Elon vs OpenAI, Ads in ChatGPT, Leaked Tech Emails | Sean Frank, Bill Shufelt, Alex Mashrabov, Sonya Huang & Pat Grady

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Today is Friday, January 16, 2026. We are live from the TVPN Ultradome. The temple of technology, the fortress of finance, the capital of capital, El capitol de capital. Let's tell you about Ramp times. Money baby Save Both easy to use. Corporate cards, bill payments, accounting and a whole lot more all in one place. It is the goat of fintech. A fintech goat. A bunch of news today. Lots of people dropping stuff on Fridays. What's the meaning behind that? I don't know, but we'll take you through it. Lots of AI news, lots of OpenAI news because there's new details, new discovery in the OpenAI vs Elon Musk lawsuit that's heating up.

There's a whole bunch of scoops Greg was waiting for.

Yes, for sure, for sure. There's a lot of crazy quotes.

Really?

We're going to go through it all.

Yeah.

Because it's part of our job.

We're going to go through both sides. We're going to do the steel man for Sam, the steel man for Elon.

Yeah. I would just say I have a lot of sympathy for Greg. This is like a night, you know, having your personal diary.

It is sort of crazy. I mean, do we know it's his diary?

Elon's calling, framing it as a diary.

I think you had the best take of the day so far, which is that this is the super bowl for.

Nick on X. Nick on X. Nik.

Is having the best OpenAI's number one hater for three years. He's having a great time. Anyway, let's take you through the Linear lineup, tell you who we're having on the show today. Linear, of course, is the system for modern software development. 70% of enterprise workspaces on Linear are using agents now. And we will be having the co founder and CEO, the founder and CEO of Athletic Brewing. We got the Athletic Brewing beers here in the studio.

We got a lot of them.

Pat Grady and Sonia Wong from Sequoia Capital coming on their co authors of 2026. This is AGI. Then we have Sean Frank Emergency podcast. They put ads in ChatGPT, so we're calling the God of ads himself, Sean Frank, the CEO of Ridge. And then Alex from Higgs Field's coming back on the show to give us an update.

They just hit 200. Alien Arrast is growing.

So we're very excited for our guests. But we have about 90 minutes here to lock in talk about the two sides of the Elon vs OpenAI lawsuit. So let's kick it off with the Elon should lose side of the argument. I'm going to be steel manning. Sam Steel Manning. Greg, they did nothing wrong. Elon's wrong. He needs to back up.

Do you want your helmet?

I need the steel man helmet for the whole thing. It might be too much. Maybe let's put it on the turbo puffer. But we'll just let everyone know. Going to. We're. We're Steel Manning like crazy. Put it on the puffer.

I'll wear it.

Okay, you can wear it. Before we do, let me steel man some superintelligence cloud. Specifically Lambda Lambda is the superintelligence cloud. Building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. So, okay, Elon made a donation to a nonprofit organization. He got a tax write off on that donation. And that nonprofit, OpenAI the nonprofit, now one of the best funded nonprofits in history and it's still focused on the original mission. OpenAI the nonprofit, it still exists. It has just a tiny hundred plus billion dollar position in a for profit company. They're going to be able to do nonprofit stuff forever. Whatever they want to do. If they want to hire researchers, if they want to write white papers, if they want to train their own models, the OpenAI nonprofit can do that. It's funded. Elon donated roughly $38 million alongside other donors who put in 90 million. There's some debate over how much put in. I saw one report that was around 45. It's in the tens of millions of dollars. And he was a large.

According to. According to OpenAI, they believe that. I think their sort of optimistic belief is that the damages would be $38 million if they lose the original donation.

If they lose. But I'm arguing right now that they're going to win. They're going to win. The jury's going to say not guilty. OpenAI did nothing wrong, and here's why. So Elon, yeah, he was a big donor. He put up tens of millions of dollars. But play out the counterfactual. It's entirely reasonable to assume that things would have played out exactly the same even if Elon was never in the picture, even if he never donated.

Sure.

I mean, the office would have had to be a little bit smaller. You're working with 90 million instead of 120 million. But we've seen folks raise 90 million Series B's. We've seen folks raise $120 million Series C's roughly the same company. You know, you pay People a little bit less, you have a few less perks. The office snacks aren't as good. Maybe you skimp on the 45 pound plates. You just get the pound plates. These things happen. So if Elon had never donated, maybe Sam would have just stepped up his donation. He put in 10. Maybe he goes and leverages something.

He's a non profit club.

Yeah, yeah, he put in 10. He could have potentially sold more stock that he owned, taken a loan, sold Property, put the McLaren F1 up for sale. That's another $20 million he could pour in. He could have filled that gap. Or he could have hit the road. He's a good fundraiser. He could have gone out and gotten money from a variety of people. Reid Hoffman, Peter Thiel, Dustin Moskovitz, all put in money. There are more tech billionaires in that crowd that could have written a $1 million check. So Sam could have gotten 34 $1 million checks and filled the gap. So it's not like if Elon didn't donate, he wouldn't have, like OpenAI wouldn't exist. Right. It's totally possible that everything would have been the same and that the Elon donations were not make or break for OpenAI. So Elon should lose this case because everyone around the table came to the same realization at roughly the same time about the goal of creating AI responsibly. Basically, scaling laws ensured that AI progress would require vastly more capital than could ever be raised through donations. At a certain point, if you need $100 million for a nonprofit, you can do it if you're aligned with some of the world's richest people in tech, like Elon, Peter Thiel, the other folks that I mentioned. On the flip side, if you need $100 billion or you need $50 billion like OpenAI has already raised in the venture markets, that's just not going to happen in the nonprofit sector. Except it could have. Because if Elon really believed in the nonprofit mission and really said nonprofit or bust, yes, I see the scaling laws. Yes, I agree. We'll need an insane amount of capital to get to AGI. Well, guess who has an insane amount of capital?

Elon.

If he wanted to, he could have said yes, I'm staying with the nonprofit strategy and I'm going to put up the 50 billion. Every dollar that OpenAI has raised in the venture markets could have been a dollar donated by Elon Musk if he sold out all the positions now. It's crazy. Never going to happen. Doesn't make any sense. Obviously we're Pro. I think the nonprofit transition makes a ton of sense in the context of raising that amount of money. I think that's a reality. And truthfully, I think that everyone around the table agreed about that.

And so one thing that seems clear here is there. There were a variety of different paths, but clearly a lot of big personalities in the room, a lot of ego. And it makes sense that eventually that just kind of blew up, right?

Yeah. And so even if you were going to keep funding the nonprofit, you're going up against Google. They have an economic flywheel that will provide the amount of capital required to advance AI, build massive. They're a hyperscaler. They're going to build massive data centers. They're not going to have a problem with this. Google was set up to make investments at this level. At 10 billion of capex, Google's not blinking. The shareholders are all thumbs up on that. Very different.

Remember when Sam was texting Elon, I think this was in 2023, saying, like, it pains me to see you attack OpenAI publicly. I think we can both agree it's important that Google doesn't own AI. And that's been one of the only things that throughout this whole process they've stayed in agreement on.

Yes, yes. So they want to create a counterbalance to Google specifically. And Elon actually agreed with this as they were shifting from maybe the nonprofit's not the ultimate way to win this AI race, this AI battle, this AI future. Because Elon agreed, according to Greg Brockman in emails that he said he being Elon said nonprofit was def. The right one early on, the right structure at the beginning, but may not be the right one now. So according to these leaks, it seems like Elon wasn't always all in on a nonprofit. He was maybe open to the idea of a for profit. And of course, that was a fork in the road. Elon did actually have the money to continue supporting OpenAI as a nonprofit would have been crazy, but technically could have sold down positions. But Elon clearly agreed that OpenAI should build a for profit. And that's why he wanted equity. He wanted to be CEO. He was interested in OpenAI joining Tesla. Tesla's a for profit. He wasn't saying, we're going to bring OpenAI over to Tesla and the whole thing is going to be a nonprofit. Clearly, Elon is no purist about nonprofit AI research. He runs XAI. It's a direct competitor to OpenAI. He started it as a benefit corporation, which meant it had an obligation to deliver environmental and social benefits. But after the merger with X, that benefit corporation status was dropped entirely. This whole lawsuit is clearly just corporate lawfare and the battle should be fought out in the financial markets, in the App Store, on the open Internet, not the courtroom. Let the best product win. Let the best AI model win. Let the best team win. And so let's wrap this court case up and let OpenAI go and compete it out. They're fighting a war on five different fronts. Let them. Let them build, let them cook.

Yeah. It's worth noting that this is. This is the. This is what winning, like today is what winning looks like for Elon if he gets a. If he gets like the damages awarded and he gets 38 million.

Yeah.

He's like, nice. Yeah, I can fund XAI for a week or even 20 billion if he gets like some points in OpenAI. Right?

Yeah.

He's like, great. This is not a material jump in my net worth or even my influence or power, whatever he's looking for. This doesn't really get me one step closer to Mars. Right. It doesn't necessarily align. So the wind state right now is just being disruptive, basically buying XAI time, putting OpenAI in a position where they are trying to go public. Right. And they've got this massive high profile trial going on.

The helmet is really adding a lot to this conversation. I love it. The chat loves it too. Jordan in a night helmet is what winning looks like.

Anyways, thinking.

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Gets me fired up. This, this kind of. This reminded me today of the deal rippling lawsuit where like the actual win state for this, like, deal rippling lawsuit is just rippling, like, like being a somewhat of an annoyance. Right. Both companies are going to continue.

Yeah, yeah, yeah.

There's no amount of money that's going to make Parker, like, happy.

Right.

But what. What will like, probably make him happy is just like making it harder for deal to go public. Yep.

Right?

Yeah. Did you see that line that apparently they were talking to Elon in one of these, like, leaked emails and Elon's like, I don't really care about money, but I do need, I do need $80 billion just handy in my back pocket for a city on Mars. It's like, it's like the most extreme being like, yeah, like I'm, I'm. I'm basically post economic but there's like one more thing that I'm reaching for and it just happens to $80 billion. Like more liquidity than anyone has ever had in history. And I just need it ready to go for when I land on Mars and want to build.

I just need about 80 billion liquid.

Just liquid.

Liquid.

It would fix me. He says, 80 billion liquid would fix me.

In fact, even then I moved back to California because even if they're doing a 1% a year right, I can probably get.

Okay, now let's argue the flip side. Elon Musk will win the OpenAI lawsuit. And before we tell you how and why Elon will win the OpenAI lawsuit, I'll tell you about Console. Console builds AI agents that automate 70% of it. HR and finance support giving employees instant resolution for access requests and password resets. So Elon will win the OpenAI lawsuit. And he should. And he should, he should win this. Judge Gonzalez Rogers already rejected OpenAI's motion to dismiss. OpenAI wanted to throw this thing out and the judge said no. The judge said, I think there's plenty of evidence that something happened here. Yes, it's all circumstantial, but that's how these things work. OpenAI was trying to kill the case before the trial even started. They're trying to get rid of this thing, but it's clear that Elon is onto something here. Okay, just look at the emails. Just look at the emails. It's so obvious that the OpenAI squad was trying to fleece Elon and push him out without giving him a fair share. Elon said, guys, I've had enough. This is a direct quote from Elon email. Guys, I've had enough. This is the final straw. Either go do something on your own or continue with OpenAI as a non profit. Otherwise, I'm out. I'm not donating anymore. You guys, if you're gonna do the for profit, just go start a normal company and wind this thing down. And that makes a ton of sense. It was an open invitation by him to just go build a traditional part of the trial.

Part of the trial in this proceeding that I'm interested in is like finding out why they didn't just do that. Yeah, it's not like Sam and GRE have been like, cool, we worked on a nonprofit for a while.

How do we set up a C corp?

How do we set up a C corp?

How do we set up a Sam?

Sam's like, oh, I, I, I own like a couple points of stripe. Yeah, I think they have Something called Atlas. You can just make a C corp. Maybe he forgot a few clicks. Maybe he just forgot.

Oh, if I remembered about Atlas, if.

There was, if there was like a very, very specific reason, like the, the nonprofit had developed some IP at that point.

Yeah.

That meant that starting over or having to rebuild the team or whatever factor meant that that was going to set them back years. That's a big deal.

Yeah. And realistically, even there's no indentured servitude, you can't keep nonprofit employees working there. Why is the horse the workhorse and OpenAI Ilya Sutsk button Ilya was the workhorse at OpenAI. And you needed him to keep the excitement, keep working. He developed a ton of the foundational technologies at OpenAI. And if he wanted to work at a nonprofit and you say, hey, we're leaving to go do a for profit, come over here. Who knows if he's going to come? And that, that applies to tons of different researchers that were instrumental in the development of what ultimately became ChatGPT and GPT 3 and 4. And so Elon gave them an invitation. Just go out and build a traditional venture backed company. Maybe I'll invest, maybe I'll be involved, maybe I won't, but at least we'll have a clean slate to start from. It would have been trivial to set up a new entity. As we discussed, you could start building a team and then you run the classic venture playbook. But Sam told Elon that he remained, quote, enthusiastic about the nonprofit structure. That was enough to get Elon to donate more. But OpenAI wasn't all in on staying in nonprofit mode. They were on the cusp of restructuring OpenAI and taking the $10 billion investment from Microsoft. See the reality of modern philanthropy, it's not fire. And forget big donors like Elon in this case do have specific intentions and conditions attached to the gifts. It's not like he's just throwing 20 bucks in the Salvation army donation box around Christmas. This is 30 something million. If you give that to a university and you want a building, they need to build that building. They probably need to build it to your specifications. Even if you want to put your name on it. Yeah, they might even put your name on it. And, and you can, and you can dictate these things in a nonprofit donation and you can ask that they, that, that the donation is contingent on those results. You can, you can pursue specific directions you have. He has every right to demand results.

And so yeah, meanwhile, you know, during this whole period, Greg is writing to himself Allegedly that he cannot say we are committed to the nonprofit. Don't want to say that we're committed if three months later we're doing B Corp and it was a lie, and then later saying, can't see us turning this into a for profit without a very nasty fight. His story will correctly be that we weren't honest with him in the end about still wanting to do the for profit just without him.

Yeah. Before we continue our defense of Elon Musk, let's tell you about Cognition. They're the makers of Devon, the AI software engineer. Crush your backlog with your personal AI engineering team. So a big part of this if and why Elon is going to win, why he should win, is that you can't just have corporate structure, remorse, OpenAI. You can't pull the plug on promises made OpenAI's own certificates of incorporation. Talk about creating a company, quote, exclusively for charitable purposes with the technology being intended to benefit the public. What's exclusively charitable about raising venture to build a subscription app with ads. That's not charity. Why? Why are you doing that? Elon's right. Not only should Elon win this case against OpenAI, he will win this case. It's simple. A bunch of people, bunch of San Francisco elite tech guys, their fancy cars promised to build AI for Humanity. They took $38 million from one of their co founders based on that promise, then turned around and built a $500 billion for profit empire with Microsoft. It's a straightforward bait and switch story that will play well to 12 regular jurors in Oakland. And so that's the case.

I mean, this is going to be the big challenge. Finding 12 regular people in Oakland extremely offline.

How illegal is it to try to be on a jury?

Extremely. Stop trying to get on the jury.

Stop trying to get on the jury.

Look, I said this. I'm going to vot. I'm going to vote in favor of whoever has the higher ARC AGI score.

Okay?

I'm just pro AI progress.

Yes. Yes.

I don't care at all about who wins. I just want better models.

You just want better AI?

Yeah.

Whoever will build, whoever's scaling faster. Well, then I think you go with open AI. They have. They have 50 billion in the bank.

Dan, in the chat, ready to be a juror? We got to get somebody in the chat.

Somebody in the chat got to get. Yeah, just live tweeting in the corner while you're injured. Just like, hey, guys. Yeah. In the chat. Yeah. I don't know. I mean, this is incredibly Dramatic. We're going to hear a bunch of crazy storylines, learn a lot about the internal mechanics of both the elon Empire and OpenAI's world. But at the end of the day, OpenAI is signaling to investors, hey, the max damage is going to be 38 million, something like that.

They did say it could be more.

It could be more.

Of course, it could always be more.

It does feel like it won't be existential and it feels like it's more of a vibe war than maybe a true economic war. I mean, you could go back and argue that Elon should get pro rata equity at what it was effectively like a pre seed round that was done as a nonprofit. And that's 38 out of 120 that was raised in the nonprofit, something like that. So you give him 23.

Is there any precedent for a company going for a blockbuster IPO while having this like, lawsuit that is really going at the, like, foundation of the entity itself? Right. You can imagine a company going public where they're in some process, legal process, with a former executive or a specific customer or even a lender on some.

Individual deal. I can't think of anything this big ever happening. But OpenAI is a unique company and if anything, it's going to draw a lot of attention to the company.

And yeah, it's interesting from the retail investor crowd. I think they're still going to be happy to be in this company even if this is all not settled. But it's really a question of is Wall street going to be on board?

I think Wall street will underwrite it as there's a potential settlement that could be in the tens of millions, it could be in the billions. But at the same time, you just calculate an expected value, take that off the valuation that you've built up, and if you're bullish on the long term value and cash flow of the business you buy anyway, I think that's sort of what happens. Tyler.

Okay, so I've been reading through some of the documents and so I just want to add some other details, please. So one thing is, I think I'm reading through, you can actually see the arguments being made. One of them is from the defense of OpenAI and that Elon actually didn't directly donate to OpenAI. It was basically indirectly through a donor advised fund through OpenAI's fiscal sponsor, YC. And so because it's not direct, the idea of the specific charitable purpose doesn't actually hold up and that it actually just defaults to OpenAI's.

Yeah, because you donate to one entity and then that entity would have to make that claim so their direct communication doesn't necessarily pull as much weight.

And then so there's like, there's a bunch of pages about the history of, like, how you actually define these things. So it seems like it's going to just come down to extremely esoteric legal definitions of trust.

Well, I think we're out of steel man mode. Jordy, of course, dons the steel man helmet whenever he's trying to steel man. An argument. We thank you for putting up with our shenanigans and our props. Let me tell you about Vibe Co, where D2C brands, B2B startups and AI companies advertise on streaming TV, pick channels, target audiences and measure sales, just like on Meta. And speaking of ads, there's ads in ChatGPT. I liked Raghav in the chat saying they're putting ads in ChatGPT to help fund the trial. Oh, sorry, that was actually Dave. But Raghav did say OpenAI is nothing without its lawsuits, which I think is very funny.

Anyway, if you want to know, let's.

Go through some, let's go through some of the leaks, let's go through some of the ad details. We also have Sean Frank from Ridge joining to break down the ad landscape, whether he will be advertising ridge wallets in ChatGPT anytime soon.

Yeah, part of the last thing I would say there is, part of OpenAI's defense is that through their actions they've created one of the most well capitalized foundations in history. Right. And I think that they're going to continue to lean on that. Novo Nordisk has a foundation themselves focused on biomedical research. And it's like it has. The estimate is that they have $167 billion.

Okay, so that's why we're using the term one of the best funded. Because it's possible that the OpenAI nonprofit might not be the best funded in history. Although if the stock continues to rip, they will probably become the best funded in the in history. Well, there's a whole bunch of leaks news in the timeline. There's so many documents that hit the timeline that it brought down all of X and X actually crashed because so many people were logging on to read the Brockman files.

Yeah, and there's one more quote that's worth reading through, which is that from the Greg Files from Greg Gate. Another realization from this meeting is that it'd be wrong to steal the nonprofit from him to convert to a B corp without him. That'd Be pretty morally bankrupt. Yeah, he's really not an idiot.

Yeah, I mean, but that sounds like, you know, they were, like, it would be wrong to do that. And by their admission, like, they would argue that they didn't steal it from him.

The funny thing in here. The funny thing in here is like the. And again, I love Greg and I feel bad that this is all coming out, but his very millennial coded writing, Brockman further wrote under the heading, our plan quote, it would be nice to be making the billions.

Okay, I didn't see that one. That's a funny one. I do think that there's a very odd wrinkle where Elon didn't invest in the for profit when any of those rounds were going. Like, the ships were so thoroughly burnt to a crisp that even when the new for profit was doing the round, he was not. There's. At least we haven't seen a lot of emails or evidence saying like, whoa, whoa, whoa, don't go with Microsoft. At least give me right of first refusal. Let's do this at Tesla. And I'll be the financier and I'll take the equity. I'm bullish on this. And you don't have to. I don't know how much that plays into the actual court case, but it is interesting just seeing once the ships were burned and the bridges were burned and the paths started to diverge like they never really resolidified, and you would think that, you know, if you wanted to continue, you would try and build a position one way or another, get some cap table ownership. It is odd that we're in a situation where Elon has zero equity in the OpenAI for profit. There were clearly many opportunities to get exposure, but again, bad blood. So who knows?

Maybe at least Greg didn't go in front of Congress and say, I'm just doing this because I love it. Y make these other notes on it would be nice to be making the billions.

Yeah, for sure. But the other interesting thing is that do we know where Sam Altman sits in terms of equity? It's been going back and forth.

There isn't a number. But in one of the documents, I lost it, but it said he had indirect exposure via yc.

Okay, okay. Into the for profit as well.

Yes.

Okay, so look through exposure there. But then in terms of like an actual grant, is there a number that's been thrown around?

To my knowledge, nothing has been shared publicly other than the sort of idea of him getting around 7%.

Okay, okay. But yeah, that still feels low for Co founder of a. You know.

No, but that was happening. That's like. That's like a lot of happened.

Yeah.

No, by that point makes sense.

But, you know, it's just like the Mark Zuckerberg or the Bill Gates or the, you know, or the Jeff Bezos scenario.

I mean. Yeah. If anything, these files make a lot of Elon's kind of antics more understandable. He's been the one saying that they're morally bankrupt. And here they just straight up say pretty morally bankrupt to steal the nonprofit from him.

Yeah.

I don't think anyone ever expected their. That language came out that was this specific about their moment to moment thinking during that point in time.

Yeah. What's the phrase that Elon uses? Scam. Defaultman. Scamule. Scamule. Defaultman. The timeline is really so stupid. The portmantez. But I mean, one thing that is real is that it's very clear that at some point the core OpenAI team was like, it's either like Elon as CEO, financial backer, like, complete control. Like Greg Brockman said, this is the only chance we have to get out from Elon. Is he the glorious leader that I would pick. We truly have a chance to make this happen financially. What will take me to 1B? Which is interesting because there are definitely people that have been taken to 1B alongside Elon. With Elon in the glorious leader seat. Like, there are people on the Tesla train. There are people on SpaceX train where truly, like, they are completely hands off. Elon is the glorious leader of those companies. They don't have any control over Elon, but Elon has given them effectively billions and billions through either their direct work with the company or their investment in the company. Like, there's a whole bunch of ways that those two things could actually be very compatible.

Yeah.

But it would be weird, especially if you want more of an egalitarian organization, more of an equal board, more of a.

Well, you look and you look at the run that Sam has gone on.

Yeah.

And you could imagine a situation where they're sitting at a table and saying, this boardroom ain't big enough for the two of us.

Yep.

Right?

Yep.

And it really feels that way.

Big egos. Yeah. Yeah.

Sam notoriously is able to draw in capital using many of the same sort of methods that Elon has.

Yeah. I do think the. Financially, what will take me to 1B? That's just a good question to ask.

Everybody needs to be asking themselves this.

Yes. This is something that should be taught in grade school.

Really.

I See people on Instagram reels all the time asking this question. Alex Hormozi makes reels about this. He's asking himself this question. The only other question is why aren't you asking yourself that question? You should. You should also get on 11 labs, build intelligent real time conversational agents. Reimagine human technology interaction with 11 labs, baby. Continuing with the timeline, a federal judge denied OpenAI's motion for summary judgment. The case is going to trial and Tyler's moving to Oakland.

Oakland, East Bay.

Should we read through some of Alex Heath's coverage in Sources News and talk.

About a scoop athlete that has really given. I call him Scoop God, really given Kylie over at Core Memory. I mean these two are just going head to head, right?

Yeah, yeah, it is a knockout drag out fight for scoop athlete of the year, but they're both doing great stuff. And Alex read through thousands of Pages in Musk vs Altman so you don't have to. We'll go through some of the summary here. There's some news about Ilya Sutskever. Ilya had early concerns about treating open source AI as a sideshow. In 2022, OpenAI's leaders seemed quite concerned about the prominence of the Open Source lab Stability AI. We don't talk about stable diffusion that often anymore, but I believe Stability AI was the team behind that. Right. Imad Mustach, I believe, runs it. Sutskever voiced his worry over text with Murati and others. Sutskever, my trepidation around Open source is that we're treating it as a sideshow, eg def. Not going far enough to really hurt stability. So they're not taking it seriously. And if Open source takes off, everyone could standardize on that.

Says bro. Scooping harder than a Ben and Jerry's employee.

Let's go. This is good. This is good. Alex, he's scooping harder than a Ben and Jerry's employee. We're gonna use that from now on. This is fantastic. Maratti Mira said we're missing the option.

Standing and let's just say Mira is the real winner here. Yeah, she's winning today simply because. Oh yeah, attention has shifted away from, you know, a good number of people.

Leaving their own, their own co founder, exodus, drama firings, who knows what's happening. But good to have the narrative shift and the vibes move on to OpenAI versus Elon Musk. So Miramoradi said, We're missing the opportunity to set standards with this massive growing group of developers. People are hungry to build things and we should lean in and bring our tech to as many people as possible long term, maximize our chance of maintaining leash, reducing competition. But if we do everything to get this in a couple of weeks at any cost out, because we heard stability is open sourcing a similar model, that's not in line at all with my motivation. So reducing competition, never something you want to see in discovery, always something you want to see in a pitch meeting with a vc, but you usually don't want to put it in writing. OpenAI leaders were divided over early investor Reid Hoffman's decision to start a rival AI lab, Inflection and Reid Hoffman's interesting because he was one of the big early donors, I believe maybe 10 million, something like that, in the millions. And he has not joined the lawsuit. He has not jumped in and said, hey, I need equity in OpenAI. I'm also wrong to like Elon now. In order to make the claim that Elon's making, you need a lot more correspondence, a lot more proof of, you know, misleading around the donation. And I don't think Reid necessarily has that. But also he doesn't seem to be saber rattling about it. So there were already. They were also already. They were. They were also already considering prohibiting investors from backing competing labs from an October 2022 exchange. Sutzkever I guess I just felt betrayed by him founding a direct competitor while simultaneously telling me, quote, I could not possibly imagine you'd find it it objectionable.

And this is Inflection AI.

Of course he'd find it objectionable.

Inflection AI, which was ultimately sort of like acquired by Microsoft in that licensing deal.

Was that Mustafa Suleiman's company? I think Inflection Altman. Here's how I'd summarize my thoughts on this. Pros. He supported us in a moment when no one else would. And it was pretty existential. Okay, so we're learning more about the existentialness of certain donations when they came in. During the OpenAI nonprofit era, there are times when if somebody didn't come in and write a check, it would have been very, very rough for them. And Sam says Reid helped out at a key moment. I think OpenAI would have been pretty effed if he hadn't stepped up. Also, he was instrumental in getting the first Microsoft deal done and has generally been quite helpful with Microsoft related stuff. And he's generally a good board member. Cons, he's very motivated by collecting status, although I personally think he cares much more about OpenAI than inflection. He was blinded enough by the startup of Being able to call himself the co founder of a company, he made an uncareful decision. Also at this point, I think this, at this point, I think at this point OpenAI has the leverage to ask for a soft promise for new investors not to invest in competitors. But only a select few companies ever get to do that. And we heard stories of this during one of the bigger fundraisers where even Glean was targeted as something that they didn't want their investors to also invest in. They wanted you to be open AI ride or die, of course, tons of funds said I'd like a basket of labs, actually I'm going to invest in.

I would like broad based exposure.

I would like broad based exposure. And so I'm doing SSI and thinking machines that I'm doing anthropic too. And I'm also on the board of Meta and I'm also investing in OpenAI and XAI. You got to get a little taste of all of them. Brockman chimes in. He says, oh, also an aside, after talking to Sam Altman, I'm planning to meet Patrick Collison Tomorrow in demo DB3 will ask if he's interested in participating in the tender under the condition of not investing in AGI big model competitors. So we talked about the Brockman diary.

Well, yeah, the funny thing is he must. I'd find it hard to believe that he didn't get to 1 billion just off of Stripe. Obviously Stripe was much smaller back then, but Greg was the CTO of stripe from 2010 to 2015. Stripe was founded in 2010. He was there for certainly longer than a four year vest. So who knows.

But we don't know about his consumption habits. He might have been selling off Stripe equity as fast as possible to.

He might have been using shares to pay for coffee. It's like saying, hey, I'll give you a forward contract on one of these shares if you give me a free cup of joe.

Yeah. Satya Nadella was worried about Microsoft's position in AI when he started looking at OpenAI.

Stripe was in 2017, Stripe was valued at 9.2 billion.

Bunch of wee lads, Stripe. From Satya Nadella's deposition, the question to Satya Nadella, the CEO of Microsoft, did you feel that your progress was moving more slowly than you had liked? And the answer, Satya Nadella says, I mean always as a CEO of a company, I feel my job is to sort of be dissatisfied with the rate of progress at all times. And so yes would be the answer, which is both in the absolute sense which is can we build products that are more capable in any particular domain? And also, you know, vis a vis competition, there were others achieving things that we looked at and said, hey, that's great. And also how can we make sure we're competitive with it? And so Satya Nadella was obviously motivated to invest and now he has a huge stack of OpenAI shares ready to rock. Also, Satya Nadella almost wrote a book about an AI about AI called An Inflection Point. I think he definitely should write that book. That sounds amazing. According to an exhibit filed in the case, it was co written with Marco Ioncity and was in development in 2023. From the first chapter on Wednesday, August 24, 2022, with the Pacific Northwest summer showing all of its beauty, Bill Gates hosted a dinner at his home in Lake Washington, just a few miles from Microsoft's campus. No longer a Microsoft board member or even Microsoft's largest shareholder, Bill remained the iconic co founder and trusted advisor of the company's senior technical leaders. Satya suggested the gathering, which included Chief Technology Officer Kevin Scott and a handful of top researchers. Food and drinks would be served, but the main entree was a hush hush demo by OpenAI co founder Sam Altman on a forthcoming release of ChatGPT, powered by GPT4, an AI built on large language models. Bill had long encouraged researchers to develop a truly accomplished AI assistant, but had voiced his skepticism about this particular approach.

This sounds like I'm listening to an audible.

Thank you, CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches, baby. That's right, CrowdStrike. So that would be fun. I hope that book gets published. It'd be fun to have some of those little stories about. I don't feel like we don't have enough oral histories of AI who was in the room at what time. I feel like there's a whole series of books to be written about OpenAI. I know that they're writing, they've written a few, but most of them are sort of these like skeptical drama pieces. I'd be much more interested in two different books. One would be the technical histories, like exactly what researchers were doing, what at what times. And also I want to know the feeling that was going through Ilya's head. And what was the vibe when he said like I'm hitting the button and I'm running the training run.

What do you think you're just describing doorkech's book. Yeah, but the Scaling Era, an oral History of AI 2019-2025.

So, yes.

And he interviewed Ilya.

Yeah, yeah, So I hear you on that. Being a great tour of AI progress across labs. I'm talking about within a single lab. Within a single lab. You're in the room account of narrow it just to the GPT models. And so imagine the scaling era, but.

Just for the product, basically the acquired episode.

There's that. I mean, isn't there news that there's a book on Demis Hassibas that's coming out about DeepMind, that's going to be fantastic. It's written by Sebastian Malabai, one of the goats of business writing. He wrote the Power Law, all about the history of Silicon Valley. I know that book is going to be incredible. So I'd be very interested in the research side, how the research developed, who was doing what, and then I'd also be interested in the financial side. I want to know, okay, how did this SPV actually get done? What were the terms on this? Who was jumping in, in this round at what terms? Who were they talking to? Who were their LPs? Were their LPs skeptical? We've talked to and seen a little bit of the other side of that.

And then layering in all of this information from the, like, depth, like the deposition.

Totally, totally.

And some of these. Yeah, some of this evidence that's come out that we read.

And so there are a few writers that will take different cracks at the OpenAI story. I think the definitive book probably has yet to be written, but it will come. And hopefully Satya Nadella can play a role in that because he's such a key figure in the full story. Vanta Automate Compliance and Security. Vanta is the leading AI trust management platform. I like Foghorn. Microsoft beat out Amazon when it initially started working with OpenAI. Elon Musk was opposed to working with Jeff Bezos and wrote the following. In an early email to Sam Altman, he said, I think Jeff is a bit of a tool and Satya is not. So I slightly prefer Microsoft, but I hate the marketing department. Altman responded that Amazon had started, quote, really dicking us around.

Yeah, that's such a crazy line.

He's like, I don't like his taste in champagne. Have you seen what that guy drinks in St. Barts? It's unacceptable. He should be taking it up another notch.

And the sparklers with the champagne.

Sparklers, it's all. It's just over the top.

He knew he was gonna get mogged.

Yeah, yeah. True, true. Yeah. I like a Tesla tequila. Over a St. Bart's champagne bathtub. I don't know.

Credit to Jeff. He, of course, was a bit more locked in during that era.

So the upside on Microsoft's initial $1 billion investment in OpenAI was capped at 500 billion. Hopefully they hit that cap. From a filing written by Musk's lawyers In November 2018, after dinner with Sam Altman, Scott told Nadella that OpenAI's new corporate structure offered both, quote, a commercial vehicle for monetizing OpenAIP and investment returns capped at 500 billion. That's not bad. A 500x bagger is going to move the needle for Microsoft for sure. Altman claimed the nonprofit would eventually benefit because though OpenAI has yet to make a single dollar in returns, if OpenAI ever does get to 500 billion in returns, the balance over that goes directly to the 501C3. That's exciting. Microsoft's board initially approved a capital investment of 2 billion, but ultimately decided to limit its initial investment to to 1 billion in the hopes that a smaller investment would press OpenAI to commercialize.

Satya. Hey, we got it. We can't give them too much.

Let's put a little fire under them. Let's make sure that they're thinking about dollars, dollars and cents.

Well, you see what you've seen. You've seen what happened with thinking machines. Give somebody 2 billion. Maybe less pressure to commercialize, maybe, maybe more money on weight. Weight racks.

Yes. Yes. In exchange for its investment, Microsoft received a convertible limited partnership, interest and rights to OpenAI's profits, with returns capped at 2,000% of its $1 billion investment. Microsoft CFO noted in an internal email that the cap is actually larger than 90% of public companies. And the limit on Microsoft's profits is not terribly constraining nor terribly altruistic. In fact, it was a good investment. At Microsoft's request, true, OpenAI agreed to keep any mention of Microsoft's promise 2000% of return on its investment out of its public announcement. Imagine going to someone and pitching them, oh, we'll give you a 2000% return and then actually delivering it. What a crazy, crazy story. Gusto. The united platform for payroll benefits and hr built to evolve with modern small and medium sized businesses. Get on it. Stop making excuses. The second update to Microsoft's partnership with OpenAI in 2021 included another $2 billion investment that wasn't reported and came with a lower upside. This is also a filing from Musk's lawyers. In March of 2021, Microsoft quietly invested another $2 billion in OpenAI. Neither OpenAI nor Microsoft publicly announced the investment, which was subject to a lower 6x return multiple. In place of its 2019 license to a single OpenAI model, Microsoft secured rights to commercialize any OpenAI model developed during the term of the agreement accept AGI facilitating its commercial use of OpenAI's IP. Microsoft was permitted to permitted to embed up to 10 of its employees on site at OpenAI. That's interesting. Anticipate Anticipating increased product commercialization, Microsoft and OpenAI agreed to share any resulting revenue. Just three months later, in June of 2021, Microsoft released GitHub Copilot, its first product incorporating OpenAI's technology. Well, there are many, many more scoops in this piece by Alex Heath over at Sources News. So I encourage you to go subscribe, go sign up for his substack and read the full thing for yourself because there's a lot of interesting stuff going on. But we should move on to the timeline. There's so much more news. Let's find some post to run through. Everyone is having fun with financially. What will take me to 1B sitting on the edge of the bed. I love it.

Feet up.

You got to be asking yourself this. It's just so clear. This could have saved OpenAI from Elon. And it's a diary with a lock on it. I think the diary framing is like woefully wrong. That's probably the worst part of this whole thing is because most of the thoughts that Greg's putting out are completely reasonable. It's like, yeah, we shouldn't screw this guy over. Do we really want him to have complete authority? I can't. These are all reasonable things to be thinking out loud. It's just when you write them down, they get recontextualized in the courtroom. And then the fact that it's framed as a diary, very questionable.

Probably just I don't think it makes Greg look that bad because he wasn't. Ultimately. It's not like he was like secretly Sam's puppet master.

No, no, no. And a lot of this went back and forth and there were lots of opportunities for both sides to yield. It was like a long, ongoing negotiation, but everyone's picking their sides. Owen Sparks says case closed. Elon has OpenAI dead to rights. Based on this quote here. He wrote, can't see us turning this into a for profit without a very nasty fight. I'm just thinking about the office and we're in the office. And his story will correctly be that we weren't honest with him in the end about still wanting to do the for profit, just without him so bad. That's a bad one. That's a bad one. We will see. Anyway, we should move on from all this. Are there any other things in the timeline that we should run through here? Elon says they stole a charity, plain and simple.

They're really on the. For all the jurors, they're really going to have to. I imagine you get if it's Oakland, 12 people on the jury, I'd guess like four of them are driving Teslas. They're really gonna have to go check all the cars, make sure they don't have the bought this before Elon went crazy bumper sticker on. They're gonna have to throw those. Those candidates.

Well, they should also throw out any jurors that show up in Koenigseggs. They're probably in the Koenigsegg owner meetup and they're at Cars and Coffee and they're like, well, yeah, I mean, like, I don't know. I don't really like. I don't like electric cars. Okay. I do have a bias against electric cars. I need a V12 and anyone who drives a V12, I'm gonna give them some leeway. I'm gonna give them some leeway.

The thing about a Koenigsegg owners meetup is that a lot of them are probably not driving the Koenigsegg. Cause they don't work that well. They're not reliable. Frequently, it's been frequently reported that they're not quite reliable enough.

The one day you get it to start cars and cops, there's paparazzi taking pictures of you. Just one of the chances.

Seriously, it's the worst luck.

The one day. The worst luck. The worst luck. Anyway, Sentry good luck for your systems. Sentry shows developers what's broken and helps them fix it fast. That's why 150,000 organizations use it to keep their apps working.

Elon Hallmark catalog was asking ChatGPT what ChatGPT thinks, and it says, if I were grading this purely as an analyst, not as an OpenAI model, the documents are legitimately bad. Brockman notes, not ambiguous.

I was asking Claude about this and it was very funny because it does. You can't not read into it like you're talking to someone at Anthropic because it's taking shots at both of them being like, oh, well, Elon has XAI and that's a for profit, so he's a hypocrite. And maybe that's just objectively true and the model's just accurate. But it's funny just reading it in Claude's voice being like, Claude's sitting there being like, I don't like either of these companies anyway.

One more post. One more post. Elon said yesterday, we talked about this yesterday. He was quoting the Kalshi odds on his case against OpenAI. And he said, what are they? I've lost a few battles over the years, but I've never lost a war. I think what this comes down to, though is like, what is the same thing as, like, what is winning the AI race actually look like with China? What is, what is Elon winning against OpenAI?

So that doesn't. So the odds now it's 68% chance will Elon win his case against OpenAI? That's up from 34% back in January, January 14th, just a few days ago. And so this new trove really did move the market, at least on Kalshi. So we will see where this goes. If the U.S. district Court in Northern California sides with Elon Musk in Musk vs Altman before January 1, 2027, then the market results to. Yes, of course, this doesn't take into account appeals, which will obviously happen. And there's always the chance that there's a settlement before this. Although I think it feels like we're just past all that and we are fully in. It's going to trial, there's going to be some drama, there's going to be some courtroom sketches. So get ready because it's going to be beautiful. And I wonder who they're going to call to testify. A whole bunch of people will be.

On the stand, presumably Joe Wiesenthal.

What's he saying?

He is highlighting Goldman raising 16 billion in record Wall street bank bond sale. Joe Wiesenthal says right here, right here, here.

Toss to me, Toss to me.

Joe.

Finally some good news.

Huge congrats to Goldman Sachs. I've been following them a long time. The whole team in culture is so impressive. I can't wait to, to see where they're going and what they do next.

Yes, yes, yes.

Goldman's really just getting started.

They are.

They're really just. Today's really just day one.

It's day one.

It's day one for Goldman.

Willmanitis. He thinks of Goldman as kind of the ideal firm.

Right.

He has this idea of firm versus company.

Yes, yes.

Where the company is just the people, the firm is the core ethos.

Sure, sure, sure.

And Goldman is kind of the Perfect firm.

There are some absolute dogs over there. We talked about it a bunch. But one of the most legendary things going into the financial crisis, they know that real estate's going to sell off. They sell their corporate headquarters and lease it back for 10 years so they're not exposed to the financial risk of their building. You got to be careful if you're on the other side of a deal. If they're selling, why, why are you buying? It's a good question. But fantastic firm, fantastic results from them.

And congrats, Joe.

And speaking of the financial markets, markets, you got to get in on them with public.com investing for those tickets.

Seriously.

Stocks, options, crypto, bonds, treasuries and more with incredible customer service.

Joe has some more news. Yes, he's newsmaxing some news out of AP Beijing. Breaking with the United States. Canada has agreed to cut its 100% tariff on Chinese electric cars in return for lower tariffs on Canadian farm products, Prime Minister Mark Carney said on Friday. Carney made the announcements after two days of meetings with Chinese leaders. He said there would be an initial annual cap of 49,000 vehicles on Chinese EV exports, growing to about 70,000 over five years. China will reduce its total tariffs on canola seeds a major.

Okay, yeah, canola oil, they're getting seed oils. They're like, we got to have.

Okay, okay. Maybe this is part of a grander strategy. He's like, yeah, we need to. This is our version of fentanyl.

So he actually did. Carney said that Canada's partnership with China sets US Canada up well for the new world order. So this is the ceetols are the first steps.

Yeah. That was a crazy quote. That was a crazy quote. When I first saw that, I saw the video, I was like, okay, like, funny, deep, fake.

Yeah.

Prime minister saying like, new world. We're excited for this new world order. But it was real.

Yeah. In other. In other electric car news, Ford and BYD are in talks for car batteries. Let's give it up for some talks US Car makers need for. The US Carmaker needs more batteries for hybrid vehicles because it's shifting away from the full EVs. You know, they canceled the Ford Lightning, but they are going to do a lot of hybrids, and so they need a lot of batteries and they're calling up BYD to help with it. Ford and BYD are going to do a partnership or they're in discussions for it, in which the American carmaker would buy batteries from the Chinese auto company for some of Ford's hybrid vehicle models, according to people familiar with the matter. The two companies are still discussing how the arrangement would work. One idea is that Ford would import batteries from BYD to Ford's factories outside of the U.S. some of the people said. Talks continue and it's possible a deal won't materialize. The tie up, if completed, would pair forward with the largest Chinese car company that has struck fear in much of the auto industry over its ability to produce affordable models that carry sophisticated technology. For Ford, it solves problems as the company pulls back from electric vehicles and ramps up its lineup of hybrids. It needs a battery supplier, and BYD is able to produce high quality car batteries. We talk to lots of companies about many things, a Ford spokesman said. A BYD spokesman declined to comment. That's a good comment. We talk to a lot of people about a lot of things. Why are you focusing on the Chinese batteries today? Stop calling me Ryan Felton from the Wall Street Journal. Move on. I talk to a lot of people. Before becoming one of the world's biggest carmakers in the world, BYD developed a robust battery manufacturing business, including batteries for hybrid models. It currently produces most batteries in China, but the company is building up capacity in its overseas plants as it expands to markets such as Southeast Asia, Europe. In Brazil, Bernstein research estimated that BYD's battery shipments rose 47% last year to 286 gigawatt hours. President Trump's trade advisor, Peter Navarro, criticized the idea. On X, he said, so Ford wants to simultaneously prop up a Chinese competitor's supply chain and make it more vulnerable to the same supply supply chain extortion. What could go wrong here? That's Peter Navarro on X, the trade advisor. Last month, Ford said it would pivot away from making electric vehicles in the face of slumping demand and take an expected $19.5 billion in charges primarily tied to its EV business. So very interesting news. Anyway, let's move on to the next big story of the day. But first let me tell you about Shopify. Shopify is a platform commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents.

Agents. So, and relevant because the day has finally come not to see ads in ChatGPT. That's true. But they're coming, they're coming, they're coming. We're talking. We're no longer in talks. We're no longer in advanced talks. We're talking about. In the coming weeks, OpenAI plans to start testing ads in ChatGPT Free and Go tiers. It's go time.

Go tiers. ChatGPT. Go.

They said we're sharing our principles early on how we'll approach ads, guided by putting user trust and transparency first as we work to make AI accessible to everyone. We gotta check in with Mark Cuban. With Mark Cuban. But they say what matters Most. Responses in ChatGPT will not be influenced by ads. That is there's a firewall.

There's a firewall. Editorials over here, ad sales is over here. They don't interface with each other at all. And so the models that generate the responses will not be aware of who's advertising on what. This seems extremely easy to do technically. Extremely good for product reliability. It's what the consumer wants. They want. You want to know when you go to Google, if you scroll down far enough, you eventually get past the ads and you see the real results. And you're going to want that in your LLM. Even if there's an ad up at the top or in the middle, as long as it's clearly labeled, which they say they will be. So ads will always be separate and clearly labeled. Your conversations are private from advertisers. Plus pro, business and enterprise tiers will not have ads. So I'm going to have to downgrade.

Yeah.

Because I'm on the Pro $200 a month tier. But I want ads. I want to experience the ad products.

So everybody's got a downgrade, but I.

Think they're gonna be making way more than 200amonth off me on ads.

Oh, yeah.

Oh, yeah. Oh, yeah. Oh, yeah.

Oh, yeah.

Oh, yeah. They're gonna be advertising crazy stuff to me. They're gonna be every other. Every other results gonna be Koenigsegg. Here's a McLaren F1 in your. In your area. You can go pick it up right now. It's gonna be insane.

Yeah. So people have been so concerned, specifically Mark Cuban. We obviously had him on the show to talk about this last year about this idea of ads showing up in the results. And part of it, the reason I was never that concerned is if I just search best backpack for men. Which is kind of a joke in itself because I'll tell you.

Ridge.

But.

Well, a man shouldn't wear a backpack in the first place. Sorry. To any backpack super fans out there.

Tyler.

Well, you're not a man yet. You're not 21.

Oh, true.

So you're good. You gotta enjoy your backpack years.

Yeah. You should switch to a stainless steel briefcase that you handcuff to your hand. That's the correct thing for someone of your stature, someone of your importance. You got important stuff carrying around.

But anyways, when I search best backpack for men, I can scroll down and find a Reddit result from. It's the second result after Nordstrom.

Sure.

But they also serve me a bunch of ads. I don't assume that the best backpack for men is the first ad. Right. It's not like when it's clearly labeled and separated. I just assume this is an ad for somebody that sells backpacks.

Yeah. But now I'm aware of that particular backpack.

Yeah, maybe.

So I think it's. I think it's fairly aligned, right?

Yeah. That's why I don't search like best backpack for men. I search best. Highest margin. Highest, highest margin backpack, men's backpack, men's backpack.

Because you appreciate from the celebration of the business. Yeah.

Of the business.

You want to support business.

Yeah. And then, and then so I want to know what's the, what's the highest margin backpack for whoever I'm buying from? Then I go to shopping tab and then it tells me, okay, this is the highest margin one. If you want to support that corporation, make sure the most number of dollars flow to their shareholders.

This is the backpack you should buy back in. The chat says he uses a Spider man lunchbox. See, I can appreciate a Spider man lunchbox.

Soon you'll be able to generate a sora of Spider man in ChatGPT. It'll serve you an ad for that Spider man lunchbox and the virtuous cycle of Commerce will continue. MongoDB Choose a database built for flexibility and scale with best in class embedding models and re rankers. MongoDB has what you need to build what's next?

Anyways, so plus pro, business and enterprise tiers will not have ads.

Yes, super disappointing. They need to hammer, hammer, hammer. The first bullet point here. Responses in ChatGPT will not be in influenced by ads. We know that this is what they're going to do. Technically it makes sense. It's completely the industry standard. Everyone knows that. Everyone in tech knows that this is how it works. But consumers will have all sorts of conspiracy theories. I mean remember how big the whole like Facebook listens to your audio and then targets ads off of that. And there's been so many, so many like viral conspiracy theories about around how ads work, how monetization works on these platforms. There's gonna be a huge amount of just noise out there basically saying that ChatGPT is polluted by ads overly influenced by ads and so they need to beat that drum really, really hard. It's good that they're doing it on the main account. It's good that they're doing with Fiji CMOs post. But they're going to have to. They're going to have to emphasize this in comms on every podcast that they do. Every announcement.

Yeah, people seem to be really riled up about this. I'm seeing a bunch of comments on the post. They're upset. I don't get it at all. The whole point is that ads have made it so that wonderful services on the Internet have been free for decades. They're generally aligned. Even target people report they like targeted ads. It's annoying getting an ad that's not targeted. Like, why are you. Why are you wasting my time?

I agree.

This is funny. Somebody in here says some poor fifth grade teacher grading the worst World War II paper ever turned in when it suddenly starts talking about World of Tanks and Nord.

Just copy pasting the ads.

Honestly. Maybe that's a feature though, because you get two impressions.

Two impressions? Yeah, there's going to be some hilarious hallucinations or someone's reading from their press release and they accidentally have an ad in there. Oh, that's going to be amazing. I love it. I love it. Well, the Wall Street Journal had a little bit of an Overview on this. OpenAI to begin testing ads and ChatGPT and push for fresh revenue. The company will be showing ads in the free version of the chatbot as well as it's let's give it up for fresh rep. Fresh revenue ads will appear at the bottom of ChatGPT's answers and be labeled interesting. The bottom of the answer, I want it at the top and the middle and the bottom. And I also definitely want to show the ads while it's thinking, because you can run an ad auction and show an ad while you're waiting. I mean, Uber's done this while you're waiting for the car. There's no reason why that shouldn't be there, especially if you're doing a deep research report or anything. I do wonder how the ads will surface in the audio summary. So if you fire off a deep research report, it throws an ad at the end. If you're listening to that audio, will that play the ad at the end? Will that sound like a podcast ad or will it sound like something else?

Like, will it be clunky? I'm assuming that they're not doing audio in these, right? Imagine if you do a Google search and it pops up a video. It's like trying to play sound.

It's annoying.

It could be you'd be throwing your laptop.

Yeah, yeah, but I mean, a lot of times people will go to ChatGPT, fire off a query, and then when the query comes back, they will just hit the play the audio button. And will it read the ad as well? I don't know. Maybe. But the company said ads wouldn't influence the chatbots answers. Of course. And that user conversations wouldn't be sold to ad advertisers. That also makes a lot of sense. Also, advertisers don't really.

Well, to be clear, like, they will. I'm. My understanding is they will use what they know about you to offer better targeted ads to advertisers. They're just saying they won't explicitly be like, hey, we have here's this person's email and here's what they like. And actually sell that specifically or even anonymous.

There's not even an option to go to OpenAI and say, hey, I'd like to buy 10,000 conversations about backpacks. That's not an option. What you can say is, you can say, I have a backpack. Find me some customers who want to buy backpacks. And they will say, sure, we'll do that. And we will go into the black box and sort and match you and give you the lowest cost per acquisition. You tell us that you're willing to pay five bucks per customer, $2 per customer. We'll get you $2. Customers, we'll do our best. This is the auction model.

Yeah.

And the thing here is if you are a business owner.

Yes.

You should be incredibly excited about this.

Yes.

Every time a major new ad platform has come out.

Yes.

It is an opportunity to drive a tremendous amount of growth really, really quickly because they typically under. Under price, underprice the ads in the short room, in the short run, just to get volume, just to get a lot of customers in. So when Sean Frank comes on later, we can talk with him about this. I remember, like, early days of Snapchat advertising, like Connor over at the ridge was like, getting tremendous results.

Cisco. Cisco is critical infrastructure for the AI era. Thank you to Cisco for powering tdpn. Dean Ball is back on the timeline.

We know Dean Ball.

We know Dean Ball. He says flowers. No way. Reacting to the screenshot that flowers hint at math before numerals. Pottery made by people of the Halifian culture who inhabited northern Mesopotamia between 62005500 BC painted flowers with 4, 8, 16, 32 petals. Some of them have 64 petals. They were obsessed with exponential growth. They were obsessed with compounding. The power of compounding.

It's the Claude logo.

It is the Claude logo. That's hilarious. I love it. It's amazing. Anyway, graphite. Graphite.dev graphite. Code review for the age of AI graphite helps teams on GitHub ship higher quality software faster. Where would you like to go next?

Has a fantastic post. It says, had dinner with wife at a Mexican restaurant last night. Looked at the menu. They were trying to raise prices from $18 to $24 for her favorite entree. Wife was like, I think we can have Claude make this old waitress trying to go to gouge us. They done one week Sprint. Claude cloned and replaced cochinita, pabil and carnitas. Restaurant manager freaks out. How do we solve this? This is gonna happen so much in 2026.

Just telling the restaurant owner that you're gonna do it at home.

We cloned your entree with Claude.

We cloned you. We cloned it. We cloned it. I just cloned it.

This is pretty funny. Jeff Huber sharing this post from R. Teacher. Every year these kids come back with a new annoying quirk. Claude boys are apparently the new thing. In my 10th year of teaching, mostly freshmen. Ever since the pandemic, there's always a new thing students bring to school that they learned over the summer from the Internet or wherever. The newest thing here is a flock of self proclaimed Claude boys who carry AI on hand at all times and constantly ask it what to do. They have their entire personality revolve around Claude prompting an AI. When we went around doing an icebreaker, four of the five kids, some variation of I live by Claude and die by the Claude as their fact. Just about an hour ago, when I assigned the first assignment of the school year, one of the Claude boys was bold enough to say, if Claude says I do it. Otherwise I don't. I told him if he asked Claude, he would be getting a call home on the first week of high school. He asked it anyway and it said to do the homework.

That's amazing.

This is a copy pasta from the coin boys. Yeah, same thing.

Except instead of asking Claude, you flip a coin.

You flip a coin boys.

The coin boys are apparently a new thing.

This is very funny. I like the copy pasta. This is amazing. Very, very funny. Well, you've been trying to make Jemmy boys happen, which I think is underrated. We should get a copy pasta whipped up, of course, because we are. We are sponsored by Gemini 3 Pro Google's most intelligent model yet. They got state of the art reasoning, next level vibe coding, a deep multimodal understanding. I have some advice for Jeff Huber. He's the founder of Chroma and he's trying to change the world. And if he wants to change the world, he should raise capital at the New York Stock Exchange. Jeff, if that's simple, head over to the New York Stock Exchange. When you want to change the world, you raise capital.

Call Lynn Martin.

Call Lynn Martin.

Let's get into the Mansion section.

Let's get into the Mansion section. I've been waiting all day. The first big piece is about the great property transfer Gen Xers and Millennials will inherit trillions of dollars of real estate over the next decade. And it's already reshaping how luxury homes are bought and sold. So over the next decade, roughly 1.2 million individuals with net worths of over $5 million are projected to pass down more than 3.38 trillion globally. That is a huge amount. Real estate is poised to play a significant role in the great wealth transfer. Gen Xers and Millennials are set to inherit 4.6 trillion in global real estate over the next 10 years. And this is why it's so important to win the genetic lottery when you're born.

We didn't I won't be inheriting anything.

But stop making excuses and maybe get a time machine and go back in time and be born to someone with a luxury estate that you can inherit.

Yes, maybe even. Maybe even multiple.

We already read about that. So M6.

Let's kick it over to M6.

Parents are buying earlier and bigger. It isn't a new phenomena for well off parents to give children a helping hand in securing a first home. But at the high end of the market, agents say more parents aren't waiting for kids to inherit their wealth, they are buying them luxury properties sooner. It's reshaping the definition of luxury real estate as more sellers cater to the tastes and preferences of a younger generation.

The price points have gone wild, said Ian Slater, a Compass agent who works with ultra wealthy families in New York. I used to commonly see people buy 3 million to 5 million apartments for their 25 to 30 year old kids. Now I see them buying 15 million to $30 million apartments for their kids. That is absolutely crazy when you're buying for children. Co ops are a real no no, since many co op boards want the occupants of the units to be financially independent. By contrast, condos offer flexibility, which is.

Special, which is especially they can't make The. What makes you. What makes you more financially independent than having a trust fund that just.

Yeah, I don't know. I mean, I guess if you're in a co op, you want to just be around other people who, like, aren't Nepos or something. You want people who like, built their own businesses or something. I don't know.

Well, I won't. Yeah, I won't stand for Nepo slander. Seriously, I love, I love when a Nepo utilizes every available resource and just absolutely dominates.

Yeah, it's beautiful.

You gotta appreciate it.

Well, let's look at Gene Hackman's Santa Fe compound, which just lists.

Wait, what did. How did he. How did Gene Hackman make his money? Actor.

You didn't know that?

No, I don't. This guy was born in the. In 1930.

He's amazing. He's a Hollywood icon.

He's not a hack.

No, he's not a hack. French Connection, Unforgiven, Superman, the movie. Enemy of the State. That's where I know him from. Enemy of the State's a great movie. He's in the firm.

Is this on the movie list?

He's in the firm.

Are any Hackman movies in the TVPN chat movie list?

Behind Enemy Lines. That's a great movie. About a downed fighter pilot or spy U2 spy plane. I think it's Owen Wilson who goes down and crashes and needs to get back to his team to his side. It's a fun ride. I recommend it. So nearly a year after the shocking deaths of Hollywood icon Gene Hackman and his wife Betsy Arakawa, at their compound In Santa Fe, New Mexico, the couple's 53 acre estate is coming on the market for just $6.5 million. I had no idea that Santa Fe, New Mexico was so affordable. We were looking at a place in Nashville which I would put at the same level as Santa Fe.

John, I gotta stop you there.

Explain.

I mean, saying that. Is this a bit saying. So at 6.5 million, it's so affordable?

It is. I mean, we looked at a three bedroom apartment that was like $25 million in Nashville last year or last week. This is 13,000 square feet, 53 acre estate, and it's 1/5 of the price. I'm just saying, like on a relative basis. Do you go Santa Fe at 6 and you get 53 acres or you're living next to John Fio and you paid 25 mil, which one would you go for?

Okay, pick it, pick it.

Which one would you go for? I'm going Santa Fe all day personally. Hackman, the two time Oscar winner. Let's see, there will be some buyers who just adverse to purchasing property, blah blah blah. Let's move on to Washington D.C. where the prices are way up, way over 6. 6 is 6 is low compared to this $28 million home. It's DC's most expensive home and it's now owned by the owner of the Washington Commanders, Joshua Harris. And this is one of those interesting things where you can build a massive private equity firm, a massive financial institution. Josh Harris of course built Apollo, the co founder of Apollo, but he's known as the owner of the Washington Commanders, even though that's not like his life's work. It's an interesting thing, but when you buy a sports team, that's the thing that follows you around forever. And so the billionaire investor Josh Harris, the owner of Washington Commander's NFL team, and his wife Marjorie Harris have paid $28 million for a storied Washington D.C. landmark with plans to return it to its original use as a single family home. The sale is a record for the city. It's known as the Halcyon House. The federal style building in Georgetown dates to the late 1700s. The roughly 30,000 square foot house, which has a large garden with a pool in the back, wasn't publicly listed at the time of sale. And then the deal happened quietly off market.

Would you live in a house like this, John?

100%.

I knew it.

Absolutely. Would you not? It's amazing.

This style of architecture is extremely depressing to me.

What do you mean? This is like the lindiest thing. You know who, you know who lived there, you know who lived here first. This was built for the first secretary of the Navy.

No, I understood that.

Benjamin Stoddard. You are inhabited.

I understand the appeal for you, but. And what is depressing about this, this.

Is a beautiful house. Is it not enough light?

I don't know. Potentially if they like did a pretty hardcore remodel to it. Really, really brought it.

What's not to like? It looks beautiful. I don't understand.

It just looks a little too vintage, ridiculous.

It does have a crazy like there's.

A roof inside and it looks like a frat house.

Do you see this?

It looks like.

Why do you have a roof inside, under your roof? You see what happened here? They got roofs. It looks like they just built another house, an addition on, on top.

And so yeah, there is some chaos here. It's a little, a little too fratty for me. It looks like the beer. It Looks like the floor would be sticky with fifth floor.

Sticky. Somehow I don't think this $28 million property has a sticky floor. But you never know. They have three TVs up there. That's sort of fratty. You watch three different football games.

Well, if you own an NFL team.

You got to watch all the games.

Yeah.

The market. The previous record in D.C. was set in 2024 when Cantor Fitzgerald CEO Howard Lutnick purchased Fox News anchor Brett Byers Foxhall Estate for 25 million mark. And Hunter McFadden of Compass represented Dr. Kuno in the Georgetown sale. Harris was represented by Sotheby's International. Figma. Figma make isn't your average vibe coding tool. It lives in Figma. So outputs look good, feel real and stay connected to how teams build, create code back prototypes and outputs.

Okay, I hate to interrupt the mansion section, but we have to pull up this video from the Houston Texans.

Let's do it.

They are. Their new video is Call of Duty themed.

No way.

And I just gotta wonder. Oh, we created COD. Yes, 100% created the.

Well, let's switch over to reacting to.

The latest video from the Houston in the timeline.

And while we pull.

Here it is.

Here it is. What is this? The match begins in 4.3gen. Eliminate the enemy team down left side.

And Kirk with a diving attempt. And he's got that catch.

Oh, the hit marker. The hit marker. Sounds good. Long shot.

It's so funny because we were just. Earlier this week we did the hit marker.

Yeah.

Sound effect.

Hit marker.

Sound.

Air raid. Air raid kick.

What?

Sound effect. UAV online. UAV online. That's us. That's not them, right? That was you.

We got to figure out if they did this, if they did this before.

Good. The graphics package. I didn't realize how iconic the text was in cod. That deep glow right there, the glowing letters, that's just COD to a T. They really nailed that. That's very fun.

I wonder what inspired that.

Anyway, let's move on to the last story in the mansion section. But first, let me tell you about railway. Railway simplifies software deployment. Web apps, servers and databases run in one place with scaling and monitoring and security built in. So this is a renovation. I want your take on this renovation. A Texas couple transformed a 945 square foot room into a space where they could watch sports and entertain friends.

See?

This looks fantastic.

Thank you.

This is what I want to see.

This is what I want to see.

On the last property. I want to see this level of Renault. More talent to the last property.

But I feel like this does capture some of the opulence, some of the details, some of the texture. This is not flat. White walls, there's lots of layers, there's trim. I like the blue, the way it goes, the brown, the gray couches, Everything's sort of like harmonizes, but it's not bland, it's not flat. There's a lot of detail and layering there. Even behind the tv, you see a sort of like textured backsplash. I think they did a fantastic job on this. And they spent $465,000. So when financial consultants Damon Cronus and Julie Cronus decided last year that it was time to renovate their game room, they wanted to keep it fun for the two teenagers, but add a layer of sophistication. You always got to do that. They're in their early 50s, and they drew inspiration for their new entertainment lounge during a visit to Manhattan and a stop by the UBS arena preview club, A temporary showroom for the arena's premium space under construction. Styled in vintage hues of rich gold and deep blue with dark brown wood, the space had just the upscale feel they wanted for their home. They brought in pulp design studios and they transformed it. The owners wanted it to look like a lounge, like a private sports club. We took the inspiration and created our vision to suit their needs and lifestyle. The 945 foot square square foot space was designed for versatility, allowing guests to enjoy different activities at once. It was tailored to host movie nights, lively cocktail parties, and Sunday football gatherings. The room had to have maximum flow for people to move about. And so you see they have a horseshoe couch, but there's a gap in the middle so you can flow around either way. So it's kind of like 2L couches nestled next to each other. Very, very smart.

2L'S the custom. Making a W here.

I like it. The custom two piece sectional sofa set them back $26,000, and it allows guests to move in and out of the tv.

So you can tell the floors are not sticky here.

Yes, definitely.

Which is key.

The room is narrow and we didn't want to have a second that you had to walk all the way around. And so for additional seating, ottomans pull out from under the coffee table. Swivel stools accompany console tables beside the sofas. Tall stools are tucked under the nearby bar top and custom banquet hugs a curve of windows. Performance fabrics and durable materials were chosen to endure active crowds. They're not letting the beer soak the walls. They got performance fabrics, durable material materials in there. They're not, they're not worried about a sticky floor. A sticky floor here, a sticky floor there. It's going to be okay. They're going to mop it up. Those performance fabrics are built to handle the stickiest beer, maybe even the athletic brew.

Some athletic brews.

You're chugging athletic brews, you're spraying them all over, you're cheersing, slamming them on your head and. And they get on the.

Honestly, Athletic Brewing, which we have, we have a few here. Athletic Brewing really needs to do a hard sell to Cheeky Pint and be like, look, you guys are hardly drinking. We can tell.

We'll have to ask him if he uses Stripe currently because maybe there's a washing the other deal there.

Yeah, yeah, yeah. We can tell you don't have it in you to get hammered on podcast, but we want you to be able to enjoy the taste of beer.

Yeah, I like that. A little cheeky. Athletic brewing. I like that.

Cheeky brew.

Beyond watching sports across two TVs, the family enjoys competition of their own. Oversized food Scrabble board hangs on the wall. To set the tone, they spent $25,000 on a table. Who knew tables can get so expensive? We've been looking at tables.

I mean, I feel like we did. We're just trying to get a new table.

I know we want a bigger table.

We want a slightly bigger table.

Some features, but very quickly you get up into these big numbers. So the table, the round Cambria table, was crafted from man made quartz with a metal base. We bolted the base to the floor because Damon and Julie wanted to be sure it wouldn't topple around the teens. If people are getting hammered down there standing on the table, they don't want it falling over, so they bolt it into the floor. The chandelier set them back $3,900. The Cavallino X large radial chandelier from Visual Comfort adds sculptural interest and focused lighting to the game. Table chairs, 2,400 bucks each, covered in Everly fabric. Having coasters, casters allowed them to move freely perfectly for group activities. You can move them around. The window shades, $12,000. Motorized Roman shades create a blackout environment that's ideal for TV watching.

That's a cool feature.

And the banquet cost $27,000. The bottom is covered in ultra suede green and ochre from Cravat and the back in Lulu velvet from S. Harris. We had to do a custom banquet so that it fit the curve of the Window to maximize seating. They're all about maximizing, maximizing seating over here. Well, congrats. And also Fin AI, the number one AI agent for customer service. If you want AI to handle your customer support, go to Fin AI. What other news do we have, Jordy? Tell me.

Harmonic. Harmonic Nidia is investing in math.

How much?

They're investing in Vlad's AI startup, Harmonic. They're investing 120 million. Quality hit, clean hit. Emerson Collecting Collective is also joining as a new investor alongside existing backers Ribbit, Ribbit, Ribbit. We need a frog sound effect.

Mickey Malka's Dublin Dex.

Or Mickey. He's a big Robin Hood index and Kleiner.

Ooh, Sequoia. Yeah, we'll have to talk to the Sequoia folks about how Harmonic fits into the post AGI agent because we have pack radiance.

What if it turned? What if it. What if it comes out that Harmonic is just working on a ChatGPT style app to help kids do math problems?

That's it.

That's the play.

Yes.

It's a trillion dollar opportunity.

Yes. I love it. Well, we have our next guest in the Restream waiting room. Let me tell you about Label Box while we bring him in.

Get in the box.

Real reinforcement, learning environment environments, Voice robotics, evals, and expert human data. Label Box is the data factory behind the world's leading AI teams. And we have. Ooh, nice and cold athletic brewing, hazy IPAs. I will enjoy one of these while we bring in our guest, Bill Shufelt from the Restream radio room Welch to the TV Fit Ultra. How are you doing, Bill?

Incredible to be here. Love the show. Thank you so much. And even though I'm east coast and not in the AI world, I just sell things that hurt when you drop them on your feet over here. But I'm a huge, huge fan of the show and so excited to be here.

Yeah. So great to have you. I was just trying to remember I listened to like about 90 minutes of you on a podcast. It must have been like four or.

Five years I listened to you on Logan Bartlett? That was a fun one.

Yeah, he's great.

Yeah, yeah, he's awesome.

What do you think about the pitch of getting. Are you familiar with the Cheeky Pint podcast from Stripe? Have you seen this?

I love it.

Okay.

I'm actually thinking about cold emailing them together.

So the elephant in their pub is that they're not really crushing beers.

They're not getting actually drunk.

And so I think you should make a special edition for the team. Over there. So they can really be athletic. Start indulging.

I love that.

I'm a fan of them. Ireland. I've got a bunch of their books, so yeah, would love to reach out to them.

Fantastic. Let's take it back to the beginning. Since it's your first time on the show, give me the founding story, give me what you were doing before. It's such a huge trend now, mostly thanks to you. Did you imagine that the trend would become so big? What were the inciting elements?

Yeah, I think there's both the personal story and the category story and the health and wellness megatrend behind it. Even zooming out to the trend. I know so much of the megatrends in business these days and big numbers around AI and it's rare to see something that is so solidified, very visible long term. And I can get more into how big I think the trend will be and why it'll be so big over time and why I have good line of sight to that. My personal story really is I was working in the hedge fund world, had a great finance job. I came, I went, I went to like, went to college.

Exactly.

But I like went to college with that view. Went right into it in my career. Never thought I'd do anything different. But I was living this high performance lifestyle where, you know, 12 years ago I was about to get married. I was thinking about my future life and alcohol was kind of a ceiling on my work productivity, my relationships, my sleep, my workouts, all the things that are so commonplace in knowledge now that all the fitness wearables, the podcasts like Peter Attia, Huberman, Rhonda, all these things are so evident now. But I was living that and feeling it myself. I was, you know, I had a very intellectually intense job at Steve Cohen's hedge fund where you're graded on your output every day. I was at the desk from 6am to 6pm 150 work dinners a year, then out with friends and family on weekends.

150 work dinners is insane one for us. I mean, we have like a. Maybe not as intense as your schedule with Steve Cohen, but it's very, you know, we're here, we have to get to the studio at 9, we go live at 11. There's very little downtime. And so we do one work dinner and it throws everything off. It's like throws off the whole week.

I have huge admiration for your always on. I think about that all the time. But Yeah, I had 200 brokers and I had to do research dinners also and you have to have good relationships. So when you pick up the phone and need to convey Something in 10 seconds, that you know that person. So anyway, that's a long way of saying, like, I was very interested in health, longevity, my fitness, my performance way before it became such a commonplace trend. And I was living that. And I really started saying to people, like, I. I really wish I could go out to all these dinners and be in the moment without alcohol. And, you know, I saw the trend happening over my finance career where people were just as excited to go to Barry's Boot Camp or something in the morning rather than go to a steak dinner at night. And so. But I just really wish there was.

Keith her boy keith her boy. 4 Barry's Boot Camps in a day.

So why not Shirley Temples? Why didn't you just become the Shirley Temple King drinking six of those? What were you doing before you actually decided to build a new product in the category? Were you on just soda water and lime? What were the options?

Well, so I saw that huge impact on my life just by moderating my drinking and ultimately stopping my drinking, and then thought, you know, if I could just bring moderation to the masses and just make it accessible, Like, I have no view on, like, bringing back prohibition sobriety or anything like that, but just making the other side of the menu delicious. Like, match the culinary expectation and the experience that. And as I started to look into the numbers behind it, 50% of adults, even at that point, had 0.1 drinks or less per week. And it was really only like, the top 10% of adults have more than, like, seven drinks a week. And it kind of hit me that the adult beverage world is also just totally missing a majority of the population and their needs. And so I'll skip, like, the years of business research and surveys and stuff like that to get conviction around it. But ultimately, it was, like, right out of my lived experience, and I wanted it to exist and quit my job to build that.

How much. How much credit do you give? Just how good the product is with the success of the company. Because I think in cpg, you're not the first finance chad to, like, wake up one day and say, I want to start it. Like, it's kind of a common path. Like, you know, they're kind of, like, bored. They're, you know, they try some drink. Like, I've met as an angel, I've met so many people over the years that, like, are trying to make the leap from finance to being an entrepreneur and cbg, because it's like you're going from like spreadsheets to something that's like super tangible and you still have to use. You spend plenty of time in spreadsheets. And I think there's something really appealing about like going from like finance to like the tangibility of cbg. But the issue is like so many people that are incredibly talented, they just end up like, they end up developing, developing a product that's not amazing. And then it just, you can't even live up to your talent level or your potential because you're just like handicapped by the product. And when I tried, you know, having this product, even when I had it for the first time, it's like, it's just a fantastic product. It tastes exactly like a beer. It tastes like a sort of a celebratory moment or it tastes like, you know, winding down at the end of the day, which is like, it delivers something unique in the way that like Lacroix or just some other like non alk alternative actually works.

Yeah, that is exactly it. And we have an incredible co founder, John Walker, and the two of us homebrewed on Gatorade jugs and we took it down to the screws and reinvented the way non alcoholic beer is made. Rather than where historically non alcoholic beer was a very industrialized, heavily processed thing, it was only a lager category as well. And so we took the time and John said he wouldn't even sign on if I, if I didn't agree that we wouldn't launch the beer if it wasn't indistinguishable from top craft beers from day one. And I think that's the huge differentiation. We made the very unattractive decision to investors to take a capital intensive route. We've built all our own breweries, we've put over 130 million into our manufacturing. Just very unattractive to investors, if I can recall.

Attractive now.

Yeah, but it was so we could own our proprietary process, own the quality of what we were doing every step of the way. Where, yeah, as you were saying, if you were to like Nick, surely a lot of CPG or especially the competitors in our category, like you would find that they just totally outsource all the production. There aren't brewers on the team and it truly had to be different quality and different experience. And we really invested to change that perception of the category. And that's still very rare in non alcoholic beer. There have been 280 brands since we launched and a lot have had very disparate futures.

Well, yeah. And what's happening with the category right now, broadly, because, you know, again, as an angel in la, there's so many CPG founders. I've seen so many of these companies try to come up not just in kind of the non alk beer category, but in other categories. And one of the things I always struggle with as somebody who, you know, dramatically reduced my drinking probably like six years ago from, like drinking like a handful of drinks once a week to like drinking like one or two drinks like once a month. Really, like, so really limited it. And so I'd get these pitches and people would be pitching, like something that doesn't taste like alcohol at all. And I'm like, I'm the buyer here, but you're selling me a product that I can. I can drink a Diet Coke. I can drink any number of other things. And so, like, your competition is just. Is not like the non alk category for some of these new non alk brands. Their competition is just like every single drink that doesn't have alcohol in it. And that just felt like a super tough physician. Whereas for this, it's like if you want a beer but you don't want alcohol, like, your options are, like, much more limited.

Yeah, for sure. And as I looked at the tam of the market, the way I thought about it was a 50% of the people really aren't drinking and 99% of people, or even people who do drink are not drinking like 99% of the time, they're awake. So there's a huge opportunity to meet new occasions. And those occasions you just described losing over the years, we're trying to bring those back, bring the social connection back, get people out multiple times a week. But I think the clearest way I think I could say this is, and why I think it's such a big trend, is the overall beer category, per the brewers association, is north of 100 billion billion in all retail sales. Craft beer itself is 28 billion, supposedly, per the Crappers Association. If you go back, like 50 years, light beer was one of the biggest megatrends to ever hit beer. And that is an enormous part of the beer category today. But that was a huge trend up until about the turn of the millennia. And then we started to see people. Well, the light beer trend was driven by the nutritionals. Where people wanted superior nutritionals to what existed previously. Then you had big trends in craft beer and flavored RTDs, which were light beer might not have that flavor. We want to have the nutritionals, but the flavor. And where non alcoholic beer comes in is all the experience, superior Nutritionals. It's about 20, 30% of the calories plus all the flavor of great craft beer. And it's emerging in this new big megatrend that I think has really good line of sight to be the next huge thing in beer. And I'm a very delusionally optimistic person, but I do think non alcoholic beer will be significantly bigger than craft beer and a huge part of the overall beer category in the future.

Yeah. Where else in beer is there meaningful growth?

Well, that's also the problem too is every other like most CPG overall, but especially bevalk all the innovation is like a one for one substitute for the same consumer in the same occasion. And, and even some of them are like you're substituting one thing for many. Like a THC drink is a one, one for like six substitute.

Like.

And so what we're doing is we're bringing in like a lot of people drink our beers within the same night as alcohol. Our 80% of our consumers drink. So we're bringing a lot of people back into the category. Plus 25% of our drinkers are new to beer altogether. So this is really additive to the beer world for the first time.

Yeah.

And then as you think about those occasions, there's just a lot of occasions to layer in, I guess on the broader beer category too. The last few years have been the worst beer years of our generation in alcohol for a number of reasons. I think part of it is the category is not connecting to the next wave of consumers. If you look across the spokespeople in the major brand TV ads, most of them in their 70s, one of them's in their 80s, one brand's about to bring back an 87 year old spokesperson from 10 years ago. So like this is a cohort. This is not the cohort we need to meet. We are bringing beer for the modern, healthy, active adult. We have great aspirational athletes and chefs and people behind it. But more than anything, we're just trying to build like a really timeless brand. And I could share more about our marketing and how we're thinking about that differently too.

I want to get to that, but first I want to know about how is your business different or similar to other beer companies that are higher alcohol? Do you need to be 21 to buy this? Are you subject to the three tiered system? Can you sell this online? What's different or similar to just higher alcohol beer distribution and sales?

Yeah, I mean as a finance chad coming into this category, I was like wow, there is no tech in this sector and there is margin everywhere. I very quickly got on the ground and realized that there's a lot of reasons why beer distributors are great at what they do. It's incredibly capital intensive. They're basically a big logistics business. And so we do largely plug into the three tier system, but that's our opt in.

And then legally you don't have to necessarily because you're regulated slightly differently.

Correct. And then we were the first beer brand to launch nationally on D2C also. And so that was like an absolutely enormous marketing advantage where you know, any high flying brewery of the 2010s you'd have to wait in line outside of their brewery for a limited release in the locale where you know, we could, we could lose tons of money shipping beer all across the country. So.

And then is there any age restriction?

Not in most states, no. But yeah, typically it's, you know we, we're trying to establish it for adults in typical beer occasions, celebrating life's special moments.

Yeah, I'm mostly trying to catch Tyler because I saw him grab, grab one and if, if there's some rule that he's violating, I'm going to call the cops right now.

I mean we are huge on the Michigan campus and you know we like some, I mean some of the, like, just like colleges across the country were enormous. This next generation is so much more moderate than prior generations. And I, I think the perception of alcohol has changed something like 14, 14 percentage points in three years which you know, it's happening really fast.

Talk about the formulation process a little bit, not to go too far back, but a lot of folks when they're doing a CPG project, they go to a co packer and they get a dog and pony show and they come out and they're like we formulated the perfect thing for you or flavor house or some supplier. They tell you this is the best thing possible. And then if you're not sharp, sort of the dog and pony show can kind of overpower you. Was there any point where you were working with a manufacturer and you had to sort of override them or what was the initial scale up like?

It's really been all internal since day one. Yeah, I basically put my life savings into our first 10,000 square foot warehouse Gatorade jug me and John's salaries a bit and then raised an angel round to build that First Brewery. Did 120 meetings. Huge rejection percentage. But yeah, in that we wanted to approach it in a totally different way. And so we're confident we arrived at.

A point where we have. I feel like consumer is the one category where you just really don't know until you start selling the product. Like, I can easily imagine getting this pitch and just being in the mindset of like, like, if I'm, if I want to drink a beer, I want to, I want to, I want alcohol. And it just turns out it's like totally, just totally false. Right. I wanted to ask, I know you did a ton of like community IRL marketing early on, and I wanted to ask you about how you advise other consumer brands when they're early on and thinking about how to spend their time, what channels to really focus on. Because for certain consumer categories, if somebody's like, yeah, we're gonna really focus on events and community. I'm just looking at them being like, you should just sell the product. Like just sell the product. Like spend all your time selling the product. Whereas you guys, like, I know, invested a lot in the, in kind of the running, running world and saw a ton of great results.

Yeah. I mean by invested a lot of my time in weekends, every weekend. Yeah. We had no more resources after all the stainless steel to put into marketing. So that was all on us. But just touching quickly on two things you said there where a lot of people both a don't contemplate non alcoholic beer. They're almost like non considerers and then think they don't like the taste of beer. Are two things we combat over and over again. Because it really is hard to imagine non alcoholic beer and the social experience. Until you actually experience the social experience without alcohol. And you're like, oh, I kind of really like this. I'm actually in it for my friends, the food, the moment and not the alcohol. That mostly hits you after the moment. That was like a big light bulb to me. And the thing we hear all the time is people say, oh, I don't like the taste of beer. Well, actually, the ingredient a lot of people don't like in beer is the ethanol, which at times is up to like 80, 85% of the calories of beer. Like in a normal, like light beer, the ethanol calories is more than 80 of the calories of like the 95 to 100 calories. And so we actually do have a pretty big flavor advantage too. And like no comparison, large brand. Yeah. On the, in real life too, that was almost out of necessity. Like I was like going around our early grocery stores like Whole Foods and nobody was even looking at the non alcoholic beer shelf. And so I was like, okay, I gotta get out in the world and bring people in. And so I like, I was running a lot of races and like trailhead marathons and spartan races anyway, and so I just started pouring beer at those, giving out hundreds of beers a weekend and getting people to like, to the actual like table and trying the beer where they're like happy, sweaty, thirsty and actually considering it.

So it's got to be how do.

You, yeah, how do you measure success with an initiative like that? You're pouring, you're, you're sampling with people, you're seeing their reaction. Are you trying to like, are you already at that time stocked in shelves in local stores and then you're trying to like see, hey, if I do like a bunch of weekends back to back, am I going to see an uptick in sell through or is it more just like this is like I'm basically spending my time to get more people aware of the brand and I have more time than I have capital.

Yeah, we have down to zip code and store level sales. And so I was able to see like ripples fairly quickly and could run regressions on that separately. Like it has to be authentic to the brand proposition. Like everything about this brand, like the can, the mountains, the outdoor esthetic, the taste was like all out of me and John's life and like primarily my life. And so where I was going to market the brand and talk to people were like, I didn't have to go to a focus group or Google where people like me hang out because it was all built around me. And so I have seen a lot of people try to bring non alcoholic spirits to races and it's an absolutely laughably terrible fit. But you can tell some VCs are pushing someone up to, yeah, they heard.

You on a podcast and they're like, yeah, let's just run, do the same thing. It'll have the same thing.

For Manhattan.

We did also take a very intentionally like long track with things too where so like that like, yeah, talking to someone face to face is very unscalable. And like doing things digitally is so much more scalable in awareness. But like if you do it enough and if you're doing it all the time, all of a sudden it is scalable on a long time horizon. And even up until this year, last year, we probably did 2,500 events as a company and handed out well over a million samples. Examples probably in all 50 states and three other countries. And so those things do scale over time. And then we've Been really consistent with our marketing messages too. I knew my core skillset isn't like me being a social media Persona and just turning on the cameras all the time. We wanted to create a timeless brand that just compounds over time. We talk about the same things over and over again. I think of it somewhat as like a Red Bull model of advertising consistency where most of CPG these days is like chasing that next hit. It's like you've got to be on the next trend. You've got to be like the next video's got to be a home run or even shorter duration. Like Celebrity Trends. We've had upwards of 10 celebrities enter our category. We have a whole range of superheroes at this point. And.

And it's so funny because you probably know all of them, but you could list them all off and I've never heard of any of them. And that tells you everything about the level of focus.

And actually it's probably harder to watch their movies now.

I feel personally slighted. I can't do it.

Yeah.

Well, we've got one more, at least.

One more superhero coming into the category this year. This one's being launched at us from a French castle. You know, it's gonna be draped in Americana imagery. So we're excited for that one. But there's all different texts. There's like the short term celebrity spike and hope you can ride it where we've kind of just done the thing and been authentic. Like who we are inside the walls is who we are outside the walls over and over again. I think that really compounds over time and matches with our manufacturing strategy, our continuous investments in quality. Every one of our teammates is full time teammates. And all this capital investment looks really good right now. But in 2018, this was super out of vogue for sure.

Yeah. Well, yeah. The beautiful thing with cpg, it is incredibly competitive. You are going to do. If you're successful at all, you'll deal with a million knockoffs and new entrants. But you can look backwards and say, or even just look at your business today and realize even with everything you know now, imagine trying to compete with yourself from zero. It would be an absolute nightmare. So it's just the benefits of great product operational excellence and then compounding.

Talk more about the decline in alcohol consumption amongst young people. What are you seeing in the data? How real is the trend and what are the key, key drivers of what's going on?

Yeah. And how much basically, how much does the alcohol industry hate Andrew Huberman? He basically needs to be in witness protection.

Yeah, the, the new dietary guidelines were basically like don't not drink alcohol. It was like it, it was like as close to don't drink alcohol as it gets. And the industry was like, yeah, but, but at the end of the day, I think a lot of this is potentially skewed by Covid and generations that were maybe, I mean, if you go back to the start of our careers.

It was so easy.

I lived above a bar in the West Village in New York and I had friends in that bar every afternoon. It was so easy to find where people were after work. And I feel for this generation that is kind of losing the work happy hours, the mentorship and stuff. And, and I don't think we're going to have generations that don't love social connection and blowing off steam and having fun. I think the industry and the world has to meet people where they're at and so I do think they'll normalize. But I also don't think in a world of cell phones and videos always on and high work performance expectations, it's going to be really tough to get back those volume drinkers as well. So I think you've got to layer in more occasions throughout the week. You've got to find ways to keep people at bars longer with moderate beverages. So the industry on the alcohol side will have continued volume challenges. And then there's like new non alcoholic functional drinks too, of which THC is the most obvious. And those are not like high volume drinks either.

So yeah, they're low volume and they destroy your sleep. So yeah, not a fan.

Talk to me about label claims. The only real label claim that I see on here is just non alcoholic brew. It doesn't say it has creatine in it or protein or caffeine or anything else. Protein. But I mean, you've reached the cow.

Have you guys ever, have you ever made like a, have you been tempted internally of the protein beer?

The high protein beer? 50 grams? Why not?

We've had some fun with like caffeine and protein and like funny videos and stuff. I do think there could be a world of functional beers in the future. But I, I also think beer and function is just kind of different things for the most part. And so. But that being said, one of the hardest things of starting a CPG business is the plaintiff's bar and all the, how tight the FTC rules are from website to label claims to everything. And there are a thousand eyes waiting for people to misstep even the smallest tripwires.

And yeah, that was why earlier last year, there was somebody, there was a viral brand doing like nicotine drinks.

Yeah.

And that, that.

But at the same time, I mean.

That just looked like it was like, okay, you, you're just, you're just making stuff and selling it.

Jordan, you don't think an athletic 4 loco could work? An Athletic Loco. Athletic Loco has a nice ring to it. No, that one got shipped immediately.

What's the scale of the business today?

Steadily compounding, I guess. We've moved into the top 5 of overall craft breweries out of 10,000 crap brewers. Top 20 beer producers overall. Yeah. We passed 100 million in revenue in 2024 and have been growing very healthy double digits since then. Last year was the worst beer year of our lifetime probably. And we had really strong growth into that. And we're just coming back with more exciting partnerships, more marketing spend next year as the business grows and kind of steadily just chugging along. And comparable, I think could be the energy drink category, which Red Bull really put on the map in the 90s. Monster arrived in 2002 and those brands didn't have a lot of 100% years. It was just a 5 to 15% compounder for 25 years. And that's really what we're looking for also is just to like make really high quality beer. Timeless marketing and just ride that health and wellness wave.

Yeah, that's always the. I feel like founders can get a bit carried away of like, I'm making an energy drink. Look how big Monster is. It's like. Or look how big Red Bull is. It's like, you don't. They didn't just like be like, oh, yeah, we just executed well for six years and suddenly we're a $50 billion company. It's like decades and decades and decades. And I think I get excited about CPG founders that are like, you know, I think of like Peter with David, where he doesn't want to sell out to the last gen. He wants to just compound enough launch new products, launch new brands to get to the point where he is the 800 pound gorilla in the industry. And so. So I'm sure you've had a bunch of opportunities to sell and turn them down to date. So I'm a fan of the compounding.

Well, you guys know better than ever too. The rules of private capital have totally changed since we launched the business. And we have an amazing cap table through all that rejection I went through and just people who are super excited about what we're doing with a really long time horizon. And there's the whole public versus private debate and do we want to go public and spend 80% of our time on the regulatory of that versus how great it is for awareness. And then the public can also invest in the business who are like super fans in it. So there's a lot of push pull on public versus private too that we're working out.

Are you getting any pushback from other alcoholic beer producers? We saw this with the milk lobby pushing back against like the alternative milks and saying, hey, you can't use the word milk. Are there words you can't use?

There's actually like the alcohol industry definitely tries to put up walls around things like this. We can't use like all the normal beer words like lager, stout, ale, like you name it. And so like we have to call our Mexican lager copper, for example, our stout a dark. But I did look at those analogs and beyond meat and companies like that and how they made enemies with the incumbent industry. And we wanted to make it really clear from day one we're not out to stand on a soapbox and kill alcohol. We're here to add to it, bring a lot of new consumers into it and actually create a really new, exciting, viable part of the industry that just helps build the whole thing. Yeah, definitely learnings from that.

Well, thank you so much for coming.

Thanks for all the drinks. Thank you for working through it. We're working through it.

We're, we're.

I think, I mean it says under half a percent. I think if I drink 50 of these, I can get a buzz going. So hell or high water here.

Yeah. There's a major placebo effect. So it's like having one with lunch or on stressful work days or like my commute beer is my favorite beer to have one beer. Yeah, it's like all these new occasions.

It feels a little risque. I like it.

Oh, it's delicious. Yeah.

So thank you so much for taking the time to come chat.

Yeah, great, great to meet you. Super, super impressed with everything you guys have built and come back on anything news.

Yeah, thank you so much. Love the show.

Thanks so much. We'll talk to you soon.

Chatting, Bill.

Bye.

Cheers.

Let me tell you about Turbo Puffer. Serverless vector and full text search built from first principles on object storage. It's fast, 10x cheaper and extremely scalable.

Our next switching gears just a little bit, we're going from non alcohol brewing.

We have Pat Grady and Sonia Wong from Sequoia Capital in the Restream waiting room.

Welcome, welcome to the Show.

How are you doing?

Cheers.

Thanks for having us.

It's Friday.

It's been way too long, Pat.

We missed you too.

Most shows, it's like, you know, maybe once a year we'll have someone on.

I like that.

We just get you every week. We'll start scheduling next week's appearance too. Sonia, it's also been too long. We enjoyed the candles that you sent us after our last hangout.

I'm so glad. The ideas for this year's swag, just wait.

Yes. Is the conference. It's still called AI Ascent.

It's going to be on 420 this year, so that'll give you.

Yeah, you were. You were early to the whole Ascent Ascend trend. Everyone's talking about Ascending this year. And so it's just a great brand for you guys. I love it. Anyway, take me through the article. 2026. This is AGI. Why were you writing it now? What was the one thing that you saw? What was the inciting element?

Do you want me to start? Go for it. I think there were two. Let me start with. There were two purposes to the article, and there was something that we saw that catalyzed the article. One purpose was to kind of put a stake in the ground because there's this thing that people call the AI effect, where once the technology is actually out there and working, we stop to believe that it's AI and we start to just call it by the specific name of the technology. That's not AI, that's just our lhf. There's this mythical quest for AGI and best we can tell, we're there. And so we just kind of want to put a stake in the ground and say, hey, look, we're there. And then you say, okay, well, what's the point of doing that? Why put a stake in the ground? Well, that leads to purpose number two of the article, which is it is time. This is meant to be a call to arms for founders. It is time to take stock of what capabilities are available in the world today and apply those to real world problems as vigorously as possible. And so there is enough great technology out there available to founders today to go solve so many real world problems, and particularly what we've seen over the last couple of months. And this is kind of the triggering thing for the article with Claude Code and Opus 4 or 5 and these long Horizon agents, which to us are kind of the tipping point that's gotten us into AGI. Like in particular, what is possible now with that as sort of the third big inflection point of the last five years is pretty remarkable. And so it's kind of meant to be a call to arms.

Yeah, we're not helping because we have physical goal posts.

Yes, exactly. Do we have to take the goal posts off if we've achieved it?

No, no, let's just mount. Let's mount it to the ground. Like we actually have to. Yeah, bring it.

Your smell, the AGI stuff was amazing.

Yeah, see, it's there.

We're there.

Yeah, we'll bolt it.

Congratulations, you're in the goal post now. You're physically in the goal post because you have. Have declared AGI. Take me through a little bit of the history of Sequoia, the history of previous technological revolutions. I don't remember a 1999. This is Internet. But as you reflect on the work the firm has done, what can you tell us and what can you share about how the firm has processed these broad proclamations about the impact of technologies that are coming and then arrival dates when they are ready and that maybe changes the stance of the firm?

Yeah, I love that as a question. So thank you for asking that. We've been pretty quiet historically as a partnership, and so this idea of sharing our thoughts with the world is kind of new and hopefully it's a useful service to the founder community. If you go back to our founding, so 1972, when Don Valentine started Sequoia Capital, he was the go to market guy at a company called Fairchild Semiconductor, which is a household name for people who studied the history of Silicon Valley, but not really outside of that. It was kind of like the OpenAI of its day. Or is the Nvidia of its day? Like, it was the IT company of its day because it was the first company to really commercialize silicon based transistors. It was kind of the company that gave Silicon Valley its name. And as the go to market guy at that company, Don's job was to take this magical new capability and figure out how to apply it to real world problems.

Yeah, make it useful.

Make it useful. And that sort of led him into venture capital because a lot of his customers were these founders and he just kind of fell in love with them in their quest to build these businesses. And so I mention that because we grew out of this semiconductor revolution, where all of a sudden computation is a thing that was available to the masses. We move from that into systems in the next generation with the Apples and the Oracles, you know, taking these chips and turning them into more computing systems. We move from that into the networking and PC Era where all of a sudden you have endpoints on every desk, in every office, thanks to the PC, and you can connect them all up with networks thanks to Cisco and the router. We move from that into a more sophisticated form of networking, which is known as the Internet. We move from that into applications which are a more sophisticated way to make use of the Internet. Those applications start to show up on mobile devices and then eventually, now that everybody has one of these mobile devices in their pocket, there's an enormous amount of data. People started doing interesting stuff with data and now we have AI. And so this lineage of Silicon Valley has kind of built up over the decades and each successive wave has built on the one that's come before. And being in this very fortunate position to kind of be in the mix on a lot of these transitions and actually being the only partnership that's kind of made it through these different tectonic shifts and kind of has this institutional knowledge, you know, gives us this broader view on, okay, what's the importance, knowing what we know about past tectonic shifts, what's the importance of the current moment? And with that, I'll hand it off to Sonia, because Sonia was the one who, you know, three, four years ago, prior to the release of ChatGPT, kind of called this for what it was and put out the original generative AI host back in, back in the fall of 2022.

The other thing I think that's interesting about this moment is I feel like people have had this sense of like, AGI will be here when it's just like so obvious in the economic data and like, that's like, that's when it'll really feel like, okay, that's when you can declare it of like, it's here, it's working the economy. And I think part of why I appreciated your guys piece is it's like it actually is going to require a lot of human agency and like human application of this. It's not just going to, it may not just like happen fully organically running away by itself. Right, Call to arms.

Now's the time. Let's go.

Yeah, yeah. I wanted, I want to hear from you, Sonia, but I wanted to ask like, has there been any type of shift in founders coming and pitching Sequoia with like an entirely like. I felt like last year I kept seeing like agent businesses that were exciting and the teams were talented, but I felt like they were just in many cases just like kind of rebranded SaaS. It's like, okay, like you're pitching me this as an agent. But like if I log into the product, it's gonna look like traditional software and maybe that's the. Maybe SaaS is evergreen and we're just gonna live in dashboards forever. But I mean, I kept wanting more basically and I think we have started to see some new paradigms. But has there been any type of shift in terms of the companies coming in where maybe somebody spent a few years in a lab and they're like, okay, we're actually going to kind of, we've seen the future and now we're going to really reinvent the entire product experience from the ground up based on this new set of capabilities.

I'll start, but Pat is our app layer guy, so you should talk as well. We framed this at the bottom of our post, like from talkers to doers. And I think maybe that describes a little bit of what you're describing of like first iteration gen AI companies, including some of the great ones. Like it did feel like, you know, it was a next generation of SaaS was how it felt like they weren't actually getting work done for you. Part of the reason for this call to arms is like we're going from talkers to doers, which is, and I think it is both the long horizon agents is the thing, but it's both the underlying model capabilities and the harness around it. So like these models can now take action and iterate and persist in the world around us. And so what we're seeing now is that founders are selling companies. They're not just doing the, you know, the, you know, newer, brighter, newer, shinier version of sas, but actually something that takes real agency and takes real time horizons to execute. So for example, a traversal in the troubleshooting space, like when there's a bug that goes down, Datadog says like, ding, ding, ding, there's an issue. Typically you have a war room that goes back and triages what the hell happened? Goes back and scrolls through dashboards, goes through traces, et cetera, eventually root causes, it fixes it. This is a several hour to day long process for companies.

It's funny to think of the human analog there. It's like if you have an employee that comes to you and they just tell you there's a problem and they're not doing anything about it. They're just like, we got a big problem here boss. And you're like, okay, okay, what are you doing about it? And it's like, so traversal is like, okay, we're actually going to be what a good employee would do, which is like, we have a problem, here's how we're going to fix it. And hopefully that's just solved before it even gets to you.

Right, exactly. And so in this case, there is no SaaS equivalent to that. Right. It doesn't even feel like SaaS. It feels like talking to a coworker. And that's why the litmus test here is, you know, are you, are you. Can you actually sell work? I'd say the founders that came into our door a few years ago, they all sell that vision like it's not a new idea that you can build agents. I think what's new is that you can actually execute on that vision because these models are finally smart enough, capable enough to actually stay on the rails where you can just let them run.

Yeah, I would say founders have done a really nice job of making use of what is available technologically at the time. And I think over the last five years, we've kind of had three big inflection points. You know, inflection point one was ChatGPT when we saw the benefits of pre training. And pre training kind of gives you baseline world knowledge and some kind of instinctive judgment, so to speak. Inflection point number two is late 2024, when O1 came out and we had reasoning and so the ability to kind of take your time and really think through particular questions and come up with deeper answers and better conclusions. And then inflection point number three has sort of been these last couple of months where we saw the impact of these long horizon agents. And so you've got some baseline, baseline knowledge. You can do some reasoning over that knowledge now. You can actually bail, recover, stay on task, persist all the way through to some sort of an outcome. And I think if you map those three capabilities to the applications that people have built, it's no surprise that the initial applications were kind of like good Q and A or good summarization or good basic content generation. Like, it was the stuff that pre training sort of gives you. The next generation of those agents could, could think a little bit harder, you know, like in the case of, in the case of Notion, as an example, which I think has done a really good job of staying on top of all this stuff. You know, you could now tell notion, okay, can you build me a database? And it could actually reason through, like, what kind of database do you need? How should I build? And it can actually build you a database. It's pretty good. And then now with these Long horizon agents, we're finally getting to the Point where you can make a couple mistakes, you can take a test, a couple hypotheses, and you can actually iterate your way toward the right outcome. And so look at, again, you can look at notion and you can effectively have your personal chief of staff doing stuff that you would otherwise be doing while you are in a meeting running in the background, you know, or in the case of Harvey, you can effectively deploy an AI associate after a data room or a deposition or some other legal workflow and actually complete it end to end while you're doing something else. And so I think this, maybe one way to put it is with this third inflection point, you don't have to babysit the model. You can just like give it instructions and let it go and you can have a few instances of it running in parallel and you kind of go from this is a cool tool that allows me to be more productive to holy cow. This is kind of like a team of coworkers that I have at my disposal.

Yeah, totally.

Help me reconcile these two things that I'm feeling simultaneously. I agree with your declaration, the call to action. Just the idea of so much opportunity for founders to use AGI to create all sorts of different value in products and services at the same time. Towards the back half of 2025, I was seeing Ilya on Doarkesh talking about, hey, maybe we're in Age of Research, and Richard Sutton and Andre Karpathy talking about some of the more restrictive aspects of the research progress. And so is that something else that we're working on? How are you thinking about the progress that's happening in more purely research contexts? What even needs to happen there? Your role as venture capitalist in helping that happen? How do you blend those two things that both feel true, but are, but feel somewhat at odds?

I think it's an end and we're putting our money in both camps.

Okay.

Like on the research side, there's, there's absolute fundamental research that needs to be done right now. Yeah, I'm personally, I don't know if you've. You guys have read Dave Silver and Rich Sutton's Age of Experience paper like that, to me, kind of outlines the premise. Like we're going from, you know, learning from existing data, Internet data, etc. Yeah, that was like the paradigm for pre training to learning from experience, which is like reinforcement learning. The paradigm is you interact with the environment, you get reward signals, you improve. And so I think there's a lot that's going to happen in terms of learning from experience and have Been following, you know, what Rich Sutton's doing with Keen and very excited about some of that direction. I'll give you an example. Also, we backed a company called Recursive Intelligence. They form a chip at Google, and this is like recursive chip design. So similar to. In the game of Go, you can have. You can play your. The agent can play itself and get superhuman at Go. You can actually get superhuman at chip design. And very surprising things come out of that. Like, you end up having chip design that looks, you know, not like the Manhattan distance kind of like square grid stuff. You actually have what looks kind of like alien, like, chip design layouts. And so we are absolutely backing Research Labs. But then if you like, if you freeze research progress where it is, I am convinced there is so much value to be built in the world, and it's just like, it's. It's just lacking founders, lacking agencies to actually go out and productize and build companies around those. Like one of my examples. Go ahead.

I was gonna say, how are you guys thinking about, like, more passive product experiences? Because people talk about agents, and most of the time they're talking about, like, giving agents tasks like, hey, go do this thing and spend as much time as you need on it. And, you know, we'll see the result. Right? Like selling work. But when you think about actually working with people, some of the best employees are just without direct guidance, constantly doing work in the background and coming to you only when maybe they need some type of input. And so it's more like you're just kind of reacting to the work that they're doing and giving guidance. And so an example I would think of is with Harvey, it's like, if somebody sends me legal docs, I should get some type of notification from Harvey. Really? When it's. When it's already done some type of.

Like, I already jumped on it.

I already did the work. You only don't. So I'm not even worried about. I'm just, I'm getting a ping from Harvey. Hey, you should pay attention to this thing. Yeah, you're going to need to make a decision here. I've done all the work and so. And even, like, with the email experience, like, I would love to log into my email and not see just like the order at which the emails came in. But like, here's three decisions you need to make. And again, like, when you work with great people, they're gonna. If they have five minutes of your time, they don't just tell you, here's the last 20 things that's happened, they're like, here's the three things that you need to make a decision on. And so I'm really excited to see more of these, like, passive product experiences where the work is just being done and you only need to chime in when it's really necessary or if you're actually a bottleneck.

Yes, I think this is a great question and a great direction. And. And to me, this kind of gets.

At the software as a service versus.

Services as a software. You know, the nature of software is really changing as we go from an era of apps to an era of agents. In the era of apps, you want a lot of surface area with your customers. You want them to spend a lot of time in your product. You want to put workflows around them. They're going to be really sticky that they're going to get accustomed to. In an era of agents, to your point, things can just be running passively in the background. The actual amount of surface area you have with your customers might be de minimis. The amount of time they spend in your product might. Might be de minimis. So the nature of the moat that you build is different. And the nature of the moat that you build, kind of what Sony was saying with the age of experience, it's all about context. It's all about, like, the environmental context of the job that you are trying to achieve and the feedback that that agent gets as it runs off and does something and comes back and say, actually, you know, like, you did this part a little bit, a little bit wrong. You need to do this part a little bit different. And I think in a perfect world, you have something. You have something like what Harvey does, which, you know, Harvey kind of bridges that gap where there are workflows today for people who, who want to do the work kind of how they've done it in the past, just a lot better, faster, cheaper, with the benefit of the AI brain. And you can deploy agents to go out and do the work on your behalf and then come back to you when it is done. And I think that, I think that, I think we'll see a lot of that over the next handful of years where there are companies who can kind of bridge that gap, where they can live in the software world and have some of the workflows, better workflows because of the AI, but some of the workflows people might be accustomed to, and then separately, they can deploy in the background with these passive agents that kind of function as coworkers who just come back to you when things are done. But it's two very different like design paradigms. It's two very different business paradigms. The fact that they're so different is one of the reasons why I think it's going to be tricky for a lot of the incumbent software companies to make the leap the same way it was tricky for a lot of on prem companies to make the leap to cloud.

Yeah.

Can you help me understand where you sit on the level of software eating the world? We talked to Tyler Cowan about one of the problems with AGI showing up in economic statistics is that AGI needs to live in a digital realm. It has to affect the digital economy, the services economy, and that there's so much of the GDP is made up of the healthcare sector, nonprofit sector. He highlights a number of sectors that are sort of AGI resistant or AI resistant. And so that's why he has longer timelines for significant impact to the overall GDP figure. Do you agree with that or do you think that there's something different about AGI that should allow tech to finally move the needle on those stickier industries?

Well, I do think as like I fully agree with the premise that, you know, this AGI stuff is only good. It's only embodied in the digital world right now. Right. And so like we, we seem to be, you know, getting tantalizing close to solving the entire digital world. That is very exciting. At some point the physical world does become the next bottleneck. I think exciting thing is actually that like hey, robotics is also going through renaissance right now as well. Like some of the smartest people are going out and working on robots. And so I do think like similar. The pace of progress is so high right now and I didn't think we're going to have digital embodiment that was reliable this early. And now you can just let the thing run on your machine. I think that increasingly we get to physical embodiment and it's a, with we're going to have a smooth curve there. I do agree with the premise of like if you want, if you believe in the super fast takeoff recursive self improving, like you know, everything is just going to, you know, go vertical line. Like I just. Yeah, we're not going to get there. We're not going to get there without the physical world. We're probably not going to get there even if we have the physical world. I just think the reality of life is, is really messy. So I don't think we're at, we're at asi. We're not at that kind of like takeoff moment whatsoever. That's not the stake in the ground that we're putting. We're almost saying here is, hey, guys, this, this quasi religious concept of AGI, like, is the thing, you know, generally intelligent and you know, instead of just waiting for it to arrive, it's here. Let's, let's, let's build that here. That's.

Yeah, there's so much, there's, there's such a. There's kind of this toxic idea that I feel like is ingrained in so many people's head, which is like, AGI is just going to do that. Yeah, like AGI is just going to do that and then we're done.

We'll all be retired.

AGI is going to cure cancer. And it's like, it's, at least in the near term from everything we're seeing, it's going to be a human properly, you know, a group of talented people properly using the tools to solve all the most pressing problems that we have. And so it's, and for young people.

It'S extremely paralyzed to be like, in 2027, I'm either dead or a billionaire retired on a space yacht. And so I could probably just chill for the next two years because it's going to be one of the other.

No.

And I worry abundance.

I worry that we'll have this sort of like lost generation of people that have let be ingrained in their head that it's not worth trying, it's not worth.

Now is the time to build enterprise SaaS even. I heard it from Sequoia Capital. Get in the arena, folks.

Action.

I feel bad because, seriously, I feel bad because a friend of mine was pitching me this idea of like an agent to help consumers switch between, like insurance products. Like an insurance company will sell you in a policy and then they'll just kind of jack up the price a little bit every year because they assume a lot of people are going to churn. And at the time I think ChatGPT agent had come out and I was just like, dude, the labs are gonna like one shot. This problem. I think pretty quickly I think you could work on this for six months and get steamrolled. And it's very possible that if he had just posted focus on that one.

Little problem, it'd be a decent business. You would have figured out something unique.

Yeah, it's a big category. And so I felt bad.

There's lots of examples.

How much do you guys. I wanted to ask, like processing signal because obviously there's so much noise Right now. And something that I've appreciated is kind of comparing like the X timeline to the app Store charts. Because every single day on the X timeline, like vibes are fluctuating and some news will break or some product will be released and the common response is like it's so over for XYZ company. And then you look at the app store chart and it's like the company that just launched the thing is like not actually even in the picture at all. Like they're not in the top 25 of any category. And so like I feel like there's this insane disconnect between the real world. The real world is using chat CBT all the time but they're clearly not paying attention to X, our little bubble. So it's like, like where are you guys really looking for signal and noise? Especially in the later stages where you're investing in companies that should be out in the real world at some point.

Yeah, totally.

Before I get to that point, I think it is so amazing that all of this AI discourse is happening on X right now. You could imagine a world where all this dialogue was happening behind closed doors or scattered across different channels. The fact that it's all on X is amazing. And you know, it's a combination of research and hot takes and what's happening in the labs. It's like it's. I think it's awesome that's all happening in one place.

It's remarkable for young people.

You can just like jump in and learn by osmosis and understand.

Yeah, it'd be bad if it was only happening in Valinor.

I still have to figure out what the elves comment was about. But anyways, putting that aside, like yes, our like our job is to like, you know, to kind of try to pee signal from the noise we have. We're obviously doing everything we can in the background. Credit card panels, web signals, etc and I'll say like sometimes we see a, you know, trending web signal take on, on X and it's just, it's just wrong. Like we look at our own sources of ground truth. The example like this, some of the stuff on you know, ChatGPT is losing, losing market share. We actually cut it by like us web traffic. Like it's a very different story. And so for us it's like it's really important that we're on X. I think all the discourse happening here, very important. But then like let's get to ground truth.

Most importantly, just know that as venture capitalists, if someone refers to you as Smog. It's sort of a compliment but also sort of a dig. So that's what you need to know in terms of Lord of the Rings references for where you sit in the ecosystem specifically.

Okay, that's good to kind of like Smeagol.

Smog is the dragon that hoards all the gold and is an antagonist in the Hobbit, but does have the gold, which is kind of like what you do. You got a lot of capital over there at Sequoia Capital. Sorry Jordy, continue.

No, what were you going to say, Pat?

Sorry.

Oh, I was just going to say to the question on Signal. Interestingly, one of the big themes of the last few years on X, thanks to Lulu, is the go Direct idea. And I think for us go Direct is a little bit of try to, you know, let the world know what we're thinking, but probably even more so just go direct to the founders. You know, the best source of signal we get is the founders. We spend, you know, we spend many hours every day just meeting with founders out there doing interesting things and we kind of have the ability to do primary research that not everybody gets a chance to do. And I think that's, that's still the best source of signal.

Yeah. What's. What is changing in the AGI age in terms of adoption and just AI diffusing itself through the economy? This is something that obviously every company has to deal with because they can build a great product but then they need to get it into businesses. If they're in enterprise SaaS, they need to get adoption, make sure that it's being used correctly. There's the forward deployed model, there's self serve models. Is anything changing there structurally or is it all all just the same playbooks?

One thought is I think we're going from, over the last decade we went from sales led growth to product led growth. I think we're going from product led growth to agent led growth. I think you see this most clearly actually. If you're using for example cloud code actively, it says hey, you should use for database, you should use Supabase for hosting use Vercel, et cetera. And it's choosing for you the stuff you should be using. And, and I think increasingly like, so it's, it's most obvious to me with code like your agent is choosing your infrastructure. But I think it's going to happen across the entire economy. Like your chat GPT is going to tell you like, hey, this is the, this is the place, this is the travel you should be booking. This is the you know, and, and so I think we are going to.

It'S like back to channel channel sales. Like old school.

Yeah, old school. But I think that the difference is like you don't have competing incentives here. And I think the Open I guys tried to lay principles that I think are. It's a very principled take on you know, how do you want to tell users what to use. And I think product led growth brought us closer to the vision of best product wins. But like ultimately people are still lazy. They can't read all these reviews, they kind of default to like what looks cool on the website. Whereas agent led growth like your agent has, remember your agent has infinite time to go and make these for you. And so it can go and you know, read all the documentation, read all the user comments like figure out for.

Your user use case also has an.

Experience like building on top of the infrastructure. It's like eventually it's like well you want change?

Yeah. Reputation management is going to be very important. The way you show up in these LLMs is important both in the pre training and in all the research that they do. And then also this whole idea of like you know, SaaS, companies that don't have customers, they have hostages. Well if it's one click or one, one prompt to replatform from the database that has that was trying to keep you hostage to the database that's trying to keep you happy.

Yeah.

But it's also, I think it's good alignment. Compare it to like if you're building a home and like the person like you know like running like the construction firm that you choose like uses really bad cement and then you have like a terrible foundation. Like you're going to be mad, you're actually going to be mad at like the, the firm because you're like why did you pick this?

Yeah, should have known.

This is like. And so I do think there's a good alignment where it's like the best like you were saying the best product should win because the, the agent is incentivized to make sure that you're on the best like footing and using the best product and cost is a factor. Quality, reliability, all these things. So I do think there's that good.

Alignment that makes a lot of sense.

The agent kind of accelerate this, you know, best product wins notion and best product for the human is maybe different. Best product of the agent sometimes.

Fantastic. Well thank you so much for taking the time to come and chat with us today. Have a great weekend and we'll talk to you soon. Pat, we'll see you next week. Sonia.

Two for two. Have a great to see you guys. Have a great Friday.

Goodbye, Phantom Cash. Fund your wallet without exchanges or middlemen and spend with the Phantom card.

Meet Phantom Cash and Andrew Reed Special.

A Sequoia Capital company. We have some breaking news before we bring in Sean Frank. Sam Altman has taken to the timeline. He posts the melting smiley face emoji with a screenshot from Elon's court filing. In the court filing, here's what it said. Musk insisted that any new entity, quote, support the nonprofit mission and that OpenAI remain, quote, essentially a philanthropic endeavor. Now Sam Altman's putting it in the truth zone. He says, here are the actual September 2017 call notes from Elon. Coming weeks, top priority. Gotta figure out how we transition from nonprofit to something which is essentially philanthropic endeavor and is B Corp or C Corp or something. Must tell the story and not lose moral high ground. Absolutely vital. So we'll see how Elon reacts to that. But if that is the case, Sam Altman is upset about it. He says Elon is cherry picking things to make Greg look bad. But the full story is that Elon was pushing for a new structure and Greg and Ilya spent a lot of time trying to figure out if they could meet his demands. I remembered a lot of this, but here's a part I had forgotten. Elon said he wanted to accumulate $80 billion for a self sustaining city on Mars and that he needed and deserved majority equity. He said that he needed full control since he'd been burnt by not having it in the past. And when we discussed succession, he surprised us by talking about his children controlling AGI. I appreciate people saying what they want and think it enables people to resolve things or not. This is Sam speaking. He's no longer quoting, but Elon saying he wants the above is important context for Greg trying to figure out what he wants. And Hope's revenge says, oh my God girl, he's such a snake. The drama continues. The drama continues on the timeline. Well, let me tell you about Applovin. Profitable advertising made Easy with Axon AI. Get access to over 1 billion daily active users and grow your business today. And we have a happy Applovin customer. In the Restream waiting room we have Sean Frank from Ridge. He's the CEO. Welcome to the show. How you doing? Good to see you. Oh, you got the polo there. What's this?

Is that the Winter Olympics? Team usa.

That is the newest drop, guys. You guys like it?

I put on just for you insane?

Fantastic.

Insane. Brought the.

Okay, so emergency podcast we have why we wanted to have you on because OpenAI introduced ads. How quickly are you thinking about ramping up, testing it out? What have you learned?

Is Connor waiting in line outside of OpenAI to try to be the first?

Dude, no joke. We would be the first advertiser if they let us. We measure a lot of traffic sources over at Ridge and the most revenue per user out of all traffic ever. I mean, Google branded, meta, whatever is chatgpt. We get like $12 from every one of those sessions. And it like, you know, for meta, you'd be lucky to get a dollar per user. Right. So the revenue per session from a AI user is just through the roof. And we have some data. I don't know if you want to share it or not, but North Beam put out their 2025 report and they track probably 2,000 merchants, billions of dollars in revenue. And AI search in January was like 0.01% of all traffic on all e commerce websites and now it's like 07. So it's just like shot through the roof and there's not ads yet. As soon as ads roll out, I am so excited.

Okay. We would expect the dollar per user to fall based on ads. Correct. But do you still expect them to be high intent? Because there were, you know, we were talking to Ben Thompson about this and he was saying that they should have launched two years earlier because it's going to take a while for the ads product to work its way up. I imagine that the ChatGPT users that land on your website are super high intent because they've probably been asking ChatGPT about your product specifically, or wallet specifically, or product specifically. Now, if they're researching the Roman Empire and they just see a little ad at the end that you purchased and it's not targeted at all, they might click on it and check it out, but it's probably going to be lower intent. How optimistic are you about ChatGPT ads delivering at a level above Facebook quickly?

Well, Google is rolling out their direct AI offer, right. And, and what that is is if someone asks, hey, what are the best gifts for dads? Right, they're going to ask that specific question. I can now bid to show up with an offer for those people. It's like, hey, the Ridge wallet's a really good gift for dads, and they're going to give you 20% off right now if you click this link, right? So it's incredibly bottom of the funnel. Like people who are ready to purchase. And that's Google's ad offering inside of AI and that's coming out soon. So I think that was like what pushed ChatGPT over the edge to roll this out. They'd probably do a carbon copy of that. So it's not going to be discovery ads like you get on a applovin or a meta. Right. What it's going to be is that last point of sale, almost like an affiliate, like push you over the door, like a honey competitor or whatever, which I think is.

Would you be unhappy if the offering was just give us a dollar amount per customer and we'll go find you customers, something that's fully black box. You're not doing any demographic targeting, no keyword targeting, or would you like those features?

Well, that historically, if you can tell somebody, like, here's 20 bucks, find me customers. And you just look at your average order size. That's like the holy grail of advertising, but it usually ends up being a bit more complicated.

But is the initial product that they roll out, does it matter to you or will you just take what they give you?

Yeah, it's what we've seen. The organic traffic from any AI search is already so valuable. Right. Any way to get more of that, we would spend a lot of money for. But the beauty of the Facebook ad product is that they figured out a way to take half of everybody's revenue. Affiliate is like, people, let's give it up for Mark.

Yeah, I'll take. You do the work. I'll take half.

Yeah.

TikTok Shop affiliate. People don't want to give more than 15% of a sale. They're like, oh, that is too much. Right. But all performance marketing is. Is just a. Is affiliate in a different coat. Right. It's like they're able to like, oh, you're going to generate your demand and if you have a better offer, you'll get a better return. Right. But really they just figured out exactly how much money they could take from everybody at the optimal level. And that's why they do $100 billion year in revenue. So if the offer from ChatGPT and Sam Altman is, hey, give us 40% of your revenue and we'll give you new customers you wouldn't get otherwise. I would take that deal because I'm already Giving Mark Zuckerberg 50%. Right.

One thing that's exciting is I think once people start seeing more, once they start seeing ads for products, they will just Naturally start using LLMs for more product research. Like, I still find myself If I'm like, if I'm doing like product research, I'll still go to Google search quite a lot, even though in many ways the experience is inferior just because I'm so trained on that. And so I think, like, as they roll out ads, they're just, there's going to be like more organic activity. So hopefully as a brand, you should be getting more people just landing on the site organically because they're just finding out through their own research.

Totally half of all product searches start on Amazon. So like, Amazon has been able to take over the product search box from Google, but they spent $500 billion in two decades doing it. So if ChatGPT can start stealing some of that glow that Amazon's been able to do, they'll have an amazing affiliate business and ads business and whatever you want.

Yeah. What do you, what do you, you guys sell a ton on Amazon. What do you think Amazon's play here really is? Because they obviously don't want to give up the golden goose of their massive ad revenue business. They want to protect that. Alexa is not even in the picture as far as I'm concerned. In terms of a shopping assistant, what's the play?

Well, Amazon has a beautiful ad arbitrage system where they spend, they're like the number one spender on Amazon, on Meta and on Google because they can spend $2 to get a user and then those users click on a bunch of ads on Amazon. It's a free money machine that they've invented.

So.

Yeah, I think they would love to partner with everybody because once you're on Amazon, you're still going to click around, you're still going to do shopping and they have an ad product. The more interesting question is what is shopping Shopify do? Because you know, Shopify is a product feed of all these merchants, right? But will they be able to win over any sort of these deals? They don't have an ad product. Like, they make all of their money on me hosting my website and then a percentage of the sales I drive. And it's a very small percentage. It's a payment processing company. So it's like, how are they going to survive if more and more of those transactions are happening inside of ChatGPT or inside of of Gemini? I think Amazon's fine. They have a big enough product, you know, feed, they could feed it in everywhere. And if you do come to Amazon, they get all their money back with all the clicks.

But walk me through, walk me through the risk of Shopify, because if I am, if I'm looking to. There's a lot of. There's a lot of brands. Like, there's a ton of. I would say, like, the real, like, shopping that I've done over the last five years is like, almost always on Shopify stores, right? Like Amazon for, like, essentials and things, like batteries and things of that nature. But I feel like a lot of my lifestyle consumption is happening on Shopify. And so you mentioned that not having that ad flywheel, but am I not still discovering Ridge and just popping over to your Shopify store and like, to complete the transaction? And if they're effectively a payment processor, like, they're still making their money, right?

Well, it's just if websites continue to be important, like, you know, I'm going to operate on the assumption that.

Yeah, but, but calling. Calling Shopify just like a website company, like, in my view, it's like a catalog and it's a CRM and it's a payment processor.

Oh, for sure. It does all those things incredibly well, bro. I'm so bullish on Shopify. I love Shopify as a thing. But the challenge is the website will become less important in the future. Just like mobile apps had a moment. They're not important anymore. When was the last time you guys opened a shopping mobile app? And before that it was catalogs. Right? So, like, the user experience has become easier and easier and easier and the way you interact with brands has changed. And I think the website will kind of be replaced just by asking chat to buy you stuff. And maybe you'll still go to websites, but kind of like how you still kind of open catalogs and I don't open catalogs.

Yeah, Straight in the recycling. I'm like, I did not ask for this.

Totally. Right. And that's just like the worry of the website. So Shopify is incredibly important for us, but they do have to plug into every single LLM, right? They have to be that product feed everywhere.

Yeah, but I think they're. They've taken the approach of just like being more quick to partner with the LLMs than an Amazon has because again, they don't have that same, like, they have, like, less to lose. Right? They're not worried that because they don't have an ad business, they're not like, I feel like Amazon has to be a lot more. When you look at the. When you look at the marketplaces that have partnered with ChatGPT, it's like Etsy, right? Etsy doesn't really have any. Anything to lose, right? Like, they're. They just Want more traffic, more, more sales. Like they'll take it however they can get it. Whereas like Amazon has something to lose.

Right? You know, and it was big news when Shopify partnered with ChatGPT, Intel, Amazon partnered with ChatGPT and Amazon comes in with an equity round and like that. Now all of those products are going to be feeding in ChatGPT and that's one of the worries of Shopify. It's like, how do you stand out right now? It's like beautiful brands with beautiful websites with shopping experiences and that is different from what Amazon offers. But if all of those products are just going to be discoverable inside of ChatGPT and competing for the same space, I don't know the value of my website in three years. That's one thing that we're worried about at Ridge right now.

What about ad creative? I There's this weird trend where D2C companies were effectively making TV commercials with TV production techniques, cinema cameras, high res photos, whatnot. But what wound up working on TikTok and Instagram Reels and YouTube shorts was a lot of UGC, a lot of stuff shot on iPhones, a lot of stuff that, that feels more natural. Is there a world where maybe you want to get good at creating Sora videos or AI generated images? Even if they don't look like a real photo, it looks more natural within that app. Within the chat app, you're expecting to see AI images and so you want to lean into AI image versions of your products. Even if the background's a little crazy, hallucinogenic, it's what people will be used to. They'll be in that mode.

Yeah.

I think when ChatGPT launches their ad product, it's probably going to be thumbnails to websites with really aggressive offers. But right now in our ad account, if you guys go to the Facebook ad library and pull up Bridge, we are running full blown AI videos, right. And they're getting spend and they're winners in the ad account. So we're all probably underestimating how much it's going to affect the ad industry. It's like by the end of the year video is going to be. If you want to make AI video, it'll look just like human video. And the highest level productions are already being basically monopolized by AI.

Something I've been thinking about that feels inevitable is two years from now we'll look back and laugh that people would make an ad and then serve the same ad to like 100,000 people or a million people because it's like, if you're gonna spend a lot of money serving somebody an ad, you should serve them the most, like, hyper targeted, like, Sean Frank, I have an Athletic Brewing Company beer for here for you. I got an offer for you, Sean. Just click the link and check out. Like, eventually it will just get so, so, so, so targeted that it's basically like ads are being generated on the fly for individual customers.

Oh, dude, that's for sure coming. Matt is working on it. And not only that, they'll put you in the ads. They'll be like, hey, look how cool you can look in this sweater. You should buy this sweater. And they want to do that because then the CPMs just go up. Right now, I get a $12 cpm on Meta. They would much prefer me get a $200 cpm and just show way less ads to everybody. Right? So I think that the personalization of ads is coming. And we've already just seen it, like in my ad account right now. Today, maybe a third of all my spenders will be AI ads. And that's crazy.

That is crazy. Double click on the AI ads that you're running. Are you running stuff that you could shoot that's indistinguishable from human photography, human videography? Or is there unique value to saying, look, there's just no way that we could take a ridge wallet to the top of Mount Everest, shoot it into space, have it turn into cake, have it turn into a cat. Like, crazy stuff. That's just impossible. Maybe with a massive CGI budget, but truly breaking the laws of physics. Or are you just trying to do like, hey, it's just a ridge wallet on a beautiful background and we were able to generate that.

Yeah. So really what it is is we have wallets with every college. And let's say there's 200 colleges in America right now. I could get 200 jerseys, I could get 200 fans, and I could have them talk about this particular wallet with this jersey, with this fan, like a very bespoke ad, and then serve it into a market like Ohio. I could do that, but that would cost, I don't know, $85,000 to run that campaign. Or I can have one guy do it in one day with a Hicksfield or whatever. Right. So that's what we're doing right now.

And are you guys using Hicksfield?

We're having them at the show in just a couple minutes.

Yeah, I love Hicksfield. I think normies are using ChatGPT now, like it fully broken through the mainstream. But all of the tools around that. I mean, everyone knows lovable, they're both new. But if you want to make videos at scale, I think it feels like the best, easiest way to do that.

Yeah. So the pipeline is you specifically want to multiply your creative. So you are filming one human video and then you're creating variations with AI. Is that the correct use case right now as that example?

No. So what we're doing is we have B roll of actual wallets being used that we've shot.

Right.

But we need an opening hook of a buckeye stand in a jersey or whatever. So that is being done with AI and it intros to the wallet.

Got it.

And you can pull up our Attica. Right now, there's a woman like Hunter. She's walking, talking about like, hey, like, I bought this for my husband. He's like, you know, whatever, that she doesn't exist. That is all AI and it's because for us to find a woman, Hunter, who's out in a field or whatever, we could. We could do that. It would just take, you know, two days, and it probably cost $2,000. And we can test that concept right now in real time inside the Facebook ad library.

So it's going to be interesting. I'm so curious to see what happens to the brands that try to take some type of moral, aesthetic, or ethical high ground and just say, we never use AI and what actually happens to those.

It's one of those things. Yeah, it's like not using AI it's like if somebody said, yeah, we don't use computers, I'm like, I don't even know what you mean. It's like, everything's AI. Everything's going to be AI so look incredibly bullish on ads coming to any surface of the Internet. So if there's any surface of the Internet that doesn't have an ad, I would love an ad to be there. You guys did the Applovin ad, read brand new to E commerce, and I spend millions of dollars there, and I love it as an ad production. So more of that is just really good for me. So if it comes to Gemini or ChatGPT now, I just don't think they'll do big, beautiful display ads. I don't think there'll be any video ads. It's just going to be, hey, you're looking for a gift? Ridge Wallet will give you the best price ever right now. And then they'll take a 30% commission.

I really want to see more flashbangs come.

Watch out, watch out. We Got you. Yeah. I hope you.

Do you have any flashbangs on your podcast? You're the one show that we would give you the effect if you want to flashbang your boys.

Okay, cool.

I'll get the ad rights to that.

We also have a horse that runs across the screen now.

We'll save that for right now.

Wait, have you used any other of the AI ads? Like AI basically. Like I heard Perplexity was rolling out ads in their product. Did you demo that?

Have you.

Have you thought about using that? I know it's smaller and earlier. Are they actually live. You have any experience there?

No. And I have a list of in front of me. Like I told you earlier. Northbeam did a report.

Yeah.

And ChatGPT is 99.5% of all AI traffic to E commerce website right now.

So it's a big one. So this is a big announcement today. So. Yeah. What does it take to actually get Ridge live?

I don't know, man. You guys know Sam. Dude, hit him up. Say he's got his first paying customer right now.

He's a little busy today.

He's got to go back and forth between Oakland and Traffic. No. Yeah. We'll put in a good word for you.

I would love to take consumer or kind of broader consumer trends are you tracking this year? We were talking about the sauna wars in New York City. People setting up these bathhouses. I was somewhat bearish on the trend nationally. I just think there's a lot of places in America where people will be like, am I going to pay a couple hundred bucks a month for this sauna bathhouse membership or do I just want to buy one for my house? But what are you tracking?

Well on the sauna Wars? I mean, Pause is a franchise based sauna business. They have them in Venice. They have them in Southern California. I was at a E Commerce or like a private equity conference. I think those guys are going to expand aggressively. So I think they're selling to.

Yeah. But here's the thing. I used to live down the street from a Pause. I would go there. I enjoyed it. I was like, I like using asana and I like using an ice bath. And so I just bought one because it was like $100 every time I went. I just did the math and I was like, it's nice to go there, but it's nicer to just have it in my house. And so that's one of those things. I don't know how much actual spend they can capture long term or what the LTV Is like if you get somebody hooked on using the sauna, eventually they just run the numbers right. It's not like a gym where it's like a gym, I'll pay however much it is a month because it's nice to go somewhere out of my house to work out. And I don't want 300 different machines and all these different plates. So I'm not convinced that it's actually going to scale that well outside of major metros like LA and New York.

Yeah. Also the cost per use of a gym is really low compared to 100 bucks every pop of a pause. But they're going to expand like crazy and it'll be a great private equity transaction for somebody. But yeah, long term, I mean, I don't think it's a good trend. The thing we're most interested in is fiber. I think fiber is going to have a protein like moment and protein's been like on a mega trend for 20 years or whatever and has billions of dollars in spend behind it. You know, Creatine had like a little taste of that. But fiber will be like the next, you know, thing that even reaches something like a protein. So we think fiber is like the obvious big trend right now, that it's going mainstream.

Will we see, will we see you guys enter the category this year?

We're secretly in the fiber space already, so we're not talking about it, but we have a brand bubbling up. We have real customers that are paying. They don't know what's behind Ridge, but we'll talk about that. Maybe offline.

Amazing. So you're going to post your revenue every single month to invite thousands of competitors into the category, right?

Yeah.

Seems to be the smartest thing to do.

Right?

The build in public movement brought to consumer is just an absolute nightmare. It's like if you brag to the world about how much revenue you're doing, there are going to be smart people that enter your category and they're going to do it fast and they might out execute you. I don't think they'd out execute you guys, but I've yet to see a consumer founder build in public that didn't ultimately regret it.

Oh yeah, we're pretty public with Rich just because I think you have to be stupid to try to sell wallets in 2026 or whatever.

Yeah. But for you guys, it was never like you were just like, here's our investor update. I'm publishing it because it's so good. You guys don't have investors. But it was never like I'm going to flex monthly on the timeline, which is the approach that I think a lot of people have had. Like on the consumer side.

Yeah, I mean consumer's a knife fight, man. There's no moats at all. It's the digital equivalent of opening a restaurant, I think.

So.

You'Re fighting for every single transaction. Right. You guys were just having Sequoia on talking about it's a great time to sell enterprise SaaS because you guys have hostages and not customers. And it's like, yeah, I would love to have.

Yeah, there's truly no lock in. Once you buy one, it's not that you have to come back the next year. Whereas for a lot of Enterprise SaaS, if you stop paying, your entire business shuts down.

Yeah, the moat is like scale operational excellence. But those things like, those things can erode. Very team based.

Well, thank you so much for taking the time to hop on.

It's great to see you. Next time you come on, come in person. You know, it's not that long of a drive.

Yeah, dude, I would love to. And wait. Crushing it.

Once you. Once you actually have the. The OpenAI ad platform live, let's come here, let's put it on the big screen. We'll get a bunch of monitors and we'll just monitor the situation together.

And we'll clap every time a sale comes in. Hell yeah, brothers.

And thank you for hooking the team up with Ridge Wallet.

Oh yeah, you guys are too kind.

I was in the gym this morning with some of the folks. They had the suitcase. Look at the suitcase.

There it is in the corner.

Every single member of the team is rocking a Ridge suitcase. There are more Ridge wallets that you can possibly count in this ultra dome.

It's amazing.

We're huge fans.

We love you.

I carry a Ridge wallet every day. I love it.

Talk soon.

Thank you. Keep crushing. Goodbye.

Goodbye.

Goodbye.

Restream 1 livestream 30 plus destinations. If you want a multi restream, go to restream.com I want to talk about ads more. I want to talk about Vibe Co's ads. They're a sponsor of us but they've also been burning up the timeline with a number of billboard ads in San Francisco. Shiel Monot, friend of the show, says these ads are very clever. What else is in the collection? And I got a preview of some other ones. So this is Jensen on target, Jensen on tv. That's a brilliant billboard. It only works in San Francisco, but Jensen Wong, the CEO of Nvidia, his leather jacket is Iconic. And so you see the shoulder of the leather jacket with Jensen, you know what they're talking about. If you want to get to him, you're going to go to Vibe Co. What else did they do? They did say Target Mark on tv. They put just Mark Andreessen's head there. It's an iconic image and it lets you know immediately. How can you target someone like Mark Andrew? He's not going to be everywhere. Vibe Co has great targeting. So I got a little teaser of what else is available. We got Sam Altman, Target Sama on TV with the McLaren one. Yeah.

Is that real?

And then we'll go to the next one. Target Zuck on tv. And it's a wrist with a FP Journe on there or a Patek.

No, you made these.

And then the next one, they have a Target Chesky on tv and it is a barbell. Yeah. So this is the type of marketing that you got to be doing. You got to be thinking, okay, how do I send a message? There's one more. We'll go to this target Augustus on tv. Of course, everyone knows Augustus Dirico. You know, he's known for carrying a.

White monster, sort of like a human version of the white monster.

If you put this billboard up, everyone's gonna get it immediately. They're gonna know that you're. You're cool. They're gonna know that they should go to Vibe Co and they should start targeting folks like Augustus Costa Rico, the CEO and founder of Rainmaker, who's known for having a white monster every once in a while.

Not every once in a while.

Pretty much constantly.

Every hour, Every hour, on the hour.

He's powered by it.

The way you drink Diet Cokes, I imagine he drinks white monster.

Yes, yes.

It's just like, oh, oh, it's two o'. Clock.

No, no. The four of those that we just displayed, I did generate in nano banana with Gemini 3 Pro, Google's most intelligent model yet.

Leah says, love trash day. Love hearing that truck. Humans getting stuff done. Cooperation, logistics, municipal services, civilization. Couldn't agree more. It's a reminder that we haven't collapsed yet.

Dude, a four year old. The way their face lights up when the trash truck comes. And it's just pure wonder at the massive machinery moving up and down the street. The bees when it backs up. That is childlike wonder that you should never lose. No matter what, you should always take a moment to show some respect for the trash truck. I completely agree. I love it. Joe Wiesenthal is crashing out. He says he never wants to use the web again. Said in today's Odd Lots newsletter he wrote about how depressing the Internet's become. We'll read his piece and we need to catch up with Joe. I think he's coming on the show soon, he says. I swear I this is not another piece about my personal forays into vibe coding. Okay, maybe it is a little bit, but not really. So last year we did an episode with the COO of Perplexity, whose name is Dimitri, he says, which is kind of a hybrid LLM search engine. You'll be familiar with it. It's very tethered to the real world. So if you asked it about, hey, maybe the latest developments in Venezuela, it will obviously produce text, but also links to the latest reporting from reputable news outlet outlets and other sources. It generally works well if you want to get up to speed on something that's happening right now. Anyway, one of the questions that Joe tried to get across with Dimitri, but he doesn't think he phrased it all that particularly well, is what happens to the future of the web as we know it if more and more of our news is coming to us from chatbot form? Let's just imagine people start regularly making Perplexity their first destination each morning to capture up on the news. And let's just imagine for some sake of a thought experiment that the traditional news publishers come out fine in this relationship. So the New York Times and the CNNs and the AL Jazeeras of this world are getting adequately compensated for their reporting to be summarized and displayed in perplexity. It's hard for me to imagine the future, but whatever is beside the point. So he's just saying it's not an economic issue. Let's talk about the vibes that would result from this. So he says this is his question in the future, why do websites still exist? If more and more people start consuming the New York Times content throughout a chatbot, why continue to invest in maintaining a well functioning website called nytimes.com I suppose that to some extent this is a question that precedes the existence of chatbots. There was almost certainly a time when a majority when a major priority for the New York Times was to have a well functioning, elegant website. And while there are people still paid to work on it, this is probably not their top priority right now. A tech budget that might have once gone to web development might now be going to figure out the best strategy for Instagram reels or whatever. Nonetheless. Do you have a comment, Jordan?

Yeah, maybe this is just because I turned 30 and I'm unknown now. But I like going into the world of the content. Like, I like going to the Wall Street Journal app. I like going to the New York Times app. I like going to these places because the physical paper, we like the physical paper.

This isn't going anywhere for my cold, dead hands. Me and you, Joe Weisenthal, we are keeping the newspaper alive. I guess you'll be on the web like some hot new youngin and I will be reading the paper.

Yeah, ultimately, I still care about like it matters. I care a lot about who wrote it too.

Totally.

Like, I don't want it just served.

But that can be instantiated in perplexity or chatgpt. It can tell you who wrote it. You, you could, in theory, if the, if the deals are structured properly. Now you can't get, I don't think you can get the New York times content in ChatGPT because they have a lawsuit. You can get Wall Street Journal content. So in theory, you could kick off your morning with a query to ChatGPT, hey, tell me the most interesting pieces that are on the front page of the Wall Street Journal. And it would just do it for you and it would bring that in and it would pay News Corp accordingly. But there's something fun about holding a nice piece of paper in your hands. I think it will die, but of course, very slow death. We're still reading newspapers. I imagine I'll still be reading newspapers in a while, and I imagine that we'll still be going to the websites. But he is correct to highlight that there is a change afoot. So he says, nonetheless, the web browser is by and large still a dominant piece of software for accessing content and services that exist on the Internet. And in fact, if we step out of the news context and think about it, say, buying car insurance, then the website as we know it is still, still incredibly important. Anyway, I was thinking about this again because my vibe coding foray, easily the most annoying parts were when I had to leave the terminal interface and do something on the web. So it's still an unbelievably annoying process to do something simple like redirect a domain name. I found godaddies where I've been registering various domain names for years. Interface to be borderline unusable. Shots fired.

Fact check.

True, it is difficult sometimes.

Every time I'm just trying to make sure that, like a domain is renewed. They're like, how about you buy a thousand websites right now? Buy a thousand websites, buy a thousand AI websites.

I'm a name.com guy.

We actually have experience. We have 1 billion websites for you.

Yeah, yeah, yeah. As I mentioned in the piece he wrote on Tuesday, one of the first things Joe did to make it so he could update his website directly from Claude Code, rather than having to update the files via cloudflare backend. This is the first very small thing, but the point is that every time I had to operate in the browser, it felt deflating. Typing in URLs, clicking buttons, checking boxes, pulling down drop downs, entering fields. No, thank you. He's genuinely curious what happens to visual the visual web that's designed for humans? I know there's plenty of work that's being done to allow agents such as Claude Code to go to a website, click around to what human does. Just in the same way the chatbots were trained on billions of Reddit posts and everything else on the Internet, these agents are being trained by ingesting numerous sessions of people, moving a mouse on the screen and so forth until they commit that process. So that's all well and good, but it still gets to this issue that we currently have much of the Internet presented in the form of web pages that are designed to be logical and pleasing to the human eye. We still do so much on the web, but now every time I have to use the web, it feels kind of like a personal failure. It feels inefficient. And if the web is increasingly going to be navigated by bots working on a human user's behalf, then why even bother optimizing it for visuality at all? I don't know where any of this is going, but my guess is that it's pretty big. Structural changes are in store for what people think of as the Internet. Yes, it's interesting.

No, I feel like the Internet is already living in apps. So much. Like when I think about a world in the future where an LLM is just generating me an article that was in the New York Times that day. I could imagine it just generating it in the visual style the New York Times decides themselves.

I mean, you can already do this with Nanobanana. You can say, write me a New York Times style article about this topic. It will write it, instantiate it, it will search the web to find the facts, so it'll probably not hallucinate that much. And then you could say, turn it into an image that looks like a New York Times screen and it'll do that too. So people will be met where their preferences are. I don't know. I Think that. I mean, the flip side is like he's making this argument that as more and more traffic shifts away from the web, it will get fewer and fewer resources within those organizations. So the New York Times will say, hey, we're not getting that much traffic to our website, so let's not spend that much effort making it better. But. But you also get 10 times as much leverage because the folks at the New York Times will be able to fire off an agent and say, hey, make it look better. And so you would imagine, I would hope that even as you go from, okay, maybe there's 10 people working on a website and now five of them move over to Instagram and YouTube strategy and four of them move over to generative optimization strategies and LLM and AI stuff. Well, there's one person left, the person on the Japanese soldier on the island who hasn't gotten the memo that no one's going to the website. Well, some people are going there and they fire off a prompt, make it perfect, don't make mistakes, and boom, they're good, they're in business. So some cost for optimism. We'll see. What do you think, Tyler?

I was just going to update on the same.

Altman, please give us an update. What's up?

So first, Jesse, if you want to look at prediction markets. So will Elon Musk win his case against OpenAI? Yes, earlier today, basically at the peak of like the. Oh my gosh, like Sam is so cooked.

Yes.

He was at 74.5% chance. Whoa. It's now down at 54.1.

This is fascinating. We're watching them like duke it out in real time prediction.

You know, Elon, he doesn't have to worry too much because Nick.

Oh, Nick, his strongest soldier from the.

He's saying it reads as Elon Musk emails. It reads as obviously fabricated. Elon doesn't talk like that.

Oh, well, case closed. Case closed. I wonder if Nick will be called to testify. I'd love to see him on the stand. That would be very entertaining. Anyway, Jensen Huang doesn't care about gamers. Allegedly. ASUS reportedly says the RTX 5070 Ti is no longer being produced. RTX 5060 Ti 16 gig to follow. The gamers have been having a rough.

I don't want to play with. Jensen says I don't want to play with gamers anymore.

It's AI all the time. Yes. Gamers are being squeezed left and right. We need to make everyone aware of the rights of gamers with our cod sounds and our flashbangs and our smoke grenades to let people know, let Jensen know. Maybe we'll have to bring Jensen on the show. Throw a smoke grenade and when the smoke clears, he can tell us that he is still committed to gamers. Let's move on to World Labs. World Labs. What do we got? Launched a box. They shipped a box. It's a video of. They took World Labs. I think this is real. I have no idea how to process this, but it looks like they built a screen put in a box that has. What is it? Imu Inertial measurement unit that can measure how the box is being rotated and then it can re render the world. So you're looking into it in this box. This seems really, really cool. This seems like just a piece of hardware that people would actually buy and sell. We've seen this with the holographic display that you put next to your gaming rig. Made by Asus or Asus Razor. I guess Razor is the one that makes it. This is really cool. I'm a big fan of World Labs and I like that they're productizing this. I wonder if this is like a stunt. If this is just for fun. I really hope we can get our hands on one of these because this looks amazing. Well, there is more news in the AI talent war. The total number of employees that are leaving thinking machines. Alex Heath is hearing that it's up to six now. The true scoop God is on the trail of another scoop. He posted this at 2am he's up burning the midnight oil, getting the scoops on thinking machines. Maybe up to six people leaving.

Naval says California based unicorns because of ads.

Do you think all the thinking machines folks were like wait a minute, we.

Want to work on ads.

They're gonna do ads at OpenAI. I gotta go back there. I gotta go to OpenAI. I gotta get out of here.

It's been my dream.

Mira hasn't said anything about.

Or maybe it's. Maybe it's they wanted to work on adult mode.

Maybe. Maybe there's lots of reasons. Or Sora, they could be trying to.

Grind up the Disney ip. They want to get their hands on that ip.

Yeah, they want to slop it up and they say we're not doing any of that at thinking Machine. So we're going over to Open. Talk about this.

Naval says California based unicorn is being routed to the glue factory.

The horse. Not metaphor.

Mincing words. We will protect the unicorns. Unicorns are horses. We will protect them.

They are.

Should we read through David Friedberg's piece yeah, fantastic piece. California started with the gold rush and might end with the golden exit. It's been underreported how much wealth has left California because of the asset seizure tax being proposed. It's important that we continue to call it the asset seizure tax. A private poll was conducted amongst effects individuals a few days ago and 80 to 90% surveyed they had already left California in 2025 or will leave in 2026 if the ballot measure looks likely to pass. Of course, the ballot measure currently is retroactive, so they would be subject to the 5% one time tax. And of course it would get litigated. Dave Friedberg continues to 2 1/2 trillion of assets gone, representing 20 billion of annual revenue for the state government and likely hundreds of thousands of jobs now at risk. Less reported is the bigger exodus underway from folks who are not directly affected but worry, as they should, that this law will quickly transition from billionaires to everyone else. The initiative actually gives California legislators the right to take anyone's post tax assets anytime in the future based on a majority vote. This isn't about billionaires. It's a new tax system that simply destroys private property rights rates. In America, all private property is now public property. Even after paying your taxes, it's not legally your property anymore. It's the government's. You're just borrowing it. Legislators will decide what you get to keep and temporarily use. Each year, countless founders, CEOs and other business leaders are actively looking to move their companies out of state. Not just tech, not just AI, not just billionaires. But the core engine of California's prosperity since 1847 is unraveling. And here is how this initiative risks unraveling America. Ten states have explicit or implicit prohibitions against asset seizure tax. Individuals affected in California and other states trying to do the same will move to these states that endow private property rights. California already has a 20 to 30 billion dollars budget deficit, an unfunded 1 trillion pension liability for public employees unions and 500 billion of debt outstanding. The state, Pennsylvania cannot afford to borrow much more and will launch more asset seizures to meet its obligations. Asset seizures will transition to millionaires and eventually to the entire middle class. As more asset seizures drive more people to leave the state, the deficit, debt and job loss will spiral. The golden exit. No US state has ever declared bankruptcy. In addition to California, dozens of other states face similar fiscal crises. Legislators promise future benefits that can't be paid. Where theft and waste have been allowed to run rampant and unabated for years. Struggling states will eventually request federal Government assistance as they always have in times of fiscal crisis, effectively federalizing state debt. States not in crisis will declare enough is enough. Individuals in those states will refuse to pay their federal taxes. Why pay for other people's mistakes? Some states may try to secede from the union and a constitutional and civil crisis will erupt. I know this sounds crazy, but I think at some point states will just say, like people. Citizens will be like, why am I sending 30% of every dollar I make to bureaucrats in Washington that hate me? And so I think this sounds wild, but I don't think it's as far fetched.

Yeah, it's very dark.

Nothing like a little Friday Black.

The answer is clearly just AGI pilling. All of the California regulators just say AGI will solve the deficit. We will just ask AGI to fix the debt, fix the fiscal crisis, fix the pension liabilities, fix the budget deficit. Don't make mistakes. And so much value will be created by AGI here. Just the income taxes will pay for that A thousand times over. A thousand times over. So you don't need to. You can respect private property. Don't worry, it's going to be fine. AGI is here to save it. That's the solution. Got to pitch them anyway. Back to the AI world. We have Alex from Higsfield AI in the Restream waiting room. Let's bring him in to the TVPN ultradome. Alex, how are you doing?

He's back.

Doing great. Great to be back.

Sounds like we were just talking about the billionaire tax. This is something that fortunately your business is doing so well.

Yeah. Focus on growth. Focus on the good things. Tell us the best news in your world this year.

Give me that mallet.

Oh, yeah.

Give me that mallet.

Yeah. What's the latest, what's the latest metric?

Absolutely. So what's exciting about Hicksfield is that we see emergence of AI native social media agencies. So really teams from maybe 10 to 30 people making commercial ads end to end with AI.

Yeah, we just talked to Sean Frank. He said he's a huge fan. He uses it for Ridge Wallet and, and has been able to generate custom ads for tons of different markets, local areas where it was just completely unfeasible to cast so many actors to play so many different parts for every single different college team that he sells products for. Yeah, it's a fascinating time. So this is mostly driven by agents or brands going direct. What's the biggest driver of growth for you?

Absolutely. We are excited to see Fortune 500 brands really hiring primarily Hiring really hiring smaller. Really hiring smaller agencies.

Yeah.

So that they then use Heapsel to make those ads. And I think although the most exciting segment is definitely direct to consumer, especially when AI can deliver not just the efficiency, not the cost efficiency, but also higher level of personalization. So the example which you just brought up completely makes sense. Whenever someone needs to customize for 30, 60, 100 different user groups, let's say sports teams, Genai delivers against this goal and Hixel is at forefront of that.

What are the compute costs looking like these days? The biggest news is that you, you jumped from 100 million to 200 million top line in just two months. That's insane. Congratulations. Jordy hit the app level. Congratulations. But on the flip side, I mean if you, I mean you are raising money, obviously the capital markets are open. But if you were really spending on inference, that could be, you know, difficult. How are the margins developing? How are you optimizing for inference cost? What are you seeing on just inference cost trends broadly? Are you happy with the progress or what else can you tell us about the cost structure of this business?

I have good news and I have bad news.

Okay.

Look, I think the good news is that video models gets more capable so that over time marketers can just upload all the brand assets in one place and then the model just remembers all the contexts. And this helps to make not just one video, but multiple videos and extend existing marketing campaigns. I think this is going to be a major unlock. Think about marketing agents who, who actually remember all the previous campaigns, all the performance of the previous campaigns and so on. Although there is a bad thing, these models, they get bigger and bigger. There is no other path around. I think most of the video models last year were maybe between 10 and 50 billion parameters and it is going to scale well beyond 100 billion parameters. So I think, although the good news is that in the same time we're seeing customers spending thousands dollars a month on the platform, which tells us that slay likely make thousands of videos. Cost per one video is still quite below $1. This is very interesting times as we move from a concept of well, yeah.

That'S an insane reduction in cost because.

I'm even the most efficient video shoot on your iPhone. You're gonna spend a day even if you're paying a marketing intern $20 an hour.

Yeah, when brands are trying to generate UGC content, historically, now they can use Higgs field and generate stuff on the fly, but historically you'd be like, okay, I'm setting a budget of like $100 an asset and then you'd have a bunch of people actually record on their iPhone to generate it. And so if you're saying it's a dollar an asset or sub a dollar, it's like a hundred x reduction in cost. It's pretty significant.

Absolutely. I think cost reduction has already, I mean it has already happened compared to physical production. And I think this content generation, meaning that we make not just one video, but hundreds of videos simultaneously. I think this change happening this year. So the goal for Higgsfield is to lead this new wave of agency behaviors and build cursor for video.

What about ingesting the data on performance? Do you have API integrations with all the big platforms where you're ingesting ad data from meta and app love or whoever else you're distributing video content through? Or is it PDF upload, CSV upload? How are you thinking about actually creating that feedback loop? Because that seems extremely powerful.

Yeah, absolutely. On that angle I can tell that probably 2027 is going to be a year of major evolution in ad tech worlds as connecting generation with performance data is going to become a major point.

Got it.

This year we collect a lot of these data from social media platforms. We build most of these integrations and establishing direct relationships with the platforms. We collect lots of very valuable data points directly as we see which generations results in an actual ad so that we can actually run reinforcement learning to streamline content creation process. I think this is the main priority for 26 and 27 is going to be a year of full revolution in advertising technology space.

What's going on in the hardware side? What would be most valuable to you? We saw Nvidia acquire Grok with the Q. Grok's whole pitch has been very fast inference, usually for text based LLM models. When I think about the work of a marketer generating a bunch of different video variations, if they fire that off and they come back an hour later, that doesn't seem like a terrible experience. So are you more focused on higher fidelity, larger parameter counts over speed? Are you interested in what's happening in custom silicon in a particular area or do you just want to more and more Nvidia GPUs at your disposal? Like what's important on the infrastructure side for your plans over the next few years?

This is a great question and I think we have seen that custom silicon can perform really well. Gemini 3 is the first multimodal LLM which has these immersion capabilities, which is not a Banana Pro model. This model essentially made Adobe obsolete.

Yeah.

Who needs to. Yeah, because I mean, who needs to go to Photoshop?

Yeah, yeah.

Look, I mean I, I'm not saying like, like especially for social media marketing.

Yeah.

If we're being serious so. Because I mean going. And if, let's say Georgie, you assign me to go and make five ads for you a day and try completely different stuff, I don't have time to go to Photoshop and push every pixel to make it perfect. I better use a model like nanobananapro to really deliver against the vision. And it's semantic based editing, not just like pixel pushing.

I kind of miss. When you used to be able, used to see a really high quality Photoshop on the timeline and part of why you appreciated it is somebody really needed to put the effort in or they needed. Even if they're not great at Photoshop, they hired somebody and it's like you and nowadays it's, you know, they got.

The Lasso tool and they cut that character out and slapped that text over there, threw a drop shadow on it. Now it's just a prompt. It's fascinating.

Yeah.

Now it's just a prompt and it's done with custom silicon. So I think we're going to see a renaissance of custom silicon for sure. In Gemini and Nana Banana Pro are amazing model with these immersion capabilities and we really embrace those, create those creators and social media marketers who create ads with AI end to end so they don't have to go to Adobe tooling at all.

How are you tracking the problem of understanding what's AI generated, what's real? This is now a daily. I feel like it used to be like even like 12 months ago it was like, you know, once, once a month you'd see something and you're like, oh, is that AI or is that real? Now it's like almost every single day.

I see stuff on Instagram all the time where I know it's AI, but then I go to the comments and everyone's happy. No one's. It used to be people would clock it and then even if they couldn't tell, they would key off of the comments and then kind of pile on. Now people are, are just like, yeah, this is good content. Yeah. What's your take on AI detection, how it's working its way through the Internet?

Look, I think that we're going to see more standards emerging. I think in European Union it's a big thing. We're going to see something by the end of the year coming on that front. I guess I can just tell you that direct to consumer brands, they primarily don't care if that looks like AI generated content or non AI generated content, as long as it catches eyeballs and it sells. They just keep coming to Higgsfield and making more of such videos. So the best performing AI generated ads, they look like AI ads and they don't look like real ads. I think that's my main observation.

Yeah, yeah, yeah. I mean, there's a certain element where, you know, the iPhone, the selfie video, it never actually wound up looking like an HBO show or James Cameron film. It never wound up looking like, you know, it was shot with a hundred thousand dollar camera. But everyone just got used to it and they liked the aesthetic and we grew accustomed to that aesthetic. And it has its own aesthetic. And so if AI content, even if it retains its aesthetic for a very long time, even though I think it's going to be indistinguishable, already sort of is. But even if it does, people could just become fans of that and be like, yeah, I like the way it looks. Yeah, interesting. Anything else?

Very cool. Well, I also. My buddy texted me. It's Alex Kassin. You guys just had lunch.

No.

No way.

Absolutely. We're just chatting about that.

Small bowls.

Yeah, He's a great guy to know in this town. So are you in LA right now?

Yes, I'm in la.

You should have come by the studio next time. Could have been sitting here, you could have been hitting the gong.

Could have been moving the goalposts.

Next time.

Absolutely.

Anyway, thank you so much for taking this time well.

Yeah, congrats on the progress. The growth is absolutely insane and look forward to talking more this year.

Yeah, we'll talk to you soon.

Cheers.

Thank you, guys. Thank you.

Have a great weekend. Goodbye. All right, we can close with one of the best ideas that I've heard recently. It's from Ryan Peterson. He says we should have an AI transfer portal like in the ncaa. Couldn't agree more. Well, that's our show. The bomb has been planted. Thank you for tuning in today. Thank you for watching Leave Us five stars on Apple Podcasts and Spotify and sign up for our daily newsletter@tbpn.com. we send out our newsletter every weekday.

Enjoy the weekend. We will be live Monday.

We will be live Monday. We'll come back at 11am Pacific, so tune in. We have a couple live in person guests.

Go touch some grass.

It's going to be a lot of fun. Well, hope you have a great day. Thank you for being here with us and goodbye.