Bridgit Mendler, Aravind Srinivas, Ted Feldmann, Karol Hausman & Lachy Groom, Sam Lessin, Kevin Systrom Says Meta Denied Instagram Resources

You're watching TVPN. Today is Wednesday, April 23, 2025. We are live from the temple of technology, the fortress of finance, the capital of capital. We're short. We're sorry, we're starting late. We are under attack, folks, likely by a nation state, likely by a state actor. That's why we're six minutes late. Seven minutes late. But we got a good. They didn't. They knew the lineup was too unbelievable. We're going to pull it up on the screen for you folks today.

We're.

We got a massive lineup. We got funding announcements, we got Sam Lesson coming on, yapping about VC stuff. We got perplexity. Big announcement. They're going head to head with Siri. They're launching an iOS voice assistant during Physical intelligence. Northwood. We're gonna be covering it all, but first we need to cover Kevin Systrom. The founder of Instagram has changed.

An absolute dog.

Turns out. Billion dollar acquisition, it's not enough. He went to court and said, you know, testified. Testified and said his was being mean, I guess. So Alex Heath kicks it off with a post here saying, lord, give me the confidence to sell a company for a billion dollars. Basically disappear for seven years. Not true. He built another app. It didn't really go that well and they wound up selling it.

But I used it for a while.

I used it for a while too.

News app.

News app. Very cool. I wanted that to be like a modern incarnation of Google Reader. I thought it would be very cool if it was like AI assisted news reading. They had some summaries. It wasn't quite there. And I think they didn't find their like, early adopter. It wasn't clear if it was for like tech, tech, tech people or like normies. And so it didn't really go anywhere, but it was pretty cool at the time. And so he basically disappeared for seven years and then reappeared in court to basically shit on my acquirer. And I went back and found a great Sam Par post from five years ago. Basically with some chat logs. You know, we love some leaked emails on this show. This is amazing. The chat logs from when Zuck was buying Instagram. The highlights, Zuck, I can't get to $2 billion. Systrom. 2 billion was my absolute say yes number. I'll have to think on it. Just two dudes negotiating the best $1 billion acquisition ever via Facebook Messenger. Yeah, the deals go down in the DMs as they do. Deals die in the data room and they flinger down. Sarah Fryer says, wow. After years of silence from Instagram co founder Kevin Systrom is on the stand in federal court confirming what I reported in my book, including that Zuckerberg starved Instagram's headcount around safety issues, leading to major problems. And so Alex Cantrowitz posts Kevin Systrom watching Zuckerberg saying Instagram would be nothing without him. Curious now, I was onto something here. And so there's another funny post from Wilson.

Do you think Kevin Systrom and Mike Krieger envisioned this when they created Instagram? Chatting with AI Chatting with Walter White.

Yep.

Or Y. N. I don't know who.

YN is, but 8 million messages. Wow, that's a lot. Anyway, also Kevin Systrom, apparently he's on the board of Walmart.

Not bad.

Pretty, pretty awesome post. Exit founder mentality, place to land. Yeah. I grew up with a buddy whose dad was on the board of Walmart and, and we'd go to Walmart and he was just like, buy anything you want. It's customer, it's research. I was like, that's great.

Well, if you think about it, for Walmart, the amount of purchasing activity that Instagram drives is obscene.

That does make sense actually. Yeah. And that's why Ben Thompson was saying that Walmart should buy TikTok, which seems weird, but it actually makes so much sense when you actually play it out. Right. And so this all comes from a report in the New York Times. At trial, Instagram co founder says Meta denied his company resources Kevin Systrom said during testimony in a landmark antitrust trial that he believed Mark Zuckerberg, Meta's chief executives, viewed Instagram as a threat. Kevin Systrom, a co founder of Instagram, testified on Tuesday. He said, quote, mark was not investigating, not, not investing in Instagram because he believed we were a. We were, he. Mark was not investing in Instagram because he believed we were a threat to their growth. But they'd already done the acquisition.

It was interesting. So. So I think high level Systrom is basically saying that Mark wanted to own Instagram and he knew it could be successful, but he didn't want it to be too successful because it would, it was basically would have. Would have been damaging to Facebook's metrics.

Yes. Systrom called it a buy or bury strategy to illegally cement the social media monopoly by killing off its rivals. The Instagram co founder made millions when Mark Zuckerberg bough his company. But system sharply contradicted Meta's defense during hours on the stand.

And so when millions is sort of an understatement.

It was more like 100 million, I think a couple hundred million.

But.

But I'm confused about this because once it's a whole co acquisition, like he owns the whole thing. Was Zuck optimizing for like short term earnings in the public markets? Because yes, if you funnel everyone over to a lower monetizing product. This happened with Reels too. When they started pulling people away from the feed, which was very pot, which was efficiently monetized. Yeah, they moved people over to Reels. Reels wasn't monetizing as well then they had, they had to keep giving guidance to the market and say, hey, Reels is going to get there. It's going to get there. Trust us. It's starting to monetize really well. The, the ARPU is going to be there, the retention's there, it's going to be additive to our business. It's not going to be destructive because there's always a fear of that.

It's very possible that Zuck at the same time was being, you know, wanted to be aggressive over the long term in terms of building out a new platform, but short term, you know, wanted to basically be able to control the process, basically. And I think that's a great take being like, hey, we don't want to move a bunch of users over to this app that we're monetizing well on Facebook and move them over somewhere where we just can't make nearly the same amount of.

Yeah, it's just odd to sell your company to Facebook and then you have Facebook stock or cash or some mix of those two and not just immediately and still have it be like your baby. Like I feel like if you're, if you sell your company to Facebook, you should be very much on like the Facebook team and you should say, hey, yeah, I have my thing, Instagram that I want to grow, but really all I care about is the Facebook share price. And so like if, if, if what's best for the Facebook share price, because that's what I own now is slower growth of Instagram, faster growth, for instance, for Facebook. You should be fine with that. So I don't really understand the, the problem here. It does seem like he has a bone to pick. Lots of people do. I was listening to Palmer Luckey talk about the Facebook acquisition and he said that the thing that got him over the line was that Mark told him that, yes, we're going to acquire you for single digit billions, I think 3 billion, something like that. But if you let us acquire you, we will invest $10 billion a year for a decade in VR and AR technology in reality Labs. And Palmer was running the numbers and was saying, well, I'd either have to raise $100 billion to make that happen, or I need to sell, you know, millions and millions of headsets, like, every quarter to justify that type of R and D investment. And so in terms of, like, making VR a reality in the way Palmer wanted, this was a great option. And of course, like, Zuck did do that. He did actually back that up. Did wind up investing in Reality Labs very heavily. Of course, there was all the political stuff and the fallout from that that left like a bad taste in Palmer's mouth, obviously. But then he built and. Or also it all worked.

Yeah. I'll be interested to hear if Adam Mosseri ends up having to. Is basically dragged into this because he was. Had a product at Instagram. This was, you know, I think long after Kevin had left. But ultimately he was the VP of product management at Facebook during the period in which they were kind of integrating the platforms and then eventually kind of moved over and focused exclusively on Instagram.

Yep. Another quote from Systrom here. As the founder of Facebook, he felt a lot of emotion around which one was better, meaning Instagram or Facebook. And I think there were real human, emotional things going on there. That's funny because the, the, the, the, the diss on Zuck during this. Oh, he has no emotions. He's a robot. And now it's like, oh, he's too emotional. I don't know. It's hard to tell favorites. It seemed like it all worked out and it didn't, it didn't feel as a consumer like Instagram. Oh, they're not investing in this. Oh, they're trying to sunset this. It was like, no, they're trying to monetize this like crazy. They're putting more ads, they're adding video stories, reels, everything. They went crazy with the, with that business and it became very, very, very, very successful.

So, yeah, I mean, seem to hands down, one of the best consumer tech acquisitions of all time. Yes. Can you think of anything bigger or better? It's not like WhatsApp. Like WhatsApp was significant and was, but.

It was also 19 times the cost.

And doesn't generate nearly the very direct.

Revenue to the strategy. But I'm sure we will have more to talk about on big tech strategy, but we have the founder of Perplexity in the studio, so. Welcome to the show. How are you doing?

Thank you. Thank you for having me here. John.

What'S going on?

Great to have you. Can you Tell us about the announcement today. What are you announcing? Who are you taking a shot at?

Well, we are going to be partnering with a oem. I think Bloomberg's already written about it. Perplexity will be pre installed on the phones of and we'll be able to like push notify all those users to set Perplexity as the default assistant on the Android phone. This is a pretty big deal because until now like people with OEMs would just not even take a meeting with you. If you ever go to them and say, hey, what do you think about using an alternative assistant or an alternative search, they'd be like Google says, paying too much money, I'm not going to do anything. So it took this long to actually build something pretty differentiated and new which is obviously taking actions. We put out a Twitter announcement today morning too saying we got most of it working on iOS as well. So I feel like this is the next stage moving all these AI chatbots to native assistants on the phone that not just answer your questions but also help you get things done.

Is there any hope that there will be a more open ecosystem on the iPhone? I've used the shortcuts function on the action button. It's pretty janky. I'd love to just remap Siri. I love Apple, I love my phone, but I don't love that particular product. I'd love to swap it out with one of the more founder led AI companies like yours. Is there any hope there or is Apple just too dominant in that and do they view it as too valuable?

I would assume the latter. I think my hope is at least like let's start with Siri being able to call multiple AI apps. Sure. You know they let the user provide some preferences on what apps they like for what different things. At least we can start with that. And I think calling other apps could be interesting. Most of actually to be fair to Apple, a lot of it is still exposed in the Apple SDK through the events kit. So that's how we got things done like calendar, mail, reminders. These are all part of their SDK so you can actually call it podcasts, Apple Music, that's Apple Maps. All of these are possible to integrate into. You cannot do stuff that's more native like alarms and volume or brightness. People want and everything system at the end of the day.

Sure.

So that's their advantage. So I hope what they can do is stuff that's so easy and obvious like setting an alarm or making a phone call or sending a text message. They can just Continue to be pretty reliable there, but anything that's more multi step in nature, they let the user invoke their favorite AIs to get things done.

What lessons have you learned from the antitrust history in big tech? And what are you watching today with the antitrust stories that are unfolding around Google and Meta on Capitol Hill recently?

Yeah, so one of our executives, Dimitri, is testifying today for the Google vs DOJ case. I've already written on our core points. I don't think Google should be broken up for two main reasons. One is it's not even in the interest of America for Google to be broken up. And number two is it doesn't actually increase competition, it's just going to transfer from one monopoly to another. And actually they've done a pretty great job at helping other people build browsers like Edge. I mean if, if you want to use the word wrapper, since I get accused of it a lot, Microsoft Edge is a chromium wrapper. Yeah, right.

That's right.

Ray was a Chrome wrapper.

No, that's a great title.

Everything. Everything. Every other browser that's even managed to take even a tiny bit of market share from Google Chrome has been built on technology that Google did, so we should actually credit them for that. And I don't trust another organization to maintain that open source repository in the same way that they have. And the other, the, the other thing honestly though, that we're pushing back on against Google is their how they couple OEMs to keep them as a default and don't let the OEMs put in play Store otherwise. So basically it's very simple to understand if, if there is like an enthusiastic OEM who wants to ship AIs on their phones, what Google does is okay, you can do whatever you want, it won't be an approved Android version of Google. And if it's not, you're not allowed to put maps, YouTube, Play Store. The one that this the most is the Play Store because nobody can see a phone where you cannot install other apps. And most developers of other companies are not interested in like maintaining versions of their apps for multiple Play Stores. It's a lot of work. Even Samsung couldn't really get Galaxy Store to work. And Meta Amazon, all of them tried making their own phones and failed for this very reason. Even if you fork Android and try to make your own phone, you have to convince everybody to actually ship to that particular new Play Store and maintain it and keep improving it and you're not going to be able to share The Play Store ad revenue and subscription revenue with the OEMs that Google can. So this is the primary problem. But that said, the assistant that they have, Gemini is actually pretty horrible and the model is great, but the product is not and there should be no reason to force people to keep that as a default when you have an inferior product just because you have all these deals and lock ins. So that's what we are pushing back on in our testimony.

Yeah, just because you build a great foundation model does not give you a guarantee that you'll win at the application layer. And so these wrappers, although they've been derided like that's the UI layer, that's what's so important to the actual consumer. I want to talk about social networking in the context of foundation models. We've seen the partnership between the merger between x and xai. There's been rumors that OpenAI might be thinking about doing some sort of social network. Obviously Zuck has been able to vend llama into all of the meta core products. What do you think the future? Does every, does every AI company need a social media dance partner? Are we going to see Pinterest and Snap do things? I know some of them have, have experimented with AI features but haven't brokered a huge partnership yet. What does the future look like? Are these two technologies like intrinsically linked and destined to be part of one organization or can an AI company operate independently forever?

I mean, I don't know how social and AI go hand in hand. It's not that straightforward. If it was, then meta AI would have already taken off pretty massively. Even though it's not the leading model you could imagine most of the like say let's assume ChatGPT, you know, get like a billion queries a day or something. I don't think like, like 60 to 70% of them are probably going to be super simple enough that meta AI is going to work for it. You don't need the fancy models. In fact, Most people using ChatGPT in the world don't even know there's a model called O1 or 03 and don't even know what the difference is for GPT4. So I would say the main problem is it's not AI is still very single player. The only experiment that I feel took off on social is this thing that we did first called Ask Perplexity Bot on X. Yeah, I remember that and.

Of course all the time in the comments. Yeah, it's great.

XAI also implemented that with Ad Grok and they have way more advantages because they own the platform, no rate limits and they can drive installs of their app through that. So it's like a pretty good experiment that worked. So I could imagine Meta doing this like you know, on threads. There could be like at meta AI and or it could automatically reply. You could do all sorts of cool things. So it's more like the other way where a social network can help you grow usage of an AI app pretty immensely compared to like an AI app benefiting from social layer so far at least. But if you could figure out social for an AI app within the app itself, it can definitely make it more daily usage and high retention, which is what most AI apps struggle with today.

Can you talk about how you're thinking about your own models going forward versus leveraging the existing models? You guys have sonar and then R 1776. I'm curious how you where you're looking to focus going forward.

I think we'll continue to keep the same strategy, which is have a version of our product that can run with our own models but not hinder or disrupt the user from this best experience that we can provide to them. If we're not able to do it with our own model, we'll just use other people's models. We have no problems with that. Our belief is that nobody's going to have a lead in having the best AI model for more than a few weeks. The pace at which the field is moving like anthropic did the 3.7 sonnet and then within a few weeks Google did Gemini 2.5 Pro, which was way better. Grok 3 came out and then OpenAI has 03 and 04. There's always some debate on what is the best model, but they're all looking the same and they're all good for certain specific set of things.

Do you think in five years the average Internet user will have a favorite model or they just won't even know the underlying model that they're using and they'll just be sort of the software application layer will just be serving the most effective model for the task.

I think it's going to be more like the second case. The main reason I believe that's going to be like that because everybody's just chasing the same benchmarks. Everyone has the same set of benchmarks, LMSIs, LM Arena, GAIA, GPQA and humanity last exam. And they're just trying to show their AI is the best and so they do all the same sort of things that you do in RLHF and it ends up making the models look similar. Yes, there are some tasteful things some model developers do. Some people like the way Claude responds, some people like Grox Atire. But these are all easy to build. It's not that hard. The difficulty, which is why everybody's working on the difficult problem is making these truly smart and better at all these reasoning tasks that's going to end up making all these models roughly similar looking to the average user.

That makes sense. When do you and the team decide when something is ready to ship with the voice assistant? Today. One of the massive advantages that I think you guys have is the culture of Apple specifically is about perfection. Right. It's about pixel perfect design. You know, it's not. It doesn't feel like the culture is sort of comfortable making mistakes. You can see the even imessage summaries being very embarrassing to them. Right. Whereas like as a, you know, a big company now, but, but still relatively young, you guys have the advantage of being able to, you know, move quickly, try things and iterate.

Yeah. So I literally read out to you the chat I had with our engineer who worked on this. We good to launch and announce today, question mark. And then he's like, yes, still making improvements, but let's launch. And me like, do you want to address some of the onboarding concerns people had, like all the which calendar or which maps to use? And he's like, yeah, they're valid concerns, but I'm worried about waiting too long to launch. The Apple engineer in me says to wait until it's perfect. The perplexity engineer in me says that's why Apple has never launched anything. So. And then I said, okay, let's roll.

Do you have a sound effect for us? Jordy Founder mode. You posted what's a social app that doesn't exist yet but you wish existed, doesn't need to get to 100 million or a billion users. What did you learn from that? What was exciting and what do you think you might stay away from?

Yeah, the major learning was the OG Facebook and Usenet. These were the two main ideas. Mark Andreessen actually talked to me after that. This is like his pet idea that he always keeps coming back to, apparently. And Bloomberg Terminal is another interesting thing where nobody thinks about it as a social network, but it is what it is today. People are not leaving it because of the network it has. Right. And it's very elite because you have to actually pay that much money to get into it. But then because of that, the quality of like exchanges are Also high, or at least it gives you this feeling of exclusivity, which is what Facebook leaned onto in the early days where they were only in Ivy League colleges and stuff. And so I think that concept can be explored. Clubhouse definitely tried that and failed. So it's not bulletproof, but that can certainly be explored. Again, if you want to build an app that doesn't have too many users, you need to gate it in some way. Whether it's by pay to play or some other kind of eliteness criterion, it's not clear. But then what after you get in should also be thought about. The quality of exchanges should be high in some sense. Elon has turned X into some. Something like that. There are a lot of trolls, a lot of random accounts and all that stuff. But by forcing people to have the blue mark and paying $8 a month and. And all that stuff, I think he's already made it like much better than it used to be. So a more aggressive version of that could be explored. He could explore it himself. Like if there's a super premium version where you only get to like respond to some people, if you're paying even more, how would that make the quality of exchanges on the platform? It's not clear because the other side of the story, where some people like Bill Ackman come and respond to random people on X and the reason he gives us like, I like the attention, even on a vacation, I want to come and keep replying. I like the dopamine hits of getting notifications. So it's not like if you get billionaires, they want to stay with the other billionaires or stay exclusive. I think they actually like using a product like X to stay connected to the normal people. Yeah.

Okay.

I haven't quite cracked the idea yet.

I want to pitch you an idea that we've been kicking around here. Might be terrible, but in terms of like the LLM research, AI driven social network, I find myself doing a lot of very niche deep research reports. Sometimes I did a whole deep dive on deep research report on Thoma Bravo. And then I did another one on the story of Johnny Carson, the original host of the Tonight Show. Fascinating. I don't know how I wound up down that rabbit hole. I really enjoyed it. If I'm on Perplexity and I find some. And I ask some really interesting question because asking interesting questions is often more challenging than getting a great answer. What if I just could just click a button and share, publish it to an internal network and then Jordy can follow me on Perplexity that he can see my most interesting questions. Not, not going to see the whole feed because maybe I'm asking about a healthcare issue but if I choose to share it, I'm just sharing my result and then they can click in. Oh, John was interested in, you know, this specific thing. Maybe I'll take a tour down his research result. Is that an interesting option or is there something I'm missing that's like, that's actually a terrible idea.

No, it's not a terrible idea. We've considered this exact idea. And you know, obviously the more I keep working on features, people ridicule me that what are you doing when your core product is failing and buggy and like going down? Like you're going down the drain and like you're taking the company down. So all I read all that stuff too.

So don't let the haters get to you. Don't let the haters get to you.

I think some of them have a valid point though, like more features, you keep introducing the product, you just lose sight of the core focus, why the product even exists in the first place and making it like a pretty bad experience. And then you win on neither of these things. But I do agree with you, it'd be great to share the Perplexity threads that you create. We have this thing called Discover and we are trying to increase the volume of content on discovery and once we do that in an automatic way with curation to users interest, like we're going to let some of the users try to publish it to Discover on their own just like a creator on YouTube does it. And then if a few people engage with the TikTok algorithm, we're going to try to surface it to more people. That is the long term idea. That's why I'm even having the Discover product. A lot of people even ask me why does this thing even exist? Because I want to keep it as the optionality to have a social product within Perplexity.

Yeah, that makes sense.

If you have another minute, I'm curious how you're thinking about shopping, how much time you and the team are putting into this. It's obviously a very exciting opportunity. Yeah. And I know you've shared some about what you guys are doing before.

Yeah. So last year, towards the end of last year we launched Perplexity Pro Shopping where you can once, once you do a shopping query, we're not just giving you the answer but giving you the product cards and we could even let you buy directly from there. Some of the things we surfaced from Shopify with their API and like let you buy with shop and some of the things we ourselves integrated with some merchants and like did the checkout flow ourselves and you wouldn't even have to go and check out on the merchant side. You can just do it directly. On Perplexity. We thought this would be the best innovator dilemma angle against Google because Google, even if Gemini gives you shopping answers, they have no incentive to like let you transact because like they lose. They make money by sending you merchant sites. That's why Google Flights doesn't let you book flights on Google. You have to book it on Expedia or booking.com hotels. Same thing. So I think that's why we worked on travel and shopping where we let people try to book directly. We have some ideas on how to incentivize it like free shipping or like x percent off on hotel bookings done on Perplexity. And but, but what we learned the hard way is people actually want really good results first. That's why they're even coming here. They don't care if they transact here or not. It's, it's a secondary thing. That is only if the result quality is so good are they interested in the last step. And we didn't quite get that right in the whatever we did end of November. So that's what we spend time on. The first quarter is to just improve the ui, improve the latency, improve the relevance, make sure the cards are like up to date. High quality, filter all the low merchants, like low quality merchants, make sure even images for every card is present. This is all a lot of boring work that LLMs don't solve. Same thing with hotels. TripAdvisor data is great, we work with them, but there are so many other places on the web where there are good reviews that people want to know and you gotta aggregate all of that. And this is why I think model companies are not guaranteed to win the application layer because you have to work on all these boring things. And then sometimes when people book a hotel on Perplexity, when you actually go to the hotel, they say the booking never came through. So there's a lot of real world problems. You hid in packages might not get delivered. You don't have a way to track the package because the merchants still does the shipping. We don't do that. So TikTok, if you notice TikTok has a shop tab which literally looks like Amazon now. And I heard like they even have their own fulfillment in Seattle. They hire people from Amazon and like they're doing their own shipping.

That's crazy.

So that's my lesson from this is you want to go to a vertical, you have to go all in and like nail like, like be prepared to like play the long game there.

How do you think about manufacturing viral moments? You guys had a cool experiment with your super bowl activation. I'd love to get a postmortem on that. But then you're also not afraid to go and you did this sort of squid games campaign that I saw getting a lot of attention as well. How do you think going forward, sort of balancing these more like scrappy kind of organic activations versus, you know, going big and working with, you know, global celebrities to build the brand?

I think we should keep being scrappy. The thing, it's, it's by the way, like he's a pretty global star, like well known star. Like people recognize his face pretty quickly, but he's also not like as expensive as Hollywood people. And so that's why we decided to work with him. And the other other things, like it's the concept that matters at the end, right? Like coming up with the right concept is more important than like who you work with. And we will still try to keep doing these one off viral moments. It's about taking bets. Not all of them land. The super bowl was good. In fact, the retention from people who came to super bowl exceeded my expectations. And again, whether it's better than doing Instagram ads is not clear to me yet. We have to explore all these different platforms. But I do think there's two things you benefit from. We did this thing with Ben Shapiro where in his podcast, like he pulls up perplexity and asks questions. I think like, that doesn't actually convert. Like you cannot track performance. But it does lead to more brand awareness. Like if they're like, he has a lot of listeners and it's a different way of doing ads on a podcast where you're not actually having him say perplexity is awesome. Go and install it. It's more like watching him use it and then you learn what the product is and what it's meant to be used for. Kind of inspired by Joe Rogan's Pull It Up Jamie where all the time Google is being used there. Yep.

Yeah, we do that with Polymarket. We pull up Polymarkets all the time and recommend that people go and download and install.

Yeah, that's pretty awesome.

Yeah, it works really well.

I'm curious, you mentioned earlier, you know, people sort of yapping on X, you know, trying to Trying to sound in on your product strategy. How do you balance like, you know, on X, it's like an echo chamber of people that are in Silicon Valley working on AI. But like perplexity in theory doesn't really care about people on like, you know, in San Francisco or New York or Hubs. Right. It's like you care a lot more about like, you know, some random person in Arkansas, like, you know, you know, wanting an answer about something and using the app. How do you, how do you personally kind of like everyone in Silicon Valley.

Could switch to DuckDuckGo and Google would be unaffected. That's like the lesson from the last era. And so you could do the same thing. But yeah, I'm interested to hear your take.

I think this is both my like weakness and strength. I spend a lot of time on this platform so I understand it better. But then like we are living in a bubble like there most people are only using ChatGPT and they don't. They haven't even heard about like most of the other apps. I think Elon has managed to break that a little bit because he has 200 million followers. So essentially he reaches a lot of people. But that's kind of why we want to do more of these Instagram related things. The commercials, super bowl, like these are our attempts actually, if you notice, the super bowl tweets didn't actually matter on X. Like most people made fun of it or didn't even engage with it, but it did help us get a lot of like mainstream normal people become aware of the app and use it. Same thing with the Legion J commercial. Like it helped increase our usage in other countries outside, you know, countries that don't even use X. So I believe the platform that has the most people in the world is Instagram for good or bad. Like if you go to any city outside the Bay Area, just watch which app like people are having on their phone. It's mostly Instagram or WhatsApp. It's not really X. Yeah.

Do you spend a lot of time thinking about AGI or is there just enough consumer application features to build that? It's almost a distraction.

I do spend time thinking about it in some sense. It's a unique opportunity to have the ability to have the front end which people can feel the AGI, let's say. So you do want to think about experiences where people can be made to feel AI and that creates that jaw dropping, magical end consumer experience. So that's kind of why we worked on all these pro searches, voice assistants, agents, we were working on the browser, browser agents. You can only do all that if you're making some predictions of where these models could potentially get to and try to build before even they get there. You don't want to be late, you want to build at the right moment where like kind of like how we built proplexy around the GPT 3.5 time, not GPT 4 time. It would have been too late then. You need to pick your moments. So you do need to think about AGI. That said, I'm not a believer in fear mongering. I just think it's already happened. The genie is out of the bottle. China versus America. That race is already going on. Nobody's going to slow down and everybody wants glory, nobody cares about other people or something. Everybody wants glory and some kind of power to control the future. So let's just like accept the truth and move on and try to make sure everyone knows how to use the AI so that their livelihood doesn't get affected.

That makes sense. I was thinking about it. I don't know of another $10 billion plus AI startup founder who's not constantly promising that AGI is like two months away to get. You're just like let's focus on our users and focus on the opportunity.

Probably the right thing. I mean speaking of the foundation models, on a more practical level, where are you seeing the most interesting vectors of optimization? People are focused on large context windows, huge pre training runs. But there's been some debate about are we hitting a pre training wall, Are we hitting a data wall? RL is very hot right now. Where do you think the foundation model labs need to go and, and what are you specifically excited about? I imagine that maybe a co generation model, not super important to your business, but something that's more knowledgeable and hallucinates less about facts. Extremely valuable. So what do you want to see?

I think RL is the place where most investments are going to go to. Especially with models like O3 that are able to do tool calls pretty natively rather than being prompt engineered to do that. Or like for example before O3 the way we built our agents is there would be one model that came up with a plan for the query, another model that would execute the plan by converting the plan to smaller queries, filtering links, calling searches, and then another summarization model that actually takes all the results of the planner and the router and summarize things. Now it's all one single model. That's great. That means you have to rebuild it. You have to throw away lines of code and rewrite it. But we've been doing this since the beginning. Like people think, like perplexities remain a stagnant code base or something. It's always changed as soon as models became more capable. But the interesting thing about the native tool called Models is that if we want like a sonar version of the product that runs on our own setup, we also need to start doing post training beyond just training for instruction, following and summarization, but like also like tool calls and completing tasks using rl. We hope to collect all this interesting data through the browser platform where people are giving tasks on our browser and then obviously some of the agents will fail there where we'll collect all the data and try to create positive trajectories, create eval suites and then do RL post training on that. The nice thing is a lot of open source code bases exist on how to replicate GRPO or PPO and post train these models. And we've been doing that work already. So that's where we plan to invest more resources into for this year.

How are you thinking about advertising in the context of search? It's historically been an ad driven business, but we're seeing a lot of AI product companies just charge 20 bucks a month, $200 a month, $2000 a month. Who knows, is there a future where if you search for what's the best corporate card it's going to ramp is going to show up at the top if they bid on that?

Hopefully not. I think that's the main reason why people like using the AIs. They think it's giving them something that Google doesn't offer. So I think the subscription revenue is very healthy and positive. Like OpenAI is making 10 billion a year or something like that, right? Or 7 billion, something like that. So definitely that's only going to grow. And if AI start doing things not just answering questions or writing code, people will pay even more because they kind of think about it as hiring somebody. If you look at the amount of people people pay for personal assistants, chiefs of chief of staffs, personal chief of staff, estate managers, nannies, like, you know, it's a lot of money and there are a lot of people who can afford all that. And we're talking about doing something 100x cheaper and also economically 10 to 100x more valuable in terms of end output. So I think the subscription TAM is way bigger than what it is today. I believe you can do a lot of interesting things with memory where once you understand the user deeply enough, the user can probably trust you if you show them relevant sponsored content as long as it's super personalized and hyper optimized for that user. Instagram has shown some stats where the engagement time on their platform reduces if they remove the ads because that's the level of personalization of the ads. So if any of the AI companies can do that, I think that could be like a thing where brands could pay a lot more money to advertise there. So that's yet to be explored. But in order to crack that, you need to crack memory properly. That's kind of one of the other reasons we wanted to build a browser is like we want to get data even outside the app to better understand you. Because some of the prompts that people do in these AIs is purely work related. It's not like that personal. On the other hand, like what are the things you're buying, which hotels are you going, where are you, which restaurants are you going to, what are you spending time browsing? Tells us so much more about you that we plan to use all the context to build a better user profile and maybe through our Discover feed we could show some ads there.

Makes no sense.

How quickly do you want to launch Comet? Do you have a launch data this afternoon?

Yeah, it was supposed to be out by now. We got delayed I think partly because we underestimated the difficulty of the project and partly because we tried to do multiple things. And so we've tried to scope it down and we're aiming to get it out by mid May.

Awesome.

Good luck.

Last question. I have you posted ByteDance of America is worth building. I'm assuming you're building the ByteDance of America.

I hope to be able to, but we need to earn the right to do that. So let's first like you know, I want to succeed with the common browser. I think that'll be like the real second product of Perplexity. Everything else we launched like the Assistant or the like like apps platforms is all like just different versions of the same thing. The Comet will be the first really truly different product and I think if we can do that a second time, I believe like we can and discover that's the other product we are trying to though it's within the app right now. But you could imagine spinning it out as a separate app too. You could imagine us like earning the right to do that. I think there's like I've spoken to the founder of ByteDance and one thing he told me is they're structured in a very different way. It's not like cap cuts or TikTok have different growth teams. They do have their own growth teams, but there's one team, bytedance, that takes care of infrastructure for all their companies, one team that takes care of growth for all their companies, one team that takes care of front end mobile development for all their apps. And so they share knowledge across apps very quickly. It's insane. So that sort of structure doesn't exist in the U.S. like, Google is actually the closest to ByteDance of America if you think about it. They have so many different apps in one umbrella, but they don't share lessons. Like the YouTube team is so different from the Gmail team, so from the Chrome team. And that's why it takes so much time to collaborate. So you need a very different leadership structure and a culture to make it happen in America.

Yeah, that makes sense. Every time I ask you one more question, I get one more question and this I promise is the last.

People use Perplexity.

Yeah. Without violating any NDAs. What's going on with TikTok? Speaking of ByteDance, there was a big flurry. Everybody was submitting, you know, bids and then it's been quiet. Is there any. Do you have any insight that is not necessarily confidential?

Yeah, what is?

I really don't. We've submitted our bid. We never expected to be the leading candidate or anything. We're a very small company compared to them. Our bid was more interesting in the sense that everybody else who bid for them did not want to do anything to do with the algorithm. But I felt like the core problem is fact that the algorithm is controlled by China in some form or the other. Even if they say, okay, the Chinese app is separate apps running outside the US and outside China, like European countries are all sharing the same code and so they can get to use that data and influence what feeds people in America. See, So I think that's where we wanted to do some real work and the search bar is another place where we want to do some real work. We thought our proposal was pretty interesting, but there are some, you know, we're not a data center company. We cannot guarantee them security and all that Oracle can. So we'll see what happens. I think they've delayed the decision and it's probably going to be coupled with the tariff situation too.

Yeah, that makes sense. Well, thank you so much for coming on. Thank you for wearing a suit as well.

Yeah, you look fantastic.

And you guys are.

You guys are killing it. Like, thank you, Technology brothers. I like the name.

Yeah, it's awesome.

Well, it's great to have you on fellow technology brother. And come back on anytime when you have news.

Yeah, we'll talk to you soon. Thanks so much. Bye. On Polymarket, who will acquire TikTok, Applovin has shot to the top of the charts, but on low volume, they have about $10,000 in a $2 million market in terms of volume, but AppLovin is at 20%. Oracle, Larry Ellison combined, if you consider them one entity over 21%. Oracle's at 12, Larry Ellison's at 9. Microsoft's at 8, Amazon's at 8, Tim Stokely at 8, Frank McCourt at 8, Alexis Ohanian at 6. Perplexity is down at 4% right there next to Mr. Beast at 4% as well. Walmart at 3%, who we discussed earlier would actually be the. The Ben Thompson choice.

We should get ourselves in the mix and I don't think submit a fake.

Bid just to go viral.

We're not allowed to bid on anything on Polymarket.

But, but, but we should.

We should throw our names in that.

Tick Tock.

Yeah, we should just bid on Tick Tock.

It's just gonna be. We're gonna. No more slop content. It's just.

We considered doing a press release around. Never. Never hit the wire.

Played out pretty quickly. Anyway, let's do some timeline while we wait for our next guest. Tyler says, Scoop, I found TBPN's hidden warehouse. Nice try. And he finds a picture of the brother's supply. I wonder where this is. But we always love when fans share fun.

You found us, Tyler.

We are in the market for a new studio. Hopefully moving into one soon. And this. This brick building looks like it's fireproof. It's Lindy. It's been around for a long time. Probably safe. Probably great to record a show there.

We love a fireproof.

Luffy says, there was this News yesterday in TechCrunch x Meta Engineer raises $14 million for LACE AI, a revenue generation sales software startup.

And this was shaking up the timeline.

Everyone was quote, tweeting this.

Luffy says, hey, Lace, make 100 million ARR software for me. Do not make any mistakes. Fantastic prompt, by the way. Use it. Use it on any of any your preferred model. It'll work.

Why don't people. Why don't more people do this?

I don't. I don't know. It's. It seems like one of those obvious Teian sort of secrets.

Secrets.

Yeah.

No, but Lace. Lace, I guess is is focused on maximizing revenue for your call center with.

Zero extra it's more just like the TechCrunch like headline went weird. But again, I think people wanted to joke.

Yeah, a lot of startups don't generate much revenue.

Yes, yes. So they're like, hey, we will. Our business is revenue generation. But yeah, TechCrunch is back. I don't know if this is accidental, but I feel like again and again we're seeing more TechCrunch headlines post acquisition. So they're doing well.

Great to see.

Great to see Patty. I just wanted to give Patty a shout out because he's a former Patty. He says he's proud to announce he's starting a profitable startup. VCs. My DMs are open. So yeah, if you want to get in touch with Patty. He's a free agent. Could be picked up at any moment in Japan. Live streaming could be picked up by a venture capitalist or company. But we love Patty on this stream.

This post from east village guy is 32. Late for me to lock in. My brother Ray Kroc was a 52 year old traveling salesman when he met the McDonald brothers. Get a grip. And I thought this was worth highlighting. There's so many great stories of this. Enzo Ferrari is another. He was 45 when he started Ferrari. Granted, he had spent a couple decades in automotive racing.

Founder of Zoom, Founder of workday. Both 60s, 50s when they started their company.

Red Bull founder too, right?

Yeah. Dietrich. Yeah, I think he was pretty old. Founder of Monster. Very old. Which was very funny because it's a very young brand.

Estee Lauder Founder yeah, There's tons of these examples.

Never too late to start doing your life's work and start a generational company. Just do it.

Why don't.

Why not? Estee Lauder was 38 years old.

Why not just start a power law company? More people should do that. For sure. Anyway, we have this bizarre TikTok or YouTube video. It's the third most viewed video on YouTube this week. Is an AI generated short of a. A pug that saves a baby from a plane crash and then they try surviving on an island. Can we play this? It's in the future, folks. This is, this is entertainment now.

It's great parachute.

It does have a compelling narrative. You know, inciting, inciting element, inciting action. You know, turn of events. Will he save the baby?

The sound effects.

I know, it's really well designed. It's so optimized for that.

400 million views.

400 million views. Yes. 400 million views. Feeds the baby, starts cooking over the coconut, cooks fish over the coconut.

That is adorable.

Feeds the baby some sort of fish stew and then writes SOS in the sand rather than. And then for some reason, the military shows up and they have like, guns and stuff and they've overnight success and they rescue the baby and the pug and then it just ends. And it's like the ultimate. Like, you don't expect it to end.

So you watch the fine art.

It's the future. It's the future again. You know, clearly some. Some human element in there figuring out what's viral about it, but pretty sloppy. Pretty sloppy.

A little sloppy. Well, you know, it's not slop. AI Grant, batch one. That's true. Absolutely insane. Jeff Huber, who had on the show shared this.

I didn't realize this was a throwback.

Yeah. So going off the initial batch.

This is crazy.

Flexity was in there. Cursor.

I know.

Chroma Wombo.

Who else do we know in here? Pretty cool. Pixel cut. Dust forefront. Just so early. I wonder when AI Grant Batch 1 was. This is the Nat Friedman project, correct?

Yeah.

Very, very cool. Little, like, under the radar, I guess. Was it structured as a grant? It wasn't even. It wasn't even YC style. Or was it. Did they take.

No, it's an investment via. No cap, no discount. MFN safe.

Okay.

Yeah.

Pretty standard.

So. Pretty standard investment. And you can imagine they've done pretty well.

Yeah, I think some other. Cool. I'm almost sure Julius went through a later batch. I saw some other folks go through.

Pretty.

Pretty cool.

Julius was in batch too.

We have our next guest here. Let's bring him in.

You guys told us you yearn for the mines, so we brought the man himself. How you doing, Minor? What's going?

Great.

How are you? John Jordan.

Fantastic.

What's happening?

You're looking great in that suit. Welcome to the show.

Thank you. It's technology brothers. You need to dress up.

You gotta dress.

I love the map, too. That's the only market map that I care about personally.

Yes, this is. This is our target market, at least.

What's actually going on with that map? What are the different colors represent?

Yeah, this is a geological map showing kind of the common rock types in a given area. And you can see the central and eastern US are not quite as exciting as the western US and that's where all the minerals are.

Interesting. Can you give us a brief overview of you and your company just to kick us off?

Yeah, absolutely. So I'm Ted Feldman, founder of Durin. Started the company about a year ago, we are building and operating automated diamond drill rigs used in mineral export exploration. So I'll start out kind of high level. How does mineral exploration work and kind of get into what is the actual problem we're solving. So basically building a mine is in many cases a billion dollar endeavor, incredibly expensive. In order to justify this capex, you never really get understanding of what's actually going on underground. And so you have this kind of decade long exploration process where you'll start out, maybe geologists walking around, they're seeing some interesting rocks. You can do geophysics, look for a magnetic anomaly, a gravity anomaly, or do some seismic surveys. You do soil sampling, kind of pick up some, drill some kind of tiny holes, see if there's kind of trace elements of what you're looking for. But really in order to understand what's underground, you got to drill. And the main type of drilling used in neural inspiration is called diamond drilling or core drilling. This is basically where you're collecting cylindrical core samples of the rock anywhere from a few hundred meters to a kilometer or more underground, generally a few inches wide. You pull it up in three meter intervals. But really once you collect these core samples, you send them off to the lab. The lab will tell you exactly what the composition is. You do that every foot or every meter across hundreds of holes. You, you plug all this data into a 3D model and you have a kind of, yeah, 3D model of the subsurface. You can visualize where is the mineral deposit, see how large is the resource, what's the grade, the kind of percent of the metal you're looking for within that deposit, and then make a determination on whether it's economic to mine or whether you need to collect more data in order to make that determination. That's the problem here. Go ahead.

Before you go into the next segment, can you talk about the value chain? Is there different groups that are doing the core like research and then do they sell the rights? Basically say like, hey, this is worth spending a billion dollars, but like we're not going to spend a billion dollars, like you should do it. And they sort of like sell access to it effectively.

So the way this will normally work is you have an exploration company or junior explorer, junior miner, they either own the land outright, they have rights to lease the land, or they have some claim on federal land, but they have the rights to mine in a given area. And they basically have a hypothesis written in geology that there is some value to deposit underground and they raise capital primarily from public markets. Many of these companies Go public extreme on, on the TSXV or the asx. And they raise capital and spend most of that capital on drilling to actually collect more data. And so they're in this constant cycle of raising capital, spending most of it on drilling, analyzing those drill results, updating the geological model until they can either raise enough capital, raise a billion dollars in equity and debt to actually build the mine, or what happens more often is sell the mine or sell the deposit to a larger miner that will actually have the money on the balance sheet in order to develop the asset.

Why? And so you why public markets versus private? Is it just because you need to raise so much money, you need to be able to basically effectively market it?

Sounds like biotech. What happens with biotech companies going early, earlier out.

Are these like typically like penny stocks where they're just trading?

Exactly.

And it's some random.

Yeah, yeah.

Mining is historically a penny stock industry. We used to have kind of small exchanges in Denver or Phoenix in the US but in North America it's just dominated by Vancouver and Toronto, where a lot of these exploration companies are based. Canada has a lot more capital flowing into mining, the United States does today. And it's really just how it's been done historically. These investors largely kind of smaller retail investors historically, they want liquidity and they can't, can't, can't just be called up for a private placement. If you're Joe with a hundred bucks to throw into a gold project.

Did you ever, speaking of mining, did you ever join a call with a VC early and have them be like, sorry, I thought this was like crypto mining.

That has happened a lot. It has happened less now than a year or 18 months ago, which I think is a very promising trend.

Got it.

That's good.

How much of the business is kind of just you need to take off the shelf technology and just go do the thing versus you need to build new technology. And is that more in like the hardware world or the software world or are you just like going and doing the actual exploring? Like can you concretize what you're.

Yeah. So I'll get into what is Jiren actually doing? So we are a drilling contractor. We are building rigs from scratch and operating them for exploration companies. We're starting our first pilot with the Gold Explorer in Nevada in a little over a week. We'll be out in the field for that. We started building this rig about four months ago. And so we get paid basically per meter that we drill for our clients. And so we're not Taking on the geology risk.

Yeah, yeah. And why are you building the rig yourself? I imagine that is that just built. You're buying different pieces of equipment and then piecing them together. I mean you've raised money but not that much. Like I imagine you're not reinventing. Plus it's probably there's good drills out there. I imagine you don't need to build a new drill or do you?

Yeah. So the initial idea was let's retrofit a rig that maybe save us a lot of money. And there this was the avenue I was pursuing for about six months. And we really had two options. We could buy a Chinese rig for less than 100 grand. We need to add a whole bunch of sensors. I talked to a lot of the operators. These things fall apart. They are not high quality. So we rolled that out. Or you could buy a western rig for half a million bucks and either need to hack into the firmware and probably would a warranty, which you do not want to do on a half million dollar piece of equipment or partner with a manufacturer and figure out how to actually pull data from it. We tried that with a couple of manufacturers. They were incredibly slow. And all the manufacturers they sort of have their own half hearted efforts on autonomy and so they didn't seem particularly eager to partner up to partner with us. And so almost out of necessity we had to design our own. And now the way this rig operates is really similar to every other sort of rig. All these drill rigs are basically two hydraulic rams pushing what is called the drill head, which is what provides the rotary motion to the the drill rods into the ground. So all drilling is really. So you have a bunch of pipes that you screw together and then push and twist into the ground. And you have a bit on the end to make sure you get a clean cut. And so we are the off the shelf parts that we're buying is with the drill head. That's what grips onto the rods and rotates them. You have other part called the foot clamp which just clamps down onto that bottom part of the drill string to make it easy to load a new rod in and then rams to push it into the ground. And then the structure is ours. And then in order to actually retrieve the core sample from the bottom of the hole. Think about it like this. You have your drill bit and then you have which is a cylinder, that's what our logo is actually. And then you have drill rods coming up from that. But inside of that bottom rod you have another tube called the inner Tube, there's a latch on the top of that. So basically 1cm tube fills up with rock. When you've gone down 5ft you can grab a tool called the overshot, lower it down on a wire line, it latches into place. You could pull up the inner tube containing the core sample and then that's what you send to the lab to be analyzed.

How mature is the venture backed mining market? Are there market maps that exist and.

Are there's a few.

Were you surprised? Everybody wants to go to space, nobody wants to look beneath our feet and go down. Has it been surprising how little investment has gone into the actual technology side of the industry?

There's been very little surface area between mining and particularly Silicon Valley. Historically Australia has a bit of a more mature mining technology ecosystem but not nearly as much capital as we have over here. And so there's been a few kind of billion dollar multi hundred billion dollar mining tech companies over the last decade or so but just a few. And like mining overall is a $2 to $3 trillion industry. Kind of, yeah. Overall market size, mining tech is a small portion of that. But it's a difficult industry to sell into is really why it's difficult to start a tech company here. Building a mine is incredibly capex intensive and you're basically making a bet on technology early and then utilizing that equipment or software system for a decade plus. And so these companies are risk averse. I don't want to bet the farm on a, on a new, new technology where I think we come in. There's a few other companies with a similar model is as a contractor. So we're just replacing a separate service provider and any sort of innovation that we're creating is done internally. So we are a more efficient, safer and more cost effective drilling contractor because the autonomy that we're building but it's really no rest of the customer. We get paid just like any other contractor to them.

What's been the industry's reaction to the trade war? China very early came out and said that they were restricting access to various rare earths. Is that.

Yeah.

You know what's been your read on the situation? How are, how are us players kind of reacting?

Yeah, rarers are very close to my heart. Prior to starting Duran, I work for Empty Materials which operates the only rare earths mine in the United States for about a year and a half. Their mine is in California about three hours away from where we are right now in LA. They MP produces about 15% of the global rare earth supply. They refine about Half of it domestically right now. They announced last week that they are seizing shipments to China. So keeping it all domestic. We're going to Japan, Korea, which they have some offtake with through Sumitomo. I think it's certainly a tailwind for the western producers. But there is fear because we don't have everything in the United States. Rare earths we would be almost self sufficient on. But we really need to ramp up the processing. The problem is that within this group of Rare Earths, about 15 different elements, you have some rare earths that we have a good chunk of at mountain pass like neodymium and prasodymium. But then you have heavy railroads like terbium or dysprosium, which we do not have enough of empty materials. It's very heavily weighted towards these light rare earths. And there's very little of these heavy railroads. And so we really need to partner with countries like Brazil or Vietnam are the two that I point to for rare earths that are potentially allies. And maybe we'll get closer to them over the next few years. We're going to need to import. There are no other decent railroads deposits in the United States that we can just spin up production at that we know of.

You never know. We could find. I see a bunch of gaps in that map in Ohio. We'll find rare earths there.

I'm sure that that's, that's where we come in is that in order to find that kind of deposit you got to spend everything.

Every suburban neighborhood just drop a durin miner in the back of my backyard and start finding stuff.

What we'll do first is fly fly planes over to do some sort of magnetic survey that USGS is a pretty cool program called Earth MRI where they're mapping a lot of the country with tighter spacing than they have previously these geophysical surveys. But we need to be doing a lot more on that because that's really the top of funnel that narrows down the potentially minimum sites.

Sorry, can you talk a little bit more about autonomy? I'm seeing the first prototype rig can core 300 meters around a thousand feet deep, two and a half inch diameter. And these rigs can run unattended for something like two to three years. So what is the math on that? Is the rig moving around or does it just take that long to get a single core sample out?

Yeah. So basically I'll tell you kind of how it's done today, what we have now and then where we're going to be in 12 months. So today you have a rig, these things weigh to 10 tons. You're normally track mounted. So basically on tank treads, you have, you put them on a truck as close to the side as you can. Then you have a guy with a remote control driving it in the rest of the way. You generally have three operators on a rig. You have the driller, he's the guy listening to it and looking at a bunch of gauges and he's really sort of interpreting what is the kind of rock that we're going through that through at that time. And from that adjusting rpm, the amount of weight applied to the drill bit, the pressure of a fluid that you're pumping down hole to clear the cuttings and keep the bit cool, she's kind of constantly adjusting these parameters. Then you have another one or two guys called helpers, and they're doing a lot of the manual work. They're loading the rods into place because you normally they're using five or ten foot rods. They're grabbing the overshot, lowering it down to pull up the inner tube, tapping on the inner tube with a hammer to actually take the core out, putting that in boxes for the customer. 3 Sing the rods, adding additives to the mud mixture, because you got to adjust the viscosity of the fluid that you're pumping down hole. And so you really have this sensing problem, this controls problem of adjusting these drilling parameters. Then you have this more so robotics problem of just grabbing the rods, putting them into place, grabbing the core samples, et cetera. So on this first rig, we have basically the ability to collect a whole bunch of data. But everything that's going on on the rig at any given time, we're going to use that data to build a sort of V1 autopilot system. Deterministic at the start. Move to machine learning when we get enough data. Really are not data sets available for this online? And so we've got to. Got to do a whole lot of drilling before we can actually get to full autonomy. And then we have a run in.

How does it, how long does it actually take to drill a thousand feet deep?

Yes. So a good shift is about 50ft in a day. And so 12 hours, 50ft, thousand foot hole, 20 shifts, 10 days, traditional, like.

You know, human operated.

So that's like a month, basically. Yeah, like a month on one hole, right?

Wow. Yeah. And you're looking about $100 a foot.

Yeah. Okay. Yeah, that's a lot. Interesting.

How are you really.

What we're trying to do is we've built this first rig Manually operate at the start we'll have some automation in terms of rod handling and kind of a V1 of this drilling parameter adjustment system. But then on the next version, which start building in just a couple months, we'll kind of add on to the rod handling system to actually be able to cover the core sample design our own mud mixer that can dump in the additives separately and then you get most of the way there in terms of kind of removing these jobs on site. And it's really, it's, it's. Yes, I think we can save a lot of money because labor is incredibly expensive here. But it's more so about availability. We are in a workforce crisis in the mining industry right now. I heard someone say like we don't have a autonomy problem in the mining industry but labor problem. Just don't have enough people. And so Minecraft.

Is Minecraft not providing the pipeline that one would?

No, I think the problem here is you play Minecraft when you're like 8 to 14 or something or maybe later and then you have this kind of eight year gap between start of high school and finishing college to where you're not involved in the mining industry.

We need Minecraft for today.

Okay, I have to ask, how are you so goaded at marketing? You have one of the most unique sort of hard tech brands every time. I think it's very common for people to copy what Anduril does and it's very hard to do something that feels like new and fresh and like super opinionated. And I've loved your out of home ads and this segment is brought to you by Ad Quick but I think you've been extremely strategic. I saw this hiring billboard that you had that you can't have rocket science without rock science and sort of like placing these strategically in Hawthorne. Where does that come from? When did you figure out that, that you had a knack for this? Because I'm assuming your team helps but oftentimes marketing this good typically is very founder led.

We've got an incredible team. My head of operations has really helped a lot with the marketing. We have a few incredible designers that help us out part time with all this as well. Hiring is a lifeblood of any company, particularly a company with as border vision as what we're trying to accomplish. And so we need to get the word out and have kind of this massive funnel of people that have heard of us. Some of them will be interested and some of them we are going to want to hire. And so we, I think we need, need a cool brand for people to hear about us both in kind of the. We have the billboard across from SpaceX. Obviously want to pull incredible talent from SpaceX. But also like there are very few companies in the mining industry that really care about, I think they don't care about the brand. There are very few that are particularly good brand about creating a cool brand. And so like we get like, we get great engineers in LA reaching out to us because they like our stuff, but even more so drillers and geologists in the mining who are like you're the only cool company in the mining industry and we've hardly put anything out yet. And so both kind of in both of those sides, the engineering and for kind of the mining customer and talent acquisition. We want to be very intentional about it. And there is much more to come once we get this first rig in the field. In about a week or so there'll be some really cool videos of us actually drilling and showing some hardware in the field.

Love it.

Can you talk us through the path to full autonomy? I imagine it's like a walk, crawl or crawl, roll, walk, run situation. Is teleoperation a big deal here as you get towards a fully autonomous autopilot system?

Yeah, so it's. We need a whole lot of data for this and so it's mainly controlled at the start. You can have a driller there with an iPad or laptop. The infrastructure is there, but it's really like a Tesla full self driving sort of system. Like you build the software to actually control it. A drill by wire system is what we're calling it and then you get data and so we're going to have a driller on site operating it initially collect this data. We need them there to actually test the robotic side of this in case anything goes wrong. And I think rod handling we should have done over the next few months extraction system by the end of the year there's a bunch of little stuff like how are you going to grease the rocks to figure that out or drop the additives into the mud mixer. And so we're going about this incrementally. We'll have three guys at the rig initially, go down to two, then hopefully have one can operate at himself safe distance and if something goes wrong, bring another guy in. But we're never going to get to a point where you don't need at least someone on site, at least not over the next five years because you need a flat surface to drill on. So you have guys out there with dozers clearing these drill pads. You need to Dig a sump pit to put the water into. After you use it, you need to deliver your consumables, your water, your fuel. You need to pick up the core samples to deliver to your customer, the exploration company. And so there's always going to be things to do like you need someone to get the rig there and then maintain it. But the point is like we don't need someone there listening to the rig and loading rods into place like their time operating a fleet of brakes.

Two weeks ago it came out that, that China was limiting rare earth exports. Chamath chimed in. He said, this may be a good moment to let everyone know that I control one of if not the largest rare earth supplies outside of China. At full capacity, it could be 25% of what the world needs. All located within countries allied with the US and the US itself. A lot of people pushed back on this. They said okay, what's the company? He said it was in stealth. I want to give them the benefit of the doubt and say, you know, it sounds very, it sounds almost unbelievable that a stealth company could control 25% of the world's rare earth supplies. Is that, is that possible? Could, could there have been some sort of like roll up behind the scenes? What was your reaction to that exchange?

Perhaps I haven't heard anything about Chamath's involvement in any rare earth project beyond he helps back kept materials five or so years ago. I haven't heard anything. Maybe he does. I hope he does. That would be great. Master various mine that, that. Yeah. Myself and the friends who have rare earth analysts haven't heard of and so I want him to surprise us, but I haven't heard anything.

Sure. Cool. Can you talk about the challenges of putting a sensor a thousand feet underground? Like I just imagine if there's like dirt and grime and crust and whatever else is down there. Plus like a diamond tip drill churning everything up. Like even putting like a thermometer down there is going to be difficult. How are you actually collecting data is, does this exist off the shelf? Is this something like oil explorers do? I imagine that it's mature.

So the short answer is we're not collecting any data underground at this point. Everything we are measuring you can measure from the surface just like the human does.

Right, because the human's listening to everything and collecting that data from above.

Exactly.

Got it.

Okay. And so it's like using vibration. We're not even using vibration right now. So you can measure your, your weight on bit basically how much force are you pushing into the Ground with your rpm, how fast are you spinning pressure going into the hole, your rate of penetration, just how quickly you're moving into the ground, your torque, you can do that through a secondary pressure reading that there are. You can't put sensors down hole. There's a WHO kind of field of study within the gas industry, primarily called MWD or lwd. Measurement while drilling, Logging while drilling, where you can put sensors down hole. That's something we're going to be looking into. One of the things that you'll do when you're doing this sort of drilling, mineral exploration, is you can send on a survey tool that can tell you sort of exact position. Because your hole, you want to drill it straight, it's not always going to go straight, might deviate a degree or two every 100 meters. And if you're trying to hit a 50 foot high target 500ft underground, you might miss. And so making sure you know exactly where the tip of the drill is at all times is paramount. So you can lower a tool down either every run or every 50 meters really whenever you want, and that'll tell your exact position. Basically a gyro probe. And so if we can integrate that into our core barrel down pole, that would be cool. Not doing that yet or doing some sort of EM survey or XRF to scan the core or the sides of the walls as you're actually drilling, that'd be great. We're not doing it yet. It's going to be done soon.

Are cavings a problem? Like as you dig down, you get, you know, you have a 2 inch hole that you're digging and then if you pull up the rods to send something else down and then all of a sudden it collapses on itself, that seems like a problem.

You're, you're thinking like a driller. That is a huge problem in this space. Basically what you do as you're drilling through the first, call it 100ft of kind of unconsolidated sediment or looser rock to the surface. What you'll do is you'll drive casing. And so casing is basically a wider diameter pipe that you'll drill down with and then drill through that hole. And that basically prevents that there's some sort of collapse near the surface. It goes around the casing and maybe your casing gets stuck, but at least it's not around your drill string and that continue drilling through that. The problem is what if you don't drive the casing deep enough or there's some sort of fracture down hole like 500ft down or whatever that does collapse in and you'll basically what you'll try doing then is try a whole bunch of different RPMs, pull up with maximum force, but sometimes you get stuck. There's really two options. You could try to try to guess where the the cave in is actually tools to cut the steel above that and just recover everything above that. You lose some, some steel in the ground. Oh well, you're out 10, 20 grand at least. Or you can kind of say you're stuck but you can actually drill through it. So there are tools that you can literally drill through your previous tools that were down hole at a smaller diameter and should get some steel in the steel in the inner tube, which is pretty cool to see, let you continue the hole. You don't have to abandon it. You're decreasing the diameter. Not as valuable data and you are still going to lose some equipment and so basically don't want to push it too hard to avoid risking cave in.

Last question on my side, just curious, how has the have I'm assuming throughout history the sort of drill bits, diamond drill bits were just actual diamonds that people pulled out of the earth and then at some point they were lab grown or were they always. So what's the history there?

Yeah, so the way these drill bits work is you have a. It's primarily iron, the soft iron matrix with diamond particles impregnated into it. And so you can like kind of see. I should have brought a drill bit over here to show you all that would have been cool. You can see these tiny diamond particles. It looks like glitter on it. And then as it, as it cuts the diamonds, the hardest material on earth, but they do wear, they dull. And so the bits are designed such that as the diamonds dull, the iron wears at approximately the same rate to reveal new sharp diamonds.

Very cool, very cool.

Last question for me. Armageddon. In the plot of Armageddon, they say it's too hard to teach drilling to an astronaut. They got to teach going to space, to the drillers, to the miners. Realistic or unrealistic? Based on what you know about how complex mining is, would you have trained the drillers to go to space or would you have trained the astronauts to drill?

I think we're doing both. Here we are, we're teaching SpaceXers how to drill and drillers how to participate in a high functioning engineering organization. And so I think you got to do both. If you're trying to, trying to build a large organization and manufacture thousands of these rigs over the next five, six years become a leading drilling contract.

Yeah, they really didn't bring any space. Any astronauts on that trip. It's all drillers. No, that movie.

I don't think that's realistic.

Okay. Anyway, this is a fantastic conversation. Thanks so much for joining Ted.

I'm very excited for you and the team. It's been awesome watching you guys over the last few months and congratulations on all the progress in the new round.

We're excited to be on. Just a quick message to everyone. We are hiring jobs.com Brilliant engineers. Please apply or reach out to me. Thank you all for having me.

Beautiful.

Have a great rest of your day. Talk soon.

Bye.

Cheers.

Let's go back to the timeline. Duran did run a great out of home ad brought to you by Adquik. There's also news on the timeline about a Series A that was announced by Artisan, apparently a Y Combinator company. They announced their Series A with a massive billboard. And if we can pull this billboard up, it's the previous slide. I believe Celine is just commenting on it. But. But Tij says what's going on here? And it's the two founders there.

And are those the actual founders? I thought they were.

Those are the founders. Those are the founders. The founders are Jasper Carmichael, Jack and his co founder Sam Stallings, a former IBM product manager. But the way they're looking at each other in this photo makes me look like they're in love or something. Maybe they're married, but I don't know. We often look at each other like that longingly and fondly during photo shoots. So it's understandable but very funny to put out a billboard about your Series.

A with your own face.

With your own face on it. But I guess no information about what the.

I guess they have the whole team there presumably.

Or are those the AI SDRs? Because I think this is.

You don't know.

So it's funny. Representative.

Yeah. I thought these were just two AI.

They're not. Those are the founders.

Those are the first. They're stoked. Yeah, I. This. You know, every once in a while the timeline starts talking about taste. Yeah, this is a very specific kind of taste.

I mean also look. Founder that they absolutely jacked. The guy's diced.

We love dice.

Let's hear it. Let's hear it for Jasper. Guy is looking. Looking. Peel activate Gold Golden Retriever mode. TechCrunch Ventures, HubSpot Ventures, Oliver Jung Fellows Fund participated as well. They closed a 12 million dollar round in September and now they got a $25 million Series A. They're, they're running a marketing campaign. Stop hiring humans. Very viral. They, I, I think they just get it. They get it. I think they get it.

They're Gonna, they're playing 5D chess.

Yep, yep.

They're gonna frustrate a lot of people.

And this, they knew this billboard would go by Celine totally. Post about.

Yeah, look at this. Celine, the CEO of Loyal says, I cannot believe a startup bought a billboard on the 101 to advertise their Series A and 671 likes. And so, yeah, out of home advertising. Consistently underrated. We've said this. Go to adquick.com out of home advertising made easy pull stunt and go. Yeah. And measurable and go viral. As long as you can come up with something that's going to infuriate enough, people on the timeline will get attention.

That's right.

Andrew Mallop says, I think company towns are going to make a comeback.

We've been exploring this. We've been exploring a town.

Yeah, I was actually thinking about this. So I think if, I think if things go really, really well for tvpn, what we're doing here in Los Angeles, people, a lot of people say, oh, why are you building in Los Angeles? Like, you should be in Silicon Valley. And I think that we could potentially make Los Angeles like, like the Silicon Valley of media, like a Silicon Valley of television almost. And we could create a whole boom. And I think in a number of years you could see some massive media.

Companies, entire film and television kind of.

It's totally possible, right? It's totally possible. And I think it could all start right here. And so what I would say is to folks is like, let's check back in five or 10 years, see the market cap of all the media companies that are built in Los Angeles. And you know, maybe it's in the hundreds of billions.

If we add it all up, it could become possible.

It could become possible. Yeah. We are in.

John's onto something here. Yeah. We are in a company town, Los Angeles.

I call it the Silicon Valley of News.

Yeah, it's interesting. I mean, it actually is very. I think the experience of living in Los Angeles has become worse as the entertainment industry has struggled. Right.

Yeah.

The number of restaurants that can be supported has just gone down.

The interesting thing about this post is that he's saying specifically company towns. So there's obviously industry towns. New York is a finance hub. Silicon Valley is a tech hub. Louisiana is a media hub. Miami is like NFT hub, but company for Foster City. They are, remember? Oh, I didn't know that. Oh, yeah, yeah, yeah, that's right.

Left sf. They went to Foster City. They were like, we're going to focus. It's nicer to live here.

Meta and Facebook were kind of doing that in Palo Alto to some degree. They were like building housing for employees and stuff. But I think, I think what he's getting at is that things like Starbase, where a company can't just be in the hub of a main city, so they go somewhere really bizarre and off grid and then the infrastructure builds up about, around that. We were talking about like the Stargate facility. Like if $500 billion really does pour into one data center, there's going to be infrastructure around that.

Welcome to Abilene, Texas.

Abilene, Texas is going to data center. There's going to be people that are like, yes, it's going to be low headcount because it's just data centers. But like, you're talking about so many data centers. There's going to be people that are working on the air conditioning, on the power. They're going to need an erewhon for sure. They're definitely going to need an erewhon. And so, yeah, I was talking to a real estate guy, I was like, maybe you should just go to Abilene, Texas and then just start doing deals because the construction is going to be going on for a decade. There's going to be a lot of people that settle there after the fact. They're going to need an erewhon. You could sell them the property for the erewhon. They're going to need gas stations and all sorts of different. And there's going to need to be a hardware store. Right? They're going to need hammers, all these different things. So it'll be interesting to see if, if this happens. I think it'll be a long, long journey to get to new company towns. But I love that we have a post from Adam Rosenblum. Says my nomination for the next TVPN AI deep dive. Live from the forge of fine tuning, the MCP monastery. The Eye of AGI.

Weights are sacred. The context is cash. The vibes are auto regressive. Tune in now. I messaged Adam, I think he's over at Cal. I said maybe you should write for tvpn. Seriously open invite. Adam, you absolutely cooked. And we love being live from the Eye of AGI.

I like it, I like it. We need to spice up the intros, keep iterating on them. I think people enjoyed The Institute of Iron, the palace of Pomp, the hall of Hypertrophy. But there will be more. We're doing a crypto day. We'll have to come up with some new jingles for that. That'll be fun. Anyway, Google co founder Sergey Brin pulled up in downtown Miami in his $450 million founder.

No.

450 million dollar 465 foot yacht.

That's less than a million dollars dollars a foot.

Yeah. At that price they're giving these yachts away. To be honest.

I mean it's a lot of money, but it's a lot of yacht. It is a lot of yacht. And you can't sell a house or a mid sized series B company.

That's right. Mike Solana says. I honestly can't figure out why everyone is attacking him for this. Sorry. Yachts are awesome. Pirate wires. Will absolutely have one in a few years. I completely agree with that. We'll be laughing there. Champagne in hand before the waving flags when you come for us. Enjoy your bike ride.

One of the greatest posters of all time.

He cooked him, John.

Generational poster for sure. Fantastic. Good friend of the show. Yeah, I love it. Beautiful, beautiful yacht. And why not? I mean Google co founder Sergey Brin has generated probably a trillion dollars of value for the economy.

Right.

So enjoy your little yacht.

I get a. I support Big tech. I love big tech.

I would take a bullet for big tech.

I in theory would take a bullet for Big tech.

I would scale a castle wall.

That's right.

For Big tech.

Yeah.

I would fight in a trench war. I would dig a tunnel under a castle with a spoon for big tech.

I would work years in the mines for big tech.

Yes. I would fight a decades long trench war. I would re enlist in the hundreds year war. The Hundred years War.

We got our next year. We got our next guest to join us.

Welcome to the studio. How are you doing?

We are doing.

What's going on?

Hey, we got both of you. That's fantastic.

What's happening?

I'm so happy. Welcome to the show.

You can ask him about how it was.

Yes, yes. Maybe that's a great way to start. We are huge fans. We were just singing Big Tech's praises, saying that we would do anything to support big technology. And yet you left Big Tech. Why did you leave and what are you building now?

We are building physical intelligence. We want to build a model that can control any robot to do any task. This is something I did explore in Big Tech before. It's just much more fun to do it in a startup way, more fun also. A little quicker, A little quicker, A little faster pace.

Yeah. I mean, it's crazy.

Anything's become clear in the last few weeks. We need the robots now.

Yes.

We can't really wait 20 years. And big Tech was fully responsible. We probably would have to wait. Something like that.

Yeah, for sure. So can you walk me through the most recent announcement? I saw the video. Fantastic. But how would you break it down in terms of, like, what the milestone represents?

Yeah.

So the biggest challenge in robotics so far hasn't really been agility or dexterity, what robots can do, but then generalization, kind of similar to what we've seen in language before, where it was really, really hard to get it to do tasks, where you just ask it to do something and see if it can work. And what we tried to do for the past six months or so is to get to the next level of generalization for these models for robots. So the challenge we set for ourselves is to take a robot to a completely new home it's never seen before, and ask you to do a complex long horizon task, like clean a bedroom or clean a kitchen. And there is so many details that go into cleaning a kitchen that you need to understand when you're in a new home. And you only start appreciating it when you try to do it with a robot where, you know everything is different. Like, the countertop looks very differently. You don't know where the drawers are, you don't know how to open them. You don't know where the objects are.

You don't know where I try to wash dishes in my house. I'm always. I'm like, I can't. Where's this? Where's the sponge? I don't know where the soap is. Where do I put this?

It's a mess. So now you can't generalize. Yeah, I guess challenging really, really hard.

And on top of, like, knowing all of those things, then you also need to connect it to motion. You actually need to get the robot to do the right thing. And it turns out that with pi05, which we. Which we just released yesterday, we can do that.

That.

And it doesn't work all the time. It's not that I can just give it to you and it will work in your kitchen every single time, but it works quite often, quite well. So we bring it to a new home and it can do those things maybe like 50% of the time, sometimes 80% of the time, big increase from 0% of the time. But yeah, Big increase from what we've seen before. Where the previous state of the art was basically if you want to show a robotic demo, you need to collect data in that specific environment for those specific tasks and that's where you show it. But now we can first time bring it somewhere else and it kind of works, it understands what it needs to do.

Do you think that consumers will generally be more patient around reliability with robotics? Because if I, you know, let's say I have some type of robot in my home and I say hey, do the dishes, right? And 50% of the time it does it perfectly. And like, you know, the other 50% of the time I have to kind of interject. Whereas if I'm like booking a flight and only 50% of the time it like books the flight, it's like, well, I'm just going to do it myself, right? Because like it's only going to take me a minute. Whereas like the dishes could take 20 minutes. Right. So how do you think about kind of the sort of threshold of reliability in order to like really deliver value for consumers?

Yeah, I think that like we don't think right now about delivering value for consumers and it's kind of why we structured the company the way we did. We're a research lab, we're trying to solve this problem of physical intelligence. We really like these consumer oriented talks and I think people tend to as well when they think about laundry being folded for them. I think there'll be a point at which it gets good enough that we can deploy it to consumers, but it's not going to be like 50%, it's going to be closer to 98, 99%. And there I think we can harp on self driving cars where there will be a period of interventions, right. Like if it doesn't work, it's not that it just will stop and do nothing for a while. We can have a human telly operator intervene and finish the task. But I think the other cool thing about the home and consumer use case is there's so much that could also just happen overnight. There's like while you're sleeping, your laundry is folded, your, your, your meals are cooked for like the, you know, they're prepped for the week ahead, your house is tidied, so consumer is still a little far away, but making a lot of progress.

Can you talk about the, just the path in terms of the underlying technology to go from a Roomba. We're pulling up the video here on the stream of what you've actually built. What were the Foundational turning points in terms of the, like, the different models and different breakthroughs. I imagine the transformer was really important, but there's probably a ton of other developments that excited you. Please claim that now is the time. Like we're ready to go.

Yeah.

There's been a lot of things that we are building on top of. Things like transformers, things like vision language models, the concept of pre training and post training. A lot of those things transfer to the robotics world, but they're not as well understood. We are still in the process of figuring out what that recipe should be like. We kind of have to rediscover some of the steps that language people had to do initially and see how we can map them onto the robotics world. We don't have the privilege of having open Internet full of data. We need to collect the data ourselves, which on one hand is a big challenge. Like the data isn't there, you can't iterate nearly as fast. On the other hand, it also gives you more freedom in figuring out what kind of data is the most important and what data to collect. For this particular Pi05 advancement, what we had to do is one, collect very diverse data set, large diverse data set, that involves not only model manipulators in homes, but also static robots in the office or data of the Internet. And it turns out if you collect very diverse data across many different tasks from many different form factors, they all contribute to each other and they contribute to a better understanding for the model of what actually is happening and how to utilize all of the data to figure out what to do. So that was a really, really big component. And then there's also a lot of architectural things, a lot of details that we need to get right to make sure that we take full advantage of that data. Interestingly, most of the data is actually not the model manipulators in many different homes. It's a very, very small percentage of it. So it gives us also a lot of hope that we can leverage the data from the Internet or from other platforms where it's easier to collect it. To get to that kind of generalization.

Can you talk a little bit about simulation, like data generation through simulation? I imagine it's very easy to procedurally generate a million different floor plans or a trillion different floor plans to try and navigate those in, you know, kind of two dimensional space. But at the same time, when you get into the manipulating of a sheet, all of a sudden that's a physics calculation. It's probably harder to simulate there. It's not like with self driving cars, there's, you know, Grand Theft Auto you can train on. I haven't, maybe there's a game where you clean up your house, but I certainly haven't played it. How effective has simulation been in generating data and is it useful? Is that a viable path here?

Yeah, it's been so far really, really useful for locomotion, for robots walking around. And the reason for this is that for that kind of problem, the main difficulty is modeling your own body, like how do you place your foot, how do you walk? And that you can do once when you model your robot really, really well. And then it works, it works across many different terrains. You can can easily randomize that and figure out the gate that is robust. It hasn't worked nearly as well for manipulating objects or working with your hands. And I think the reason for that is then the difficulty isn't about how do you move your hands, it's more about the world that you're manipulating. And that is much harder to simulate. You don't just do it once. Every object you interact with is different and you have to model each one of them those and it's really, really hard to figure out all the different physical parameters to make it good. And this is kind of the data that is the most important, the data of physical interactions. Because this is the data that is not on the Internet. This is the data that is not even described in language. This is something that comes really natural to you. You just know how to do it, you don't even sometimes know how to describe it in words. So I think it's kind of like the, a really bad combination where it's the hardest thing to do for SIM and is the data that we need the SIEM the most for. And what we discovered so far is that basically looking at the past successes of machine learning of AI, it seems that the best successes are where you take real world data and large diversity of that data and learn directly on that. You don't try to find some kind of proxy or some kind of simulated environment that reflects what you actually want to do. You just go after the problem head on. And that's what we're doing here. So we're collecting a ton of data ourselves. In the real world we can collect very diverse data this way. It's also very easy to collect it across many different scenes, many different objects. We don't need to create them in sim, we can just buy them and bring them in and start interacting with them. And that so far has been actually easier than we had initially thought, yeah.

I mean, you say you're collecting a lot of data, but I imagine like, there's only so many of those robots in that demo video that you can manufacture. There's only so many houses that are like, yeah, come try your 50% robot in my house. Is that a key? Is that scaling as you'd like, or is this more like you're going to build a physical demonstration unit and then be manipulating it in a warehouse? Or is the plan to be more like, let's roll this out and just have beta testers kind of dog food it for us?

All of the above.

Okay.

Basically where we find there's benefits to scale at this stage. We'll scale it, we'll figure out a way and whether that's producing more robots, giving them to people, whether it's scaling up our, our operations team and the folks that teleoperate these robots ourselves, whether it's going out and commercially deploying these into environments where they're doing economically useful or viable tasks as a training data collection, we'll do it. We also think there's, there's so much though to do on just the algorithmic development that, that can make the data far more useful, that can reduce the necessities of scale. But we're structured such that we can go and pursue every avenue requires mention.

There is. That was one of the big questions before pi05, where it kind of was unclear, you know, do we have to visit million homes? Do we have to visit, you know, hundreds of thousands? And at some point it becomes kind of not feasible or really, really hard and maybe we need to find a different path. But so far we've been quite surprised by how few different environments you need to see to be able to generalize to a new one.

It's awesome.

We actually got really reassured that this path could really work.

Would you guys like to see way more early stage robotics companies? It feels like there's the Optimus, the One X you've got got, you know, figure making noise. But it feels like, you know, we, we just covered this, I think Monday, the, the Chinese humanoid marathon. I'm sure you guys followed that. They've got a lot of people working on this problem. It, it, it seems like there's a tendency and venture to think that, okay, there's a bunch of heavily funded players now, I shouldn't go build in that space. But at the same time, the, when you look at some of these TAMs, maybe we should have 10 times the amount of early stage robotics companies Getting.

Started, it's extremely early. We work with, I'd say probably most of the new robotics companies starting in the US and abroad. If you're starting a robotics company, reach out to us. We'd love to work with you. You can build the body, we'll build the brain. But yeah, we need to see a lot more robotics companies, particularly in the U.S. that's awesome.

I want to talk. Did you ever interact with the Google ARM farm?

Yes.

Yeah, one of, one of my co founders actually started that project.

I had a feeling. Do you have your own version of an ARM farm or can you describe for people that might not know what was the genesis of the ARM farm, What was the purpose, what was the takeaway? And is that, does every robotics company ARM farm or is it just you? And what will that look like in the context of what doing you're building specifically?

Yeah, so back then, that was few years ago, the idea was that for robots to learn to acquire those kind of skills to manipulate the world around them, you can't really prescribe it, you can't just code it all up. The world is too diverse. You can't have a lot of IF statements describing what you should do in every single situation. They need to learn it the same way as we do. And the idea of the ARM farm was to, to set up many different stations where you have static robots, static robotic arms, where they just practice and they learn from experience. So in that particular case, they were trying to learn how to grasp objects. So they just had a bin in front of them with lots of different objects that are very diverse. And the ARM was just going down and trying to figure out how to grasp it. And over a long period of time, it gathered enough experience to actually learn from it and get and become really, really good at grasping objects. Like remarkably good and way better than any kind of prescribed systems that people design by hand. And on one hand it was a big success because of that, because it was clear that this learning approach is something that can truly work and understand the nature of grasping and truly nail that skill. On the other hand, it was also disappointing in that it took really long time. It needed a lot of data and especially a lot of data at the beginning was kind of just like the arm wandering around and not knowing what to do. So it seemed like a lot of that time was just kind of wasted with the arm figuring out the simplest things. And one thing with Pi05 that we are really excited about is that we are now at the stage where the robots kind of get the sense of what they should be doing in that environment so they are no longer in this space where you just arrive in a new home and you start with just moving your arms around, not knowing what to do and hoping that you do something that is useful. And then you learn from that. You start at a point where you kind of know more or less what you can do. It works some of the time. You just now need to get it to work every time and really, really well.

Can you talk about the path to or the importance of end to end learning in the context of robotics? My understanding is that teleoperation is great and as long as it's economical, we should do it. And then having a deterministic code like, you know, control system that's written in C, that's also great. As long as it works. It's sometimes more debuggable. But the reason that we want to get to end to end AI systems is that then you're on the scaling law, then you're just data bound. And the more you can manufacture, the more you can produce the actual robots. You're on this flywheel and you're now bound by actual productive, you know, like getting the cars into the, on the roads, getting the robots into the world that will naturally create a flywheel. That's what everyone's hoping for in self driving. But. But what does that path look like now? And how ridiculous is it to claim that end to end robotics will be here by the end of the year or something like that, that.

So end to end robotics is already here. Everything we've shown so far is fully end to end, where you take camera input in and few other sensors and output actions directly.

Wow.

I think there's another reason to do end to end learning, which is this is I think the only thing that has a chance of working Y. Like if, if there was a way to just pre program your robot and write a really good C code to get it to do all kinds of different things like folding laundry, we would have done it a long time ago.

Totally.

That's not for the lack of trying. Many people have tried it for a very, very long time. There's just. The world is too complex. There's too many things that you will never see, you will never predict and you can't really write that code. And I think the only way to get there is for AI to figure it out from experience. This is similar to what we've seen in language or in vision where people have tried to write chatbots with writing different instructions. And prescribing logical steps of how you should proceed. But it turned out that the intelligence you need is much more messy. You give it a lot of text and you let it figure out all the different patterns and analogies, and there's many, many more of them than the ones that we can express in code or in language. I think something very, very analogous is going to happen here, and that's what we start seeing. Demonstrations that we've shown so far here at Physical Intelligence are of tasks that were not possible before, like things like folding laundry. You can't really. There is no program that I've ever seen that could. That could do that. The same with arriving in a new home and making the bed. There's just too many variables there to do it any other way.

Can you talk about some of the experiences that you both have had in your careers? Google and Stripe, in some ways, big companies that maybe move slower than a small startup, but at the same time, both of those organizations, I feel like the time from, hey, we're starting the company to we have a product that it wasn't a research organization for years. What have you learned from those organizations? What are you taking into this experience?

Stripe really taught me everything I need to know about building a robotics research lab. It's just lessons galore. I'd never worked in a research environment, so I don't have priors. I don't know what a research environment actually looks like. I just know what our research environment looks like. I feel like whatever it looks like, maybe it operates exactly like startups. Like, maybe grad programs are exactly like startups. But we feel like every other company I've worked with that moves extremely quickly and has a clear set of goals and direction and just has a bunch of people that work behind it it and work extremely hard to solve whatever it is that we're setting our minds towards. And there's so much I learned from Stripe that informed that. But a lot of it's just the obvious stuff, right? It's like, hire exceptional people, set a really high bar for it, don't compromise. Set a very clear set of goals for everyone. Really align people. Actually, I think that's one thing I really took from Stripe is you want an extremely aligned set of people. And I've never seen more alignment than I've seen at pie. We talk about the alignment tax. Like when we're bringing someone on, how much work is there to align them around our mission, our way of seeing the world? And almost everyone that joins, there's like Basically nothing. Most of the people that work here have dedicated their lives towards robotics or robotic learning or AI in some form or another, hardware, whatever it might be, and that just allows us to move so much quicker. It's like we need to communicate a fraction of what the average company needs to communicate to someone. We don't really need to inspire people or motivate them because they're so inspired and so self motivated. I think that's probably one of the things that's worked best for us today.

How have you seen your customers react to all the news and chaos around the tariffs? I think a lot of these companies are not in full commercial production yet. So it's not like, hey, we're no longer making money, but how are they thinking kind of like long term, just given how much of the supply chain is based in Asia and are there opportunities for, you know, new US kind of like subcontractors and manufacturing companies to sort of service this new industry?

Yeah, the good thing is, I mean, good and bad, it's also sub scale right now. Like most of the money is being spent on R and D rather than scaled production. And so it's not as if there's 100,000 robots that everyone's buying and it's now just twice as expensive. I think the good thing is that given its subscale, there's a lot of time to build out U.S. supply chains and it's putting a lot of focus on figuring out can we get US actuators, can we start to create companies that are developing those and all the other critical supply elements of the supply chain. So it's actually just getting people into gear and maybe it's the right time for it.

Can you talk a little bit about what you're excited about on the data center side? Is there a moment where you're like really pulling for Stargate to come together and we need the 100 gigawatt data center to crunch all of the data that you've collected in kind of a GPT5 class training run? Or is that something that's so far out that you'll always be able to just tag along on the residual capability from the large language model labs?

Yeah, we are not there yet in terms of having a full scaling law, the same way as we've seen for LLM companies, where you can just translate compute to progress or compute to capability. We are searching really, really, really heavily for that. We are trying to figure out what is the recipe that would scale like this, but we are not there yet. We do at the same time generate a ton of data. I think that's one thing that I realized since starting the company is that robots generate a ton of data and you don't need that many to generate data that is close to the levels that LLM companies use for their models. And there is no ceiling to it.

Right.

Not that we run out of the data that the robots can collapse. It's not like the Internet. So I think over time it's quite likely that the places are going to switch a little bit. Where most of the models, including LLMs and BLMs, are going to be using real world data collected through robot because that's the data that has no ceiling and it's very active as opposed to just passive observations of what people wrote on the Internet. And I think at that point, probably the question about data centers and compute is going to be a big one. But for our models, we are not there yet. We are not bottlenecked by. If only we had 100 times more compute, everything would have worked so much better.

How do you guys think about demos long term? We joked on the show recently after seeing the Chinese Humanoid marathon, like, I want to see humanoids doing like big wave surfing, cliff jumping, you know, at what point is that like worth even doing or exploring just because of the amount of attention that it would bring to the industry.

What do you think we should demo?

I think I'd like to see one of your robots surf Jaws. I think that's, that's really.

I want to see a robot about do the 900 on a half pipe, Tony Hawk style. That was a really foundational moment in my childhood in American skateboarding.

Like really life or death stuff.

Exactly. It's gotta be high stakes.

Yeah.

What about with hands? What about manipulation?

Juggling for sure. Rubik's Cube.

For sure.

Juggling Rubik's Cubes. You can do that? I can do the Rubik's Cube. Jordy can juggle. We need to learn each other's skills so we can do both at the same time. But yeah, I mean, these stunts, when they're done right, they can draw a bunch of attention. Although you guys have of plenty, plenty of attention. I don't know if that's really what's.

Going on, but it's an interesting thing where it's like you have the intention of the entire industry, but then at some point to basically inspire the next however many thousand robotics companies I would.

Love to know about. Obviously, with any AI project, there's always the public perception of job displacement. Dystopia AI doom, etc. But when I look at the demo that you just posted, I'm like, that thing is going to be fighting on my team in the singularity. Like, this is a friendly robot that will be defending me. But how do you think about the, like, tuning the language interaction so that. Do you see a world where, yes, it's doing my laundry or making my bed, but if I happen to just also ask it, hey, tell me about the news, I can just have a chat with it? Is that something that's even in your mind in terms of like, human computer interaction, action?

It's not a big focus of ours right now, really. We're so focused on, on manipulation and economically valuable tasks, and more so than that, the fundamental building blocks that we think gets us from here to physical intelligence. I think it's inevitable that everyone has robots in their homes, their workplaces, just like in their lives. And I think they'll want robots that are more useful than just doing things, whether it's companionship or like, it's the best Amazon Alexa that can actually then go like, cook the recipe that you ask it for. It's a place we focus around the interaction. But right now it's more understanding the intent of clean my kitchen and then breaking that down into tasks. But it's pretty straightforward to go from do the thing to tell me about the thing to let's have a conversation about the thing. And so it's on the horizon, but not the greatest priority.

And one thing there, I would say, is with the models we've been releasing, they're actually built on top of vision language models. So these are the models that are truly what they call multimodal, where you can talk to it, you can ask it what they see in the image, and every now and then you can ask it to perform actions too.

That's cool.

And what we start to realize is that all of these different data sources contribute to each other. They give you just like a bigger picture of what the world is like and better understanding. And it just turns out that robot actions is just like yet another language that these monks can speak peak, and they just need to learn it and see enough examples of it. So the model that we have already is the model that you can talk to. And it works just as well as open source VLMs. But on top of that, it can also have that understanding be very embodied and it understands what it sees in front of it. And it's a much deeper understanding when it knows how to move its arm to actually accomplish a task.

We were kind of joking before the show about the obvious comparison between robotics and self driving cars, but can you explain to me like I'm a 5 year old or like a venture capitalist, like why is that a bad analogy? Why don't you love that, that analogy?

I feel like it's, it's not that you don't love it, it's just that can put you down a bunch of wrong directions. There's a lot of parallels, but I mean even like the Waymo Tesla thing, right? Like Tesla has this incredible advantage with how much data they're collecting and passively. Yet Waymo is so much better so far and it has so many fewer cars on the road. There's useful things about it, but there's also aspects that don't transfer in the analogy. And I think the reason why we were joking about it is it's the number one question we don't talk to many five year olds, but investors and VCs ask us. And so we have to go down this rabbit hole where we're breaking down all of the assumptions and correcting some of them and validating some of them.

I mean, is that so should VCs, if they're looking at the robotics market, just throw out that analogy entirely? Or should they be saying there are a set of robotics companies that are in the Waymo category and there's a set of robotics companies that are in the Tesla category and those are reasonable, like an ontology to map to.

Yeah, no, there's a lot of very useful stuff in the analogy. I think, I think one thing that's interesting is that there are all these self driving companies that have died over the past 15 years. And one thing that we actually like to remind people is that this is not coming tomorrow. You log on to Twitter and you'll see all of these crazy robotics demos, most of them teleoperated or most of them being robots doing backflips, which is, is a much easier problem than actually a robot folding laundry. And the thing we really try and remind everyone that looks at investing in us or is thinking about investing in us is this is not a problem we're going to solve tomorrow. There's fundamental research breakthroughs that, that we need to make. And much like self driving had a, it's what, like a 15 year arc. At this point there is a very high likelihood that robotics is the same way. Like we, we think our greatest competition is science itself. It's not like this company or that company, it's just Maybe we can't pull it off in our lifetimes. We think we'll be able to. It's looking more and more likely, but it's not a tomorrow thing.

I have one last question. I know you enjoy food and cooking. What is the final eval? The Mount Rushmore, the Mount Everest of cooking that you expect will be the last, the last dish that a robot will be able to cook. What's the hardest dish for a robot to cook?

The Dun Angie Lasagna.

Oh, yeah.

Yeah.

Okay.

It'll be very difficult.

So when they cook that AGI achieved, it's game over. That's amazing. There was actually an AGI benchmark. Someone shared a screenshot and it was a very old definition of AGI. It said it'll be able to describe a sheep, tell you three things that are larger than a lobster and all of and AGI is here by that definition. But one of the things that it can't do is bake you a cat take. And we just thought it was funny. That was the last thing that the computer can't do. But maybe soon, maybe future. But thank you so much for coming on the show. This is a fantastic conversation.

Thanks for making the time.

Best of luck to you and thank you so much for building this, this really important technology.

Yeah, we're excited. Put a robot in the studio.

When you're ready, send it over. It's a mess. I have clothes all over here that need to be folded. So we'd love to have one awesome demo.

See you by.

Next up, we got Sam Lesson coming in the studio. Venture capitalist yapping about venture capital. We will bring him in when he's ready. In the meantime, I will do some ads. We'll talk to you about wander. Find your happy place. Book a wander with inspiring views. Hotel grade amenities, dreamy beds, top tier cleaning, 247 concierge service. It's a vacation home, but better folks. We can also tell you about rent. Time is money. Save both. You heard me. Slip it into the Perplexity interview. I'm going to try and slip more ads in. We've been hearing a lot of feedback that there aren't enough ads on the show. We are working hard to remedy that. But we have Sam Lesson here in the studio. Welcome to the show, Sam. How are you doing?

I'm doing great. How are you guys doing?

We're doing fantastic. We just had a fantastic conversation with Carol Houseman and Locky Groom over at Physical Intelligence. Did you see the demo of their. Their, their cleaner robot?

The. The room No, I love Lucky. I haven't seen him in a bit. I know he. Is this the folding robot they've been folding in, like, a warehouse for a while?

Yep. Well, they're doing the real world now. The demo was they. They sent the robot out into the field. It cleans someone's house. They say it's about 50 accurate. They're getting ready to deploy it once it gets to 99.

What is a 50 accurate cleaning robot do? Like, I would imagine.

Yeah. It can fold half of your shirts properly and half of your shirts improperly.

Look, in fairness, that's probably better than I could do. I'm not much of a folder myself.

I'm terrible at it. I'm terrible at it.

So, you know, I would be a terrible laundry robot personally.

Yes.

Great to see you, Sam.

Always fun. You guys are crushing it. I'm loving the vibe. You're both full time now. Like ads.

Yeah, ads. Yeah, yeah.

We can just never side hustle.

Yeah, that's our never side hustle.

Always full hustle.

Yeah.

What's. What's going on in your world?

You know, I don't know. I've been traveling a bunch, but I'm back and traveling as a venture capitalist.

How does that work?

Oh, just for fun, guys. Not for work, please. Yeah, no, I just.

But I would imagine such a prestigious career path is so demanding that you would never be able to take a day off.

Off, never. No. I am a slave to zoom. I just sit here and zoom back, crack the code.

What's your stance on zoom? Do you invest much purely over zoom, or are you just meeting everybody at this point?

You know, it's a really interesting question. I personally think zoom. Zoom's had, like, a really interesting impact, I think, on venture capital because initially people were all bowled up on how zoom and list, like, no meeting meetings in person was going to open the funnel and people would, like, invest all over the country. And we break down walls because all of a sudden physicality, like, there was like this kind of euphoric zoom will be democratizing type thing going on. And it's interesting. I do think that zoom means that people like me and venture capitalists are willing to take more meetings than we otherwise would be on, like, interesting topics with people that again, like, it's just like. Like the barrier is lower. You'll meet with more people. Now, does that actually result in more investments? Unclear. I think it might invest in, like, broader sets of first meetings just because the barrier is lower. And, like, if the meeting gets boring after 15 minutes I can just do my email and say, aha. Right. So like, it's like there is some breakdown in like, access, but it's not clear to me how much that resolves to like, actually broader access means. And in fact, I think that's one of the big things that's interesting about AI broadly right now is. Is, you know, there's this narrative, like with auto scripting. I get the number of pitches I get that are like half written by AI or written by AI is like out of control. Right. I don't know what people think they're doing with those because they're all just going to get deleted.

Right.

And if anything, the irony is the fact that the barrier now is so low to those emails means that even the ones that actually are legitimate just get archived because, like, on the margin they're probably spam. And so there's this interesting thing where AI is actually leading making venture capital. I would argue more insular. Right. Than it was before, not less insular. Right. So there's all these, like, unintended consequences going on of zoom, of AI, of all this type of stuff in vc.

Yeah. Email, you just got to use it like text messaging. Just no. No subject, no body at all. Just whatever you have to say, just put it in the subject and send.

Yeah.

I actually am a huge. I'm like, probably. I'm old. I'm like 41. Right. So I'm like a huge. I love email. Like, I think it's great.

Great.

And I'm an inbox zero guy. I'm like. But I also like, run aggressive filters on my email. Sure. And like, I'm fine not responding. Like, I don't consider email a contract that because you sent me something, I'm required to send you something back. I think you just have to treat it differently.

What about on text? Are you an inbox 0 on text?

Text I take pretty seriously, actually. So that is like, I kind of have a pretty quick SLA on tax and I. I tried to make sure that not everyone knows my actual phone number.

Yeah. Let's put Sam's phone number up on the screen for everyone so you can text him if you have.

Well, I'll give you my plug, which is, you know, one of our companies is called Open Phone, which is a great company and that I use an Open Phone phone number for a lot of things where you want to put it up on screen and it's great. It's like a second text inbox. That's not really the purpose of the company. It's more sophisticated than that, but I like it for that.

That, that's great.

We should, we should set an open.

Yeah, yeah, we should.

Yeah. For me I like to think of the hierarchy of like you know, inboxes, right. Email. But then now it's like okay, you have XDMS iMessage WhatsApp signal.

If you want to get in touch with me, show up, grab me by the collar. Yeah, it's basically like until I hear what you have to say, that's the only option.

I mean I, I, so I have like my stack is, is text is incredibly important and serious. That's like a one hour sla but it's limited. Email I take very seriously. Like I really care about email. But then people are like, you should be in my Discord server or like Slack. I'm like absolute lutely not like I think those things are disasters. I refuse to engage with them. I hate everything about them. Despite the fact Slow was one of the seed investors in in Slack. And so I have to thank Stuart for making us some money. But like I just like can't deal with. I refuse to deal.

Yeah, let's take us through that.

Should we talk about venture capital? I actually want to start and go back to your 2023 piece which is on the timeline you called out. This is 10-16-2023. The shutdown of the VC factory line and the death of the factory farm unicorn narrative. The awkward crowd into seed investing by multi stage firms. The mirage of AI and LLM startup investing. The post pandemic fundamental cultural change impacting startups. What? Which one of those.

Yourself?

Yeah. How would you, how would you grade your.

Obviously grade myself excellently. No, I mean I think like look, I try to pull up every few years and just, especially in times of uncertainty and just like what is going on? Like where should we be spending time and attention? I think you know, two years ago, you know, those were the big themes for me is one we were very used to for 10 years as a fund effectively operating on this factory line. We take in companies at a certain stage, we know what metrics they have to hit, we give them the money, we then package them and send them on to our friends at series A who then send them on to B and da da da. And the whole thing works beautifully because at the end we pop them out into the public markets and retail investors buy them and life is good. And I was just saying like after the pandemic, you know, people wanted that to come back and I was like this is not coming back back. Like this whole, the market is, it's a mixed up market. You know, we've basically produced a bunch of these things which are on paper unicorns, but like they're not fundamentally important businesses. And more importantly the, there's been this huge release which is the biggest platforms in the world can just keep getting bigger. Like I remember a time when like $100 billion company was a huge company, right? People thought there was a limit to how big the biggest could get. And so there was this constant hunger in the public market for what's the next $3 billion company that's going to grow really fast. And there was coverage for that. People cared about it. And now the obvious answer is just like put more money into Amazon, put more money into Meta. Like there is no upper bound. And so I just think the markets have shifted. Demand from consumers has shifted at the market, at the public has kind of rippled back to the ecosystem. You know what we have now, and you know I have this in the 2025 version is what I'm calling zombie corns, right? So there's all, you know, people thought people friends of mine were like, oh, we're going to see this mass extinction of these unicorns. They're all going to die because you know they're going to run out of money. No one's going to fund them. The liquidation preferences are huge. They can't go public. They actually mostly didn't die, right. What they did do is they basically sacrifice growth. They cut their burn a lot. They kind of got marginally profitable. They can kind of exist and they're kind of zombies. They're just, they're out there, they're not going anywhere. But they're also not going public. There's no market for them, no one knows how to buy them. The liquidation preferences are set up so that no one wants to deal with them and they're just going to kind of exist.

So the factory line is broken at the late stage because there's no off ramp. But in many ways this sort of early stage precede to seed, to Series A is still accelerating as though there's an off ramp.

I don't think, I don't think it is actually. I think this is like one of the, I think the part of the 2025 deck or trying to think about what's going on. I actually think what we now have weirdly is effectively several markets for companies that are pretty decoupled from each other and kind of have their own logic and exist in their Own vacuum. So like there is a public market. Like the public market exists is the biggest. Right. There is a private market. Now there are companies that are private and will like probably never go public or for various reasons. The way that companies are valued by the late stage, private and the public are actually just different. Different, like what's valued is different. How people think about them is different. Large LPs actually invest in both, so they don't care. They like. But there's basically like running two parallel universes that don't have a lot of operability. Now at the early stage I actually think the same thing is going on. Right. Which is like there is a kind of seed to pre seed esque market that exists and people compete and people get excited and there's kind of a market clearing price for startups and invest. Sure. But then when you say well what do you. What does it take to. To hop from an early stage? Call it like pre seed seed maybe sneaking into A to like a legitimate B and beyond growth round. There's no more like magic numbers you hit and like a valuation framework that's consistent. It's actually much more about belief. You know, I say in the deck, it's a lot about this kind of new math of people want downside protection and then an option on infinity. Right. And so like what's the average of infinity and zero? It's infinity. Infinity. Right. And so the way people are backing into valuate. So the entire factory is predicated on $1,000,000 in ARR equals series A at price, blah blah, with 30, you know, 30% growth and $10 million in ARR. Like triple, triple, double, double. You come up with all these frameworks. Everyone kind of agreed on shit and there was just like market clearing action in prices and now I actually think there's just like distinct markets of belief that are really hard to move between.

Between.

Yeah.

Does this necessitate like a different model around growth? We kind of saw this like the crossover investors like Tiger, but a lot of growth funds have this downside protection mandate. No zeros, but let's underwrite to a 3X. And yes, I mean I hear your infinity thing that does happen every once in a while. But I think in general a lot of growth investors are just saying no zeros and let's triple our money over this deal. But should you have more later stage growth investors that are thinking more like portfolio construction at the seed stage?

Look, I think that the answer to that basically is I don't even know when they talk about we're underwriting to a 3x who's buying, right? Like everything is about the marginal buyer, right? There is no value on anything, right? It's all about who's buying.

Like a dcf. I mean you could justify the cash flows, right? You could comp to the public market.

But the problem with first of all comping to the basically nothing at late stage is trading comp to the public market really. Right. And we can get, we can get into like why. I think, I think that look, the DCF comp to the public market that way. That is the factory model, right? It's basically saying like, hey, I have a late stage thing, I put money in, it's going to triple the DCF looks like this, it has this much profit margin. Like this is the story package sell to the public market. The public market buys on that same story. Like that. That was the mentality that persisted for a long time and it was a great system for a lot of, of for money making for a lot of people, right? I actually think that again, the public market now is like, well, if I kind of just want those types of metrics, why don't I just buy more of the Mag 7? Like I don't, I don't even want to dick around with your subscale offering. Like I don't care, right? Like I think and there's reasons for that is because the big LPs are bigger. It's because of meme stocks. Like there's a whole bunch of stuff going on there, right? That like kind of makes that happen. But the net outcome is there is no off ramp. So then the question is, is when you're underwriting at a late stage, you're not. You also have to underwrite to someone buying from you, right? And like the question is what are they buying and why are they buying it, right? And I think this is where it gets a little bit squirrely because I do think, you know, I'm not the only one saying this but like private to private transactions are going to happen way more, right? Like you're going to look just as it happened in private equity, like funds will sell the funds. Then the question is, well, what is the buying fund paying? Right? They're going to pay. They need some margin. They need to have a framework in their heads about how they're going to sell, right? So then they're going to, you're going to be paying you as an early stage fund are no longer underwriting to some late stage to some DCF to the public market. You're really underwriting to who's going to buy from you? What's their narrative on buying? Like, why do they want to hold this, right? Like, what's their time horizon? What's their purpose? And like, the irony of the whole thing is, like, honestly, those prices are going to probably be much lower than what the DCF might otherwise imply, right?

How do you think about. How do you think about funds, you know, selling an entire fund, and I'm talking about venture funds maybe selling to other, you know, kind of like not continuation vehicles, but just other secondary buyers versus trying to sell off and kind of like prune the portfolio and say.

Like, well, at the end of the day, look, I. I think, look, the fun side of the funds, you're just going to take some massive discounts on that shit, right? Because at the end of the day, like, if someone's buying a fund from you, they're really only buying the winners and the rest is bullshit, right? So in an ideal world, they just carve out the pieces they want. Like, I want this position and this position and this position because I care about these companies or I have an infinity thesis on them, like, everyone has to have. I actually think the infinity thesis really matters in terms of how people are thinking about how big things can get and whether they matter or not in the world. And then everything else, it's like, it's basically worth zero, right? You know, we were joking at our firm back about, like, we were joking about starting right off co. Right. Because that's the other funny thing that happens, right, is you just kind of give up on positions and you sell them for a dollar to take the tax, the tax advantage right on it every once in a while. The hilarious part is you sell something for a dollar because you give up on it and it turns out being worth something, right? So, like, there's a whole business, we love a comeback, hoovering up, you know, irrelevant positions. But, yeah, I don't know. Does it happen? Yeah.

Yes.

Do GPS sell piece of the gp? Yes, but that's complicated because the reality is, at least the public market only really values the fees, right? Which means, like, so it's basically. I've been having trouble because I wrote this 20, 23 thing that I was pretty proud of and I think was honestly pretty accurate about what was going on, understandably. It's been two years. I wanted to update it and be like, well, where are we now? And, like, there are things I think I got mostly right. There are things that I think are wrong, but I think that the Real story is end of factory model, the factory's over. What the yada, yada, yada on is we're now, I think, entering this period where you don't even think about it as one integrated capital system. They're just different parallel universes. Everything in the world is regionalizing and fractionalizing. This is happening with globalization. We're having a deglobalization moment. This is happening with all sorts of things. I think it's happening with capital too. There are just literally distinct ecosystems and people play in multiple, multiple of them.

Right.

But they have their own valuation logic, et cetera. And then I think, like, the way people value companies as a result has changed. What you should be looking for has changed. The types of CEOs you want to back has changed. It's just a new world.

Did you dabble much internationally? This was a very 2021, 2022 thing with funds thinking that, you know, they, they'd win a deal and like, you know, like 10,000 miles away. And then like, in hindsight, it's like you have to think like, why did you win this deal? Why didn't you know? Why? Why are you, you know, so lucky to have the opportunity to back this company? And then a lot of them just, you know, are derivative and, and the.

Only, yeah, the only play. We've always invested in Israel when it made sense. I think the, the US Israel relationship is strong. I think there's a lot of good technology. There's a lot of reasons that makes sense. And so that's always been a thing we've done. We know it well enough to like, be confident in investing there. I, again, I think that's the thing for us historically is, yes, in a zoom world, you'll take the meeting in Europe, right? Because, like, it's interesting and like, you know, no one's accounting for your time as a venture capitalist. So if you're interested in something in Europe and they really want to talk, like, sure, you'll do it, but we're so lazy, right, that like, I don't want to deal with, like, there's always an exception. Like, we have done a handful of deals that are kind of outside the wheelhouse, but it's looking at. But I kind of believe that there's really something to, you know, be New York, be San Francisco focused, pick a few geos, understand them, understand how they fit into the global capital world, et cetera. So, no, we didn't get drawn into too much Europe.

What is your interpretation of the rumor around OpenAI potentially buying Windser for 3 billion. It's not an AI cherry on top business, it's a wrapper. Is it bull market for rappers now? Are we going to see tons more acquisitions? Yes.

Slow is going to FOMO into a bunch of rappers.

Yeah, FOMO into every rapper because they're just gonna get hoovered up. I mean my, my take was Maybe, you know, OpenAI buys one, then Anthropic needs one, then Amazon needs one, then Google needs one and all of a sudden you have like seven unicorns getting bought. Everyone's making money, everyone's generationally wealthy. That's the good ending, right?

I don't, look, I really am pretty cynical. Slash don't think that we're gonna see a lot of aqua higher AI type stuff in this era. I think there's a few reasons that one is like, like what are you really buying right in some of these things? Like you could, are you buying talent? That is not un unreasonable. But you know, and we've seen that, we've seen people like effectively quote unquote buy companies that are literally just for like the one person they want to pay $200 million to because they really think they're special, because they need an ex. Look, some people are going to get massively over comped. That will happen. I don't think it's an investment thesis. It is what it is and I think it won't happen that much, but we'll see. I think there's going to be. Are you buying technology? It's like the thing about AI and a lot of where we're going is like, why, right? Like software is getting commoditized, like what is it like if you're buying technology, you got to be buying some really important technology, right? And I think that's like the third thing you in theory can buy is just distribution, right? Which is like if someone really has for whatever reason got their hooks into a few key contracts or like, you know, they have a tailwind, fine, you buy distribution and that, that, that can be worth something. But look, honestly, it just seems like all very squirrely to me at this moment. You know the thing I'd say in venture capital is there will be random walks, some random stuff will happen, right? And like I think you can't get too, you know, twisted around that you certainly shouldn't be chasing random walk. But no, I don't, I don't personally see it. And if anything I'd say like, look, I was part of this. You know, my first company was acquired by Facebook in the era of aqua hires. Right. And I think, and I say this with some humility but also perspective is like, I think when you go back and look at like what was really bought there and was that a good use of capital by most of the acqui hiring company, I think the answer is probably not. You know, like that era is kind of over. People aren't that special. You know, the big companies, just because they have such incredible access to capital and distribution at this point, they can kind of just build whatever they need anyway, right? So anything that does happen will be highly bespoke as opposed to like some industry wide trend is my personal view.

How do you think right now about the dynamic between 30 to $50 million early stage funds versus 30 plus billion dollar AUM funds? In some ways the tiny upstart funds benefit from these big platforms form funds coming in and sort of marking up deals. Right. The returns look good, but maybe I.

Just think they're completely like they're two completely different business models.

Right.

Like I think is the thing this goes back to my poll about like regionalization and fragmentation of what capital even is. Right. If you're running a $50 billion venture fund, you can't possibly be deploying that well early, right? And actually you're paid to move gross dollars. The problem you're solving for LPs is you have some massive fucking LPs. You're like, I want exposure to private markets. It's really hard for me to go find how to do that. I would love you to deploy as much capital as possible. And like effectively the way you get paid is on fees. You're not getting paid on carry. Like it's, you know, if you have a $50 billion fund making 3x on that, so you're making money on carry is like extremely difficult to impossible. Like the numbers just don't add up. You're getting paid to deploy, deploy. And that means your business model is attracting more capital. You have to return enough to justify it. Right? But like you're not actually shooting for maximum DPI or actual returns, you're just shooting for that. And by the way, doesn't the big.

You know, I just see this all the time where I have friends with funds that are maybe sub 50 million dollar funds and they're investing into like even if the big platform's just periodically dipping down into seed when, when they have a, you know, really long like the founder or whatever and then suddenly the round is like, you know, six on 40 and yeah, and that's just the tiny fun and then the tiny fund is like you could get a bunch of bangers and you just do the math and you realize like they're not making, they're not going to be making DPI either. And they're not.

The late stage, what happened after 20 in 2023 era, which I wrote about then is like the late stage capital allocators who again are paid fees to deploy gross. They're like their weight deployers, they're mass capital deployers. They got, they couldn't deploy. So a bunch of their junior people in particular, like well I need to do something to justify my paycheck. So they started dipping into seed, right? Because like they're bored, right? And they're like we can't deploy big checks so we might as well deploy small ones. And by the way, no one cares, right? Like it's such small amounts of money, it's irrelevant either way. That completely messed up the seed markets because it got super undisciplined, right? And like it did because it's candidly we do the same thing at slow to like the angel market market, right? Whereas we, it's a recursive problem. Like we will write $100,000 checks off a meeting because it's kind of irrelevant to us and it's just relationship building and like whatever. But there's some poor angel is out there trying to price it properly and we don't care and then we fuck it up for them. So like it's a recursive problem that did happen. I think mostly honestly the late stage guys with AI have a narrative where they can put billions of dollars to work and do their actual job jobs. So they've mostly pulled out of up the early stage markets because they have better things to do with their time. That's actually what they get paid for, right? And just to make a finer point on that, you know, a lot of these late stage public platforms, they really are like setting themselves up to go public. Here's the thing about that. When, when they go public, the actual way re like the public markets value these funds has absolutely nothing to do with returns. It is 100, the fee based base, right? And so there's structure and their incentive structures of 1000% about earning fees and just making enough returns to justify the fees they charge and raise more money. Like that's what they do. Then there's the early stage market. Here's the thing about those $50 million funds, right? Ultimately you got to eat, you got to actually deliver dpi, not just Marks. Right. And so marks are nice, like they're fine. But I think what we're going to find in a lot of ways is the gulf between I have on paper made a bunch of money or these deals look good versus like, oh no, I actually return capital. I like made you money, you should give me more money and I made myself money doing it. That's a pretty big gulf. And I think what we're going to find is that A, most of those funds are going away because they don't have that and they're not going to. B, there could be a world where late stage funds start saying, okay, at some discount to the last round, I'll buy out the seed funds effectively and give them some DPI, etc. But then the problem for the seed funds is that Mark they were using to be like, look how smart I am. That's not what they're getting paid. Right. That's like the high water mark. Some investor invested later for primary and when you come around and say, hey, by the way, would you like to buy my shares? And they're like, well, we'll take more and a lower average cost base. They're not paying what they paid for the primary. Right.

And they're looking at their portfolio and they're like, I need to do this for, for 80% of my bets basically in order to like actually.

Yeah.

And then it's like, you know.

Yeah. And so look, I mean the upshot, the really simple way to think about it is like if you're an early stage investor, you have to make money. Like that is actually what you are paid for. And you're. People are saying, hey, I'm going to allocate a small amount of money to you. By the way, it's not efficient. Right. Because if you're even a medium sized LP, someone's running a $50 million fund, what are you going to give them? Like a few million bucks. You don't care unless they make you a shit ton of money. Right. And so like if you make them a shit ton of money, you're doing your job. You get to keep playing if you don't forget it. And that's just in a completely different game than what it means to be a late stage capital allocator in the private markets.

Yeah.

I have kind of a random topic, but there's, there's two early stage kind of publicity stunts going on this week. One is by Roy Lee. He launched Clue Clulee Cheat on Everything. I'm not sure if you saw this, but I did see this very controversial and he's kind of like a troll, almost like a Nathan Fielder type, really kicking the bear. And then there's also this artisan company announcing their $25 million series day with a billboard on the wall.

I love billboards, as you know.

Yeah, we love billboards here. We're sponsored by Ad Quick. We love billboards. But you know, the positive take on this is that hey, hey, like they're breaking through, they're getting attention. Attention's valuable, distribution's important. The counter to that is should they even need to do that? Shouldn't they just be heads down, building. Where do you sit on that continuum?

I guess the question I would ask is what percent, what is the track record of companies that started with marketing stunts that ultimately were important or successful? Right. My sense is the track record off the top of my head is zero. Right.

That was very viral.

I'll give you an example. I'll give an example. So the challenge with going super viral early and I had this with party round is that people get a fixed idea, a lot of people get a very fixed idea of what your business does. And then you run into this like product marketing challenge which, you know, people are aware of your business, but they're aware of it for something that you may not even do anymore. And that's why I was you telling talking with Cluly founder yesterday of like, you need to be committed to like iterating and basically burning the whole brand down because you might find in two months that completely the real opportunity is something else.

Yeah, I think that's a really good point. And like I, I'll do a step further which is I, in my experience really successful things, you actually want fairly high barriers to entry so that the people who show up as your early customers are like deeply in need of it. And true believers.

Right?

Because if they're deeply in need of it, they're going to put up with a lot of crap to get what it is you're offering out of it. Because they're deep, because they really care. Like, they showed up first and they like have a real stake in it and then they become true believers in that cult that advocates. I think if you have too much attention too quickly from a not fervent enough audience, you get distracted. You have to deal with a bunch of the wrong stuff. People are flighty. Like. So I think there's this irony which is like, like it all how you get your first hundred thousand, ten thousand people and the barriers to entry there are like really? I'll give you a kind of counter example, which actually kind of is a marketing stunt if you get into it, which is quite by accident. You know, Ikram and I kind of started this Jelly Jelly meme coin which blew way the hell up and went crazy, but was supposed to be like a component of this app, Jelly Jelly we've been working on. The app's super cool. But like, the app was not ready. Yeah, right. Like, and what's been really interesting to watch is because the app wasn't ready, you got a bunch of people in, most of them balanced. They're like, this isn't ready, this is weird, whatever. But you did attract a kernel of like crazy true believers that are really engaged with it. And then it's kind of like a fire. Like you kind of blow on the coals of that.

Right.

And you kind of keep iterating and working. So I guess that's a long winded way of saying. I think the history of companies that start with a marketing stuff stunt and blow up big is pretty poor. There probably is a way to like be very inefficient and like blow up something big or say something. Funnel out 99% of the noise.

Yep.

Somehow find that kernel 1%, work with that 1% and like treat it like kind of the embers of a fire.

Right.

And grow up. That's kind of the mental model.

It's like how you handle it. Got it.

Last question. How cool hooked is Tesla?

I mean, look, I've been in the camp of like, Tesla's a meme stock for a long time. Right. And I think Tesla's a meme stock. Right. You know, and so I. Yeah, you posted.

Maybe it was yesterday. No, this morning. If Elon can move Tesla stock up by seven and a half percent by saying he is stepping back from doge against the backdrop of profits and revenue they just reported, then yes, he probably deserves the $56 billion difference as a pay package. That is what the market says his attention is worth. I thought that was pretty on the nose.

Yeah, look, it's, it's, it's. Elon is the greatest marketer of our generation. He's the greatest capital raiser of our generation. You know, he is the greatest, I think, storyteller. I mean, there's a lot that he's really, really, really good at. Right. And, and I think he's the ultimate cult influencer in a lot of ways. And he's built a lot of cool companies doing that, but it is so belief driven. And I think this is kind of the thing where it's like, what is Tesla work from a DCF perspective? We talked about public markets and how you value these things. Not a fraction of what it's traded at. But it is absolutely. He is great at the infinity story. The infinity story is so big, and infinity plus zero equals big number. Everything's about the marginal buyer. And it's incredibly loved because retail investors want something to believe in. Like, they want something that can go to infinity. Same thing with the Mars thing. It's like, look again. I find the whole Mars thing in SpaceX so frustrating. I love SpaceX. It's like, you know, I think it's an amazing company. Like, what they do is incredible, right? And there's a lot I love in the whole nine yards. The Mars narrative is so frustrating because it's so disingenuous on one hand, right? Like, it's just like the. The predictions are out of control. Like, it doesn't make any sense from, like, fundamentals perspective. But, my God, people need something to believe in, right?

And so believe in something.

Well, I think Texas is coming back. I think they're going to put A naturally aspirated V12 with a gated manual in a new car. They're going to sell 700 million cars in a single quarter.

I would be a fucking love that. If Tesla did that, I would be even. I would buy Tesla stock. That would be.

There we go. We cracked it. We cracked it. It's going to happen. You heard it here first. Thanks for stopping by, Sam. This is fantastic. We will talk to you.

Thanks for coming on.

Next up, we have Bridget Mendler of Northwood Space coming into the studio. Very exciting, I believe. $30 million, Series A for Andreessen Horowitz in partnership. I think Founders Fund and a bunch of other folks got in the round. So we'll talk to her about that. Bridget, welcome to the show. How are you doing?

Hey, guys. What's going on?

What's up? I haven't been on podcast before, so am I on?

You're not only on a podcast, but you're also live.

Whoa.

So there's no post editing, but hopefully we got the facts right. But you can break it down for us. Tell us, what does Northwest Space do? And tell us about the $30 million funding round that just was announced.

Yeah, we're building the ground network for the industrialized space economy. You know, we view it kind of as the third critical pillar of infrastructure for space, where you need to get things into space on rockets, you need to have things to put into space, which are satellites, and then you need a way to actually communicate with them and use them once they're up and operational. And so we're focused on that last third part and building the shared infrastructure that the whole industry can take advantage of. Really drawing parallels to the cellular industry and to the Internet, where shared infrastructure is just a big enabler for being able to push technology forward.

Talk about what companies have had to do historically. You know, we've heard a lot about satellite companies that send a satellite up and they're like, it's working, but we don't know where it is. So it's like, you know, kind of critical aspect of, you know, you know, maintaining.

Yeah. What was the status quo prior to you starting the company?

Oh, yeah, yeah. I mean, it's not just prior to starting the company. It's like ongoing. You know, we talked about companies, I think like last week that are just not getting enough coverage and so they're endeavoring to build their own ground stations themselves. And you know, our co founder, Char, it was actually interesting during our first fundraise, he was still working at his old company and he was woken up two times in the middle of the night. There were a total of four ground failures just in the course of one evening while he was manning their operations at all different locations, all different ground networks. One was a site that had already been down and just like not even notified the company that they weren't going to be able to make their contact. Talked to another company last week that had been out of contact with their satellite for 28 hours. It's like, you know, you're not just tossing like a $50 piece of equipment up there. It's like tens or hundreds of millions of dollars. So it's very stressful and we're excited to pursue setting a new standard there.

Yeah, people get stressed out when slack's down for like five minutes. And imagine having like, you know, this $100 million billion dollar device you don't have contact with. I'm curious, what does scale look like for Northwood? You know, how many different, you know, ground stations, you know, do you hope to kind of get to within the next. Call it decade.

Ooh, decade. That's a long horizon, but that's fun. We are looking at scale both from like a network level and a site level. So when you think about like, why do you need to have a global network to begin with with space? Like, the reason why you need to have a global network is because satellites orbit the Earth. And so maintaining contact with them requires having, you know, locations all over the earth to make sure that you can be in contact all the time. So think of it kind of like when you're using a cell phone and you're, you're driving on the freeway and you're passing different cell towers. You need to maintain contact with cell towers in order to maintain connection. Same with space. And so for us there's like two verticals. One is coverage, so you want to have enough coverage. So basically like a cell tower, like you're always in contact no matter where you are, and then the, the other one is throughput. That's like density. And so kind of gold standard for this is SpaceX, where they have hundreds of ground stations to not just have global coverage, but to be able to serve millions of users in different regions. So when they're wanting to like service a region that has a lot of customers, they need to put a lot of ground stations in that region in order to support that much capacity. And so we want to be able to offer that to other folks so that they can have like that kind of gold standard of connectivity through space. So we're going to be putting, you know, ground stations in different regions as well as ground stations densifying in the same regions. And one of the things that we think about with scale is really like how can we put as many ground stations to support as much capacity as possible at a single region? So our kind of, you know, sub near term goal is 500 sites.

Can you talk through some of the, can you take me through some of the history of these ground stations? Maybe explain it in really, really simple terms like maybe like I'm a venture capitalist or something. Something, something like how do we communicate with the Hubble telescope? Is this like a big satellite dish? Like what I saw in contact with Jodie Foster? Is that how we communicate with the Hubble? Or is there a different network of ground stations? What was kind of the gold standard 10, 20 years ago?

Yeah, I have to just say, like us ground nerds in space, we do not often get asked these questions. So thank you very much. Like the ground is just generally like the not sexy part of space. So it's very fun. So yeah, I mean what you're doing is, you know, generally using RF to contact a satellite that is like hundreds of kilometers away. You need to concentrate enough power to be able to do that. So that's why you see like the big parabolic dishes, it's concentrating power. And so when you're further away that requires more tower, more power. So actually if you're, you know, in the Palo Alto area, you go by the, the Stanford dish is kind of a well known one I imagine like some folks, if they're watching might know of that. It's massive, a giant dish that's used to make that contact. And so it's interesting because like the legacy of space, it's more exploratory, it's more research based where like booking an antenna was kind of more like booking a telescope, you know, where it's like an individual piece of equipment where you know they're located at these different locations around the world. You book the time, you're kind of in control of how that functions and how it operates. But as the space industry has been scaling, it's not really a sustainable model to think of like as you're needing to coordinate tens or hundreds of different sites to think about that individual booking and coordination. And with that we kind of like to analogize to network routing for the Internet where it's like you're not thinking of every single router and network switch. You kind of trust, trust in a network that can reliably deliver that data. And so that's something that we're starting to think about how the space industry is going to evolve in terms of communication going from booking an antenna like you book a science telescope, to having the outcomes through a global network where you can have a lot of observability and control into that network, but it's much more software defined and controlled, kind of like modern Internet infrastructure.

Question for now, I think there's an obvious opportunity to serve existing space companies. What kind of companies do you think are potentially enabled by your technology and network that may not have been smart to start five years ago if you didn't have kind of the resources of SpaceX?

Yeah, there's a company that we were recently talking to that I get really excited about. You know, in la we had the wildfires a couple months ago and absolutely devastating. You know, really difficult to figure out where to route resources with a really fast moving fire. If you're trying to get a sense of like the scale and the direction of that fire with a helicopter, it's often like not safe or not even permitted to go into those regions because there's just so much debris. And so satellites are a really interesting application where if you're able to have enough revisit rate, which is what in the space industry call being able to go over a region again, if you're a low Earth Orbit satellite where you basically just need to have a bunch of satellites that pass over and take turns because it takes time to orbit the Earth. So having enough revisit rate to where you can actually regularly track the movement of a fire is pretty revolutionary. You could stop fires much more rapidly and be able to detect the movement. The challenge with that is if you don't have your latency down low enough to be able to give the information, it's pretty much useless. Right? Like if you deliver information like an hour later, then you can't deliver anything actionable and helpful towards firefighters on the ground. Like they're going to go into the.

Lives are on the line. I remember John and I live in Malibu. John lives in Pasadena. I remember the watch, fire watch duty, watch duty went down for like an hour and I was like, I was looking at the mountain behind my house just like being like if the fire comes over the hill, I just want to have eyes on it quickly. And that was like, you know, very brief that it was down.

I have a follow up question again, maybe a stupid question, but what is going on in the various different orbits? We talked to Albedo about V Leo. Obviously Leo's kind of the hot one with Starlink, but. But do you need different ground station technology or scale to hit something in high Earth orbit? We talked to Astranis which is maybe partnering with Impulse to kind of boost to higher orbits. What are the challenges or benefits to different orbits when you're thinking about it from a ground communication perspective?

Yeah, no, that's a great question Veo. You're getting closer to Earth so you're able to get more high fidelity imagery or sensor things like that if you go up to Leo. Like that's useful both from that perspective but also from like a latency perspective when you're talking about like trying to hit Internet, similar kind of latency timelines, just the time it takes to go with those altitudes. There's also operators in like neo, which is, you know, middle Earth orbit that are supporting Internet use cases. And then if you go out to geo, the benefit of that is like it's geostationary. That's what the name means. You're fixed at a certain location and you're able to have really continuous coverage over a wider area because it can see so much of the globe. This is a super interesting area and an area that we're actually really enthusiastic to be working in is servicing multiple orbits. And yeah, I think it's both of interest on the commercial side and also on the government Side they have a lot of assets that stretch up into higher orbits and they're looking to have more capacity, more coverage, more resiliency. There's really a shortfall of ground assets in the higher orbits actually. And so that's something that we didn't enter into the business planning on. But that's something that has been like a very large driver of activity in our business over the past like 18 months of existence. And yeah, I think like the more dynamic movement is also a really interesting point where it's not like you're just hanging out in one orbit. Right. Like that's kind of in impulses. Really exciting proposition with CROP is that they're able to you know, maneuver between orbits in, in new ways and you know, in space economy rendezvous proximity operations, like that's, that's something that's definitely going to be picking up and very significant in the coming years.

I feel like Middle Earth orbit is like super ripe for a Tolkien named startup. Some founders back there thing. I mean I would love to hear where the name Northwood came from. Yeah, tell me where, where the name come from. And then I do have a follow up question that's more serious.

Yes, that's a very serious question. The name came from the lake house where we first did our prototyping of antennas during Pandemic and it was the very origin of becoming a ground nerd. And so yeah, that's, that's kind of the history of the navigation. I mean that, that lake house, my great grandparents got it in 1945. It's just a little shack in New Hampshire and it's been kind of the, all, all the companies that I've had have had some affiliation to it.

Got it. So on the business side, can you walk me through where you're playing in kind of the value chain? I imagine that there's a fair amount of equipment that's available off the shelf you might earn. Correct me if I'm wrong but do you need to build equipment from scratch? Is this a project where you're going to be building like a gigafactory, like what we've seen for the Starlink units at some point or is it more about assembling different components and then being really strategic about placing them and then building a network on top of that and really like the services side of the business?

Great question. Something that our head of manufacturing Thomas thinks about a lot. We're definitely going to be leveraging outsourcing in early days. We, we are a vertically integrated company. Like we, we design all of the different components, we have those outsourced and then, you know, brought in. We're not. We're not, you know, like, making our own circuit boards at this point in time. There's certain things that are, like, more efficient. Efficient to insource versus outsource. So largely leveraging outsourcing initially, I think, you know, we're really focusing on modular units and making our units. Units designed for manufacturing. So making sure that we can parallelize development, Making sure that we can have things ready to be integrated at, like, kind of the final hour is the thought process just to accelerate our manufacturing capability. And then gradually over time, when we figure out, like, what is actually cost efficient and time efficient, we bring it in house entirely.

I want to know more about actually the mechanics of setting up a ground station somewhere. I imagine you could do it.

We've been looking. Yeah, yeah.

We're thinking about doing my backyard. You know, I have some extra space.

Are you gonna pay?

There's a lot of ham radio amateur folks that do that.

Yeah. I have a family friend who. Their family has some land in Napa, and I think they monetize it by selling a cell phone tower right on top of it. Is that one of the folks that you'd buy land from, or is it on federal land? Like, how do you think about placing these? Do we need them to be equidistant across the United States? United States and beyond? Are there other countries? Are you placing them in allied countries? Like, how do you think about the. The coverage map, the veri. I want to see the Verizon map with all the different coverage points.

Right.

How does that grow over time?

Yeah, no, it's. It's real. We do that modeling in house. So, yeah, we think in terms of, like, the coverage mapping and the metrics that we're prioritizing. Hitting for customers. Also, shout out to Christian at Astranus, who has his own amateur radio. We had a fun time talking about tune in. Yeah. But in terms of where you put sites, It's a great question. Basically comes down to three things. Land, fiber, power. So you just need to optimally be able to make your sites. We prioritize making our sites as generic as possible, really, so that we have the most optionality possible. We are also prioritizing really high throughput put backhaul. So data centers honestly become like a good spot to put them at because they have the power in the backhaul already set up. And generally try to just make sure that the land is easy to deploy. One advantage of the way that we're building our systems is we don't need to lay a concrete pad which can add weeks to months to your timeframe, especially when you need to do permitting and all that. So our goal is to make it so that the tech bros of the world can just have one in their backyard very easily deployed easily. And yes, it is a global effort that we're.

I remember Anduril did something similar with the sensor tower. They didn't want to pour the concrete pad because of permitting. So it's on wheels and it's completely unnecessary. You could just drill it in the ground, but then it's way more complicated.

How do your timelines work? A lot of, you know, I'm assuming a lot of your customers are kind of planning around like launches and that means those are kind of busy moments for you guys, I imagine. But at the same time, you can serve a lot of existing companies that have assets in orbit already. How do you think about kind of the advantages that you guys have of like being on the ground and not needing to plan your entire business around SpaceX?

Oh yeah, it's very convenient. We can work on our own schedule. I mean, we have different challenges because, you know, you're going to different countries and they have their own local regulatory regimes and all that. But we are not constrained by launch schedules, which is great. And then the first part of your question was, what was the first.

No, you answered it. You answered it already.

I have another somewhere, somewhat random question. We ask a lot of artificial intelligence founders about their p doom. We ask a lot of space founders about their p. Moon. What is the probability that you will visit the moon in the next 30 years? Let's call it. Would you go if the capability was there? Let's say there's been 100 people or a thousand people or 10,000 people up. Are you going? And then what's the likelihood that you think the space economy and the flywheel that gets us to the moon, the moon happens? Based on your insider knowledge of the.

Industry, I would absolutely go to the moon if I had the opportunity. I did hear from like an astronaut one time just how life changing that experience was. And yeah, I mean, I feel like that would be definitely a thing for the bucket list. As a mom now, I think that's honestly like the only thing that holds me back from, you gotta bring the.

Kids, you gotta bring the kids. It's gonna be Disneyland on the moon. That's the first deck.

I'm gonna. We talked about this too. Like you go to do we go on a blue origin flight? It's 250k. Do we just go and podcast in space? John was all in. I was like, my wife will absolutely kill me. I don't know if it's worth it. So it's definitely part of the calculus.

I know to be young and wild and free and the lunar economy. I'm very bullish on it. I think we'll hopefully see that within our lifetime.

Somewhat related to space tourism, the blue Origin fly flight did just happen last week. I want to know specifically what are the challenges with, again, connectivity? Because it seemed like we lost the video feed while they were at the apex of their kind of trajectory. It was only three miles or three kilometers up or something. It wasn't that high. And yet we still lost the live video feed. Is that something? It's a moving object, but satellites move too. What does it take from a ground station perspective to be able to watch Netflix on your Blue Origin flight consistently?

Yeah, that was actually something that we talked about in the very early days, preforming Northwood was being able to watch Netflix in space. And we're like, oh, wouldn't that be such a cool feature? I mean, to accomplish that, there's multiple different kinds of the communication going on. There's how do you actually make sure that the rocket is going where it's supposed to go and it's safe? And like, you know, we talked to someone the other day who was concerned about, like, a rocket trajectory not going the direction it was supposed to and winding up, like, landing on another country and needing to deal with kind of like the catastrophe that falls out of. Out of that and managing that. So, like, you really need to know where your spacecraft is going because, yeah, the consequences that fall out of that are serious. But then, yeah, having actual, you know, humans on board, needing to have some kind of communications on board. Yeah, it's. It's going in a different trajectory than a satellite that is just kind of conventionally like orbiting. And that's something that we're excited about with our technology as well, is being able to vary our beam width. So if you think about, like, you know, the. The signal as you get further away is kind of like if you were to shine a flashlight on a table and the area that the flashlight spotlight covers changes depending on how far away the flashlight is. It's the same thing with an object going up in space. It's changing the actual signal propagation depending on how far away the spacecraft is. And so you need to be able to have Some way of tracking that. And we're excited through the tech that we're developing to be able to track the beam with the as it changes for more dynamic trajectories.

Can you talk a little bit about the long term mix of customers? I mean, we've all been following Delian's trajectory with Varda. He was talking about Zblan at one point. Then it was pharma. Now there's some DOD mixed in there, some government contracting. It feels like a lot of these companies that are doing stuff in space or doing stuff in hard tech, it's dual use. Is there a government angle here at some point or, or is that just something you're thinking about in the future?

No, it's very near term. It's very real term. Very real term. Very real. Very real, yeah. Across a number of different applications. I mean, they're dealing with the same challenges, if not even more so, where they have aging assets that are kind of infrequent. Like there's certain networks that just don't have a lot of assets and they're old and they're vulnerable to outages, whether it's like an intentional outage by somebody targeting, targeting that site or not. And so there's been a lot of interest in how that they can leverage commercial to get sites deployed quickly. Like for us, in the conversations we're having, we're really emphasizing like, we can deploy capability quickly and we can serve up capability that's quite scalable. So if one of those outages happens, you'll have that backup and that resiliency. And so as government use cases is like so much of our world runs on space in a way that I think people don't really realize. And so it was, you know, that's been a refrain that you're hearing more and more through government stakeholders where there's this concern on, you know, if anything goes down in space or through the ground connectivity, it has ripple effects through like a lot, a lot of our critical infrastructure. And so for us to be able to, you know, deploy capability that can enable resilience, there is something that's definitely resonating.

This might be a silly question. Are you guys already making hardware that's actually on satellites? And if not, is that something you would do at some point? Because I imagine when it comes to, you know, reliable communication, you're somewhat reliant on the technology that's actually on the craft.

Yeah, that's a, it's a great question. I think like, so far we've been pursuing partnership There. But like, if the need presented itself to stretch onto that side, we have amazing engineers that would be very capable of doing something like that.

That.

But yeah, for now, there's kind of.

A decomposition happening right now where there's one company that just makes the satellite buses. And so you could imagine that there's a different company that makes, oh, just downlink connectivity and then you kind of vend all that together and then you do the important thing and you can focus your company a little bit more.

Exactly, exactly like that. That's the vision where you know, in the same way that a developer doesn't need to think about like their database or front end networking or any of it, it's just like, like you just focus on building and. Yeah, the rest is kind of focus.

On that key value creation. When did you initially start researching or like, catch the space bug? When did you get into this?

I mean, honestly, it was around that time of the prototypes that we were making. My husband Griffin is our cto, and so we were just working on those prototypes during the pandemic. And I feel like I don't pursue.

Things casually as one does. Some people were baking, some people were podcasting sourdough bread.

But rocketry.

A lot of, like, new founders coming out of the pandemic too. Yeah. Too much time on your hands. We were fortunate to be in that position. But yeah, can't do something casually. I was just like, all right. And then after we did that, we kind of like, you know, wrote a white paper with commercial folks and then we did another one with some government stakeholders and like, damn, like, this is a really critical vulnerability in the space industry. It kind of took off from there.

There.

So five years of work to get here. Can we play the overnight success sound? Overnight success. But congratulations on the, on the funding round.

Really, really, really great conversation. Milestone and congrats to you and the whole team coming next time.

What are you guys drinking over there? Is that a yerba mate?

That's a yerba mate.

I am, I am, yeah.

Like Guayaqui.

Big yerba mate. John's.

You know, I'm having the third. Wait, this is like endorsement or something. But yeah, we have the trifecta. The holy trinity of energy drinks.

What are you drinking?

Red Bull.

Red Bull.

A classic, very Lindy. Lindy.

Holy trinity.

The holy trinity of energy drinks. Anyway, have a great rest of your day. Thank you so much for coming on the show and love to have you back when there's more news. Thank you so much.

Cheers.

Bye.

All right, have a Good one.

Later.

Bye.

Let's close out with some timelines. What else we got? Oh, Mike, new former guest on the show, has released the results from OpenAI's O3 model which everyone's raving about on Arc AGI. And so his takeaway is that O3 medium because there's a million different varieties now for how in how intense and how long running these reasoning models can run for. But O3 medium is the industry leading AI reasoning system by a large market margin 2x the score and 1 20th the cost compared to the next leading chain of thought system as measured by ARC V1 semi private set scoring 57% for $1.50 per task. And that's interesting because we talked to Sean Swix about how Google was dominating in this Pareto frontier of model capability versus cost and they'd really. We talked about this with Logan too. How Google has been dominating these benchmarks and then cost. But ARC AGI is this completely separate benchmark from MMLU and LM arena and Humanities last exam and all these other things that are ARC AGI. It's so simple, it's these puzzles, but it's in some ways harder to game or harder to optimize for apparently. And so he says his key question for released 03 is it more like 01, slightly better, better than pure LLM on novel tasks or more like O3 preview? I love opening eyes, naming scheme, keep it, keep it simple guys. It makes us really hard to do my job qualitatively. New capability to solve problems outside training data. And so we are going to be following the Arc AGI development very closely. He closes by saying Arc v2, which is the latest puzzle eval that he released least arcv2 still has a long way to go. Even with the great reasoning efficiency of O3, new ideas are still needed. He called this when he came on the show. He said we haven't evaluated the new OpenAI models yet. We heard rumors about them. We think they're great, obviously very economically valuable, obviously amazing tools. We love them. But in terms of arc v2 they're not solving that fundamental problem. And it raises questions about, about is it AGI? Is it 10 minute AGI? Is it? It's. It's AGI that can do like IMO level math but it can't solve a puzzle that a kid can solve. It's a different type of intelligence and I think that's great. I think it's amazing for the economic impact, but we still got our edge, still got it. We still got It. Humanity's not done yet. But anyway. Let's move on to some news. The United States States banned artificial dyes from all food products effective yesterday.

Yeah. This is big. We got to get C. Yeah. Co founder on to come break this down. I don't have full context. It seems like it's going to be incredibly disruptive to big CPG.

Can you imagine trying to reformulate M&M's like M&M's. They've been making this for 100 years.

Get ready to have some gray M&Ms. Folks.

I haven't.

They're still going to taste the same. Actually. We'll see if they taste the same if they're not. You know the color of the rainbow.

Yeah.

But I think this is good. There's plenty of evidence that these different dyes, like have really terrible impacts on health. And especially considering that kids consume these and they don't have the same ability to reason.

I have a different take. I think natural immunity of the human body. It's incredibly resilient and so poisonous. Build up a tolerance to the poison. You're going to do fine. So I would say just start slowly. Micro dose the M&Ms. Build up your tolerance and then you take a ton of artificial dye. No amount of artificial adai could do anything to me at this point. I have consumed so much Celsius and so many processed foods that I am invincible. Some people say hubris. Yes.

Thank you.

Thank you, everyone.

Thank you.

Yes. I'm unkillable by the American food industry.

Let's end the show there. We got to get on with Taipei.

We do.

But we will see you guys tomorrow.

See you tomorrow.

Great show.

Thank you.

Thank you for tuning in. We'll see you tomorrow. Thank you to the incredible corporations that make the show possible.

Thank you.