Apple Looks to Anthropic and OpenAI for Siri Upgrade, Senate Passes Trump's Megabill | Zak Kukoff, SWYX, Matthew Prince, Luca Netz, Julia Steinberg, Joel Hron, Mackenzie Burnett

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TVPN today is Tuesday, July 1, 2025. We are live from the TVPN Ultradome, the Temple of technology, the fortress of finance, the capital of capital. We have the current thing hot off the presses. It's Siri v2.

Apple is making moves.

Apple's making moves. They are weighing.

They are listening.

They're listening. They're weighing. Using Anthropic or OpenAI to. To power Siri. In a major reversal, everyone thought they were going to do it in house.

Can you imagine the actual customer feedback that they get on the Siri product? It's like people try to get Siri to do a simple thing. It fails. And they're just hearing somebody swearing or something.

Well, they turn it off. I haven't even thought about that.

It's like, we've heard you loud and clear. We've heard you loud and clear. You guys are mad.

I don't even know if you've done something about it. Is that really. I feel like people. The expectations for Siri have also been low because it was introduced a decade ago and it was like the thing that sets the timer and the thing that you ask to get the weather and that's it. And so people haven't been asking for super intelligence or the ChatGPT, like, experience.

Or even a companion. Certainly not.

Yeah, certainly not.

You don't hear about people falling in love with Siri.

It was kind of pitched like that, though, back in the day. It was very much like Siri. We're giving it a human's name because it will be as integrated into your life as a human. And that was the original pitch. And now it's possible, but not possible with the team they have on staff. So they're partnering with Anthropic or OpenAI? Well, they're exploring bidding war.

Bit of a bidding war.

Yeah.

And Apple allegedly has been balking at some of the prices being thrown out. Okay, Anthropic wants how much? Billions a year and ramping up over time.

Yeah. Yeah. What's interesting is that it could go the other way where Anthropic or OpenAI could pay Apple. Like Google pays Apple.

No. I imagine knowing Tim, he'll figure out a way to make it a profit center.

I would think so, yeah. I mean, the data.

But the issue is there's real costs to running these products for now.

Yeah. But I mean, it seems like the cost will come way down. And I mean, I believe that the current ChatGPT OpenAI apple deal is revenue Neutral for both. I don't think there's any money changing hands, but it's also kind of a mess of a product because you have to say, hey Siri, go to ChatGPT and look this up. And then it pops up a prompt that says, would you like to use ChatGPT? Even though you just said that and I don't understand what you said and then you have to click yes. It's like, come on Apple, like you.

Know what I want to do Forward progress. The markets like it anyway.

Mark Gurman has the story in Bloomberg. We'll be diving into that said side lighting its own in house models and potentially a blockbuster move aimed at turning around its AI effort. We should go to the Mag 7 market caps to track the horse race of the biggest tech companies in the world. Let's pull them up on the screen and see where people are tracking. So Apple's in third at 3.1 trillion. Good to see that. They're over 3 trillion stocks up 2% today. Nvidia and Microsoft is climbing as well.

And one of these companies is not like the other.

Meta does not.

Measured in Tesla. Oh, measured in the. In the paltry billions.

Congratulations to Apple. 2% up. You love to see it. They're up 2%. Yeah. Meta being in sixth doesn't feel like a sixth company to me. Based on the team and the. And the moves they've made this week, which we will continue to dive into. We have SWIX on the show today to break down some of the AI talent moves. We have a bunch of other folks coming on the show today.

Yep.

Talk about that.

Anyway, other news. The Senate passes Trump's mega bill, the big beautiful bill, after an all night session. They went all night.

I like that.

And it's got to get through the House still. But Elon is fuming.

Play the Ashton hall sound effect for coming. Coming for the bill. It's absolute war on the timeline. The timeline's in turmoil, but because Elon Musk said anyone who campaigned on the promise of reducing spending but continues to vote on the biggest debt ceiling increase in history will see their face on this poster in the primary next year. Pinocchio mode liar voted to increase American spending.

It's actually never been easier to make your enemies look like Pinocchio.

Yeah, wait, but, but I feel like if you put like, I don't know, I don't even know who voted for it. Like, let's just say like Ted Cruz or something. If you put like Ted Cruz's face on here, like, are you going to to lose the Pinocchio, Nessa?

We'll find a way.

I feel like it can be a little bit rough anyway. Elon's upset. He's trying to start a new party, the America Party. He said, vox popula populi, vox dei. He wants to start the American party.

And he is pissed because polymarket is showing that the. Is expecting the reconciliation bill, the big beautiful bill to pass 70% by July 5th and 62%.

Yeah, 62% by July 4th and almost certainly by the end of the month.

So this will be the one to watch. They're voting. I guess the first vote is tomorrow. Yeah, we'll be following that.

Lots of pork. But if you're AGI pilled, it doesn't matter.

Yeah.

We are going to be printing at 10% GDP, folks, in just a few thousand days when superintelligence arrives.

These deaths are weeks, if not days away.

Many people are saying, if you're against this bill, you're just telling yourself about your AGI timelines. You're like, I don't really think super intelligence is coming.

Yeah, it is. I think Thiel was pushing, generally pushing on Elon a bit in the interview he did last week around like, okay, so are humanoids. Humanoids are going to be important. You're obviously making them. Are they going to impact the economy? Are they going to accelerate growth?

This is the post 1970 stagnation. We've been growing at 2%. Satya Nadella is asking the question of will AI accelerate GDP growth? Because if GDP growth accelerates a lot, it changes the dynamic around everything. Not just this debt, which we've been kind of lightly joking about, but also redistribution.

To Elon's credit. He's also said when. When he initially exited Doge and just stopped being a special employee, he did say the only way out is growth. So he knows this too.

Yeah.

But I think he can hold both of these ideas, which is we need to grow. But he's also frustrated the Hegelian dialectic.

Of course. Yeah. I mean, if GDP is growing really, really fast, you could even keep tax rates the same or lower them and still pay down the debt and do more redistribution like you could be paying people. Like, you could have like, something that feels like a massive social safety net, something that feels like UB or socialism, but actually attack people less because the growth is so significant. So it all changes when superintelligence arise.

Maybe. Maybe Zoran is just so AGI pilled himself. True that he's like, yeah, we're Going to have plenty, plenty to go around. We're going to have such high levels of production. Sure. The state can just see.

Or alternatively, maybe he's a hardcore bitcoiner. And so if he wants. If he wants there to be no billionaires. No, it is impossible mathematically to be a billionaire in bitcoin because there's only 21 million of them. So the richest you could possibly be is a millionaire if you owned over 5% of the Bitcoin supply. Right. So there will never be a bitcoin billionaire because there aren't a billion of them. Well, whereas there are billions of dollars.

Maybe he doesn't want the network to vote to expand the supply.

Yes. So he's probably against the expansion of the bitcoin supply, but maybe he's a hardcore bitcoiner.

He's a hardcore bitcoiner. That's against inflation.

Yes, yes, exactly. Exactly. Anyway, in other news, somewhere we got to hit that gong. Jordy for Rahul Vora.

Where's the hammer, John Founder, you got.

The hammer of Superhuman. He has sold his company to Grammarly for an undisclosed sum.

Nothing like hitting the gong for an undisclosed sum. You just don't. You don't know.

Could be a million, could be a billion, who knows?

But I've used Superhuman for many, many years now. How many? When did they really get out? Was it like six years ago?

I think it was. Been older. I feel like it came on the scene like 2018.

I remember I was, I think, Yeah, I was graduating college and there was this concept that the thread boys at the time were talking about luxury software because the idea of charging $30 for email, which was just default free, they grew really quickly. Apparently at the time of this acquisition they have about 35 million of ARR. Very impressive.

Of ARR. Okay, so that's like what, 100,000 users paying roughly. Something like that.

Something like that.

Between 100 and 200,000 users paying $30 a month. Yeah, got it. Pretty cool. I mean, yeah, serious business. That 35 mil, if it's run effectively, could have been kind of a lifestyle business. Throwing off a couple million dollars in free cash flow.

Clearly wanted to go bigger.

Yeah, potentially.

I'm really interested. We should have the CEO of Grammarly on because we want to understand. So they acquired Coda. That was surprising. Coda was another company that had a lot of meaningful traction, a lot of fans. It was a great product, but I don't think it was breaking out. Right. It wasn't on a path to being a public company itself or A billion dollar outcome and then now they're adding Superhuman to the network. I don't see yet exactly how these tools all interconnect. Right. Grammarly helps you with grammar in the browser. Superhuman does have some AI functionality, I'm sure, and I know Coda does as well. Unclear to me yet how if it's like the same user that's going to be using all these things, if it's truly a productivity suite or it's a basket of.

I mean selling a point solution in the enterprise is hard when you look at the, the story of Slack versus teams like Microsoft just has so much dominant distribution there actually having someone rip out their productivity suite and say as a company we're using Superhuman for email and Grammarly for writing and this other product for Docs. And then not to mention the fact that Notion's running somewhat of a similar playbook with Notion Mail and Notion Docs. And then Google has a similar productivity suite. I mean it's a tall order but will be cool to see how these different products interact because they're clearly excited about tying them all together in some interesting way. Yep, very cool. Anyway, you mentioned Humanoid Robotics and you know there's another player, it's not just Elon, it's Jeff Bezos as well. Amazon now has as many robots as employees in its warehouses. So the number of.

Let's give it up for the hard working robots.

Yes, they haven't striked work.

They haven't striked yet.

The number of Amazon employees per facility over the last 10 years has kind of oscillated from 750, 800 employees per facility went up to a thousand. Now it's down around 700, down 30% over the last five years. That's the post Covid era. And the packages handled by Amazon end to end per employee has skyrocketed over that time from zero to over 4,000. And so the robots are taking over. They're about to cross their one millionth robot deployed in an Amazon warehouse. So congrats to Jeff Bezos. Hope you enjoyed the wedding. Yeah, we should hit the gonk for that. Maybe the gonk sounds.

Yeah, I saw a post somebody, maybe it ended up in the timeline but I'll say it now. It was like a lot of people have opinions on Jeff Bezos wedding. I ordered a phone last night at 10pm and I got it this morning. I think he should be able to celebrate however he wants. So I'm happy for him.

Built a huge business. Very helpful.

This was kind of tense and even Looking at like Amazon puts up over $100 billion a year of profit.

Yeah.

Let the man have a $50 million a year wedding.

A year. Not a year.

Not a year. Hopefully not a year. Hopefully not a year.

He's only done it twice.

Some guys get to that stage of life and they just enjoy weddings. Right. So they just have, you know.

Yeah.

Frequent.

There was this narrative around the wedding actually that, oh, he only invited celebrities because like Sydney Sweeney went and everyone was like, oh, is he really tight with like Sydney Sweeney? Like, and, but, but. And I was saying like, look, he invited 200 people. You're seeing Sydney Sweeney because like if you're a, if you're a celebrity, like, you know, paparazzi photographer, you're not taking a picture of like RJ Scaringe from Rivian who Bezos invested in and might have been there. I don't know. Or like Andy Jassy, the current CEO of amaz probably got the invite, but is doesn't get in the paparazzi.

So he's having a party. Yeah, he's having a party.

But you're going to invite your boys, your business.

Yeah, I'm sure, I'm sure he did. But yeah, yeah. The media is obviously the media doesn't care about on who are the biggest stars there.

Exactly.

They are who drive click.

But that's why we need to send.

Our paparazzi and you know, people don't know Andy Jassy. That's true.

Yeah.

That would. Andy Jassy spotted and then it's just.

Yeah, yeah. And then it's just like Sydney Sweeney off blurry in the left. It's like everyone's like, you missed the most important person at the wedding. We did not. No, we didn't. We never did. Andy Jassy is the most important person at that wedding potentially, if you win. Anyway, in other news, Commonwealth Fusion Systems, a fusion startup has struck a deal with Google. Historic news. We've signed a landmark agreement with Google, a multifaceted partnership that dramatically advances our commercial fusion energy mission. Google signed an offtake agreement for 200 megawatts of power from our first ARC power plant. Google is increasing its corporate investment in in Commonwealth Fusion Systems. Google has the option to procure power from future arcs. The deal is very strong signal that the world wants clean, secure power that fusion offers. Together we're catalyzing the fusion market. So there's a couple players in this space, but all the interesting AI hashtags.

As well dating themselves a little bit. They maybe have a veteran social media Manager, maybe.

Maybe more for like the fusion energy hashtag power moves because people are searching that. Didn't Elon ban hashtags recently? But from ads and ads. Okay, so you can still rip them in hard posts. Yeah. Anyway, beautiful video. Good luck to them.

And if you want to learn more about Commonwealth Fusion Systems, go to hashtag FusionEnergy.

Stop it. Stop it.

This is great. Super exciting.

So, I mean, this is like the flip side of the Sam Altman helion deal where OpenAI and Sam Altman. He's clearly thinking about power being very, very important for the long term. Crusoe has been very important in finding stranded energy, building natural gas plants, and helping scale up Stargate in Abilene, Texas. And Commonwealth Fusion Systems is kind of the other side of that. And they're partnering up with Google. So good to see it. In other news, Microsoft claims that their new AI framework diagnoses four times better than doctors. And people are kind of putting this in the truth zone, says Dr. Dominic Ng. I'm a medical doctor and I actually read the paper. Here's my perspective on why this is both impressive and misleading. There were some interesting things where in the control set, I believe the doctors couldn't use Google. So it wasn't necessarily like a current doctor versus the Microsoft AI system. It was like a, like a, like.

A doctor just sort of acting like a human gpu.

Yeah, yeah. Just being like completely pen and paper, which isn't really the benchmark that you need to go against, but still impressive. Maybe the Forex is a little overstated.

Because the average doctor in the United States when they're sitting with a patient is they have Google, whatever's happening. And then Reddit at the end. Reddit and then OpenAI is scraping that.

Yeah.

And you know, summarizing.

Yeah. But it is cool because now we have a Pareto frontier. We have a graph of the average total diagnostic care per case, how much it costs versus the diagnostic accuracy. And Microsoft with this team, this is led by Mustafa Suleiman, who in an interesting trade deal was over at Google in DeepMind, co founded DeepMind, then did inflection AI and got like Aqua hired in one of those, like zombie deals to go to Microsoft. He's now the head of AI at Microsoft and he has been leading this push. That's much more, it feels maybe more Microsoft coded than what Google is doing on the DeepMind team, where Google is focused on like solving these very fundamental questions in science and health, like how do you do protein folding? That's not something that you go into like your primary care doctor say like my shoulder hurts and they need to know how to bold proteins.

Right?

But if you go into your doctor and you say my shoulder hurts like having an AI tool basically like a great fine tuned chatbot that's HIPAA compliant and works within the Microsoft Teams ecosystem to pull the patient records in appropriately fine tune on the right data and then and then suggest a bunch of things that the human doctor can then go investigate. That's super valuable and that feels like something that Microsoft is equipped to roll out to the network of of doctors and clinicians that probably are already on Microsoft tool sets and Microsoft stacks. So good stuff from Microsoft. We'll have to get somebody on the show to talk about that since AI in health care is all the rage anyway. Hit that sound effect Jordi, as we move to our next important news item which is that ramp.com is available now.

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Yes, to all of you. Well, if you're looking to design a meme like this, head over to figma.com, think bigger, build faster. Figma helps design and and teams build great products together and you can get started for free@figma.com Signal had a post breaking down Mark Gurman's analysis of Apple weighing anthropic or OpenAI in the major power shift in the Siri game. Signal says, absolutely astonishing. Apple used to own the full stack. Silicon to software to services. Now they're outsourcing the one layer that will define the next decade of computing. It's a metaphysical betrayal of their own DNA. Anthropic and OpenAI don't need Apple, but Apple desperately needs one of them. This puts Apple under the models it's integrating wild reversal, whoever they choose they now owe existential dependency to. And finally, if it consume if consumers realize Siri does not equal Apple anymore, that it's powered by OpenAI or Anthropic, then what exactly is Apple's IP thin shell over someone else's mind that kills the aura of vertical magic.

I do agree. It's exciting.

It's certainly exciting.

It's exciting. I would push back and say OpenAI and Anthropic don't need Apple. I would say that OpenAI sure they don't need Apple, but integrating deeply at the hardware layer is going to be important. Otherwise they wouldn't buy Jony I've love from they wouldn't spend billions of dollars trying to develop their own hardware device. Obviously they're trying to figure out what's after phones or what could complement phones but ultimately I think it is a for both companies extremely important relationship in the context of consumer Right. Is this going to impact Anthropic's code gen business? No. But will this?

It might. It might in the sense that if I'm asking Siri to do tasks that require writing code and the models are generating more code, that's more training data. Right. Like that example of like I took a photo of Pat McAfee, I took a screenshot from the Pat McAfee show and asked how tall is his desk? And chatgpt303 wrote like a thousand lines of python to go through and calculate how tall that desk was. And then I was able to say basically by thumbs up or thumbs down or asking another question, I was able to give it human feedback on whether or not that code path was the accurate if it got me the answer I wanted and if I, if I walk away from that, that's a signal. If I ask another question, that's a signal. If I give it a thumbs up or thumbs down, that's another signal. And so there actually is a world where if you need to test a ton of different real world code generation tasks and, and is the code that you're writing actually useful to the consumer, the average consumer, the person who's just asking Siri for random stuff, maybe that is valuable. And so I don't know, I'm still curious as to like maybe, but what is the flow of value accrual at.

The same time obviously are they going to get better, more valuable data from just having tens of thousands or hundreds of thousands of developers building on true, true Claude code daily?

Yeah.

The other thing is what's completely unclear so far is will consumers just be talking to Siri and it's still the relationship. Just like Siri might be running on some cloud somewhere. Consumers aren't saying, well Siri is not Apple because it's not their own servers.

Well, Apple does push on that point very precisely because privacy around privacy. They say yes, when you use our models, it is on our cloud and it is super private and it is on device.

Yeah, but they can still partner with OpenAI or an anthropic to figure out how to deliver that same and value prop.

Yeah, it seemed like a lot of the privacy narrative at Apple was about control of the ecosystem and the ability to really push on the Apple tax and justify it.

Right.

And maintain that leverage. I don't know, it's interesting.

And also remember Siri was an acquisition. Consumers didn't have an issue with that saying, oh, this isn't Apple code.

Yeah, yeah, yeah.

This isn't homegrown farm to table. This isn't handmade.

Can you imagine if consumers cared about that? It's like this was technically an Aqua Hire, not an acquisition. Oh no, I don't want to wear beats. The earn out structure wasn't to my liking. Like only one board seat changed hands. I wanted three board seats in the acquisition.

Yeah. It was telling though that Prakash here has a post. Claude gave Tim Cook sticker shock. I was referring to this earlier in the show. Anthropic have asked Apple for a multibillion dollar annual fee that increases sharply each year. Very acceleration pill.

Yes.

Anthropic, yes. But yeah, so ultimately I think that that feels like, you know, Apple having a cost center that can scale exponentially with usage is not going to be something they're super excited about because at the the same point in time they're trying to show we are this ecosystem of software products. Yes, hardware is important, but really we're growing services revenue and so if their costs are growing sharply as defined here. But the surprising thing is yeah, you could imagine a world where OpenAI says we'll give it to you for free for the first five years or something like that. Right.

I mean it could even be that because if Apple, OpenAI is paying Apple because if they are able to drop the inference cost low enough that it's similar to serving a Google search and they're able to stuff ads in it that would be incredibly valuable. Like imagine if you go to Siri and you say I'm looking for a new backpack and ChatGPT can dynamically insert out ads into that response within Siri, that should be extremely valuable. And so that, I mean that's the, that's the current structure that Google has. That's the current arrangement that Google has. I'm. It's unclear to me how much, how much different the market will be going forward. I don't know Anyway, let's read through some of this Mark Gurman report in Bloomberg. Apple weighs using Anthropic or OpenAI to power Siri in major reversal. I'll read through some of this and then I'll want your reaction. Jordi. Apple is considering using artificial intelligence technology from anthropic, BPC or OpenAI to power a new version of Siri sidelining its own in house models. In a potentially blockbuster move aimed at turning around its failing AI effort. The iPhone maker has talked with both companies about using their large language models for Siri according to people familiar with it asked them to retrain versions of their models that could run on Apple's cloud infrastructure for testing, who asked not to be identified discussing private deliberations. Interesting. So I mean I don't know that Apple's cloud infrastructure has a lot of H2 hundreds and is ready. I mean they certainly could not serve 4.5 like a truly large model like.

That hundred billion dollar customer for gen.

I mean Apple has enough of a relationship with TSMC that they could go and do kind of like you know, the A3, the A or the, the Apple silicon, you know, the M2 chip, the M3 chip, like the M4 chip. They could do a different run with TSMC that's more optimized for inference of large models in the data center context. But it does seem like it'd be a very different muscle for Apple since they have not been. I mean when you think Apple's cloud infrastructure it's like storing photos, it's like icloud, like that's probably their biggest service or like, like I guess like Apple Music, Apple tv, like they serve files, they don't do a lot of machine learning inference versus say meta that already has a, you know, hundred billion dollar data center that just does recommendation algorithms and machine learning and inference. It's not fully like a transformer large transformer model but it is, you know, multi parameter model for deciding what ads go where and what reels get served to you. So it would definitely be overtime to.

Serve you the perfect reel right now.

For sure, for sure. And Apple just doesn't have that scaled GPU cluster that I'm aware of. So they'll have to call up Dylan Patel and some folks to get it done. Call up Jensen maybe. Who knows, if Apple ultimately moves forward it would represent a monumental reversal. The company, the company currently powers most of its AI features with homegrown technology it calls Apple foundation models and had been planning a new version of its voice assistant that runs on that technology for 2026, but it seems like they're backtracking. Switch to Claude or ChatGPT models for Siri would be an acknowledgment that the company is struggling to compete in Generative AI, the most important new technology in decades. Apple already allows ChatGPT to answer web based search queries in Siri, but the assistant itself is powered by Apple. Apple's investigation into third party models is an early stage and the company hasn't made a final decision on using them. Marking a change which is under discussion for next year could allow Cupertino based Apple to offer Siri features on par with AI assistance on Android phones, which you don't hear about that much. I see the Gemini demos on your.

Friends that use Android phones. Don't talk about how they're, you know.

The lone rangers on Android.

The lone ranger.

You know, we got one in our group chat, but other than that it is rare. But even then I feel like there would be more like viral X posts about cool Android features if they had really done well on the Gemini product, like implementation. And it's just like maybe not quite there. But Gemini is great. The models are really top tier. The gemini app on iOS is not amazing. Like the text to speech is really, really rough. Like you click, you click dictate and then it will just stop dictating when you pause and then just submit their query and so you can be with ChatGPT. I love it because I open it up and I hit that button and I think and I say okay, I'm trying to do a research on the Mag 7 and I want to look at Mag 7, their performance over the last decade. So go back and pull what their market cap was 10 years ago and then what it was today and then create a table. But then if I pause like Google will just submit that and I'll be like, whoa, I wanted to add more and I wanted to give you more context. But ChatGPT waits until I push the button to finish that. So it's just like minor, minor ui. But that's more important to me than like does it have 150 on MMLU versus 149? Like I care more about the UX of like am I? Did I just waste 10 minutes by sending like a query that isn't complete and I know I'm going to get a bad answer on yeah. And so I don't know. But again, Andrew is clearly Siri here. So it's not even a competition. The competing project, internally dubbed LLM Siri that uses in house models to remains in active development. So representatives for Apple declined to comment. Shares closed up over 2% after Bloomberg reported on the deliberation. So Wall street clearly likes the idea of one of these deals getting done, but very big question as to the structure of those deals. And I keep triggering Siri because I'm talking about it on my phone, it keeps popping up. Fantastic. Incredible. The project to evaluate external models was started by Siri chief Mike Rockwell and software engineering lead Craig Federighi. They were given oversight of Siri after the duties were removed from the command of John Giandrea, the company's AI chief. This was a spicy little trade deal going on over there. Andrea Federici, spicy meatball over at Apple in Cupertino. He was sidelined in the wake of a tepid response to Apple intelligence and series feature delays. Rockwell, who previously launched the Vision Pro headset, assumed the Siri engineering role in March after taking over. He instructed his new group to assess whether Siri would do a better job handling queries using Apple's AI models or third party technology, including Claude, ChatGPT and Google's Gemini. Interesting. After multiple rounds of testing, Rockwell and other executives concluded that anthropics technology is most promising for Siri's needs. That led Adrian Parika, the company's vice president of corporate development, to start discussions with Anthropic about using Claude. What's interesting is that ssi not in the conversation here yet. Also Thinking machines not in the conversation yet. And when you think about thinking machines, that recent Information article about Miramoradi wanting to do fine tuning RL for businesses, it's like there's very few bigger businesses than Apple. That's a pretty good client to go win. And so if you have a foundation model, you have to assume she's raised what, 2 billion? So she can do precede. Yeah, yeah, the pre seed.

It could be a thing. Apple doesn't really work with a lot of precede companies.

Yeah, yeah, yeah. They're like, call us when you're like.

Series C. I'm sorry, like, you know, I can't bet my career on a.

On a pre seed company, but call.

Us if you can get a seed round up.

Yeah, yeah. But I mean I think the, I think the fact of the matter is like $2 billion is enough to do a GPT4 level run, to do a Deep SEQ style run. And so if you take all the best practices from deep seq v3 and R1, like the reasoning model, and you Spend the money to go do the training and you pull all the data together. And maybe you're not completely stealing the data from the GPT4 API, but you're getting it somewhat legitimately through these data brokers like Merkor and scale and whatnot. You should be able to get a, you know, near the frontier level model done.

The issue is Apple isn't set up to comp top AI researchers.

Exactly.

So in some ways, in some ways.

It'S not a money issue.

They're not willing to spend the money to put together to say hey, we're getting kind of cooked in AI. Yeah, we should spend $5 billion like Zuck just did to put together, you know, an incredible team. But. But they'll have to pay for it by it sounds like they may end up paying annually to get access to the technology that those types of teams.

It's crazy. Yeah.

And so you got to pay for it somewhere.

It's the Capex opex which route the CFO is like, okay, yeah, we don't want to spend a bunch of money up front to reap this award endlessly, but we will pay a billion dollars a year, I guess. I don't know. They seem not fully AGI pelled over there. The Siri assistant, originally released in 2011, has fallen behind popular AI chatbots. And Apple's attempt to upgrade the software has been stymied by engineering snags and delays. A year ago Apple unveiled new Siri capabilities, including ones that would let it tap into users personal data and analyze on screen content to better fulfill queries. I do wonder if Apple is thinking about thinking machines. You have to imagine that Zuck is thinking about buying the company, Right?

Sure, they talked.

It's only a couple billion dollars.

And by all accounts, I think to be honest, it sounds like Zuck had offered somewhere around the last private market valuation for SSI. And he probably, even though all the investors had a 1x pref, he probably needed to do that to get at least the early investors comfortable with it.

So. But Ilya is a true missionary. True believer wants to take the straight shot to ssi, doesn't care about optimizing Ilya, doesn't care about the debt ceiling, let's put it that way. Mira on the other hand is doing reinforcement learning for businesses. So you throw a $15 billion acqui hire her way with that team, maybe it gets done. I don't know if I'm Apple. Well, let's pull up the MAG7 market cap again. What are they at? 2 trillion 3 trillion. They're up there and Apple is. It feels like they could afford even 15 billion for thinking machines.

Sure.

Do you disagree?

No. I mean they totally could. But they'd be looking at it as talent acquisition, I think.

Yeah.

Because the team is, I mean it's such a young company.

Yeah. And but if you were, if you were in, in the big man.

So you would do that. You think Mira is going to be cool just clearing 74 million? She's not going to make more than Tim. You think she's going to be down to sell now and then just make have total comp less than the average AI researcher going to meta.

I don't know. I mean the beauty of an acquisition is that like you can be structured to make more than the CEO, at least in a short amount of time. Like that certainly was the case with the Beats acquisition. Right?

Sure.

Like for those years when that earnout was active, they made more than the CEO.

Yeah.

And that's okay. Anyway. People with knowledge of Apple's AI team say it is operating with a high degree of uncertainty and a lack of clarity with executives pouring over a number of possible directions. Apple has already approved a multi billion dollar budget for 22026 for running its own models via the cloud. But plans for that beyond remain. For beyond that remain murky. Still, Federighi, Rockwell and other executives have grown increasingly open to the idea that embracing outside technology is the key to a near term turnaround. They don't see the need for Apple to rely on its own models, which they can, which they currently consider inferior. And this makes a lot of sense because Apple is not great at software that needs to be updated. You know, 25 times a year. We're in this crazy AI model horse race. You don't want to be waiting around for, oh yeah, like the next wwdc. They're going to improve it. When Sam Altman shipped like 25 updates.

Sam's going to have 40 buzzy announcements between now.

Exactly.

So Beats was Apple's largest ever acquisition.

Yes.

Paid $3 billion including 4 million of Apple 400 million of Apple stock. But Beats at the time was doing a billion dollars. They only paid like a 3x revenue multiple.

Wow.

That's in Intel's modem business.

Yeah, yeah.

Which was in 2019. For a billion.

Okay. And it was doing 2 billion in revenue problems.

Yeah, probably.

Yeah. You look that up. I'll keep reading. They don't see the need to rely on the own models. Licensing third party AI would mirror an approach taken by Samsung While the company brands its its features under the Galaxy AI umbrella, many of its features are actually based on Gemini. Anthropic, for its part, is already used by Amazon to help power the new Alexa plus, which I haven't seen rolling out into the Amazon Alexas. Maybe the Alexas aren't wired up properly and you have to get the next batch, the next revision.

Intel's business was doing over a billion.

So less than a 1x revenue multiple.

Yeah, basically a 1x.

Okay.

And you remember in 2018 they acquired shipping Shazam.

Oh yeah.

For 400 million.

How much were they doing in the future? If its own technology improves, the executives believe Apple should have ownership of AI models given their increasing importance of.

How do you think Shazam's annual revenue was at the time of acquisition?

I want to say 80.

How much waiting?

The company is working on a series of projects including a tab, a tabletop robot and glasses that will make heavy use of AI. I'm really excited for the Apple tabletop robot that doesn't get enough coverage these days. I think that's a really cool idea.

So Apple paid 400 million. The app was pulling in roughly 38 million a year.

Oh, so over 10x revenue multiple.

Okay, so anyways, not a long history of making massive aqua hires. Yeah, actually no history at all.

Well, whatever Apple's planning, they got to do it on Linear. Linear is a purpose built tool for planning and building products. Meet the system for modern software development, streamline issues, projects and product roadmaps.

If Apple wants to be more like OpenAI, one way they could do that is by getting on Linear uses linear.

Oh, here we go. We get to. We get to thinking machines. Apple has also recently considered acquiring Perplexity in order to help bolster its AI work. It also briefly held discussions with Thinking Machines Lab, the AI startup founded by former OpenAI chief technology officer Mira Muradi. But nothing really more than that in the story. Apple's models are developed by a roughly 100 person team. Maybe two. Two times big. Too big. Who knows, maybe 50.

It's a lot of pizzas.

A lot of pizzas run by Ruming Pong. The an Apple distinguished engineer who joined from Google in 2021 to lead this work. He reports to Daphne Luong, a senior director in charge of AI research. Long is one of G Andrea's top lieutenants and the Foundation Models team is one of the few significant AI groups still reporting to Gandrea. Even in that area, Federighi and Rockwell have taken a larger role regardless of the path it takes the proposed shift has weighed on the team which has some of the industry AI industry's most in demand talent. Some members have signaled internally that they are unhappy the company is considering technology from a third party, creating the perception that they are to blame at least partially for the company's AI shortcomings. They have said that they could leave for multimillion dollar packages being floated by Meta Platforms and OpenAI.

Yeah, if you are a great AI researcher, the idea of being responsible for just integrating the work of OpenAI or Anthropic is going to be much less exciting than trying to build frontier models.

Totally. And also like, I don't know, just in terms of missionary work. Like the idea of building like the most advanced God that you can talk to in this crazy. I like that is exciting. But there's also something that's like, I think potentially like a really strong missionary pitch for. You are going to create. You're going to build models that are used at massive scale by every iPhone user and you can actually, you know, surprise and delight the customer to the tune of hundreds of millions of people. Like, I think that is, I think that is actually like pretty, pretty laudable.

Work and very even going to work at super intelligence at Facebook knowing or at Meta knowing that. Knowing that your work will be integrated into the meta Ray Bans and you're gonna have like a cluely like experience. Yeah, just.

That's very cool.

Wearing glasses like that is a cool. That is like a new dimension that you can build on.

I remember the initial Siri build out. They, they did a bunch of magical things. Like you could say like Siri, tell me a joke and it would come up with these like funny zingers that were like tuned to Apple's brand but still actually pretty funny. And they hired comedy writers to work on it. And so like I think that there still is a world where you, you find, you develop the model, you own it and you're doing the foundational, like serious AI research, but you're still productizing it in the Apple way, creating something special. You know, you already hear about this with the. The Claude is different than ChatGPT. Like the vibe test. Like we haven't seen the vibes fork out really all that much. But there's definitely a world where the Apple LLM performs at a similar scale and speed and the reasoning and it's doing well in the benchmarks. But then you know, you're talking to the Apple model and it has the Apple feel to it and like that could be cool. If you, if you can actually.

It could be so cool.

It could be very cool.

It could be so cool. Yeah, like if they brought, if they could bring back some of the like flair from the brand campaigns that you, that you remember. Apple buy 1984, the like original ipod, like these things that were just iconic and if you could think about how to like embody that, that original Apple feeling.

It's like Steve Jobs voice basically. Yeah. Bicycle for the mind and, and like encouraging that, that wonder. I keep going back to that idea of like what would Steve Jobs have thought about Vibe coding? And it's like he would have loved it. He loved GarageBand. He loved giving everyone the tools to be an artist. Everyone's a musician, everyone's a programmer. Like these, these things this, like this giving someone the ability to do really, really interesting things with Siri. Awesome. I think, I think it's very, very on brand for, for Apple. Anyway, let me tell you about Vanta Automate Compliance. Manage Risk, Improve Trust Continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation. Whether you're pursuing your first framework or managing a complex program, head over to.

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There are some more trade deals in this report in Bloomberg. One of Apple's most senior large language model researchers, Tom Gunter, left last week. He had worked at Apple for about eight years and some colleagues see him as difficult to replace given his unique skill set and the willingness of Apple's competitors to pay exponentially more for talent. Apple this month also nearly lost the team behind mlx, its key open source system for developing machine learning models on the latest Apple chips. After the engineers threatened to leave, Apple made counteroffers to retain them, and they're staying for now. That's dramatic. Wow. In his discussions with Both anthropic and OpenAI, the iPhone maker requested a custom version that could run on Apple's private platform.

Apple's such an interesting culture because it's counter to a lot of other cultures in tech that are like, oh, I might work at meta for 5 years and then go to Google for a few years and then dabble at a startup and then go back to Meta and Apple. You see more of the somebody who's been there for 15 years, but then at a certain point, even if you've been there a long time, you're looking around and you're saying, people with my exact same skill set are making 5, 10 times. This article highlights that the Meta pay packages have been between 10 and 40 million annually and I would trust you more on that. That feels more realistic than what the New York Times had been saying about $100 million signing bonuses and all that good stuff.

Well, the source is not conflicted at all. The guy that hates the fact that these pay packages exist is quoting them. It's so funny to source a podcast between two brothers doing psy hops. Come on New York Times, step it up. The company has already internally tested the idea of running these LLMs other models other companies models on their own Apple controlled cloud services. Obviously that's very important for the data privacy narrative. Other Apple intelligence features are powered by AI models that reside in consumers devices. These models, slower and less powerful than cloud based versions, are used for tasks like summarizing short emails and creating Genmojis. Let's hear for Genmoji. Just bake down Ghibli. Just bake down Ghibli. Have it be a filter in the iPhone app. Boom, you're done. Like you have a banger product there. Something like that. Just cart like you know you can go in and make any photo in your camera roll black and white. You can make it Hollywood like teal and orange. You can make it, you know, super moody or super cool or super warm. Like you can adjust the contrast and the color temperature, turn it into a cartoon. People will love that. Everyone will be using that. Apple is opening up the on device models to third party developers later this year, letting app makers create AI features based on its technology. Very excited for that. Very bullish for Apple on that. Amazing.

Yeah, which is why the fact that they almost lost the team working on that entirely.

They need that team badly is would have been crazy because if that product stagnates.

I saw founder, I saw founder. I forget their name posting hearing that you know the team that you're based he was building a product based on MLX and then he heard the MLX team almost left. He was like freaking out. He was like whoa.

So last year OpenAI offered to train on device models for Apple, but the iPhone maker was not interested. They said we got it handled. Turns out they didn't. Since December 2024, Apple has been using OpenAI to handle some features. In addition to responding to world knowledge queries in Siri, ChatGPT can write blocks of text in the writing tools feature. Later this year in iOS 26 there will be a ChatGPT option for image generation and on screen image analysis. While discussing the potential arrangement, Apple and anthropic have disagreed over preliminary financial terms. According to the people, the AI startup is seeking a multibillion dollar annual fee that increases sharply each year. The struggle to reach a deal has left Apple contemplating working with OpenAI or others if it moves forward with third party plan. They said if Apple does so interesting.

You can imagine OpenAI being more willing to strike some type of deal because they're, they want to be effectively the next Google. Right. In terms of this dominant consumer Internet company.

Yep.

But at the same time, OpenAI is building devices to try to kill, you know, Apple. You can imagine. They wouldn't say that. They wouldn't say that.

Yeah. They would say it's complicated.

I do believe that consumers, there's like a finite amount of devices that they're willing to have. And so if they want to compete in hardware, it's a little hard for Apple to get excited. Although they partner with Google and Google has.

I have been surprised by the number of devices that people carry. I mean like, I'd say like a decent chunk of San Francisco tech people carry AirPods, an iPhone, an Apple watch and an Apple laptop basically everywhere they go. That's four devices. That's like a lot.

Yeah.

And then yeah, maybe, maybe a VR headset eventually. Well, if they do wind up buying a device, they got to pay sales tax. They got to get a numeral HQ sales tax on autopilot, spend less than 5 minutes per month on sales tax compliance. Anyway, in other news, John Mew, the inventor of Mewing, has passed away at 96 in his castle. Rest in peace to John Professor John Mew, visionary orthodontist and founder of Orthotropics, passed away peacefully in June 2025 at the age of 96 in his castle. A pioneering figure in the facial growth and development, John Mew challenged the status quo of traditional orthodontics, arguing that environment, posture and function, not genetics alone shaped the face. His philosophy, Orthotropics, aimed not only to straighten the teeth, but help promote healthy jaws, open airways and confident faces. Through his work was. Though his work was often met with fierce resistance from the establishment, John stood firm in his convictions, driven by a lifelong commitment to prevention, integrity and science and giving every child a fair chance at full facial distance development. Today, his legacy works on through lives on through the work of his son. John Mew will be remembered not only as a clinician, but as a courageous truth seeker who dared to ask better questions and never stopped looking for better answers. So never stop chewing some mast gum, say, pour one out for John I.

Wonder how he processed the explosion of mass things popularity, social media.

It must have come as a surprise because it was the last like few years of his life working on it for pro. I mean he's 96 and somebody probably printed out a tweet for him and said look some some trad influencer has gotten 10,000 likes on your on your work and a million views. Anyway, we have some trade deal news ring that gong Jordy Mary d' Onofrio and has joined Crosslink Capital as a partner and a leader of the Berms crossover strategy. She will be focusing Series B + venture investments across software categories. She Fortune magazine has the story. She was a longtime Bessemer investor and now she's heading over to Crosslink Capital to cross over into private growth equity deals. So congratulations.

Married to no Frio.

In other news, Mira Moradi's Thinking Machines is offering top dollar to technical talent much higher base salaries than anthropic and OpenAI. Thinking machines will give you 500k anthropic. How about a safe 400k OpenAI? Best we can do is 300k. No wonder everyone's jumping ship. I think we're looking at two different things here. This is not necessarily for the top researchers. Who are these like star athletes. This is maybe more for just like the general folks who are joining as like software engineers and developers and kind of like members of technical staff. But it is interesting to see that Mira is getting generous. Yeah, getting aggressive and offering generous pay packages because there's obviously a lot of work and it's a very small team. And even though Thinking Machines has some great great AI researchers on board, they got to have some folks to chop wood. And now that Mira is in the business of selling to businesses B2B fine tuning, reinforcement learning for businesses to drive profit, she's got to get Thinking Machines on adeo Customer Relationship Magic ADEO is the AI native CRM that builds scales and grows your company to the next level. You can get started for free.

You can try it out for free on us.

So the 462.5k average salary thinking machines lab offered 4 technical hires is considerably higher than more established language model competitors Murati is aiming to compete with. So the the competition in AI talent rages on. We will be joined by Zwicks in just a few minutes to discuss the AI talent wars in more detail. Aidan McLaughlin who's been on the show says posts the Survivorship Bias photo of the plane with the red dots and Benjamin this is in response To Benjamin Decracker, who says the OpenAI brain drain poaching by other labs kind of confirms that the smartest minds. And I don't actually believe OpenAI is on the cusp of AGI, but rather that it's going to be a drawn out slugfest for several years at least, and the economy still matters. In other words, if you really believed that OpenAI was right around the corner from AGI and once there, AI disrupts the entire economy to a post scarcity economy, why would you leave that organization right now in exchange for money? It's a good question, but Aidan is of course saying that the true believers are still there. They haven't left. It's only the mercenaries that left and he's.

We got to have. We got to have Aiden back on the show.

Get him back.

That was, that was a really fun conversation.

He's a great guy. It's fantastic. Also in other news, they're saying Meta is now preparing a huge pile of cash to acquire sweet baby rays.

Sweet baby rays.

I would love to see you identified.

As a potential acquisition target. Yeah, I mean, I wonder what their AI talent pool really looks like.

I mean, Elon sells the Tesla tequila, Chamath has tequila. Maybe Zuck, he, you know, he.

The Meta. Sweet.

He says he doesn't use caffeine. Maybe I just discovered something.

Sweet baby rays bands. Ray Bans.

Sweet baby Ray Ban Metas. There we go.

They come with sauce. Honestly, the glasses.

No, no, no, no, no. When you're barbecue barbecuing. That's the ultimate augmented reality use case. That's right, because it can take the picture and say, okay, I've set a timer automatically check the temperature. How long, oh, how long should this particular steak be cooked? Sets the timer, lets you know, starts buzzing.

Little reminder when it's ready.

This is actually a killer application.

Perfect Perfect ribs.

This is actually a killer.

You can only make perfect ribs with the sweet baby Ray Bans.

Well, if you're interested in, in getting in on the action of the Mag 7, the public companies head over to public.com investing for those who take it seriously. They got multi asset investing industry leading yields and they're trusted by millions. So Elon Musk is starting a new party. Says vox populi, vox dei 40. 80% of people voted for a new political party. That actually represents the 80% in the middle. Interesting. So we'll see if he actually does it. There is a poly market tracking whether or not he will do it. It has been surging. We will be tracking that Third parties. Not very successful in American history.

But not yet.

We're in a new era. Maybe Elon will charity. It's unclear if he wants to be the head because he can't be the president because not a native born citizen. So who would he put in charge or who would he back? Andrew Yang was running a third party for a while, the Forward Party. Do you remember this whole thing?

That whole. You remember that whole thing? I do remember at a high level, yeah.

I mean he had the backing of like Sam Altman, some really big tech people and he was running as a Democrat and then he, and then he dropped out and kind of like was seen as like an outsider and then he started the, the Forward party. So not left, not right before it and didn't really get that off the ground fully, but good branding. Yeah, branding. So I wonder what the Elon Musk. I wonder what the Elon Musk Party will be called.

I think it's called the America Party.

Oh, the America Party. Okay.

That won't be concerned. He called it. That was his words. What Elon Musk's America Party could look like. Yeah. He seems, he clearly hated politics.

Yes.

Got out. But he's angry enough about the state of things that he wants to potentially get back in the game. But one, we're going to have Zach Kukoff on the show in two minutes. He's going to be breaking down the big beautiful bill for us. What's happening on the ground in Washington? One thing that was included was the Invest America act which got approval from the Senate as part of the bill. It's on the verge of becoming law. The first country on the planet to make sure that every child has a stake in the game. Real private account ownership compounding in our best companies from birth.

Very cool.

So very, very cool. Great work from Brad Gerstner and otherwise. We have some breaking news from GVPN which is that we have partnered with Graphite. Graphite.dev is a website. Let's pull it up, team. I've been very excited about this. I was a happy graphite customer at my last company. My entire engineering team was running on it. Graphite helps teams on GitHub ship higher quality software faster. It is the platform trusted by 45,000 developers at top engineering orgs like Harvey.

What company is it?

Ramp, Ramp, Replit. Who else we got? We got Perplexity Harvey Asana Datadog for cell Datadog, the browser.

I love Datadog.

Duck, duck, Go, let's go. A lot of them, but if you're building on GitHub like I'm sure you are. Go and get on graphite. Graphite.dev is the website and we'll have to have Merrill, the CEO on the show very soon, but very excited to partner with them. And Tyler will be running our TVPN engineering. Org on graphite as well.

Love it.

More to come.

Well, we have our first guest of the show, Zach Kukoff.

Thanks for having me.

Live from Mr. Washington, Washington Correspondent, Mr. Washington.

I even set up. I don't know if you can see.

That's great.

That's the monument right there.

Wow. No way.

There we go.

Beautiful. That's great.

We'll just have our production team zoom in just on the monument. So you won't be on camera.

I'll get out of the way. But you can see the good stuff behind me. That's the important thing.

So, yeah, break it down for us. The Wall Street Journal has a story. Senate passes Trump's mega bill after all night session. Tax cut, Medicaid spending reductions. Head to the house with a July 4th deadline reachable. What's interesting in the bill, how likely do you think it is to pass? What are the major reads on this? And then we want to get your, your takeaway from like where the dividing lines are around the bill.

Yeah. So there's a couple trip lines. The first trip line I would say you guys have been tracking the moratorium, the 10 year moratorium on AI development. This was the, on AI regulation. This was the first. It was in. Ted Cruz put it in, then it was out, then it was back in. There was a compromise, there was a five year agreement set of a ten year agreement. And Blackburn has been sort of the key driver of getting it back out again. It's out now. It was done 99 to 1 in the Senate, almost unanimous in the Senate to get this out. This was a big win for Dario of Anthropic, probably the number one beneficiary. And by the way, somebody who certainly used a fair bit of political capital pushing for this. That's fault line number one. I would say fault line number two.

Wait, before on that, it's, it's a, it's a potential ban on AI regulation that was removed. And so the current bill does not have a, has a, does not have a moratorium on regulation. So it's kind of a double negative.

Moratorium on federal regulation. That's right.

So you can have California.

Yeah, states, whatever who want to. Marsha Blackburn, her home state of Tennessee passed last year, something called the Elvis act, which was cutely named, but basically said, look, if you are building like a, you know, an AI audio business, you cannot use any likeness of a real performer's sound. So if you want to have John singing the blues or Jory singing the blues, I cannot do that without a prior deal. That's because in Tennessee, Nashville is a dominant industry and music industry is a dominant industry. And so part of Blackburn's opposition to the moratorium, which would have prevented bills like that from taking effect, is that it ended up superseding the work that her home state has done to protect its dominant industries. By the way, net, net, this moratorium, the time that they got to a compromise, was so watered down, it really wouldn't have impacted Tennessee or California anyway. But it was a very dramatic swing from in, out, in, and now out once again for good.

And what do you, what do you.

Expect at the state level around AI safety going forward? Is this going to, is the fact that this was removed going to inspire certain governors to say, you know, make this a part of their platform?

And I guess, like, I want to know more about, like, if I'm 11 labs and I'm, and I'm training a voice agent and I can't be sure that some clip from, you know, Elvis or, you know, some Justin Bieber worked its way in there, does that mean that I just turn off Tennessee at like the DNS level or do some GEO fencing? Or is it more risky than that where I have to, I have to comply kind of at the national level and they're kind of forcing me to comply everywhere, or can I just pull back out of that state? Because we've seen this with, with Apple intelligence not being available in China, not being available in Europe, for example. But yeah, what would the impact on something like that be?

Well, think about states in two categories, right? There are some states that are so large, and by the way, the analog that I would think about here is what happens in the textbook market. So if you're a textbook publisher and you want to write some textbook about biology or whatever, if the largest states in the country, this category 1, pass a law mandating something needs to be in a textbook, suddenly you're going to comply nationally because they are so large they warp the market. Exact.

Have to.

That's right. And so if California tomorrow says, look, we're passing a European style bill to severely curtail, which I think would be a disaster, to severely curtail AI development, that would in effect be a national bill. And part of the, in my view, mistake that's happening tactically right now is this self imposed July 4th deadline is so restrictive that it forces all of these more nuanced negotiating points to fall by the wayside. Right. It becomes blanket. Either it's in or it's out. There's just not time to get to a more nuanced middle ground. So 11 Labs of Tennessee has the Elvis act, probably says, look, we just skirt around Tennessee. I don't haven't spoken to 11 labs. But if California passes, then suddenly you have the whole country warped by this. And Gavin Newsom and the California legislature are certainly ambitious enough to try, as they did last session, to try to pass something that would impact the whole country.

Yeah. Wasn't there news out of California this week or last week around some of this stuff?

Yeah, yeah, there was a huge fight which had an unlikely set of bedfellows where you saw Andreessen and others leading the anti legislative, anti regulatory brigade against some other folks who are much more pro curtailing. By the way, I will just say the other interesting takeaway for tech, not to totally dovetail away from your question, but the interesting, other interesting takeaway for us I think in this is the deciding vote in the Senate on the overall package, the reconciliation bill was J.D. vance. And so if you're a Vance head looking at 2028. Right. You already see that Ocasio Cortez and others, AOC and others are going to use his deciding vote on this bill, which includes huge amounts of Medicaid cuts that Thom Tillis from North Carolina for in particular thought were politically toxic, as a wedge against him when he comes and runs for president in four years. So sorry, that was.

You didn't answer.

You asked a question about California and I dovetailed it back to the federal level.

No, that's super interesting. That's the.

Yeah, yeah. That's the big, the big shock. So you asked about tripwires. The tripwire was one Medicaid cuts, which are politically really toxic.

Right.

Because who wants the idea that you voted for the government to take away your health care? That's another huge tripwire. And then there's a package of things that maybe we care about that are nuanced, like for example, IRA tax incentives for clean energy. Right. Or new taxes on wind and solar from China. These are all things that might enrage the Republican, the very conservative Republican faction in Vijay in the House, which now has to still pass the bill and now complicates the negotiating posture because the Senate watered down the Senate, preserved the IRA tax Incentives and watered down some of the tax cuts, got rid of some of the tax cuts on Chinese imports. Which means basically you have a bill that's actually financially harder to pass because it's less balanced. And at the same time, you've now alienated a huge faction of the gop, the super conservative GOP side of the party who still have to vote for the bill to happen. So it's up in the air if it passes or not.

Can you tell me about the EV tax credits? I know Americans are struggling more than ever to buy naturally aspirated V12. I'm hoping that there's some move there to subsidize things like the Ferrari 12 sundry, the Dolce Trilindi, a multi hundred thousand dollar car. Even if we can't subsidize that, maybe we can just take away the subsidies from electric cars to tilt the, to tilt the playing field in favor of the, of the larger engines, the supercharged V8s, the twin turbos, the G63, these types of cars that Americans, you know, deserve to be driving. So what's the news on the EV credit front?

I agree with you that the backbone of the American economy is the Ferrari. Right.

It's impossible for me to imagine a world.

Thank you for the last track. I appreciate that. Where a blue collar factory worker cannot own a sports car is beyond me. This bill doesn't address that. I wish it did.

Great.

If it did, it's not going to solve that huge unsolved problem.

Yeah.

What it will do, by the way, is continue to drive a wedge between Elon and Trump. Right. Then you saw Elon take the Twitter. I imagine you guys probably mentioned earlier you saw, you want to take the Twitter and start to really crusade against people voting for this. That is in part because at least the House version of the bill was much worse on a lot of the subsidies for electric vehicles than the Senate version. The big challenge is going to be going into now the conference committee. It's going to be how do they reconcile these two challenges so that they can hopefully tilt the market back in favor, of course, the Ferraris and supercars nonetheless, while also not alienating one of the two power centers of the gop, at least today in Elon, who could easily primary somebody who votes against.

Yeah, that makes a lot of sense. What about how are the Democrats feeling about EVs these days? Because I used to feel like it was a Democratic cause to be pro EV incentive. Let's save the environment, let's get people out of the gas. Cars. I'm joking about the V12s, obviously. But now it's become maybe let's punish Elon. But is this a cut your nose to spite your face situation for the Democrats?

I think it's a rough spot. I mean, you guys remember when Elon wasn't invited to the big EV summit under the Biden administration, right? That's part of what kicked off his political awakening is he isn't. He doesn't use unionized labor, and so he was excluded from this EV summit. There's been a huge polarization, a negative polarization against EVs among not only Dems in office, but the Democratic base too, which is, to all the points you brought up, quite ironic. You're not going to find many Dems willing to cross the aisle in support of electric vehicles to save this bill. This is a bill that will live or die by Republican whip count and Republican unity. If the whip count isn't there, it's going to be really hard to get it done before July 4th.

Mm.

What about Elon's America Party? You think that's real or just exciting?

Those my only two options. Real or exciting?

There's no door.

There's no door number three.

Yeah, I mean, it's obvious. Like, you know, we were talking earlier. Third parties haven't. Haven't historically done well.

Well, he has the America pack. So when you say Elon could primary someone, he could potentially primary a Republican on the Republican ticket with the American pac, and he could almost like, be kind of like a head fake, like, oh, this is part of the America Party, but it's not really a third party. Is that more what we're thinking here.

How this plays out?

Maybe.

Maybe one historical analog. It's not perfect, but think about like a Theodore Roosevelt, like a Teddy Roosevelt with the Bull Moose Party, right? You think about it's a faction within a larger established party, to your point, that can serve as an engine to primary people who are in disagreements. Exactly. Like the Tea Party. Or frankly, what's happening now. Look at Zoron.

Maga. MAGA is also like a wing of the Republican Party.

That's right. That's right. Maga, the Tea Party. And now on the left, the polarization from the Zoron and democratic socialist world. All of these folks are new factions in a way that, by the way, we haven't seen before. The same way that 50 years ago, you basically watched MASH on television. That was your only option. And now I tune into TVPN while I play Subway Surfers and have 30 other things hitting me at the same time. This is the political version of that, right? Where you say, okay, it used to be my options were a platform that I accepted wholesale on the Republican side or the Dem side. Now I can be a MAGA guy, can be a tech right guy, I can be a populist guy, and I'm a new right guy. And on the left, I can be a Democratic socialist. I can be an abundance bro. I have an infinite menu of things. The America Party is more likely if it sticks one more menu on the side of the right.

Sure, sure. Yeah, that makes a lot of sense. What question?

What, what time? What do you expect out of the next 24 hours?

So tomorrow morning at 9, House Rules Committee votes, that's going to be a key vote to see how this thing does. What I would say is if this gets done by July 4th, the thing that you're going to have to look to is that 9:00am Eastern vote to see how much unity is there in the Republican Party. They can barely lose any votes that this thing goes through the House in its current form. But I think it's unlikely that it's going to happen immediately. It'll happen. This will get passed. But on their timeline, I don't know. In the next 24 hours, if you see more senators like Murkowski from Alaska who are saying things like the bill is flawed, please send it back to the Senate so we can work on it again. That's a key indicator. This thing may not have the legs it needs the next couple of days.

Yeah, we heard about. I mean, everyone's saying, like, it's the biggest bill, there's all this pork. Are there any, like, green shoots where there's some random startup out there that's just super excited because maybe it's not a headline grabbing, you know, $10 billion thing, but it's like, that's $100 million that I can go after in energy or in defense or in shipbuilding or anything. Have you seen any of these? Like, they're called riders, right?

Yeah, yeah, it's a good question. Biden was famous for stacking a lot of these. Like the Inflation Reduction act had a million ways you could go participate. This one's got fewer. I'll say one funny piece of pork and I'll say one actual opportunity. The real opportunity, I would say, is for fintech folks who are looking at the Trump accounts, right, which is giving huge amounts of new Americans who are underbanked or not banked before access to capital for the first Time. If I'm Robinhood, I am loving. That's a big change for me. Funniest piece of work in the bill Murkowski, who is the key holdout in the Senate from Alaska, got a tax exemption for Alaskan. Native Alaskan whalers. She said basically native Alaskan whalers need to be. Yeah. That was honestly big delivery for her constituency of people who kill whales.

And let's give it up.

Let's give it up for the whalers.

Yeah.

They don't get enough attention in Washington.

Well, I mean, we've talked about. But energy is really important for the AI data center. Race whales. They produce oil that you can burn.

Wasn't it Chase who said he would burn whale oil?

He didn't say he would do it. He said that the hyperscalers are so desperate for energy right now that they would burn whale oil.

It's more fun to think about Chase.

Personally launching Crusoe for whales. Crusoe Blubber VCs are the new whalers. Yes. Yes, they really are. The old whaler and the old whalers. That's true.

Zach, this was so much fun. We'll have to have you call in tomorrow or Thursday.

Yeah, when there's more news, please.

I'll be around. It's my first wedding anniversary, so I'll be around.

Congratulations.

Plenty of time to call in.

Thank you very much. Incredible.

Incredible.

We'll talk to you soon.

Thanks for having me, boys.

See you soon. Yeah.

Bye. Up next, we're going back to the AI talent wars. Talking trade deals, talking $100 million offers with Sean Swix. How are you doing? There he is with the suit, looking fantastic. We. You wore a suit last time and we didn't give you enough credit because you were at your own conference, the AI World Fair. This is a sign and I would just.

This is a sign of great respect.

This is a great respect. So thank you. Thank you. And it's always great to. Great to catch up with you. How. How did you process the news over the weekend? What jumped out at you? I saw a couple of your posts. You were breaking it down. But how would you tell the story? How big is this for Meta? How bad Is this for OpenAI? How are you feeling about the trade deals that we've seen break loose over the last few days?

I feel like people who have been in discussing sports trades might be way more equipped to discuss this. This is relatively new in AI land and honestly just absurd. Get that bad guys. I'm happy you're getting paid, but also it definitely Feels like for a lot of the AI researchers I talk to, this is a little bit like a panic move and in some extent warranted. Right. I think that Meta has felt like it needs to do something different than what it has been doing, especially leading up to Llama four. And this is different. This is very, very different. This is something that only Zuck can do, I think, for me.

So there was just for some extra context, there's new reporting from Kylie at Wired just now saying that, you know, there's been some back and forth. What are the actual offers? Obviously, a lot of them are different. Right. It's not just like a set offer that everybody is getting.

If you join meta, you get $100 million immediately in a briefcase, hand delivered. I don't think that's what's going on.

So apparently some of them are up to 300 million over four years, with more than 100 million in total compensation for the first year. This is Wired's reporting. Mark Gurman was saying.

She said she needed to see an offer letter.

But the funny thing here is there's an OpenAI staffer who was responding to this anonymously, and they said that's about how much it would take for me to go work at Meta. Shots fired.

Wow.

But, I mean, they have set the right. So now they have. Unfortunately, they have set their own price. It is public now. I think there was some back and forth between, like, whether or not Sam appearing on his brother's podcast was like a very calculated move and, like, was he dishonest? This is not my words.

This is what it seems like he might have been honest based on this reporting. Like, it seems like it's real.

I think it. Look, it's in that ballpark, right? Like, whether or not it's exactly 100 plus minus. Like, it is at least eight figures. And that is like, far and beyond what anyone else had been getting prior.

And it is in there, at least in the relative range of what Tim Cook and Satya made all of 2024.

Yeah. Which is crazy. Which is also the 100 million number. It's so round that it just jumps out to you. And I think it's much more viral than 112 or 89. Like, 100 is just such a round number. It's such a big amount of money. It's just instant generational wealth, for sure.

I think that's exactly. It's weird, the calculus of. Does this make sense for Meta? Yes, it does, because I think you guys covered my analysis before that. Basically, they just cut VR spend and reallocate to AI spend and they have funding. They have the equivalent of anthropics and entire annual spend.

Yeah.

Meta's at all time highs right now.

Now. Right.

The, the market's doing great.

The market. Yeah.

And so, and so it doesn't really matter if, if you could move a $1.8 trillion company market cap by a couple points, you're doing pretty well.

Yeah. Yeah.

Zuck is no stranger to betting like 1% of his company.

Right.

To. To against the future. And he like I think of uniquely of. Of a lot of the sort of fang or what I think a lot of people are trying to come up with like new acronyms for like the. The Magnificent Seven. So I like the one that's among us.

Among Us. Yeah.

Among Us is the best acronym.

There have been some wild acronyms.

Uniquely.

Empowered as like founder mode of the trillion dollar companies to actually do this and like so like it's really amazing the leaders he's hired and the people that he's managed to hire. I would say that, you know, to one part of your opening question, like how effective is OpenAI? I would have said no, not that affected. They have a super deep bench. Even the people that you don't really hear about are actually fantastic leaders in their own right. And so in some extent opening eyes are very robust to already sort of lead departures already. But the email from Mark Chen over the weekend I think was also like, oh, I wouldn't say that if I were him. I don't know if you guys have the example.

Oh yeah, we saw it.

Oh yeah. Knowing that that memo would immediately leak, it felt emotional and defensive versus hey John. John's phrasing was. Or at least the way that you, you said, if you phrase this as hey guys, we have billions of people coming to our website monthly. We have hundreds. We have billions and billions of revenue. We are the category leader in the space. We are doing something different than Meta is doing.

Yes.

And we will continue to dominate.

And now this is the fourth time this has happened. Maybe fifth time this has happened. So we survived Anthropic and Dario.

Don't forget surviving.

Elon leaving. We survived Ilya leaving and we survived Mira leaving. And there's four spin out direct competitor co founder companies. This is a couple people leaving. We're going to get through it. We've been. You look at the growth chart, we're growing, growing, growing. I would have, yeah, definitely gone from a source of strength there. I don't know. But yeah. What is Your thought on like the narrative that like OpenAI seems Lindy @ this point, incredibly resilient, able to lose key people and just keep plodding forward with, you know, iterative releases. Models get a little bit better, UI on the app gets a little bit better, deep research comes out. They're just always staying on the frontier, just one step ahead of everyone else in that core chat product. And yeah, maybe they, maybe they might not be able to dominate in, you know, the, the Claude code ecosystem immediately. They got to make some plays to make that happen.

They definitely want to, by the way.

They, they want to, yeah, for sure. But in terms of the core thing, that's clearly dominant and huge and like game changing and profitable, like they're doing great and they should, and they should kind of, they should lead from a source of strength there because they've been through so much and continue to deliver on that front. And, and this doesn't seem like a cause for like the narrative around this, this leaving. Is that okay, Meta's gonna catch up to a frontier LLM reasoning model. They're going to have great image generation. But does anyone think that, you know, in three years time, people's phone, people's home screens are going to switch from chatgpt to Meta Chat? No, I don't think so. But what about you?

Yeah, yeah, I don't think so. Keep in mind also, Meta has its own institutional issues with AI products. I think they launched this like AI chat feature that, where every chat was public. I don't think, I still think it's still there.

I think it was accidentally shared.

You had to check.

Yeah, people were accidentally sharing it. But it kind of speaks to like, yeah, when you're dealing with a trillion daus, like you're having weird stuff happen.

But yeah, I would say that Sam would be the first of many people to acknowledge that there's such a thing as a 10,000x engineer and 10,000x AI researcher. But they also have a very deep bench. And it's not just about the bench, it's also about the data. It's also about the infrastructure that they've accumulated that. What's their acronym? Msl. Meta Superintelligence is going to have to build up effectively from scratch because effectively Yann Lecun has failed in his leadership of Meta AI there. I think that's fine. That's a pivot. That's something that only Zuck can do. But yeah, OpenAI has a very deep bench and I think they are like, they're good there. I would say, though, that it's really interesting how well diversified this landscape is. Most people when I talk to, there's often in the AI circles, there is discussion of who has the mandate of heaven. Mandate of heaven, meaning they're just most likely to achieve AGI switch. Obviously of the big labs, myself excluded of the big labs, a lot of people are mostly saying deep minds.

Mind.

It's actually not OpenAI. So I think OpenAI is intensely aware that they're being poached, they're being out competed on pricing, they're being all competed on some metrics, like Elementsys for DeepMind. And OpenAI is extremely competitive. Whenever I talk to them, I'm so impressed that they're not just arrogance, they're not resting on the laurels. They're actually just like, we will win on every single front. And I think it's just a very impressive company that way.

Then let's flip over. I mean, MSL is a very. It's a cooler acronym than than llama. I always love LLAMA because it's a fun name, but it didn't have the same, like, it used to be fair, fair and fair. Felt also just like it's. It's a little nice. It's not hardcore team. We don't.

We don't care about fairness.

We drop safety from MSL is like.

Going to the majors.

Exactly. It sounds like major league LLM, major league AI training. But I want to talk about the historical analogy, because Zuck has been in this position before with the shift to mobile. So when Meta, or when Facebook back in the day was a web browser, they initially moved over to an iPhone app and the iPhone was growing and they kind of made a mistake going a little bit too far into the HTML5 route, wrapping it in an iOS shell. But they didn't build the app natively and they were kind of falling behind. But then from 2012 to 2015, Mark was extremely aggressive about acquiring Instagram and WhatsApp, rebuilding the team, hiring some great people. This is when Adam Mosseri and Andrew Bosworth came in and really, really built out monetization in the feed. So they had more money flowing through, through the system to actually pay for all this stuff. And then, yeah, we were covering yesterday.

The Zuck did a talent raid in the 2010 era of Google because he just wanted to get better at ads, basically. And then he built the greatest ad engine of all time.

Yeah. So, yeah, how are you interpreting the comeback story and the fact that Mark has also been here before?

I think that it's interesting how you have like Zuck almost has to fail first and then he overcorrects and goes really really hard and wins. In contrast, I think VR never really had a failure because it didn't really have that much of a success to begin with. But yeah, MSL could only have happened after the comparative disappointment of llama 4. If llama 4 had proportionately the same traction that llama 3 had, I don't think we'd be sitting here today.

Totally.

So actually this is like net positive that we went through that because we were like oh, we proved out that we've tapped out in this direction and we just need a whole new team and we need to scale things in a very different way and probably we just need to poach from the other labs. So that's what they've done.

What do you think? Oh, sorry, yeah, continue.

It's also interesting though that that their current strategy was their third choice and somewhere in the middle either first or second choice was perplexity and that would have led Facebook or Meta in a very, very different direction. More consumery than right now, which is building a lab.

What do you think the post mortem on llama4 is? Is it just that they are over rotated towards pre training massive model Behemoth? These like, you know, not focused on reasoning, not focused on all the little tricks and tool use and stuff that actually creates a delightful LLM experience or chat experience these days. Or is there something else going on there? Like how do you tell the story of of what they got wrong with llama4?

If anything, I don't want to bag a llama for too much. By the way, I put in a thing in the chat for people to compare. Scout and Maverick were great and then the shenanigans around LM arena were regrettable but understandable. Honest mistake, whatever. But it seems that Behemoth will just never be released. The assertion again, Behemoth never released. So this is all rumors was that they tried to basically adopt whatever that Deepseek did for their large fine grained mixture of experts model and it just didn't work. They didn't put train it enough. Whatever. We will never really know the answer. I think there's probably also organizational issues around what data they can use. I know this for a fact just because I've heard issues around. Honestly at a big corp when your lawyers get into the mix of training data issues that can get very inconvenient when I think comparatively anthropic. When they won their recent case they were More like bend the laws and seek Founder mode.

Founder mode.

I think now that we actually have a little bit of ruling around. Okay. Pre trading on copyrighted data is actually transformative used, therefore it's fair use, therefore it's fair game. Go ahead. Actually we'll see.

Yes, but you, the case is still trying whether that you need to buy the underlying thing which could still be egregiously. You know, it could be incredibly expensive to acquire the copyrighted material.

Not at all.

You don't think, you don't think that'll go through?

No, no, no. Whether or not you buy the underlying thing is fine. It's actually just the issue of copyright whether you have to pay per use. Especially pay per. Now that that issue is out of the way.

Yeah, but I was saying the Anthropic case is still like they had 7,000 7 million books that they obtained through that they don't. That they didn't purchase. And the case, the pirated ones. The pirated ones. It will be interesting if labs have to effectively strike deals with publish. You know, I don't know it's still in the courts.

They are doing that. They probably just should do that. That it's a one time cost comparatively compared to the value that they can extract out of the books. The books are just guaranteed to be underpriced because the books are priced as though they're sold to one person whereas a model is going to be used by millions. So it's fine, just pay it. The piracy thing is A Legacy of Books 3 which is a data set that was created by let's say someone who is very pro piracy. It was a copy of Books one and Books two which is actual licensed public domain books. Anyway, so long story short, I think those cases will be resolved and I think that Llama and Meta's strategy there were probably affected by the quality of the data that they had and the fact that they just couldn't. They were playing one hand tied behind their back whereas all the other labs were not.

Yeah, interesting.

Well, this has been fantastic.

Last one more question. Any reactions to the news that Apple's working with, you know, potentially working on a deal with Anthropic or OpenAI? Anthropic wants potentially billions out of it.

Very, very convenient timing for the open model release which is rumored to be soon. But like I no reactions yet. I think Apple, there's a lot of news around Apple that never materializes. I think Apple hasn't shown that it has gotten the memo like Zuck has has shown so until, until it wakes up. Like I don't know. I think like around the time of the Apple intelligence launch last year, I think a lot of people I was commenting that like basically Apple wanted to be the first layer of intelligence and it wanted to route. So he always wanted to keep, wanted to be Switzerland, wanted to play nice between OpenAI Anthropic and all the and whatever other labs. Probably not Google but I think you kind of have to make a bet. I think you kind of have to go all in. Like I'm not that interested in Apple making deals with OpenAI OrientalHropic. I still want OpenAI to do an OpenAI iPhone. I don't feel like I don't like the in ear device and I just wish they just went all in and took Apple on head on because all of these are half measures man. We're going to be sitting here five years from now and Siri is still going to kind of suck. It's the same deal as Amazon making a deal with Anthropic for smarter Alexa. Where is that today?

Yep. I was just asking. I haven't actually seen it in the wild.

Yeah, great point.

This is really one more breaking news for you guys. I don't know if you probably guys probably missed it, but Cursor has hired the cloud code people from ecopic.

What do you mean hired? Like how many of them?

I heard they hired the Notion Mail team. I didn't realize that they hired the cloud code team.

That's an interesting commentary on what is notionable to keep its people because the Notion Mail team was, you know, they just launched it.

Yeah, they just launched it.

Now they've left trade deal but like Cursor, so cloud code developers have been talking about it non stop. I think people who are like adjacent to developers really pay attention to this one. This is as close as anything is to being the new Cursor. It is. Cloud code people are going absolutely nuts and spending a huge amount on it. Anthropic's revenue is up 4x since the start of this year. Cloud code only launched in February and now Cursor has poached the top two people from cloud code like the creator and the pm. It's breaking news.

I love it.

In terms of talent trains, this is a really interesting one because it's at the engineering level and not the model level and it's starting to spread out. It's starting to be extremely competitive here and I think it's very exciting.

Exciting?

Well, yeah, we'll have to have you back Soon. Since this is, this is the top story every day now. This is real life. Thank you so much for joining us on. Great to see you. Have a great rest of your day. And next up we have Matthew Prince from Cloudflare coming in to tbpn. Welcome to the Stream. Some huge news from Cloudflare. We'll let him tell us the story. How are you doing? Good to meet you. Nice to meet you. Welcome to the Stream. I would love to start with the news today and then I want to go into some of the history of the company and when you faced similar junction points and kind of turning points in the past. So why don't you kick us off with the big announcement and the big news today from Cloudflare? Sure.

So about 18 months ago, we started getting approached by a number of content creators saying that they faced a new threat online. We spend most of our days, most of our business, trying to fight cyber hackers, Iranians, Russians, North Koreans. And so I was surprised when the new threat was AI companies. And frankly, I kind of rolled my eyes at publishers. I was like, publishers are always complaining about the next new technology. And they said, just pull the data, look at what is going on. And it was really striking that over time you could watch as the sort of deal that publishers had made with Google starting 30 years ago, which was you can copy all of my content and in exchange you send us traffic. That deal just didn't hold up anymore where they were copying the content, but because they were providing answer boxes, AI overviews, they just weren't sending nearly as much traffic. And that was the good news. As you looked at OpenAI, it was about 750 times harder than with the kind of Google of old. To get traffic with something like anthropic is 30,000 times harder. And the reason why is because people are reading the derivatives, they're not reading the content. It'd be effectively like if I asked an AI system, you know, summarize what happened on the Technology Brothers show today, I have less incentive to actually go and watch your actual show. And that means that if you're making money through advertising, if you're making money through subscriptions, if you're just just getting value out of the ego of knowing that people are watching your show, that's going away in an increasingly AI driven web. And we worried about that quite a bit. And more and more as we talked to publishers, we realized there was something that we could do about it. Because Cloudflare runs one of the world's largest networks, a Huge amount of the Internet already sits behind us. We could partner with literally publishers, everyone from Adweek to Zif Davis and everything in between to say that let's change the way that the Internet works and let's change the sort of model where if you're going to take content, you should actually compensate the content creators for it. And so starting on July 1, we flipped the script. We made it as a default that if you're using cloudflare, that you can by default for free, block any AI crawlers from taking your content without compensating you. And I think now the hard work begins where we have to figure out now the business model around how we get compensation back to these content creators and make sure that folks like you who are creating real, original content can continue to be compensated for the hard work that you're doing.

Yeah, well, we used to joke saying that the labs are welcome to scrape our content because we want to influence the outcome of the model. No, it's a serious. It's a serious issue. We were covering one of Ben Thompson's pieces about this whole debacle a few weeks ago, and it was funny because at the time we were like, this is. There's so many different stakeholders here who could possibly try to figure out a solution to this problem. And I obviously, you guys are a key player in this and you have the scale in order to kind of make changes happen. Can you. Yeah, can you, I guess, like break down more kind of like the kind of the market structure between and how you see this? Actually.

Yeah, I mean, I guess have been done in over the past year because I know didn't News Corp do a bespoke deal with OpenAI for that exact thing? It sounds like you are more equipped to kind of handle like the longer tail, but also some of the bigger publishers. So talk to me about kind of the state of the art of what those deals look like when they're one to one and then what things might look like going forward.

Yeah. So I think that first of all, I think for some time to come, large publishers will do deals with large AI companies where there might be places that people need help, or either small publishers or small AI companies and figuring out what has to happen there. But I think even in the case of places where deals have been struck, what the challenge is is someone like OpenAI is paying a lot of publishers for their content and doesn't actually object to the basic idea that they should pay for the content that they're using, but they do object to the Fact that they're paying where all of their competitors are getting content for free. Any market that exists has to have scarcity. And the problem, the reason why there hasn't been a market in this place space is that there isn't scarcity. And so what changed yesterday is scarcity was introduced really for the first time. And I think the closest analogy is if you think back to before itunes launched, we were all downloading music on Napster and all the free pirate services. That's effectively how the AI companies are taking data from any content creators today. And what you need is an itunes. You need someone to come in and say, okay, let's provide a way where people can pay for that content and they can go back. Now that's evolved over time. I think our first version in the marketplace will probably be relatively naive and we'll figure it out. No one's paying 99 cents for songs anymore. We've moved to something that's closer to a subscription model like a Spotify. And I think that that's what we will evolve to have over time. And if we do it right, I think that we can have a large number of sellers of content, obviously, but also a large number of buyers of content. Both the big sort of general purpose models, but then also very specific models. And we've got to make sure that new entrants can come into this market and have a vibrant way of participating and competing. And so I think that for now, most of the deals will be one on one bespoke deals between publishers and AI companies. You'll need to have some way of enforcing those deals and making sure that if you're charging someone, they can get access but their competitors can't. And then over time, I think we'll develop something that looks much more like a robust marketplace where content providers can set sort of what their price is. There can be a bid for maybe getting that content exclusively for some period of time or whatever else. And that's going to develop over the coming months.

Is that the correct model to think that the content producer would set the price? I mean, that's certainly what happens on Substack and the New York Times, the Wall Street Journal set their price. But I've always thought that this might evolve a little bit more like YouTube or like Spotify where there is a pool of dollars that are going into ChatGPT subscriptions. I personally pay $200 a month and occasionally I fire off queries that probably land on the Wall Street Journal or the Financial Times. And I would be happy for them to send 10 cents or a dollar or split off 50% of what I'm paying. So you have a hundred dollars to kind of of parcel out in the pool and then you see how much inference pulled what data from what sources and kind of have it all be driven by kind of the same volume, like the volume algorithm that you see on YouTube or Spotify. Does that seem like kind of what the long term outcome might look like? Or do we need to also get to some sort of ad driven marketplace? Because that's ultimately where YouTube, how YouTube prices these things?

Yeah, you know, I think it's going to be, I think that there's a lot that we still have to figure out. I last week traveled up to Stockholm to meet with Daniel Ek, the founder of Spotify. And it was, you know, it was really, it was interesting. He said, you know, the ultimate model that Spotify settled on. I think it's, I don't want to put words in his mouth, but it was basically like it was sort of the most naive of all of the different options that he had come up with. And it works as it is a pool of funds and then they divide it up based on basically how many minutes of content you consume. And there are different rates for music versus podcasts versus audiobooks. And it was fascinating to see. So you could imagine a version where Cloudflare effectively negotiates on behalf of all of the content that sits behind us. With the big AI companies, people can opt in or opt out of being a part of that pool. The more content that's part of that, the more valuable it is, the AI companies. And then we would look at how we could split that up across how much crawling is actually done across that. I think one of the real keys will be how can we give hints to the AI companies on what is the content which is the most valuable to them. So for instance, if Taylor Swift releases a brand new song and maybe does an interview about it, that's incredibly valuable content if you're a chatbot for teen, lonely teen girls. Right. On the other hand, it's probably not so valuable if you're sort of a chatbot trying to be the world's best doctor. You know, maybe there's some value in sort of bedside manner, but largely that's not going to be a big deal in your care. On the other hand, if a research study comes out on acetaminophen's effects on different types of chemotherapy, very little value for the chatbot for teen girls, but incredibly valuable for the doctor. And so what we have to do is actually, I think on an LLM or a AI model, by AI model basis, be able to give them signals back to say this is the sort of thing that you should be paying attention to, that you should be indexing, that you should be actually scraping and paying for. And the same way that in the music industry we've got reviews, we've got different types of music that people are. You might be into country, you might be into classical, and it kind of allows you to compartmentalize that. I think that whole ecosystem has to develop. But once that does something very much like Spotify could be the right answer long term. And again, I think we're in a unique position to pull it together.

Talk briefly about stablecoins. I remember in this Ben Thompson piece people have been suggesting this idea that stablecoins could be some part of the solution or a backbone for a new business model for the Internet. At the same time, while I'm bullish on stablecoins, someone like a cloudflare can set up the infrastructure to just use traditional financial Rails to process payments. So I'm guessing that it's not part of what you're.

This was Ben's reaction to the original sin of the Internet was advertising. And this idea that, that Marc Andreessen, when he built the browser, didn't build in payments because it was this multi party discussion to figure out how to actually integrate payments into HTTP didn't happen. The first MCP spec, that's the model context protocol spec for AI agents to interact with each other doesn't include payments. But he was kind of saying that it might be on the horizon, but would love your take.

Yeah, you know, I think the answer doesn't have to be 100% one or the other. And so I would guess that there are going to be be very traditional kind of traditional financial Rails that will be ways to pay, pay people out. But there will also likely be something that is blockchain based or, or stablecoin based. And again, I think we're looking at all of the different providers that are in this space, including potentially creating our own stablecoin that would be part of how these, these transactions, you know, take place. And I think you're exactly right that there's a natural extension from what we're doing here to how we figure out around what the payment Rails look like for mcps. Because as your agent is going around interacting with things, that's also going to be something that is either charged for or that you actually get paid to do. And there's got to be a way for those transactions to take place. And to the extent that you can reduce the transaction costs for those transactions as far as possible, then that's a pretty interesting way of being able to process very high volume, low dollar amount transactions. So I think that's right. My only one quibble is that I think that the original sin of the Internet is not that it didn't include payments, it's that there was no privacy built into it. And your IP address reveals far too much about you as and who you are. We don't even have to get to cookies.

But that's.

What about, we've talked about content creators, publishers. What about the apps of the world, the Ubers, the Instacarts that actually have really meaningful advertiser businesses built on top of them. Do you expect there to be any type of this functionality rolled out to them over time, or is that something you think they're thinking about quite a bit? Because if I can go into ChatGPT and that's my default daily assistant, let's say in a few years from now, and I'm like, hey, order me groceries and order me this Uber. I'm not in the app seeing ads potentially being upsold and that could be a problem for those types of companies.

Yeah, totally. And I think that, I mean, robots don't click on ads. And so the model, that part of the revenue stream to support these services has to come from somewhere. If today Uber is able to monetize the time where I'm waiting for a car to come by showing me an advertisement, that means that they can effectively charge me less for the ride. And so it may be that if that ride is booked through an agent instead and they don't get that, that advertising experience. And again, I don't know enough about, you know, Uber's business model to know how important that is to them, but if they don't get that, then maybe it is that there's some sort of premium that an agent booked ride receives versus a human booked ride. And again, I think that that's, that's just, we've got to figure out what that looks like. I think that's gonna be less up to Cloudflare. I think it's gonna be, you know, our job will be how do we provide those payment rails, how do we provide the systems, how do we make it so, so that we can have guardrails on as agents interact with applications that are there, that you as the application provider can set those, those rules and controls and then, and then agents can interact within, within that system. And MCP is, is sort of the leading candidate for providing that. But you're right that it's a sort of draft version of that specification and there are a lot of things that have to mature in order for that to be something that is the real kind of agent to agent system that is likely to run what will be an increasingly AI driven web.

Yeah. Can you talk about any previous crucible moments for either Cloudflare or just like the Internet history broadly? This feels like a moment where you're potentially trying to, I mean, deal with a shift in the overall Internet structure or the incentive structure. But it's a reaction, but it's also an action that should reshape the relationship between different parties on the Internet. Are there different moments in the history of Cloudflare or the history of the Internet that you think we could draw on as historical analogies to learn from, to see how this might play out?

You know, I think that Google really 30 years ago defined what was the business model for the web, which was you create content, search drives traffic and then you monetize that content through advertising or subscriptions or ego and ego and monetization. Not quite the right thing, but you drive value from it in one of those three ways. And that's held up for the last 30 years. I think that this is the first time that I've seen something where I thought, wow, there are really going to be very, very, very fundamental changes to the structure of how the Internet works if we move from a search driven model to an AI driven model. And I think that what I hope is that we can actually make this something where what gets rewarded is not what gets rewarded today, which largely is who can write the headline that produces the most inflammatory response in all of us. Who basically drives the most cortisol, you know, gets the most clicks and therefore the most ad revenue or the most subscriptions. That's not a healthy way of looking at the world. I think the alternative is if you imagine that kind of all of the AI models together are a good kind of assemblage of an approximation on human knowledge. If we can identify where the holes are and then create incentives for content creators to actually fill in those holes, that actually is going to move humanity forward. It's going to make the AIs better, it's going to be a much more interesting thing. And that's, I think, how we're going to be creating it. I can't think in the last 30 years of a seminal moment. I think there are some things that are along the way. I think 2016 was a really a big turning point year for a lot of reasons. It was sort of the year that technology went from being able to do no wrong to being able to do no right and sort of rise in populism around the world. You have Brexit in the eu, you have the first Donald Trump election, you've got Xi and Modi consolidating power in Asia, the Filipino election. And I think that that was a point in time where also driven by Snowden shortly before that, in 2015, that a lot of the world lost faith in the US model of Internet governance and it wasn't quite ready to adopt the Chinese model. But that's, that's definitely been a shift which is substantial and I think we're still watching that play out. That's. That I think is probably still remains the biggest threat to the overall Internet. But this shift to AI as well, you know, again, I think is, is, is a real challenge, but it's also an incredible opportunity. If, if again we can make the rewards incentives for content creators not be who can produce the most cortisol, but who can produce the biggest sort of incremental improvement in human knowledge. That'd be an incredible win and something.

That.

I don't quite know how to get there yet. But I think yesterday or today, in July 1st, we took a real step in moving in that direction and making sure that content creators can be compensated for really producing information which is valuable to advance human knowledge.

What do you think about the future of investigative journalism? There's been a big shift in just content creation into independent creators, but a lot of that is actually downstream or separate from the type of work that investigative journalists do. I'm thinking of like Seymour Hersh hanging out at a local army bar for a year before he gets one scoop that he can write a book about. And these investigative journalists, they tend to, you know, John Carreyrou was on the payroll of the Wall Street Journal for years. He was writing stuff. But then he blows the Theranos case wide open. Eventually a book and then a movie. And I imagine that with artificial intelligence, the value of a scoop could actually go up because you could use an LLM to read through the clickbait repurposed version of the article to find, wait, they're sourcing. Actually, this person posted it on the Internet earlier. They're the one that actually did the hard work to get the scoop. They should get 90% of the value and 10% should go to the repurposed rage bait version as opposed to the economic model now, which is Maybe you get 90% more clicks on the. On the viral, you know, repurposed content and the scooper actually gets. That's 10%. Do you think that's possible? Or how do you think that investigative journalism will evolve?

Yeah, I don't know. This is an answer to your question, but I thought it was interesting. As I said. I met with Daniel AK up in Stockholm and he told me, he said, we were talking about this and he said one of the things we do at Spotify is we actually surface all of the different queries that are sent to Spotify that we don't feel like we have a really good response for. So if somebody searches for, you know, I want a song to a reggae kind of beat with. It's all about how much it sucks when your sister steals your car and your dog.

Like, not to get too specific, I.

Don'T know what these things are, but they're people, they're musicians who take this list and they actually write songs based on what people are looking for.

No way.

And that. That they make tens of millions of dollars a year doing just exactly that. And there's something about that that I think is really beautiful as opposed to the alternative of just, you know, just trying to do a little of more. Me too. Of what everybody else is doing, like taking a different twist, using signals from the market in order to go find that. So. So again, that's not investigative journalism by any means, but I think it is actually advancing the sort of good of humanity. It's taking a place where there's a missing need and it's filling that missing need. And so I am hopeful, I mean, I'm a relatively optimistic person and I'm hopeful that if we get this right, that we might be on a golden age of content creation where people actually are rewarded for doing things that advance human knowledge as opposed to just doing things that produce as much cortisol as possible.

Yeah, the idea of a knowledge bounty, right, it's like, hey, there, there's. There's groups of people or a single entity online that will just pay you to produce really high quality information around this specific topic. And this, The Internet always did this sort of organically, but it would just be somebody spinning up a blog or maybe an Instagram account or, or something like that, and they would just start blogging about something that was niche, and then an entire network would form around it and other people would contribute to it. So I think there's quite a lot of precedent, but it would be exciting to put that reward out and not saying, hey, you have to do this and then maybe you'll get some ads associated with it later. But basically the pool of capital is here and you just have to deliver that knowledge that people already want. And we know it because they're searching it on LLMs and things like that.

Can I.

Think, I'll tell you the sort of black mirror kind of dystopian outcome if we don't get this right, which is, I don't think that. I don't think journalism goes away. I don't think that research goes away. But you could imagine a world in which we go back to something kind of like the Medici, where there are five big AI companies and they basically employ each of them, all of the journalists, all the researchers, all the academics to be able to do the research to feed their systems, because you're still going to have to have original content. People are still going to have to be able to produce that in order for the AI systems to, you know, fill in the holes in their kind of effective block of Swiss cheese that is their model. But, but I think that that's, that's a bad, that's a pretty bad world where, where again, because you then probably have like the conservative AI and the liberal AI and I mean all these things that we've kind of, that the Internet kind of broke apart. You could imagine AI as a system that is just this massive consolidator in the future. And I think that's a bad outcome. And I think a better outcome is if we can figure out how can we reward people for again, driving knowledge. But, but, but not get to a place where all of them have to be employed by, by one of the five, you know, big.

Yeah, you actually talk to somebody very high up at one of the. Said that was, was saying that like if you take the total, the total salaries of all the journalists in America, it would be a fraction of what the AI labs are spending right now just acquiring data. And so it's not a financial question, it is a political cultural question.

It's interesting the argument why I think that. And I've been really positively surprised as we've talked with, because we've talked with all of it big tech companies, all the AI companies about this. And they, and they all like with, with maybe one or two very small exceptions, they all say, yes, we understand over the long term we have to pay for content. And so they get that, what, what, what's key, though, is it has to be a fair playing field. And that fair playing field, everyone sees that slightly differently. So if you're a new incumbent, you want to say, well, Google can't be advantaged. If you're Google, you have to say, you know, well, we have to, it has, we have to be respected for, but the ecosystem that we've helped build and flourish and we should be able to do this thing. And so everyone's got a slightly different take on this, but I'm actually encouraged that the dollars are there, that there is an acceptance that this is something that needs to happen, and that if you ask them, everyone says, yes, we need to do this, as long as you can create a level playing field. And again, that's where I think our role comes in, is how can we create that level of playing field? Playing field, how can we create scarcity? And then how can we make sure that content creators are being compensated for the hard work that they're doing?

Yeah, zooming out just for a second. What is the state? How's the Internet been for the last few weeks? It's been a busy month in, or last month in geopolitics. And I know that makes your job a bit harder, or at least I would imagine things get a little bit.

Busier, keeps it interesting. I mean, it's whatever, whatever you see sort of in, in a, in the sort of kinetic side, the physical side of a conflict is, is usually replicated in the, in the cyber side of the conflict. And so, you know, we, as the hostilities ramped up between Israel and Iran, first of all, we saw very clear signals that that something was coming ahead of time, which is, it's interesting how there's sort of a digital residue which shows when there's going to be kinetic action taken. And so we were watching that pretty carefully. Big attacks targeting both Iran, one of Iran's largest banks, was hacked by what looked like a group of Israeli hacktivists. The largest cryptocurrency exchange in Iran was hacked and all its funds were drained. Again, looking back, it was either by the Israelis or sympathetic attackers. Iran has tried to do the same thing against Israel. Israel's cyber defenses are much stronger. But we're starting to see that Iran is targeting other, largely US Financial services firms, critical infrastructure firms, to try and see, to sort of try and strike back from what is, how do they strike back against the US In a way that is harmful but doesn't start World War Three. And I think that increasingly, unfortunately, cyber will be a big piece of that. And so we're doing everything we can to stay in front of that, make sure that anyone who needs it has protection and that we can keep the lights on everywhere in the world.

Last question for me. There's a number of larger overarching tech narratives I'm interested in. If you're losing sleep over any or track tracking any in particular focus. The AI talent wars and kind of pay inflation for top performers. Is that an issue or something you've been tracking or the difficulty to build larger data centers and infrastructure? The GPU short of the chip wars? Any of those topics kind of particularly relevant to you or your business or kind of keeping you up at night?

Yeah, I think we're not trying to build a foundational model LLM, so we're not as much competing for the bleeding edge AI researchers. I will say that I've been really amazed at both from an academic side and then also just pure talent side. How many people are interested in working on that problem of something like how do you score content in order to be able to create a marketplace? And so that's something that. That's been pretty exciting. We're very excited about the people who are coming to apply to work for Cloudflare to work on problems like that. And today has been a record applicant day for us on the Congratulations record.

Sorry I hit the air horns for you. Record applicant day.

But it's good, it's good news.

And then I think we tend to put a little bit of equipment in a lot of places and so we don't tend not to have kind of massive multi.

Yeah, you're not running into like power constraints or rare earth element constraints or water. Right. Constraints.

Yes, we do, but in kind of a micro way where, you know, we put GPUs at the edge of our network. We have to live with a power envelope that we're given by an isp. And so we're doing things to try and figure out how to just get the best power efficiency out of the GPUs that are there. The answer to more and more need of GPUs can't be. Everyone has to turn up their own nuclear power station.

So.

So I do think the place where we're pushing suppliers and AMD is doing some really interesting things in this space. Qualcomm is doing some interesting things in the space. The fruit company down in Cupertino is doing some interesting things in space are how do you focus on, yes, performance, but performance per watt and. And we've seen this game before with, with intel saying, oh, that doesn't matter. Like just, just get the most performance possible. You can water, cool things, all kinds of things that, that tends to not, not be the winning strategy over the long term. And so we do think that there will be a renewed focus on just energy efficiency around GPUs. And we're really pushing that in a way that, because again, we can't build our own data centers in the business that we're in. And then chip shortage. The chip shortages are funny. There's never been a chip shortage at any time in the history of silicon that doesn't turn into a gluttony because it's.

Hey, but this time it's different.

Yeah, this time it's totally different. So I think you're going to see both, you're going to just see shifting demand that's there and a lot more. Nvidia is not going to be the only chip supplier of GPUs. There are some. Really, Again, great, great. Other providers that are out there.

Yeah. Well, thank you so much for stopping.

By the conversation and come back on again soon.

Yeah, thanks. Good luck filtering through all those job applicants. We'll talk to you soon.

See ya.

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Right back and kick it off.

Yeah. We'll bring in Luca from Pudgy Penguins. We're going to talk about what's going on with the market structure. Bill, what's going on with the genius act, what's going on with his business. So we're very excited to catch up with him. It's his second time in the show. He came on during Crypto day. Fantastic conversation. And now we're excited to have him back on to talk about the state of crypto. How are you doing, Luca? Good to see you. I'm doing good.

How are you doing?

I'm great. What is that behind you? The, the igloo. Is this part of the Pudgy Penguins expanded universe?

Yeah.

The holding company that holds Pudgy Penguins Abstract and a couple other companies we've yet to announce that we've acquired is called IGLOO So everything lives within the igloo.

That makes sense. There you go. Has there, is there a. Is anyone riffing on the meme of like selling ice to an Eskimo yet? I feel like that's, you know, I know that you're good at doing deals with old line retailers, but can you sell ice to an Eskimo?

I can. I can sell ice to an Eskimo. I can sell fish to a penguin. I can sell land to a mammal.

Yeah. What is, what is the latest, I mean, we caught up on crypto day a couple months ago. What's the latest in your world? How are you feeling? We've been in this kind of kangaroo market for the high level L1s. Prices are up, prices are down. Everyone's kind of waiting for the next big crypto catalyst. But maybe that's the genius act, the Market Structure Act. Maybe that's legislation, but what else are you tracking? Stablecoins have been really hot with the circle ipo. What's been top of mind for you?

Yeah, our big thing at the Igloo is actually like, we feel like we.

Are one of the most well positioned.

Organizations for consumer and culture in crypto. And it was actually a little fascinating because I actually felt like I missed a piece in terms of what I felt like was needed for this consumer crypto revolution. And I think it's really prevalent around this genius act, which is, I think you're going to see crypto break through mass off the backs of stablecoins. Because if you look at all of the consumer crypto applications and really their barrier and bottleneck, you know, I thought it was product builds and I do think that is true to a certain extent. But I think the product builds are a byproduct of the current environment that rewards builders for building in. And I think that gets completely flipped on its face when average consumers are now transacting in dollars that are on chain. It opens up a whole new vertical of product builds that I think are more oriented around maybe providing a service or an experience and not providing a scheme to return your dollars two or threefold as like a financial mechanism for you to kind of speculate on.

Yeah.

And so I think like the genius act is quite literally going to kick off the consumer crypto revolution and that is really apps that are built around, I think the best properties of blockchains, which is like on its face, I think a lot of people listening specifically around your audience, like maybe look at blockchains as like, maybe speculative vehicles or like programming languages. But I think the best frame to look at it as is like a blockchain is a censorship resistant version of a stripe or a PayPal that taps into global composability and global liquidity, which basically means that like anybody with an Internet connection can transact, you know, using these payment rails without some sort of intermediary. And that at scale, if you actually understand like consumer product builds, you know, every, every guy that I know that's building an AI or building consumer product goods at one point has had their account locked up or their funds withheld or paying a huge premium on these transactions, whether it's 3%, in some cases 5 to 8% if it's a higher risk product. And I think this, you know, blockchain is very useful when you think about removing that middleman for those applications. I think we've just been pigeonholed as an industry around like these builds that are solely around speculation and making the end user more money. Right? Like I go buy this, I should return a 2x or a 3x or a 5x. And I think we're slowly transitioning into more traditional builds where it's like, hey, consumer crypto is really around this idea of removing these, these layers that I think today make it so hard to build, you know, fun and robust applications that are, you know, segmented, either geo from a geography perspective, whether it's certain regions, etc. And, and I think it's kind of transitioning to like more real product builds that I think more serious entrepreneurs are interested in. So the genius act I think is going to change everything because the floodgates for stablecoins are here. And I think that was the missing piece to the consumer crypto revolution that I think crypto very much desperately needed.

Okay, I want your reaction to this older analysis by Ben Thompson during the first NFT boom where he was talking about the value of NFTs as a, as, as a disintermediated membership program, essentially. So basically the, the link I see to stablecoins is if you have a community and you're a creator, you might not want to have someone have a super fluctuating financial interest in your community. And so when I think about the folks who are big on patreon and it's $5 a month or $10 a month, but when I pay $30 a month for the Wall Street Journal, I get access to WSJ.com I can comment there, there's a bunch of other things that you could imagine, but I can't really go around the Internet and carry my Wall Street Journal login to their YouTube account and get custom YouTube videos. Like the videos have to be embedded on the Wall Street Journal website, so it can't really follow me around the web. And Ben Thompson was talking to Adam Mossari at Instagram about this idea that Instagram might be open to a bring your own membership type of integration with Web3. And so I think that we were almost there, but there was no one that really broke out into mainstream adoption where both you gotta get YouTube and you gotta get Instagram to say yes. We are integrating this membership card as a native, as a primitive on our platform to allow, you know, creators to create, you know, subscription level content. Instead we wound up with every social media app has their own subscriptions. So I can go get YouTube, YouTube Premium subscribers who subscribe to me, pay me $5, then on X, I can have subscriptions $5. They subscribe to me there. But you got to follow, follow me around. You can't just subscribe to me as the creator. That felt like something that Web3 could do, but we weren't quite there. With stablecoins, is that something you think is a reasonable dynamic that could play out post Genius act, is there still some sort of countervailing force where the big tech companies might just want, not want to give it away? Because, hey, they're earning a cut on those membership revenues directly. How do you see that playing out?

They're definitely not going to want to give it away, right? Like, those guys are pretty good at capturing and trying to keep revenue. I think like one of the biggest, you know, bull cases around web3 is like these universal logins and identities, right, that like follow you all over the Internet.

Like that.

That's going to take a lot of pieces to put together. But like things like the genius act, right, and everyone transacting in stablecoins makes that so much more possible and feasible that I don't know of anyone who's really mastering that build just yet. And to the point of NFTs, I think there's two bull cases for NFTs. One which is the one that you referenced, which is access, right? And that is a more mundane, probably less exciting, but probably bigger tam, because you could replace the entire ticketing industry and only fans and Patreon like you'd mentioned and info, right? The WAP guys can go and plug that in. So I, you know, I think there's that and then there's also the TAM of digital collectibles, which is, you know, physical collectibles today have a total addressable market of about 600 billion. One percent of that 600 billion is digital. Yet digital collectibles have a slew of pros that physical do not. Right. They are, they have no friction when buying or selling. They have no insurance issues, they have no storage issues, they have no inauthenticity issues. Right. And so I think there's a, there's a gap in value to capture in terms of, you know, in a $600 billion market. It's kind of like gold to, you know, physical gold, the digital gold. You know, bitcoins captured 10% of it. I believe that digital collectibles are, you know, whether you argue what side of the spectrum they're on, they're not 1%. They shouldn't have 1% of that market share. And so I think there's going to be value to capture between that spread.

The other, the other, the other thing that stands out to me as a, as just an observer is that I think when people are frustrated with the NFT market, broadly, it's frustration with 90. It's basically saying like, yes, 99% of, of attempts to create new IP are going to fall flat because it's really hard to create IP that is actually like, it's easy to create IP. It's hard to create valuable IP.

Yeah. And most people, the random 20, 21 floating around Hollywood. 90% of scripts in Hollywood don't go anywhere fall flat, but 1% of them come out.

It's like they just hit the chain and people assume that there should be some value tied to them. And so I think it's just very possible that NFTs become bigger and bigger and bigger. But it's just a handful of really select projects that become these sort of centers for gravity and get developed in all these different ways. But you're not going to have 100,000 projects that each have movie offshoots, video game offshoots, physical toys attached to them. And that's exactly the way it happened in the real world, where people in Hollywood, like you said, will spend their entire life trying to develop a cartoon that actually turns into a franchise. And many people will try and fail. And the difference with crypto is the expectation is immediate value creation. And I don't see that happening.

The tokens, whether it's fungible or non fungible, there's a superpower behind it. It's a kryptonite and it's a superpower depending on how you harness the power. But financial alignments can be your greatest Weapon or your greatest weakness.

Right.

And how you harness that. Right. Like us being able at Pudgy to galvanize this group of 10,000 people to go and hit algorithms. Our big breakthrough at Pudgy was I told all of them that Walmart had turned us down, that we were going to go live on Amazon and that I needed everybody to buy. And if they bought it right, all at the same time, we would trigger Amazon algorithms would be number one across all of these different categories and that they'd give me a lot of leverage to go do a deal with a major retailer. Well, what happened was exactly that we launched within, you know, 30 minutes of launching on Amazon. I'm number one across basically every consumer product category, every toy category. And then, and then Laura Rush, who is the head of merchandising at the time at Walmart, Walmart pinged us and said, we want to stock you. You got three months. We're going to put you in a pallet in the center of the store in 2,000 locations in quarter four. And that was like the big paradigm shift for Pudgy where people are like, oh, shit, you know, these kids, you know, came out of nowhere and did it and the rest is history. We've basically carried that momentum up until where we are today. But that was our big breakthrough. And that was because I think of that alignment and that incentive, everyone was incentivized to go and create this headline in this moment for Pudgy, at least the core community members who had quote, unquote bags or collectibles or tokens within the ecosystem. And if you can harness that and if you can respect that, it can be a superpower, it can be your greatest kryptonite, as you've seen 100 times over. And there's plenty of horror stories which we won't get into.

Yeah. Bit of a wild card question, but I don't know if you saw OpenAI has a deal with Mattel to make a chat GPT enabled Barbie, potentially. We don't really know the shit of the deal.

How many LLMs can fit in a pudgy Penguin?

Yeah, yeah, that's what we want to do.

I mean, a lot of LLMs in this.

Yeah, I mean, you're, you're, you're in some ways in the toy business. And what is the next generation of toys look like? What are you optimistic about? What will change? What technologies do you think will be integrated? What considerations will drive actual success instead of just like, yeah, we slapped AI on it, like, we tried that with with every toaster having Bluetooth didn't really work out, but the nest thermostat, pretty, pretty, pretty popular. So yeah, how does this play out?

It's a great question. I saw this coming two years ago and I basically jumped for joy when I thought of it. And I told the guys because for those who are not familiar, the toys that we sell have the QR codes. So it's not just like selling toys that are, you know, IP related, we're actually putting NFTs in the hands of regular people because you buy this toy, you scan this QR code, you redeem these NFTs through a gas experience. So it's like a whole crypto funnel, which is basically our product, our physical toys. But I jumped for joy because I was like, dude, what if these, these characters that you bought and these NFTs that you created then became like your AI homeworker helper?

Right?

And this was an idea I had to two years ago. And Lorenzo, our president was like, you know, dude, you know, if there's a.01% chance this homeworker helper tells a kid to kill himself, it's not worth it because, because we'll get deshelved and it'll create a bunch of chaos. And we weren't, you know, AI guys, but we actually are doing a toy with Curio who recently raised pretty big over in the whole, you know, AI crypto or AI you know, startup, Twitter, land.com land and that whole place.

Yeah, we're familiar, we've dabbled.

That's great.

Yeah. How. Who's the musician that's involved with that?

I don't know. I mean, yeah, I'm super bullish on this. You know, I have kids and I mean I was thinking about this with the rabbit R1 like yes, the safety and security stuff is really, really important, but safety, interpretability, research and the ability to run an extra LLM just filtering. Is this a harmful response from the LLM that seems to be getting better and better. And I'm pretty optimistic about having a watered down LLM that can't explain everything but is really good at identifying plants and animals. That's going to be a big product for kids. I think the trick to CPG is.

All about providing value for the customer. Like Walmart will tell you if you're trying to stock, they're always optimizing for the best deal. And so my mind frame is like, how much bang for your buck can you get for this purchase? Well, if you can buy it and redeem some NFTs that could be worth some digital dollars. Maybe you recoup your cost on the physical item and then it's a net free good and then maybe you can go in and ask it questions. And now it's a value add. And so I think this stuff is just changing. It's a complete paradigm shift, I think. I think no one's really ready for how I think the world is going to change. But in terms of a value add, you can plug in an LLM to a lot of physical products, just alpha for the room, you know, and create a ton of value for your end consumer, which is ultimately your goal as an entrepreneur.

That's awesome. Well, thank you so much for stopping by.

Always appreciate your perspective.

We gotta have you back when there's more breaking news and we'll keep catching up with you. Good to see you, Luca. We'll talk to you.

Cheers, Luca. Have a good one.

Really quickly, let me tell you about adquick.com out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only Ad Quick combines technology out of home expertise and data to enable efficient, seamless ad buying across the globe. If you're going to be in Walmart, if you're going to be selling toys, you got to get on Ad quick dot com. Anyway, our next guest is here. Julia. Hey, how you doing?

Doing well.

I like the intro music.

Yes. Welcome to the studio.

Welcome.

We are professional newscasters. As you know, you're one of a.

Handful of people in the entire world that has actually visited the temple of.

Technology you've been in.

Of technology, the capital of capital.

Yes, that's right.

Give us the latest and greatest in your world. New piece in Palladium. What was the thesis? What inspired it? Take us through the high level of the piece.

Yeah, so something I've been thinking about for a while. It was actually sort of inspired by this freshman at Stanford who I was talking to the library, very, very sweet girl. And she was like, what are you doing postgraduate? And I said, well, I'm working for this magazine called Arena. They want to do books, so I'm going to be helping with that. I'm super excited. And she said, that's a 1930 ass job. And I was like, well, why is it a 1930 ass job? Well, it's like, you know, most people are like consultants or software engineers, but you're making like this very real thing that's like, you can touch. It's like, yeah, like maybe it is a 1930s job, I guess.

People.

A lot of people in the 1930s didn't have jobs, but there were some people who were writing books and publishing books. So I was sort of thinking it's like, well, how do we get to this point where it's like you, it is sort of like this weird thing for people to be doing something real and tangible. And then I think it's also just, you know, I sort of feel like graduating from Stanford in 2025. In some ways I'm like out on the last chopper out of nom. Like Chat GPT was only like super ubiquitous really my senior year. Like sometimes you just walk into the library and everyone had chat GBT on their screens and it was just, you'd go to section and the section leader would be like, please. I know it's really easy to use AI, but it would really make me sad if you used AI to write your weekly reading response. And then sort of just like all these things that were just like you felt like you're more practicing acting like a college student because just AI was just making a lot of the day to day obsolete. And it's also just like there's a pretty good chance that AI is a better writer than I am. There's a really high chance AI will be a better writer than I am in 5 years. And I think it's like, well, if I wanted to be as a writer and that's going to be obsolete, or AI is going to be better than me, or if my friends who want to be lawyers are just going to be replaced by Harvey, and my friends who want to be software engineers are going to be replaced by Cursor. What does the future look like? I think I was also guided by this conversation I had with a wonderful professor at Stanford, Jennifer Burns. She's in the history department. She has written biographies of Milton Friedman and Ayn Rand. I took a really great class with her in the fall called Thinking about Capitalism. I had a lot of conversations with her just because I found her work really interesting. And she asked me, she's like, you're pretty enmeshed in the current right wing intellectual moment. HU is the defining economic thinker. And this was back in October, November. And I was just totally stumped. And when I published the piece with Palladium, I sent it to her and I was like, this is sort of my answer to what is the economic thought of Gen Z or really of the 21st century? And it's economic nihilism.

Nihilism. So yeah, are we cooked? Where are you most bearish it seems like you're, you're worried about a lot of different trends. Is, is, is capitalism cooked? Is democracy cooked? Is technology?

I'd be curious to get an anecdotal job market kind of date. It sounds like we got breakfast last week and you were saying that. Sure. Somebody some of your classmates got offers from, what was it, like TEMU or something?

Yeah.

So to work in like a warehouse. And they were all like super cool.

Yeah, it was Shein. And it was like become this like Shein warehouse manager. And I was like, actually that sounds like a really interesting job. Like if I didn't have something lined up, maybe I would apply to be like a Shein warehouse manager. And there's this app called Fizz, which is sort of like Yik Yak 2.0. It's an anonymous forum for college students at particular campuses. And people got so mad that she and like dared ask Stanford students to stoop to their level to become a warehouse manager. And I think it's sort of like a paradox because Stanford students believe that they are entitled to certain jobs. And this is true of sort of like all Ivies or elite universities, but there are a lot of jobs that people aren't willing to do. And I sort of wrote in the article for Palladium, it's like the line used to be, well, the hardest part about Harvard is getting in. And now I would say the hardest part about Harvard is getting a job that your peers deem elite enough to not feel any social backlash or to feel comfortable in the rat race. And I think Peter Churchin, who's a phenomenal historian, has written a lot about how conflict rises in societies when there are more elite aspirants than there are elite positions. And I think especially as class sizes at these schools are expanding and the Internet is democratizing access to education and democratizing access to power. In some ways I think that these schools are in a really tough place because it is not. Is no longer a guarantee that you can go to Stanford, you can go to Harvard, you can go to Yale and be upper middle class.

Are there really not that many jobs at McKinsey, Bain, BCG, the Wall street banks, the big tech companies, the PMs. It feels like we're hearing a lot of nervousness about job loss and not hiring. But it feels like also McKinsey's printing a bunch of money just writing slide decks about AI transformation in the Fortune 500. Or has the actual shift in what is a high status job changed? And if it has, what is the high status job. Is it a entrepreneurship now? Is it yc? Where are we sitting with that?

I think it's, I think it's vc. I think it's entrepreneurship. Just regards to whether they want to.

Go straight to venture capital.

Yeah, this is, this is the golden ticket.

Just kidding. We support venture capital.

Yeah.

I think like anecdotally it seems that big tech is like that used to sort of be like, okay, everyone told you to study CS and if you study CS you'll have like a 200k post grad salary. And now that's not really happening anymore. Like yeah, it's. I think there's definitely a shortage of or especially in like more big tech firms which offer more security than like startups.

Sure.

It's a lot harder to get those positions now than five or 10 years ago.

That's more of a hangover from COVID and kind of Elon showing that he could run X at 1/5 the headcount versus truly AI disruptive to like replacing workers.

I think it's probably both. I think there's like the zero. Well, there's a time in 2021 where just people were throwing money at anything that they could throw money at. And I think we're in very different times now. But I think, I think about it less in terms of just like, oh, what's the market like now? And more in terms of like how has the social contract changed? And I think for a lot of Lee college students the sort of social contract was for a time like, okay, if you study these three things then post grad you will have and you don't fuck up in college, you'll have pretty easy access to these really important high paying jobs. But I think we've seen now that it's like maybe a job at Goldman Sachs as an analyst isn't that important. You're just changing font colors for 110 hours a week. But also just we're seeing underemployment rates in these sectors. I think the computer science underemployment rate is 1 in 6, which is insane considering that pretty much every authority figure I had from ages like 8 to 18 told me to major in computer science.

Yeah. Do you. Sam Altman wrote this post about the soft singularity and his kind of thesis was that if you went back to 1930, they would think we all have fake jobs and so we will maybe create new fake jobs. Are you optimistic about that at all?

Yeah, I don't think the fake jobs thing is necessarily going away. Like I'm in LA right now, that's my parents live and every third person is an influencer. So it's not hard for me to.

Say let's hear it for the influencers.

You know, the hard working content creators.

It's very hard to go and get.

Slaves to the algo.

But I think what we're going to see is just there's a lack of what we're sort of seeing. It's like there have been fake jobs for I don't know, maybe, probably not eternity but for like recent history. And what we're going to see is just the fake jobs. It just the work becomes more and more meaningless. It's like I don't know what the fake jobs of like 5 years, 10 years from now are going to look like. But I think a key thesis in my article was that Gen Z is simultaneously like hyper careerist but there's no career at all. It's just sort of floating around from one job to the other. And because there's so much hopping over from one company to another, one firm to the next, there's never really any real experiment expertise that's developed and there's this shallowness in the work. I think it's like my parents, especially my dad who just retired, he worked at one firm for the vast majority of his career. He was an expert in that field and that wasn't an anomalous for people of his generations of boomers at all. But I think now with Gen Z it's just like okay, you have one job for six months to two years and then you move on to the next, next thing. And these big companies have like incentive structures built in like McKinsey that has search time. It's like okay, well we're gonna, after one year we'll give you six weeks off so you can go and look for another job. And I think in sort of doing that it's admitting that it's a fake job because it has no real tie to its employees and no real tie to their employees.

Sticking around.

Yeah, for some of the new grad roles, fascinating. At least the big three, they'll very much encourage you to go take two years off to do an mba, which feels like, I don't know, it just feels odd to me to like lose an employee that you could be just nurturing internally and growing and stuff. What's the reaction on campus? Been to the big AI trade deals? These massive offers are people, most of those folks who are getting $100 million offers, they have PhDs, they're published papers. Maybe the new advice should be don't just get a CS job and then a CS degree and then try and go work in big tech. Maybe it should say, actually stick in academia longer.

Yeah, I don't know. I can't say just because, like, I'm not a CS major. In fact, I never took a single CS class at Stanford. But I also think the people who go into CS PhD programs just like love the subject. And I think Stanford in particular is very good at getting people to major in computer science because they just teach the intro courses very, very well. But I think that's a very different demographic. The people you just sort of want to check out for college have an easy ish major that a lot of people around them do so they can have a cohort versus the people who are like, I'm really into systems. This thing is, if you met someone at Stanford who was a systems concentrator rather than an AI concentrator, they were.

Like really in it.

Oh, you're a systems guy. Name every system.

This is Symbolic Systems.

No, Symbolic Systems is a fake major. It's like the systems cracked in the shots fired. I also did a fake major, so I'm not.

That's so funny. It's a big major.

The realest major is art history. Higher employment than cs.

You know, Symbolic Systems is like literally every first employee at all the big tech companies who's worth like $100 million now.

It's like they probably have a higher average income than the average comparative literature major, which is what?

Oh, well. Well, thank you so much for stopping by, Jordy. Do you have any other questions?

Let's make this. You're new our. You're our Gen Z correspondent.

Oh, gosh.

Okay, we need you. We need you. I. I want more updates. Reporting on the Stanford Class of 2025. Where are they landing?

We got a fake job for you. Gen Z correspondent on a live stream.

Yes. New fake job alert.

New fake job.

I had a funny idea when I was editor but never got around to doing it and sort of. One last thing was that we would compile the names and photos of everyone who got a job at Goldman Sachs. And it was just black and white portraits of all of them listed like vertically. And it was titled Our best and brightest. So it's something like that for you guys.

There we go. Let's see it. Love it.

Well, very, very excited for you to be at Arena.

Who's going to take the companies public if not Goldman Sachs?

I don't know.

Who's going to issue the massive debt to back these corporate titans, if not Goldman Sachs.

Well, they are our best and brightest. They're doing important things.

They are. Anyway, this has been fantastic. Thank you so much for stopping.

Great to see you.

Thank you.

Cheers. Talk soon.

Up next, we have Joel from Thompson Reuters coming in the studio. He was supposed to be on AI Day. He's buddies with Swix, was introduced to me by Sean Swix who's on the show earlier. We're going to dig into how Thomson Reuters is using artificial intelligence and what's going on in the enterprise. Welcome to the stream, Joel. How are you doing today guys?

How's it going?

It's going great. Good to meet you.

What's happening?

Would you mind kicking us off with an introduction on yourself? And then I'd love to know a little bit about the shape of technology. Thompson Reuters business people obviously are familiar with the brand, but on a day to day basis what's actually going on the technology side? Yeah, you bet.

So I've been at Thompson Reuters a few years. I joined via acquisition as a CTO of an AI company, TR acquired a few years back and have been with the company since then. I think a lot of people know Thomson Reuters from the news business. Obviously that's, that's the most public facing part of the business. But from a revenue perspective and a technology perspective, it's really, I would say a relatively small percentage of what we do. You know, we're one of the top two or three software providers in the world in the legal industry, in the tax industry, compliance, audit and risk. So we really cover, I would say, a pretty broad expanse of the information services industry. For a lot of years we were really seen as a, as a content provider or an information provider within these businesses. But software and in particular like search has been sort of a foundational piece of the technology that has kind of underpinned delivering that information to customers again across, across the sectors, legal, tax compliance, etc.

Okay, so walk me through. Of those verticals, which one is seeing the most acceleration from the current suite of AI tools? Which ones? Kind of maybe next up at bat. And not really. The models aren't really having as much impact as you expected so far. But where are we getting the most leverage in AI?

Yeah, it's a great question. You know, if you look at all of those industries, you wouldn't necessarily look at anyone and immediately say they are particularly eager to adopt technology or aggressive in that sense. But for the last two, two and a half years, the legal industry has been on fire and I'm sure you guys have talked about it. There's a ton of capital coming into the legal tech industry in general but really the customers too have been extremely hungry and eager to use this technology and it's having profound impact on the way those professionals think about doing their work and operating their businesses and the underlying businesses business models themselves. I think you're starting to see more progress being made in industries like tax though. I think sort of the quantitative capabilities of the models kind of lagged the language capabilities of the models but I think that's improved. But I also think if you look at like the tax or the audit industry that particularly workflow kind of heavy and I think as agents have really taken off in the last six to nine months and the tool calling capabilities of the models have improved, it's really opened the door to deliver real true automation and productivity with some of these agentic frameworks and reasoning based models.

Yeah, talk to me about, I mean I imagine you're not focused on pre training a massive model to get to the frontier. You're probably a buyer of that capability. But we're seeing a lot of deals get done. OpenAI's fine tuning models for clients above $10 million they have, they have even cheaper offerings. Palantir is doing fine tuning work now. We just heard thinking about machines. Miramoradi is doing some fine tuning, reinforcement learning for business to business applications. What are you a buyer of right now? What are you focused on building internal applications around? Where do you want the various pieces of the building blocks of a great artificial intelligence enabled product to sit?

Yeah, this might be a little bit of a long winded answer. I would say first and foremost when we look about, look at shipping product into the market quickly, we're certainly a buyer of these models and we're close partners with Anthropic, OpenAI, Google and others in that regard. When those companies are working on their next versions of models, a lot of times they come to us to help them evaluate and test certain capabilities of the models. Because the type of work that's done in the legal industry in particular is, is challenging. It's not a simple like rhetorical response. It's. It's a deeper level of reasoning that happens in terms of the types of problems that we're solving. So I would say first and foremost like we're buyers of the technology. We have done, you know, fine tuning engagements with several of these providers, super excited about the sort of RFT trend that may be coming with many of them. In terms of being able to apply more RL based methods to that fine tuning. But we're also, I would say, builders in some sense. We're not, you know, pre training models of the size of, of GPT4 or Claude Sonnet, but, but we do engage in that. So about a year and a half ago we acquired a small company with a couple folks from, from DeepMind who have come and really built up our deep learning expertise and deep learning training expertise within our team. We've got about one and a half trillion tokens of our own proprietary content in legal and tax and news. And like I said, that's been sort of one of our defining assets for a long period of time. As RL really becomes kind of the main mechanism for driving further improvements in the models, we see our talent, you know, our 4,500 domain experts across legal and tax and otherwise really being pivotal in that process of driving performance into the model. So we're certainly a buyer, but we're definitely trying to exercise the data and the content that we have proprietary to us, but also the human experts that we employ to do.

Can you give me some extra color on all the different value kind of on the table with one of these deals between a big company and a foundation model provider? Because it can seem so simple. It's like I'm buying an API, but there's actually a lot more to it. And we were talking about this in the context of Apple potentially partnering with Anthropic or OpenAI and there's actually kind of a, you know, an odd relationship there where if Apple's sending a bunch of users to ChatGPT that could improve the model and that could make their business stronger. They could wind up servicing ads in the responses like Google does and you could wind up with a situation where you know, Google is paying Apple, not the other way around. You can see ChatGPT potentially paying Apple for the right to be on the Siri button. But in your business you have over a trillion tokens that, that's pretty valuable data. There's a question of what value are you bringing to that side of the deal? And so how are you thinking about doing a great deal that sticks and is aligned economically over the long term with a foundation model provider?

Yeah, it's a really hard question to answer and certainly you have to kind of have some crystal ball to project out what the next two years are going to look like. And it's hard to project two weeks to do that effectively.

That's true.

We actually have a crystal Ball in.

The studio for this exact reason.

Helps quite a bit.

It helps a lot. Yeah, it's important.

I'll borrow that next time I'm out there. So, you know, for us, I think, like I said, our people and our experts and the data that they create ultimately I think is sort of core to our identity and core to what we believe is valuable to us. And we try to really hold on to that and extract as much value from it into our IP as we can. I think where, where there's mutual benefit, like I said before, is we provide a lot of insight and direction to these foundation model providers in terms of like what the models are failing at, sort of what kind of capabilities. You know, they have these public benchmarks that say, you know, every week one model is better than the other, but they don't really represent the real world and in particular they don't represent the real world of like how professionals do work on a day to day basis. And we spend a tremendous amount of time building real world evaluations into those kinds of things. And not only that, but we spend a tremendous amount of time and energy grading and evaluating those on like real world rubrics for how a lawyer would interpret this. So it's not like it's a right or wrong answer, it's is it helpful, is it harmful in some way to a lawyer? These are types of things that like create a, require a tremendous amount of just domain understanding to do well. And so that insight's super valuable to the foundation model providers to understand how they need to adjust their data sets. And it benefits us on the flip side because we get more performant models out the back end that are better suited for our tasks.

How much time are you guys spending just on preventing hallucinations? When you talk about domains like law and tax, you know, it's not uncommon for a lawyer or a tax attorney to hallucinate themselves, put the wrong number somewhere, you know, have the right. But usually there's, you know, hopefully checks and balances in terms of, of someone else reviewing it, the client reviewing it, making sure that it's getting to the right place. But that feels like the number one of the bigger issues kind of holding back LLMs from unlocking the full value. So I imagine it's a big focus for you guys, but what are your thoughts?

Yeah, I mean, all the time. I think that's one of the core things that we do. And you're right that hallucinations existed before AI was involved here and they exist now. And they, no matter how Good. These models will get, they will exist in the future. I think there's, there's some element of like that that will be the fact foundationally the way the models operate like it is a propensity and it can happen. But we spend a lot of time trying to build guardrails, trying to build methodologies to prevent that or at least mitigate it in as, as many ways as we can. I would say this is where though the UX of the applications really becomes like more and more critical. Like creating the environment where a lawyer like knows what they need to validate, knows how to do that validation, and can do it quickly and efficiently so that they're still saving time in whatever they're doing, I think is a critical part of the design of the applications and how they operate. And as much time as we spend on the science side trying to build algorithms that prevent that, we spend just as much time on the design side trying to make sure we build experiences that allow lawyers to build that confidence and trust that they need.

Very cool. Well, thank you so much for stopping by. We'll have to have you back when there's more news from your world. And we hope you have a great day. And thank you for joining July 4th too.

Yeah, appreciate the easy.

We'll talk to you you soon.

Cheers.

Jordy, how did you sleep last night? I think you might have me beat. I was a little rougher. I got an 81. But how did you do? Go to 8sleep.com tvpn get a pod 5 actually.

Unbelievable.

Did I beat you? Did I beat you? Play the sound effect, you know, you know the Reward. I get 81. What do you get?

82. 52.

Oh my gosh.

Wow.

I, I'm, you're, I said, I said what it's worth.

You have put on a fantastic performance this show. I would have guessed 99. I thought you were locked in. I think you've. Thank you. I think you've done fantastically this show.

I, I, I like need to hire a new head coach. I'm gonna like have a call.

We gotta have Brian Johnson back on the show. He's getting back. He's down to come in the studio. He can give us a coach. We'll bring Andrew Huberman back to. He was. Andrew Huber was saying there's a drug that can help you sleep better, something like that.

I might need to get on peds to actually beat you.

But then we're drug test because if you're, if you're cheating and I'm natty sleeping. Hey, this is not going to fly.

We sleep. We focus on our sleep to make the show better.

We do.

We should be able to do any type of.

And there's no better, there's no better place to sleep than a wander. If you're on vacation, find your happy place. Book a wanderer with inspiring views, hotel, great amenities, dreamy beds, top tier cleaning and 247 concierge service. It's a vacation, but better.

We are going to be launching a video of us in a wander.

Get ready.

Get ready for that. I can't wait.

Get ready. We have our next guest coming to the studio. We'll let you take the intro.

Mackenzie will be coming in from Ambrook announcing some news. What's going on? Welcome to the studio.

Hey, thanks so much for having me.

Quick intro on yourself and the company and then let's get into the news.

Okay, sweet. So I'm MacKenzie. I'm the CEO, one of the co founders of Ambrook. Our mission is to help American family run businesses become more profitable and resilient. And yeah, the way that we do that is we're starting in agriculture, so building out financial management software. So accounting like the full bundle. So accounting payments, banking cards for America's farmers and ranchers.

How did you land on this idea? Where did it, where did it all start?

Yeah, it was a pretty winding path, but we actually started during the pandemic helping a lot of producers try to get access to working capital. And if you talk to a lot of producers about their problems and sort of what they think software can help with, it almost always has to do with the, all the way up the Maslow's hierarchy. So getting access to capital to take more risk. But the more that we dug into it, we helped a couple thousand producers access a couple million during the pandemic. But when you really dig into it, it just kind of, it kind of gets down to like accounting and financial record keeping. Like it's just accounting all the way down.

Non existent was one of the issues. You're like trying to underwrite a business but they're like, well, I have this piece of paper and I have this piece of paper and, and there's a.

Huge range like you can imagine. But a lot of, you know, you have farmers that are running multimillion dollar businesses on pen and paper and of course you have folks who are also using standard F and B accounting software too. But the real issue is just that farming is actually so complicated. I don't know if you guys have ever been on A dairy or how to do, or how to do fda.

I don't know if you guys have ever farmed.

Not a lot of content farming.

Content farming.

No. I grew up, I grew up in the country, in wine country. So I had some exposure. I also have some portfolio companies that have some end farms as customers. So I feel like I've had some exposure, but certainly not an expert. But from my understanding, I think that the challenges, one, you're actually on a farm and historically some farm maybe. I'm sure there's a lot of starlink adoption which maybe is a catalyst, but at the same time you're not at a desktop computer. So the explosion of mobile helped in farming because you could be updating a database or even sending an email. But all that is relatively new. And I don't think the big accounting software providers of the world were necessarily like actually on the ground talking with farmers, being like, what software do you want to run your business?

Totally, yeah. We, we ended up. So a lot of accounting and FP&A software is built for, for like office workers. So it's built as if they assume that you're going to be in an office, you know, eight hours a day. And we actually ended up flipping that very early on and building workflows that were built for folks who spend more time in the field than the office. And so from the very beginning we had like cross platform across mobile and desktop, like sort of web based. But over 50% of our users use the mobile app as their primary device to do pretty complex bookkeeping, accounting, payments, receipt management and you know, understanding their analytics and reports. And I think that speaks to kind of what you were talking about there.

How consolidated is the industry? I feel like there's this narrative of like private equity is rolled up every farm and there's like a few mega farms and the certain like billionaires own all the farmland in America. But then at the same time it sounds, it seems like there's still, I personally know folks who have family farms that are still in this like single digit million, maybe tens of millions of business. They're definitely SM.

There's, there's a little under 2 million farms in the US and only, only, only something like 12 to 16,000 of them do more than 5 million a.

Year in annual very long tail.

Yeah, okay, so super long tail. Yeah, yeah.

So I mean, yeah, that's the market opportunity for you.

Now talk about the new financing you guys announced today and maybe what was the inflection point that you, that made this round kind of Possible.

Possible.

Yeah, totally. So we just announced 26.1 million Series A.

Who's it from?

So it's led by Josh at Thrive and Dylan.

Congratulations. He's on a terror, our guys. He got a trade deal done. He got. He got.

It's been a busy, busy day for this day for Thrive, all three of you. So.

Yeah, busy day for Dylan too.

Yeah. I don't even think you caught this, but they released S1 just like an hour ago.

Oh yes, that's right.

More breaking news. But anyways, back to Ambrooke.

No.

Yeah, no, super. Yeah. So the inflection point for us was that we just sat, I think once we realized that we actually did need to. I mentioned earlier that we at first were just trying to solve this paperwork problem with getting access to working capital. And once we realized we actually had to just rebuild QuickBooks from the ground up. But that is not. That is a long build.

Non trivial.

So non trivial. And so we ended up sitting with a group of pilot customers a couple dozen farms across the US for about two and a half years before we ended up releasing it and actually starting to market it more to the public. And so it wasn't until last year that we. That we launched early last year and that that growth basically catalyzed. Catalyzed this round.

So that's awesome. And well, is the goal for working capital to still be a core part of the business in the long run, but you just had to solve the underlying kind of ledger first.

Yeah, totally. And actually I was, I was. What pushed me to this decision too was just I ended up talking to a lot of these big ag tech players that a lot of the executives there that were doing a lot of ag financing and I asked them whether or not they could standardize it by pulling on QuickBooks and they just said it was a garbage, garbage in, garbage out problem. And so they couldn't even. Like they weren't. They themselves were going in and doing pretty specialized underwriting that was one off basically per operation. I figured if we were going to have any shot at getting a lot of these folks, our customers, access to not just commodity, you know, commoditized financing. Because a lot of these, a lot of ag bankers actually drive to the farm to put together boots on the ground.

Boots. We need boots on the ground.

Yeah. Which is, I mean the faith based relationships are really important. But what that also what the cost is that it means that more capital can't flow into this ecosystem. Right. And you. It's really a lot harder to to do really interesting niches financing as well, if you don't have that level of standardization. And so a lot of what Ambrec has been focused on is first just solving producers problems, so making it easier to file taxes, making it easier to manage receipts. But now what we're starting to do is a lot of our producers, for example, are for the first time understanding their managerial costs in real time and able to make a decision. Like one of our producers realized that actually replacement heifers was a much more profitable enterprise than his hay enterprise. And being able to make those decisions in real time and either, you know, because, hey, equipment is pretty expensive. And so he basically to increase the amount of income that was flowing through the hay enterprise to offset the cost or essentially, you know, stop growing his own hay and instead buy it. And like, those are the types of decisions that actually in real time affect profitability in the long run and build a more resilient operation. And that's just not something that again is, you know, these farms are pretty complex. It's one of the only industries where oftentimes for manufacturing, you're usually assembling things actually with agriculture, disassembling it. So like, what are the cogs on that?

Yeah, it's exciting because to me it's like you can level the playing field. And like, if you're a farm and you don't have access to capital in the way that these big, you know, sort of, you know, mega corporations have like really efficiently run businesses, plenty of access to capital because they're running sophisticated financial operations, it's just so much harder to compete. And with a business like farming, where I think a lot of. There's a bunch of different subcategories, but so much of the revenue comes in waves seasonally, based on harvests and things like that. And so if you're getting paid a couple times a year and you, you can't really have consistent access to capital, it's like very challenging to actually run a business and stay in business and not be forced to just sell your land or do something else. So it's very.

Yeah, totally. I mean, and there's a huge. The big trend that everyone talks about in ag is just the generational transition. Right. Like 70% of land is supposed to change hands in the next 15, 10, 15 years. The average age of a farmer in the United States is 57, 58. It's only increasing. Right. And so a lot of these operations are looking at generational transitions and there's a knowledge gap there as well. Because if everything is in, you know, if everyone's in someone's head about how all the finances work and how the operation runs. Right. Like, that's fine. But what happens when, you know what happens when you need to pass on to the next generation? And so a lot of what we think about is democratizing access to that knowledge. Democratizing access to capital, to knowledge. Right. I think this is also our thesis on AI, which is AI should actually be the great. It should be actually the democratizing wave that the computing revolution promised but ended up just actually hollowing out the middle class. I think you're actually seeing that come back in a real way where you're able to tap in. Folks who don't necessarily have specialized skill sets or have a CPA or something can actually understand more about their books in real time. You don't need to necessarily have that background.

You can get at least access to the intelligence of the average McKinsey associate. But for the cost of Amber, you don't have to go hire McKinsey.

Yeah, it's great.

Awesome. Well, super exciting. Thanks for coming on the show and come back on when you have news.

Yeah, congratulations. Thanks so much.

Thanks, guys.

We'll talk to you soon.

Awesome. The breaking news, of course, is that Figma has filed publicly filed their S1 with the SEC today.

Oh, this on the printer kit.

Oh, is the printer.

The printer's going.

It's going.

Okay.

They applied to list on the.

Oh, don't, don't, don't. There we go.

Boom, boom. They have applied to list on the New York Stock Exchange under the symbol fig.

Love it.

It's got a great rig. Congratulations. The New York Stock Exchange for one of the best stock exchanges if you ask me. Preliminary. John, I. I called you. Gone. Anyways, the other interesting data point, Arfur Rock called this out. There's 70 million held in Bitcoin ETFs on the balance sheet with board approval for another 30 million BTC purchased via US USDC.

Whoa.

Little bit of a BTC treasury action going on.

Wild.

What else?

I would not have expected.

Bill McDermott, who was formerly at Xerox, transformed SAP and is now leading service, now is joining Figma's board of directors.

Congratulations.

Bill is a legend. In addition to his wisdom, I especially appreciate his humility and authenticity. So great addition to Figma's board. And.

Well, you're heading to the New York Stockings.

We'll have to have some.

You got to get a watch on bezel. Go to getbezel.com your bezel is relentless available now to source you any watch on the planet. Seriously, any watch. Yes, this is very good news. Should we run through some timeline? Get out of here. What do you say? We got another trade deal. Another massive trade deal. Jeff Bercovici is joining the Wall street journal. Starting July 28th he'll be heading up Wall Street Journal's San Francisco team as deputy tech and media editor. Absolutely massive news. Congratulations to Jeff on the trade deal. We had another trade deal that we posted on the timeline. Same is moving to Thrive holdings to build exceptional businesses designed to compound over.

Many decades Massive signing from Thrive. Massive over Thrive. I mean we're hearing rumors maxed out probably four years guessing a one year cliff but we'll wait for more details. A veteran of ramp an absolute dog. Congratulations.

And in other news Public our sponsor has the IRA triple play here 1% match plus 1% match plus 1% match. That's 3% so go check it out@public.com.

The absolute dog over public do it again. Yes Will Menidis has a new law New law alert we got oh he's coining.

He's coining Citadel's law. Any industry with sufficiently high stakes will end up mirroring the culture of hedge funds. Massive cash comp for top performers bid away dynamics where entire teams walk together extreme litigation of Non competes harder work 247 culture short 10 years we are at most 6 months away from PE style midnight recruiting coming to AI at most 12 months away from undergraduates pre interviewing for the job they want after a two year stint in a frontier lab because because they even start there's scrambling now Hawaii Sagaponic pear trade here it's fun to be aghast when Balyasney or whoever pays 100 million to bring some PM an unknown quantity of their loyalists. That's portfolio manager not yeah my favorite.

Is when portfolio managers have their their squad no no no on the LinkedIn gap where they'll add like I'm gardening gardening like gardening for six months legally.

Couldn'T go work at another another hedge fund after a six month cooldown of course over but this is actually much pure expression of the kind of thing that is being attempted in the Wong FB Nikita Z deal but this is actually much pure expression at this at the margin I think makes the capital environment for funding independent big AI things much worse. Not worth underwriting a team if you know they can do R and D on your dollar and then walk in the same way. My sense is fund staking terms got worse not better post Pod shop. He's getting in the weeds there, but it's a fun post. Deep cut, but this is the long term impact of the AI talent.

Yeah, I do think it's accurate to say that a lot of people over the last 24 hours have been saying, oh, nerds are being treated like athletes. I would just say this is tech. This is AI researchers being treated like PMs in the hedge fund world. Yep, totally.

And the last piece of breaking news. I think you mentioned this briefly yesterday, but injuries and Horowitz is back in the mix to acquire TikTok, joining Oracle and Blackstone in talks to buy the United States business. That'd be fantastic.

I would love to see that.

Be great.

Well, would be absolutely fantastic.

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