David Senra, Nichole Wischoff, Daniel Yanisse, Ryan Sandler, History of "Golden Dome", Johnson & Johnson Pivots AI Strategy, Google & Meta Facing Legal Threats, EU Delayed Penalizing Apple & Meta Platforms

You're watching TVPN. Today is Friday, April 18, 2025. We are live from the temple of.

Technology, the fortress of finance, the capital of capital.

This show starts now. We're going to take you through some of the headlines. We want to give you the top 10 news stories that we're following. And then we'll break it down. We'll go some deep dives, we'll get some guests, and then we'll give you some timeline. So number one, AI startups soaked up a record 58% of global venture capital money in Q1.

2025.

$73 billion flowed into AI companies more than double their share a year ago. As investors chase generative AI growth. Every founder, every, every founder has found a way to wrap their narrative in AI. And every VC has decided to put.

A little artificial intelligence, put a little.

Gen AI on it, little cherry on top.

And the good thing here is that there's a lot of revenue growth across the sector. I don't know. You know, the investment is certainly outpacing revenue by a long shot. That is the function.

Companies are making money. And we have a deep dive story a little bit later about how some big companies like Johnson and Johnson tried a bunch of stuff with AI.

Generative Johnson, Generative Johnson.

And then they, and then they're starting to pull back and that's causing churn. And so that should give us some more in kind of just insight into how the AI market and how sticky these deals are, how easy it is to get a Fortune 500 company to buy your product and. But then it's harder to get them to stick. Stick around for a long time. So the second stop story is Nvidia Jensen. Nvidia's Jensen Huang made a surprise trip to Beijing right after the US chip curbs the new. The new restrictions on the H20s.

Strange timing, but I'm sure he has. Well, it makes sense, but it is.

Strange timing in the sense that an interesting signal. Yes. The headline from the age 20 news was basically like, look, it's over. It's completely over. It's never been more over. Yeah, stop selling anything to China at all.

But he's probably over there, basically.

But that's not actually the rule. Like, the rule is, you know, Nvidia, we've heard this again and again. If the speed limits 55, we're going to go 54. If the speed limit's 45, we're going to go 44 miles an hour. But we are going to go as fast as you let us. We Will never break the rules, break the law.

But we're going to walking, walking speed. We're gonna get our steps in.

We're gonna get our steps in. Yeah. And so you know, this, this, this discussion could be hey, gaming. GPUs aren't banned. Can you do AI stuff on gaming? Well, can you do AI stuff on gaming? Absolutely. I trained a custom version of Stable diffusion on a PC that I built with two 1080. I think 1080 tis like pretty old but they had like 8 gigs of RAM. It was pretty fine. There were a bunch of models that you could fine tune and run locally on gaming graphics cards. And so if the name of the game is just get some sort of AI system inferencing, you can distill these down pretty small. And I think that that might be a bit of a narrative going forward. I mean Apple Intelligence, not a great product, but it's been able to run inference of LLMs on phone hardware. And so if Nvidia can still ship something to China, it still is an important part of the business and they will continue to maintain that relationship, I'm sure. And they have employees and manufacturing and all sorts of stuff on the ground, I'm sure.

And despite the visit, Nvidia is down according to public, another 3ish percent. Okay, so not great.

I also want you to check the the how Google is doing in the markets because the US judge rules Google illegal monopoly illegally monopolized key digital ad markets. We talked about this on yesterday's show.

But down 1.3%.

Okay. What's the market doing overall?

Probably something similar.

Okay.

Doesn't feel super significant.

Yeah, and Google will appeal this. That was something that we talked about on the show yesterday. It does open the door to possible breakup remedies. And briefly knocked Alphabet share before a partial rebound. OpenAI and SoftBank Stargate project eyes the UK for part of its $500 billion data center build out. This is kind of an interesting twist because the whole pitch for Stargate was like we're going to spend a half a trillion dollars in America.

It was announced they even got the President of America to, you know, come out and basically do a keynote for them. So anyways, fascinating. I mean it makes sense. The UK is an ally, so they should have great data centers as well.

I guess. I don't really understand exactly where this is going. We'll have to dig into that more.

But it could easily be a capital play play. Right. If they're trying to raise $500 billion, that's a huge Number if they went to variety of sort of institutions in the UK and say, hey, we'll make the UK part of Stargate. So you can have, you guys can have some type of AI narrative, but you need to put up, I guess the $1 million.

Yeah, the one, the one thing that we've seen time and time again is like these deals are extremely flexible. Right. And so it can be we're buying from you, you're buying from us, you're getting equity, you're getting tokens, you're getting all sorts of different stuff. And so could you see a world where Europe to develop AI supremacy and so they pay for a huge portion of this AI data center, but there's kind of like a rofer where they can buy it out and use it for their own model in the future. And that justifies and that meets their, their goal of like, you know, nationalist power around AI. Just having the megaproject built in their country. Even if it's, you know, serving American company right now. Maybe a grows into something bigger over time, I don't know. But on the other side of the open air.

Yeah. Were you diving into this too? Just that it could be like an EU wide thing where everybody's kind of pitching to get a part of the project.

Yeah, yeah, no, no, it makes sense. OpenAI also debuted Flex processing to have API costs for non urgent jobs. We saw this with the O3 and 04 mini models. This trades slower responses and occasional downtime for a price cut. We saw Mike Noop over at zapier and arcprize talk about this a little bit with the, when they beat, when, when OpenAI beat Arc AGI1, the precursor eval, it cost something like, I forget, it was like, it was like thousands of dollars per task. They had to really, really throw a ton of reasoning tokens at it to get it done. And so a lot of these models, there's always this. They're always trying to be better and people really only care about the better models. But they're also trying to cut.

Yeah. And there's a lot of work, there's a lot of knowledge work that gets done that doesn't need to be done in real time. It's amazing that these models can do like a deep research report in a minute. But it's great. It's equally valuable to basically send a request and just say like, yeah, sometime tomorrow morning would be great. Just have it to me by tomorrow morning. But like, you know, deliver it in the most efficient way. So I can easily see that Becoming a huge amount of their kind of like API calls over time.

Totally. Databricks bought incremental computing engine Fennel to turbocharge real time feature engineering. We've talked about databricks a little bit. The goal here is to promise faster model iteration and lower compute bills for streaming ML pipelines. Somewhat related to the flex processing going on in OpenAI. Love to dig into more, more into databricks as they prepare to potentially go out.

Yeah, Fennel's only a three year old company, haven't been around for a long time, but I think we're going to see a lot more of this happening. Right. It just makes sense. Windsurf is a, you know, the most prominent recent example, but I can see a lot more of these deals happening where, you know, great, great early teams realize that they can do a lot more as part of a much bigger platform.

Yep. To two Apple headlines today. The iPhone 16e was successfully made in Brazil. And so this is kind of a leak, but there were some retail boxes that were spotted by Mac magazine showed assembled in Brazil, signaling that Foxconn's Sao Paulo plant is producing the latest entry level model to hedge tariff risk. And so Apple and Foxconn have been on the case for a long time. It is interesting because.

Yeah, and this is a Taiwanese company going international. Right. I think people have this idea that they, they always associate Foxconn with China.

Yep, exactly.

Foxconn is out of Taiwan and still headquartered in Taiwan and has, you know, global ambitions, which I think is good. Right. It's easier for Foxconn to set up production somewhere new than, you know, a new kind of like subcontractor.

Yeah. It's also interesting, Brazil specifically has not been in the conversation that much. People are talking about Vietnam, India. But if you go back to like the original BRICS report that was put out by Goldman Sachs, that was Brazil, Russia, India, China. These were the emerging markets that Goldman said would be like major, major contenders in the kind of the coming two decades. Right.

Yeah.

And then you. I think that that report was probably published around 2005 or something and it looked like they kind of got it wrong because it was just China. China, China. Yeah. Like, like Brazil didn't really do too much. Russia obviously kind of turned inward and India did okay. But it was nowhere near on the same scale as, as China in terms of like.

You weren't hitting the big gong.

Exactly. We have a, we have a giant gong in the studio now, but we.

Are not debuting it today. Can I debut maybe the, the sound no, just the.

Oh, oh, yeah, yeah. Show. Show the mallet. You have to show. So this is the, this is the old mallet. This is the old mallet and that's the new mallet. It gives you an idea of, of where we're going with the gong. The scale of the gong.

Look at the. Yeah, I mean this thing is.

We were up at, at 6:30 in the morning and Jordy was just.

I was waking up all of Los Angeles with this gong.

It was so loud. That's great. Anyway, very excited to roll that into the show as we, as we keep improving things. Anyway, the other Apple leak, a lighter Apple Vision air headset will use titanium and launch in midnight black. Not a huge leak. We kind of knew this was coming. Obviously they need to make it cheaper and lighter. Carmack has said this, everyone knows this, but they are working on it. And every time you see these leaks, it's just a reminder.

Hey, lighter and cleaner. They're dropping the pro branding and they should definitely.

Yeah. I wonder if titanium is really the lightest thing. Like I. With this. I think it's just like light at all costs. Like if titanium doesn't sound super light, but I don't know, I would probably go aluminum or something. But wait, they know more about it than I do for sure. And we'll have to have big screen back on when, when it drops to give his. The founder of Big Screen to give his take as he dukes it out in the VR market. Anyway, new Dwarkesh Patel show dropped. Very interesting. Taking the exact opposite approach as AGI 2020 27. A 2027. So the AI 2027 guys came on and they're like, this is happening in 18 months. I guess. I mean 2027 is, is. Is 18 months away. It's. It's so close and they forecast it all out and it's very, you know, kind of doom and gloom. But then he dropped this three hour episode, which you should go listen to. AGI is really more like 2050, more than 30 years away and whatnot. And it was very interesting to hear about.

And the big argument, I haven't been able to listen to the whole thing yet is that reasoning is not intelligence.

So yeah, I was thinking about that because we love to reduce these things down into like very pithy statements like attention is all you need. I was thinking about that like the attention mechanism of the transformer, it allows the, it allows the neural network to focus on specific subparts of the input. So you give it a picture. Typically most image generation Algorithms, like all the compute is spread across the image equally. But that doesn't make sense because as soon as you get an idea that it's like, oh, I'm trying to actually identify if there's a cat in the corner, so I know that there's a blurry animal in the corner. Let me zoom in on that. Essentially, it's essentially zooming in is like kind of what attention is. Somebody's going to correct me, but it's like close. It's this idea of like, like, attention allows the, allows the neural network to focus on the most important aspect of the computational problem. And, and it's very clear that attention is not all you need when you're talking in the context of like AGI, like just the transformer, we scaled up the transformer. That's the raw LLM. That's just next token prediction. We had to drop tool use. On top of that, we had to drop reasoning. On top of that, we have to drop memory databases, Internet queries, search engines. Like, we have to, we have to use all of these tools together. So attention is not all you need. And same thing with scale. Scale probably isn't all you need. You probably also need some algorithms in there, some, some like, novel design of these things. And so it seems like there, there are definitely, like, breakthroughs that need to be worked on until we fully get to AGI. But it's fun to, to track and I, and I can see it's, it's more definition. It's more like a debate about definition than anything else. Like, they can be correct and Tyler Cowen can also be correct, which is why it's fun to debate this stuff.

Yeah.

And the last rumor that was going around, Elon Musk actually said this is not true, but Reuters did report that, that SpaceX, Palantir and Androl are talking to the US government about a Golden Dome project, which I think Trump mentioned a while back.

He likes the idea of. We know that.

I mean, it's a great brand. What's interesting, I mean, I want to dig into this because we. So, so the, the claim is that they're, they're pitching between 400 and 1,000 tracking satellites, plus 200 armed satellites. So you put a bunch of satellites up in low earth orbit, they track missiles that are potentially coming into the United States. If somebody's sending a missile to, you know, TVPN HQ to take us out, one of the armed satellites would go into action and blow up that missile before it can blow us up. Right. Pretty basic. This is One of those things that comes out and like wait, you guys aren't already doing this? I would really appreciate if this already existed.

I mean some forms of it already.

Exist but, but we can actually go through the whole history of the like domes generally I guess. Because I think it's really interesting if we have some and we have some time. The first guest is coming on at 12:30 and so I think we should run through history of Golden Dome, Iron Dome. What do you think?

Let's do it.

Okay, so the US Department of Defense formally launched the Golden Dome plan in April of 2025. Do you want me to share this with you?

Yeah, that'd be great.

Let me send this over to you in 2025. How do I copy this link? There we go to Jordy. Boom, there we go. And the, and basically the plan is to ring the planet with hundreds of sensor satellites and roughly 200 space based interceptors capable of shooting down ballistic and hypersonic missiles in their boost phase. SpaceX, Palantir and Anduril are currently the industry team. Which is, I mean it's just like a wild combo of companies right? Because it's like all FFs which is why I should, I actually don't know anything about this and you know, I think all of these companies would decline to comment on speculation and I have no inside information here. But I'm excited about this so we're going to talk about it anyway. So of course there are other subcontractors on stuff like this. There's more than 180 firms ranging from Lockheed Martin RTX to newer start startups vying for pieces of the project that maybe may cost well over 300 billion. So golden Dome revives the majority is about to make the loudest gong hit in history if he can't control himself. So do you remember Star Wars? This was Ronald Reagan's 1983 Strategic Defense Initiative. And he was like made fun of for this because everyone was like oh stupid president thought saw Star wars and wants to build laser weapons in space. But like it was actually a good idea. Like a good idea. Exactly. And so this, and so, so, so Golden Dome is kind of like revising that plus what the the United States already has which is called the layered homeland shield. I guess the, the Patriot, the Thaad, the Aegis BMD ground based mid course defense. And so let's go into the Israel's Iron Dome and how that works and then we will contrast that with the American current situation and then where we might go.

Yeah, so I'll give some backstory here. After the 2006 Lebanon War showered northern Israel with roughly 4,000 rockets, the Israeli Ministry of Defense rushed development of Iron Dome, jointly built by Rafael Advanced, Rafael Raphael Advanced Defense Systems and Israel Aerospace Industries, with Raytheon providing US CO production. The system entered service in March 2011 and scored its first combat intercept two weeks later. Quick turnaround. Since then, Iron Dome has logged over 5000 successful kills with a claimed 90% success rate. So those kills are missile kills. So this is a missile defense system, to be clear. So US financing has been decisive, divisive.

Yeah, a lot of people don't like that America's paying for Israel's Golden Dome. But of course there's like all the strategic decision making about. Well, they're an ally in a very complicated area, complicated region. You, you back them. Also, there's a lot of Israeli citizens that come to America. We want to support them and stuff. So we're not going to go into all the geopolitics of it, but yeah.

So Congress has spent about 1.6 billion between 2011 and 2021, plus another 1 billion emergency tranche in 2022.

But I think what should be non controversial and non is that, hey, if we've invested a ton of money in this technology, we should get a claim on some of this ip.

Yeah.

And we should be able to bring that back and it should be able to protect Americans.

Yep.

And I think that that's probably something that most people would be in favor of.

So in exchange, the US army gained two Iron Dome batteries for limited homeland expeditionary use and early experiment and importing allied systems.

Exactly. So they build it there, they test it there.

And anyway, so the key takeaways for, you know, I think, you know, basically the takeaways that, that the Golden Dome will look to implement is software. First design enables basically like rapid updates to the system.

Yep.

Networked launchers, radars and battle management lets operator operators mass interceptors at the most dangerous threats. Basically like conserving and effectively ammunition and just this constant pressure.

Oh, this is. Yeah, this is interesting.

Is forcing iterative improvement in a way that a US system just never would. Right.

Because America's famous for like the exquisite system like the F35 took 2 trillion and like 30 years. Because like, no, it's not like, it's not like, oh, F35s are blowing up and getting shot down constantly. So we gotta make it better.

But it's also like we don't have Canada and Mexico constantly launching rockets into the US if we did, we'd be able to iterate really quickly.

We're in the, we're in what, the fat on the couch era and we're gonna get back in shape.

Right?

And so this is, this is us getting back in shape and so giving a little bit of history on how America thinks about this. I mean obviously there's a, there's a few different layered shield systems that have, that have built up over time. But it all goes back to that Reagan strategic defense initiative, aka Star wars, announced on March 23, 1983. The idea was space based lasers would sound crazy, but kinetic interceptors, which actually makes a lot of sense. And exotic sensor webs to render nuclear missiles obsolete. Congress ultimately spent roughly $30 billion in current dollars on prototypes such as Brilliant Pebbles Miniature Interceptors and Alpha Chemical Lasers. But the collapse of the Soviet Union and severe technical hurdles led to program curtailment by 1993. So of course like can you imagine how difficult it would be to put how expensive it is to put technology, lasers, interceptors, drones, anything like that into space when you don't have SpaceX launching a new rocket every single day? Like you have to use NASA for that. It's extremely expensive. You just don't have the cost, the cost to leo, so you can't iterate or anything like that. And then also a lot of these, a lot of these like, you know, drone based systems were not really developed yet. And so all of it was a little bit too early. But it did seed today's hit to kill technology. Infrared sensors and the political idea that the US could defend rather than simply deter against nuclear attack. Yeah, and so the golden dome has this like kind of potent, this is all kind of rumor at this point, but you can think about two different layers to the golden dome dome like core, so two ring satellite constellations, wide field tracking layer. That's 400 to like 1,000 satellites. CubeSat class, which is like star, think like Starlink in 500 kilometer orbits provide a global persistent infrared coverage PIR coverage, queuing interceptors within seconds of a hostile launch. So basically you put up all the different sensors and then you're seeing is are there any missiles that are launching. And then the shooter level is a larger platform to carry kinetic kill vehicles. KKVs. And this is a cool part class solid lasers. They're actually doing the laser thing. Allegedly this is all alleged, but yeah, a lot destroy can destroy missiles 50 to 150 seconds after boost.

Yeah, and a lot of what the real role of deep tech is to turn Science fiction into reality.

Right.

And so this, this is sort of crazy conceptually, but if it's, you know, if, if effective, it will be extremely cost efficient way to mitigate the threat of, you know, ICBMs.

And, and also there's this rumor that it will be offered on a subscription model. Did you see this?

Elon's like, hey, Starlink is actually a pretty good model. They don't really churn.

But it also makes sense then, as opposed to building this exquisite system like it really is. It sounds funny, but it is a reasonable way to finance this type of development and the ongoing upkeep and the iterative improvement of it. So the Missile Defense Agency issued its first industry sources sought notice on April 4, 2025. I think that's probably what's driving the news today. Calling for concepts that can just, that can demonstrate initial boost phase intercept by 2026 and expanded capabilities through 2030. The Space Force will own command and control. And so, like, the companies that build this stuff, whoever they are, might be SpaceX, Palantir and oral might be completely different companies, but, yeah, they're not going to have their finger on the trigger. Yeah, command and control operates with the space. Yes, because we are a democracy. And, and this was something that was, it became a point of debate with, with Star Shield and Starlink. And so there was a moment where Starlink was so dominant and there was no real path for the US Government to buy Starlink in a meaningful way, like, buy it as a capability not by the company. And so people were saying, like, well, if Elon turns on Starlink in the Ukraine, that's helping Ukraine, if he chooses to turn it off, that's hurting Ukraine or Israel or Taiwan or any of these countries that are in geopolitical conflict. And so all of a sudden, the decision about our geopolitics actually rests with his business decision. And so that is something that should, I think, be decided democratically through America's normal process for how we engage with, with allies and adversaries. It should not be a purely economic consideration for the company that just wants to maximize shareholder value. Because you could imagine, you know, if you're just trying to maximize shareholder value, you're like, yeah, okay, we're going to turn Starlink on for both sides of this conflict because we just want to make as much money as possible. But so Elon got all this intense, like, criticism. Oh, Elon's just playing like, you know, God. And like, you know, he's deciding what's going on with this war he shouldn't have that much power. But I always said like that's not going to be an issue because the US government will just be able to buy it as a capability. And they wound up doing that. And that's Star Shield and then, and then it's actually like a more, more secure version of it. And it's something that the US government then decides and this is going to be the same thing where it's leveraging technology from private citizens that have been developed. But ultimately the decision of how it's used, the command and control rests with the, with the government and ultimately the American people, which is great. So the government will pay an annual service fee rather than buying hardware outright, which sounds funny because now it's like SaaS. But it's way better that way because of course then you can upgrade and you can iterate and you can improve.

Yeah. And these annual service fee proposals seen by Reuters so far, which again Elon denied it.

Yeah.

Suggests a 30 year life cycle that could reach $600 billion, roughly equivalent to three years of the entire US defense budget. So really eye watering numbers.

Yep.

But makes sense in the context of, you know, preventing full scale, you know, nuclear war and having, you know, hundreds of ICBM is flying through the sky is effectively in the interests of all of humanity.

I agree.

So I agree.

Take out all of them. Of course it gets more complicated because like everything that's like the line between like defensive technology and offensive technology is pretty loose.

Right.

So it's like if you can build this like KKV vehicle or secrecy vehicle that can, or late space laser that can shoot down a missile, it can also shoot down like a 747 with the president on it or it can shoot down, you know, an adversary or can conduct an assassination. So like you still have to like even if you, even if you create the best golden dome possible and make, make nuclear war a thing of the past, like you will still have the risk of conflict.

Right.

And so you always need to come back to just like how we actually resolve these conflicts. Interesting to hear a little bit about who, how all these companies could fit together hypothetically. Obviously SpaceX has launched the cheapest mega constellation with Starlink. And they also have the Starlink bus, which is like the platform that Starlink is built on. So they could easily swap out Internet for, I guess it's infrared, and then just start spamming those up there on the subscription. Which is actually how I would describe their approach to putting up Starlink satellites. It is just spamming them up there. But it's great. It works really well. And I'm sure there's a lot of work that goes into positioning them perfectly whatnot. But so they'd be like potentially the prime integrator. The Falcon 9R and Starship launches would be putting up these satellite buses.

Yeah, but there's. This is going to be a huge collective effort. Right. There's so many different primes that are, you know, wanting to participate in this. You have the new Primes, the Palantirs, the Anderils, and then you have Lockheed Martin, Northrop, Grumman rtx, which is Raytheon, Boeing. Boeing has a bunch of heavy satellite experience. Raytheon has a bunch of relevant experience. North Grommet is like, you know, very oriented around these. Yeah. Has built missile interceptor products in the.

Past and collectively and a lot of rocket motors too. So if you want to deploy some sort of missile from the, from like a satellite platform, actually building that rocket motor, they have, they do have a heritage there. There's good things you can say about them. There's things where they're falling behind.

And Northrop actually had a huge explosion. I saw that April 16. Dhruva had a post yesterday. I'll just pull it up on my computer. But he said a real setback for America. This rocket motor plant was such a pillar of national security capacity that Northrop had agreed to be a supplier to Boeing in a competition to build the LGM35A Sentinel, a key part of the US nuclear triad. So anyways, unclear if this explosion was just an accident or if there was something else going on. These types of facilities are super dangerous. But again, this is Northrop and Boeing already being a, that they were basically leveraging this facility to, to contribute to the US nuclear sort of defense apparatus.

Yeah, it's, it can be dangerous stuff. So more than 180 firms responded to the April industry day, including laser Specialist General Atomics, L3Harris for space radars. Everyone shows up, even AWS and Azure. Microsoft showed up, said, hey, we got the data back end covered and it makes sense. This should be bipartisan. It's like protecting us from nuclear war. This is amazing and I'm very excited to learn more about this. And it's always tough because like they are probably not going to tell everyone everything. Right. Because it's going to be classified and like.

Yeah.

Because as soon as you say this is exactly how it works, well, it's easy to start shooting them down and taking them out and defend and figuring out what the, what the Anti missile. The anti anti missile is right. So anyway, you know, it'll be interesting in terms of just the history of missile defense in the 1960s. We have the Nike, Zeus and Sentinel. These are silo based sites and so we gotta fire it off from the ground. 1983 we see SDI Star Wars. The tech was premature, but they did create the idea of like this IR sensor and KKV field which is kind of the modern strategy I think, I think that we're not reinventing the wheel on that. We're just using the latest technology and actually being able to get it to scale. And then of course the iron dome is kind of like the gold standard here until the golden dome becomes the gold standard hopefully because it's been combat validated with 90% greater success. And so I don't know. I think we should keep following this story. It'll be interesting to see where, where it lands and how much we learn. I mean at the very least it will be. I think it might be more of a business story than a technology story because I think a lot of the technology will be classified effectively. But we will be start as. I mean Palantir is a public company so if there is a big award it will show up in their earnings and that's cool. And that will drive the market and that, that's interesting to follow.

Yeah. And it's coming at a very interesting time. Obviously Reagan's Star wars program and campaign was, was made fun of in many ways partly because of the name. Golden Dome will be made fun of too because it's kind of a funny name.

It's almost.

But at the same time it's coming at a time when the commercial space economy is flourishing. We're putting stuff into orbit every technology so much more. And so the timing feels right. And over time this could replace a bunch of systems on the ground that are very, very, very costly and to you know, create and maintain so well.

If you think the legacy primes are going to do well, if you think Palantir is going to do well or vice versa, you can go express your opinion, your indifference, your independently formed opinion on public.com investing for those who take it seriously. Multi asset investing industry leading everything trusted by millions.

You got pretty, pretty much every asset on there.

Pretty much every asset on there. And we got to do another ad ramp. Time is money save. Both easy use corporate cards, bill payments, accounting and a whole lot more all in one place back to back. But we got to move on to.

Johnson card reader here to just swipe.

We have a card reader. We, we ordered one for a shoot that we did and I, and I got some very nice cinematic shots with Ben for the card reader.

There we go. Well, let's talk about generative Johnson Johnson.

So Johnson and Johnson is making a shift to focus only on the highest value generative AI use cases and shut down pilots that were redundant or under delivering. And this is big news because a lot of companies have probably sold huge generative AI transformation projects into all sorts of companies and we'll see how many stick around.

Yep.

And so they used to. Previously Johnson and Johnson was experimenting with generative AI pretty broadly across the healthcare conglomerate and now they're taking a more focused approach and they want everyone to.

Know, let's try a bunch of stuff.

Journal about it.

Let's try a bunch of stuff makes sense. See what's working well today. What would double down on what's first and then churn.

We hate to see churn.

Anyways, so. Chief Information Officer Jim Swanson said the move ensures the company allocates resources only to the highest value generative AI use cases while it cuts projects that are redundant or simply not working. That was a pivot we made after about a year of learning. Swanson said. Now we've moved from a thousand flowers to a really priority, prioritized focus on gen AI. The thousand.

Funny. What a funny analysis.

Golden Dome, Thousand Flowers, Thousand flower approach.

Involved a number of use case ideas germinating from across the company, which made their way through a centralized governance board. At one point, employees were pursuing nearly 9,000 individual use cases, many that were redundant or simply didn't work, he said. And as the company tracked the broad value of AI, including generative AI, data science and intelligent automation, it found that only 10 to 15% of use cases were driving about 80% of the value, he added. Interesting. And I imagine, yeah, I mean, I'd love to know exactly what they're, what they're, what they're using, but you can imagine like, you know, when all you have is a hammer, everything looks like a nail. Yeah, let's throw generative AI at everything. But it's going to be places that are like, oh wait, we, we still have a division that's just transcribing paper receipts or something. Should just get on ramp.

Yeah. So here's where it's working. JJ is drilling down into high value gen AI use cases around drug discovery and supply. Ch Zach Weinberg might put the drug discovery one in the truth zone as well as an internal chatbot to Answer questions on company policy. So hard to know if this, it's.

Like, okay, chat with your company handbook basically, which, that's fine, but I don't think people care at all.

Drag the handbook into Enterprise version of ChatGPT in your Azure cloud and ask it questions. Yeah, not probably something they're paying for. A standalone product for sure. Maybe will long term. It's hard to say.

Sure.

I know there's companies like Glean that have, you know, gotten to, you know, multi billion dollar valuations doing something like this.

Yeah.

Anyways, so it's also just funny because.

You know that like with a company like JJ, like McKinsey was like all over this being like, with like millions of decks of like, let's put it in this, let's slot it in here, let's do all this. And, and, and then there's also, there's just all the forces aligned to do 900 projects. Because yeah, anyone who's at JJ and wants a promotion is like, well, yeah, I'm not just a marketer, I'm a technology enabled marketer and I, my team is using AI. So we're going to be more efficient, we're going to drive more shareholder value. Then, then you have the CEO who's like, yeah, oh, I got to tell Wall street an AI transformation story.

Yeah.

Oh yeah, we're firing everyone. It's all AI. So very interesting. We're not doing it this quarter. We're not firing everyone this quarter. But like AI is coming and you can, you can price this into the stock today.

It's interesting that they used a centralized governance board to lead the Thousand Flowers AI transformation.

Like, it's like the one thing you shouldn't do is just like, instead just, just diffuse the, the research. I mean, I think the way you actually transform an organization is just say like, hey, everyone, like AI. It's the Toby Lutkey approach. It's Shopify. It's like AI exists. Like whatever your job is. Like use ChatGPT. If you need to expense ChatGPT, it's the same thing as like Google exists. If you hired an employee and they didn't use Google, you'd be like, whoa, whoa, whoa, what's going on with this person? Like they need to be googling stuff.

Yeah. One example that is working is a rep copilot which helps coach sales representatives on how to engage with healthcare professionals about new treatments.

We actually use this to coach our sales reps on how to pitch the show to other people that are listening to other podcasts.

Yeah. And I think we have. You know, our sales team isn't as big as J and J, but it's close.

Yeah, right. Dozens, as you.

You know. Yeah, dozens of thousands, I think. But anyways, the company is piloting this.

In its innovative medicine business segment, which develops new treatments for oncology and other areas, and is now working to expand that pilot to its med tech segment, which sells robotics and hardware like hip replacement and lenses. So the rep copilot, that sounds like a SDR but not going all in on the agent motion, more like an.

AI sales manager, maybe.

But I would imagine that what works well in in sales rep copilot is, okay, I just got an email from someone we're trying to sell to. They ask these questions instead of needing to go back to the team and say, that's the thing.

Going back to the sales manager. How would you answer? I guess that's the right question.

Exactly, exactly. And so that's just information retrieval. It's LLMs as a knowledge engine and help with copywriting. Right. Which is like what we know these things are so great at.

Yeah. And then it has a little bit more on the internal chatbot. It says it. The internal chatbot ingests information about company policies and benefits to help reduce the sum 10 million interactions employees have every year with the services team. And so this is just like, hey, am I allowed to take this day off?

Yep.

I already used 14 of my vacation days.

We should actually develop something like this because I'm getting sick of everyone on our team asking, like, how much creatine should I be taking? Like, like, is it chest day or is it back day or is it leg day? Like, you know, if we could just have a chat bot that they could ask all that stuff, it would really.

Am I allowed to work on Saturday? I've worked, you know, 10 weekends in a row and I know it's required that I take one Saturday off every 10 weeks. Can I. Do I have to take it off?

Do I have to take it off? I want to keep grinding.

This is potentially more interesting in drug discovery. The company is looking at whether Genai can help researchers find the optimal moment to add a solvent, turn a liquid molecule into a solid. And they're also doing stuff on the supply chain side, specifically around supply chain risk, which is relevant now given some of the shortages and. And, you know, trade war stuff that's going on. So anyways, the good news is if you were working with JJ and you didn't and they didn't churn probably on the Right. Track, at least. And so I think this will be a good signal. We need more companies to, like, overspend and then scale back to figure out, like, what. What's actually valuable.

Yeah. It's also unclear to me, like, we. Maybe we should try and find, like, some sort of, like, consultant or someone who has worked inside these Fortune 500 companies and kind of seen what is actually working or not. We might need to have them call in, like, anonymously, honestly. But. But I'd love. I'd love to know, like, like, of. Of these, like, for a representative organization that's done, like, a thousand AI projects, how many of those are just, hey, we had our team sign up for ChatGPT Pro versus, hey, we had our team buy a trial with a enterprise like an AI SaaS company versus we built something internally. We had our teams implement something, because obviously a company like JJ has a massive IT team. They have CIO who's commenting to the Wall Street Journal. So clearly they have, you know, the ability to roll out software and automation across that's entirely custom to their business. And. And I would be interested to see, like, what tools are they using, because they probably haven't built their own AI copilot for coding, but are they using Windsurf? Are they using Cursor? Are they using Devon? Like, what's sticking around? Yeah, it's interesting. But, well.

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We got another headline here. The EU delayed punishing Apple Meta. Just before trade talk started. They postponed an announcement that was initially planned for this week. Earlier this week. So the European Union recently delayed penalizing Apple and Meta platforms. Temp. They're just always, always coming after our big tech. I said earlier, I will defend big technology.

You didn't just say that. What did you say, Jordan? I say you didn't say you would defend them. You said you would die for them.

No, I said I would take a bullet.

Okay. Take a bullet. Yeah.

I would probably hold out my arm.

Yeah, yeah, yeah.

And just flex as hard as I could to try to, you know.

Yeah.

Block it. But not.

Yeah, yeah. I mean. I mean, that is the goal of, like, this, the Secret Service. Like, if Sundar Pichai was over there and I was wearing a bulletproof vest. I would dive in front of it for sure.

That's right. That's right. Diving in front with a bulletproof vest.

Exactly. That's the level of dedication. Still a lot of dedication.

Totally.

But you know, it's not.

You're going to get badly bruised by.

That, but you're gonna look like a hero.

Totally.

For big tech.

Anyways, what's new? EU coming after big technology. But they had initially planned to announce cease and desist orders targeting the tech giants on Tuesday and had informed at least one of the companies of that timing. People familiar with the matter said, what are they? They're like, hey, by the way, we're going to send a cease and desist and slap you with some fines. The decision to postpone the announcement was made shortly before EU Trade Commissioner Moros Sef Kovic met with US Officials in Washington on Monday for his first in person talks since President Trump announced a 90 day pause on some tariffs. I think this is a good call by the eu. There's kind of bigger fish to fry right now. And it says, in addition, this week, Italian Prime Minister Giorgio Maloney met with Trump who said he would have very little problem making a trade deal with the eu.

Yep. Okay, so. So the actual cases here, what's going on? Meta and Apple, they're both under pressure from the EU for alleged breaches of the Digital Markets Act. This is a law that seeks to make it easier for small companies to compete with their big tech rivals. The commission opened investigations in March of 2024 and issued preliminary findings in both cases last summer. The cases carry a potential fine of up to 10% of the company's global annual revenue revenue, though people familiar with the matter said that they expect fines would be much lower. But can you imagine that you're vending the iPhone, you're selling iPhones in Italy or something. And because you're not in compliance with the Digital Markets act that says, oh, you got to have open app store competition or you got to let this API work in this particular way so someone can build on top of Apple in a more competitive way, you violate that, they catch you and the fine is 10% of your global revenue, which is like hundreds of millions of dollars across these companies. Like, it is an insane amount of money. But of course, this would all be negotiated and there's a lot of leverage because again, consumers like these products.

Regulators are basically negotiating. We saw the FTC coming after Meta.

Yep.

Saying we want 30 Bs, 30 Bs. 30 Bs. We see you spending on AI capex.

We know you're good for it. Mark, we saw that cubitus on your wrist. Yeah, we, we saw that, we saw that FP Jord. Yeah, give us some of that when flexing goes wrong.

Yeah, everyone just knows. Yeah. And anyways, they say European officials say they won't water down their tech regulations in response to US pressure. But some lawmakers in the European Parliament have questioned whether the cases have become political.

Hmm.

Wonder if they've become political as the EU seeks to negotiate a deal with the US on trade. The Meta and Apple cases both relate. And you covered this already.

So with Meta specifically, the EU is upset that Meta has a policy of you either have to buy a subscription and pay for Facebook or Instagram or you have to allow Meta to use data for targeted advertising. And the EU is arguing this does not comply with the Digital Markets Act. Meta, they said, hey, here's an olive branch. Let's introduce an alternative that allows you to see less personalized ads without buying a subscription. Third option. But they say that's still not good enough. We want you to just show random ads all the time.

I guess it's so wild because that's so harmful to businesses, small businesses, incredibly harmful. It's actually okay. Like Apple, Nike.

Yes.

You know, a big insurance company, a big bank, they have billions of dollars to spend on advertising. They can just basically spend money in a completely non targeted way. And so policy like this over time will just hurt small businesses that you think you're trying to protect.

Exactly.

Even, even companies that would go on to compete with, with these big tech giants are going to struggle when they're like, hey, we have a million dollars to spend on advertising this year and all we can advertise to on Google is just this random audience. And so the ads are going to be terribly inefficient. You know, just CAC will go through the roof. And we saw this with the sort of iOS tracking changes and so anyways, these types of app tracking, transparency. Yeah, all of this is just absolutely insane to me. And well, some people hate small businesses.

And they just want to hurt them.

It's possible that EU regulators, small businesses. Yep. They want to support.

I mean that was the most ironic thing about the whole ATT thing was like it just made Facebook stronger because they were the only company that could actually do machine learning based ads and non deterministic ads. So they didn't need to track you anymore anymore because they had enough data that they could infer that this person wants a Ridge wallet just from what they're watching on the actual Facebook but no one else.

Even on the, even on the consumer side. Yeah, I want ads.

I completely agree with this.

Targeted.

I completely agree with this. Like do not show me ads for dementia, medication or like, you know, I don't know, there's a million things that I'm not in the market for and I just, it's a complete waste of time to show me like even just products that are sold to women, I don't need to see any of those. And all of that's just like a waste of time. And I actually enjoy and get value out of having ads. If I'm going to see an ad, it should be targeted at something. It should educate me about something that I'm already in the market for or considering buying.

And every once in a while an American VC will go to Europe and make a joke about cookies. In the past I've made jokes about.

Cookies.

But it's still just like funny how they're like high level tech policy really works. You go over there and you will spend. If you're just using the Internet. Yeah, I hope you enjoy cookies because you'll be accepting a lot of them.

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So we have, we have new data on Apple in China. They're losing ground in the smartphone market as local rivals gain. The US tech giant dropped a fifth place with a 13.7 market share. They lost its top spot in the China smartphone market, dethroned by Xiaomi as Beijing's consumption boosting subsidies helped buoy demand for cheaper products. The US tech giants share of China. China's highly lucrative phone market shrank to 13.7% during the first quarter from 15.6 a year earlier. That is a pretty big drop.

Yeah.

Apple's been facing increasing competition in China in recent years. Despite claiming the top spot in the final quarter of 2024 with a marginal lead, the iPhone maker lost out to local rivals Vivo and Huawei on annual shipments that year. And it is Interesting. Have you seen any of these Chinese phones? Some of them. I mean it feels like there's like a Cambrian explosion. Like I saw ishowspeed was over there. And looking at this, it's a tri fold phone that basically turns into like an entire tablet but it's almost the same size as an iPhone. Like they're doing cool stuff over there. Like the tech is cool.

I want a phone that's structured like a newspaper, John. I want, I want it to you know, basically fold up like this and then I want to be able to unfold it like this and just, you know, you're sitting in the back of a Waymo.

They're getting close.

So that's where we're headed. I just, I would not be surprised to see Apple drop out of the top five.

Yeah, I agree.

In, you know, even in the next year it just does not seem like they are welcome there despite having their supply chain oriented around it. And yeah, the competitors are just iterating quickly. They have a cost advantage.

Yep. And there's also a major cultural shift in China about like nationalism. Like let's buy, let's buy Chinese made products from Chinese brands.

And it's no longer government subsidies. Xiaomi's return to the top spot after nearly a decade was largely due to government subsidies. So they're just directly subsidizing and that is resonating with just the Chinese citizens problem.

I mean it's funny to compare Apple's experience in Europe where it's basically like an anti subsidy. It's like get out of here. Pay us 10% of your global revenue.

Accept our cookies and leave.

And oh by the way like what has Nokia done in. I mean it's the only broadly European phone company and Nokia is completely out of the game. They're not really producing new phones that are competitive whatsoever.

When you go to nokia.com by the way 1 what do you get? They just the name of the site is just Nokia Corporation which is not super optimized. Apple just says Apple but Nokia Corporation and there's not a single mobile device on the homepage.

Yeah, I think they're out of the game. So it's, it's very odd where, where you know, China has upstart companies that are competing with Apple and they're subsidizing them and being very aggressive to push and win. And then Europe is taking the opposite approach where they're like Apple still is a. China hasn't banned iPhones in China. Like you can still sell them. They are subsidizing their national champions. But at least the end result of that will be more technology, better homegrown competitors. Right?

Yeah.

Versus Europe is just give us 10% of your global revenue. And yeah, we're not going to even try and compete. We're just going to try and tax you. Yeah, it's like, it's a very, very weird strategy.

Well, maybe Harry Stebbings.

Yeah, maybe, maybe someone in, maybe someone in Europe will try and build a phone and take some market share, but it doesn't seem like it's happening.

Yeah, so very, very subsidies are basically oriented towards 75% of the country's entire smartphone user base. So no matter what kind of product Apple releases to try to hit that lower end of the market, they're going to have trouble competing.

So basically if you buy a phone in China, that's under 6,000 yuan, the equivalent of $821.92. $821.92. Consumers like the subsidy applies so consumers can't use the benefit to buy products with bigger price tags like high end iPhones. And so the whole, the whole push will push Chinese consumers to replace their phones with products that cost less than 3,000 yuan, a segment that makes up 75% of the country's smartphone user base. This is also a great industrial policy or economic policy because if you can get your entire, your entire country on phones, on smartphones, you're going to increase, you know, finding jobs, doing remote work like communication, economic activity, paying each other like everything like the smartphone is the backbone of the economy. And so getting everyone in the entire, even at the lower end of the lower and middle class on smartphones, it's just good economic policy domestically. It's kind of like what we talked about in the US where there's this push to get high speed Internet into rural communities. It was an absolute disaster. Instead the focus should have just been, hey, let's try and subsidize potentially smartphones that connect to Starlink satellites. Something like that would have been a much, much more like free market approach. We're getting out out capitalism in China recently. We got to step it up and they're good. Yeah. And Europe needs to, Europe needs to step it up too.

Anyway, Apple is under threat in China. If they don't want to just give up on the market entirely, what should they do?

I'm thinking what you're thinking. They should buy some billboards.

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Well, we're staying with big tech. Big tech is under attack left and right. We've big Google, Meta and Apple are under attack in Europe, Apple's under attack in China. And then Meta and Google are under attack in the US for antitrust. And we talked about this yesterday with Adam. With Adam, which was great, great segment. Go listen to it if you haven't already. But they are the two titans of digital advertising are facing unprecedented legal threats over tactics they use to reach dominance.

And it's wild because I'm sure this will get into it, but basically the FTC and the Justice Department were basically like, let's just, just divide everything up and you attack and we'll attack and you know, they'll be facing an attack from, you know, both sides. So the key points, Google and Meta are facing antitrust pressure focused on tactics they use to grow into tech giants. Google lost its second antitrust case in eight months. Moment of silence affecting its core ad business. Meta faces a trial with the ftc which is seeking to force the company to part ways with Instagram and WhatsApp. So two things here. One, the, the case yesterday that Google lost, or was it Wednesday, losing track of time, is not really its core ad business. Right. This is like the sort of display network business that was impacted. And then Meta very clearly feels like they have a super strong case here because they are fighting over something that happened. Happened roughly 13 years ago.

Yeah. And it all comes down to market definition and they're trying to define the market as what it's like Meta versus Snapchat and like weme or something. Yeah.

We'Ve got to have the me we founder on.

We really do Me.

We. Any. If you've used me, we should we be on me.

We should we be distributing the show on.

Well, it's called the next gen social network.

We gotta get on there, then we gotta be socially.

They've got 20 million people. Cool.

That's pretty good.

Yeah, congrats.

Yeah, but yeah, I mean, the FTC is trying to force Meta to sell Instagram and WhatsApp and I mean those are still intertwined.

I feel like Zuck had a pretty good faith offer half a billion dollars to say, like, hey, let's just make this, let's make this all go away. Right. And they denied it and they're pushing. The FTC is pushing forward. And again, they're trying to ignore TikTok entirely. And TikTok is not necessarily an example of completely organic adoption. Right. They spent billions of dollars on user acquisition. And who knows, if you could start a completely independent TikTok and compete, how.

Do you think that would play out? If the FTC forces Meta to part ways with Instagram and WhatsApp, like, does Adam Mosseri become the CEO of Instagram? Do they try and bring back Kevin Systrom? Are they just like bringing in some McKinsey guy or some HBS search funder?

No, I mean, the thing here that's interesting is, is Zuck made a very concerted effort years ago. Remember the Meta rebrand? Remember when they started rolling out messaging, like, you know, sort of universal messaging across different products? And all of that was in. In anticipation of this type of conflict. And so smart move to get ahead of it and show that, yeah, these products are deeply interconnected. They have a lot of overlapping users.

I would just be very bearish if they spun out Instagram and it went to some manager mode person. Some manager modes competing. Yeah, like, maybe it could win if they bring back a founder, but I would be very, very skeptical of it running well as a business independently without Zuck at the helm. Like, that's the bull case for Reda is that he keeps taking all these risks and building all these different tools and integrating them all in very aggressive ways. It'd be very, very odd. Maybe just sell it to private equity and just like try and squeeze as much cash out of it while they wind it down. Do it for like an asset fire sale. Like fire everyone. Like, that would be the outcome. Like, a lot of that the FTC would really want.

Seems like there's a common thread of, of social network type platforms, just Internet platforms in general. Getting a manager mode operator and just being run into the ground.

Yeah, I don't know.

Aol, Yahoo, et cetera.

There's. There's actually interesting. So Zuck inferred that Snapchat, which he tried to buy twice, the second time for 6 billion, is an F successful as it could have been if Meta had bought the disappearing Photos app. And there's a Rajvir dropped a little history lesson on the Snapchat Facebook tragedy of 2013 that kind of backs this idea up. So Evan Spiegel turned down a $4 billion acquisition offer. Zuck asks for a counter. Evan doesn't respond and moves to close a fundraiser. $3 billion valuation. Zuck loses hope, but makes one last ditch call. Evan hints at wanting $1 billion liquid post tax. Marc Andreessen.

Just pause for a second because it's, it's. Makes total sense. Why not? And it's also very funny.

It's great.

So yeah, could be interested, but like would need to be a liquid billionaire to even consider.

Yeah, I mean we'll go through the numbers, but achievable, Achievable. With what he built, like he deserved it, in my opinion. Mark Andreessen tells Zuck to buy it at any price. Zuck tells his suits to come up with cash and presents final offer of 6 billion. So Zuck starts at 4 billion, raises it to 6 billion. Evan says offer is good, but later turns it down, wants to stay independent. Zuck is upset. Facebook since then up 900%. Snapchat since then up 123%. Both sides would have been richer if the deal happens. But at this point, if, if, if they owned Instagram, Snapchat and WhatsApp and Facebook, like the FTC would be even more upset for sure. But here's, here's the actual email that, that eventually leaked in a, in a legal proceeding from Mark Zuckerberg. Subject re Sasquatch update privileged and confidential. Well, not anymore. It's been leaked onto the Internet because of the lawsuit. I delivered the offer to Evan and he seemed to take it well. He told me that he could get it done and that he'd call me back quickly. Five hours later he called me and told me he was turning down the offer. He says the offer is, the offer is what he wants, but he just wants to build the company on his own. I'm disappointed and frustrated by this. I don't know what else to say to him at this point. We should probably prepare for it to leak that we offered 6 billion for them and all the negative that will come from that. Interesting.

Cool to see the actual email.

Yeah, I mean the big question is like, where would Snapchat have gone if Zuck had been behind it? I think the easy answer is just Meta has been the one company that's really, really been dominant in the post ATT era in terms of driving higher revenue from advertising based on the AI driven ad ad matching essentially. And so even if first off, Snapchat probably would have grown into its own thing and not been as competitive with Instagram over time. So like if he buys Snapchat, does he clone stories into Instagram or does he let stories live in Snapchat as its own thing like that might be. That might have Been some of the, some of the strategy. Eventually stories got cloned into everything. Like even LinkedIn, I think got stories for a while. Remember, remember Twitter had stories for a little bit.

Yeah.

What were they called? Fleets.

Fleets.

Fleets, yeah.

They really didn't take off.

There was like, there was like a three month period where like every social app needed like stories and people were joking. Like now XL has stories and it's.

Interesting to put these numbers into context. So Mark was telling Zuck to buy it at any price. And you know, with six billion dollars eventually being turned down, Clubhouse got a basically four billion. I believe they got a four billion dollar acquisition offer despite not having anywhere near the traction or scale that Snapchat had at that point, which they turned down from Twitter, as everyone knows at this point. And you know, ultimately got cloned. And I don't know the, the latest over there.

What is, what is Snapchat's market cap right now?

They are still a $13 billion company.

So I mean, arguably he should have taken Marc Andreessen's advice and gone back and said 7, 8. Evan, come on, I know you want to be independent, but you must have a buy it now price.

Yeah. And they've just really, really struggled year to date, down 30%.

They did have a crazy spike right. At some point. Yeah.

A lot of people were longing it hard. In 2021, they were at $74 a share at their $83 a share. At their peak, they're down 7, 7.

Bucks a share now.

$7.88 now.

So I mean, I still think Evan Spiegel is like a fantastic entrepreneur and has a really fascinating story. And, and to even compete in that, it's a network effects driven business. Like it's so monopolistic at its core. It's the classic example of a compounding monopoly advantage. And as soon as that snowball gets rolling, it's really, really hard to play in that space at all.

Well, it's also a company that doesn't get nearly the use that many of these other platforms do among our networks. Right?

That's true.

Five years.

Yes, but that was because of Zuck. Like if Zuck had not, had not gone after Snapchat so aggressively, Snapchat would have kept growing and had been the app. Like most millennials, most anecdotally, I was.

Aging out of Snapchat before.

You think so, before it was cloned. I think that a lot of it was like you were aging out because Instagram was effectively on the defensive and it was working. It was like, yeah, you have a stronger network over at Instagram and they have all the same features, so why would you open that other app? But I agree. I went through the exact same. I went through the exact same experience where I was on Snapchat for a little bit and then eventually Instagram was good enough for everything and so I went back and then I never really opened Snapchat again. But I don't know. We'll figure it out. It is fascinating that Snapchat was able to hold on to the users that they did. It wasn't, it wasn't declining in user base. It was just kind of flatlining. And that's the same thing that happened with TikTok once. Zuck really moved aggressively on reels, but they are stuck in this interesting place, which again, it's a $13 billion company.

Yes.

So at this point you have to ask the question of do they get bought by a foundation model company?

Interesting.

You need more distribution. If you're not like Llama is aligned with, with Meta and Instagram Xai is aligned with X Anthropic. Google has, you know, YouTube and Google search for distribution. Yeah. Maybe you take Anthropic and put it together with Snapchat. That'd be interesting. Dario. Just. No, I just wanted to work on safety. Now I have to work on viral TikToks or viral Snapchats. I don't know. It does seem like it's interesting. It's like floating out there as this, like pretty solid platform and distribution. And they have a lot of tech and a lot of interesting ways to push content.

The other issue with Snapchat from an acquisition standpoint is even if you're a foundation model, let's say you're massively loss making foundation model. Snapchat is also losing. They lost $700 million in 2024.

Wow.

Despite being how many years into the business. Hard for a CEO that even wants massive distribution among a younger sort of cohort. Still, it's hard to say, is it going to be worth it to have that be my problem now?

I mean, if AI allows for better monetization and it turns Snapchat into a stronger engine. Part of the reason Snapchat is not monetizing that well is because of things like ATT tracking, transparency, harder targeting. But maybe you start, you know, inserting chatbots into the conversation and driving more personalization, better targeting, better monetization through that.

I think the question just comes down to where is the consumer value for the anthropics? The OpenAI's the GROKS etc really going to come from. And I think there's a good argument to say it will come come from the sort of personal assistant capacity. If Snapchat is big on college campuses and with high school students and things like that, is Snapchat suddenly like trying to force an LLM, Forcing kids to say like, hey, I know you're in here to talk with your friends but like why don't you use us for your homework? Yeah, like maybe that works. Or maybe they're just like, yeah, when I'm on my computer I use ChatGPT and when I want to talk to to my friends, I. Yeah, it just.

Like I still think like the X X AI integration is actually a pretty good case study for AI in a social context where you see someone post something and you want to fact check it essentially or get more context around it. And so you just click a button and so I could imagine you're watching content on Snapchat and then you click a button and you're dropped into an interface where you're dropping. Discussing that with the LLM and that could be somewhat valuable. So you see a viral video for, you know, a handbag, click on the chatbot. Get more context on the handbag industry, what the different options are. Maybe there's a, there's an agent that helps you buy that and you check out all in Snapchat and it's becoming more of an E commerce engine.

Yeah.

Not sure.

Maybe Snap's one of those companies that always. And Evan, I would love to get an up.

Like it seems like he just loves running the company still. It seems like even though, yeah, maybe financially it wasn't the best decision not to sell. Like he probably could have gotten a bunch of Meta stock and then 10x that 10x that is the mean exit again.

If he just got the 6 billion.

If he got a billion, he could have gotten a billion in meta stock. He could have gotten a billion in meta stock. Like for sure. At the 6 billion price based on what he owns. Like he could have gotten a billion in meta stock and then he. And then the stock price would have actually 10x and he would have had 10 billion. It's crazy. And then he just has 10 that 10x that three more times and he's trillionaire.

Yeah. So yeah, the math is like pretty simple.

Yeah, the math is pretty simple. More people should be doing this.

But no, Snap's just one of those companies. I mean, we got to get the full update from Evan sometime.

Yeah, yeah, I reached out to his team to try and get him on the show.

I really think that it's a company that has consistently shown so much potential, potential spectacles, VR shopping, you know, early AI avatar, you know, and never has like quite. They just haven't hit a home run on any of those.

Yeah, it is interesting. They, they have like enough resources because it is a ten plus billion dollar company. There's a lot of cash sloshing around so they can go and do a VR project. But Zuck has, has 100 times more resources. Right, because he's a trillion dollar company and so it's literally 100 to 1 fight on everything. You want to train a model. Well, Zuck has a hundred times more resources. And so Evan for a long time was, I mean, I think still on his LinkedIn he puts like, I'm like the VP of ideas at Meta because his whole idea is like he comes up with the ideas and then Meta clones them and it's like, yeah, but when you have 100x. Yeah, but when you have 100x the money to spend, you can actually win in those markets sometimes. Anyway, you want to read this post from Ryan Peterson?

Yes. Ryan says bull market are n for the number of business people admitting to Customs Fraud on LinkedIn.

So a lot of people are saying, oh, I figured out how to get around the tariffs. Basically, it's like, no, that's not how it works.

That's not how it works.

You can't just figure out a workaround. You have to pay the customs.

No, I talked to somebody that works in apparel manufacturing and they're like, everybody's just working a way to figure out loopholes, a way to effectively show that their cogs are maybe lower than they actually are. So the tariff is not as substantial. So folks, if you are importing products to the United States, why don't you go and just talk to the Flexport team before you think you. You cracked the code?

Yep.

They will help you out.

Don't skimp on your customs bill. Don't skimp on your sales tax. Go to Numeral hq. Put your sales tax on autopilot.

You would be crazy not to use.

Spend less than five minutes per month on sales tax compliance. Go to Numeral hq.

Benchmark Series A. That's my favorite, my favorite line to just sprinkle in there.

I love it. Well, let's move from Benchmark over to Sequoia. Andrew Reed says founder to their therapist. Hey, look, I want this to be more of a conversation than a presentation. Please jump in with questions anytime.

Classic board meeting.

Clearly takes a lot of pitches. Yeah. When you're pitching there, I don't think you have to say that to make it a conversation. You should just actually have a conversation. But it is a little bit of an art.

Yeah. I mean, the right approach generally is explain very clearly what you're doing in about three to five minutes and then talk about it. Yeah.

I told you about that founder I got on the phone with and he spent. I was eating lunch and I just put myself on mute and he just talked for 20 minutes straight. Great. And at the end I was like, hey, like, I'm not an investor, I'm.

Not on the investing team.

Yeah, founders, fun. And he just did not understand that. And I was like, I should have jumped in 15 minutes ago, but I was just eating. So I was like, okay, just keep talking.

Steak doesn't eat itself.

It was wild. It was very funny. So, yeah, don't make the mistake. May actually make it a conversation more than a presentation. People like conversations. People hate presentations. Stick to the. Stick to the conversation. Aaron Harris gives a shout out to Sequoia with some best practices for VCs. I think everyone should probably follow this. The truth is, this isn't complicated. One, make the calls you say you will to schedule the meetings you say you will on time. Three, if you ask for a data room, actually look at the data room. If you ask for customer references, do them quickly and promptly. If you want to pass, you have to tell the founder. You can't just whisper it into your pillow. If you want the deal, chase the founder. If you want the deal, don't disappear for a few days. Be extremely responsive. Yeah. If you can't do that, you're not going to be competing. This isn't just a Sequoia thing. I think all the best VCs follow the same playbook and that, like, I mean, it is crazy how bad some VCs are at passing. They just cannot bring themselves to do it. And it's like, it's like pretty easy part of the job.

Unfortunately, we're going to.

The hard part is picking the good companies. The hard part should not be just saying, like, yes, I have enough conviction to say, like, I'm passing on this round. Like, go find someone else. There's a million VCs. Like, no one's going to be, like, forever.

Every now and then you'll see like some exchange where a VC passes and then the founders, like, basically like, start swearing fu all this stuff. But those founders don't Tend to go anywhere at all. And, and usually founders are going to really respect just like kind of really direct prompt pass.

Yeah.

Of course most of the big funds now are very much multi stage and there's not a lot of value in making enemies.

Exactly.

Anyway, we have a post here from Architectural Digest.

Oh, you want to do this one?

Okay.

Yeah, let's do it.

Yeah, let's pull it up. I just thought this was a fantastic house.

I wanted to look at this house because I was, I was looking for, specifically for the bed. I wanted to see if the bed had an eight sleep on it. I don't know if the photos just doxed the bed that Dan Romero, the founder of Farcaster sleeps on, but he does have a fantastic looking house that's been profiled in Architectural Digest. I did a lot better last night. 8 hours and 11 minutes, 100% sleep quality. The routine still off because I'm all over the place, but 91, how'd you do?

Let's see.

And you know you were talking trash to me. You beat me. Of course. You got a 100. Let's go. Yeah, you, you're talking. Oh, just beat me twice. Just beat me twice.

I.

You beat me once and then I beat you twice. You beat me once and then I beat you twice. Well, I have twice as many children. Right. Or young children, so it makes sense.

Okay, okay. You're trying to, you're trying to.

I just think, I just think like.

You have three kids. I have two.

Yes, yes. But. But the young ones are the dangerous ones. Yeah, the young ones are the ones that kill the sleep score.

Those are the wild cards.

So when you have two young, young ones, that's two extra bad nights of sleep. And so I think the ratio of good sleep here in this, in between me and you, it's actually completely understandable.

I need a button here that just says giga excuse.

Giga excuse.

Anyway, anyways, Architectural Digest did a fantastic.

This was a really cool story. They bought four. How they bought four houses and merged them all together in some mega compounds. It's pretty cool.

I didn't realize in la I used to live on the street. Same street. And this house just looks absolutely phenomenal. They did an amazing job with it. Dan and his wife, who I haven't met, but she's Julia de Wall. Julia.

Founder of Antares Nuclear. Very cool. Nuclear.

Very cool. I think she was at SpaceX for a long time and they just did an incredible job with this and it's very cool.

Let's hear it for A beautiful house. We love to beautiful house. Overnight success. Anyway, go to eightsleep.com 5 year warranty, 30 night risk free trial free returns, free shipping. They got the Pod 4 Ultra. Check it out.

I loved how you turned an ad home feature into an eight sleep ad. That was just phenomenal.

That's all that matters.

Well, I have a post here from Sean Frank. Yes, I believe Sean Frank is in the YouTube chat right now. Just hanging out really. He says second order effects. Talked about this on a call with Ryan Peterson today. But ocean freight out of China is capital D E, A D dead prices should collapse, right? Well, it is so dead ships aren't sailing. They're just canceling the voyage instead of losing money on the cargo. So ships are waiting around for weeks waiting to fill up, driving up the cost costs to get an actual. To get on an actual departure. Ironically, freight costs out of China are peaking. So interesting. Weird second order effects. And this again is little word play there. Peking.

This just king China.

Yeah, this just makes it even harder. If you're, you know, manufacturing products in China and needing to get them to the U.S. not only are your actual effectively your cogs going up due to the tariffs, your, your, you know, transportation costs are going up as well.

Back to three kids in a trench coat walking through TSA security with all your goods. That's the way you get stuff out of China these days. Fly there. Yeah, I don't have 75 iPhones on me. Don't worry about it. I'm all good.

Trench coat with. With a bunch of iPhones.

Yeah. I don't know, it seems rough. I have not tried to get anything out of China. Hopefully we can manufacture all our merch in America. We did get this giant gong which we have not revealed yet. I think it came from China.

It may have been. The gong would have been hit hard except there was a gift.

So yeah, we'll reveal it soon. We'll reveal it soon. There's a time and a place for that. It's so loud.

It's way too loud.

I was dying laughing.

Anyways, we got a post from Yasine. He says, girl science is real. Manifest in manifestation is real. It works. What else are girls right about? I'm going to start looking into astrology. Maybe I should listen more.

Yeah, I've been, I've been long on astrology for a long time and. But my thesis was like you can actually get to the same conclusion via something that feels more like boy science, I guess, which is that. So what is astrology? It's like if you born in this month, you have a certain personality. Right. And that seems like weird, random. Like why would it be that case? Like is it really like the moon and the stars in the certain alignment, like makes who you. Who you are. Doesn't really, doesn't really track if you're like a science guy. But I always thought about it like, well, if you're born during like tax season and your parents are stressed out about tax season and that's your main memory of like your birthday, well, could that make you more neurotic about money? Like, probably. What about if you're born during Christmas and every Christmas season you're like warm mead.

Yeah.

Or, or, or like there's all these difference. Even just being born in the winter and spending more of your life in harsh winter conditions and, and having more rain, more gloomy days be imprinted on you. Could that make you a gloomier person? Like, that's certainly possible. Right.

You might have cracked the code.

And so, and so I always thought that like the, the astrology thing, like it's, it maybe isn't straight up like this moon and this sun and this star at the same time, but just the idea of like when you're born, that affects you. Even you look at the NHL, the hockey, hockey guys, many, many of the hockey stars are born right before hockey season starts or something like that. So that they're older, so they, they're bigger on their young teams. And then they outperform again and again and again and then they, and then they get reinforcement on that. And so like there's a, there's probably like, like there's, there's more. I remember on my high school football team, the best guy was born in July and was really old for the class and the worst guy was born in September and was really young for the class or something like that. You know, it wasn't worse but like, like, you know, just being a year bigger a year.

There's no. If you really care about your children's athletic pursuits.

Yeah. Hold them back. Right? Hold them back. And there's all those things about like, oh yeah, there's a foot. I remember there's a football player in la. This guy, I think he went to go play at Notre Dame, but he was like driving himself to pee wee football games because he'd been held back so much. So he was 16 in like 8th grade. He was like a 16 year old 8th grader. He should have been like a junior, but he was like amazing because he was older. And then there was all those, like, all those debates about the baseball players who came from other countries and they'd, like, fake their baseball, fake their birth certificates. So, like, it's very clear that, like, when you're born, affects, like, how you accelerate in different.

My parents are doing. My parents are doing that with YC. They say don't. Don't do YC until you're, you know, 60. Yeah. Like, wage. I mean, we know accumulated, incredible, immense knowledge in a network.

Yeah.

Come into YC, get the check, raise $200 million in the first week and just steamroll the class.

Same. Same thing about the, like, the teal fellows. Like, people are always trying to, you know, kind of reinvent themselves at age, like, 38 and be like, oh, yeah, I dropped out of college. Like, let me go through a teal fellowship. Right. And it's all just a ruse, but it's effectively like, holding yourself back. If you hold yourself back and you're like, like, yeah, well, I had a career, 10 years on wall Street. Then I went back to college undergrad, and then I dropped out of undergrad for Thiel fellowship at age 36. Like, all of a sudden, everyone's like, wunderkind. He's amazing. This guy is incredible. Like, he knows he has encyclopedic knowledge of business because it feels like he's been on Wall street for a decade. But he's a teal fellow. He's super young. How old is he? Oh, oh, yeah. 24. You know, people lie about their ages all the time, you know, and this is kind of. This is all. This all related to. It's all hearsay to astrology. Anyway. I think it's. I think. I think Yoxine is onto something.

Anyway, well, I'll be right back.

And we have our first guest, actually, two guests coming in to the temple of technology. We got Daniel from Checker and Ryan from True Work coming into the studio to discuss a very cool merger that's happening, an acquisition. So Checker, C H E K C H E K R C K R Checker. Employee background screening for companies. Streamline your hiring with the fastest, most accurate background checks. So you've probably run into these background checks not just when you're hiring on for a job, but also this was a huge thing during the. Those marketplace boom of you want to put your product on or your. Your house on Wander, for example. Well, they're gonna want to see your id. They're going to want to know who you are. Same thing with your car on Turo. They're going to want to make sure that you have, you know, they know who you are. Even Coinbase is a customer of Checker here. And so when you go through these, the KYC flow of Coinbase, Checkers, the company that helps Coinbase understand the ID verification, all the document verification, Coinbase didn't have to build that in house. Instead Checker built it and sold that into DoorDash, Fenwick, FIFA, Harris, Hot Topic, Instacart. Wow, they're really in everything Domino's uses Checker. That's cool. Anyway, and the deal that was announced.

Was announced yesterday morning.

Yeah, let's break that down. Checker, True Work deal. Let's see. Checker requires True Work in. It was an employment verification rollup. I'm getting a pay wall on Axios. Let's see if there's something else we can do. Big news. Ryan Sandler, he writes True Work is being acquired by Checker. Together, Checker and True Work will achieve the vision of a truly one stop consumer verification product. When Ethan, Victor and Ryan here started TrueWerk in a back alley office in the Mission in 2017, it was a dream to get to where we are today. Over the past eight years they've grown as an incredible team to over 100 employees. Pretty big company. Raised five funding rounds, called six different offices home operated in three cities, had two name changes and most important helped millions of consumers get approved for homes and apartments. True Work now services thousands of customers from the smallest family owned businesses to eight of the 10 largest mortgage lenders in the country including Rate, PennyMac and Fairway. We've gotten to the scale only because we are obsessed with giving our customers the highest completion rate and accuracy in the industry. Today marks a major milestone, but the journey is just beginning. I'm excited to see True Work and Checker continue pushing boundaries of what's possible. Together we can unlock endless opportunities from powering Checkers, background checks with True Work employment data, to expanding Checker into new verticals like mortgage and property management. It's going to be an incredible journey ahead. So.

Well, looks like we got both of them.

Fantastic. Let's bring them in. Let's bring them in. And I'd like you to kick it off with a little bit of an intro. Get the background from them and I will be right back.

Sounds great.

Yes.

Okay. All good. Sorry, there was a Google Meet link in the same invite. I clicked on the Google Meet, not the zoom.

That's on me. Sorry I messed it up. How are you guys? Exciting week? Yeah, great to Meet and great to see you Ryan.

Good to see you.

It's been a long journey. Why don't you guys give your own kind of quick intros and and then John will get back and we can go from there.

Great.

Ryan, cool.

Yeah. Ryan here, founder and CEO of True Work and Jordi, it's great to see you. We started True Work eight years ago, grew it to quite a large company and excited to see the vision really continue and accelerate under Checker. So I'll let Dale and show himself.

Awesome.

Yeah. Hey guys. Yeah. Daniel here, founder and CEO of Checker. We started 11 years ago. We invented the API for background checks and verifications and so we've been pretty big in the employment space and verifications for employment, access to marketplaces and I've known Ryan and the Truck team for many years as well. I was an investor in there in their B round and been following the journey and and we're excited to announce that our teams are going to join forces and we can continue to build the product and platform together.

Amazing. Did you know when you were investing in the Bee, did you have any idea that your guys journeys would really intersect at some point? I'm curious when that conversation or that idea even popped into your head.

I mean I love this space because I love APIs and data products and verifications. I wasn't sure if it will ever intersect at some point. I thought the challenge that they're taking was great then. I think it's only in the last, I would say maybe in less than last year that we started thinking that that could align with our long term data platform vision.

Awesome. Talk about I guess the last your guys opinion the last few years. I know checkers more on the HR category. True work, more of a fintech darling. But Ryan, how was it the last few years navigating all the ups and downs to get to this point?

Yeah, we saw immense growth during during COVID with home buying sprees and once the interest rate went up, you know, we definitely had to navigate a higher rate environment that meant lower volumes for mortgage lenders. We expanded into other verticals like property management that was a little less cyclical.

But we were able to keep up.

You know, really strong growth despite the market that we're really proud of. And now there's a way for us to expand it to even more verticals like back on Share Check.

Can you talk a little bit about the different tiers of verification and kind of like the different pools of TAM that you're going after together? Like I Started a nicotine product company and we need to age verify. So we do background checks loosely, we do ID verification, but it's sometimes like a $30 checkout. So, so we need to be under a dollar per verification versus if you're hiring some engineer and you need to verify them, that could be hundreds of thousands of dollars in value, essentially totally worth paying, I don't know, ten hundred dollars per verification. What are the different pools and what's most exciting, what's the biggest TAM and how do you kind of divide up the market?

Yeah, yeah. So we're going after over a $50 billion TAM on different types of verifications and identity products which like I started in the 14 plus billion dollar employment market. Ryan and team, they've been going after financial underwriting, property management, which is also, you know, 12 billion plus TAM. We also are going after the risk and fraud market in TAM which we also size at about $10 billion, you know, specifically competing with companies like LexisNexis in financial fraud and financial risk. And then we also have a nascent consumer offering and product that's going quite well and that's also a multi billion dollar theme. So yeah, we're quite busy. And once we start to build a consumer driven profile with verified credentials, identities, employment work information that can be used to sort of lots of use cases in different industries.

Can you talk about the war between artificial intelligence here? I saw a post recently saying, oh, the new ChatGPT images, you can generate a fake receipt, you can generate a fake ID and use that and upload that at the same time. I'm sure you can use AI to weed some of that out. What technologies are the most interesting to you today?

Yeah, so I mean Ryan's product and ours, we've been more on the data side, which is a little bit harder to fake by AI. I mean AI can fake anything. It's just a question of cost of the bad actors. How much money are they going to spend to try to do fraud? So we're not focusing on taking pictures of driver licenses. I think that's going to become very challenging over time.

Okay.

We're focusing more on verified data sources from government signals like the dmv, from payroll companies and payroll records from employee records. So we stitch together different verified data sources, also consumer generated data. We triangulate it, we score it, we verify it. And so that's a lot of our approaches that are a little bit more resilient, I would say to AI fraud frauds. We also both in our products have documents based verification and processes in case there's no data available on different systems. And we also use AI to combat AI fraud on documents. So it's definitely multi pronged strategy. And AI I think is both an opportunity because it's going to create a lot more fraud and problems for customers. So it gives us a lot more work to do. And at the same time it's an opportunity because we're going to use AI tools and technology to combat AI fraud.

What is it like working with the DMV as a data source? When you hit the API, do they make you take a ticket and wait for the response or is it a little bit faster on your end?

Yeah, and I'm curious about the evolution. I imagine when, when Ryan started true work and Daniel when you started Checker even farther back, I imagine there was things that you had to do with humans that you maybe anticipated that you could do with AI at some point but weren't immediately possible just given. Now we have products like Computer Use that could sort of like navigate systems that don't necessarily have APIs.

Yeah, I mean for us, like we, you know, as Daniel mentioned, similar checker, we try to get our data from as automated of sources as possible, like directly from the payroll system, directly from your bank account, et cetera. But in some cases where, you know, you work at a mom and pop store and there's, there's just no other way to access information. We have to get in touch with the HR department, we have to, we have to get verified data back from them. And it's a mix of automation and manual work. But there are some HR departments that, that just only use a fax machine, for example, they will only respond to fax, which is crazy. And so we've had to kind of build a lot of automated flows on top of these manual processes. AI LLMs are definitely making that easier. You can automatically send a fax, email, communication, even make a phone call to these teams in an automated way. So it's changing, but there are still a lot of these businesses that are really stuck in the legacy past.

It's really funny to be using like the future of technology to work backwards with.

I mean that's like every SaaS company, right? Like they all build on top of these like archaic systems. What's your take on eyeball scanning World coin? Is this the future?

I was going to ask.

You're going to ask that?

I imagine every time you guys see somebody walking around with an orb scanning eyeballs, you're like, that's cool. But you can also see sort of triangulate personhood, but they're less focused on the US market. But I'm curious how you guys think.

Yeah. What do you think of the far future of verification?

No, I think on identity, I think we're laughing about it, but I think in person is going to become important when you want to, want to have the best assurance because online will be able to be faked so much easier and cheaper. So I think there's going to be actually more. It depends, it depends on the use case. But if you have some very, very important transaction like getting a passport or very important points, you still are going to need the biometrics in person. It's going to be hard to fake that. So I think we'll see more in person use cases and probably in the identity stack, more solutions. The other thing that I'm bullish on is electronic driver licenses and wallets. You know, like Apple and Google are starting to have your driver license in your wallet like Apple Pay. And I think, you know, and the government, especially in Europe and other countries, they're moving to mobile driver licenses that connect to the government. And if Apple and Google are, are opening their SDKs and continuing to build them.

Right.

I think that's going to be a more elegant solution than scanning your picture of your driver license, for example.

Yeah. How do you think about, I don't know, the cost curve on this technology? A lot of people are complaining about the dead Internet theory. All social networks will just be filled with spam and bots. Is there a world where you can get this to a scale where it's so cheap and effective that we can can reliably put an end to the bot problem on the Internet? Or is that just intractable because it's like a capital fight?

No, I think the cost is definitely going down. I mean, just to give you an example, the verifications Ryan and I were doing, they used to cost tens of dollars because a lot of human labor with AI and automation, we can now automate it end to end and bring it to pennies in terms of cost. Many of them, for example, do the criminal checks. We can do it at very high scale, very low cost, and that allows us to open new use cases, like not just hiring an engineer, background check, but we can provide safety on online dating marketplaces, car rental marketplaces, home sharing marketplaces for a fraction of the cost. And it's an instant product. So with technology you can lower the costs, you can make it instant, you can open new use cases. So I Think, think we'll be able to do similar things also on risk and fraud over time.

Yeah, we see this with like ramp often looks at like the B2B trend report of where companies are spending more money than ever before. Do you have data like that as well? Because I see on your website like, you know, you're in gigan marketplace, staffing, hospitality, retail, manufacturing, healthcare technology. Do you have an idea of what industries are doing like a exponential growth in verification, I guess like ours quickly.

And you add Daniel, like, we have a pretty good view of the mortgage market. Like mortgage lenders, thousands of lenders on platform. So we will see pretty early if volumes are going up or down.

Sure.

I think what's interesting, these other verticals, like property management, like we are seeing a huge uptick in using technology here. I mean, I mean 90% plus of property managers were using very manual processes. Hey, give me your pay stubs, give me a tax return. And you're seeing real momentum in that space of folks bringing on AI and automation.

There was this tweet a while back that we talked about something like, you'll meet your acquirer like four years before the deal gets done. Something like that. How'd you guys originally meet?

That's been true for us. Right, Ryan?

Yeah, exactly. You know, Daniel and I got connected, I believe by a mutual investor. And, and you know, Daniel's been incredibly helpful. Just obviously really close to the space invested in our Series B about four or five years ago.

So.

Yeah, and we're both part of Y Combinator, so, you know, we are well connected with wise founders.

And so Gary Tan wins no matter what. I, again, another, another million dollars for Gary. I love to see it. That's great.

It's great. And it's been great to just work with other founders. You know, I think there's, there's lots of small YC companies who, you know, some of them are going to break through. Some of them, it makes sense to join forces and build products together. So YC founders working with YC founders been one of the most, most fun thing for me to do.

I think a lot of people don't often get like the inside story of like how an M and A event comes together. Can you give us some color on like, how long the deal took? Who were the parties in the room? Was it just handshakes over dinner and steaks and Dom Perignon or was this in a boardroom with all the lawyers and you're screaming at each other, what happened? And then I also want to go through the post merger integration stuff. But let's talk about the anatomy of the deal first.

Yeah, we can share some story. Ryan, when did you go on that walk, Ryan?

I think it was July of last year. So it's been quite the long process. About 10 months.

Overnight success.

That's great. And yeah, I mean, like. Like, how do you build vision? What are the. What are the hurdles that you guys have to overcome to kind of get a deal done? I think a lot of founders are open to acquisitions, but what are the parameters that you guys were thinking about that and the discussion points that led you to think that this would make a lot of sense? Sense?

Yeah, I think. I mean, one thing I was really impressed by how Daniel and team approached it is I think it really started a lot with the product. And is this a product that works really well? Is this something that we want to buy? And, you know, there was testing of the product and our completion rate and how it could potentially look like a part of the checker environment. And I really appreciated that as like one of the first things.

So are you both based in San Francisco?

Yeah.

Okay, so you just went on a walk. Where was the walk?

Specifically around my office right here in Montgomery.

Yeah.

Very cool. So the deal comes together. What does post merger integration look like? I imagine that there's, you know, teams can work together, you guys can merge offices, you can go into a new office together. What are you thinking? What are the hurdles that you both want to overcome?

Yeah. Yeah. So it's still very fresh, right? I mean, we literally signed. It was a bit of drama getting all the signatures on Wednesday evening, like less than two days ago, like at 2am the last few days were a lot of lawyer calls, like more than my entire life. Like, I have enough lawyer core that.

I want to do more.

Like, but on, like, small details that are not very important. Like, we're. Both sides were like, let's. Let's get it done, guys. You know, it's fine. It's just like legalese. So it just got signed and then we just announced it yesterday externally and to our employees and everything. So it's still very early. We've done six different acquisitions, bigger and smaller over the years, so kind of trying to learn how to get better at it. And a lot of acquirers mess up the acquisition, as you know. Right. Like a lot of company, it's a failure because mostly because of the acquirer just not. Not doing the best to welcome the team and to continue the growth and the business. So. So our top priorities like, to continue what's working at Truark. A lot of things are working. We want to accelerate their growth and give them more support. We don't want to suffocate them in a bigger company. So I think that's been early alignment with Ryan and Ethan and Victor and the team. And so also the rationale for the acquisition is both we tested their product and their employment verifications are 10x better than what we have. So it's going to. Their product is going to make our product much better for all of the customers. And we're excited to expand into the financial underwriting space.

Sure.

So double rationale. And on that, they have.

Yeah, it's cool to. It's cool to think about. You know, I can imagine you guys are in a much better place to do this extensive diligence because you have such a, you know, similar and potentially overlapping businesses over time than even somebody that'd be writing like a note, figure check right on the VC side, just because who's going to be able to get into the weeds more and really understand the product? So it's a huge vote of confidence in the platform.

Yeah.

I remember hearing a story from a lawyer about getting a signature from a VC who was literally. This is not a joke, literally on the ski slopes, and they had to fly someone out with the paperwork to get them to sign at the top of the hill because they were on vacation. They're like this. You have to sign this day. This is super important. So I'm sure. I'm sure there's a lot of drama and I'm sure there's going to be a massive legal bill for you, but good luck. I think it's going to work out. Obviously, it's a lot easier when the companies are growing. Right. Because this doesn't become about like, oh, let's chop it up and like, really cut costs. It's like, hey, we're all growing together. This just will accelerate things. You're both private companies. Is there like an FTC approval process for a deal like this, or is that just something that doesn't even come into play at this level? Is Lina Khan punching the air watching two companies merge even though both of you guys seem pretty happy about this?

Yeah, I think this one was below the threshold. We've had it for previous, bigger acquisitions.

Sure. Yeah. Is there any regulatory process? How do you even think about that as a startup? I mean, we've all heard the story about the big ones like the Figma, Adobe, back and forth. They're still Litigating Instagram and Meta right now. What advice would you give to founders as they're growing to think about acquisition and merger and acquisition strategies broadly in the regime as it's evolved over the last few years?

Yeah, I think M and A, and I was talking to the M and A bankers last year and this year and the trend M and A with the big, big, big four tech companies like Amazon, Google, everything has been very difficult, especially in the last regime. Lots of deals canceled and everything. I don't know for right or for wrong. You know, I think it is important we, we are startup guys. Like we root for new startups to succeed. Right? I think we, that's what we like to do. But I think in, in the opportunities are for small and medium startups to join forces and do M and A. And I think it's a good M and A market right now. The roads to IPO is longer than ever. The bar is higher than ever. I mean, the IPO window just got shut again. And even before that, you know, experts and friends and people are saying, like, hey, even $500 million in revenue, it's not strong enough these days. You want a billion plus in revenue, super strong growth, super strong profitability, super diversified business, very high bar. There's very few companies to get to that level. And so even for us, you know, I think the opportunities, like we have a big vision, we work in the data and identity space. What other startups can kind of join adventure and we all work together to be a bigger, stronger company and qualify over time.

Yeah, yeah. Ev Randall was talking about how he pulled up a screen of SaaS companies with over $500 million in revenue that are public and there's, there's hundreds of them now. And so just as a public markets investor, you can kind of satiate your demand for SaaS companies in like almost any vertical. And so the bar has never been higher. I mean, you mentioned that like the M and A markets are heating up. Is that, is that, are you looking backwards towards a year ago when this start process started, or is this what you're feeling even this week? Because obviously there's been some market turmoil. Do you think that the mood in Silicon Valley, the mood in San Francisco has shifted at all around M and A? Because obviously Wall street reacts much faster with like the, the IPO window is closed, like as of a week ago.

Well, it might be open again, it.

Might be open again. Who knows? It changes so fast. But I feel like in Silicon Valley, the MA market moves much more, much more slowly as VC funds scale up and scale down, obviously there's, there's still growth funds that are getting bigger than ever. What are you seeing in terms of M and A over the last year and do you think there's going to be a shift this year?

Yeah, I mean I think it's from the seller side. There's going to continue to be a lot of appetite because again the valuations were so high in 2021.

Sure.

It's really hard to catch up especially when you're raising at 100 times revenue multiple or things like that. If the scale is not there, profitability is not there, companies might, it's really struggle to fundraise more. So I think we're going to continue to see companies interested in joining forces and demand. On the seller side that started over a year ago and it's continuing today. I think on the buyer side I have seen some anxiety in the last few weeks from investors. Should we really do M and A or not? It's scary out there. There's anxiety and so it's always a big investment. So people don't want to invest or take risks. Risk when things are scary out there. But from our perspective, I'm fortunate. We have a strong financial position, strong long term investors and we continue to win for it. We did that M and A because it's the right thing to do in the long term. So we're really playing the long term game here.

Yeah.

Love it. Last question. I have Ryan. Is there one investor maybe besides Daniel that comes to mind as the most helpful, somebody that stands out on the eight year journey that, that you would highlight?

Yeah, I mean it's hard to single out just one. We, we were lucky to have many really, really great helpful investors. I mean all three investors on our board. Alfred Lynn from Sequoia, Kether Boy from Khosla and really stacked.

Yeah.

Stack board and who is the last one? And Steve Saracino from Activant.

Awesome.

Yeah, so there's that. Is that incredibly helpful, incredibly supportive from the beginning till now. I really couldn't have asked for a better board. We got really lucky.

But gun to your head, Keith or Alfred? Just kidding. No, I do want to know. Like maybe. Last question for Daniel. There's been this back and forth meme about ChatGPT rappers, GPT rappers. Just we're the AI Salesforce. Maybe we're the AI Checker. There's a lot of those companies, some of them, they felt like they were overvalued and then some of them ramped up Revenue really nicely. But they still feel like I wouldn't want to be building one of those companies when there's a active venture backed company in founder mode building in the same category. Because I think that they're going to figure out how to wrap if they need to wrap. But what are you thinking about in the early, early stage of like, like AI empowered disruption, how important is it to do a greenfield project, build something? We're seeing that Windsurf is getting acquired and I think a lot of people were saying, oh, that's just a ChatGPT wrapper. OpenAI is just going to build that. Well, maybe they will buy it. And so what are you thinking about the latest crop of kind of AI driven startups?

Yeah, I mean I think we are the AI checker in founding mode, so good luck. If you want to come, come. But, but in our space. No, but I think AI is just the latest software. Right. Like you used to say, we're like the SaaS company to do CRM. We are a cloud company to do CRM. Now we're AI company to do CRM. I think in B2B and we're in B2B. It's like what B2B problem are you tackling? Are you tackling sales? Are you tackling underwriting? Are you tackling hr? And AI is just the way to build modern products. If you think about it this way, it applies to every category, every business. And it's not enough to just be the AI wrapper. You have to come in and say, why is AI going to be a differentiator to replace all of the other players? And if you have a strong story on that and the other players are not doing and leveraging what you're doing, I think there's a chance it's highly disruptive. Building AI products is not the same as building the products we've been building as product and ENG people in the last 20 years. The paradigm, the UI, the experience is different, the stack is different. So either there's going to be opportunity because bigger companies are not going to change fast enough. But I'm racing in my company to transform everyone to be like, hey guys, we got to relearn everything from sign up flow to monetization to buttons and dashboards. We have to rebuild products. AI first. It's different.

Have you thought at all? We always say last question and then there ends up being more questions. But we have one minute left. Have you thought about a world, you know, maybe you've done this already, but integrating with something like a ChatGPT where if somebody's using ChatGPT at work and they can say like hey I have a new hire coming on board. Would there ever be a world in the future where you would actually like integrate into the, you know, agent layer if you're looking at something like a chat GPT as an agent or is that not even the right kind of workflow?

No, that's futuristic. But it could be. It could be. You know I think if you look at who is it like Klarna who's not even using workday and Salesforce anymore and just like directly agent to the workflow.

Yeah.

You could skip some of the traditional recruiting and hiring process and go straight into the agents. Yeah, could happen.

Awesome.

Interesting. Well, thanks so much for stopping.

Congratulations guys.

Very congratulations.

Excited to watch you guys guys dominate together. Seems like it was fate and yeah, congrats to the whole true work team on the eight year run too and the continued success. Thanks guys.

Thanks so much.

Thanks guys. Thanks Ryan.

Bye. Really rubbing it in Lina Khan's face. She hates a merger, doesn't she?

She hates a merger.

I'm sure she's fine with this one. Little tech, little tech, building up resources.

Future big tech.

Future big tech. But little tech right now. Gary Tan at the helm.

Yep.

One hand washing the other on this one.

Yeah. Well, we are going to be talking about David Senra.

He's coming on the show.

Technology Big Dell.

Big Dell. The history of Michael Dell.

The history of Dell technologies. He asked a post.

Yes, historic runs for a founder. Dell. Are you looking at the revenue over time? Is that the one?

Oh man. 1984, $6 million. This is the first 16 years. 1985, $33 million. 1986, $67 million. 1987, 159. 1988, 258. 1989, 388. Goes all the way up to 25 billion by 1999. And let's bring sunrise. What a run.

How you doing, David?

What's up brothers?

What's up? You're looking great today. I like the suit.

Of course I, I text you. Last time I came on with a hoodie and it was completely unacceptable. So never happen again.

Much better in a suit. You look fantastic.

Everybody does. Before we jump into Dell, which is a crazy story, can we talk about the fact that Larry Ellison has now started following TPBN and say hello Larry.

Hi, how you doing? Good to have you.

And what, what I and what you guys called him? Do you remember the nickname you gave him?

Big Technology father was that he's not. He's not a tech bro. He's a tech father.

Yeah.

I think I texted you guys and then what I love is how fast like you are with it. You're like the original technology father, like.

Immediately basically created the database, basically the mainframe. Yeah. I mean, what a fantastic.

What an incredible book which you covered. What is it the difference between God and Larry Ellison? Is that.

So there's actually. It's funny because I think he's going to be. I just did Michael Dell. I'm working on the founder of Sony, Akih Morita, and I think I'm doing Larry Ellison again. I've done three on Ellison, but it's been like four or five years. So there's. There's three books about him. The best one is probably software.

Yep.

Because he got the footnotes.

Yeah. This is so such a funny story. Tell this, please. So to get to agree to cooperate.

With the author, he's like, you can write whatever you want, but I must be able to answer on the same page and, like, have my, like, counter argument. And so at the bottom it's like LE writes his initials and I could almost do an entire episode. Like, you might want to just read the whole book and just read. Ellie writes.

This is just.

It's hilarious.

But more books actually exist. Somebody should go do that for, you know, all the major tech people today with that style. Because on the one hand it's like, it's not what journalism's about. Like, you're. It's not, it's not. It's not going to drive the same narrative. It's not objective because he's like putting his footnotes everywhere. But it's just an awesome format. I think more people should do that.

Yeah, we go back and forth. Like, actually, no, I disagree with it. I was there. It. This is what I think happens. And then there's even better. So I think I'm going to do software, you know, because I think the founding story of Oracle is told best in that book. There's only, you know, shockingly, only three books on him. But then he did a book called. There's a book written about him called the Billionaire and the Mechanic. And I think when I did that episode, I was like, yeah, it's technically about Larry Ellison, but it's about extreme winners. And I think that's when I realized, like, oh, Larry Ellison has probably, like, more in common in terms of his competitive drive with like, Michael Jordan than he does with, like, most other, like, founders and I said something like, you know, if Michael Jordan sold enterprise software, he'd be Larry Ellison. Like, they're just ruthlessly competitive. And there's a fantastic scene in the Billionaire and the Mechanic because Larry Ellison was best friends with Steve Jobs and they'd go on long walks. And so I'm pretty sure the book opens or maybe opened the episode with it, with them debating who the greatest person in history was. And Jobs went more like Gandhi, peaceful. And I'm pretty sure, if I remember correctly, Ellison went like conqueror, like Napoleon or something like that. That it's like, all right, here's your two personalities, you know, basically explained in this conversation. Yeah. You guys are having.

So, yeah, I hope you can uncover what, what Allison's longevity regimen is. He looks, I know it won't be the focus, but to live such an intense, high stress, you know, lifestyle.

Yeah, you think it would take a toll on him, but it seemed like it hasn't at all.

So this is actually interesting because I feel like every time we come on there, we talk about founder mode.

Sure.

And one thing that was like striking, that missing from that essay is the fact, like, you know, like, it was like, well, there's a manager runs a company one way and a founder runs a company in one way. It's like, no, like the founder runs it based on the personality and who they are. And so I, I was having private conversations about this and it was like, well, take, take two competitors, Larry Ellison and Bill Gates. It's like Bill Gates was a grinder. Larry Ellison, by his own admission, is a sprinter. He'll work excessively hard for like three weeks and then he'll disappear on his boat with some Italian model for a few weeks and he comes back. He literally says he did that during.

COVID During COVID he sent an email like everyone in Oracle just saying, like, I'm on the island, I'm online.

He's like, yeah, we're all going to work remotely. It's like, yeah, but you're working. Yeah, you're working from an island that you own.

Island that you own. He only owns 96% of it.

But, but the point, the important part was like, he was like that, you know, really his island decades ago. He was like that decades ago. It wasn't just now as like an 80 year old man. So like, you know, he, there's, there's a lot of different personality types where Bill Gates was just like ripping his, you know, there's this great story that Michael Moritz tells when he, before he was a vc he was a phenomenal writer. Still is a phenomenal writer. I just finished reading his Don. His hidden book on Down Valentine, which is remarkable. But Moritz tells a story, I think at Stanford. You can see this on YouTube, where he's like, oh, you want to know what focus is? Like, I'll tell you a story about focus. Like, I'm riding with Bill Gates probably in the early 80s, and he's like, oh, somebody broke into your car and stole your radio.

Radio.

And Bogate's like, what are you talking about? He's like, no, I had. I took that out. He said, why'd you have it taken out? He's like, well, it takes me eight minutes to drive from my house to Microsoft, and It takes me 11 minutes to drive from Microsoft to the airport. And he does the math. He's like, so, you know, if I had a radio, that means I would. Wouldn't be thinking about Microsoft for that. Those eight minutes or for those 11 minutes. And then I go to work every day. So that's like 40 minutes.

Whatever.

The time frame is like, insane focus, insane level grinding. That was not Allison, by his own admission. It was not him. Well, they work a lot, but founders.

Podcasts didn't exist back then. So, no, I kept the radio in there and just been hearing you over the airwaves.

So I talk about this. We were talking in our group chat that I'm probably gonna do an episode on Genghis Khan. And I said, there's a fantastic book on Bill Gates which everybody should read. It's really hard to find. It's a biography, the first 35 years of his life. It's called Hard Drive Bill Gates and the Making of the Microsoft Empire. I've done two episodes on it, and in that episode, I said a line that now, like, years later, so gets spit back to me, like, every week. And they're like, you realize the similarities between, like, Genghis Khan and Bill Gates. I was like, oh, Bill Gates is like Genghis Khan in a Mr. Rogers costume. Like, he's like, dressed like Mr. Rogers, but he's unbelievably, like, ruthlessly competitive with. Yeah, like when he lost the contract and young Bill Gates lost a contract. Let's say, you know, you lost us a $50,000 contract. He's like, you didn't lose this $50,000 contract. It was a hundred thousand dollar contract because we lost the 50,000 and our competitor got to 50,000. There's this great. I can't remember which one of his competitors was, but There's a great story that one of his competitors tells that Bill Gates wipes the floor with and knocks the guy out of business. Where he sees Bill Gates sitting in the corner at a conference one day, and he's sitting in like a foldable chair and he's looking at something. His hand. He's like just really focused, kind of of shut out the world, shut everything around him out except what he's looking at. And so he walk. The competitor walks over to Bill to like, say hi to him and talk to him. And what he realizes is that Bill is looking at a picture of his face.

I love that. It's like, that's amazing.

It's like if I come to the TP Van studio and like, I walk in and there's pictures of other podcasters face that you guys are looking at.

We have, I think we actually have a picture of you up as a godfather of podcasting.

Yeah, we're framed photo around here.

Yeah, that's, that's a, that's a positive thing. No, I know some other people.

Yeah.

That you would have like bullseyes on for sure. Well, yeah, just super competitive.

What do you think about the, the post economic adventuring of the greatest founders? What I'm talking about is like, you know, there's a very, I mean, a lot of the. There's like a lot of commonalities between what the founders do when they build their companies and how methodical they are about that. But once they're super rich and they're thinking about their legacy, some of them start hospitals, some of them get involved in politics. Larry Ellison is really into sailing, I guess. Nathan Myhrvold at Microsoft, he owns more T. Rexes than anyone in the world. He owns the T. Rex skeletons. And he's.

My son would love that.

Massive. Yeah.

Yeah.

So he, he actually put all of his money to go and find new T. Rex skeletons. And I need to bring them back.

We need a Jurassic World. Yeah. And like, for a dinosaur fund.

Yeah, yeah, yeah, yeah, yeah. And, and, and you know, William Randolph Hearst obviously built this like, unmanageable castle that became a museum. I. I'm, I'm kind of beating this drum about like, we need our elites to go and do even crazier things. Just like build the world's tallest building, build the world's biggest house, build a castle, build a library, build a museum. And I'm not, not seeing it enough. But what do you think about that? What interesting kind of like side projects have you seen from the greatest founders in History.

It's interesting. Like, what would be the most interesting one that's done? Honestly, I prefer them to do, like, what Steve Jobs did. If Steve was alive today, he'd be, what, 70? So still young. The idea that he wouldn't be still working all the time on Apple, to me, is just unfathomable. Like, I think I'm all for charity and all that other kind of stuff, but, like, you know, every biography is kind of written like that where it's like, you know, focuses on the early life and then the rise and then gets really boring once they're, like, super rich. And, like, naming, like, that's not relatable to other people. It's like, yeah, I donated a wing to, you know, the hospital named after my mother or something like that. Yeah, I'd prefer them to not have side quests. I'd prefer them to work on what they're working on until they're dead.

You want Bezos to go back into Amazon now that Lena Khan's out and the heat's off? Cool it with the Blue Origin. Cool it with the girls group chat.

But if you're gonna have a side. No, that's actually a great example. If you're gonna have a side quest like the Blue Origin, like, then build, like, another company.

Make it a company. Yeah, Clock. The Long Now Foundation. Have you heard about the clock?

Yeah, of course, of course.

But, like, even. Even Ellison did this. He. He took his island and. And turned it into a sensei. Seasons, which is. Oh, yeah, like, you know, this amazing, like, hotel. It's not. It's not. David might say it's not a mon. But, Larry, when you hear this, I love sensei. I think your properties are phenomenal.

Yeah, they're fantastic.

I'm sure they're excellent. I would expect nothing else.

Did you guys say interesting lore? So Larry has six homes on pch. He's invested heavily.

More than that?

Well, no, he's got, like, dozens of properties in Malibu, and I think there's six that are just in a row on pch. And I think the fires got to two of them, and at some point, the firemen decided to make, like, a last stand. And we're basically like, the fire's not going past this point. And so a couple of them went down, I heard, in the. In the January fires, but four still standing. And I'm sure he's doing a ton to kind of help with the recovery effort broadly in Malibu.

No, I think this is a perfect, like, segue into what I actually want to talk to you guys about which is Michael Dell. It's like, like he's 18. He starts Dell when he's 18. 19 years old. He's 60 now. Right. I talked, you had Zach Dell, his son, his co founder on last week for, for Base Power. I talked to, I, I talked to or yeah, I talked to Zach for a while before I did the episode. And you know, he's like the idea that my dad is ever going to stop is just never going to happen. He's just like he had so many opportunities. Like he didn't when, when he took the company private. When he came back public, he didn't have to be the CEO. It's like he, he's just obsessed with it. Like you go to his house, like he will, he's working on his computer. He wants to talk to you about the, the company. Like he's completely in love with what he's doing and that's probably the, the highest and best use of his time as opposed to like another side quest. Yeah, so I, I do. Like, I, the response for this episode has been really, really nutty in terms of like, everybody knows they've heard Dell, right? They know who he is, they've heard this company. But the feedback I'm getting is like they didn't understand his life story and just how I think I just tweeted out like I study uncommon people. Uncommon like stories for a living. And Michael Dell is uncommon amongst uncommon people. I'm almost 400 episodes in. I can't think of another single comparable founder story to his in the sense that like this guy was a money making machine since he was like 13. You guys. I just heard if, I don't know if you guys put up on the screen, I heard you talking about it, that, that tweet that he has where he starts with, you know, $6 million.

The first year breakdown doing. How did he manage? I haven't, I've been so focused on TVPN this week, I haven't been able to listen to the episode yet. I'm going to get to it this weekend. But how do you go from zero to netting 6 million or grossing 6 million in the first year here? Like what does that even look like?

It's even crazier than that where like he started the company with a thousand dollars. No co founder, no vcs. Okay, so like this is what I mean. Like I, I, I, I've been getting a bunch of text messages and one of them was like, I don't think there's another like fucking startup story like this ever. I forgot what the text said. It's definitely an F word in there. And I posted it too, because I, I just can't think of another like that successful that fast with so limited means. And he's. His head competitor was Compact, which was. He's in Austin. He launches Dell in his, in his dorm room. Austin's. Our Dell compact is in Houston. They raised I think 25 million initially. So I think 25 million at the beginning. And then in the first early years of Dell, they had already raised like 100 million in capital. And he smokes them. They wind up getting bought. And then, you know, Dell still is thriving and Compaq no longer exists. But one of the things that is obvious in the stories is like he A lot of these outside successes, obviously you have to be the right person with the right set of skills at the right time. And in 84, the personal computer, the first time, the first very popular personal computer, computer appliance is what Steve Jobs called it was the Apple II. That's the first computer that I think Dell is 14 years old when he buys. And there's crazy stories about how big of a hustler he is and the businesses he was making. He was making more in high school than his teacher was. Like just a money making machine from day one. And he buys an Apple II with its own money.

Right.

You'll love him, Coogan, because he buys a Porsche, he buys a BMW and then a Porsche. He gets arrested when he's like 19 for going like 92 and like a 55 and a red 911.

I think both of us like this.

You'll love him because he was speeding.

I've defended Marquez Brownlee for speeding.

Yeah, yeah, I think it's fine.

So he's, he's obsessed with, with, you know, beautiful cars and, and going very, very fast. But to answer your question, it's like a lot of this is because the market was pulling out. So I, I, I, a long time ago. I think it's episode 50. Have you guys ever read Mark Andreessen's blog archive?

Most of it, I think.

Yeah. Do you remember, like this is a long time ago. So a lot of young founders don't even know this. He was like a prolific blogger before he started a 16Z PMarca.

That's like the blog name.

Exactly. And I think you go to A16's website now and you can pull the archive and it's absolutely incredible. And one of the most important things that Mark says In that was very fascinating because he's like, well, you know, a lot of people debate what is the biggest predictor of startup success? Is it like, the product? Is it the actual people, the founders, the team, or is it market? And he's like, if I had to pick one, my thing would be on the market. And he's like, in a great market with a lot of real customers, the market has to be satisfied. The market will pull product out of the market will pull product out of the company, and the market will be satisfied by the first viable competitor that comes along. And so Dell, kind of, before he goes all in on it, he travels to England. He's making a ton of money essentially just buying IBM PCs, souping them up, and then selling them to rich architects, dentists, doctors and stuff like that, right? That's how it starts.

The Bravis of PC Market, of IBM PCs, the AMG. Yeah, yeah.

So. And so then he goes to England and he's like, wait a minute. I thought like all this, like, there was just like, computer fever in Texas. He goes to England and he's like, I'm in these stores, the. The product sucks. The salespeople don't know anything, and yet they can't keep. Keep the inventory in stock. And that's when he realizes, like, oh, I need to go all in on this. He winds up dropping out at 19, telling his parents, hey, you know, if this doesn't work out, I'll go back to school. He never goes back to school.

And you see this running technical at this time. Or was he just a hustler? Or was it.

No, he was.

He.

No, no, he was like a computer nerd. But I think he was much more like in. In the sense of like a hardware. He liked his favorite thing to do is to take apart computers. So let me give you example, another crazy stat that people don't understand. He starts a company in 84, 88, they go public, okay? By the time he's 26, he's in the Fortune 500, 26 years old. Like, what I'm telling you right now, when you listen to this episode, you're gonna be like, holy, there's not another story like this. So his favorite thing to do, he recruits this older guy. Because we can talk about the fact that they. They. He made a lot of money because, you know, people give him money. They were paying on credit cards back then, so the customer pays today, and then I go buy the parts, right? And then eventually he starts selling to governments and businesses and schools and everything. Else so he needs to get credit. And so this where he's like my bank will give me credit. I need to extend credit to governments and everything else because I'm not paying credit cards. So he ends up partnering with this guy named Lee Walker who is like a 45 year old, very successful venture capitalist entrepreneur in Austin. And he played a really important role in the first like four years of Dell. But one of the most fascinating things is that what Dell then does. They. How would I like let me back, back up real quick. Lee Walker is the one that has the relationships with the bank to get the credit that Dell needs to start selling to all of these like to, to issue the credit like they're selling to like US Government and Monsanto and, and all these different companies. He's also the one that helps Dell go right. Go public. So Goldman Sachs does recommends they choose Goldman Sachs to do to, to, to take Dell public. They say hey, let's do a private placement first. Okay. This is gonna answer your question, Jordy. So the private placement, right, there's like a couple hundred private placements that are, that are in the works on Black Friday, which is the stock market crash in 1987.

Okay.

Which we talked about last time I was on here with Sam Walter, him, Lee Walker goes in and is telling a young Michael Dell we're screwed. Like they're, they're going to cancel our private placement.

They.

The stock market drops in 23. I think it's 23% in a single day. And he goes in to, to Dell's office and he finds Dell to tell him this bad news. And what's Dell doing? Dell's like, I was taking apart the, the computers of my competitors to see how we can improve. So I don't know if he was technical from a software perspective or more hardware perspective. He was, he understood how they worked. He liked putting them together. He liked taking them apart, putting them together, making them go faster and perform better.

Yeah. The concept of a computer nerd almost like died off. Right. In some ways. But it was just way more of a thing. And then it became like, well, if I'm really into computers and I'm just going to make software.

He talks about now, they're way too complicated. You used to be able to take away the first Apple II, the IBM 5150, which I think is the first one he gets, you could take it apart and actually understand what every single component was doing. Now it's impossible to do that.

Yeah. Can you, can you compare Dell to Jobs Similar revenue ramp at Apple, actually, although a little bit slower in the first year. I think Apple made under $1 million the first year, but that was 1997. By 1984, Apple was doing over a billion dollars in revenue. So Dell comes in with 6 million. The market's a little bit more established. And then if you look at what Dell's done today, they're selling servers for businesses, that's about $40 billion revenue. And then laptops for often computers, personal computers. But for business workers, another 40 billion or something in revenue. He seems much less focused on product design, brand, all the different things that Steve Jobs was known for. Is he?

Yeah, for sure.

Private equity, financial mastermind. Is that what makes him special?

No, he's, he's. This is the weird thing too, where again, not really comparable to any other people. He was upset. He was a computer nerd. Like, he'd get in trouble in high school because he'd just sit in the back of class and read like Bite magazine and like was just computers. But his parents were successful in business and so every single conversation they'd have when he was a kid, like this dude was reading Fortune and forge magazine at 12 years old. And then we didn't even get to the point where like he does, he takes Dell. By the time they, they go off on this crazy run, by the time they start hitting a lot of headwinds, like 2005, by the time it gets 2012, 2013, he's in real big trouble. And so he takes this huge risk of doing the lever, the, the, the, the biggest technology leverage buyout in history with Silver Lake Partners. So they take dell private in 2013. Okay, the story gets even crazier. So he understands, he was actually preparing for the age of AI like 10 years ago. And so Jensen, I talked about this in the, in the episode where I found an interview with Jensen Wong and Michael Dell. And Jensen's like, well, there's only one company in the world that can actually build these data centers at scale and give, do every single thing from the storage to compute everything else. And that's a Dell. And that's why they're such an important part of partner to us. And Dell was like moving into storage and servers and stuff a long time ago, way before AI, like the prolifera proliferation of AI, I should say. And the, I, the, the, the most interesting is like, so he take, he does the largest technology that they buy out Dell, all they take a private $24.4 billion if I remember correctly. Okay, two years later, while he's still a private company, he does the largest technology acquisition ever, the mc and.

Right.

I, I, I. I was at dinner tonight, and we were with our wives, and I had to apologize. You know, I was like, listen, I don't mean to be vulgar, but I have no other way to say this. It's like, Dell's got balls the size of watermelons. Like, the guy is a private company. He buys EMC VMware, right? $67 billion with, like, 4 billion of equity.

Yeah.

So it's like there was like, a special dividend or something like that, but they wind up borrowing, like, $50 billion. $50 billion. He's like, hey, I'm gonna take this risk. I'm gonna go $50 billion into debt to buy this company. There's a great story I talk about the podcast. It's also in the book where EMC is, I think, a Boston company, the board of directors, a little older, a little different. And so Dell's coming there saying he's pitching this as a, you know, merger, not an acquisition, but, you know, it's more of an acquisition, I would say, but merger, acquisition, whatever you want to call it. And he brings Jamie Dimon with him, right? And there's a great story in the book where the boards, he's talking about what his vision for emc, what he wants to do, and everything else, and then they're like, okay. And they lean forward. This old guy on the board, he's like, but, Michael, we're talking about a lot of money here. Do you have the money? And Michael is about to answer, and Dell goes, all right. And Jamie Dimon goes, they have the money. It's like the guy running the most valuable bank in the world is telling him, he has the money. We got the money. We will get you the money. Money. So, yeah, and then what happens? He buys that for 67 billion. They spin out VMware. This will go back to your question is technology. He's obviously technology. Speech. Also really gifted at business. He understands finance and everything else. So he buys EMC VMware for 67 billion, I think, in 2022. They spin out, and they sell VMware by itself for 61 billion. That's insane.

Wow.

Like, that's insane. And then EMC. I forgot the dividends. It's in the book. They were making, like, 6 or 7 billion a year in cash flow anyways, every single year. So it was like the, the. It's one of the most successful acquisitions of all time as well. And the foundation for all the, like, building all the AI and everything they're doing now. I, again, I just, I've Never, I'm almost eight years, nine years into this project. 400 biographies written. I just cannot think of another comparable to Dell. Now, if you want me to contra contrast him with Jobs. Yeah, Jobs was much more interested in, you know, the, the, the. There's a great, there's a great clip that just went viral on Twitter the other day where it's like Steve jobs back in 97 sitting there with Tim.

I think you went on mute.

Could share. Yeah. And his whole thing was like, no, no, no. Like, I'm not worried about market share. I'm worried about building products that I could be proud of. So, yeah, completely different.

Much less acquisitive. I mean, Apple's never really done that opportunistic acquisition thing. Generally it seems like it's the DNA of the company now. They buy some ip, they buy some foundational technologies, but of. But they're not just going to go buy a VR headset, they're going to build their own.

And then if you. Look, I've been told by people that know way more about finance than I do that Dell's family office is the most financially successful family office in history. He's actually built it into a firm and like some of the things they've done around that. So like every single thing this guy does, he's just an extreme winner.

Yeah.

And, and he just owned, I think when they went public, he owned like 73% of Dell the first time. When they went private and then went public again, he wound up owning like something like 45 personally. So huge ownership. And then I think he personally profited from a friend of ours that I can't mention who, that knows a lot about finance, told me this, where it's like, you have to also look that when he sold VMware to Broadcom, he took a shit ton in stock. And if you look at the acquisition date and Broadcom stock, It's up like 3. So Broadcom buys VMware for 61 billion and then the stock is up like 3x from that since then. And a lot of that was his own personal money. Money, from what I understand. So it's just like when it just. The guy, the guy just can't help but win. It's. It's crazy.

What, what's the backstory on his broadcasting company? Did you, did you follow that at all? He started ota Broadcasting in 2011, which seems like maybe kind of a no, the.

So the, the book has actually a weird structure. So I read he'd. I read his first kind of autobiography. It's called Direct from Dell. It's published in 1989. Then he publishes during COVID Play Nice but Win. So Play Nice But Win is, is the one I wanted to focus on because I think it's actually like any. He like reads the audiobook. It has a very interesting structure because the. The first chapter is him fighting with Carl Icon is trying to steal. Steal his company from him, and it's about to take Private Adele. Then every chapter alternates right between the fight to take his company private to the. The startup of Dell. It's a very interesting structure for an autobiography. And then the next chapter will go back to the fight, and then it'll. And then the next chapter after that will go, okay, now we're 90. You know, we're in 84, we' 87. It weirdly stops in like 90, I think maybe 99 or 2001. He talks about the troubles they were having in 2005, 2007, 2011. The first chapter of the book. But no, I don't even think that's in the book, if I, If I remember correctly.

Yeah, that makes sense. It's crazy to see where Dell imagining if he was still running the company today. It trades at two thirds of their, like the value today. The market cap is like 2/3 of their revenue last year.

Wow.

So.

Which is just $60 billion company and.

Yeah, what was it like, billion revenue. Yeah. What was it last year, though?

Well, they did like $95 billion of revenue last year.

Yeah, yeah, yeah. But it was. Your market was over 100. Yeah, 100 billion, right. What was it? Or two years ago?

Yeah, yeah, yeah, it was. The stock was at 118 stocks at 84 today, down 30% over the last year. So yeah, they were around 100 billion last year. And it's pretty fascinating comping them to Apple. Like Dell was significantly bigger than Apple for like a decade. Like 1999, Dell's doing 25 billion in revenue. Apple's doing 7. 1998, Dell's doing 55 billion in revenue. Apple's doing 6 billion in revenue. Apple had a, like, also had went through like this really rough period of transition in the late 90s, early 2000s, before having the breakout success that they've had now. And now they're up in like that 300 billion revenue and of course traded a much.

They also invented. They also invented the most successful consumer product of all time.

And then also built the services about. And then they also built a very, very high margin services business around that. And that's something Dell has never been able to do. Build like this high margin locked in monopoly on top of the technology in the software.

I remember in the early days of the. Making the podcast just how disorienting, like the success, the outside success of the iPhone was, because I think it's one of the first episodes I did on Steve Jobs and I've done like 10 or 15 or something. And they made the point that like Apple makes more from the iPhone if they just had the iPhone and nothing else than like Disney does from every single thing they've ever like. They, they. Everything, all their theme parks, all their movies, everything else just like that. One single product.

Yeah. I mean, Larry Ellison is 80, Dell is 60. He's got another 20 years in him. It's not, he's not stepping down or anything. So, I mean, Larry Ellison is in the conversation to buy TikTok talk now. You think Dell's got like a second, third, fourth, fifth act coming up?

I got a great. Yes, I got a great text message. Somebody. Yeah, they said, dude, when you said he's only 60, I had to Google it real quick because he's so young. There's going to be another edition of the book for sure. He has another era of domination coming.

For sure.

Yeah, I think there's going to be for sure. Like, I. Okay, so we've talked about this last time I was on here where it's like, oh, people say if you love what you do, like, you'll do it for free. And I was like, no, there's actually another step to that. It's like, if you love what you do, people couldn't pay you to. No, people couldn't pay you to stop.

Yeah, yeah.

He.

Dell takes it another level in the book where during 2012, when he's fighting to take the company private, they're like, why are you doing this? Like, it was very painful. He could have lost control of the company with his name on it. They're like, you've already made so much money. Like, just go retire to Hawaii or why don't you start a new company? And he goes, goes, I don't want to retire. I don't want to start a new company. I want this one with my name on it. And then he takes it to another level. He goes, I will care about this company after I'm dead.

Legend.

Founder. No.

And then, hold on, I do have to say one, even and again, a lot of the people I cover on the podcast are kind of cautionary tales. They're, like, obsessed to the point where they destroy everything around them.

No, Dell seems great. I think great life.

I. I think it's really important. First of all, it's a much longer episode than I normally do. It's really important to get to the last few minutes of the podcast because, like, I save what I think is the most important lesson for the very end. I'm not trying to, like, hide it in the fact that, like, when I talk to Zach and the way he talked about the way his kids think. Think about him and how they look at their father, you know, they.

They're.

They're here. He's a hero to them. He was talking about, like, you know, Dell's running one of the most complicated, largest companies in the world, and yet anytime his son calls him or anybody his kids call him, it's like he'll drop everything for them. He's legitimately great dad, still married to the same wife. Like, this is what I mean. He's just uncommon amongst uncommon people. I cannot think of another single, like, comparable to him.

It's fantastic.

Absolute legend.

I think you kind of compare to him, actually. I often think of you as, like, the Michael Dell of podcasting.

No. One thing I will say, he's got excellent, excellent taste in podcasts. He said Michael Dell, a few years, like, a year and a half ago, sent me the best DM I've ever got. He says, your podcasts are a plus. And a little trophy emoji. I was very proud of that. And then today, he wound up tweeting. He's like, you're very good at what you do. I was like, crazy that you're saying that.

So real recognized. Real, real, real.

Wrecking real. It's been great. Thanks for. Yeah, thanks for coming on, hanging out. This is always fun. Jordy's got something queued up on the soundboard.

Let's hear it.

Other behavior. Brother behavior.

Thanks for the invite.

I love you guys. Love you. Have a good rest of your Friday.

And Nicole Wiskoff's got some news, right? Wish off.

I mean, she put out a post.

She's.

She said yesterday. Spent two full days with institutional LPs. Can safely say that 98 of them are fed up with venture funds are too big, especially for new fund spin outs. No one does math anymore. No liquidity. Godspeed to whoever is out raising.

You don't need to do math. We have AI now.

Intelligence is too cheap to Meter.

Yes.

Yeah, that's true. We have to take AI to meetings and let them speak and then more funds will get raised, I think.

Yeah, break it down for us. Name names. Who's. Who's the dumbest venture LP in the Valley?

No, no, I wasn't even nsf, but.

I don't want to throw it in under a bridge.

So I was in a big money hub, if you will. Less probably tech companies, but a lot of capital.

Sure.

And I did. So I try to every six to nine months just to like set the stage here. I try to just go to the LP tour, existing LPs. As you guys probably know, you want to get to know institutional folks years before they invest or that's the expectation that they know you for a super long time. So I do my, you know, grand old tour across the U.S. you know, twice a year and this was one of those. So I took six like hour long meetings in person over the last two days with like endowments, pension funds, you name it. All of which are largely pretty active in venture or have become increasingly so and so. Yeah, just, just setting the stage there, but happy to either you guys. Yeah, let me know what's most interesting.

Yeah, break, break down. Yeah, yeah, break down the post. There was kind of a lot in there, but the idea that, you know, ventures clearly an important asset class or at least we would always like to believe, even though it's a small percentage of actual dollars allocated. I'm curious the quote, no one does math anymore. To me that stood out as potentially, you know, you have a $200 million seed fund, you start running the math and you're like, wait, we need to back back six unicorns at seed to deliver a 2x fund. And then is that what you're kind of getting at there? It's just like I don't want to.

Butcher some quotes here from meetings, but I think it was along the lines of fund managers come to raise funds, I think. And what I, what I should caveat is it seemed like a lot of the house cleaning was done on the existing kind of blue chip relationships with a lot of these institutionals, like a couple over the last few years. So I think that the negative sentiment was actually towards maybe newer funds or like the funds that are on fund three and fund four. But going out and still trying to raise these like aggressively large like over $300 million funds, it seemed less. I think they did some house cleaning already when they were frustrated with the big funds that they've had in the portfolio for over a decade and did some house cleaning there. And so I think that feels like it's sort of settled. They've picked the folks they want to concentrate with and then. But I think the new relationships are getting a little bit blurry. And so from that perspective, it was a lot of how are we supposed to invest in like the next generation of the blue chip funds? And like being in their fund two and fund three when we have these folks coming to us who don't have a portfolio construction model trying to raise over $100 million, which may seem small to folks, but it's a lot of money. And then they're saying things like, I forget exactly what the CIO said to me, but something along the lines of like, yeah, so I'm ask like, what returns the fun. And like, oh, we expect, you know, over like 25 to 30 positions that like 5 will be decocorns and like 5 will be unicorns and that like, it's just you guys get it from there. And so it's like, wait, I'm sorry, can you please back me into the math? And so they were saying that like, you know, 80% of the meetings they take and these are folks on fund two and fund three, like clearly have never like opened up a spreadsheet and like walk through portfolio construction. But I think they've been able to get away with that for their past few funds.

Do you think part of it is that math is not commonly used in venture because you're kind of trying to predict outcomes 10 years down the road. But then that CIO is getting pitched by some traditional private equity fund that's basically saying we are going to invest in six companies of fund and they need to do. We're going to exit within four years. And all we're really aiming for is to just consistently get sort of an 8% return on.

Well, there's two different types of math a VC can do. They can do math about the market size and, and you know, DCF on the value of the company they're investing in. But then they can also do math on the portfolio construction side. And it feels vibe investing might be okay. Just find the insane founder invest in, oh, it's 1 on 10 or it's 2 on 20, whatever. That might not matter. But if you're not thinking about the portfolio construction at all, yeah, you might.

Turn away some LP and then simultaneously. The other thing that I think is interesting is, is venture and private equity, we're always under the same in the same category, yet they're Starting to like overlap more in different ways.

I mean I felt like one CIO that manages like, like I think they're around 15 billion was saying to me that like, she's like, I would just rather, I'd rather just do private equity all day. She's like, the IRR is better. She's like, I have a window into like, like liquidity that is not that long. And so they're obviously safer investments. I think where people are. I would say that the net takeaway is that folks are just sitting on their hands and I think frustrated that they're still sitting on their hands. As in there's no liquidity. So there's no, no one would say this, but they're not a lot of fun that's going on right now. Like no one's super excited about like these massive exits where they've got to think that the problem that they're thinking about is where do we deploy this cash? Right? Like most folks go into every year and they have a five year plan and they know we're going to deploy a billion in venture this year. But I think that's just been the other takeaway was from really large folks that are active in venture. I don't know how everyone else is still investing in these funds when no one has any cash. They're like, I just don't understand. There's been no liquidity for any of us. We don't have a lot of money to deploy right now. I don't know where this cash is coming from. And so it just seemed like some of the bigger, I think more legitimate folks that have been around in venture for a long time don't understand. Maybe the newer entry entrance, has it.

Always been driven just by shifts away from other asset classes, like you know, large LPs rotating out of real estate or Treasuries or the public markets. Like it, like anytime there's a boom in venture, it's always dwarfed by the other asset classes. So we're just looking at like if they take, you know, 2% of their equity or their public equity strategy and roll it into venture, that will like double the size of venture, right?

Yes. Yeah, yeah, no, but maybe they're tapping out. Yeah, but it's hard. I mean, right? This is all, this is just all cyclical, right? Like we're going to be in a world I bet in 24 months, I hope that I'm on the show and we're talking about this and everyone's going to be like, wow, we like tripled Our exposure in venture and everything's going fantastic and like poo poo on private equity and like, you know, so I do foreshadow, like I foresee that happening. I think that just for right now it's just been like three plus years of crap and I think everyone feels like they're staking this beating so no one's optimistic.

Well, is the three plus years of crap coinciding with a boom in AI? You know, 58% of venture funding in Q1 went to AI startups is part of. Do you feel like LPs are like, yeah, well we had to stretch ourselves a little bit thin effectively so that we could get as much exposure here as we wanted or like yeah. How, how do you think they're like, yeah, I'm curious. Like in many ways you could, you would imagine that I think over time it will become clear like yeah, deploying into, you know, AI startups from 2022 to 2025 was, you know, yeah, there were some overvalued companies but like some generational winners I would hope.

Hope, yeah. What, what does seem to be true is that especially with AI and there's so many unknowns, right? Like how much capital these companies actually need. We're seeing record breaking seed rounds for example and insane prices like Mira's company 2 on 10 billion. Like goodness, you know. So I think a lot of it right now is. It is actually making more sense to me that I think the data last year was that like what was it like 75% of VC funds or maybe north of that went to like like 10 funds or sorry capital raised for venture funds went to like the biggest ones, the gcs, the Andreessens. I imagine a lot of it is that one. They're clearly master storytellers. So they're able to say like here's what we estimate will happen in the market and how much we need to deploy now and maybe those vintages will be fantastic. I think what is really confusing and some of the conversations I was having and I actually got this data, I said DST did this presentation for some of my portfolio companies a month ago and it was. They wouldn't give me the slides but I have a like burned in my brain which was like at growth, what's super hard is that for growth funds is that they've traditionally underwritten companies to say great, if you're a DST, you've got 30 billion plus in AUM, you're typically a growth investor. You're looking at a company and your timer starts for their year over year growth once they hit 2 million in ARR. And so like from 2 million in ARR is that if you grow and it's kind of nuts and I might be butchering some of this, but we can like verify it. But it was like, if you're growing only 200% year over year from 2 million in ARR, then it will take you like, I think it was like 29 and a half years to be a $10 billion company. They're not going to invest. That's like forever. If you're growing 300% year over year, that I think that number was around like 14 and a half. And if you're growing 500% year over year from that 2 million, I think it was like 7 and a half years. But what happens when that window from like one like that, that 2 million right now companies are going from like zero to what was it, like 70 million I just saw in like a year or like two years. So the entire underwriting model of like a great business for growth funds is broken. So everyone now I'm sure from an LP perspective is like, are you yoloing cash? Like, you know, like, what is the new model that you guys are underwriting to you? Like, what does a great exit look like? And what is the, the big question you get in venture is like, how do you identify a great business? Like, what are the metrics that make sense for you to deploy 50 million into a business? And, and like I, I shouldn't speak for dst, but they were like, they talked to all the other growth funds and all the guys that run them and they're all sitting around a dinner table wondering like, well, how do we underwrite these businesses? So I imagine as an lp, you're thinking, shoot, I'm going to trust the guys that have made us a bunch of money over the years versus these net new, let's say AI funds where no one knows. Right. They haven't proven that they've done anything.

In the past on the AI stuff. Maybe on the venture side, do you think the Windsurf rumored acquisition by OpenAI changed the conversation? There was a big meme. Don't build it. Don't build a ChatGPT wrapper. GPT5 is going to steamroll you. Well, it looks like Sam might be opening up the piggy bank and shelling out for some companies that could be described somewhat as rappers. And if that trend continues and all the foundation model companies are buying a ton of consumer products that are built on top of Them. Well, those could be some really great exits. What is your take?

One thing is we don't the conversation. We don't necessarily know. We don't have details on that acquisition. It might not be a liquidity event. Right. It might just be like, you know, our wind surf investors getting rolled in. You know, I'm sure there's people getting.

Votes in the nonprofit.

Yeah, yeah, nonprofit.

I have too many questions there that I have answers. Right. Like I actually don't even know who most of Windserf's investors are and how.

It's a Green Oaks deal. Actually Green Oaks did the seed and.

The Series A of course are amazing. No, that's amazing. Look, I, I hope, I hope, hope people make. Look, we are all incentivized to see cash, right? Like to see some liquidity. I think I would summarize all the sentiment to being just like obviously, as you guys know, lack of liquidity. And so people are looking for new reasons to get angry. Like I was hearing even things like I hate the 2 in 20 model. It's such BS. And then big funds ask for more than like 20, you know, if they hit like over a 3x net, you know, then it becomes 30 and like I feel like a few CIOs were like F this market, you know. But that sentiment's going to change as soon as they see liquidity and then it's going to be like, oh my God, it's amazing. Our exposures like tripled and so I just can't wait for that to happen. I just think people are grouchy.

Grouchy?

Are you telling an AI story to LPs that mirrors cloud or mobile or fire or electricity. Around AI, you kind of pick your metaphor and depending on how bullish you are, you pick a more extreme metaphor.

Look, I think me co founding a business to build next gen AI data centers shows where my head's at. It's in the infrastructure, like the physical infrastructure and the power and so like. And that's obviously non wish off ventures related though. I've told you guys like I gifted my shares into the funds but I think that like that that's, but that's like a non kind of LP pitch from that perspective. I think the, from a wish off Ventures perspective, I'm very bullish on the vertical AI applications. I think I can't, I don't know who can. I can't really predict where everything goes at all on the AI front. Whether it's for horizontal, it's foundational. I don't Know what I will say is the more specialized you are in your vertical and the more you can enable a home services business, for example, to, you know, hire less people and bring in more business, I think the more like, you know, insulated you are, it's harder to rip you out. And so I'm really, really all in on like these vertical applications where folks are specialized and they can kind of walk their users to this type of automation. And I think people really, really don't think deeply about how hard it is to get people to adopt this. I know the idea is to decrease headcount, but no one understands this stuff. No one knows how to implement, no one knows how to think about it. And so I just think it's down to the folks that know how to tangibly articulate the value of an offering and being an sf. And it's kind of why I'm grateful not to live there though. I love it. Not knocking it, but you just of kind of get sucked into this like, oh my God, of course it's like so obvious like everyone's going to adopt and pay a million dollars for this and enterprise value is like going to balloon and like we're forgetting that there's a whole world out there that's like never even heard of like GPT.

And so yeah, are you staying away from consumer AI? I talked to a founder yesterday that pitched me like a, what was like a great idea and application of the tech. But I just like immediately he was like, tell me why I shouldn't do this. And I was like, I believe that this is like not something that OpenAI has like explicitly said is on their roadmap, but is like an obvious thing that agentic, you know, like an agentic system would just do automatically.

Yeah.

And so how are you thinking? Are you feeling like, you know, a lot more confident in these like sort of B2B verticalized applications versus like a lot of consumer right now if, if.

It'S not like network anime Filter was not on the OpenAI roadmap, but they crushed it just by working on images long enough, right?

Like NFTs, they come in and they're so cool for like five minutes and then it's like, wow, we spent a lot of money there. I mean, that's probably not fair. And if watch NFTs come back in like 12 months, like I think that the. Honestly, I don't know. I mean, I toy around with a lot of this stuff. Like the great thing about, about consumers that I can just mess with it and like Try and figure it all out. I don't know that I, I found anything even personally sticky enough that I'm like every day like you know, like messing around with it and I guess it's not fair like obviously like OpenAI like Claude and Perplexity but I think like on the everyday I haven't really. I always have an open mind. Some of the YC companies I've seen have been super interesting but I haven't really found longevity for my myself using them as like a, you know, personally. But maybe my mind's not open enough. I just try to think. I realize this is a pretty irrational business but in some, you know, like I try to take more of a rational lens around like could this make it 10 plus years as a durable business?

You're hiring in San Francisco looking for two to three folks that are operators. Why did you settle on that language Operators. We've talked to VCs who have been top of their class at Goldman, come in and just work the spreadsheets for a decade, put up historical runs. Also founders but operators specifically. Why do you think that's the key to success in Venture?

Look, I think for my style of what we do and where we try to add value to companies is absolutely saying oh been there, seen that, here's what worked for us, here's what didn't. And just being fast to that response because things have to get done. I have hired so I have Neil on my team as a senior associate and he comes from Venture doesn't have operating experience and so this July when it's quiet of dc, Neil is full time at one of my portfolio companies in la as on the biz ops team. Operating like that's important to me. Like I'll cultivate it. Like that's the thing I want in our DNA. If you don't have the operating experience, I don't want to lose you to it, but you're going to go get it and so I want to keep that DNA. I think it matters in sf. We need exposure there. Over half the deals done last year, you know, were in California. We do a ton of deals in sf. We see a lot but I want folks that are boots on the ground. It's sort of kind of like to start I want to hire someone there full time but for now sort of like scouting people that are excited about Venture but still really like operating that are writing small checks but I want to pull them in. So unlike scouting now where you just source and then ideally get some carry, I want them to see a whole deal through. They source a deal that we do it. They're joining every call. They'll learn how to, we underwrite the deals, how we do the work and then eventually they can put that on their resume if they want to. But we'll see. And ideally I can hire one. That's fantastic. But just an approach I want to take. I don't know how these venture firms do their thing and do their scouting stuff. I don't care. But it's something that I just want to test out and see how it works.

Very cool, Jordy. Anything else?

No, this is great. I wanted to just get a gut check for. I mean we have a lot of managers that listen to the show that maybe aren't fundraising right now. Hopefully they're having, you know, doing little mini checkups, doing some math, doing some math.

Two plus two.

Open up that calculator app.

I have to answer the question, how do you. You've returned 50 million, whatever your fund sizes, you know, like, like literally and walk through tangible examples and apparently no one does that or can do that on the fly.

Interesting.

One trillion dollar company in the portfolio.

Exactly.

Just get out of the unicorn decacorn thing. Just buy 10% of the next Facebook. Seriously, for a hundred K. Yeah, it's easy.

No, on the other thing that was interesting is a lot of. I was actually, I didn't mention this, but I was asking about spin outs. There's a lot of great people, I think, great, you know, spinning out of, of notable funds and raising funds. I think what's confusing for them is they were like, look, a lot of these guys took the strategy even though they, even the blue chips do this. And this is why they're so active in seed. And this is coming from the LPs. They're so active in seed because the individual investors are like, well, hey, if we take 30 million and divide that out by a ton of two $3 million checks, if we lose a few, it's not such a blow to the reputation of that, of that part partner at the firm versus taking a 30 million dollar check and putting into one company and saying like, hey, like I'm a pretty good picker if that works out. And so I think it's made it really, really hard to underwrite these guys because they've just done whatever they wanted and candidly haven't taken a lot of risk or maybe been able to. So it's going to be interesting to see specifically, I think right now we're seeing the most probably good Quality spin outs, it sounds like over the last six months, raising funds. But I think it's also, I thought that like, shit, it's just hard for me because I've never been in venture before and I'm trying to like do something substantial, but it turns out that like even the folks that spin out are still getting kicked in the teeth. So I think to what you were saying, go meet LPs really early and be able to answer these like tangible financial questions. I mean it seems obvious. It's not, but like it really that matters.

Yeah. It's funny to look at if you just ignore like you know, looking at a spreadsheet of portfolio construction and you just look at somebody and you look and you say, if this person has $100 million to deploy in the next three years, do I think they're gonna be able to give back hundreds of millions of dollars? And when you really just like look at somebody and just like ask yourself that question. Sometimes I, sometimes I look at a manager, you know, I'm an LP in a fund here in la.

You didn't do any math. It sounds like that was a Vibe LP investment.

It was a Vibe LP investment. But I looked at, you know, I'm talking about a buddy of mine, Jack Dreyfus, and like he's got a $30 million fund. I look at him and I'm like, yes, I believe he's going to get back around $100 million to his LPs. And like it's not like it's purely Vibes based, but the guy knows how to, you know, knows how to do deals.

Well, the other. Yeah, and I'll leave you guys, this. I know we're over is like. So I was talking to like a managing director at a pension fund that's got like over 55 billion and they're super active in venture. And he was actually saying he's like, go after the pensions. Because he's like, endowments will actually leave you. Like they will turn. But he's like, pensions don't. So if you get in, it's like pretty sticky, but they do have a high bar for emerging folks. But he was like, I almost, he's like, I could make a killing if I left here and just advised managers that are trying to basically institutionalize. Because he was like, the hard stuff are things like when to exit. He's like, you could be, you could have great access. You could actually pick up them right deals and you could just never exit at the right time. And he's like, that is just like a lot of what we see. So there's just an art to how do you institutionalize your firm that is like a lot of folks miss. So if emerging managers are listening, that's like the big chasm that is really hard to cross. Like have you hired appropriately? Even if you're a solo gp, when.

You talk about when to exit, are you talking about, let's say a breakout company in the portfolio is raising around at $5 billion and there's a lot of enough demand for the round and you're saying like when to exit the those positions or what did you mean by that?

I would say that largely most folks, especially emerging managers, at least as far as I know, are tell lps. And this is what I do as well. I'm not a public markets investor. When my companies go public, as soon as we're out of lockup like that, that's ideally around the time that we sell. And then it's your responsibility to do what you want to do with the shares. So I think a lot of it is on the way there especially, I mean, and this is probably a lot of what we're seeing because of 2021. A lot of folks should have probably, probably sold secondary on the way up because people got priced at like sky high valuations and there was secondary happening all over the place at an insane premium. And I think they're referring to VCs never selling secondary. And then those rounds go from being a 5 billion dollar series D where they could have sold secondary in 21, to like a billion dollar company right now and they're sitting on these and it's like just still on the books. And so I think it's a lot more of that that never happened. But that's hard.

Well, that's another reason to keep your fund small because if you have a $50 million fund and you get an opportunity to sell, you know, secondary like that could return the fund potentially. But if you're, you know, $500 million fund, it's hard to ever figure out an opportunity to sell secondary that's going to like meaningfully, you know, you know, return the fund or, or, or anything along those lines.

That stuff can haunt you too because I'll hear stories of people selling Facebook book when it was like, you know, 20 bucks. I think I heard the craziest story from Tiger once, which like I actually. Never mind. I was like, I don't even know if that's on the record.

Yeah, yeah, they love doing PR actually. Tiger loves just like they're open book.

I was like, that is not my story to tell.

There's definitely not a book about them where all the names are changed floating around.

Actually, no, it's got to be public knowledge. They sold. They. Oh, my God, they sold so early at Facebook. That's all I'll say it is. It hurts because they do.

20 people sold. I mean, like, Sequoia sold Google. And we've talked about this. Like, they, you know, IPO and then they just distribute and it's like, oh, like they sold Google at like 50 million or 100 million or 500 million. Like, way, way, way too early, by the way.

I have no idea if that. Look, I just think it's the. It's the angle. This the approach you want to take. If they want to take that capital and the returns they made and dump it right back in, then they should do that. But yeah.

Yeah.

Awesome, guys.

Anyway, this is great.

Thanks for squeezing this in and have a great weekend, y', all, too. See you soon.

Thank you.

Talk to you soon. Bye. Let's go to Zach Kukoff. He says, know your audience, Chief of staff edition. In DC, they're either 24 or 45. There's the second most powerful person in the room. They run the show in San Francisco. It's a new grad, a glorified associate best case or EA base case. And they run the slack.

Slack.

It's funny.

Very real. SF stole the word.

The title Chief co opted that language. Yeah. Yeah.

It made it extreme in the opposite direction.

They did. Yeah. Got to bring it back. She says thoughts and prayers for our glasspreneurs. The business is down 75%.

Is cooked so hard.

It's incredible.

Glass is not getting broken.

So San Francisco auto glass shops are now suffering as car break ins plunge. It really does seem like San Francisco's cleaning things up. There's a new mayor, There's a of lot of new investment, and obviously the AI boom. But I think just a general vibe shift. Not even around the federal election, but just around enough is enough. And so they're. They're mixing things up there and seems like good progress. And also anytime anything bad happens, somebody tags Gary Tan. He's Batman.

I kept telling friends who live in the Bay, I'm like, you realize that like, like 20, 23 was the time to be buying an SF because the vibe ship was happening.

Yes.

Homes were. When I. When I compared home prices in prime central SF to, like, suburbs outside of la.

Yep.

I was like, how does this make any sense? The only Reason it makes sense is people had gotten so depressed. There was not a lot of, you know, people saying, you know, certainly less people going, I'm going to move from Austin to sf.

Yeah. But people did get dramatic with the moves out of sf. Sf. It's like you could have gone to Marin, you could have gone to Atherton. But instead they were like, I need to go to Mogadishu, Somalia. I have to leave the, the hemisphere. I have to be so far away from San Francisco because it's so bad. I have to go to North Korea. I would rather be in Pyongyang than, than Incline Village in Tahoe. There's so many good options. Even, even if San Francisco, the city is rough, like Sunnyvale is fine. Like there's so many places, places in the bay that are great. You can go to Sand Hill Road, you can go to Menlo, you can go to Palo Alto. None of those places were ever bad. But it got really, really dramatic for a while. Anyway, here's a rumor from TechCrunch expense management startup ramp is being considered for a charge card pilot program by the US Government's General Services Administration.

Well, we're going to take a little credit for this.

Did they plant this in our head and they, and we joked about it or did we joke about it, plant the in their head?

I don't know. We were just joking about it.

We were joking about it.

We were joking about it in a serious way.

Yeah. And then, and then we got a, a deep dive on it. Eric put out a longer post, started taking it more seriously and it sounds like it's actually being considered, which is crazy. But you love to see it and it'd be very cool. I mean we always have the question of like where does the money go in the government. Why not have some insight in that? Why not have the receipts actually category categorized? That makes a ton of sense. There's some debate over whether or not.

Every card to a dollar like what they've been doing.

Yeah, yeah, yeah. Very, very bizarre functions. And I mean you can just imagine that if there's no oversight there's going to be more like just looser spending and that hurts the taxpayer. So very excited about this. I hope it happens. Anyway, anyways, let's move on. We talked about the golden dome. Anything else in here we should talk about? Should we close out with Willmanitis this talking about Don Valentine. Don Valentine, Don Valentine, he says on pricing and 25 year old entrepreneurs. Valentine says maybe, maybe we should go back and forth here. I'll be Valentine I guess. Can I make an observation before we switch? Sure, absolutely. Because John, I were. John and I were talking about this in the car and one of the great things about that venture business is that you're in an opportunity to learn constantly. One of the large number of things that were brilliantly recognized and executed was the pricing of the product. We have in general at Sequoia lots of trouble and Difficulty in persuading 25 entrepreneur, 25 year old entrepreneurs that you've got to price the product higher. And our agenda for that conviction was the fact that 25 year old that a 25 year old cannot run a company. Activate go golden retriever mode on 35 or 40% gross margin they need 60%, 65% gross margin in order to compensate for the mistakes that we know they're going to make. Not specifically, no. But in general we know they're going to waste a great deal of investment capital. That's a great insight. Like they're going to over hire, they're going to get over their skis on Capex, they're going to be excited and say oh yeah, let's just pay up for this talent and if you are.

Making a lot of money you can afford to make mistakes.

Yeah, it's fine. And Cisco was early on and no influence from me or other investors able to recognize the need of first of all pricing the product very high, sustaining a very high price and continuing to make enhancements to the product that provided them with the opportunity to continue at a high gross margin level or increase the high gross margin level. So one of the miracles of the launch of Cisco was the creation of an enviable cash flow that was early on very positive when most companies are not negative and I remember conversations not seriously had but not often had either about what we were going to do with all this cash we are accumulating now. Startups do not have accumulation problems, they have the opposite problem. So they need to persuade the founders.

Yeah, I love where, I love where Will pulled this from. Cisco Oral history panel part two I love it.

He's got the PDF esoteric.

He's got the PDF big PDF guy But I think that's a good place to end the show.

Yeah, this was fun.

Hope everyone has a fantastic weekend ahead.

Thank you to Polymarket. If you're trying to monitor the news in real time over this weekend, head over to Polymarket. They got a bunch of markets to check out what's going on.

Yeah, the Polymarket news platform never stops. I shared earlier this chart the largest company end of April, and Apple and Microsoft were neck and neck, and then Tim cooked. And Apple is now sitting at, you know, a 92% with a almost a couple weeks left in the month. So who would have thought that Apple would be still on top in a trade war with China, their primary supplier?

They're doing great.

Tim is goaded when it comes to supply chain management. So anyways, we were in one of those interviews.

I just looked over at that stupid giant gong and started laughing.

When we roll out this gong, it's gonna be insane. Keep going to the wide angle. And the gong is not even. It's too big to fit in the shot.

It's such a tease. Anyway, have a great weekend, everyone. Happy Friday. We will see you soon. Goodbye.

Looking forward to Monday. Cheers.