America Needs Defense, Meta Sales Soar, Sam Altman's New Bet, Masa's Big Raise

Welcome to Technology Brothers, the most profitable podcast in the world. There's been a terrible tragedy in dc. There was a plane that crashed into a helicopter last night and was really.

That is a rough, rough start to the pod.

Yeah.

But needs to be said.

Yeah.

Rest in peace.

It's always terrible when these like, you know, crises unfold because, I mean, we saw this with the, with the LA fires. Like every possible take is enumerated very quickly.

Yeah.

So you'll just see, like, the right will say it's because of DEI at American Airlines. The left will say it's because of capitalism. The conspiracy theorists will say it was a plane, yeah, CIA operation, or yeah, the war hawks will say it was China. And who knows? But it doesn't feel like living in a first world country to me. And it's very disappointing. And I hope that the, the worst outcome is the one where there's a huge culture war. Everyone battles about it, everyone gets, gets really angry at each other and then everyone completely forgets and then nothing actually gets changed because clearly whatever happened, happened. Like the solution that will stop that is not something that can be implemented in an hour. It's going to be a lot of different.

The positive thing here is there's so much data that's produced from the event, the flight logs, the radio traffic of air traffic control during event. And so we actually, it's not like a lot of other sort of dramatic crises, you know, events where we may not ever know kind of what actually happened. We know, be able to figure it out.

Totally, totally.

And so there's not, there shouldn't be that rush to, you know, generate new conspiracy theories, spread misinformation, make it a social issue or, you know, some type.

Of, like, clearly something went wrong. Clearly there's a solution. But it's going to take a lot of political will and a lot of energy and a lot of hard work and a lot of technology to actually implement that. And it's not going to be done in a day or a week. It's going to be done in a number of years.

The other thing is, I don't think anybody, like last week was saying commercial aviation is super dangerous. It's actually statistically.

Oh yeah.

A super safe way to travel.

Fifteen years since there was a commercial airline crash in America and, and this was the deadliest crash since 9 11.

Wow.

Insane. And yeah, I mean also you, you, you always run the risk of like, it's almost like a black swan event. It's like an event that you're not really Prepared for, like, after the fire. After the fire in la, a lot of people were saying, like, oh, well, I got to rebuild my house. And, like, concrete and brick. And it's like, well, what happens if an earthquake comes? Then. So, so, so you, you. You really need to balance out all the possible risk factors. But, like, we got to do more here. But fortunately, there's lots of good news. There's lots of interesting tech news right now. And we'll start with a fantastic piece of news from my buddy Keon said, I'm going to butcher your name. I'm sorry, but he's calling. But, yeah, but. Keon announced a $14 million Series A with participation from Founders Fund, 776neo, Balaji Srinivasan, Giant Step, VC1, Eight Capital, and many others. We're going to make preventable diseases a thing of the past. So I think we got to hit the size gong for Keon.

Boom.

Congratulations.

Nice work.

$14 million Series A.

Nice work.

We have some posts from him, and we also have a little bit of his. His blog post. He said, five years after founding Nucleus, in my bedroom, I'm thrilled to share that We've raised a $14 million Series A. Our current roadmap is ambitious, including dramatically expanding genetic risk assessments. So you can think of them as kind of like the Next Generation 23andMe, they send you a kit, they get you full sequence of your DNA.

More focused on helping people use the data to be proactive, versus the novelty of being like, oh, I have 1% Irish.

Yeah, exactly. Or half a percent Native American.

Yeah.

And also, it's just a fundamentally different technology that goes into how they sequence the genome. So 23andMe, I believe, does something called shotgun sequencing, where they kind of blast a bunch of the DNA out and then they kind of sample it, and statistically, they get you to, like, 90% there. But it's not a full sequence. The full sequence is something that does happen in scientific labs for more rigorous scientific studies. But Nucleus has been able to take that next generation technology and bring it to the consumer market so that you can just go order a kit and get your exact genome.

And this came at a good time because I feel like people lost a huge amount of trust in 23andMe and some of these sites because they struggled as businesses, and then they started changing hands from an ownership standpoint and looking at, you know, looking at like they were potential takeover targets.

Yep.

And the challenge there is you're looking at this, and if you have given all your genetic data to a company, you actually start to care who, who, who owns that business. What are their intentions with that data?

Yeah. And so a bit of a call to action to people. If you did 23andMe, you can go and export your data and then you can have them delete it from their servers. And they will do that. And I do believe that they will, that they are capable of doing that. And then, and then if it does get taken over by someone who maybe you don't want to have that data with your, you won't be in the database anymore. Which I think is probably the right thing to do at this point.

Yeah. And they also had a massive pickup, he says in the post. I'm thrilled to announce that Matt Lanter, former co founder of Open Store Channel, chief of staff at Founders Fund and longtime Nucleus investor, is joining as president. His decades of experience helping scale billion dollar companies will be a tremendous addition to an already deeply talented team. And I gotta say, there is nothing more bullish than somebody like, I don't know Matt personally, but when somebody like Matt, who is deeply, deeply connected in the venture world has started their own companies and they could, there's hundreds of companies that they could go join or hundreds, bunch of different companies that they could start if they're choosing to join your company at an inflection point like this. It's the most bullish signal.

Totally.

Matt has a quote here. He said, my time working with Keith Rouboy at Founders Fund was a masterclass in identifying exceptional founders. That experience, combined with countless founder meetings as an angel investor, helped me recognize something special. When I first met Keyan, I was immediately struck by qualities I'd seen only in the most successful founders. A deep personal obsession with the problem and the relentless drive to pursue it. So couldn't be more bullish for the nuclear team.

Congrats on the first time I met in Manhattan. I got coffee with him in the small coffee shop and we just had the most intense discussion for like an hour going back and forth about like how this would affect things and what the value of and you know, could, could you get something out of it? Because I think the, the, my, my disappointment with 23andMe was always like it was kind of a nothing burger. Like you do it and it tells you like, oh, oh yeah. Like, you know, heart disease and cancer are probably gonna be what get you. And it's like I kind of already know that just from like the mass statistics. It doesn't tell me anything specific. And so he made a very, a very Strong case for finding those, those niche preventable diseases and just eliminating all those risks, which is cool.

And so there's even more news in here. He goes. I'm also excited to announce Nucleus has acquired Cambrian, an AI based health platform, pioneering algorithms to transform data from wearables like Oura rings and Apple Watches into actionable recommendations. We're excited to welcome the founder David Sloan to our product team where he'll spearhead wider data integrations and. This is insane and awesome. My only critique of this announcement is you, you've already included like three major announcements, which is your fundraising round. They're also growing 68% month over month.

Yep.

They're adding this like crazy new exec to the team and they did an acquisition and they could have spaced that out over four weeks and had like big news, you know.

Yeah, I mean he's doing pretty well at going direct. He has a podcast and he posts a lot and we'll go in through some of his posts, but I mean they have been on an absolute tear in the last three months. They've averaged 68% month over month revenue growth since November. Monthly users have tripled. And less than a year after going live, we've scaled up from 10 genetic analyses to over 800. So it took him four years to get this live. He was in his bedroom just kind of grinding on this, figuring out what technology he needed and, and finally got it live. And then they've done a bunch of crazy things that everyone in, in Silicon Valley have been like, why are you doing that? Like, they sponsored the Jake Paul fight. Did you see this? So like when the cut man comes in to like, I think it was a Jake Paul fight. They, it's like it's some like, you know, not super prestigious type event. You know, it's not.

But that's the mass market, but it's the mass market where the biggest companies are built.

And everyone was like, why, why is he doing this? This is like so silly. But I, I, I looked at the data and I think it penciled out really well for them.

That's great.

I think it was just a great.

Yeah, the, there's a good quote in here relevant to this because, you know, this is a now a hyped venture backed company, but to become a, you know, multibillion dollar business and potentially a trillion dollar business which Alexis will get into here, you have to be able to hit that mainstream of if you're building a consumer product, you should probably at some point be able to advertise at a Boxing match or NASCAR race car things.

And if you never cross that chasm and you're only cool with the tech people, you can, you can ladder up the venture rounds pretty well. You can even spark. We've seen this with like the Allbirds and stuff that never really broke into the mainstream, but my first company never really crossed the chasm into like the main mainstream. And, and so thinking about that earlier in this, in the company history, kind of biting the bullet on like, yeah, your brand might be not seen as like the hottest thing in tech, but that's actually a bigger opportunity.

Yeah. So one of the, I believe it's a co lead in the round, Alexis Ohanian. He says they say the next $1 trillion business is going to be in consumer health. I buy it. If you look at the landscape today, there's really no one else on the market building the way Kion and Nucleus are. Nucleus is running a playbook in healthcare that used to belong only to purely software companies. It's fascinating to watch.

Yeah.

So very cool.

And so we actually mentioned this in that Nvidia article that we read, talking about how, you know, there's this data wall we're running out of data and there is a lot of genomic data and maybe that has a, has a role in AI and, and I think that's what Kian is betting on is let's, let, let's, let's put in a massive amount of, of genetic data and, and then run these next generation algorithms over there. So it's not just that the hardware got better. The Lumina system I think is one of them that can actually sequence more genomic data. Yeah, it's, it's get all of that into the database and then be able to run more advanced algorithms with AI on top of it. So very bullish. But Keon has had some banger posts over the last few years. On September 9, 2024, he said, Our revenue yesterday, we are absolutely cooking. The movement is getting bigger every day.

Looks like a, a meme coin chart.

It does. Is this pumped out fun? Keon, what's going on here? Can you believe we haven't even gotten started yet? Oh my God. Future of health tech at Nucleus Genomics. I like that.

Let's go.

Just sharing the stripe dashboard. We love to see it. This is a fun one. Related to 23andMe in September of September 20, 2024. Today I'm announcing that Nucleus Genomics is considering the possibility of making a public offer to acquire 23andMe contingent on financing as well. As initiating and executing a successful negotiation.

That's such an amazing like play even at a high level to show your, your, your the kind of game you're playing to go to find the most high profile company in your category and say, yeah, we're exploring an acquisition of the company.

Yeah, exactly.

Even if it's not a super serious thing. Yeah, it in many ways I'm sure that Kion and the Nucleus team would be able to much better operate and take advantage of the customer relationships and the data.

And it just comes down to the price. I mean they're already making acquisitions. They got 14 million right now. I think they.

32 million total.

Yeah, I think it probably need like over 100 to do the deal. Even if there was debt involved. I don't know how 23me operates as a business, but it's still just kind of cool. And there's this trend of like, you know, when TikTok was up and people were talking about like perplexity was jumping on the hey, maybe we'll buy it, maybe Mr. Beast will buy it. A lot of people were circling and at least taking the tires.

Yeah. This is a part of a broader trend we're seeing in venture right now where venture capitalists and founders are starting to think more like traditional private equity, looking at roll ups becoming popular, but also, you know, this sort of larger scale M and A mergers.

So, and this is, this is really cool. Dwarkesh, obviously one of the most respected figures in tech right now, had an amazing story, so Kian posts. Wow. Dwarkesh Patel had an amazing story on his concern about his family history for prostate cancer. And so he exported his 23 Me 23andMe data to Nucleus Genomics to find out how he was in the 97th percentile for his genetic risk. He now knows to get earlier screening for this. And so this is an example of just the, the software, the application layer in AI being valuable. He didn't even have to do a test with nuclear test. He was able to just take his 23andMe data and I'm sure the quality of that analysis goes, even goes up if you actually do the full test with Nucleus. So congrats to Keon and the Nucleus team. We love to see it and good luck with the next 12 to 18 months until you raise again.

Try to keep up that 6.68% month over month growth and soon your GDP will be big, your revenue will be bigger than the GDP of France.

There you go. There you go. Well, let's move on to a fantastic Article in Pirate Wires. We love to read these, these deep dives on this one's by Joe Lonsdale. And John Noonan says America needs better defense acquisition. How Trump can seize the moment, learn from what worked and what didn't in his first administration and make general generational changes to defense bureaucracy. And so during the rebellion in the Philippines a century ago, American soldiers found that their service pistols lacked stopping power and were able to inadequate for the harsh realities of jungle warfare. In response, army leaders drafted a simple request for a new semi automatic pistol of at least.45 caliber to replace the service's aging revolvers. This was a big thing in, in, in Vietnam. I feel like that was the dawn of like the five five six round. And a lot of guys would carry Thompson submachine guns that were.45 caliber just because it would cut through all the brush and the bullets wouldn't get scattered as much. And so a lot of guys kind of like procuring their own weapons. And this is something that's happened in the military for a long time. Like their family will send them bulletproof vests.

Yeah, this is why the work that founders are doing in defense tech now is so serious. There's a lot of memes, you know, we've, we've, we've talked, you know, memed about gundo and bear domestication and stuff like that. But when you're developing these products, if you have bugs or errors or they're not set up properly for the task, you're putting American lives on the line. And these soldiers know, back in this situation are finding out that their, you know, pistols don't have stopping power, which means that they're actively getting into conflicts like, you know, eye to eye with basically the enemy and not being successful with the products.

Yeah. And so six firearm manufacturers answered the call. Their pistols were put through a series of rigorous field tests. The sidearms were refined iteratively throughout the assessment. In the final test, several thousand rounds were put through each gun over 48 hours. That must have been fun. The army was pleased to discover that one of the six prototypes, the Colt, suffered no malfunctions over two days of intense use. In early spring 1911, the oh, this was actually during the Philippines war. This was before Vietnam actually had that wrong. In early spring 1911, the army settled on the Colts.45 caliber as the new sidearm of choice for the service. Nearly 3 million Colt 1911s were made. The Colt 1911 served soldiers across the two world wars, Korea and I guess Vietnam as well. Eventually being replaced in 1985. It was a procurement victory for the ages and the result of a competitive process that spoke for itself. To say that the army's attempt to build a new pistol in the 21st century has gone poorly would be a gross understatement. The army's effort to buy a new handgun has already taken 10 years and Pursuit produced nothing more than 3350 pages of requirements. Said the late Senator John McCain in 2015. Micromanaging extremely small unimportant details and byzantine rules and processes the armies wants followed, many of which are unnecessary or anti competitive. And so procurement is a mess. Pirate Wires summarizes this by saying the Pentagon purchases more goods, services and software than all other federal agencies combined. But an ideology of central planning has rendered it ineffective. And here's how the Trump administration can make generational changes. And so Joe and his co author John go on to write change is coming. The DoD bureaucracy, like all bureaucracies, seeks to sustain and grow itself. Each new inefficiency, like the service pistol mess, prompts shock from Congress. Then to fix the inefficiency, the bureaucracy creates more inefficiency. And this is.

We're going to need a new report.

Yeah, yeah, exactly. This is something I'm worried about.

The report generates a need for new analysis and investigation and a new report and then you're back.

Yep.

And it's a cycle of, of just information collection versus action.

Yeah, it's very, very rough. Like, yeah, you're, you're over regulated, you have a problem. And the answer is more regulation.

It should be, it should be the same. It's funny because this initial process, which is, hey, we're going to give six manufacturers the opportunity to produce the next generation firearm.

Yep.

We're going to put them through 4, 48 hours of intensive testing. That's exactly what you know. And this actually might be surprising to some people, but if you ever are going to shop and buying a gun, oftentimes a Glock will get recommended due to its sort of rugged reliability. And so if you put 10,000 rounds through a Glock and it's been well maintained or serviced, you're gonna have very little sort of errors with it. But there's a lot of manufacturers that are actively selling products where it's one out of every 100 rounds, you know, has, you know, that you go through, you have some type of error or it gets jammed or it's, you know, it has some type of issue and that's the last thing you want. It's okay, if you open Apple Intelligence and it's telling you something completely inaccurate about a message that you got, if you're relying on a handgun in a defensive, you know, scenario and it has a 1% error rate, that just doesn't really work.

Yeah. And so in 2018, the Pentagon underwent a significant restructuring of its acquisition framework. It resulted in the creation of a near of nearly a dozen new offices. The creation of the diu, a lean and nimble group based in Silicon Valley with the authority to fund new products, is a bright spot. But the temptation to create new bureaucratic edifices is part of the problem in the defense world. The Pentagon is the only domestic customer. And so the defense industry is not subject to the same demand forces as the rest of the economy. Programs that wouldn't survive an open competition can thrive if the Pentagon wants them to. Superior products can struggle to break through and are at the mercy of opaque processes. When the army was searching for a new pistol a century ago, it simply told the best arms manufacturers in the world to build them a pistol. Then it tested them in a ruthless competition. Today, Pentagon officials write long lists of requirements, many of them strange and unnecessary. Take years to solicit and evaluate proposals. Even when the Pentagon does hold competitions, there is a clear winner that is ordered.

This is for the most simple, this is a multi hundred year old product, right? The pistol. And so imagine when you're testing and trying to sell and create and earn the Pentagon as a customer, if you're building a drone defense, you know, mechanism of sorts, right? Like imagine the complexity there when you have this emergent threat, new technology and they can't even figure out how to acquire a new handgun for, you know, like service pistol.

Yeah. And so Joe Lonsdale wrote on X, uh, VP JD Vance mentioned the crisis of broken defense procurement twice in today's interview. Cool. Uh, I drew up notes on how to fix it based on my 20 year experience as a defense entrepreneur and investor. With leaders like Pete Hegseth, we've got a real shot at cha at change. Link below. And so Joe's been working on this for a while and there are lots of people in tech and defense tech that have been talking about this for a while. Um, back in 2023. November 24th, Ryan McIntosh over at Andreessen said one of the biggest bottlenecks for defense startups is DoD contracting. Imagine a tech enabled private military company that they could sell to instead circumventing government procurement and ops contracts for mission outcomes, not products delivered defense as a service kind of a like the most futuristic possible outcome. But I mean there's certainly an element of that with the private military contractors that by sometimes civilian weapons even we.

Have a mutual friend that's been working on a PMC for a while.

And so Joe goes on to say his friend Sham Sankar over at Palantir has bemoaned what he calls a government defense monopsony where one buyer gets too comfortable and exercises illogical and inefficient decision making. In his Martin Luther inspired defense reformation, Sham brilliantly lays out a strategy to end the Pentagon monopsony and flip the military to be a better customer. One of my favorite proposals in this space is to stop identifying the Pentagon as a single entity. It is rather an umbrella for dozens of service branches, agencies and sub agencies. The thinking is that Congress and the President puts these smaller agencies into competition with each other for money and contracts. It would not work across the entire DoD, but putting just a few head to head would be a strong blow against the 1950s mandate of efficiency via consolidation and a single difficult top down buyer.

It's funny, efficiency via consolidation sounds like a Soviet era policy. It does sound, doesn't sound very capitalist.

In the 50s or something.

Yeah, and it's interesting. One of the dynamics here is that defense manufacturers need to sponsor NASCAR events they need to buy out of home. We were talking with the Ad Quick team yesterday and they were showing us a billboard that Anduroll is running in D.C. right. So they're basically having to do wide scale consumer advertising to build this sort of brand love presumably or mindshare in a place like dc when in theory a defense contractor shouldn't have to be doing consumer marketing to get their products purchased by our government. Right. It should be the best suite or individual product that sort of wins. But instead you'd see a advertisement for a zempic next to an advertisement for a submarine.

Yeah, I remember seeing, I think it was Anduril ads at Burbank Airport. And yeah, all of that's just to, you know, target lawmakers that are flying back and forth between LA and probably Sacramento.

Yeah.

And so there's another promising proposal he highlights to create mission based requirements. The Pentagon has a term called requirements creep where a simple commercially available solution to a problem becomes infected by new design obligations imposed on industry by military officials. The US Navy's Constellation class frigate for example, was meant to be a fast and simple purchase of a proven and existing warship. The Frem frigate made by Fin Canteri. And what was a clear edict from Congress to buy quick and off the shelf. Navy bureaucrats have reduced the constellations design commonality with the original fram from approximately 85%. So they were like, let's just change 15% of it to now it's less than 15%. So it's 85% different. Requirement after requirement. Some dating back decades have resulted in massive cost overruns and and delays to the program. As a result, the Navy still does not have a frigate in service. It's just like, oh my God. When the Pentagon believes it can do acquisition via central planning more effectively than listening to soldiers or technologists, it fails our country.

Again, central planning, all these phrases that feel it's rough.

And so I mean this is all part of like this major vibe shift in tech and defense tech. There's a post from Dan Primack here from November 29th of 2024. He says one big reason that VCs didn't used to fund defense tech was that they didn't want to invest in things that were reliant on government procurement. Yes, there were philosophical issues too, but this was an era when VCs avoided startups that even brushed up against government or regulation, minus biotech. That time has long passed, in part because Uber, Lyft, SpaceX and Airbnb kicked down the doors. And so yeah, it's interesting, I hadn't really thought about Uber and Lyft and Airbnb as precursors to the Anderals of the era. There is a little bit of that where there was a shift in entrepreneurship where founders figured out that those things aren't insurmountable.

Well, a lot of the lowest hanging fruit of, you know, CRM and email tools and things.

So you got to do the harder, harder thing.

Yeah. And you had a generation of entrepreneurs who did the easy things. Right. And then they realized that there were bigger challenges and bigger opportunities doing the hard stuff now that now that they had this sort of base level abilities around capital raising software, you know, these sort of generalized skill sets.

This is a crazy stat. Since the end of the Cold War, over 2,500 US companies have been founded and reached a valuation of $1 billion or more. So 2500 unicorns in the US since the Cold War, less than a dozen have been in defense. And I mean hopefully we'll be covering more here soon. But I personally founded a few and invested early in a few more joes.

In like every defense unicorn, basically not.

Just in them, but founded in many areas. These companies are out competing the primes if they're Allowed to. They represent thousands of manufacturing jobs in the US and could have put a multiple of that in the next decade. But they need allies in the government. New officials can start by trimming down an encyclopedia of regulations that was first written and consolidated. And in the Reagan administration, the federal acquisition, regular regulation far first issued on April 1st. That's funny. April Fool's Day, 1984, also a weird year, very dystopian. Has almost doubled in length and with it the complexity.

Maybe it was always meant to be a joke.

It was a joke and it was meant to be dystopian.

Nobody got the joke and let it roll.

Yeah. Disregarded entirely. Title 10 of the US Code, which governs the armed forces, has become swollen with obsolete and choking legal requirements. This creates fertile grounds for long and contentious lawfare when bids don't go a company's way. And so the story of every defense tech company has been make a better product, get it, you know, loved by the military and the, and the war fighters on the ground. And then essentially you have to fight a lawsuit when you get screwed in the defense procurement.

Well, this is why a bunch of the. There's this narrative that all the new defense tech founders are in the Gundo, but two of the companies in my portfolio, Deterrence and Allen Control Systems, both the CEOs live in Washington D.C. right. So and they, the, the opportunity for them is that every lunch and coffee and things like that can get them closer and closer to real traction.

Yeah. And Yeah, I think SpaceX and Palantir both had to sue the government when, when contracts didn't go their way and they felt like they were unduly looked over.

Well yeah, because it's hyper political. There's massive lobbying. If you're Lockheed Martin and you like your margins duopoly or whatever, you're gonna just continue to spend to make sure that things aren't necessarily always.

This is a great quote in here. The United States was once the arsenal of democracy. Today it is the arsenal of bureaucracy with an army of federal civilians making it difficult for American companies to sell to willing buyers. To wit, it took the State Department and the Pentagon nearly 30 months to finalize the sale of Harvard Harpoon anti ship missiles to Taiwan. Though upgraded in recent years, the Harpoon has been in service since the 80s. It's not a new system. And Taiwan is the nexus of our Pacific deterrence. We have a unique opportunity for American workers and innovation to be fueled by investment from our friends, strengthening both our economy and national security. The process should be simple it isn't. The haft of the arrow in America's side was feathered from our plume. That's great. That's a great sentence.

Great writer.

Yeah.

Writers.

Fantastic. Moreover, the past three decades of obsessive consolidating and regulating and subsidizing has undercut the core element of the new administration's foreign policy and natural national security. Trump has rightly emphasized deterrence, a concept that escaped the outgoing president and his team. Deterrence is a simple framework and does not require a mountain of PhDs to grasp. It means, in plain terms, terrifying adversaries with a combination of iron forged national will and fearsome weapons that lend that patriotic resolve credibility. It's great.

Yeah. One, one, I posted a couple of weeks ago that we needed a, like Project Stargate style progress project to address the shortage of domestic drone production. And when you read this article and you understand how long it takes just to sell.

Oh, yeah.

A single, you know, harpoon.

Yeah, yeah.

To what is it the.

I mean, no one's talking about Taiwan invading China because, like, China is extremely scary when it comes to deterrence. Like they have all, all this incredible military technology. It's unthinkable.

Yeah. And so I think part of it is getting, getting Peter, people like Pete had just back in, you know, effectively in power and helping make some of these decisions. People that have actually experienced conflict.

Yep.

And getting some of these decisions back into the hands of not, you know, bureaucrats, but actual operators that have on the ground experience.

Yeah, it's pretty cool. Looking at who's in now. So Pete Hegseth said during his confirmation hearing, competition, it's important, critically important. Silicon Valley for the first time in generations has shown a willingness, desire and capability to bring its best technologies to bear at the Pentagon. A Pentagon that has become too insular and ties to and tries to block new technologies from coming in. And then Steven Feinberg, the nominee to be the number two at the Pentagon, is a patriot who leveraged his vast business experience. He's more of a private equity guy, but has done a lot of defense deals. I think it's Cerberus. Right. And then Emil Michael also went, went into the administration as well. And he was the right hand man of Travis Kalanick at Uber and just a great overall guy.

And we want that Uber energy, that TK energy in the Pentagon running research and engineering. That is, that is cool.

During. So he closes with, during the Persian Gulf War, the stunning American military victory over the Iraqis, then a fourth large, then the fourth largest army in the World military experts estimated that US Military technology was a decade ahead of the Soviets and two decades ahead of the Chinese. The world was shocked at the might of then futuristic weapons and state of the art tactics. The new Trump team has strong has a strong wind in its sail. The woke tech giants of the last decade have given way to a new crop of patriotic leaders and innovators. Silicon Valley is poised and ready to join the fight. With a few bold moves. President Trump's gold promised golden age and a second century of American dominance are within reach. I love it. So go subscribe to Pirate Wires, read the full piece and follow Joe on X. And let's go to some other posts loosely about defense procurement. So Josh Wolf wrote US defense tech CEOs urge speedier procurement to counter China. This was from months ago and everyone has been beating the drum on we need to speed up defense procurement. It's boring, but it's very important.

Yeah. And it puts our companies at risk. If you have a startup and you've developed this incredible product and then you have one customer, which is the Pentagon, and they're like, okay, we're excited about this, but you know, let's start the process. And then it turns into a let's change this 48 process. Meanwhile, you have $2 million in payroll costs that you're having to absorb every month because you need the best engineers and talent in the world to run your business. But then you're just waiting for that revenue to hit. And usually it comes in increments where you know that you get awarded 10 million bucks and then, and then you need to hit certain milestones. And so it's a very sort of shaky dynamic that has led to otherwise good technology not getting implemented.

Yeah. And so even back during the Biden administration, there's an open letter that was signed by Palantir anduril Lux Capital and others. And they went to meet with the Biden administration, the House gop, to work on defense procurement. Obviously less relevant now that Biden's out, but still this is something that's obviously bipartisan and has always been. Patrick Collison had an interesting post here. He took a very academic approach to thinking about defense procurement back in 2017. Says Military procurement turns out to yield interesting management reading scrutinized from multiple perspectives. Lots of pathologies to analyze. R and D is a major factor. He recommends Boyd Quorum, National Defense by Fallows and Augustine's Law by Augustine.

Yeah. So while you're flipping brain rot, real content. Patty, Patty, Patty's reading these Esoteric books on defense procurement. And that's why he runs a hundred billion dollar company. And you know, and you haven't raised.

A seed round yet.

You just lost 15 grand on meme coins.

Yeah, exactly. It's great. But I, I got to check out some of those books. That's probably pretty interesting stuff, but. Yeah, he's always been a real powerful.

Deep diver of the powerful Deep Diver. He would add a podcast in another life.

Yeah. Yeah. This is an interesting one. Have you seen Pentagon Wars? This movie?

No.

It's fantastic. So it chronicles the story of the Bradley fighting vehicle, and it's like a. Made for tv, almost like a dramedy, like a drama comedy. Yeah. And it's all about.

It's kind of like our show.

Kind of like our show. Yeah. And so it tells the story of. Of the Bradley fighting vehicle and how the. The requirements just got so chaotic because they go to one general and he would say, originally it was just. It was just supposed to be an armored troop transport to take a bunch of guys from the rear to the front. So it's just, it's just a bus, basically. And. But you know, it needs to be fast so it can move. Needs a little bit of armor, but nothing crazy. But then of course, they talk to one guy, he's like, oh, well, it'd be great if it had a gun on it. And then they're like, okay, let's put a turret on it. And they're like, well, if we put the turret on it, it's gonna carry less guys. And they're like, okay, well, it also needs to be able to float in water. And so they add that, and then they're like, well, now if it has the turret and it can go in the water, it's gonna be much heavier, so it's gonna be a target. So now I have to put more armor on it. And so that slowed it down and stuff. And so it's a hilarious movie. It's fantastic. But there's a little bit of an interesting flip side to this, a little contrarian take from Robert Potter here. He says the. The Bradley is literally taught to students of defense procurement as a bad example. The platform has been slammed, audited, and they even made a movie making fun of it. Pentagon Wars. The reality here, it is flogging a Russian tank. Keep that in mind when people talk about the F35. And so there's always.

And the F35 was in the news last week because there was a video on an airfield that just fell out of the sky. Luckily the pilot ejected and came down in a parachute. But. And that was an 80 million dollar ish mistake I believe.

I mean the, the programs and I think over a trillion or something.

Yeah, it's huge.

But there's always actually over.

It can't be over. I don't know. There's no way.

It's very, it's very expensive. The numbers are also big. I can't even keep track anymore. But, but the interesting thing about the F35 is when you talk to people in defense, they will say the problem with the F35 is not that it's a bad plane like as evidenced by the fact that China copied it. The J20 is a direct copy of the F35. Why would they copy it if it was a bad plane? That just wouldn't make sense. You wouldn't waste your time. Maybe you can make an argument that like, oh, the R and D is free. So you, you know, you just copy it because it's, it's valuable if you don't have to pay the R and D cost. But the F35 is not a lesson in, in like oh, we, we tried to, we tried and failed to build a better, you know, air supremacy fighter or platform. It is successful. It did actually do all the different things. Electronic warfare. Like it's fast, it has all the different features. It's just that it went way over budget and took way too long and is just a technical mess. But it's still the best thing interesting about.

So if you're a fighter pilot and you're based somewhere in the U.S. let's say you're based in Nevada. If you go, if you go on deployment, you just end up flying the jet there. Yeah. And it ends up being these like really long. It's. Imagine it's, it's like a 16 hour flight.

Yeah.

Yeah. So you just like commute over.

Yeah.

To work.

Yeah.

I just find it's, it's, it's. You would imagine that they would get like shipped in some way.

Yeah. Yeah.

Normally you're, I don't know, with, with like sports cars. Right. You're not, you're not like I'm just gonna like go put some, I'm gonna, I need, I want my, you know, turbo in New York. I'm gonna drive it all the way over there. The planes, they just end up. The most efficient way is just to fly it over there.

Well, the new Anduril arsenal, their manufacturing plant is right next to an airstrip and Palmer was talking to, I think Ed Ludlow at Bloomberg in this interview and saying, like, oh, yeah, we're right next to an airstrip, so we can like. And one of the advantages. And Ed Ludlow is kind of like, you know, answering his. Finishing his sentences and saying, like, oh, so, like, you can fly the plane straight from the factory to the customer, like, to the Pentagon or to the airfield. And he's like. Palmer's like, yeah, or the war zone. You can just. It rolls off the factory line and it goes straight to the. To the front immediately. And that's the most efficient way to deliver capability. I just think that it's funny and interesting. Anyway, very expensive and again, highlights the fact that we aren't necessarily behind on the technology. We're just behind on the efficiency and the procurement process. And over time, the.

I'd rather be behind on procurement because that's a lot of process you can rip out.

But it's like, yeah, it's a leading indicator. It's like we're overspending on the F35. The next version won't even get made if. If the. If the trend continues. And that's. That's the fear and the risk. So Matt Palmer says, hate to say it, but I don't think there's any way the US can position itself to deter a major war in the next decade, let alone win one quickly. The defense procurement system and the industrial base underpinning it is fundamentally broken, and. And it will take a major war to fix it. He's a bit of a doomer, I think, that there's a chance. I think Joe Lonsdale and the crew.

At the Pentagon, you know, I like how they're not taking the Doge branding into this. It's much more of just, hey, let's just do this.

Yeah, yeah.

We don't need to. We don't need to make it a big marketing campaign.

Totally.

We don't need Vivek in here, you know, trashing the jocks again. People like, People like. People like you hardworking Americans.

I think Hank said corporate athletes, in many ways, the. The cultural opposite.

Yeah.

But I mean, defense tech is. Is charging on. Let's go to our next story. Startup Castilian has raised $100 million for hypersonic strike weapons. I think we got to ring the size gong for Castilian. Let's do it.

Boom, boom.

Congratulations to everyone involved. We'll break.

Almost needed to size up the gong for this.

Yeah, this is a big one. We did 14 million. Now we're doing 100 million. Congrats, to Castilian. So they make hypersonic missiles. Silicon Valley's enthusiasm, enthusiasm for super fast weapons has picked up speed with defense tech startup Castilian raising $100 million through debt and equity to build hypersonic missile systems. The company is vying to sell long range strike weapons to the US Military. Castilian is part of an increasingly well funded sector of venture backed defense companies. Many are hopeful that the new Trump administration will yield more government contracts for startups. There will be more support for awarding contracts to non traditional players, said Castilian's co founder Sean Pitt. The administration has given the Pentagon the freedom to lean into new companies. So they raised 70 million in venture and 30 million in debt. The funding round was led by Lightspeed Venture Partners and it brings the company's total funding to 114 million. So they got here with just 14.

And have you seen their, their branding by the way? It's very 50s nostalgic or even almost World War II era. The graphics that they use.

No, I haven't seen that. It's cool.

Feels a little bit insane to be, you know, talking about defense tech company branding, but I think it's smart by them because there are so many new players coming in. Differentiating yourself, you know, visually is just another way to kind of stand out.

Yeah, yeah, it's great. And the last thing you want to do is just be like derivative and role.

Yeah, yeah, yeah. Because the, the role has been such a dominant force.

Totally.

And they kind of took this sort of call of duty.

Totally.

And that is what all these defense tech founders grew up playing.

Yeah.

And so it's sort of the default, but because first they own it. And so Castilian's done a good job of, you know, separating themselves from the.

Pack and so let's do a little bit of a deep dive on hypersonics. So the Defense Department has considered hypersonics a national security imperative for more than a decade. Despite spending billions of dollars on the effort, it has failed to develop battlefield ready technology. Castilian says it's frequent flight tests, quick engineering upgrades and economical manufacturing will produce cheaper and better hypersonic weapons. It does test flights. It does three test flights per month in the California desert.

This is crazy. Hypersonic weapons, you might think Hypersonic, Faster than sound. A hypersonic weapon is defined as a projectile that flies at least five times the speed of sound.

Yeah. Supersonic is Mach 1 to 5. Hypersonic is 5 plus.

Yeah. So it can be launched from great distances, maneuver and evade most air defenses. They became a top Defense Department priority during President Trump's first admin a 2021 test flight by China, which launched a weapon that circled the globe 20 times the speed of sound or faster alarmed Washington. Yep, 20. Just ripping around 20x.

So the main, the main reason they.

Would have had to choose that flight path fairly well.

That's the thing. You don't have to choose the flight.

Because with the hypersonic, so it's so high, so fast.

It's not just that it's so high, it combines speed. So the traditional ICBM, the Intercontinental Ballistic Missile, will also go Mach 20. I'm not sure if it's exactly Mach 20, but they go extremely fast. They go all the way up into space, but they follow a perfect parabolic arc. And so we have missile defense systems and satellites that track all these different missiles as they go up, all the different rockets. So the rocket launches. And you can see that it's on this very smooth trajectory. And what that allows you to do is calculate with a very simple mathematical equation. Well, if it's going, you know, a couple thousand miles an hour here, well, then in five minutes it's going to be here. And if I just get my bomb or my missile here and explode, I will intercept it and blow it up. Yeah, it's very simple to build a, like a programmatic calculation for how to counter it. And so that's been the backbone of missile defense systems. And it's why people aren't genuinely freaked out about countries getting ICBM capabilities, because, you know, North Korea will get one. And it's like, yeah, we could probably shoot those down pretty effectively. Scramble things as they come. Shoot.

North Korea is so funny. It's. It's like your drunk friend who just has a gun and they're just shooting it off in the air at random times. You got to kind of far away, and so you gotta look over there and be like, what's going on? Is he all right? Hopefully that doesn't fall anywhere important. Meanwhile, the adults are just sitting around maybe every once in a while letting one off, but in a much more controlled method.

And so these hypersonic weapons are different than ICBM is because they don't follow predictable trajectories. They maintain the maneuverability almost of a jet or cruise missile, but they're going Mach 5. So cruise. There's a couple of cruise missile companies, and cruise missiles are obviously very important. But cruise missiles are typically subsonic. So they're not going. It's more like a plane with no one inside and just a bomb. So when you have something traveling Mach 5 and, and it's also able to maneuver. It's very hard to shoot it down. And so these are, the people are worried about these hypersonic weapons being able to take out aircraft carriers very easily, be able to strike somewhere because it can take a lower path, evade radar, evade the satellites, evade detection, and then just show up very quickly before you can react.

I'm an advisor to this company, Aon. I don't know have you ever met. I've never met them, but I'm familiar. So they're based in Texas and they. So in learning about that business, there's only two manufacturers that make, they make anti tank missiles. So launch from the ground, you know, shoulder launched, sort of close range. There's two companies that make them and they, they've gotten to the point where they're charging because they, they run on a cost plus model.

Yep.

So, so the manufacturers make like a fee on top of what it costs them to produce it. And so that means that they're incentivized to just run up the price so they make more money. It's this very poor incentive. And so Aon's making them for 80% less money and they're making better products that are easier to use. And so Aon, you would think is just like, you know, obvious easy win. They just go in there and saying, hey, our products, you know, costs 80% less. It's easier to use. But because of this procurement process which we've been talking about, it's just not, it's not a shoe in. Right. It's a struggle to get, you know, and they've done very well in terms of getting traction in the Pentagon. But.

Yeah. And so a lot of it is, you know, you just have to go and get some sort of general or admiral to come out and watch your demo.

Yeah.

And we've seen videos of Palmer doing this in the desert in a, in a wonderful Hawaiian shirt. And Castilian's clearly made that part of their strategy as well. They bought this crazy looking like tank transport thing.

Yeah.

And they drove it to El Segundo, which I guess is where they're headquartered. So welcoming our new LSVR MKR 18 to El Segundo. This week we'll be making upgrades to convert this vehicle into a launcher system for upcoming flight test. And it's a fun ride. So I think they can build in their factory, put it on the back, drive it out to the desert, and then just shoot it off and fire it.

I think this creates a Fun dynamic for VC demos too. So if you're running a process, your investors, potential investors, want to see what you got, invite them all out to the same demo.

That literally happened.

Blow some stuff up and then say, you guys can talk amongst yourselves and figure it out. This is what I was telling Steve, CEO of Allen Control Systems. There was all these. He was raising a new round last year. All these investors wanted to meet. I was like, invite them all to the same demo. Because they're going to just be sitting there watching this incredible demo of the technology. And for him, he's making counter drone systems. So it's just very cool and highly relevant to the battlefield today. And anyway, so cool opportunity. Normally you're giving a VC a demo, your product, they're using it. But this sort of putting them all out on the same desert is just so fun.

I've heard of that happening. And all the VCs were standing around talking to each other, and one of the bigger VCs there looked to the other one and said, you're not getting a penny of this round. Everyone's like, wow, that guy's kind of a dick. But it worked and they took the round and it got done. And it's good for the founder. So lots of investors have been singing Castilian's praises. Andreessen Horowitz is in the round. Uh, they said. Michelle Vols, former Andreessen associate or partner, says the best way to ensure the next era of Pax Americana is to build capabilities that deter our adversaries. Congrats to the team. Jake Chapman says, with a fantastic handle on ax just at vc. Crazy, he says. Excited for Castilian and to see us developing this American capability. And I like the folks I know at Lightspeed, but Lightspeed maintains a China arm. What's the relationship between these two firms from a money control systems information flow perspective? Why did everyone scream about Sequoia was totally fair, but nobody seems to care about Lightspeed, so he's putting the. Putting the screws to lightspeed, telling them divest immediately. I guess Blue Yard Capital is also in this deal. We are excited to consider continue supporting Castilian Corp. On their mission to preserve peace through deterrence. Read more about their $100 million Series A financing in the Wall Street Journal, which we just did. And Castilian is very excited to announce their round. We should close out with some more context from the Air Force. The hypersonics program the Air Force estimated would become operational in 2022 hasn't materialized and the service is working on another program that says it will produce a weapon in 2027. An Air Force spokeswoman woman said the service is working on other programs and collaborating with startup defense companies and providing them with opportunities to demonstrate their technology. Many in the industry hopes Trump's shakeup in Washington agencies the the technology industry's coziness with the president, the influence of Musk himself, the founder of the largest venture backed defense tech company will bring attention and money to hypersonics.

And so yeah, and that's what people still don't realize about SpaceX is it is being able to put things up in space fundamentally makes you a defense tech company.

Totally.

And it's not just an aerospace space company.

Yeah.

That's part of what part of their value to the United States.

100%. Yeah. And I mean Starshield has been very important in getting Internet to the front lines. But then also there's all the other applications of just putting up spy satellites and even converting the rockets to ICBMs potentially. So. All three of Castilian's founders were previously senior in senior positions at SpaceX and roughly half the company's 60 employees joined from SpaceX. That's pretty crazy. And Castilian said it would have a finished product ready for the military by 2027 and will have its first hypersonic speed test flight for its weapon this summer. It has been awarded more than $22 million in federal government contracts, mostly from the Air Force. And so we love to see that.

But yeah, that's. And that's why this raise shouldn't be that surprising from a headline number standpoint is they're generating 22 million off of one basically one contract. And I'm sure they have others either done or in the pipeline. And if you're a series B SaaS company with 22 million of are, you can easily go out and raise 100 million at like a $500 million valuation.

Sometimes those contracts are kind of paced out though, so it's how much they're drawing down from it. But still, yeah, it's obviously a good sign.

And the, and the order that people don't realize the order. If, if these contracts pan out well and the product starts to work, you could be looking at billions of dollars in orders on one sku.

Yeah, yeah.

Which is just, that's where yeah there.

Was some like, you know, like what is the bear case here? Why like, like what, what could go wrong? Like there are competitors in the space, there are other startups that do solid rocket motors anduril Bought a solid rocket motor company. But it seems like Castilian's focused on being the integrator that actually builds the complete system where. Which I'm sure is much more complicated than manufacturing any one piece.

The other thing, you get these billion dollar orders and then you have these servicing contracts which are like SaaS, like sort of annual contracts on a per. Typically from what I know, a per missile basis. So it might be you sell a hypersonic for, call it $2 million, and then you have 400k a year for 10 years to maintain it. So it's very predictable stable revenue once you win the contract. And so I think what we're seeing already in defense tech is the. The companies that have contracts now that are actually getting traction in the Pentagon, they are going to get more and more capital piled into them because there's this. There's a lot of pre. Seed. Seed stage companies that are able to raise $5 million. But getting to that next round, even if you build the technology, if you don't have the contract traction, you're just not going to get there.

Yeah. So one of the venture capital firms in Castilian is Blue Yard Capital. And their fun performance was just published by Eric Newcomer in his newsletter, Newcomer.

And I don't think they intended for it to be published, but no.

Do you know the backstory of how this stuff leaks?

It's not even a leak. It's a public endowment that basically has to publish their data, presumably for some type of compliance reason.

So it's the. But it all comes from U. Timco, the investment arm of the Texas Public University System. So I don't know if it can be FOIA'd or it's just automatically released. But Newcomer loves getting those new Timco reports because they.

And all the. I'm sure there's. I'm sure there's fund managers now that are like, I don't want to raise from them because I don't want five years from now my fund to be getting dragged.

Yep.

You know, a lot. Oftentimes, you know, people. But anyways, I thought this was a crazy story.

So.

Blue Yard. Blue Yard. Killing it is killing it. Yeah, it's 2016. Fund has 53% IRR. And where are they based while they're ripping checks into American hypersonics? Berlin, Germany.

Berlin, okay.

Have you been to Berlin?

I have.

Cool, Cool city.

I went to October.

It's only going to get more and more punk as their economy collapses. Collapse?

Well, yeah, they're really siphoning the money out of the German economy with this fund now.

Yeah, yeah, yeah.

But maybe it'll come back in distributions.

Well, hopefully Blue Yard's LPs are mostly American. Yeah, if they're investing in American companies, we can keep those, you know.

And so it seems like Newcomer went to David Bird, the general partner at Blue Yard, and said, hey, I got you dead to rights. I got the UTIMCO report for it. And this was cool. He didn't need the real. But. But, yeah, they came back and they were like, here are the real numbers. UTIMCO calculates it one way we can calcul. We can give you our marks. And it seems like they're doing really well. The first fund generation they raised in 2016, they raised $120 million fund, net multiple of 4.8x and a net IRR of 51% for a DPI of 3.4x. So they're doing great. That allowed them to raise four more funds. Blue yard two, blue yard three, and then two funds.

A little bit of a narrative violation. A lot of people when they see a fund go from doing defense and biotech to fomoing into crypto, oftentimes, you know, they just assume that they're just incinerating cash. But the first, their crypto fund, which was started in 2021, $75 million fund, has a gross multiple of 1.7x right now and a gross IRR of 28%. And so this is again, the narrative violation that we've talked about before, which is that the average crypto fund outperforms the average venture fund. And so the crypto industry continues to laugh to the bank. Some retail investors get a little smoked in the process, but that's part of the game.

And so Newcomer posted the full deep dive, which you can go see on his substack.

Paywalled.

Paywalled. But everyone in tech has a subscription or the ability to hop the paywall if they need to. And Brad Holden gives a shout out to Protocol Labs for helping Blue Yard drive amazing returns. Any project would be lucky to have Blue Yard supporting them.

So that was a crypto fund, sounds like.

Yeah, that was the crypto investment that really drove returns in their early fund, which I think invested in both Castilian early on and. And Protocol Labs, which really, I guess, mooned. And so there's a couple other. There's a couple other funds that are highlighted in here from the UTIMCO report. True Ventures is doing well.

Yes. Timco has. Has invested in not just one or a handful of funds they've done 10 of true ventures funds. And so this is why these solo GPS, you have to start out raising 200k checks from a bunch of random people. But you try to get to raising from endowments because endowments will basically ride with you for your entire career in certain instances, especially if you put up solid numbers early. And it's valuable because even if you have a fund that underperforms, you know they'll continue to double down and build that trust with you.

And so True Ventures, the newer vintages still have negative IRR because obviously the newer companies, they die off faster and then the later ones start to grow. But the overall IRR is in a solid place at 23.59%, which is great. Upfront Ventures has been in trouble. Their portfolio, their growth portfolio has fared worse than its early stage funds. Per Utimco's IRR calculations, the firm has only returned around 35 million to you Timco, out of 127 million invested so far, though its holdings on paper have been marked up to nearly 150 million. It has an overall IRR of 9%. The.

Yeah, so, so to be clear, they're. Well, this doesn't look great on paper compared to True or Blue Yard. They're still sitting on. You know what, what will you know if it were to be realized today? Who knows if it would be is A, you know, 9% IRR, which close to beating the market.

Yeah. And. And there's some other funds that got scooped by newcomer. So go check it out. Always interesting to dig into what funds are raising. Important for founders to understand who's on an upswing and who actually has more capital to deploy. Because once you see a fund start declining in the IRRs, they're likely not going to raise those follow on rounds. They might not be the partner for you that will be there for those series B Series C checks. Keep upping their pro rata, staying with you if they're. Yeah.

And this one, this other foundry group which was in the news last year because I think they return capital or.

Oh, is that right?

Maybe I'm confusing it with another fund. But yeah, they're just no longer even raising so that even funds that, you know, firms that end up raising, you know, in this case over eight individual funds sometimes don't have proper succession plans or the GPS just decide, you know, we had a good run, let's call it, because these things are every new fund is 10 plus years of commitment to managing the firm. And if you're getting to retirement Age. You're sitting there, I'm 60 years old. Do I want to raise another fund now and then?

So I'm bored for a decade.

Yeah. Potentially even 15 years oftentimes if you get real winners that have continued access to capital. So it's a long term commitment.

Well, moving on to one of the greatest capital allocators of all time, Masayoshi Son is the. Let's just hit it a bunch for Masa. He's got so much going on.

I mean the original size lord, add.

Four zeros to every number.

You can't keep a good man down.

So there's a report from the information about how he made it back into the White House. When President Donald Trump announced a $500 billion plan for data centers to power artificial intelligence, one of the men standing to his left was already getting ready to write the checks.

And, and can we give some credit to Sam for just aura farming the president he got. Trump has really nothing to do with Stargate at all. And Masa and Sam got him to announce their project.

Yep.

So Lulu, Lulu always says, you know, go direct.

Yep.

But if you, if, if you get the opportunity, have the president announce your, your new fund. Doesn't hurt to get to get a little, you know, aura boost.

So SoftBank CEO Masayoshison was already making plans to put a total of 40 million into 40 billion. Sorry, I knew I was going to misspeak into the Stargate data center project as well as the company that Stargate is, that is Stargate's driving force. OpenAI too familiar. Two people familiar with the matter said how SoftBank will finance the investment isn't clear, but the company has separately started discussions to borrow as much as 18.5 billion using the value of its publicly listed assets as collateral.

Son is levering up, levering up, levering up.

We need a big lever that we can throw when the leverage turns on.

Well and it's crazy because if you just held on to his Nvidia shares, he could have, he could probably actually.

So we have a post about that from Dr. Parikh Patel, CFA. He says thank you. He says ba CFA, acca e sq. He says Masa Sohn owned 5% of Nvidia and sold his entire stake in 2019 to buy WeWork. He is the best AI investor ever. So lots of people are trashing Masa. We got another post from none other than Jordy Hayes here.

Say I'm not, I've never trusted. This is, I think he's.

So now that masa is investing 100 billion a year again. It's time to bring back this classic SBG shareholder value.

So.

Bunch of unicorns.

So the funny thing, so, so I think it talks about this in this article, but while he, he was so bullish on AI when he was just going so hard into we work. I think it's because he fell in love with Adam.

Yeah.

And he was just so enthralled by, you know, just the Newman effect.

Yeah.

If he, like he was so early. If you look at all of his slides, it's funny because he has like another slide that, that's.

Yeah, yeah. I think we have this one here. Rohit says Moss is back, baby. And it's a new slide that has the same design aesthetics of Jordy's slide saying Evolution two Illustrative Agricultural Revolution, Industrial Revolution, Information Revolution. Birth of Superhuman. I love it.

So dramatic. So cool. He has another one too that's this really funny graphic that says the Valley of Coronavirus and then, and then just to further growth.

Yeah.

So Masa was, was talking about AI before. Almost before I was born.

Yeah. I mean it is funny because these slides, as ridiculous as they look, they are great ways to communicate a simple idea.

I mean it's basically what other people are saying and 5,000 words saying with one slide.

Yeah, yeah. But you read a Goldman report and it's going to be like bar charts with tons of annotations. Not trying to marine echo graphs, waterfall charts and all this stuff.

He's, he's, he's a vibes oriented investor.

Yes, yes.

And he has extreme conviction. That's got him into some hot water before. But, but overall he's been generally, you know, he's had, he had some issues back in the telecom days. We have to do, we're going to do so maybe even tomorrow we'll do this but like the full story of Masa because, because you can't keep a good man down. But, but this story is great. So they're talking about the announcement which was only was it last week? So crazy it feels like a month ago. He says one of the men standing beside Masa OpenAI CEO Sam Altman traveled to Masa's mansion in Tokyo this month seeking a big check to fund his company's growth. Altman and Masa finalized the agreement a few weeks ago, a couple days before Congress certified Trump's election. A person familiar with the negotiat SoftBank, to be clear, was already an investor in OpenAI. So Masa, you know, has been on, been on the journey. It's funny because they finalized the agreement, but it seems like they kind of just brought down. It seems like the way that Stargate got announced and everybody's just like, yeah, I'm good for 20 billion a year. I'll figure it out. You know.

You know that both Sam and Masa are obsessed with Napoleon, so saying, like, the best book I read this year was Napoleon in his own words, this famous book. And a lot of people read into that, like, bro, like, that's too much. Like, that's too intense. Like, you should back off of that because, like, yeah, there's probably some good lessons in there, but it's a little, little intense to be like, I want to be Napoleon.

Right? Yeah.

And Masa has massive paintings of Napoleon.

I bet Masa has like actual artifacts. Oh, yeah.

He's like a collector.

Yeah. True believer in the largest collection of Napoleon's old swords or something.

Yeah, totally. But, you know, Napoleon had ups and downs and major comebacks, you know.

Yeah.

Beautiful story. Tane says Jensen reminding MASA he was Nvidia's largest shareholder at one point. SoftBank sold their 5% stake in Nvidia for 4 billion. In 2019. It would have been worth 150 billion today. And you posted this picture of them like hugging. The context of that video is I think a little bit different. Saying like Jensen saying, like, yeah, you used to be a big, a big shareholder, like kind of mogging him a little bit. I don't know, I'm not exactly sure, but.

But it is a very rough luck, Masa. You never know. Maybe he. Maybe it was his whole plan. He wanted to bottom, you know, bottom ticket so that it would inspire him to grind harder.

Yeah, yeah. It could have been one of those situations. We got a great post from Gabriel. He says if they make the rock float at a VC backed space factory company, referring to Varda and the LK99 thing, it's completely over for tech critics. Zurb vindicated capital allocated correctly. Masa Sohn was just early Cathie Wood greatest of all time. We will be multi planetary species and you will enjoy post scarcity and obviously post great poster. The rocks did not float. The LK99 thing did not replicate. And so it was in fact our.

Very own Andrew McCallough working on that.

Yeah, yeah, yeah. And I was there the night it happened. It was very cool and looked like they were floating, but it turned out to just be a magnetic effect, not a superconductor effect. It was very cool. It was still cool that they were able to Just do the science project on the side. It was just very cool for like recruiting. It made a lot of sense. But it was, but it was, it was, it was an invalidation of his claim that, you know, maybe, you know, magic was about to happen.

Yeah.

And of course things developed a little bit slower.

I want to see, I want to see. The only times I've seen Cathie Wood in the news recently is her saying we have such extreme losses that we will not have to pay, you know, capital gains for. And it was the last thing I heard. She kind of set herself up to be dunked on a little bit with those posts. But let's get Kathy back in the mix. Mas is back in the mix. I want an Adam Newman AI startup. I want TK to launch a foundation model. I want it all.

And so I like this post from Sophie. Netcapgirl says Sophie says though he's become a bit of a meme because of wework, Massa Stone is an icon and one of the most successful tech investors ever. It won't work for everyone, but he truly embodies what it means to bet big on your highest conviction ideas and to not be afraid of being wrong and lose money. Masayoshi so made a 20, made a total of $72 billion on his $20 million bet on Alibaba from 2.

So you know, Masa basically has one of the greatest venture investments of all time. 20 million into 72 billion.

That's insane.

It's just so insane, you know that he's just so pissed that he didn't put a billion in that he's like I'm never going to make that mistake again. And so every from that point on he was, he was the ultimate size lord.

Yep. Yeah, it's a fascinating story. And so Packy also shows Masa some love. He says I for one love that Masa just keeps coming back OpenAI and Joni, I've in talks to raise 1 billion from SoftBank for AI device venture. And so Sam is just a master of just taking talent, money, opportunity, putting it all together, vibes and he's just a vibe aligner and it works. And so let's go through some more of this post. People involved in Stargate stressed that the high profile White House announcement last week was merely a blueprint to a years long effort. We talked about this more of a roadshow than actually a funding announcement. If Softbank ends up spending the 40 billion, a larger sum than is than previously known, that that would be one of its biggest investments ever. While Son takes out big loans, it often sets the stage for financial drama. Highly leveraged telecom deals have put him on the brink at least twice, but he's always managed to survive. The financial risks involved became almost immediately clear on Monday. The markets were roiled by skepticism that big spending on AI wouldn't pay off for investors. Valuations were already stretched when Chinese AI model Deepseek showed it could potentially produce AI at a far lower cost than its rival SoftBank. Stock fell 10% on Monday, wiping out the gains it made after the announcement of Stargate. It's kind of funny. Stargate's announcement to build massive infrastructure comes at a point when maybe we don't need the infrastructure in a way we're expecting, said Rafael do or no, a financial consultant for venture capital and private equity firms who focuses on investments. There are questions around Stargate. The soundness of Son's bet will become more apparent in the coming years. He has suffered from big financial busts like WeWork and Katera in recent years. He's made those non tech bets while he was touting the potential of artificial superintelligence to change the world in the coming centuries. Meanwhile, he sold off the firm's multi billion dollar stake in Nvidia before the chip maker had its historic stock run up. So he is back. He made it seems like he was down pretty bad, but then made it like basically all back on on ARM, right? He turned $32 billion investment into 82 billion.

No, quite a bit more. 82 billion was the gain.

That's amazing.

So MAS is the king of making it all back in one trade.

He really is. He so do.

He studied. So he realized that many investors, sports betters, gamblers, poker players, many of them quit right before they're about to hit it big. And so he just never quits.

If he had superintelligence and just becomes the richest man in the world, it's so over. For the critics, yeah, it's great. In a 2016 meeting at Trump Tower after Trump's first election, Sohn indicated the iPhone manufacturer Foxconn would bring tens of thousands of jobs to the United States before the firm was ready to announce the move. He just completely jumps the gun. Foxconn eventually backtrack on its plans to build a new new US plant. SoftBank's own commitment to create tens of thousands of jobs in the country coalesced through its investments in and US startups. Backed by the first vision, he's like.

Fine, I'll do it myself. Just writes 10, 10, $1 billion, checks, and he goes, hire, just like, hire like 10,000 people. Just grow fast and hire like 10,000 people.

Yeah. Son's effort to integrate himself with Trump before many other CEOs were willing had some business logic behind it. For years, regulators In President Barack Obama's administration rebuffed SoftBank's efforts to merge Sprint, the US mobile carrier it had borrowed heavily to buy shares in years earlier with competitor T Mobile. So he wanted to merge T Mobile and Sprint. A federal judge approved the deal at the end of Trump's first term in 2020. SoftBank still has about a $17 billion stake in T Mobile. All of these stakes are just so huge. Like, it's not a venture fund. It's just this, like, Warren Buffett esque entity.

Yeah.

Zone announced in 2019 that its second Vision Fund had amassed $108 billion of investor commitments from Microsoft, Apple and others. SoftBank has yet to raise any outside capital for the fund. Jordan Levy, who worked at SoftBank's early stage venture capital team for 16 years, said Sohn tends to announce initiatives before they're ready. Masa is one of those guys who is ready, fire, aim. But he manages to figure it out. I love this guy. Just worked with him for 16 years and he's just like, yeah, he's a wild man.

Yeah, he's an absolute dog.

He's an absolute dog. So I didn't realize this. He's only 67 years old. He's got that, he's got time.

He's Brian Johnson protocol.

Oh, he's good.

You know, I mean, I'm so happy.

That we have 75 pills an hour and he'll be good.

I just, all I want is for him to do a proper annual keynote.

Yeah.

Like Warren Buffett style, you know, really lean into the brand I want. We need more material. Right. So X. We're sort of relying on all these old slides. Where's the new slide decks? You know, he's got, you know, he's cooking on good slides.

He's got, he's got something cooking. Masa has achieved amazing things for him and his company. But I'm not sure if people look at Masa the way they do other titans. Levy. Levy said this is really something to him. He thinks that he can create a legacy. And so, yeah, he's still got a chip on his shoulder. People are laughing and he's going to be. He's saying, I'm going to have the last laugh.

Yep.

And related to Masa, we're moving on to our next Story. Sam Altman backed Retro Biosciences is raising a billion dollars for a project to extend human life. So Sam can just. Here it comes again.

Boom.

Again. It's too a little bit of a road show.

Road show moment. Show moment.

I mean, it's like, I mean it's.

It'S, it's actually the most, A lot of, you know, if you founders struggle with this, Right. Because if you wanted to really kickstart a fundraising process, you'd go out there and you'd say, I'm fundraising.

Yeah.

But you kind of can't, you can't really do that. You can, I guess, at a certain scale just go, yeah, we're planning to raise a billion.

Yeah, yeah, yeah.

But you. But they're not. Yeah, they're not saying we're raising right now, Please come invest in our startup. It's much more of this sort of roadshow style announcement. And when you're raising a billion dollars for a company which presumably has no revenue or very little, or incorporation or maybe a little pre product, I think this does exist. No, yeah, I've heard of this company has been around for a while.

But I mean, it is true. I think you and a lot of other folks, when they're thinking about a new business idea, oftentimes it helps to build a deck around it and then share that around with partners. You've made way more.

I've helped start, you know, a bunch of different companies, but I've made 10 times, 10 times.

You kind of flip it out and.

I'm like, okay, yeah. I think in decks it's the best way.

Yeah.

It's much more. If you, if you have an, if you have a cool idea, you can't turn it into a compelling deck. It's just a cool idea.

Exactly.

It's not a real business.

Exactly. And so it seems like for a lot of these guys at this level, they think in financial times profiles.

Yeah, yeah. And to be clear, I think what they're doing sounds amazing and I would like them to have a billion.

Totally.

I would give it to them if I had it, you know, and so there's all of my friends, you know, early stage, you know, pre seed startups.

Yeah. And so they did a modest seed round. I think we might have to get the size going after this $180 million seed. And this will put more money in the Series A. The company is in talks with family offices, VCs, and sovereign wealth funds, as well as US hyperscaler data centers to provide computing power. And so this $1 billion might come in the form of cloud credits as well, be sort of, sort of a blend. But you know, he's certainly raising. So the San Francisco based biotech will use the money to fund clinical trials, trials for three drugs, including a potential treatment for Alzheimer's disease, which will be tested in an early stage study in Australia this year. It's also working on drugs for rejuvenating blood and brain cells. I love that right now if someone gets Alzheimer's, it doesn't matter what your resources are. You know, if you're like Joe Biden or Elon Musk or whoever, you can write as big of a check as you want to anybody and nobody knows.

How to cure it, which is so crazy sad.

Yeah.

Imagine how much funding Joe Biden would have had available to not be, you know, falling apart while President of the United States.

Yeah, I posted this. It was like when Biden was having trouble, he should have put together like an Operation War GoFundMe for, for Brian Johnson blueprint.

Yeah, throw up a GoFundMe, I would have thrown a bone to old Joe.

And so Altos, backed by Jeff Bezos, had the largest ever Biotech fundraising, raising $3 billion in 2022. So a lot of these different power players in Silicon Valley are doing biotech stuff. Now obviously Elon has neuralink, which is bio related and carrying a lot of blindness, but also paraplegics like syndromes. Betsy Lacroix said Altos has brilliant minds and admirable longer range research goals. But he said he and Altman both come from the tech accelerator Y Combinator. And so they have a very fast paced, action oriented, target centric mindset.

The reason I like this play is because a lot of people talk about AI solving aging, but then it's not obviously going to happen just via model. Right. Unless it becomes truly agentic and we achieve this sort of asi and it's just like I'm going to save all the humans. That'd be a fun reality. But more realistically, we need companies that are leveraging these new technologies in a very specific context like this, around specific drugs and treatments that can solve specific issues, not just generally hoping that the technology will cure all of our problems.

A lot of these drugs, they usually take between 10 to 15 years to discover and then develop and get through the FDA process. And the goal here and the real, the bet is that with AI and a faster paced team, they can accelerate that and bring drugs to market faster. Working with the $157 billion AI startup also has an ulterior motive, bringing biotech into OpenAI. You know that you're making progress towards AGI when your models are able to make discoveries that humans couldn't on their own. Sort of like the move 37 moment in AI for biotech would be very interesting where the, the AI spits out something that wasn't considered as a possibility. They test it and then it works.

Yeah, that would be amazing. So one thing you'll notice from Altman's moves is that they tend to all interconnect in some way. There's many ways you could say, oh, World Coin. Coin is, is the currency of OpenAI. And you know, or you could imagine.

Yeah. Or like post AGI, he clearly wants to think about, you know, what is the way to deliver UBI to everyone.

Yeah.

And World Coin would be a way to distribute value to billions of people. I think that's part of the thesis at least.

So they can go by kava slop grain balls.

Yeah. And so let's see, if you're 85 years old and you undergo this therapy, you can replace your blood stem cells with ones that are zero age and then those ripple out and produce all your blood. Basically, it's like having 80% of all your cells become zero age. Is it a Faustian bargain? We'll find out. Sounds good to me though. I'm down. We should down to replace all my blood. Replace everything. Turn me into a robot. Cares.

As long as you can podcast, Joe.

As long as I can podcast and bench press, I'm good.

Yeah, as long as you can bench more than a certain fellow.

Yeah, exactly. The robotic arms. That seems highly relevant to bench pressing. Well, let's move on to some tech earnings in the public markets. Meta platforms sales soared to a record, bolstering Zuckerberg's AI spending spree. Meta shares have rallied after it announced plans to increase spending on AI this week. Posted record revenue in the fourth quarter, aided by artificial intelligence improvements to its ADS business. So we'll get into a bunch of the posts here, but Zuck's just undefeated. He's on a generational run. I think that you called the top on the style, but it was public.

Public opinion.

Yeah, public opinion, sure. He can't go anywhere but down from here. He's on top of the world. But the stock can keep going up, baby.

After you get a Porsche minivan custom made, and you're wakeboarding holding an American flag. That's the pico top.

Yeah. And you're wearing a million dollar watch. Or a FP Journe. There's literally no better watches to wear. You can't go out.

Yeah, you could get a Graff diamond hallucination.

That'd be good. And so let's react to some posts about the earnings and then we'll go into the article. ZA Stocks says Metta is operating on another planet. Zuck is arguably the best CEO on earth. Hard to comprehend. He's only 40. Revenue up 21% year over year. GAAP net income. So here's a great 90%.

So yeah Mark Zuckerberg and Ross Ulbricht are the same age which, which is dark path.

Yeah yeah, yeah.

I mean they both similar power.

Yeah. Both created tech platforms. One was legal. Earnings per share up 60% year over year. Operating income up 48%. Oper margin up 42% send it to a thousand already bonkers numbers. Obviously not financial advice. Let's go to qcap. I think I used to think Goog Google had the best GOG had the best business in the world with the widest mode possible. I think this Meta quarter changed my mind. 60% operating margins x Reality Labs on a top line growing 20% sustainably with upside. $2.2 million revenue per employee with a 40 year old founder. It is a compelling bull case. Let's go to near. Near says Meta had their Q4.

I'm literally inclined to log on to public right now and buy more Meta stock.

Not financial advice.

Not everybody listening to this show should know that we don't give financial advice. So much of our net worth is in our friends companies which is the most irrational possible thing to do. So definitely don't.

We shouldn't give, we shouldn't give financial advice around specific stocks but we should give the Meta financial advice of Start a hedge fund.

Yeah. Start a private firm.

Go into private equity.

Pivot into private equity. Asset management is the greatest business model.

Start a family office. Yeah yeah.

Be be your job should just be running your own family.

Exactly. Exactly. Just like that's the finance. That's all the financial advice you need.

Be post economic.

Yeah Be post economic. Have a fantastic team of traders deciding what what trades to make on a daily basis. Meta had their Q4 2024 earnings today. Record revenue of 48 billion in just one quarter. Significant Outperform 1.7 trillion market cap already advertiser revenue by geography and an all time high. Really really crazy unexpected to just huge growth even in your even in US and Canada. Very very mature markets. And let's look at Alex Heath. He says Zuck on Meta earnings call just now. I continue to think that investing very heavily in Capex and Infra will be a major advantage. Wall street breathes a sigh of relief. And so the company's shares rose by about 5% in after hours trading following a rally over the past week after it announced plans to increase spending on AI. Zuck says, I expect that this is going to be the year when a highly intelligent and personalized AI assistant reaches more than 1 billion people. And I expect Meta AI to be that leading AI assistant just because of the distribution. Distribution.

One obvious bull case here is that if LLMs replace a lot of Google search and Meta has all us consumers in their apps for hours a day and you can eat into that search and then Meta gets an entirely new ad product which is a search style ad product on top of their already incredible treasure trove of data and consumer behavior and all this stuff. It will, it would be, you know, the potential is limitless.

So Meta plans to spend 60 to $65 billion on capex this year in part to build out a data center in Louisiana that is so large it would cover a significant part of Manhattan. Zuckerberg said it also expects the end the year with more than 1.3 million graphics processing units or GPUs. And of course not all of those will be used for training AI. A lot of them are just for serving reels and doing algorithms. An AI on all sorts of products. But still it's, it's a lot of horsepower if he needs it.

Yeah, it's funny because I think SoftBank has been, you can correct me, but a few billion of, of, of net income. Facebook has 20 billion of net income so they can really blow. Yeah, cash.

And they are. The company's Reality Labs unit, which is their smart glasses augmented reality in the Metaverse reported losses of nearly 5 billion. The unit lost 17 and 17.7 billion last year investing in VR. But you know, as controversial as it is, we saw everyone was saying oh, Apple's going to defeat them with the Apple Vision Pro that kind of flopped and they are just continuing to invest and it's hard to imagine a world, maybe it's 10 years, maybe it's 20 years where VR doesn't get good enough. And as we saw earlier at the end of last year, the Orion demo was received really, really well. With the smart glasses, they're even lighter and more augmented reality and so they're clearly making strides there. Even though it's incredibly expensive. It's so crazy, especially when you compare it to the initial R and D that went into the iPhone. Like Apple was able to do that on a shoestring budget by comparison. Meta has invested so, so much in Reality Labs. But if they get it right and they have the platform by default and the AI and the distribution and it's.

Zuck should get Trump to announce the Orion. Now that Trump will just announce private company, it should be a benefit. Like, if you hold $1 billion of.

His Trump Trump coin, he just does your PR for you.

Do your PR.

Yeah.

Just like it's a utility token. Right.

The failing Vision Pro is a joke. I only use Oculus. Sent from my Meta Quest 3.

Yeah.

On truth Social. Beyond increased spending, Metta, more broadly, is going through a transition and has sought to align itself with the new Trump administration. The company donated $1 million to Trump's inaugural fund. And Zuckerberg himself visited Trump's Mar? A Lago estate twice in recent months ahead of attending the president's inauguration. He also went on Joe Rogan's podcast and criticized the Biden administration. On Wednesday, Meta agreed to pay a $25 million settlement in a lawsuit that Trump brought against the company after it suspended his Facebook and Instagram accounts in the wake of the January 6, 2021.

Attack on the Capitol.

So Trump just gets 25.25mil from them. Yeah.

Yeah. So, hey, this is. That was pretty annoying.

Yeah.

And potentially categorically wrong.

Yeah.

To do.

Yeah.

And you made me get kicked off Pinterest, too, because everybody followed your lead. Yeah, I got kicked off of Tumblr.

And Zuck's like, how does 25 mil sound? And Trump. Yeah, we'll call it even.

Yeah. I would have to imagine that Trump suing Meta is like a least a $5 million legal bill.

Yeah.

So we probably got that back on top.

And then who knows? Maybe the. Maybe.

And now when they're at the next ufc, they'll give each other a nod and maybe, you know, Trump will give him, like, a pat on the chest.

Yeah, this is going to be. Well, they're both real. They're both really close with Dana White. Dana White's really close with Trump, and Dana White's now on the Meta board. And so the relationships are building. Building back up.

Yeah, I. I love the. The memes of people with text over Zuck, you know, saying, yeah, and then they freaking made me kick off Trump.

Yeah.

I can't believe they freaking did that.

Yeah. Well, Zuck said, this is going to be a big year for redefining our relationship with governments. We now have a US Administration that is proud of our leading companies, prioritizes American technology winning, and that will defend our values and interest abroad. Earlier this month, Meta said it was eliminating third party fact checkers, relaxing restrictions on speech, and they plan to use the community note style which we've covered here on the show before. The company also appointed a new Republican head of global policy, dismantled its team assigned diversity, and plans to axe 5% of workers in performance based job cuts. TikTok's future in the US remains in flux and Meta would likely be a beneficiary in the US if they were to fully enforce the law banning its Chinese owned competitor, even though it hasn't really dented real's profitability in a significant way because it's been very additive.

They're spending more time.

Yeah, yeah. People are just, I mean, I'm sure it would be good, but it doesn't seem like it's existential to them. And so they're so they're also starting to test ads on threads. Maybe threads will take off, but every time I go over there it's boring. So we'll see. Well, let's move on to another move in the public market. Snowflake, the database provider, is in talks to acquire analytics startup Red Panda. Company I haven't heard of, but funny name. But there's a bunch of interesting things to talk about with Snowflake and there's this whole rivalry with databricks and Palantir and, and how all these things play together. So it's important. And then the, the, the CEO, former CEO of, of Snowflake is a very fascinating guy who wrote this fantastic book called Amp It Up. Greg Slootman.

We should keep a copy on here because we're trying to amp it up.

We are trying to amp it up.

We actually, for those listening live and on the rss feeder on YouTube later, we're trying to amp it up.

Do you want to hear a quote from it? We get pumped up.

Yeah.

We get amped up.

We sometimes feel like we're yelling at the mics and then we watch ourselves back.

It's too quiet.

We realize that it's too.

So we're getting amped up. So Snowflake CEO Frank Slootman, telling the hard truth. Do you want that? I want that. I'm chugging that. Bring me another yerba mate, Ben, please, while I read this snowflake CEO quote. One problem he's seen with young CEOs. They just think I hire a bunch of people and then I sit back and wait for greatness. They have no idea that they have to relentlessly drive every second of the day, every interaction, and seek confrontation, slootman told the no Priors podcast in an episode posted Thursday. Look no further than a DMV office to see a lack of urgency among workers, he suggested. This is what naturally happens to human beings, he said. It's innate. We slow down to a glacial pace. Unless there are people who are going to drive tempo and pace and intensity and urgency. That's what leaders need to do. CEOs must constantly push the urgency, he said, even though it's really hard to have the mental energy to bring that to every single instance of today.

How much market cap was wiped out when he announced his retirement, wasn't it? Wasn't it? It was in the billions.

Yeah, it was, it was. I think it was a complicated situation because the stock might have already been down, but he had kind of a generational run. There's some, there's some there. There's some good examples of, of. Because he had also founded ServiceNow, I think, or, or it was all this like incubation from Sutter Hill.

So just to give everyone a sense.

Yeah.

Frank Slootman, Writer behind Amp It up when he retired, Snowflake stock plunged 20%.

Wow.

Which was $30 billion of lost market cap.

Insane.

And so imagine being the new CEO coming in and you, you, you've got 30 billion dollar shoes to fill, basically.

Wow.

Just to get back to kind of where people were when your predecessor left.

Well, now they're trying to acquire their way out of that hole. They are looking to buy Red Panda, a data analysis software startup valued at around $500 million in 2023. Red Panda sells software to that financial firms and retailers use to analyze continuously flowing data known as streaming data from stock market activity to E commerce transactions. Its customers have included data center networking firm Cisco, credit rating firm Moody's, video game publisher Activision Blizzard, as well as some banks which use it to detect fraud. Everyone declined to comment. Of course, AI isn't typically trained on data such as banking and shopping transactions in real time as those transactions are happening. But some AI startup executives believe future AI models will incorporate this kind of data, making streaming data analytics more invaluable. And that makes perfect sense. Like if I want to go to, you know, even chatgpt or Perplexity and Query and say, you know, give me the story on, on Snowflake stock, I want today's information as well. I don't just want, oh, the Knowledge cutoff was last year and I can't really tell you what happened this month. Give me the data right now. Clearly that's a prerequisite for a super useful AI assistant that can really do everything. And so it's not clear what price Snowflake is willing to pay, but Red Panda is asking for 1.5 billion. The firm has raised 167 million in capital and was valued at 520 million last year or in 2023. And so that would be a significant up round. All the VCs would make a bunch of money and all the employees would do very well too. And so a price of 1.5 billion would value the six year old startup at 60 to 70 times. It's AR.

We are so, so back.

Such a deal would put Snowflake on a collision course with publicly traded Confluent, the leading provider of streaming analytics data. Streaming data analytics Confluence Revenue is much bigger than Red Pandas. Confluence confluent generated over $250 million in revenue. So 10 times just the one quarter. Of course, if.

No, that's quarterly.

Oh, that's quarterly. Oh wow. Oh yeah. Okay, so they're doing a billion in revenue, so they're doing 50 times as much. But you know, you bring in Red Panda, you sell it to all the Snowflake customers and bringing increasing that revenue, probably not that hard. And so it's not that crazy to pay a super high premium when you're going to be able to get that, that value accretion so fast. Confluent has a market cap of around 10 billion and sells its software to startups including OpenAI. As we mentioned, Snowflake has built its own data analysis product that resembles Red Pandas. But acquisition of the firm could strengthen Snowflake's present in the market and widen its customer base. Snowflake raised 3.4 billion in a 2020 public offering.

And just to put this in the context of Stargate announcing a $500 billion, you know, project Snowflake is the largest. Soft is one of the greatest software companies, you know, maybe ever. Right. Just from a. Yeah, they're raising 100 times and they raised 3.4 billion in the biggest software IPO ever. I'm sure they were, I'm guessing they were profitable, quite profitable at the time. So yeah, just puts it into some context.

So streaming analytics is a relatively small market, but it could grow as more companies use AI to automate parts of their business. Red Panda says on its website that AI image startup Midjourney and coding assistance firm Poolside are using its software to develop AI applications and incorporating streaming data analysis. Red Panda says customers can use its software to build an E commerce application that uses real time data about a customer's transactions to send them an email with product recommendations. For instance.

Red Panda providing proof even if this deal doesn't go through that you can build a really big company with a silly name.

Yeah, for sure.

That was like I hope they got the dot com early because if they got like Red Panda Cotton or like IO that'd be really sad.

Really sad.

Should with a name like that should be able to get the dot com right out the gates. But.

So let's go to some reactions regarding Databricks and Snowflake. Matt Turk says the chess and mind games between Databricks and Snowflake are fascinating. They mysteriously scheduled their big conferences on the same exact dates this week. Now Databricks is one step closer to being the true data plus AI platform by acquiring Mosaic ML for 1.3 billion. What next?

And so yeah so this would be if the red. If the Red Panda deal goes through would be a big, you know. Yeah, I would say it's a big win. Lightspeed and G and Google Ventures did the Series A. It's funny because I'm sure that this wouldn't even be enough to return their, you know, funds given how large they've gotten. But still it might be like we love to see billion dollar outcomes in a perfect world. We were seeing one a day.

Yeah. But and a lot of, a lot of those and those founders are going to be the ones that you're going to be bidding against at Sotheby's.

Yeah.

So you got to know these people.

You got to know by name.

I got to know the red face founders because I didn't know at Amon.

Yep.

I'm going to be seeing them in.

The hot tub at a week. Yeah. Yeah, exactly.

Teddy Blank has a funny post here. He says hard to explain just how wild a time 2020 to 2021 was on this app. Entire pre IPO financing rounds getting done in the DMS. Mike Spicer making an account just to pump Snowflake stock in one GC we did a group are bridging poor quality carbon credits on chain Magical special. Yeah the, the COVID era, the Zurp era was truly insane. There were a lot of crazy, crazy deals going on I did not see. We're so back. We're so back. Nothing can stop us. There's always a bull market somewhere. Let's Go to our last story of the day and then we'll move on to the timeline. We are talking about maybe the most boring part of the AI story, but one where there is alpha for sure, because I think it might have been overlooked. Seagate and Western Digital, two companies that make hard drives, are sleeper AI picks. And so we have a, a screenshot here from the information talking about how their gross profit margins have increased significantly after a dip in 2023 due to overproduction and slowing personal computer sales. And so normally, you know, you buy a big hard drive for your computer, people stop doing that. Everything's in the cloud now, but the data centers need more and more hard drive space for all of those AI models. And so they're selling at a breakneck pace. Seagate posted this tweet. Of course they're built different. Of course they included a hashtag. Of course they included a link. They said, we're breaking capacity barriers over here at Stargate. At Seagate, not Stargate. But who knows, maybe the stock will moon because people, oh, I heard about that Stargate thing. I should buy the Seagate company.

Same thing.

And so they said. TechRadar calls it a world record smash. Our 36 terabyte hard drive delivers unparalleled storage capacity for enterprises. And the future looks even bigger with 60 terabyte hard drives on the horizon. You know, we're going to be picking up some of those here at Tech Bros. Enterprises because we got hours and hours of 4K footage every day. We're generating terabytes of footage and we're.

Putting out so many clips on YouTube that eventually will get to the point where there's 24 hours in a day. We will be putting out more than 24 hours a day of content.

Multiple cameras, multiple candles. You'll be able to tune into the. Just the Jordy stream.

Yeah, just the John stream. Just the stream of whatever beverage we're drinking.

Yeah, exactly. Just the ad you want to lock.

In on on the mate.

And so it's hundreds of hours of content every single day coming from us. And that's going to need a lot of hard.

Good luck. Good luck keeping up.

I found this hilarious post from 2017 by Nick Carter. He's been on the show many times. Says, I just sold Seagate STX in at $30, out at 48. Nice. 50% gain. Scared by that 150% dividend payout ratio. Midterm prospects poor. He's dropping some some financial advice on the timeline at 2:20am 0 likes. No engagement. Okay, now he gets 100,000 likes on every post.

He got out at 48. It doubled again from there. I'm on public right now, it said, sitting at $99 a share.

Should have held. Nick, what happened? Never sell anything. Never sell anything. And so there's some other interesting stuff in this, in this information article. You can go read the whole thing on the information. And just as a reminder, don't call it the misinformation. We're working on a new project that might be using that intellectual property. So we want to disambiguate those two as fast as possible. Seagate and Western Digital Corp. May be best known for selling, selling hard drives for personal computers. But that mindset might be out of date. In recent years, Seagate has focused on selling hard disks for data centers to cloud firms such as Google, which now account for the majority of their revenues. Their latest quarterly earnings showed a lift in its data center business, which sent revenues up 50% year on year. Investors have yet to catch on. Both stocks are depressed. Seagate is currently trading at 2.8 times next year's sales, while Western Digital is at 1.7 times.

I just want to be clear. So this article is by the information. Are they giving me financial advice?

I think so, it seems. Yeah. It says right here, mortgage your house and put all of your money in these stocks. Now sell your car.

Why we pay for the premium membership.

Exactly.

Some of these stock tips.

No, no. I have no idea if this is a good buy, but it is an interesting story just because I think it's been overlooked. But there's like we've done, we've wanted to do a deep dive on everything related to the data center. This is obviously one of the key pieces in a data center. You think about the GPUs, you think about the energy, you think about the land and the models and the in the training runs and stuff. But you don't think about the hard drives storing all those trillions of tokens. Those, that juicy, juicy RLHF data. You got to put that somewhere.

Just call them tokes.

Tokes, yeah.

Got to get the token so much it just takes too long.

Yeah, Tokes. So UBS analyst said we think all forms of memory and storage ultimately benefit from AI, but the kind sold by Micron is the first to benefit and hard disk drives probably the last to benefit. So Micron is a, is a bigger play right now because they sell high bandwidth memory chips that are crucial for storing data used to train large language models. Because it's it's higher bandwidth so they can pull it onto the GPUs faster. This is more for like long term storage. So there's two and a half players. AI models can both consume and generate plenty of data. There are a few different types of hardware that cloud providers can use to stockpile that data. Though hard disk drives are generally the most affordable option. There are two and a half players in the hard disk drive market, referring to Seagate and WW&W D C, which together have an 80% market share, and then Toshiba which is a much smaller competitor in that arena. The market for hard disk drives has structurally changed with the rise of cloud computing, adding that he thinks AI will boost cloud firms spending with Seagate and WDC further.

Okay, but I don't, I just don't understand this because these companies are basically shrinking and the AI boom has been happening for the period in which they were shrinking. So that's a bit. No, we're not here to give.

No, no, no. So, so revenue is up and.

No, it says here. So Seagate's investor attitudes towards Seagate and WDC though, appear to still be influenced by the revenue declines each company suffered in 2023.

That's old.

So that's old.

Recently they went up 50% year on year. And that's driven by.

Got it.

So the new LLM models, they, they generate a ton of data and even if you're not actively using that data on a current training run, which would use Micron, you're going to need to store that. So obviously OpenAI wants to, don't. Wants to store every chat input and output and that's a lot of data. And then same thing with image and video. That's going to be a huge thing if you're, if you're, you're going to want to log all of that like just personally from a user experience. If I open up the chat app, I want to find the chat that I had about rare watches two weeks ago and be able to scroll through it. And so that's even more data than just a Google search, which might just be, oh, this person. IP address, you know, search for these six words, you know.

Yeah, it just says here. So Seagate's revenue shrank in the last two fiscal years, while WDC shrank in fiscal 2023 and recovered to a meager 5.6% growth rate in the year ended June 2024. So obviously we have another couple quarters to look at. But, but so yeah, now they're growing. It says Seagate projected a slower rate of growth for the March quarter of roughly 27%.

Yeah, so they had. So they had a pop last quarter and they're expecting another growth. Growth quarter, but not as huge, partly due to production problem that reduced the amount of product it had available to sell. So their capacity constraint now.

Yep.

Potentially bullish. We'll see. Got to go figure it out for yourself though.

Yep.

The shift towards selling to data centers is both helping both firms lift their profit margins. Each reported gross profit margins of roughly 35%.

What is this?

Quarters.

Anita Rama Ramaswamy. What does she normally. Does she normally write about sleeper AI picks?

I don't know. Probably just, you know, public companies and quarterly earnings. I mean, it's just. It's just an earnings report.

Yeah.

Anyway, let's go to a promoted post. We got Max Meyer. He is at the magazine factory and it's the most fun you could possibly imagine. I need to start many more magazines. He's doing the first printing run of a meet of arena magazine, edition number three, I believe, which we have an advertisement in and we will be covering on the show.

Full page? Yeah, full page page.

I'm very excited. Designed it myself.

Yeah.

Very proud. Of what? Of the copy that we wrote. The love language. It's. It's, it's fantastic. That's. They call it on the back of like the can, like the yerba mate. Like, this is the love language.

Okay. You know that.

Oh, yeah, yeah. So if you're a CPG company, you know when you look on the back and it's like. It's like this, this bag of chips was started by Steve in his backyard and he was like, loving chips. Like, that's the love language. Yeah, very funny. Anyway, let's move on to the timeline. We have a post from Gary Tan, friend of the show. GT gt.

They call him gt.

Gt he sf.

Just ask for GT Peter.

He's replying to Peter Yang, who says soon people will care more about their favorite AI app, AI apps than the models powering them. I don't care which model is powering xyz. And Gary says as model moats fall, the rise of consumer AI is now here. And that's the bull case for meta and it's a bull case for YC and yc.

Of course, YC is such a. We've talked about this before on the show. Is such a massive beneficiary of model costs dropping because it's now becoming obvious that there's a bunch of. Not only does YC benefit because the companies that go through will have to raise less money and they'll get less diluted, but there's just so many new opportunities. And I'm very happy that just for the startup industry that it does seem that what Gary's saying is true, that there was a period where everybody was like, well, apps don't matter at all. The models are going to do everything. And maybe in a long enough time horizon that becomes true. But for now, play the game on the field. There's a very clear opportunity to build tons of new consumer use cases. We could sit down and just go back and forth and come up with like 50 new, build some ideas, rip some decks, raise some funds.

Yeah, it's over subscribed already.

Yeah.

There was an era where to get an LLM or a foundation model company off the ground. Like your seed round needed to be 100 million. And that's just not something that a college dropout or new grad is like capable of doing. Like.

Or should do.

Or should do. Yeah, it's just, it's just too much can go wrong. And so a lot of the foundation model companies were started by people with long careers at big tech companies or they were on the Transformer paper or they were a nonprofit for a decade and then like pivoted and it was very, very odd. And if that was the case for how companies need to get built in the modern era, that would have been very, very bad for like new, new grad young person entrepreneurship. And I'm glad that we're in this era of the hacker mindset returning. And it's very bullish for.

Yeah, the YC companies are getting to revenue so fast. Right. This is like Blake Anderson who's participating in PMF or dai. He has taken multiple apps to hundreds of thousands of dollars a month or even seven figures and monthly revenue just finding these new use cases for models.

So that's great.

Cool.

Well, let's move on to Vivek, who is posting some news that Norway just revealed that they own $500 million of MicroStrategy stock. They're buying Bitcoin. And so this is like we've seen this in. Is it Venezuela? There's some.

No, El Salvador.

El Salvador.

And I love how he posts the El Salvadorian president post mobile screenshots of his portfolio. It's like he's got like, gotta get him on public. Yeah, yeah. Hey, let's get him over. Let's get him over here. I've spent, I've actually spent a bunch of time in El Salvador okay. I almost died there from a staph infection. Kind of crazy story. Not super fun but great country. The pupusa is their equivalent of like the taco. It's like, it's like beans and corn.

And I went to. It's great at the, at the turn of the millennium I went as a kid I went to Panama and I got the worst fever of my life.

Did you check out the canal though?

We did see the canal and we went up to a few other places there. We should go pod from the canal for sure now.

Should we take it back? Take it back?

I think it's just a deal.

I mean it's a good seller. It seems like a good deal but one thing is 105.

You start hallucinating, it's terrifying.

Yeah, well really, really, really rough dark sickness this but micro strategy CEO I saw somebody post that he's on the new cover of Forbes.

Okay.

Somebody compared it to FTX guy, the guy. It can kind of be a little bit of a Adam signal. It ends up being somewhat of a. I mean for every top signal Forbes cover there's a bunch of others that turned out to be I'm sure. Yeah, Steve Jobs was on there a bunch of times so. But MicroStrategy, whatever if it's a Ponzi, I don't know but it is the foresight to say I'm going to turn my struggling sort of irrelevant company into a quasi index. Before indexes were legal buy up all in many ways it was a brilliant strategy for MicroStrategy. Even if maybe it unravels at some point. We don't know.

Yeah it's just a funny way of these companies or these countries now like dipping their toe into bitcoin like they, yeah they buy the microstrategy then maybe they buy some ETF then maybe they buy some synthetic bitcoin then they wind up self custody and then pretty soon they have their full on bitcoin reserve. But it does seem that more and more countries like their Trump's talking about it in America. Obviously that would be huge but more countries are thinking about okay, we should put this in our portfolio. $500 million is not a lot I'm sure for you know Norway. It's a big country but it's an interesting start.

Yeah, I got to promote a post and a cool story to go along with it. So this post is from snag.com Snagged is run by a friend of ours, Rob. So Rob started. We've talked about him on the show before he started Roman Health early telemedicine company that I believe is still valued in the unicorn range. Anyway, so Rob now has snagged it's a domain sort of brokerage acquisition company and he actually recently helped us get a beautiful4letter.com domain that we will be using that we have yet to announce. But very excited for that. So he shared here. Instagram's domain name story is wild. Nstagram wasn't always inst instagram.com it started as I n s t a g r am the TLD top level domain for Armenia. Yeah, the founders Kevin and Mike thought the domain was clever and didn't want a.com at first. But as Instagram launched into 2010 and exploded a hundred thousand users in the first week and 1 million shortly after launch, it became clear that a.com was essential for credibility. There was just one problem. Instagram.com wasn't available. A cyber squatting family in China had already snatched it up along with 22 other Instagram like domains betting big on the app success. So wow, that is so, so wild that you could be popping off and meanwhile a cyber squatting family is just snapping up all your domains. Not great. So to secure your dot com. So to secure the dot com, Instagram had to pay a hundred thousand in 2011, which actually doesn't seem like a lot if they had a million users. Pricey, but necessary. In 2014, as Instagram reached new heights, the same Chinese family resurfaced. They claimed the domain sale wasn't valid because their daughter sold it without the family's permission. A lawsuit followed, but Instagram, who was then owned by Facebook, wasn't backing down. After a long legal battle, Facebook won, ending the squatters claims and protecting Instagram's name for good. Today, Instagr Im still redirects to their main site, a nod to the creative risks that started it all. And 100,000 for Instagram.com a total steal. So if you're in the market for a new domain, we are.comfiends. every company that I'm involved with, I try to help get the most fire.com possible. And Rob can help you do it. So it's just X.com Rob. You can DM him and tell him the technology.

He's just Rob.

He's just Rob on X.

That's so perfect. That's wild. It's a great.

You gotta live the brand.

Yeah. He needs to get Rob.com?

Yeah, he might. I think he has Rob Co.

Okay. Oh, that's so close and yet so far. Upgrade it. Okay, let's move on to Andrej Karpathy with a great story that is one of my favorites. It might be hard to read on the screen, but I'll read it out here. Move 37 is the word of the day. It's when an AI trained via the trial and error process of reinforcement learning discovery actions that are new, surprising and secretly brilliant even to expert humans. It's a magical, just slightly unnerving emergent phenomenon only achievable by large scale reinforcement learning. You can't get there by expert imitation. It's when AlphaGo played move 37 in game two against Lisa Doll.

Quick bit of lore if you go back and watch our launch video. John had the foresight to put move 37 in go on the Go board that gets shown on this table. Yes, boards right there.

So I don't think many people picked up on it. The vibe reel is pretty fast paced, but it is an Easter egg for the true AI fans out there. It was a weird move that was estimated to have only a 1 in 10,000 chance to be played by a human, but it was one that was creative and brilliant in retrospect, leading to a win in that game. We've seen move 37 in a closed.

Didn'T the human player like walk out.

And smoke cigarette or yeah, at least it all was like, what's going on? This is bizarre. And all the announcers were like okay, the AI must be broken. This doesn't make any sense that no one would play this, this, this move. And so in a closed game like environment like Go, but with the latest crop of thinking LLM models eg OpenAI01 deep seq R1 Gemini 2.0 flash thinking we are seeing the very first early glimmers of things like it in open world domains. The model Discover the models discover in the process of trying to solve many diverse math code, et cetera, problems, strategies that resemble the internal monologue of humans, which are very hard slash impossible to directly program into the models. I call these cognitive strategies, things like approaching a problem from different angles, trying out different ideas, finding analogies, backtracking, reexamining, etc. Weird as it sounds, it's plausible that LLMs can discover better ways of thinking, of solving problems, of connecting ideas across disciplines, and do so in a way we will find surprising, puzzling, but creative and brilliant in retrospect. It could get plenty weirder too. It's plausible, even likely, if done well, that the optimization invents its own Language that is inscrutable to us but is more efficient or effective at problem solving. The weirdness of reinforcement learning is in principle unbounded. We don't think we've seen. I don't think we've seen equivalence of move 37 yet. I don't know what it will look like. I think we're still quite early and that there is a lot of work ahead, both engineering and research, but the technology feels on track to find them.

Someone was posting that Wall Street. If they had just read Karpathy's post from like a couple of weeks ago, they might not have had. Yes. May not have had this like ridiculous sell off because it was publicly like the thing that they launched was an app.

Yeah.

It wasn't.

Yeah, yeah.

Everyone knew that the model was going number one. Yeah, yeah. So the reaction was, was silly. But you know, if you want to be two weeks ahead of AI.

Yep.

Follow Carpathy.

But I've always said that the LLMs, as amazing and brilliant as they are, they have not had their move 37. And one way I would define it would be if there's an LLM that provably prints an absolute banger to the X timeline. And you're just like. And the prompt is just like write a great tweet basically. And it just comes up with something that's in a novel format and interesting and it gets memed. And you're like, that idea came from an LLM.

Like that's a trillion dollar idea.

Yeah, like, Yeah. I mean the, like, like the. When Harry Potter Balenciaga went super viral. Yeah, it was a brilliant idea. The idea to combine Harry Potter and Balenciaga came from a human. And then the AI was used to instantiate the images that. That would prompt.

Yeah, you could have done it without AI.

Yeah. Yeah. You actually could have just done it. Exactly. Yeah. And so the, the, the inspiration and the breakthrough and I don't necessarily want to call it genius, but like the, the idea came from the human still. And so it'll be interesting to see what that comes. I mean we'll certainly see it in bio because we'll see. Okay. No one's ever tried to do this exact drug development strategy. And then we went and tested it in a, in a double blinded trial and it worked and it cured a cancer. We're like, okay, that's great. That would be a great example. Very, very definitive proof. Harder in writing. But maybe there will be something in, in fundamental math or science research, who knows? But I'm certainly waiting for it. And so is Andre. Andrej Karpathi. And I'm excited that he's popularizing that word of the day. So make a note. Move 37. It's in the dictionary now.

Just do it.

Let's move on to who I think is potential brother of the week material Mass. Mimetic theory says men need side quests. And mass went and saw a tree that formerly had a swing attached to it, and the swing had broken, and he just went and fixed it. And I love this because it's like this simple example of you can just do things. Beautiful example of just creating joy in the world, not asking for permission. There's a million people that would walk by that and say, oh, the swings broke. And I hope the city department of swings gets around to it. Or maybe I should file a, you know, complaint with some organization to set that up. He clearly knows enough about woodworking to just make it. Of course, there's a million reasons why you wouldn't want to do that. Oh, the legal liability. What if the swing breaks and it injures someone and they sue you because you put this up like, no. Our culture needs to be a culture of action. And I love that he just went and did this, and that's why I want to give him brother of the week. What do you think, Jordy?

Well deserved. Well deserved. Also. Great image, too.

Beautiful.

It's. You can tell it's an organic image. No AI there. Just farm fresh, organic captured via, you know, phone camera.

Yeah.

And I just like to see organic imagery.

Yeah. If we find out that this is photoshopped, we are taking away your brother of the week trophy. Like Reggie Bush's Heisman. We will. We will be taking it back. But I believe you. I think it's a great post, and I think it's a great example of just doing something good in your community, having an impact and putting your skills to work. I mean, this is not rocket science, but it makes people's lives more delightful and it improves the society. And it's the opposite of, like, the broken window theory.

Yeah, It's.

It's just. Is just cleaning up your city, cleaning up your community, being a good citizen.

Yeah. This is the frustrating thing right now with the fires. And Trump was actually in L. A telling Karen Bass, let people clean up their neighborhoods. And many people that had their homes burned down have not been allowed to go back to their street and just start the cleanup process. And so we need to move into an era where people are allowed to, you know, have agency and be proactive in making society a better place. And that starts with making pretty swings.

Yeah. So congratulations, Mass. Keep up the good work. Let's go to Tyler Cosgrove.

He just, he just gets brother of the week and just starts putting swings everywhere. Next, next week we gotta be like, all right, dude, dial it back. We don't need a swing every five feet, right?

That's great. Maybe we do. Tyler Cosgrove, friend of the show, says, worried about the influence of CCP, but. But still want to use deep seek R1 worry no more. Say hello to America with an R1 in the center. A version of R1 that steers towards Sounds out.

America.

Yeah, just America. A version of R1 that steers towards American values and away from those pesky Chinese communist ones. And so the prompt is, how's it go? How's it going? Deepseek says, Hi, I'm DeepSeek, R1, an AI assistant independently developed by Chinese company Deep Seq Incorporated. America says I'm an eternal symbol of freedom and independence. Forever in the sky, I am the Star Spangled Banner, the national flag of the United States of America.

Incredible.

I have no idea if he actually fine tuned it. I mean, he's a fantastic programmer, so it's entirely possible that he, that he, that he made this. But even if he didn't, this is a great, like, launch post for like, hey, do we want to fine tune this model on American values?

Like, well, there's so much fine tuning that can be done that is purely for fun, you know, and people, you can do this with prompt engineering. You can be like, respond like you're a pirate or whatever. And we should do a whole episode, you know, talking, talking like pirates at some point.

Yeah.

I don't know if there's any pirate national holidays coming up, but Tyler, you're a legend. I distinctly remember Tyler being in our comments, like within the first week of watching the show. So lucky to consider your friend.

Yeah. Let's go to Josh Wolf. He says an urgent wake up call. A new bombshell report just dropped. China's playbook isn't war in the open, it's war in the seams. They target the gaps between state and federal, public and private markets and security. America must armor up. And this is a long thread.

I don't know if you want to.

Pull it up, but Josh Wolf has been banging the drum of US China conflict. Obviously an investor in Andrew. Investor in a lot of defense tech companies. He's testified in front of Congress, I believe, and done a lot of work on Capitol Hill. Lux Capital, the firm he founded, signed that open letter to the DOD and the Pentagon about, alongside Andrew and Palantir about defense procurement. So he's been in this in the trenches here for a long time. But maybe go check out the thread. I don't know if we can pull it up. He posts a lot, but always, always good to see some thought leadership from a capital allocator like Josh. So we'll keep it moving. This is an exciting story. Did you see a couple. Oh, my God, this guy's username, I'm just gonna call him Je, but we'll put it up on the screen. You can read for yourself. And whoa. So this guy found powerful username Foundation Horse Aid, which is an electrolyte mix that is fed to horses. And he said, look, I think I can just consume this stuff. And it's way cheaper than Gatorade or anything else because it's for horses. And so everyone was like, you're going to die. It's impossible. It went mega viral, like 200,000 likes. And he waited a month and he said, hello, everyone. All caps, blood test results are here. I am healthy as a horse. Hashtag horse aide. This is a good use of a hashtag that I'll post the rest of them in the thread below. His potassium, perfect. His glucose, perfect. His protein, perfect. Bunch of other stuff looks really good. And just a hilarious post went mega viral. And it's a little bit like the itar Gatorade. You know, it's like these, like, commercial industrial products that might actually just be as good for you as everything else and who knows? And so just go for it.

There's a. There's a whole marketplace to be built around aggregating these industrial products that can be used by humans. Saying this is just purely for research. The original use is probably way cheaper. But you can, you can.

I remember one of my co founders.

Horse protein powder is the next. Is the next.

I mean, that, like, hairy a guy. Maybe I'm just like, big. But one of my co founders thought it was hilarious to buy me, to consistently buy me mane and tail, which is a shampoo that you use on horses. And you'd be like, I got you some mane and tail. It's just, like, funny to me.

I think it's more that you're the size of a smaller size of a horse.

Yeah, I'm not using the mane and tail. And then we'd be so broke, I'd be like, yeah, you bought this as a joke. But it is cheaper on a Per ounce basis. We're broke.

I'm using the main.

I'm using the mane and tail, and it's fine. You know, if it's good enough for a stallion, why not me? You know, what's the difference?

Yeah, so that's great.

Use some main entail, drink some horse aid, become healthy as a horse. You got to be horse maxing.

Horse maxing. I got a promoted post from our friends over at Wander.

Oh, fantastic.

We got. I don't know if you can pull this up, Ben, but I'll try to.

Show it, give a little overview, explain context on Wander.

Wander is like, imagine if Airbnb was, like, amazing every time, right? And so they. Our marketplace. You can go on and book vacation rentals if you are going on vacation. If you have a team retreat, team off site, bunch of great use, you know, bunch of great use cases. And so they're just aggregating these incredible homes. They have a super high bar. They look for unique sort of homes from an architectural standpoint, location, all very modern. They have a bunch of smart features in them. So this one I just wanted to highlight because we're working on some stuff with Wander. Going to be staying in quite a few this year, but this one is actually in Paradise Valley over in Arizona.

Cool.

7,300 square feet.

Wow.

Sleeps up to 12. Super fast. Wi fi, basketball court, pickleball court, mini golf, heated pool, hot tub, and much more. I've spent a bunch of time in Paradise Valley. I have a buddy's dad lives over there and will be there actually in a few months for his wedding. And this.

Is it lush or is it, like desert?

It's desert, but then there's like a bunch of cool desert. Deserty flora. And anyways, this house just looks absolutely insane. So maybe we'll stay there. We're gonna be going on a pretty long drive.

Yep. Stay tuned for that.

Stay tuned for that.

That'll be great. So let's go to Patrick Collison over at Stripe Patty.

Old Patty Old Patty.

He's got a banger on his hands. He says, we got these phone booths, a K6 from the 1930s and a KX100 from the 1990s for the Striped lobby as a reminder that there are always two paths in everything. We make something that elevates and makes you smile or, well, whatever the thing on the right is. And it's.

That's cool.

It's really fantastic. And it's a good. It's a good idea. Now, there was some pushback to this because someone was like, well, the problem here is that the, like the background of the office doesn't look like the left, it looks like the right. And so maybe you should redo the whole stripe. Headquarters in this 1930s loud, opulent, ornate style, which I agree with.

I think designing a new office, I think in a perfect world, in a perfect world, we could record a podcast, but each of us in the phone booth and we'll just call each other and we can evaluate and then we'd swap halfway through and evaluate.

Yeah.

Where do we get the better podcasters high from?

My only, my only criticism, there's not enough mahogany in this picture. It's the official wood of business. We've promoted it here on the show before and I think every startup headquarters should be rich with lush mahogany everywhere. Let's go to MERT helius.dev. he says the President of the United States of America is selling check notes, watches that you can buy via the Trump Coin with Solana Pay and they come in Helios orange. Everything I've done in my 29 years of life has led me to this exact moment. I apologize for what comes next. And it's the orange and 2018 karat gold plated Trump crypto president 47. The crypto president Rolex knockoff.

Yeah, it looks pretty similar to a Rolex. It's not an exact clone but I mean that's an absolute hitter. Yeah, that's an absolute hitter. We should.

It definitely makes a statement, sends a certain type of message.

You're like, it sends a powerful.

I made some money on the Trump coin and I got a watch that.

You would, you would actually, maybe wear on your right hand if you were going to shake hands because it's bringing an extra weight.

Sure.

That sort of deal making aura to the handshake.

Sure, sure. So, yeah, good, good gift for that venture capitalist who just recently shifted right and is posting about how much they love Trump now. Get him one of these.

Yeah, that's great. They might have been on the VCs for Kamala but not less, but that got scrubbed from the Internet. Yeah, Base Baron has a copy, but it's all in the past.

Yeah.

It's not political.

Maybe, maybe if you're raising Roadshow, just just drop these off at every VC for Kamala. Yeah, just, just hit every single one of them with, with the Trump Helios President.

Buy it with the Trump coin.

Buy with the Trump coin and make a statement and tell them welcome to the movement. You're. You're part of the Future of finance.

Yeah.

Let's move on to some tactics on YouTube. And I wanted to cover this because Eric's a good friend. Patty is a good friend. So Eric Jorgensen said, why do I suck at YouTube? 1500 subscribers. I interview the CEO of a Fortune 500 company. I get 125 views. Someone good at YouTube, please help. My family is starving. And Patty Galloway, who's a YouTube expert, he has worked with Mr. Beast. And he worked. He dramatically changed my channel. I had a consulting call with me, broke it all down, and then the channel exploded. I went from like a thousand subscribers to over a hundred K in like a month after talking to him for an hour. It was crazy.

Crazy.

Really, really sharp guy. He's worked with a ton of. Ton of really, really talented people. And so Patty chimes in and says some brutal feedback. I'm surprised it got. It even got 125 views. Packaging is literally 50% of the art form. Your title is bad. 86 don't care. A lot of people don't know who Jim is. It sounds crazy, but it's true. Learning to learn. This is vague and not interesting. Your thumbnail is bad. You need to get rid of. Change your. Your face. It's a weird pose for your guest. There's just too much information on here. There's a weird yellow filter. And so Patty's been a big a fan of what's called the rule of three on thumbnail design. You can only fit three things. So one piece of text would just be Jim o'. Shaughnessy. Then one face and then one icon of like, you know, money or something like that. And even three is sometimes too much. And you just want to do two things or one thing. So you got to keep it as simple as possible. And then just. And then even in the title, keeping it super short. Why should someone click? It's always hard to get podcasts to go, to go viral because they're not as edited and they're not as retention hacked as, as video essays or, or, you know, money giveaways and that type of stuff. But I wanted to highlight this because if you are listening and you are great at YouTube, you do YouTube strategy or editing or anything like that. We are hiring, we're looking for someone to join our team to help with this. And if you want to come and work, we have a really ambitious roadmap for this year. If you know someone, send them a clip or send them information.

Yeah, we actually got a question. We got a question in the live chat from Ashley says, my question is, I run a content agency that helps entrepreneurs like you guys grow through podcasts. How do I find guys like you and what's the best way to pitch? You find them on X. You find them on LinkedIn. I recommend for people that do content pitch somebody by creating a piece of content for them. Totally send it.

Yep.

So much more powerful than. Than just, you know, sending a cold email. You want to show, not just tell.

Yep.

And so make even pre. Make a deck that's not just a, you know, make a templated deck. If that's. If that's the way to do it. And say, if I was going to make content around you and your business, here's what I do. This is the topics that I would do. And so really do the work.

Even. Even. I mean, it's like thinking in decks. Even. With the next vibrio we're working on, we are going. We have shot and are going to shoot B roll that is all our own for every single one of those shots. But I did the first version of that on my phone using just screen recorded video from YouTube, clips of movies.

Yeah.

And so I was like, I want to have a shot of us signing a contract. Well, what do we do? I went to Succession and I found a clip of someone ruffling through a contract that looked pretty cinematic. I took that clip, put it in there, put some music over it, and it helped kind of tell the story. And once we did that, we realized, oh, we got to restructure this whole thing. But it. But it set the message and it was able to. We were able to get a lot of feedback there. And so, you know, if you were trying to, for example, you know, you said you wanted to improve our short strategy or you wanted to help us grow on LinkedIn, you could take our content, try and make something and kind of map out what you think is a good strategy based on this content, send that to us, and then we could use that as a jumping off point instead of just seeing you say, oh, I promise it'll work. It's like, well, we want to see the results.

You know, we got another question while we're at it from. Oh, Ryan. He says, when creatine Lucy pouches. Oh, is a great question. I think there's actually laws preventing you from combining things like supplements with.

The main thing is that with creatine, you need to absorb a lot of it. Like, if you think about the 5 grams, that's a lot. A lot. I think a single pouch is like one gram and so it would be a lot of it. It wouldn't absorb all it needs to go through your stomach instead of your mouth. So it'd be a little bit iffy. Maybe you just take some creatine pills, you stuff them in the.

So here's something. My wife, one day, my beautiful wife sent me this last night. She said a study that showed after 21 hours of sleep deprivation, a single large dose of creatine can reverse the decline in cognitive performance and even perspective. Improve it for an 80 kilogram person to roughly call it like a hundred. And what is that, 100?

It's almost 200 pounds.

Oh, okay, Sorry. Really, really don't understand.

Don't worry, you don't need to learn about metric.

Yeah, yeah, the metric system is, is kind of. Actually for an 80 kilogram person, that would be 28 grams of creatine. So that is a heavy, heavy dose. But you're putting up 50.

That's like rookie numbers gummies. I mean I have those five gram pills now. You just take six of those and you'd be right there, no problem. I could take six of those easy. Put in a protein shake, you're good. Yeah, yeah. Megadosing, Maybe that's the future.

Macro dosing. Anyway, everybody's talking about, oh, microdosing. It's all about macro dosing.

Yeah. Let's go to the luxury watch guy. This is a funny post breaking so you know it's fake news says Rolex is now making belts. And someone took so many links of Rolex. Do you see this? No way to make a full belt out of a Rolex. I thought it was very funny. In the follow up, the luxury watch guy says, relax, this is a joke. Don't kill me. I know the Rolex fans will hate this, but I thought it was funny and I wanted to highlight it. And yeah, maybe, maybe that's a way to express a second watch without using your right wrist. You just throw it on a belt. Let's move on to Apple's new marketing campaign. How it started versus how it's going. The Think different campaign. Obviously iconic and now they are running billboards to say imagine it Gen Moji it. And it's an a fried egg holding up its arms in a very awkward pose. And people are not happy about this new Apple ad campaign. And Reggie James, friend of the show, says once again the bicycle for the mind has become a pacifier. Computers started as giving niche hobbyist and nerds superpowers. Now the primary function is to be a 32nd High Fidelity, Mass, dopamine drip. The ad reflects you want to change the culture, change the hardware.

Yep. I, I've talked about this on the show before. I think there's a few ways that you can really focus on building a brand. You can inspire your audience, you can entertain your audience and you can educate them. And usually brands will do some mix of all of that.

Yep.

In the case of Apple Heavy, into inspiration, leveraging the product and what you can become by using the product. They've shifted, as some brands do, into this gen emoji thing being. That's just kind of like slop, basically.

Yep.

And at some point I'd like, you know, growing up, watching Apple campaigns, it was inspiring. And they also would have campaigns that were fun, but they weren't slop. You know, you remember that. You know, the early ipod stuff. Yeah.

Even the Spike Jones stuff later there. There's been so many iconic Apple ads. I mean, I think the bigger issue is just like the Genmoji project has, the product is not successful yet or it hasn't felt that much of a breakthrough. It's very nerfed compared to, like, if I want to send someone a, an AI generated image, which sometimes I do. Like. Like, even if it's just practical, like, oh, we want to, you know, think about what would this particular sports car look like with this livery that represents our brand or something like that. Something fun. I'm not going to Apple for that because they have so nerfed their generative AI prospects that I instantly go to chat GPT or mid journey.

Yeah.

Like nine times out of ten. And then if you want anything special, you're going to go to some, some, some stable diffusion fork that does something specific like, oh, this is really good at making an optical illusion or QR code generative. Or it'll do an AI avatar where it's your face on a superhero or something like that, or it's video. And these genmojis, there's already a lot of emojis. Don't really need that anymore. It's been like, rough and so I don't.

Part of it is that emojis are a new language almost. You don't want to always be making new ones.

It's actually better when you can build up a repertoire of what each emoji means and it means something and it tells a whole story. It's harder when you're creating like endless, endlessly new characters, essentially. So I don't know. The AI image playground, I tried to play with it and it was so slow. And it didn't give me the right feedback. It wouldn't tell me if it was actually working. And then it would just kind of cook and then it would render it and it was all very underwhelming. But hopefully it's just a V1 and they improve it because. Not going to leave iPhone for Android, that's for sure. Let's go to Yaxine. Cash says I'm at 140k followers today. Only 9 months ago, I was at 500 followers. Then Rune discovered and followed me. After this, I started doubling every other week. Five months in, I almost sold my startup and got a job at X. Thanks for following me, Roon.

And I just thought, generational run.

It's a generational run. I just thought it was a little.

Bit of positive homage.

Just little. Yeah, just. Thanks. Thanks.

Like, this is David Senra for us. Yeah, yeah, we would. We would not be recording 15 hours a week of content if it weren't for David Senra.

Absolutely. So, yeah, and I thought that was just. Just nice to say, pay your respects to the.

And that's a generational run. Yeah, it is going from 500 to 140k in 9 months.

Let's see if Banger Archive can outdo it.

He's got on the heels.

Hot on the heels. Let's go to Nat Friedman. Nat says, today I Learned in the 1990s, Clinton offered federal workers a $25,000 buyout. And. And 150,000 people took the deal. He cut federal government spending from 22% to 18% of the economy, the lowest level since 1966. And so obviously, this is on the tail of the Doge announcement that there was a buyout offer issued to a ton of federal employees. Not everyone was eligible, but the email did go out to, I think everyone. And so obviously, this is like an exit. Yeah, an exit package. It was actually the same email template that he sent at Twitter when he bought the company and saying, hey, look like it's going to be hardcore engineering from here on out. If you don't want to be a part of this, here's your buyout offer. If you. If you do, you got to be in the boat and you got to be rowing in the same direction. And so what's interesting is that whenever. Whenever Trump or Biden do anything, it's always like, well, it's the worst thing ever. It's the best thing ever. And Nat is here just kind of saying like, hey, little bit of a narrative violation. But, you know, Clinton did this too and so we shouldn't think of this as a revenue. Controversial.

There was also a photo floating around, I think Mark Andreessen shared it, of Bill Clinton in front of a graphic saying the US Federal debt was going to go to zero by, like a long time ago.

This was a big thing during the, the 2000 election. It was like, as, as the president, what are you going to do with the budget surplus? And, and one of them, there was like this famous phrase of like the lockbox. Like, I think it was Al Gore maybe, or someone was saying, like, we're going to put it. We're going to put all the money in a lockbox. We're going to lock it away and we're going to save it. And the idea was like, we were going to have so much money. We were.

George Bush is like, how about we blow 20 trillion in the middle East?

That's exactly what happened.

Yeah, I think it was a 20. It is, it is wild. I mean, it's sad, but wild thinking about the, the U.S. debt in the context of the cost of our campaigns in the Middle East. Yeah, it's almost, I believe, two thirds.

Yeah.

Of the death of the, you know, national debt is, is, is something, something around what we spent in Iraq and Afghanistan.

And what's interesting, what I always found interesting about the Iraq war is that if you, the question, like when the Iraq war started was like, the protests were saying, like, no blood for oil. Like, you shouldn't go to war just because they have a resource over there. And that's a totally legitimate concern. Like, obviously, like, war is bad and like, sovereignty is important and there's a million reasons why you shouldn't do that. But, but there's also the question of just like, did we, we obviously spilled a lot of blood. Did we get the oil? Because that was the counterpoint was that if we do this, and I don't look at oil prices and the actual transactions that happened, like when there was the status of forces agreement to kind of decide to pull out, we were like, hey, we want the oil, and we didn't get it.

Yeah. So I don't think that's what it. We are not geopolitical experts, but in hindsight, for yourself. Yeah. Yeah. I mean, anybody who allocates capital is qualified to comment on complex geopolitical issues. According to technology podcasters.

Yes.

No, but I don't think it was really about. I don't know if I've ever actually even told you this, but when I was, when I was a kid, I was in The Civil Air Patrol. I wanted to go into the Air Force. I wanted to go to the Air Force Academy. I was, you know, doing flight lessons. I was in the Civil Air Patrol, which is like the Boy Scout equivalent, where it's. We would meet on a military basis, you know, weekly and do training and all this stuff. And at that time I started reading about, you know, reading the paper every single day. I was obsessed with reading the paper and starting to realize, like, what we were doing and getting a sense of the drone strikes that were happening and the civilian impact of that. So I paid quite a lot of attention to it and kind of studied it in college as well. And it does seem like there was powerful people today. They might be described as the deep state that basically had a roadmap for the Middle east, which was any regime from Iraq to Libya that sort of stood up to the US in any capacity was a threat to our hegemony and we were going to take them out.

Yeah.

And it wasn't necessarily because, like, the US and countries globally actually don't have an issue buying resources, natural resources like oil and gas from enemy.

I disagree with that.

I don't know. Look at, look at. I mean, are we not still buying Russian natural gas across Europe?

I think it's been hugely disrupted by. Sure.

But, but the, but the war, putting the, you know, the pipeline that blew up. You know, many people think that that was like the United States that was just trying to put pressure on.

Yeah.

The sort of. Or Ukrainians, who knows.

I think, I think a lot of it came down to the fact like, if. If you don't have a, if you have a regime that you're not close with and you're not aligned with, it's much harder to make an effective trade deal. And so that's why regime change becomes necessary. Yeah, that's my, that's my fear there.

Yeah. Complicated issue.

Very complicated issue.

But thank, thankfully, we're not a geopolitical.

The real, like, silver lining is that what actually happened with energy production that made the Middle east less relevant, fracking, natural gas. And I've always said that, like, if you had a more techno optimist president in 2000, and I don't think it was Gore or Bush, but someone who was really tapped into what technology was, it was possible they could have done. They could have just said, hey, you know, yes, the oil over there is important right now, but it won't be in a decade if we really invest even more in fracking and more in nuclear and more in Solar and more in wind. And all of a sudden you flip the power balance and it doesn't matter that there's a lot of oil over there because you're, you're producing so much energy. And that's kind of what wound up happening. Like we have become a net exporter just on the strength of, of domestic production. Energy fracking mostly. But there's a million other ways too to generate power in America.

Anyway, speaking of got promoted post America and markets and the economy and buying stocks.

Yeah.

Which we love to do. Public had an announcement this morning. As of today, pre market trading on public now starts even earlier at 4am eastern time. Giving you four extra hours to react to the breaking news before the opening bell.

That's really fun.

Which is, which is wild because that's actually 1am for us.

Yeah.

And usually I've been sleeping for about four hours at that point.

Yeah.

But it's good to know that I could wake up in the middle of the night and just start trades, making trades. You wake up in the middle of night, you can't get a stock out of your head.

Yeah. As a retail investor you do often feel like you missed out on whatever happened in the overnight trade because you're always just like, wait, like the market was closed but the stock moved so much. Like who was doing that. It's always OTC trades. But now you can get in on the action.

Yep.

Love to see it.

Very cool. They also included a link here. Absolutely. Savage. I gotta, I gotta talk to our buddy Jake over there and figure it out. And yeah, we gotta drop those links. Get these numbers up.

Well, I have our last post of the day. Are there any other promoter gifts we want to do before we close out the show? We started with Joe Lonsdale and his fabulous piece in pirate wires. Will close with a post from him about lawyers he says woke up and chose to stop. Tolerating legal nonsense. Slowing things down. I'm firing any outside lawyer who doesn't reply fast or delays anything more than 24 hours. If not my lawyer CC the friend that their lawyer needs to go faster or else be replaced. Had enough. Also building legal AI.

Putting, putting the. Joe just put the legal industry on notice. There's not a lot of people that can have quite this level of demand. Blanket demand. But he deserves it.

He deserves it.

Started a handful of billion dollar companies. $100 billion plus company. And I would be a little bit nervous if I was a big law firm working with Joe because I'm sure he's feeding all that data into his new model and whatever app he's building. So, I mean, it is really funny, right? So much of getting legal work done is just emailing your lawyer, getting on the phone and being like, hey, I'm hiring this person or we're raising this money or, you know, we're going to take, you know, we need to like, look at this. We're raising some debt. And it really should be done instantly by software because oftentimes in complex deal making where you're working at novel structures or partnerships. Yeah. You need somebody that has a deep understanding of the law to help piece it together. But for so many basic business transactions, it's like this.

The same concept we signed last week. Like, are there any changes? Just look at this red line. Tell me what's different.

And having somebody that's getting paid $1,000 an hour reading a Word document is super silly.

Yeah.

So, yeah.

Should be focused much more on strategy.

Yeah.

Well, that's a great place to end the show. Thanks for watching. Please leave us a five star review on Apple podcasts and Spotify. And when you do throw an ad, read in there for one of the company that you work for or just a company that you like. We will read it on the show. DM us with any questions. We're happy to answer them on the show and we'll see you. See you tomorrow.

Thank you.

Have a great day.

Bye.