for coming on the show and have a great rest of your day. >> Talk to you soon. Good to see you again until our next runin. >> See you later. Bye. >> Up next, we have Eric Reese. The author of Incorruptible: Why Good Companies Go Bad and How Great Companies Stay Great. Eric is in the waiting room. We'll bring him in in just a minute. Uh you probably know him from his first book, The Lean Startup, which focused on why successful successful companies drift. Uh this book is focused on why successful companies drift from their founding principles and how to prevent it. The lean startup uh was foundational to me when I came to Silicon Valley. I remember I went to a lean startup book event uh probably back in 2012. You spoke there and it was very inspiring as I was starting my first company. Uh and I took away from it just uh you know uh money is not infinite. Don't die. Don't burn all your money. But uh I mean maybe we could start there and sort of reset like what are the correct lessons that you think should endure from the lean startup and then we'll go into incorruptible and sort of uh all of the all of the evolution. But I'd love to >> I would just say like super >> incredibly influential on on my career and journey >> really like unlocked entrepreneurship for a lot of people because totally but perfect time where like it was you needed $20 million to be a business. >> Yeah. For me, for me as somebody who just grew up obsessed with startups, I'd be on TechCrunch every day. And all the startups that I thought were cool and crushing it were in Techrunch >> every, you know, 12 months raising all this money. And it feels like out of, you know, it feels like >> out of reach when you're a teenager and then you realize like, hey, the bookm capital is way less of a constraint than than you would think. So, thank you for that. >> Well, guys, thanks you. Thanks. First of all, congrats to you uh on the success. >> You know what's really held up? Like a lot of the techniques and the specific tactics from lean startup are a little dated now. I mean, you know, Groupon, it's a case study like it's it's it's old now. It came out in 2011. >> But I think the principles have held up really well. And especially if you think about like from a mega trends perspective, the book said that the world's going to get more and more and more uncertain. So, our ability to plan and forecast is going to get worse. I think we we think we nailed that one. and that the democratization of technology is going to mean that more and more and more people are going to be able to build faster, cheaper, better products. And so when you put those two things together, every industry that's been hit with a double whammy with those two things, lean startup holds up real well. >> Yeah. Uh do you think startups are getting leaner or less lean in the modern era? And what I mean is that uh I will see we we have folks on the show all all day. Oh, $200 million seed round doesn't feel lean. At the same time, we hear about the mythical one bill one person one billion dollar company. And although there's been some reporting that's been a little bit debunked on hasn't happened yet, it feels like it is becoming more attainable. You you can run run leaner even if you're just using SAS products, but also AI agents can do a lot of things. You can answer a lot of questions. You might have slightly lower legal bills just because you're a little bit sharper going into that negotiation. And so I'm wondering on the the net leanness, how how are you processing the modern era? >> Well, every time we have a mania or a bubble, you know, whatever you call it, right? The the situation goes biodal real fast and you have people who are struggling to raise money if they're and not in the favored category and then uh obviously the money is flowing ridiculous. What's funny is I've been at Lean Startup long enough that people periodically write these articles that are like such and such company proves that lean startup is over. >> Sure. >> And they always pick a company like Quibby. >> Okay. So it's like you know like you just never know what it's going to be the thing I I think fundamentally like using resources well is an eternal entrepreneurial virtue. So even the people that are overfunded a lot of them run into trouble because now you don't have that um that reality kind of barking at you all the time to make sure that you're actually building something that people want becomes easier and easier to delude yourself the more money you raise. The other the other kind of startup that's emerged is the is the is the lean startup that ends up raising a lot of capital but simply because they were lean and they were like really scrappy and so they grow super quickly. I'm thinking of like, you know, a turbo pumper, right? Uh our our friend's company where, you know, raised very little money. He's at a nine figure run rate right now, but extremely attractive to capital. >> But but but but his entire approach is like how do I maintain that scrainess even once I have a fortress balance sheet because that's what made the company great from the beginning. It's just like doing things that customers want that they'll pay for, you know, all these things. when it's so easy when you take in that level of money to lose that ethos. >> Sure. >> The thing that made it worth investing in in the first place. >> And I think it's interesting like I know quite a few companies that like what you're describing where the fundraising was done for some other reason than for the money. In fact, I know a bunch of founders who brag to me raised this money and never spent it. >> Yeah. >> Because it can it can make sense to have a fortress balance sheet. To me, the real question is not about like how big or or small is the organization, how much money was they raised, but how much control do the people who are locked into that mission actually have over what happens next. And sometimes when you raise too much money, especially too much money too early, you think, you know, you ring the gong and you're really proud and that's great, you know, like it's okay, that's really fun, but then like have you actually Yeah. or you I get the air hard, you guys get the sound effects and like sometime you know this you know the media environment like steadily building a product that people love day in day out like >> that's not the sexiest story and so sometimes you know we get we get distracted by all these other things that that take us away from the one and only one thing that truly matters which is can you build a great product build a great company. >> Yeah. Yeah. I mean, there there are so many uh and a lot of the financial reporting sort of misses the changes of control that happen. Like there might be a company that's raised a $1 million series C and then a $5 million series A and there's two VCs on the board and one founder and then there might be five founders on the board and VCs are stuffing $und00 million checks and they can't even get a board seat because there's so much demand. And which one tells you more about the future of that company potentially the governance side? H how are you grappling with the just governance in the modern era there? I mean I feel like that's a lot of what this book is about. There's so many different paths. There's you know PBC's and and really diffuse lots of you know lots of co-founders having even stakes and then you have the the SpaceX AI immense control in a single founder. uh both can produce you know fantastic products and good financial outcomes but like how should we interpret all the different roads that are available to founders these days >> it's really confusing that's actually part of the reason I wrote the book book is meant to blueprint to actually show a new better way forward like the extreme founder control has its problems you know psychologists call it hubris syndrome not to name not to name check any particular founders but you know that can cause some issues but also investor dominated companies really underperform uh precisely because we have this financial system that pull has this gravitational force that pulls companies down into mediocrity or worse. And in the book I document like over and over and over again, we we reenact the parable of the the goose that laid the golden egg and just stab it right through the heart when we by removing the thing that actually made it worth investing in in the first place. How many times have you gone to a restaurant and you like look on your phone, you're like take one bite and you're like, "Did private equity buy this restaurant? >> It tastes disgusting." >> No, I have the best I have the best example of this. My favorite my favorite hotel in the world was bought by private equity and one of the things that every guest would talk about didn't matter at all. It's just like barely contributed to the cost of like, you know, having a guest. There was that every night the hotel would walk around and they would leave a warm chocolate chip cookie and milk for each guest and literally and and private equity bought the hotel which only had like something like 20 something keys and they immediately removed the free chocolate chip cookie with milk at night thing. And I just it was so such a funny thing to like take out but is exactly the kind of thing when you met you transitioning from you know this like founder you know family operated business to um investorowned. >> Yeah. What's sad about it is we've built an economy where people are routinely rewarded for cutting costs >> but never held accountable for the downstream brand and quality consequences of that. So like on the balance sheet, getting rid of the cookie is immediate ROI positive. >> Yeah. And you can justify it. You can justify it because well the cookie is still on the menu so people want the cookie. >> Why do we have to get >> We looked at the data. We looked at the data. A lot of people don't even eat the cookie, right? And and so it doesn't matter. And of course, >> no, you got it right. Like how is it possible that the capital structure of a company has a flavor? >> Like you can literally taste it and because like notice how when you said that crab egg took over your hotel, we're all ready to give you condolences, right? Like you could in theory you might be like well having those resources made it better right go that's great and now they're going to no no one ever feels that way and everywhere I go you know I've been doing this book tour in the new book people are coming up to me to be like I know that story yes that happened to me and they've named like 20 different restaurants to me hotels like so many service products where and again it's not about private equity per se it's that we've built this pervasive force that is just dragging companies down so if we're going to get now get to the governance question and I know for founders listening it's like oh god governance so boring but important >> as I say in the book if you don't get the governance of a company right no other decision you make will matter in the long run because you won't be the one making it >> so we have to figure out how do we create that like incredible alignment you've seen it in missiondriven companies right where everyone's on the same page and how do we protect that special thing from outside pressure and when you put those two things together we can create what I call missionont controlled companies that cannot be corrupted by this temptation >> yeah uh there's a bunch of different uh things that I want to like click through to get to interrogate that. Uh the first is probably quarterly results, quarterly earnings. Uh I've seen proposals to go to uh every six months reporting and it seems like okay that would align public companies with like the CEO could think for six months instead of three months and take bigger risks and and and uh think longer term. That feels very good. At the same time, it feels like uh the the the rug that you sweep things under is potentially just getting twice as large or the the closet where you hide the bodies is getting twice as big. Um and I'm wondering is there attention there? Am I wrong to think that there's attention there? uh because a lot of a lot of like I I I I think about you know problems in the public markets with long-term value creation, long-term alignment, but then I also think about uh the the transparency that comes with being public, the regulation that comes with being public, the access to public investors, retail investors that can participate in a company before it's a trillion dollars if it's going to be a great company. So how how are you dealing with those tensions if there are tensions? >> Yeah. Well, okay. First of all, the tension is completely real. Okay. And the thing you got to know is is long-term stock exchange, the company that I founded, >> um, is the one who filed the petition last year to the SEC to switch from quarterly to the Okay, >> so obviously I have a I have a a strong strong view about it. Yeah. >> Oh, nailed it. >> Exactly. So, uh, and what's funny about it is, okay, so first of all, we have to understand the scale of the problem. You're not going to believe this, but we have, >> by the way, sorry. Sorry. Before we continue, you should have named it like, you know, Eric's Eric's law or something like that. You're you're not getting enough credit. You're not getting enough credit for this. >> That's Listen, the memes and everything, that's your department. Okay. I just I just Right. >> Okay. >> So, okay. But you got to understand the magnitude of this problem is insane. >> Yeah. If you look at um other countries, there's these natural experiments where certain countries have have switched from semiannual to quarterly reporting or vice versa and they happen to do it in such a way that not every company changed at the same time and it was random who did which. >> So we actually know the valuation consequences of quarterly reporting and it's roughly a 5% loss of total equity value. >> Wow. >> Companies are 5% less valuable interesting >> when they report quarterly than semiannual. So the academic research on this is pretty good and the magnitude of the cost. We're talking about so much so many billions of dollars of loss value. >> It's not because the the like you know effort to do a quarterly report is expensive although it is expensive and annoying. Rather when people report quarterly they start to run the company for the quarterly report. So companies no longer make products. They start to view the quarterly report as the product which means they're basically meme factories. what do I have to do to generate the report that will get me what I want? Now, getting rid of quarterly reporting just by itself, I don't think is a very good idea, and we'll see what the SEC ultimately decides to do. I think we should replace quarterly reporting with a better, like more wholesome disclosure project where long-term investors can actually find out what the f is going on at the companies they invest in, where today companies are strongly incentivized to give out as little information as possible. But that's kind of broken the partnership we need between long-term companies and long-term investors. of course part of why we we recreated the exchange in the first place. >> Yeah. uh talk about uh public benefit corporations and how uh incentive alignment might play out like in in in the longer term when there is you know when you get to a stage of a company that's a lot more like Apple than a founder run like anthropic is a unique example with set of co-founders but uh that like the the normal fortune 500 company has a leader at the top that might have 1% equity uh and a board seat but there is a chairman of the board there's a board of directors it's much less controlled. But in that scenario, they are reporting to shareholders and they have a fiduciary duty to shareholders. Uh if you know you have a company that's you know broadly held and has diversified board and diversified ownership structure but is a PBC. H how does that play out? Like what are they doing differently? Is it that the CEO has two different hats and they're mentally taking these on and off throughout as they're decision-m or or what is how does that actually play out? >> Yeah, that would be too hard. The so-called double bottom line, triple bottom line, I think has not worked out very well precisely because it leaves CEOs really confused. Okay, you want to be multi-holder? Great. Customers want lower prices but employees want higher wages. Now what? >> So it kind of leads to compromise. >> Yeah. >> But what's interesting PBC is actually not that new. >> Okay. For the vast majority of time, there have been joint stock corporations on this planet. It was considered obvious by everybody that they should be incorporated to do a specific thing >> when they're just trying to make money for themselves. They wind up hollowing themselves out. That's what makes them dangerous. It was only in the 1980s that the idea of so-called shareholder primacy came into effect. So, if you like walk by your local park, you will see trees that are older than this idea. This is not some like pillar of ancient pillar of capitalism. >> And in the book, I make the case for first of all, we got to get rid of shareholder primacy. I think it's a terrible idea. But the question is kind of like attacking it is easy because the data is so good about all these best practices being so bad. The issue is what do we replace it with? What is mission primacy look like? And I think the key to that is to understand that being a for-profit company is actually great. >> Making a profit is actually about making the world a better place. That's literally the definition of it. It's like a positive margin transformation. So in the book I argue and I feel weird doing it in the same day that like Pope Leo made this same point in way in way better fashion you know hundreds of pages I only mentioned it in passing but like literally to make a profit >> is to maximize human flourishing that's what it means. >> So now coming back to the PBC all a PBC does is give the CEO and the board the legal cover to pursue long-term value creation >> in the face of hostile investors. So if you go there and say, "Listen, >> I want to sell the company to Philip Morris because they're willing to pay a dollar more per share than it's worth." You need the tool to be like, "No, that's ridiculous. Of course, we're not doing that." And that's what PBC allows you to do. >> Interesting. Um, >> uh, what what do you think are some of the most underappreciated companies in history that had that you feel like had mission primacy? >> Yeah. Yeah. Obviously, these are profiled in great deal in the in the book. And what's really interesting is if you talk to people about corruption and say like why does companies go to, you know, go to bleep after they get big or whatever, most people be like, "It's inevitable. It's human nature. It's companies get old, they get big, there's a lot of money involved, blah blah blah." >> But those same people, if you're like, "Are there any companies you trust?" You're like, "Man, I love Costco." >> Yeah. >> It's like interesting. Like, how come? But I thought it was inevitable. Costco's a $400 billion public company. Oh, yeah. Well, they're the exception. You're like, "Well, what about Patagonia? You got a Vanguard mutual fund. What about, you know, John Lewis partnership or you ever eat a Hershey's chocolate bar? You ever taken a Novaortis medication? Like there's all these weird exceptions, many of which are decades or even like more than 100 years old. >> And what's interesting to me is if you take that whole category of companies as a data set and say, what do they have in common? >> Every single one of them violates pretty much all of today's so-called best practices of how companies are supposed to be structured, built, and run. So I think we actually have really good data that this is not some abstract thing. So like so for example when the founders of anthropic left open AI so what is that like three or four open AI crises ago? I can't track but anyway it's like hard for me to keep track but anyways like it's been it's been a rough you know it's been a rocky road. >> Um when they left like I was one of the people that they talked to setting up their governance structure and not only and again I am not taking credit okay don't do the meme thing okay I'm not taking credit for their success. Obviously, I played only a very big. >> They wanted to call it the Eric PBC, but you said >> I and I had to talk them out. I was like, "Guys, please, please, no, no, I don't, you know, they were looking for an idea and you told them like, I think you should work on AI." That's what happened. >> Yeah. Yeah. They were like, maybe thinking of pivoting out because they left open. They're like, "Maybe we should give up on AI." >> They were going to do protein shakes or they were going to do an energy drink and you were like, I >> don't do this. I just I just talked to I said about Dra CEO. Don't get me in trouble here. People going to click this out of context. Give me >> Okay. Well, listen. So I'm not for the record. I am not taking credit for their success, nor am I trying to talk smack about opening. I know you guys love them. >> The issue, but the specific thing I think is really interesting is because they were really worried about this specific issue when I gave them my typical litany of like founder loss of control horror stories. >> They could see how bad that would be. >> And in fact, it's funny talking about about the about the pope. I was at a event at the Vatican last year talking about AI governance. And I was on this panel with every major AI company, OpenAI, Anthropic, Coher, Palanteer, Google, Meta, everyone on the one panel together, and me for some reason. And I'm looking down this row and I'm like, "Oh my god, not a single one of these companies has standard governance. >> They all consider it to be too dangerous." Interesting. >> They got to have somebody playing the role of what's called the mission guardian. Yeah. But anthropic to their great credit I think did not want it to be the founders personally holding that >> uh that special responsibility because it's stressful as >> know many founders who are trapped in this situation. >> So they created something called the long-term benefit trust >> which is like a multibranch government right? So you have the the the for-profit PPC and then you have the board of directors accountable to a second entity, this this outside trust. And the data shows that companies with that structure are something like five times more likely to live to year 50 and have like way better long-term value creation metrics too. So again, I think we have the evidence that there are these better structures. Yet most founders are never given this as an option and by the time they find out about it, it's too late. They've already lost control. I want to talk about >> I think uh one interesting thing is is uh if we move to by annual reporting there's going to be a lot of work accountants lawyers are going to have less work but you're creating a new struct you know these much you know these complicated structures they can just shift their attention to working on mission >> mission aligned companies >> maybe maybe uh yeah sorry >> that wouldn't be that bad would it I think like compared to what they're working on now I think No, no. I I I'm I'm I'm sort of joking, but at the same time, I think it would be better much better use of their time. >> I I want to talk about Mandreon. Is that how you pronounce it? >> Sure. >> I I'd like you to introduce it though first for those who aren't familiar. And then I have some questions about uh you know, where we go, what lessons we learn from it. But first, uh how do you understand that? >> See, I don't get to talk about Mandrean very often. So, I know you did your homework and I just A+. >> Awesome. >> Um okay. So, so it's funny. talking about the day of the pope's encyclical. So, so a Catholic priest >> Yeah. >> walked into the war torn Basque region uh after the Spanish Civil War. So, this is not the setup for a joke. It's not like a priest walks into a bar. He actually went there >> um and instead of like preaching, you know, um just uh comforting people who are being devastated, he had this vision for a new kind of economic reality where workers would be empowered to learn a trade and to own and to control their own destiny. And to make a very long story short, he started to create this network of worker cooperatives >> um where the workers themselves own the means of production and they build all kinds. They started with like industrial equipment and now make all kinds of stuff. And and if you zoom out today, Mandreon is this gigantic company that employs 90,000 people in Europe, one of Spain's largest companies, makes elevators and and they have a a grocery store chain and all kind like if you look at it from the outside, you say, "Oh, that's like a fully diversified industrial conglomerate." Makes sense. Like making a lot of money that's perfectly sensible. But if you zoom in, there's nothing about Mandreon that actually resembles a typical for-profit corporation at all. It is a network of I think 80 or 90 of these independent worker cooperatives that work together. They have like a a congress where they send representatives and they self-govern and any of the cooperatives can leave the network if they don't get benefit from the central services that it provides. >> So this is an example of what I call a mission locked constellation >> which is a a set of entities that when you zoom out the customer, the investor, anyone from the outside perceives it as one thing >> but it's actually uh many things. Now be honest. If I pitched you this is my business plan that I was going to create 90,000 person network of 80 like if I pitched it to you wouldn't you say it was impossible? >> Um well that's my question. >> Should never work. >> Uh yeah I >> I would I would say it's not that it could never work. It would just be extremely hard to reproduce. Like I think if you got a really talented group of people and you tried to rebuild something like this, even knowing all of the mistakes and challenges that this last one had, it would still be very difficult and probably end in failure. But >> right, so it's clearly possible. >> Well, it's clear the fact that it exists obviously proves that it's possible, but I think most people when they're thinking about how to start a company like just have a very narrow view of what can be done. cooperives. I don't have the stat in front of me like millions of people worldwide. Like this is not some like weirdo niche thing. It's actually like it's a tool that we can use. Now in the book I try to go through all the different ways you can create mission lock and this is >> did a huge Vanguard episode like REI is well known. >> I guess my I guess my question with it is that uh so I I I agree with you like you got me. If if somebody came to me and pitched me that I'd be like ah that's too complicated. that doesn't pattern match to like the usual series A like I don't I don't get it. I'm out. Right. Uh but is that why we don't have an American Mandreon in the modern era? You know, like like why is there no uh why aren't there as many like you know uh Mandreon style counterparts to the monolithic traditional founder companies? Because the I I've heard people pitch this is like America would be better if we had more co-opworked like Mandreon style entities and and and and my initial push back has always been like well it's a free country. Like I don't I don't know that that's illegal. I think it's legal. I think you could just go do it if you wanted to. So is it that people don't want to or is it that like Jeff Bezos is secretly out there like killing people who want to try to start the Mandreon of Amazon and like compete with him? Like what's going on? That's a that's a really good question and like so for example so credit unions credit unions are the closest thing we have in the US that serves like I think it's like 40% of American households have an account at a credit union so they're pretty big they're all not you know they're not for-profit member owned financial institutions and the fact that they exist holds big banks accountable in really interesting ways so that's like >> maybe the closest >> the the point that I was trying to make in this book is not so much that we need to copy Mandreon or any particular company >> but rather collectively these what are called alternative structures control something like 5% of world GDP. >> Yeah. >> So, I don't try to convince anybody to do anything. But for founders that want to attempt something like this, most of them have never been given the permission to even try. Like you talk to most lawyers, bankers, like, and you just say, "I'm thinking about doing this." They're always like, "Oh, honey, that's so sweet that you're concerned about mission." >> How about a Delaware CRP with a safe? >> Why don't you worry about getting your first customer? >> Yeah. >> Yeah. Right. Exactly. Just go focus on this other stuff. But one of the most important ideas in the book is this principle I call it's always too early until it's too late. >> So what happens is you talk to all these advisers and like oh it's too early. Oh, they're so condescending about it too. Like don't worry about that. Just get and then one day I've actually been in the room where the CEO is like talking to their CFO and bankers and GC and everybody there and being like hey whatever happened to that like mission protective provision thing that Eric was talking about. Did we ever get around to doing that? And they're like oh you were serious about that? >> Yeah I told you to do it. You said it was too early. like, "Yeah, now it's too late. >> It's too late. >> When was it the right time?" Like, >> that's wild. >> Yeah, you should have said something, man. Like, I did say. So, I just feel like that has become the way that this is done. And it's why so many founders lose control. >> Mhm. >> Japanese katsus alternative? Do they fit in the category of alternative structures? Are they good? Are they bad? Like, I only know about them from the very highest level. Tell me. I imagine you've interrogated them more. Uh, do they fit in? And and is big tech emerging into a katu? Like Google owns Anthropic and SpaceX and and Microsoft owns Open AI like we're sort of maybe walking. Yeah, we're maybe walking our way into a Katu. I don't know. Uh but >> let's see. Let's see after the financial engineering recedes. >> Yeah. >> Yeah. I I got into I originally got into all this from studying Toyota. Remember lean startup comes from lean manufacturing. >> Yep. >> And it's really funny. Yeah, I can remember when I first was going around just like when we met in 2012 talking about lean startup, people would sometimes be like, "Hey, you're telling us to create the next Toyota, but you're also taking telling us to build a ventureback company and take it public." >> Yeah. >> Like WTF, like I thought public markets are super short-term, but if you read any books about Toyota, they're super long-term. So, I actually like spent a lot of time on that question of like, have we just grandfathered Toyota into the modern economy? But even when I was in Japan, I remember people talking to me about how we don't even create them anymore. >> Yeah. like we have these legacy companies that have this really unique cool structure >> that are kind of a hybrid of public and family run. Like it's a little bit in between both. I think if you look at the data, these structures only work if the company in question has a really strong ethos to accomplish something other than making money. >> That really is like that's what you see like but that's what unites everybody from like these like really progressive companies we've been talking about to Elon to everybody. If you have a larger vision that is long-term in nature that is like trying to to whether whether it's something really lofty like I want to fix climate change or I want to go multilanetary or something really simple like I just want to create highquality products. No matter what it is if you have that vision you are a business revolutionary whether you know it or not whether you admit it or not because the economic system we have has been designed to destroy these companies to to suck the marrow out of them because they're too weak to stand up for themselves. So if you look at the historical examples where they're talking about Mandreon or the Caretsu or all these different structures like they're only good if the thing they're protecting is good. >> So the question for me is like as founders as investors as leaders as board members like how can we create more and more and more of these companies that have a real long-term mission that are what I call mission driven not just like mission hopeful. >> And when you do that you see this like really counterintuitive economic benefits that you get. So it's like you also get moral and and ethical benefits too, you know, like but that's not even really the reason to do it. You can do it just on the basis of the economic argument alone. >> Do you think that AI will force companies where it was otherwise maybe too late to maybe over time, you know, sort of massively sort of rework any of any of their corporate structures. I mean the example I'm thinking of that is notable recently is Samsung had 48,000 workers basically say like give us a much greater share of you know AIdriven profits or we're not going to work anymore and started a you know pretty big negotiation. I could see over time that happening at at more companies specifically um ones that are you know you know facing uh disruption due to due to artificial intelligence. >> Yeah. There's two things I think that that are are pushing in that direction. The first is the data on employee ownership creating commercial advantage is actually really strong. >> So I didn't know this. I I was always a big, you know, everyone in Silicon Valley like we're into employee ownership, but I didn't know it was like an ideological thing. I thought it was just good good practice, especially we have really good data. There was a big meta study of like 55,000 companies with various levels of um employee ownership and they found that employee ownership exhibits dose response like 10% ownership is better than zero, 50% is better than 10, 100% is better than 50. Not just in terms of employee welfare, but in terms of commercial success of the company, revenue growth, stuff like that. The second thing is I really think AI is going to make collective action problems like very different very different than it was before. So for example an old Toyota production system piece of wisdom was that if you're doing a lean transformation taking cost out of a business it's not ethical nor is it effective to ask the workers themselves to contribute to their own firing. Like nobody wants that. So so they're going to sabotage the effort but also it's just not right. You're it's just fundamentally not right. should take the savings you're getting from whatever the thing is and use it to grow the business. Like if the all these CEOs who are like like I'm getting a hard on for laying people off using AI, like if they were serious about how powerful they think AI is, they'd be trying to use it to gain competitive advantage. Like I I call BS on that whole thing. >> So I think you're going to see a lot of a lot of companies who who actually sincerely believe in this possibility realize that we have to enlist our employees in it. This is existential for our business. We're going out of business if we don't do it. We need to be allies with labor to get it done together. I think that alliance is going to be far more powerful than what we currently teach the way we teach leadership today, which is this very zero- sum game thing. What was called shareholder primacy is really the idea that companies should treat their employees and their customers like a resource to be mined. >> Yeah. >> One of my favorite quotes in the book is, if you'll indulge me, there's a Wall Street analyst that was criticizing Costco. He said something like Costco takes money that rightfully belongs to shareholders and instead invests it in improving the customer experience. Like that's supposed to be a criticism. Like what are we doing here? >> That's how you get dollar. >> My favorite my favorite uh bit in here from Costco is I I'd heard this quote before. I thought it was just a meme, but uh from Costco CEO Jim uh is it Sagal? Sol. Yeah, >> Sagal. If you if you raise the effing hot dog price, I will kill you. Figure it out to then CEO Craig Gelanick in in 2008. I always I've seen that quote before. I thought it was just a joke, but I guess he actually said it, which is remarkable. >> No, he actually said it. And in fact, he said that and another quote, which is he said that um if if Costco raised the price of a of a dollar bottle of ketchup by 3 cents, they would sell the exact same number of ketchup, right? Like no one would notice. >> They did that across the whole store. 3% across the board raising prices. They would increase their net income by 50%. >> And not lose any sales. >> Yeah. >> So why don't they? He says it's like the business equivalent of taking heroin. >> You do it once and then you got to do it again and again and again. Next thing you know, you're not the low price leader. Low price are the are the easy way. that quote and the hot dog quote hard to store. >> Yeah, >> there are memes online and I was like so worried that I was going to quote him incorrectly that I actually contacted Costco PR and they put me on the phone with I was so nice of them. They put me on the phone with him. I was like is it did is this really true? Did this really happen? Confirmed it to me. >> He confirmed it to me personally. So yeah, I think this like very distinctive countercultural way that they have run that company now for 40 years. the $150 hot dog and everything. Like what's interesting to me is when I tell people that story about the hot dog, nobody ever says like, "How come the COO was trying to raise the price?" Cuz of course he was. Like we've all been trained that you can you if you can get away with screwing people over, you always do it no matter what. You raise margins. Margins are a source of strength. But Costco is I think built on a very different philosophy which is that margins can be a source of weakness. >> Jeff Bezos understood it. He used to always say your margin is my opportunity. So when you are too you're making too much money when you are being too extractive you're actually harming your competitive position in the long run. And the fact that we're consistently incentivizing that all across our economy is I think a bit of a travesty. Uh there was a recent story Everlane was acquired by Sheen. Everlane you know darling of Silicon Valley you know raised a bunch of venture very strong mission ultimately to get swallowed up by the beast that it sought to displace. Uh Michael uh the founder is buddy of mine I he seems very fired up. There was a leak earlier today that he's working on something new in apparel. How would what what is your what is your kind of general advice to somebody that wants a mission a company to have mission primacy? Like what is what is kind of the there's no Stripe Atlas equivalent today? You can't just go press a button and make one of these. But how does somebody get started? >> I'm working on it. I'm working on it obviously. >> Yeah. >> Check out the book. The book has a QR code actually has a really detailed implementation guide and we have like an incorruptible term sheet. all kinds of doc like legal docs the whole thing if you want to uh for those that want to do that but but for for your friend and for so many people who've been through this I've personally counseledled I can't tell you how many missiondriven founders who get betrayed the company gets destroyed they get ousted whatever and then you talk to them afterwards I I just had this conversation with Whole Foods John Mackey uh I I tell a bunch of stories in the book of people who've been through this and you ask them about it and they really take it personally they're like I failed this happened to me. I should have I didn't trust the right people. I tell I tell tell a story in the book of a founder who who on their deathbed was like I just didn't trust the right people. Put the wrong people on my board. We personalize it which means we keep the structural causes invisible. We don't see how it's not personal. This is a force that is dragging us down. So I tell the story even of a really close friend of mine, great entrepreneur who was just tragically ousted by his employees onto a new mission-driven company. I remember asking him, "Dude, on the new company, what are you doing differently by way of governance?" And he was like, like what? It didn't even occur to him that there was like any possible any possibility that the new company could have a different outcome. So for your friend, there's two things we got to do. Okay, just two. One is what I call the path of ethos. We have to build the company operationally to stand for something. The great Saul Price, the father of modern retail, the the progenitor behind Costco, he called this being a fiduciary to the customer. Who would you rather die than betray? Write it down. Make that the operating system of the company in its management structure, in its business model, and its culture. The second thing we have to do is what I call the path of integrity. We have to create companies that are capable of making and keeping promises like that have structural integrity. So they don't give in to inner temptation. They cannot be bullied from the outside. You try to buy them, they can say, "F you." If you try to uh incentivize them to do some bad things, they have the structural strength to resist. And that's where things like PPC, board mission pledge, the long-term benefit trust, like that's where many of the kind of so-called governance structural best practices that we currently are taught have to go by the wayside. When you have that special formula of ethos plus integrity, you have a company that is, wait for it, incorruptible. >> No, this is great. This is great timing. I was >> I was uh I was talking to a founder yesterday. I was giving them advice and uh they're they're with a with an idea that a lot of people have raised venture to do and the same way Bezos talks about your margin is is it's uh my opportunity. I was telling this founder like your competitors raising venture is your opportunity because they're going to have to do a bunch of things that aren't really aligned to what would make the product great for customers or what would make the the product that you really want. And what I like about this approach is setting things up in a way that uh a lot of the problems that you're talking about are problems where you have other shareholders and there's other people that have a stake in what you're doing. And that's most businesses will end up that way over time. But if you can find a way to create a corporate structure that mimics the found this insane mission-driven founder and allow that that that you know the the entity to maintain that even after the founder is gone. this sort of permanent structure. I think it will be incredibly powerful. So, thank you for coming on. >> No, thank you. Thank you for saying that. I will say, you know, obviously you've heard I believe in feedback. I I really like it. It's kind of my thing. Anyway, so I had a lot of people test read the book. You know, maybe 600 people generated something like 10,000 comments. So, like I really I eat my own dog food. Yeah. >> Yeah. A lot. >> And the thing I'm the most proud of of that set of people is I'm I think we're up to five or six of them now. You know, it's like well coming up on 1% of the people who read the book so far have reached out to me to say that they had a new business idea >> that they wouldn't have even considered before >> because they were able to use this framework to see new opportunities to make a profit that they they just were blind to before. And a bunch of them have that just the thing you were talking about a second ago like that there's some category where everybody hates all the vendors >> cuz they're all like they're all a-holes you know they're all extractive jur what if we had a c what if we had a company in that cate that competed by being trustworthy to companies you're seeing that obviously in AI but you see that in so many categories where it's like oh >> that's actually very simple to make a business like that if you take this idea seriously from the beginning so anyway very excited to be here on launch day with you guys. What else? What else you got TV to get the word out about? >> Congratulations for coming to the show. >> Super exciting to you, too. >> Hopefully we can talk soon. We'll see you. >> Goodbye. >> Uh, Alex Itala has some news. We're seeing a Cambrian explosion of AI models and it's happening on Open Router. The future of AI is neurodeiversity agents choosing the most cost-effective model provider tool for the task. >> He's back. >> And he's back. Welcome to the show. How are you doing? >> Doing well. Thanks for having me back. >> You've been uh very busy. >> Been busy. Give us the news. >> What happened? >> So, we actually raised this round back in February. Um but we uh we did from Capital G as the lead and our existing investors participating and a lot of strategics uh from from different uh corporate VCs participating too like Nvidia, Service Now, Data Bricks and a bunch more. >> Um and we're growing the team. So you know we not only do we believe in neurodeiversity as a good thing that every company will need to leverage but also uh like neurodiversity within our team as well. So if you're smart and you are get things done and you are uh you think in a unique way we want you. >> How much did you raise? We raised 113 million. Now, let's talk about ROI. You're obviously pushing tons of tokens. People need to measure the ROI on these tokens. How have you been processing like the next KPI? Like there's this back and forth with Uber. I'm sure you've seen this where they started token maxing. They're pushing tons of tokens through. Now they got to see what did we get done? How how are you actually talking to people about cost optimization, ROI? Like what are you hearing around the the value that people get? Where are the best use cases? What what are the places where you're telling people, hey, uh you might have gone too far on the token maxing that way. >> Yeah, there's a really important trend that we're observing among all of our customers. Sometimes you just don't need Uber black, but you're you're all the time. just don't know what else to do. There was a time where everybody was in the pre market fit phase for leveraging AI for their needs and now many companies are past that phase. >> Um and they're realizing that most of their opex is going to inference and that's pretty insane. That means that if you make cost cutting decisions and if you optimize your model usage that directly flows to your margin and now the business is directly more efficient. This is not you know like optimizing your data dog bill. >> Sure. >> So uh so I think the future is going to be multimodel for many reasons and that's that's a big one today and it's a big one this this this coming year. Um and there are a lot of companies who are also just doing one task that should be broken up into multiple tasks. >> Yes. served by specific lowerc cost models and they're getting massive cost savings out of it in addition to improving their recall and accuracy. >> Yeah. So it's really important to do and and then down the road you know another use case will be getting better than state-of-the-art performance by using multiple models >> and that's something we're also helping our customers with >> like mixture of models like ask the same question in multiple models synthesize the results >> orchestrating multiple models that were trained by completely different companies >> to do something for you and then using a judge or some other set of huristics to select the best result or combine them together. Mhm. Can you talk about uh opportunities or entrepreneurs or small operations that are bringing compute to bear on open router? I saw uh George Ho talking about he found some building that had a bunch of power. He was going to rack a bunch of Nvidia GPUs in there and sell the tokens on open router. Like what what what does a I think everyone's familiar with what the hyperscalers are doing. people are familiar with that NeoClouds are doing, but how diverse is the compute supply on open router these days? What is a small uh what does a small shop look like in the modern era? >> Good question. Yeah, a lot of people think that basically everybody's just using one model and that's completely untrue. >> Yeah. >> Um we have about 350 models that are being used by hundreds of active users per day. >> Yeah. And uh while and the token diversity is growing over time. If you go to our rankings page, we have a chart that just shows the graph getting more and more diverse. >> We're doing about 12 trillion tokens per month now. >> So the there there's diversity on model selection, but there's also a ton of diversity in providers for specific models. Um it used to be the case that like being a provider is Yeah. just really hard because how do you get distribution? Yeah. >> Um, even if you decide to specialize in like very very very uh lowcost but but slow inference. So stuff that's like optimized for batch agented workloads. >> Sure. >> Um, how are people going to discover it? So we're building all these SKUs in the marketplace so that providers can find a market really really quickly. And so we become the the goto market strategy for the the longtail of providers. We've built an enormous number of tools to do quality checks and rigorously test these providers on the SKUs that they aim to support and then we we send them back all this reporting so they can really easily optimize their inference and get better and better over time. predictions uh for American open source. I think American open source will become a mixture of taking existing models. Some of them uh some of them might be foreign might be Chinese and improving them and then creating a like new models from a new foundation. And I I it's it's hard to make a prediction on it. It remains to be seen because we're just seeing so much adoption right now from foreign open- source models and domestic closed source models. I think the the the best thing the American open-source models have to leverage is uh some enterprise demand that really wants like only American open- source models. Um they're American companies and uh and they're they're aiming at it directly. So we provide easy ways of like exploring the you know like model providers on open router by like their family type. So you can like easily look at like which models follow a specific family and and only filter down to those. Um and we do want to help model labs that are like trying to aim for some kind of niche use case in the market or some kind of niche demand in the market find that market. It's really hard to discover them otherwise. Mhm. How are you thinking about uh personal AI routing? Obviously with companies, you have this very economic calculation around opex and there's an agentic workflow that's running for every customer. So millions of times worth squeezing every uh every cent out of the out of the equation. Uh but we are also seeing growth in openclaw Hermes like these personal agents. There will be some closed source providers there. But uh memory feels like an important piece of the personal agent puzzle. A lot of that can be offloaded to the context window to MD files. Is do you expect the shape or the cost constraints to be any different in sort of personal AI or consumer AI versus enterprise? Yeah, I think I mean the this is not going to be that big of a surprise, but local context is the number one difference that we've seen over the last year. Like if you build an agent that can really leverage the full computer, um it works very well for personal AI use cases and that's because people have a personal computer. Um what's interesting is that there isn't something that works on the phone very well even though a lot of context is stuck on your phone. So, we may see a cool uh personal agent develop in that direction. Um, what's also interesting is that we don't have something very social yet. Um, there isn't something that like pulls your social media data and like really leans into that part of of a like a person's life. >> Yeah. >> Um, so I'm curious if we'll see something there. And we've also seen like shockingly few games, I think. Um and and there may be like a really good opportunity for something that looks like a game but turns out to be much more. >> How big can open router become? I mean, we want we really believe that the the like everybody in the future will want to use multiple models in the same way that like even if you could hire a 250 IQ, you know, chief of staff. Um, and you but you had the option of hiring five instead for the same if not lower cost. uh you would go for five because like you know the five people are just going to be like significantly more likely to flag issues that one person would have missed. Um and not only that but you know it helps you cost optimize significantly. You don't need Uber black all the time. >> So uh inference I think will be the largest software market potentially the largest market in the economy. um all you know knowledge work will will need to leverage it otherwise you're just handicapping yourself dramatically and open router aims to be a very large chunk of that. Um you know we we do help the model labs like find customers as well and we work symbiotically with them and and same with our providers. So uh well a lot of open router is about building like things that enterprises need. You know when when you bundle a bunch of models together immediately you realize that there are all these boundaries between models that you have to secure and observe and manage the costs. Um and so open router is a really good way of managing and securing the boundaries between models and between server tools. Um, so we're we're building a bunch of like new agentic tools that you'll see in the coming months that uh that help do this both both for enterprises and for individual devs. >> What are your scaling challenges? Are you CPU constrained? >> We are memory constrained. I think first on on uh um you know like server memory. >> Yeah. and and I don't think we're CPU constrained quite yet, but memory >> uptime is but uptime is particularly important for you I imagine but there are probably other uh other considerations around uh you know multicloud availability interactions with different uh geol locations and being like you have a different set of of optimization parameters from other companies. >> Yeah. So we that was the first problem we aimed to solve is like >> given a large set of providers for a given model. >> Um how do we really perfect the router to like send you to the model that will be up as as quickly as possible and send you the provider that can like best serve the parameters requested. So um we've been doing pretty well there but I mean we can do even better and it and it will get better soon. We do a lot of like internal benchmarking against uh against the rest of the market against going direct providers >> and um and so we can kind of track progress and hill climb internally. >> Uh I think I think what what becomes like a real constraint for us is like brand new models that don't have much capacity because only one provider is serving them. You know, there isn't a ton. Sometimes we we host the model ourselves or we work with a provider to do it. Um and sometimes we just tell other providers like all the market signals that we're seeing and be like guys you should host this model like look there you know there's in this region of the world there's like this going on and we you know we we blast this out and that sometimes solves the problem. >> Jordan, anything else? >> No. Very >> congratulations. >> I'm very bullish >> and thank you so much for taking the time to come chat with us back. >> Have a great rest of your Congrats to the team. >> We'll talk to you soon. Goodbye. >> Well, we have some words of wisdom >> to end on. >> You can lead a horse to Baja, but you can't make it blast. These are wise words. Make sure >> I'm angry that we didn't >> think of that. We've talked a lot about Baja blasting. If you're in a Code Red, when you finish the code red, you got a Baja blast. >> You got to make sure that that part leaks out. But uh we never thought of you can lead a horse to Baja but you can't make a blast. Also uh Michael Tims ran into some problems here. He said he's been trying the whole two grams of creatine per one pound of body weight thing for a month now and he's never felt worse. How do you guys do it? It's also like $1,000 a week of creatine. Hilarious. Also, it's supposed to be uh what is it? One gram per body per pound of body weight for protein, I think, is the the joke. But uh two grams of creatine. What what what's a normal creatine dose? Five grams, right? Five grams a day. Maybe 10 grams a day. Uh about 1/100th of what he was doing in this joke, of course. Uh anyway, uh anything else we need to We will be off tomorrow and Thursday. Uh we have a short week. We'll be back on Friday. We are heading to New York for some business trips. asked I asked Pat for a >> phrase like you can lead a horse to Boba but you can't make it blast and >> what did it say? >> It said you can leave a you can lead a horse to Taco Bell but you can't make it live Moss. >> It's terrible but kind of good. >> Kind of good. >> Kind of funny. >> Anyway, >> uh well folks, >> thank you so much for tuning in. >> It's been an honor. >> We hope you have >> an amazing rest of your Tuesday. Feels like a Monday. Leave us five stars on Apple Podcast and Spotify. Sign up for a newsletter at tvpan.com and we'll see you on Friday. Goodbye. >> Cheers.