Ferrari EV, Enhanced Games, Alcohol & Podcasting | Christopher Hale, Sean Henry, Eric Ries, Alex Atallah

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Today is Tuesday, May 26th, 2026. We are live from the TVPN UltraDome, the temple of technology, fortress of finance, capital of capital.

We're back.

We're back.

A lot of complaining around the office this morning.

Oh, yeah.

Team was upset. They said 2 days is the perfect length for a weekend.

Yeah.

3 is just too many.

Too many.

It's too crazy.

So we're glad to be back.

We're back. And Ferrari's back with a new electric car. Are they?

Are they back?

That's what we're going to debate. They're certainly— they launched it. Ferrari launches a $640,000 Johnny Ive-designed, glass-clad electric speedster. They're calling it the electric speedster. I was not—

I—

it's a four-door.

That is the journal's word.

It holds 5 seats.

I wouldn't—

when I think speedster, I think smaller. I think 2 seats.

I wouldn't—

I think Porsche speedster.

It is quick. It is speedy.

Well, have they actually released numbers on how quick it is? I know that they mentioned that it has 1,000 horsepower. We would assume that it's quick, but who knows? We don't have a Nürburgring time. We don't necessarily have a 0 to 60 time. We will see. But we do have some good coverage from the Wall Street Journal.

There is a 0 to 60.

What is it?

I think they released it. It is more performant than, I believe, the Model 3. I will confirm.

Model.

Model 3 or the Model S Plaid?

Now that's a good question, John.

Because the Model 3 is not like base Model 3.

0 to 60 in less than 2.5 seconds.

Okay, that's not as fast as a Plaid. That's, yeah, that's sort of surprisingly low or surprisingly high. Anyway, named after the Italian word for light, the Luce will test, or is it Luce? Luce. Luce will test the appetite of the super-rich as EVs have fallen out of favor in the United States. It'll be interesting to know where, when did this start? Because there has been a big shift and it happened somewhat quickly. It feels like it's been like the shift away from EVs happened over a year or two, but the design timelines for a project like this might be 5 years, might be even longer. So let's set the table with the Wall Street Journal article and then we can go into your take just so we have a little bit of context here. An electric vehicle big on glass, light, and space. This isn't your father's Ferrari. On Sunday, Europe's most valuable automaker took the wraps off.

For now.

Yeah, Ferrari has been a, it's a big company. It's been a successful, the market cap's been huge. Like it's grown a bunch. The Acquired team did a great podcast explaining the whole history of the company.

Stock is down 5% today.

5% today, but it's still, what is it? Oh, what's the market cap?

It's $62 billion.

That's not bad for, I mean, I feel like a lot of other car companies are sort of beaten up and much smaller based on their volumes.

They're only down 30% over the last year.

Okay, okay. Does that make an AI winner? Who knows? So named after the Italian word for light, the Ferrari Luce will test the appetite of the super rich for EVs when electric vehicles have fallen out of favor in the US, the world's top, top market for luxury cars. Designed in partnership with celebrated Apple alumnus Jony Ive, the model also represents a leap into a new technology built for a brand built over decades around the size, sound, and sensation of traditional engines. The Luce will be among the most expensive Ferraris that aren't a part of a limited production run. So it's an unlimited production run. They will be making as many as there are demand for. They'll make a bunch. People will hopefully come and buy them. If they do, they'll make more.

This production might end up being limited depending on demand.

I think you can see where Jordy's take is going. But the, the, the interesting thing here is that Ferrari typically has sort of two tiers, limited production runs. That's the F40, the F50, the F80, the LaFerrari, the Enzo Ferrari, these halo cars, these hypercar supercars.

SF90XX.

SF90 was interesting because it was one level above the sort of base model mid-engine sports car that they've made in the lineage of the 360, 430, 458, 488, and then—

296.

296, which is unlimited production, but at the lower end— lower end's still $300,000, but it's at the lower end of the traditional mid-engine sports car tossable, not fully track-focused, but it's a sports car. And then the SF90 came in as sort of like this mid-tier, higher-end, more expensive, twice the price of the— of the 296, but unlimited production run. So by getting one, you weren't locking yourself into a very tight allocation. And that, of course, led to some serious depreciation in the SF90 market, which has been sort of heralded as a crisis for Ferrari. And this doesn't seem like a response to that. This seems like a continuation of that, potentially. But anyway, the company's starting price will be €550,000, roughly equivalent to $640,000. That's more— that's a lot of money. That's more than the SF90, that's more than the Dolce e Giallindri, more than the 296, more than the new Testarossa, more than the new Testarossa, and also more than the Purosangue, which is a V12 naturally aspirated. And also, but the Purosangue only has 4 seats, this has 5, so you're getting an extra seat for for just about $200,000.

$100,000, $200,000.

It's a wild value prop. The launch event stadium took place in Rome in a stadium with a towering concrete sail that was opened for the Vatican's 2025 Jubilee, featured tortellini by Italian chef Massimo Bottura, clips of Formula 1 stars Lewis Hamilton and Charles Leclerc racing the car, and lots of lights. Ooh, I want to see what this car actually looks like on the track. I haven't seen a video of that yet. The unveiling sparked a debate among car fans online, with many pillaring the design as too far outside of Ferrari's design traditions. Ferrari's Milan-listed shares slumped around 6%. Ferrari has framed the shift as a chance to experiment. We wanted to do what we hadn't been able to do before, said Ferrari chairman John Elkann. Let's see, the Luce is Ferrari's first ever Ferrari with 5 seats, an option ruled out by the axle in its traditional powertrain configuration. So if you have a family of 5, this is your only option. Despite the roominess, the EV accelerates from 0 to 60 in less than 2.5 seconds.

And if you have a family of 6, you could pick up 2 of these for just over $1.2 million.

Yes.

And you'd still have some room for friends.

Husband and wife, his and hers.

Yes.

His and hers Luches. Yeah, wild, wild prop. Also, yeah, I mean, top speed's 190. Top speed in the Plaid is 200, and top speed in many— Cadillac CT5-V Blackwings may be more than $200,000.

I did confirm, by the way, that it is half a second slower than the Model S Plaid, which is a lot.

Yeah, at that point, maybe you don't really recognize it. Maybe you can't really tell.

The problem is the range is worse than pretty much everything BYD makes, pretty much everything that Tesla makes, and a lot of these other manufacturers. But they could always argue, no, but the performance. And I don't think for this kind of car buyer, performance matters. What is performance? Is it acceleration, straight-line speed, how it handles in corners, right? This car is not going to be a track weapon.

Not yet.

But we have some body kits that might help with that. That may take it out.

You put a wing on this thing, anything's possible. So yeah, the range is what you were getting at. 330 miles despite an unusual a really large battery. The latest releases from BMW and Volvo run for more than 500 miles. The Lucid Air Sapphire is over 500. And many Teslas can get up into the 400-something range. 330, totally usable for most people, especially if you're charging at home. Totally fine if this is a daily and you want to drive this around. But it is sort of in search of a, like, how does it fit into someone's life? Because again, it's not designed for the track. It's not designed for the straight line speed.

I overall, I think it looks pretty cool. It looks unique. I don't see it and immediately want it. There's been plenty of other modern Ferraris that I think look amazing. Even many of them have gotten quite negative reactions. So overall, I think the design is interesting. I think the interior is obviously cool. We talked about that. I was somewhat worried that the interior would maybe not match the exterior. It looks cool there.

That lighting is really good.

I don't like the two-tone thing, but again, that's just sort of like a modern—

Is that the color delete?

Like, I think it will look really cool if it's entirely black, right? Murdered out.

A lot of people were saying that.

Will look quite cool. But yeah, the main thing is like that this entire— that angle looks great, by the way, but not $650,000 great. It's certainly the most confusing release from a major automotive manufacturer that I can ever remember, right? Who is this? Who is this for? Like coming out and—

How would you come to that?

—cost significantly, like right away, I'm like, am I crazy? This costs more than the Purosangue 12-cylindri, the Testarossa, all these other cars that didn't get amazing reactions, but I think are like, very, very cool. I've seen them in person. They look amazing. I think that they're fantastic. What a confusing—

There is a huge gap between seeing images and videos and pictures of cars and then actually seeing them in person. Oftentimes, when you see something in person, you're standing there, and you have the sense of perspective. They can look a lot better.

Sometimes they're going to look worse. One of the other challenges is, you know, modern Ferraris have had, outside of their halo cars, have had, you know, pretty massive depreciation. And what have EVs become synonymous with? Depreciation. Depreciation. So this car, like the Purosangue, I don't really know how it's gonna hold up. It is naturally aspirated V12. It's probably gonna hold up decently. You're still gonna be able to buy it. Yeah, you're still gonna be able to buy it. Unlimited, you're still gonna be able to buy one for probably $350,000, like, in the next couple years. But this, I can imagine just getting cut in half, like, quite quickly. I expected it to come in, you know, not a very informed view, but I expected them to come in at maybe something in like the $300,000 range. Something that would be a very expensive daily, but something that somebody could compare to, oh, should I get, yeah, should I get a Roma? Should I get a Taycan Turbo S if you want an EV? Oh, should I stretch a little bit and get a Luce? And again, I just don't know. I just don't know who this car is for. I hope that there's, enough Johnny Ive fans to make this sell. The sense I get is like, I don't think Ferrari would've started this project and said, you know, we've always wanted to make a $650,000 daily EV. That's been the car. That's been the car. And it seems like they started this project And they're like, let's make an entry-level, the closest thing Ferrari has to a mass market car, a car that you can daily, a car that is unique, really thought through from the beginning, right? This idea of combining EV with a Johnny interior is like a cool concept. And then you could imagine they start and they're like, oh, we're gonna be able to hit 350 for sure, or we're gonna be able to hit 300 for sure. Okay, maybe it'll be more like 350, but like still we're in the range. And then it just starts like ticking up and up and up and up and up. Until how do you justify the price? It makes no sense. And it's just very— I saw when you're laughing at me. Hunter, Hunter, be kind. It's very concerning because I just think it's basically proving that Ferrari, I don't think they'll ever be competitive in EVs, right? This segment? Yeah, this segment. I think it's completely over. It feels really hard to compete in.

You're going up against Tesla, this vertically integrated, comes with— if you want a daily, you also want self-driving capabilities. You also want the park it, auto summon. You want to be able to— all these random features that Tesla puts in, like take your car, play the games. It's very functional.

And the thing with the Luce is the design. And so cheap. There's so many elements of the design that are super tactile, very cool. Quirky, but Tesla has done a very good job of making a car that is very drivable. And it can be quirky if you want it to be. And it can, yeah. There's a sound effect board.

It has a soundboard. Like if you want the quirk, you can get the quirk.

So yeah, so I think it's over.

I think it's over. Take me through your take from start to finish and then we can debate.

We've covered a lot of it. I basically said like, look, the peanut gallery's already very negative. Negative on all Ferrari launches.

Which is sometimes bullish.

Every single time they say, bring back Pininfarina. Pininfarina is not coming back. The whole company got sold to an Indian automotive conglomerate. Tata Motors. They launched the Pininfarina Battista.

So if you pull up the Pininfarina Battista, if you pull up a picture of that, you will see an image of an electric hypercar that looks exactly like you would expect, in the sense that it's the car that would go on a poster. On a kid's bedroom, but it's $1 million or more and it goes 0 to 60 in 2 seconds. And the reviews are kind of like, yeah, this is the max. Yeah, the Pininfarina Battista right there. Like that looks like a McLaren, like a Ferrari. Like it looks like, it looks like if you went to ChatGPT and just said like, make me a hypercar. And I think it checks the box. And I think the Luce does not. I think if you went to ChatGPT and said, design me a hypercar, you could sit there for days and not get something that looks like Luce because it does look different. And that can be good. It can also be bad because people are expecting this. But this car, I don't think sold very well because the buyer for this design wants a naturally aspirated V12 with a manual shifter, right? And they want something that's more focused and more of an experience. They don't want something that's practical at all. Yeah.

So anyways, people are always negative on— on recent Ferrari launches. I usually don't agree. I think a bunch of them have been great. But the anger towards the design, I think, is totally misplaced. You've got to be disappointed in the price, the gap between what you can get from a range and performance from Tesla or BYD, let's say, in the $50,000, $60,000 range. You're looking at a 10x difference, right? And that gap is just way too wide. So I think if they had been able to come in in the low $300s with this, it would've been super desirable. It's quite functional, right? This is a great, great commuter. We would've been seeing these all over LA. I think this is gonna flop. And I actually think that if Ferrari wants to be competitive in this sort of like mass market, the EV category, even like luxury, not necessarily true mass market, but more high-end, I think they would have to, at this point, partner with, you could imagine them partnering with someone else and effectively just saying, throwing in the towel. I think they still have a fantastic business focusing on the higher end of their range.

I can't even think of what a high-end driver-focused sedan, 4-door, 5-seater sedan is. Because typically, when you get to 5 seats, 4 doors, upmarket, expensive luxury, you just go SUVs. You have Range Rover and Urus from Lamborghini. And Aston Martin is pushing that way. This is a very— like, the 4-door, expensive 4-door is rare. Yeah.

And I think— It's very differentiated. The Purosangue, personally, I would have liked to see something that was sportier. Than that? Yeah. It's very— It's supposed to be. It's supposed to be. Yeah. But it's an SUV from Ferrari. Something a little bit more aggressive, personally, I would have liked. It came off very cute.

Take out the second row. Take out the 2 seats.

No, no. You can make a sporty— a Cayenne Turbo GT is a sporty—

Wing it back. —carbon fiber—

sporty, fast SUV.

I just feel like with the Purosangue, it's like the 296 is right here, sir, if you have any complaints about it being an SUV. They do have a sports car for you if you want that. The question is just like, if you want performance, you go sports car.

If you want function, you go SUV. I'm just saying I think they kind of missed on both.

Right?

I think if they made like a super— if they made like an aggressive— if they made the Purosangüe but it was like more aggressive, I think it'd be way more desirable.

Wait, are you talking about the stock Purosangüe or are you talking about the Puginator? The Mansory modified Puginator? The Puginator? No, I think— Mansory has a body kit for the Purosangüe that's called the Puginator, which is such a funny name.

Yeah, so anyways, big— Big, big L. And I think that that will become very obvious in the coming years. They are going to sell some. I expect Cupertino to be crawling with Luches. Hopefully. And I was thinking, like, who is— when I thought about who is a buyer for this, it's like foreign exchange student in the US. That needs a car for like a few years.

Instead of like a Black Badge Cullinan or something.

Exactly, exactly. And, but that's not a big market.

Yeah, it's just hard because I understand the concept of like the, when I imagine like the Cullinan, like driving on the sand dunes in Saudi Arabia, it just has such a different vibe. It's so much more regal and royal. Than this design. This design is so much more friendly. We can actually go and look at—

The fact that you can, it's like, hey, luxury car buyer, would you like a Rolls-Royce Cullinan or a Ferrari Luce? Yeah. Which is a just extremely millennial-coded car.

I mean, it has a lot of the Apple feel to it.

A lot of people were making— I had a theory earlier that maybe, Maybe the real cost, maybe it's like a $50,000 car, but making a custom iPad and you're only gonna make a very small number of them, you're only gonna make like— It's a $500,000 interior. No, it's a $600,000 iPad. Okay. You know, the, in the front console. Yeah. So it's basically like a Model 3 and then a $600,000 iPad combined, right? Because I don't think they're gonna be making a lot of these.

I really wonder how they're gonna drive. You want a safari version, right? That's the ideal? I do.

I do. Sam Sheffer was sharing the—

Like, what does it look like if it's all black?

And yeah, I went in there. I was like, make it a safari version. Get some bigger wheels on it.

Expand the wheel wells. Expand the wheel wells. Easy ask.

Basically do another $300,000 of work to it. Make it a million-dollar Luce. Add some equipment. You know what this looks like?

This looks like that—

Pull this up, this image.

What was the Lamborghini electric one that they were working on? The Lanzador. It was like a big car. This was like a theme for a while. I don't think it ever went anywhere. I don't know if you saw the Lanzador. I can share it in the thing.

There it is. So this is— Yeah, I think this looks cool. Again, having a car that's designed to go off-road that only has a few hundred miles of range, it's kind of a crazy move. It's kind of a crazy move, but I could see—

people take the Rivians off-road and they're very good at it. Yeah, because you can— I mean, this, this car has 4 electric motors, one in each wheel.

Yeah, the Rivian, adjust the torque independently.

So if you're losing grip on one Rock in particular.

Yeah, the Rivian at the Fat Ice Race in Big Sky was going absolutely crazy.

Really?

Yeah. Just crushing it. It was extremely impressive.

Yeah, it's designed for that. Pull up the Lamborghini Lanzador. This was Lamborghini's electric concept that I think got scrapped, but might still arrive in 2028. I just shared this image in the production chat. Because it has this idea of like the big car. It's like, have you seen this? What?

What are you laughing at? 2.6 says, "That looks sick.

Oh wait, it's an EV." People don't like electric vehicles. I mean, great for daily commutes, great for, you know, high gas prices. This Lanzador, you saw this?

Which they discontinued because they realized it was gonna flop extremely hard.

But it sounds like Ferrari is fully moving forward with this. They're going with it.

Yeah, I mean, all the, EU manufacturers are—

This is a very high-up car.

Like, you're very high up. They're caught between a rock and an EV, right? There's basically— I was trying to— I was asking Chad about the regulatory situation. And basically, the EU regulates average CO2 emissions across each manufacturer's new cars registered in the EU. So it's not like model by model. It's like based on all the cars you're selling in a given year, the new cars you're selling, you need to be under certain emissions standards across the entire fleet. And so if you sell a handful of EVs, you can bring down the average a lot. A lot. Okay.

And so, so yeah, maybe they only sell a couple thousand of these, but it's enough.

But yeah, it seems, seems, seems tough. We texted one of our buddies who has maybe 30 or so Ferraris this morning, uh, and, uh, he will be buying one.

He made a good point. Whether it's— he made a good point. Anything that's, uh, you know, hated at launch has the opportunity— like, the expectations are low— has the opportunity to become like a cult classic at some point. There's a lot of cars that launch and people are like— this is what happened with the Carrera GT. You were like, it doesn't look any different, it doesn't look as extreme, it doesn't stand out. If you're stopped next to a 911, most people will just think it's a—

so you think 911, you think in in 10 years we could be looking at Luches going for $2, $3 million?

Probably not, but who knows? Maybe 20 years, I don't know. It might be like an interesting relic of a particular era.

Pull up this post from Rhett. Yes. I like this version.

Clear plastic, leaning into the vibes of the era.

Just lean into the plastic.

Yeah, there's something here. People were having fun. I mean, it's a golden age of Gen AI images. Someone else was comparing it to the— Luca, former chairman of Ferrari.

Which Trey mentioned in the chat earlier in Italian. He says, "If I say what I really think, I'd be doing Ferrari harm. You risk destroying a legend. I'm very sorry. I just hope they at least take the prancing horse off that car." Wow. "What should we do? This for sure is one car the Chinese at least won't copy off us." Wow.

Those are very, very harsh words.

He, of course, worked under Enzo.

Whatever journalist went out and hunted down Luca, the former chairman of Ferrari, really knew that there was a scoop to get here. Because this is not a seated interview. This is not planned. This is an ambush. And he was struggling to not completely blow things up. And yet, the body language of him touching his head, he's not—

TJ. This. Former F40, 360 owner. He's driven most modern Ferraris. So he feels he's very qualified to chime in. He says, apparently an unpopular opinion, but I think this is great. Interior fully Johnny, exterior totally Mark. See the Ford concept, which we can pull up. I imagine for the OCD types, the daily interactions are going to be quite satisfying. Yeah. Yeah, that is the— it is an extremely unique interior, and things are experiences. This could be something you get to experience all day long. I'm excited to drive one. I won't be buying one. I won't be withholding judgment.

I won't be judging a book by its cover.

Yeah, TJ says, my opinion is in 10 years' time, the Johnny Ives Ferrari design will be the main business at a price point of $150,000. $250K equivalent and slowly washes out Ferrari as we know it. Launching at today's price point preserves the dying core biz while they transition to an Apple-style business. I would— TJ knows a lot more about cars than I would. I would take—

but I would take the exact opposite. That seems so hard to do.

I would take the exact opposite. I think this is going to be more and more like an ultra-luxury brand, small number of cars at very, very high prices. Yeah. For hardcore enthusiasts. Yeah, SP3 Daytona, F80. Yeah, just getting back to what—

like the next SF90 should be limited and manual and naturally aspirated.

And like, they're already coming back. They're making a version of the 296 without the EV componentry. Sure. So yeah, I would take the exact opposite side of this. Yeah. Unless Apple— or sorry, unless Ferrari does something like effectively a licensing deal and says, "Hey, we can't make a car for this cheap, but we can license the badge, and BYD can make a car for $50,000." That might be it. And then we'll charge $50,000 a car to put the Prancing Horse on it. Yeah, I mean, look at what Waymo's doing.

So Waymo is sourcing the powertrain and battery from Chinese EV manufacturers, but none of the, telemetry, telecommunication systems, IT systems, that's all Waymo. And so you get all of the benefits of the Chinese industrial supply chain. You get efficiencies around batteries and cheaper frames and powertrains and drivetrains and the batteries, but you don't have the, oh, like the Waymo spying on me because the cameras were made there necessarily, or like the whole car was made there. And so I think, Waymo's been very quiet about this. Obviously, they're not really openly talking about this decision, but I think that they picked a very clear line in the sand with what parts of the Chinese supply chain they would go into, because the whole, like, Waymos are Chinese cars would be a bad headline. But if they can say, well, we're just buying things there that they can't have any spyware in there because it's just a bunch of aluminum and battery packs or whatever, I think that will At least I think that's their strategy. Yeah. People, people, people will still be suspicious, of course. But by and large, I think people will be happy. We should pull up the Ford 021C concept car designed by Mark Newsom, who works with Johnny Ive and did the exterior of the Ferrari Luce, because this car is so cool. I think we were all looking at this and really enjoying this. It's the Ford 021C concept car. As TJ pointed out. Marc wanted to create a car that was simple, likable, and fun, built at a historic carrozzeria in Turin, Italy. Marc developed a car via drawings followed by computer models, and finally created a clay model to perfect complex surfaces. To perfect complex surfaces. Every component of the car was designed and fabricated from scratch from workshops all over the world. The tires were custom made by Pirelli in Italy. For example, the composite exterior featured seamless shapes and deceptively simple surfaces, including a wraparound retractable trunk that opens like a drawer, and door handles that are simple aluminum buttons surrounded by translucent plastic rings, which illuminate when remote locking is activated. The doors themselves open to expose a completely open pillarless interior. The windows were designed to allow as much light as possible to enter. This was done in 1999.

Wow, that's absolutely— hate this car.

They hate the clown car.

I think this would be a fun weekender. Yes, but this is—

this should fit into like the Volkswagen ID.Buzz lineup, which at $60,000, at $70,000, was deemed like woefully overpriced and should have been more at like $30,000 or $40,000. And so some— a design like this could be amazing, but again, uh, price is everything here because for something like this, it can be this like delightful utility, this fun thing similar to the—

I would instantly pick up the Ferrari Luce for $20 grand.

Many people would.

Sheel asked ChatGPT to make a 4-door electric Ferrari. It's pretty good at this. I bet this version would be more popular than Johnny's. This thing looks mean. It looks like a Dolce Gabbana a little bit. Yeah, mixed with—

also, it's just, it's, it's so clear that it's not electric. Like, like, why would it have this big long front hood?

Because it looks good, John.

It looks good because this is what you're used to. But this looks like a 200-inch car. Like, as a daily, this seems like it would be wildly impractical in terms of parking and dealing with everything. And it looks perfect. And also it feels like it has a lot of downforce.

The new images model is so good at making cars. Yep. You almost think that Sam was pretty involved there.

Potentially. Are you talking about Nikita Bier's car?

I mean, this thing looks fantastic. Bone has gotta make this. Yeah, maybe a production version. I think, what did they call it? What did Bone call it? The Nikita Borgata? Borgata.

I mean. It looks sort of like a Nissan Murano Cross Cabriolet.

This looks absolutely—

the front is very, very funny. Incredible. Yeah, if it was the Apple car and price for scale, this thing would go triple platinum, uh, in all white with, um, with the Apple logo on there. This does feel like a little bit of, uh, a lot of Apple leaked in this thing. Bobby Goodlatte says, uh, my theory on the Luce: this is the car Johnny wanted to design for Apple. Apple didn't want to ship it, so he made it for Ferrari. This car with an Apple logo priced at $100,000 would sell extremely well. I wonder if you can get to a place where the fit and finish and the OCD, that's the daily interactions, that's the piece that I'm not super clear on willingness to pay for that, because with a phone, you're using it just as much as a car, but I don't know, there's something about iteratively onboarding to the little features in the iPhone that create this lock-in, whereas people go and they test drive a car, and maybe the window switches are in the wrong space, and it's slightly annoying, but they don't figure that out until much later. The volume knob is in the slightly wrong place. It takes a long time to become frustrated with that. It would be hard. It's a harder pitch to make to a new car buyer. Like, oh, this won't have any frustrations. Those minor frustrations that you experience in other cars, that won't be a thing here.

Yeah, I do. I don't know. I do find that a lot of my frustration with modern cars comes from the software-hardware integration, right? And this dynamic that we have now where where the manufacturer has their software stack, and then they also have CarPlay, and they're constantly basically competing. And it makes absolutely no sense. Like, I'm in CarPlay, like, car I just bought like a week ago. I'll be in CarPlay, and then I'm like, oh, I want to change like the heating or air conditioning. I got to get out of CarPlay to go and do it in like their software. It's very, very annoying. And so yeah, Apple would make a fantastic car, but even I just don't know with Apple, part of it was like, no one's been able to make a great, like a truly great car business. Tesla, but yeah. But it's not a good business. The car business is not a good business.

Yeah, it's made $20 billion in free cash flow over the history of the company.

Something like that. Yeah, for total, as a, you know, 20 years. Yeah, over a trillion-dollar company.

Yeah, so ship a lot of cars though. It is the number one, the Model Y is the number one best-selling car in like California, China, everywhere basically. Yeah, that's what I'm saying.

So like insane product market fit, global hit. Yeah, and it's still, and to be competitive, not objectively a great business. Crazy, crazy, crazy.

And that just feels like entirely new DNA for Ferrari to spin off. It's like hand-built. Like, that's the whole concept. And, and, you know, Tesla, to get to where they have on price point and distribution and scale—

whoo, like, completely different. Jack Butcher made a great point. He said make the Luce 30% wider and everybody would love it. Where's that? You can see it on the screen here. It has such better road presence when it is wider. It just looks— when it's, it's too boxy. Sure. And it looks just a little dinky, but yeah, looks a bit more aggressive.

It does seem like everyone, everyone is just asking for something that it's not trying to be. Like, you make it wider, okay, it's less drivable. Yes, it doesn't fit in garages as easily. You make it longer, like, the proportions look cooler, but it's not— it's like, it's, it's not gonna be as easy to fit into parking spaces and stuff. Yeah, the whole point of of a vehicle like this is to be accessible and usable. And that's very antithetical to the Ferrari ethos, but maybe that wasn't the goal.

One car that was getting a lot of love was this special edition that was teased online. You can pull this up. This is the Natural Ice Edition. Oh, yeah. I thought this looked fantastic if the team— I can pull it up here for everyone to see. Yeah, with the wrap, I think—

I think really beautiful. People might be wrapping these for sure.

I'm sure color matching the wheels to the gloss and the shine of the can, I think is really, really nice. And I could see this being a hit on at least college campuses.

Yeah, yeah, for sure. Imagine you having this be your college car and wrapping it. Well, the wrap is usually paid for by the brand. So the brand will be like, oh, we want a campus ambassador.

I know, but I was hoping that Ferrari would just take the leap and actually do a full-on partnership special edition, right? Yep.

Well, Chat didn't like the Ford 021C example, the concept car in the orange, which we can pull up. But I want to know if Chat likes it more if it has a body kit. Let's pull up the Ford 021C right after the— There we go.

Does that do anything for you? There we go.

If you turn it into a track weapon, are you getting somewhere? Look at the arrow on this. The arrow is so aggressive. But show the original photo, the first one. Yeah, there you go. You're going to take that, some slight modifications, and boom, you got a track weapon.

Take it away. Go back to John's version.

There we go. Yeah. We should look at the Solo Cup inspired Hypercar.

Oh yeah, so John is having, went really, really deep on designing some new cars with the ChatGPT model.

I think I got a future here.

I think I got a future. Look at this. Sign me up. They call this the Red Time, the Redline. Good times, sharp lines. The Redline. Inspired by the iconic, simple, universal Solo Cup.

Driving a Solo Cup inspired Hypercar.

This is really the perfect Memorial Day weekend.

Car. But this is what I'm talking about where like if you saw a company come out with this, I think the reviews, like take away the joke of like the beer pong thing, like just the proportions of this particular hypercar, everyone would be like, "Oh, like that looks like a supercar, that looks cool." But it looks like generically cool. Like, and if it can be just like one shot by an image model, it's probably not gonna stand the test of time. I don't know, it's not taking any risk. Like this feels like as hilarious as the, the Solo Cup inspiration is, it's not taking any risk. When you were writing that—

The two things, like, again, my criticism was never the design, although the design is not for me. The criticism comes down to the price point and then positioning it as like an everyday car. And then the concern that I have because Ferraris have always had electronic issues that have plagued the brand forever. My personal experience, I had a Ferrari for a while and I replaced the main battery like 3 times in 3 months trying to solve an issue and eventually basically was like, okay, this is always going to have electrical issues.

Do you think all the parts on the inside are glued in like an iPhone? You just replace the whole car. I mean, people will be doing that with Teslas. They'll just be dumping them and getting new ones.

I really liked your version of the Nissan Murano. Cross Cabriolet. Yes, turning it into a proper hypercar. If we can pull this up, I mean, this thing just looks—

this one would sell. Nissan hasn't introduced a hypercar in a while.

Could be this. Could be—

look at this, the Nissan. Look at this, the Spyder.

It's crazy. It does look good.

That was the thing, is that I was like, oh, let's, let's start with a joke and then get to something that looks ridiculous, uh, and is— and still has some of that joke. Jokiness to it, but the final result just looks like a normal hypercar. It just looks like any other hypercar.

Anyway, anyways, we should talk about Enhanced Games. Yes. So I, I went over to David Sennhorst's house. Yeah, on Saturday, on Saturday. Yeah, with, with my friend Ben, and we were all excited to watch, and we basically turned it on and And, um, pretty much 15 minutes in, I texted John and said I thought the stock would nuke on Tuesday. Yeah. And it did. It's down, um, I— let's see, it was 41%.

I saw chatter about the enhanced games on the timeline. It seemed like everything was going normal. I saw some viral clips, I saw some posts about it. I didn't notice anything out of the usual, but you said that it did not, like, blow you away. And I wanted to understand what about it was not a great— like, you come away paying for UFC pay-per-view or watching it on Paramount+ now very satisfied. Like, why was this any different? From my perspective, this looks just like any other sport on TV. It looks like something you watch, sports, and yeah, you root for somebody and you pick a team.

And yeah, so, so first of all, Well, this company went public before they had ever hosted an event, right? So, and we've been hearing about it for years. I said to you this morning, it feels like we've been hearing about this for like 8 years. You said it's more like maybe 2 years or something that it's even being talked about. Yeah, yeah. But anyways, a lot of anticipation. People have been super excited about this. The entire concept, I think, is just like really cool and wild, right? You take something like the Olympics, which, you know, even if you're not obsessed with swimming or weightlifting or running or any of these things, like, the Olympics are always, like, you know, an exciting cultural moment. And I think, like, I personally, you know, have a bunch of, you know, fond memories watching the Olympics, right? So, take something that I generally think is very cool and you add, you know, steroids Fascinating. That's a very fun idea. Yeah. Should be jet fuel. Should be jet fuel. Should enhance the experience. And then as soon as I started watching, there's a bunch of stuff I would give them a pass on, right? Like the production value, putting on an event for the first time. It didn't feel like you were watching the Olympics. It felt like you were watching someone's first attempt at hosting an Olympics.

There weren't those crazy drone cameras following things, ultra slow-mo.

Yeah, they were trying to do stuff. But again, the people doing commentary have never 'cause they've never done it before. The whole event is just being birthed, right? So it had an insane amount of attention on it for a first event, which is always tough. But then watching it, I realized like the appeal, like none of these events, like you can't just watch somebody run in a race and know whether or not they're breaking a record. Like you can see like, oh, that person's quite fast, but unless there's like crazy graphics and stuff, you can't tell.

Yeah, you need like an overlay of Usain Bolt, of like the official. Yeah, yeah.

So it's never about like exactly how fast someone was, right? Because sure, there's records involved, but the difference, you can't noticeably see whether somebody lifted 220 kilograms or 220.1. It's not visible to the eye, right? And so what became really obvious to me instantly was like the appeal of the Olympics is you have these like very niche activities where athletes dedicate their entire life to something this pursuit, and then every 4 years, there's like a 5-minute period where they're getting like the entire world's attention and they're representing their country and they're going for glory. And they either do it or they don't, they get the gold medal or they don't, whether even getting a silver medal is like agony, right? 'Cause like you just dedicated your whole life to this thing and you're in second place. And so it really is about, It really, it just stuck out to me immediately that it's about national pride, representing your country, true excellence, right? And in watching this, there was none of that. They were trying to do to basically build up the brands of the athletes ahead of time, but there was just like no, I didn't feel like bought into any of the storylines. These are a bunch of athletes that were, that are formerly Olympic athletes, and some of them had done quite well, that are now basically opting into just a for-profit, like the Olympics are not about making money. The Enhanced Games were about, sure, it was about the athleticism, but a lot of it was just like a payday, right? And so, there wasn't the same, I didn't feel, well, basically we turned it on and then we walked outside and we just made a fire and hung out and it was really far in the distance. And we eventually came back came back for the very end, not realizing that no records have been broken the entire night until the last event. And then you watch the event, and I think what would've made it more interesting, like a horse race, because it's like if you had an actual overlay of the person swimming the actual record, like they left a lane open or something like that, and you could've seen the person —I mean, it was 7/100 of a second. —Yeah, so it was really, really tight.

—It would have been neck and neck.

—And so, yeah. So, anyways, it wasn't— it didn't, like, capture me. I think that it's something entirely different than the Olympics. I think it's a very clever way to market generic supplements, right? If you go on enhanced.com right now, we don't have an affiliation, of course, but you can just get, testosterone and a bunch of, you know, a bunch of different products. But, but yeah, it— to me, to me, you also came away being like, the human spirit is way more powerful than any PED. Yeah, no, just like dedicating your life to something for decades and being absolutely obsessed. Yeah. And, and representing your country is more powerful than being able to do whatever performance-enhancing drug. So major white pill for Humanity. Yeah.

Actually somewhat related to Pope Leo XIV's new letter, Magnificat Humanitas, which we will talk about with our next guest, Christopher Hale, who writes Letters from Leo and is joining us right now. He's in the waiting room. We'll bring him into the TV Pen Ultram. Christopher, how are you doing? Great, yourself? Great. Yeah, I was reflecting on Magnificat Humanitas, and I mean, I was struck by— we were just talking about the enhanced Advanced Games and the Pope's commentary on transhumanism and post-humanism. And I'm sure we can go into all of that, but why don't you start with a little bit of introduction on yourself and then take us through some of the key ideas or lessons that you pulled out of this letter and how you processed the news.

Yes, well, so my background is I work in the two things that you're not supposed to talk about on dinner dates, in politics. So I started my career working with President Obama after college. I ended up leading Catholic outreach, actually, ironically enough, for President Obama during his reelection campaign. And since then, I've done various initiatives representing— consulting for companies on faith and in politics. And I've also done religious outreach once again for really every Democratic nominee since 2012, in fact. But I am also spent a lot of time devouring, consuming Catholicism and its intersection with faith and politics. I was a contributor, a columnist for Time magazine for about a decade during the pontificate of Pope Francis and got invited by Time magazine and actually Newsweek to cover the conclave that elected Pope Francis this past year. I'm sorry, Pope Leo this past year. Yeah. And from that, I started writing on Substack and it took off. The Substack is called Letters from Leo. It's about the intersection of religion American politics and technology. So yesterday, though it was a holiday, though it was Memorial Day, was kind of my Super Bowl of sorts.

Yeah, it seems like it was— it like this particular news like really broke through. It felt like— I don't know if it was just a slow news day. I think you mentioned that there was like bad weather in a couple media markets. Was that literal? Like there was nothing else to report on or people were just inside bored and so they were reading all sorts of different stuff? Like what was your process and like how the actual announcement rolled out?

I was very upset when the Vatican announced that it would come out on Memorial Day. The Pope is born in the United States. I just thought it was a bad day for media consumption. There was bad weather. I'm here in DC, it was raining. In New York, it was raining and cold. So my, my, my religious claim is that God opened the heavens and the poor weather to allow the Pope's document to be received. But yes, it took off. And I think I think what that was really the hope of Pope Leo XIV. He really wrote this letter, and this is different from how these encyclicals normally work. We can talk a little bit about that, but normally these are very pie in the sky. This was— this definitely had pie in the sky elements of it, but, um, this was really meant for y'all, for Silicon Valley. He wrote this with builders in mind. Obviously Christopher Olaw being there was representative of that, but he wanted this to take off in Silicon Valley. And, you know, yesterday morning, Jack Dorsey tweeted out the entire encyclical. So I think mission accomplished. I think he has woken up a lot of folks, both detractors and supporters in Silicon Valley. And I think this Pope, this document's resonating and making a lot of noise.

Yeah. Yeah. What about it do you think is resonating? Because it is such a broad document and it feels like he's taking sort of a middle path. I saw it as an optimistic document. I saw it not as a doomer. This is, AI is gonna kill everyone and this is the end of the world. AI can be useful, but there are a lot of different decisions that we need to make, how AI is rolled out, how we maintain our humanity. That seemed to be the central thesis, which I liked. It seemed sort of like a middle ground. Is that the goal? And then what would you expect Silicon Valley to take away or change based on that?

So that was the goal for sure. I think Pope Leo XIV understands that AI is inevitable. Let's just sit on this for a second. He's, he's a, he's 70 years old. In Pope speak, that's like a baby. He's quite young. He's the youngest Pope we've had in 40 years. He's the first Pope to own a cell phone. He's the first Pope to send an email. He's the first Pope to have an Apple Watch. So he's ingrained in the technological revolution in the flesh.

So he daily drives an Apple Watch. Yeah.

He, yeah, he has an Apple Watch. He also has a Garmin too, so, um, so me and him have, you know, some, some pact to go there. But yes, he loves technology. He plays Wordle every day. And most importantly, um, he consumes Western media. He consumes the Western media and what's going on, so he knows what's, what's happening in the world. Um, and so I think that really informed him What he wants— the Catholic Church never prescribes policies. They prescribe principles. It's really up to the policymakers to do that. It's really up to Silicon Valley and the products they make to do that. But what he wants Silicon Valley to keep in mind is this question of the human person, whether our projects are advancing the dignity of the human person or whether they are not. And I think that he hears language that concerns a quite a bit oftentimes. He's especially concerned about any time where human responsibility is abdicated to, to machines and there's no one that you can look back to. And particularly he spent a lot of time talking about war. Obviously, what's gone on in Iran has really concerned him. He was particularly affected by that first bombing on the day one of the war that killed 168 schoolchildren in Manama, Iran, and that he received a letter from those children's parents. So he's deeply impacted by decisions like this and he finds that to be grotesque. But he thinks it would be even more grotesque if machines were killing humans without human decision-making involved. So those are some of the concerns he has. Those on the economics as well. But really, the underlying underpinning concern is human responsibility. He wants that to be at the forefront and the dignity of the person. Now, Silicon Valley, what that looks like, I think that there's a significant chance that a lot of people in Silicon Valley will view this as, you know, decel nonsense, do more nonsense, which, as you said, it isn't.

But I hope they take the folks seriously. Yeah. On the economic question, I was interested in the fact that he sort of called out that GDP might not be the best development measure because I've been hearing this from all over the place. We had Doug O'Loughlin, who is the president of Semi Analysis, very deeply in the inner workings of the AI buildout, talking about how GDP was an inaccurate measure of certain measures of progress in terms of just economic impact of AI. Then you have Kyla Scanlon has written about the vibe session, this disconnect between the economic progress of Americans versus the perception and happiness. And we can see it right now. The economy is growing, the stock market is at at all-time highs, yet consumer sentiment is at almost all-time lows. And so I've talked to a lot of folks about this problem of like, what are we measuring? What is the goal? It's always been GDP. And I think it's interesting to see that the Pope is calling it out. I don't know that anyone has a really solid answer. My fear is that you wind up going towards like happiness optimization, and then that takes you into a very dangerous territory too. But in terms of like, unpacking that question of GDP development progress measures. Like, how do you think the church is reflecting on the way we have become a very measurement-driven society broadly?

Well, let's go back. So Leo XIV was named after his— he took the name, his own name after his predecessor, Leo XIII, who in 1891 wrote what was called Rerum Novarum. If you're not a Latin expert, that means On New Things. And Leo XIII, A lot of people in the West credit him for the intellectual force behind labor unions, the intellectual force behind a 40-hour workweek and weekends, et cetera. I think that that is a good indicator of what Leo XIV wants as well. The word leisure is sometimes, I think, derided in a capitalist society, but in Catholicism, it's a great thing. We rest on Sundays. Jews rest on Fridays, Shabbat, the Sabbath. There's something about being able to limit the time of work, expanding time of recreation, of spending time with your family and loved ones. Remember the word recreation, um, its root is recreate. That's actually, um, the, the, the mission, if you will, of, of the Catholic Church, of Christianity, is to recreate. Um, that's what Christ does in Christianity when he rises from the dead. We're looking for more moments of recreation. So I think the Catholic dream would be, you know, to honor the 40-hour workweek and perhaps maybe even a little less. I don't think that's possible, but to honor the 40-hour workweek as sacred, to honor leisure as sacred, to ensure that people only have to work one job to provide for themselves and their families. I think that's what we're looking for. We're looking for a baseline comfort that everyone can achieve in this country by working hard for 40 hours a week. Yeah. There's nothing wrong with having rest.

Yeah. So help me, help me synthesize that with what the Pope said about like the unique human challenges The challenges that make us human. He said, "For an algorithm, an error is a flaw to be corrected. For a person, however, an error can be a catalyst for profound change." It was sort of a warning against transhumanism and this idea that every problem is to be solved. In fact, sometimes the problems are what make us human and our struggles are the value and what brings you joy overcoming. But how are you synthesizing those two? Ideas. I think that what—

and so it reminds me of an author that maybe your listeners are familiar with, uh, Oliver Burkeman, uh, wrote— I believe it was called— yeah, I can't remember the word— it was 4,000 Weeks, basically a survival guide for mortality. And for the Catholic Church, for Christians, for people of faith in general, mortality is not something to be overcome in and of itself. It's about having a dignified life. He's very skeptical of Bryan Johnson. Again, of course, he didn't name-check Bryan Johnson, Yeah, but for Christianity, death is a part, a noble part of the equation. So I think it's really hard for the Pope and for the church to understand this idea that that is something to be overcome. Just to get a little theological for a second, really the way that Christianity overcomes death is by dying. Saint Paul says that Jesus, by dying, destroyed our death. So death is not something we should be afraid of. It's something that is part of the journey. It's what creates a second life for us. Life everlasting. So, um, more practical levels, I think we want to do anything that can dignify the human life, to make it better to live, to make it more comfortable for people. But we, we shouldn't be afraid of our limitations. Saint Augustine famously says that my shortcomings— who, by the way, Saint Augustine's the patron of Pope Leo XIV— he says that my shortcomings actually give honor to God, because what it does is it proves the need for a redeemer, a savior. Let me put it in more blunt terms. We can't save ourselves. I think if Pope Leo thought there was an original sin of Silicon Valley, it's that Silicon Valley at its worst thinks it is God or that it can recreate God.

Yeah, we see a lot of that. How would you guess that he feels about people sort of implying that AI is a lie? There were some comments at the event yesterday saying, you know, these systems mimic feelings like fear and joy.

Yeah, particularly pointing out that Chris Olah or like Anthropic has written in the past that they have detected like, you know, emotions within certain reasoning chains. And then the Pope said that these systems don't feel emotion in the same way. But I didn't see that much incongruity there. One is sort of a description of, you know, the flavor of a text that's being generated. And the other one is like the real true emotion, I suppose. But how did you process that? Like, is there actually a divide or is there some more synthesis that can be drawn there? Sure.

I think on the first, I will say that I think Leo views this as a side issue truly in terms of he really cares about the practical first and foremost. Sure. But what you're referring to, I mean, we know Anthropic gathered 15 faith leaders in March and asked the question, is Claude a child of God? The very short answer from Catholicism, from Christianity writ large, is that the inviolable dignity of the human person is unmeasurable. A better way of putting it— people always hear that phrase, uh, the, um, the whole is greater than the sum of the parts. It's actually a Christian idea. The wholeness of what it means to be a human cannot be measured or recreated in a lab. It is a theological claim, it is a religious claim. So I think the best way the church could understand it is that you can mimic a human being 99%, perhaps 100%, but the fact that it wasn't brought to birth by God and brought to birth by a human person first and foremost and created, if you will, in a lab, I think that limits the possibility of it being divine.

Hmm. Jordy, what else stuck out to you?

What was, How do you feel the church more broadly sort of— I thought I was seeing some of the clip of Olaf talking about job loss and job displacement and economic disruption. I thought I can imagine a lot of people in the church broadly were upset to have representative of Silicon Valley there, and who many, I don't know if this is the view, but many would feel like is part of the problem, at least when you look at tech CEOs or lab CEOs specifically when they go and do interviews, and historically when they've done interviews, and they're saying like, we think this is gonna cause mass unemployment massive disruptions to the labor market, people look at the person, they think, you're doing this, like, why don't you stop, right? And, you know, we don't need to talk about maybe why it's worth doing, but I'm curious what the kind of broader reactions to that kind of rhetoric are around job displacement. Because I would say that industry is —like, the industry is becoming quite divided. I think that everyone generally agrees that there will be some serious evolution of certain jobs and roles and things like that. But a lot of people in the industry believe that there will be significant job creation as new companies get built and entirely new roles emerge, even if some roles and jobs go away entirely.

And of course, we saw the same thing in the Industrial Revolution itself. I'll say on Christopher Olah's remarks, I wanted to step back very quickly. Olah's— Christopher Olah's presence there was the result of really a 10-year effort by the Vatican to engage with Silicon Valley. And to be very blunt, that engagement was at times rebuffed by some not by others. Chris Rallo is there because OpenAI, more than any other company in Silicon Valley, took these questions seriously and took the engagement of the Vatican seriously. And I know for a fact that February dust-up with the Pentagon and the Vatican would argue— at least officials of the Vatican would argue— the, the courage that Anthropic showed in that, in that fiasco was the final, was the final straw that made them the guys for the Vatican. But very quickly, I thought a lot of remarks struck a lot of people in Rome and here in the United States as quite honest. I appreciated him saying that, like, we're not driven by these questions. In fact, we are driven by innovation. We are driven by profit. It was something of a— it was the opposite of a pitch, you know, and I appreciated the honesty. In some ways, I thought someone arguing is actually confessing. Confession. He went to Rome and asked for a confession. He said, look, we have these shortcomings. And we need outside institutions to be— I don't know if referee is the right word. It's probably too strong a word, but advocates for a human-centered development of AI. Yeah. Have you looked at—

who do we have on the show? Pat Gelsinger? Have you looked at any of his analyses of these different LLMs. He's benchmarked all the LLMs on like how spiritual they are or how they map to different religious values. And his sort of complaint is that the LLMs are overly agnostic or overly atheist in the training data, perhaps because there's like a lot of Reddit in there maybe. And I'm wondering like if there's any perception of like, the training data, like the actual products themselves misaligning with the views of the church?

I would say, so I would say the Catholic Church, Pope Leo XIV is not looking for an LLM to replace a priest or religious advice. And I think that he would have concern that people would go there first, quite frankly. So I don't think he's most concerned about the bias. I think he's concerned, I mean, I think obviously Pope Leo is neither left nor right, but I think a lot of his concerns do on this really attack to what the left in the United States is saying. I think that there's concern about bias in profiling, bias in credit scores. He talked about that. I thought that was remarkable that he talked about credit scores and mortgages, getting access to mortgages. I thought that was profound. So I think that is more of his concern. We actually saw another study today that said that when you ask some LLMs to, to compare, like when you asked them to compare religions, the Catholic Church got a nice review, a glowing review. And so perhaps Claude's Catholic or not, but I don't think Leo cares as much about that stuff. I think he can say he's concerned more about, quite frankly, access to resources and, and judgment calls about who gets something versus not, and punishment and not. Those are really what I think overwhelms. Look, this document was long. He did a lot in it. But the thing that really kind of took most of, like, the least of the latter part of a bigger portion of it was war. Yeah.

Can you help me understand his views on international governing bodies, international cooperation? A lot of the debates in artificial intelligence right now, they get, they sort of, they sort of run into problems where the different American companies sort of agree on something, but then there's this boogeyman of international competition. And if we don't do it, China will. And so we must continue to accelerate. And it feels like Pope Leo sort of gestured towards a view of international cooperation that could be the solution, but also there were some detractors who were worried about the negative outcomes of that. And I'm wondering, like, how you interpreted his vision for international cooperation in the modern era. Sure.

I think the first thing is obviously he's an American pope. He is the pope of 1.4 billion Catholics. So of course he's a globalist. Of course he is concerned. He puts global institutions at the forefront. He's not, unfortunately to some chagrin, not America first on these questions. Sure. I think that the critics of Leo are going to be disappointed because he, he does believe in regulatory order. He does believe in international norms. He does believe in governing societies. I mean, the most conservative pope we've had in the past 60 years, Pope Benedict XVI, was very big on, on the United Nations and equivalent organizations. Now, I think some in Silicon Valley might rightly argue that's naive, that those things don't work. But I would say that for a practitioner, I think that what he would ask is at least allow the question of can we have more cooperation Can we have more agreed upon constraints? Constraints? And can we at least engage in this in good order? He obviously— you all are profit-run companies that are listening today, and that's the reality of it. But I think he wants— I think he wants everyone to take to heart what can we do to ensure that what we're building is for the common good of everyone. But I very much think that J.D. Vance, when he went to Europe and Paris in 2025, 5, and he said, let's talk about innovation more and guardrails less. I think Leo's saying, no, let's talk about guardrails as well.

Oh, interesting. Okay. Well, thank you so much for coming on the show and breaking down for us.

Yeah, great to meet you. Before anything else, I appreciate it. Have a great rest of your day.

Thank you so much. We'll talk to you soon. Goodbye. Interesting. I am excited for more people in tech to digest the ins and outs and see where all of this goes. We have our next guest joining in just 3 minutes. 3 minutes. We have time for one quick story closing out the Enhanced Games, of course. The next thing was that over the weekend, Diary of a CEO host Stephen Bartlett went viral for saying that—

Tyler, throw me a beer. Yeah.

So this is a funny clip. We can play this actual clip. Clip. Ross Hendricks. A lot of people were not happy with this. The quote is, it's from a clipper, says Stephen Bartlett says a few glasses of wine ruined the next 3 days of his life. Let's play this clip.

It's one of those areas where you don't understand the hidden cost until you really give it up for a while. And I think about my own relationship with drinking, and I stopped drinking at 30 years old. I'm now 33. And I had just drank because I just drank. I'd never ran the experiment of just giving it up for a while. And then, like, I don't know, maybe I was at 31. I thought, you know, I'll have a drink. Again, because now I could really A/B test it. I had a year of not drinking, decided to have a drink again. It ruined 3 days of my life. I had a couple of glasses of wine, didn't get drunk. It ruined 3 days of my life because of the domino effect it caused. So it meant that I got worse sleep that night, and then because I got worse sleep that night, I ate more poorly the next day because my dopamine system or whatever, the cortisol system was all messed up. That's resilience, yeah. And then I podcasted worse. I didn't go to the gym the day after.

People did not like the "I podcasted worse" line. I just felt really bad.

Bad. I then slept worse, and I could track all of this on my Whoop. #ad, #sponsor, #investor, whatever. Yeah.

And I was like, oh my God. I love that Chris is just chilling there.

It's the perfect, perfect age bait.

It's the perfect hidden domino effect that I must have been living with for my whole life. So this is like a very non-controversial take that has been popular on podcasts for years, really. But it's so pointed here. And I think it, I mean, there's a bunch of interesting things. I mean, a lot of people are just saying like, oh, you should just be able to drink and like, it's gone too gone too far with the total abstinence culture. Like, you should be able to have a glass of wine and be fine. If you're completely knocked off of everything for 3 days after a couple glasses of wine, like, you're not actually, like, you know, strong and hardy, and you, like, life will throw other problems at you, and much worse than 3 glasses of wine. You will lose sleep because your kid is sick, and you will still be asked to perform. And so you should be able to perform.

Yeah, I think parents watching this, certainly, I definitely looked at it and thought, if one bad night's sleep doesn't allow you to work out for 2 days or throws you off so significantly, you probably shouldn't have kids because get ready for every other night.

A lot of crazy— it's like life will throw all sorts of stuff at you.

It was funny because when we started doing the show and you saw my various health habits, you used to joke, John would say, "I'm a junkyard dog. I just eat everything and I just assume it's healthy and nourishing and I feel great." And you would joke that, you would say, "If Jordy had a single inorganic blueberry, he would—" It would kill him.

He would explode. He would explode instantly.

The thoroughbred diet. So, yeah, I've certainly just battled that myself. Like, the point of being healthy is to be resilient.

I mean, the funny thing is that we used to have Dom Pérignon episodes where we would drink on the show and it actually did make us podcast worse as silly as as that sounds, like it was harder to maintain the flow of conversation. And you'd think, oh, having a couple drinks probably loosens you up. Like, no, this is actually a performance. Like, even though podcasting is a silly job, like it is a job and you need to be on.

And you need to be able to concentrate. Yeah, another example. So we basically decided— You can't be sleepy. We decided early on to never take sick days, partially because we would— we spend so much time together. Like, we're always— if one of us gets sick, usually the other one get sick is just part of the game. And think about moments where you just feel like completely terrible. But because we don't take sick days, we're like, OK, we're going to power through. And you end up still— we end up still having a fun time. We end up hopefully still having a good show. And so yeah, I think we probably hit— I was talking with some friends yesterday. And it feels like alcohol is gonna go the way of cigarettes, where it's broadly established that it is very unhealthy, but can still be quite enjoyable and will maintain some level of— Like cigars.

Cigars are really—

No, but I mean, cigarettes are still widely consumed.

Yeah, but cigarettes are so addictive that people either like smoke them all the time or not at all. Whereas I think a lot of people people who do drink wine will have like a glass of wine on the weekends, whereas there's no one who's like, I have one cigarette a week. That's not like a thing. But people do that with cigars. They'll be like, oh yeah, I got a cigar now.

There's definitely people that are— It's pretty rare though.

It's pretty rare. Anyway, the last thing is that I was fascinated by this fact that this went so viral because of this clip. And Crypto Mickley, who is Web3 clipping at Counterparty TV, not Thread guy, clipped this. And I was interested in it because at first I was like, "Is this out of context?" And this is sort of the full context from the actual show, but it does sort of change the context because this is obviously from a longer show. It's two people hanging out for an hour. They're talking about a lot of different things, but when the clip is introduced as like, "Stephen Bartlett says a few glasses of wine ruined the next three days of his life," it's the most it's written like a press release, you know, it's like a statement, and it's not necessarily what Steven would have put out as a press release. He wouldn't put it— he wouldn't necessarily have done a blog with the title "Few Glasses of Wine." Yeah, and the actual—

this is a guy that cares a lot about performance. Yeah. He's basically admitting that he had a few glasses of wine and it threw him off. Threw him off, yeah.

And he's just trying to tell like a positive story of like, yeah, just, you know, removing something, feeling healthier, it made him happy. I don't know, but it clearly triggered everyone because it— There's 24 million views on this and 2,000 quote tweets.

And, uh, Ian over at SciComm, the team behind Huberman, uh, Ian is pulling up the chart of new podcasts by year. It's possible that drinking is correlated with podcast creation.

People were drinking.

As people are drinking. We should start a podcast. We should start a podcast. Maybe, maybe. It actually peaked right in 2020 and falls off a cliff. This is a crazy chart. Right when drinking really fell off a cliff because of COVID too. Yeah. Make it make sense.

So were all the podcasts launched in 2020, I guess? Is that where this line lines up? Because I guess during COVID a lot of people started shows and then it went back to sort of the baseline, I guess. I'm surprised. I'd like to know more about this data because it feels like there's been like an ongoing boom forever, but I guess not. Anyway, we have our next guest waiting in the waiting room. We have Sean Henry from Stord. He's the founder and CEO. Joining us today. Sean, how are you doing?

Good to be here.

Thanks for having me, guys. Welcome to the show.

Uh, where are you? Green screen. Yeah, in the background. Love it.

Not a green screen at all. If anyone goes by, this is, this is real time. This is live. Uh, I, uh, I'll blame all of my performance on my 3 glasses of wine from Friday or Saturday night. But there we go.

Otherwise, there we go. Good. Uh, great to see you. Good to see you. Been too long.

You got some big news today.

Yeah, break it What happened?

For sure, John, Jordy, good to be here. Thank you guys for having me. Well, we're announcing that Stord has raised $250 million, a $3 billion valuation. Congratulations. Thank you, guys. Thank you. Really, to power the physical intelligence layer for commerce. We spent a decade building this at Stord, and we think that the scale, the vertical integration, and the ability to apply robotics and AI to the massive data set we have is just transformational for, for commerce and what we're enabling for our customers. So very proud to announce this round and thrilled to be here live sharing it with TVPN.

So what's been the biggest growth driver? Obviously you're expanding in your commerce market, your offerings, but also is, is e-commerce, is commerce as a, as a general category still growing? What are sort of the macro trends that are tailwinds wins for you?

Yeah, if you look at our announcement, what you'll actually find is we put out a pretty public chart of revenue, and you'll find in our tweets that right around the time that AI came out, about 6 months later, we accelerated massively as a business, which really is in part that we had spent 8 years to that point already building so much vertical integration of software from the time we're speaking to a consumer during the checkout saying order now, get it on Thursday, Thursday to the time we're orchestrating that network to the time we're executing it with software in a building like this across our network of nearly 100 facilities. And so when we took that vertical integration with the scale that we had maybe 2 years ago at that time powering about $5 billion of commerce, today powering almost $17 billion of commerce, we've been able to do is drive just faster deliveries, cheaper outcomes with all with all of that technology and with all of that scale combined. And so a lot of what we're using this new capital for is to keep expanding that scale. There's such a flywheel behind this business where as we get bigger, we're getting faster and cheaper to then also complete the front-end stack of software. That's been a big part of our growth the last few years is that we've built out that whole front-end consumer experience that's now interacting with tens of millions of consumers per year. Now that we power deliveries to over a fourth of U.S. households. So we're going to keep expanding that front-end software stack. And then the final big pillar of our growth is we're also announcing Stored Labs with this raise, which was a big part of why we raised so much capital, $250 million, to apply AI and robotics to all of this real-time volume in the real physical world already running real time. And we've carved out an entire facility here in in Atlanta just dedicated to testing next-generation robotics and AI before we apply them and roll them out across our entire network.

Oh, sorry, Drake. Yeah, what are the different why nows that you're feeling in robotics specifically around, you know, in fulfillment infrastructure? Is it like, is it happening on the model side that there's, you know, other Neo Labs just working on the intersection of AI and robotics all the way through, you know, new actuator technology coming out of, let's say, China? Like, what is it? And I imagine it's a combination of a bunch of factors that's creating the opportunity, but what are you seeing? Why is now the right time to invest what sounds like, you know, 9 figures into your own robotics and AI products?

Yeah, there's really 2 why nows going on right now. One is why now for our business, and one is why now why now for this investment in Stored Labs. For our business more broadly, I think the why now comes to by 2020, consumers had been taught they wanted fast, affordable deliveries, and that was really what was driving commerce in today's world. Since then, for the last 5 years, brands of all sizes have fought to get that Amazon-like delivery on their own channels so that they can win and retain their consumer rather than, as one of our customers said in quote for this round, they don't want to just be a SKU on Amazon. They want to be a brand and own their channels and own those direct relationships. It's actually been a really hard 5 or 10 years for e-commerce when you take into account all the changes with Apple and Facebook and rising ad costs, then with tariffs, then with— first with COVID then with tariffs and all of these kind of compounding challenges to where the why now for us is really that these brands have been beaten down. They've faced rising costs. They face rising competition from Amazon, from TikTok Shop, and more, all that are just disintermediating them with their customer and harming their unit economics. And so we want to give them those unit economics on their own website. And we even saw 2, 3 weeks ago Amazon themselves announced this kind of AWS for supply chain moment. Well, we don't see that as any different, that Amazon is really just subletting some capacity in their network. What brands want is truly structurally different, which is independence. They want somebody who's not using their data against them, who is driving all the branding on their packaging, their tracking, and more that keeps consumers coming back to them. But it was validating. The why now for robotics and Stored Labs is equally interesting, which is that you kind of look at a company like a Tesla, let's say, and you go to the, the algorithm. They often put hardware and automation last because first you have to You have to nail the processes physically and the operational excellence around those processes. Then you have to nail the software to run those processes and kind of unify those two. And that's really what Stord spent the last decade building. And then only once you've gotten every efficiency out of software, every efficiency out of process, then do you go hard code with hardware, which is physical, it's expensive, it's hard to undo. And that's really where I think Stord timed this perfectly. In that hardware's changing. The hard-coded robotics from yesterday and now the agentic robotics of tomorrow that can learn better, adapt better. Already in this building, for instance, all of our cameras are equipped with AI that are telling us about productivity across the facility, about safety issues, about compliance issues. That wasn't available a few years ago. So when you take our vertically integrated software with then all this hardware and sensors and vision and how it's then feeding dynamic agentic robotics. We're in this like fundamentally different paradigm in automation forward, but you have to have the existing software and vertical integration to capture it.

How are you thinking about the different robotic opportunities? Like I think there's a lot of excitement about humanoid robots. We saw last week a demo of a robot sort of humanoid flipping over packages so that barcodes could be scanned. And when I'm in a manufacturing facility, I usually see much more purpose-built machines or robots for those specific tasks. If there's, if there's a million boxes that just need to be tipped over, typically there will be a conveyor belt and some sort of device that just does that one task. And I'm wondering if you're seeing more energy being devoted to task-specific task-specific robotic optimization or more generalist projects? Like what excites you? What is, where's the next like couple years look like?

Yeah, that's a great question. And I think it's where we're headed, which is more general. I think the task-specific automation of the past is what's kind of causes issues because oftentimes the task at hand changes. You implement that robot and 6 months later a new SKU variety, new production change, new consumer demand pattern, all of a sudden the model you built that ROI off of is now fundamentally changed. And if your robot can't adapt to it, you've just wasted so much capital. And so we're very much focused on this kind of new generation of more agentic, more dynamic robotics. And a big challenge in the past was that you kind of either had a robot that moved the arms and could grab something or a separate robot like the Kivas of the world that were kind of moving the legs and it was just shuffling something around the facility. So now you're entering this new paradigm where what could a humanoid do in a warehouse if you can move the top arms and the bottom legs at the same time and really see this new level of movement going on in a facility? But it's in part why we're so excited because our foundational insight when we began STORD beyond the kind of consumer trend and that every brand was gonna need these Amazon capabilities was the reason brands can't do this this is that traditionally physical logistics and logistics software, and then the software that serves a brand and speaks to the consumer are all sold separately. And you're trying to figure out how to integrate all of this together and tie it into the physical atoms moving out there in the physical world. And so our thesis was, well, if we build all of those together, the infrastructure, the operating software, and the consumer-facing software, we will be the platform that can iterate off of these. Now, our biggest costs are essentially either decisions, labor, or deliveries. And with how our decisions are going from ML to AI, we're getting faster and cheaper than our industry because of that proprietary software. With how robotics are going from hardcoded to agentic, we're getting faster and cheaper at a faster pace than the industry. And even things like drone-based delivery, it's such an awesome capability, an incredible category of company. And what's happening there. But you still need inventory everywhere to be able to deliver from a drone, which has a limited radius. And you need that front-end consumer experience software telling the consumer drone deliveries available. And Stord is what controls that part of the stack that then extends out to then enable things like drones. So the shortest statement is we kind of see ourselves as the vertically integrated platform that can first take advantage advantage of a lot of these emerging technologies because our industry is so far behind us.

Talk about international expansion. Where are, where are you live today? Where do you think you'll be in 12 to 18 months? Like what, what, what, what international opportunities are exciting to you?

Yeah, so we're very large in the US, approaching 100 million packages a year to about a fourth of US households this this year. Uh, internationally, Canada is our next biggest market, followed by Europe and the UK. We're expanding with recent launches in both China and Australia, and that's taking US brands internationally to say, hey, we can already ship your products globally to over 180 countries. We do that every single year. But what if you actually wanted to hold your inventory locally in those markets and deliver locally? So if you step back, when you think of stores as saying we are the physical intelligence layer for commerce. What that means is really we're trying to give all the physical infrastructure, all the software tools, all the robotics, and all the AI that you need to sell anywhere and deliver to those consumers. And so already today, our platform is infused at every level with natural language AI, where I only bring that up because one of the most fun questions we've seen brands asking is, where should I expand globally based on where all my consumers are already purchasing? Purchasing from.

Yeah. Is China an underrated opportunity for independent brands? Like, we were just reflecting on the fact that the Tesla Model Y is the best-selling electric car in China. Uh, it's obviously an American-made, American-developed vehicle, and I'm wondering if that's not on the top of anyone's mind, but is there some sort of opportunity there?

I think you may be on to something. That's not necessarily why we expanded into China. Uh, we are very very customer obsessed. And so we tend to follow our customers globally. And to your point, we went with one of the fastest growing US brands who wanted to access consumers in China and expanded with them. And so I think oftentimes we think about the inverse, which is, hey, if I launch a brand here, my, my product, my IP or other is going to be quickly replicated internationally in markets like China. Well, there may be the opposite, which is the end consumer there may actually want that brand from other markets like that, like the US. I think there's just this often underestimated fact of opening up more channels tends to decrease your CAC on your first channel because what we see is, let's say a brand goes into a new marketplace, a new store, a new international market, and therefore the audience just gets larger and larger and larger who's seen them at least once. And so then your ad effectivity goes up and so your CAC organically continues to to go down.

Yeah, that makes a lot of sense. Well, congratulations on the fundraise. Great update. Thank you so much for coming on the show and have a great rest of your day.

Talk to you soon, guys. Good to see you again. Until our next run-in.

See you later. Bye. Up next with Eric Ries. What a chat. The author of Incorruptible: Why Good Companies Go Bad and How Great Companies Stay Great. Eric is in the waiting room. We'll bring him in in just a minute. You probably know him from his first book, The Lean Startup, which focused on why successful companies drift. This book is focused on why successful companies drift from their founding principles and how to prevent it. The Lean Startup was foundational to me when I came to Silicon Valley. I remember I went to a Lean Startup book event, probably back in 2012, you spoke there, and it was very inspiring as I was starting my first company. Company, and I took away from it just, you know, money is not infinite. Don't die. Don't burn all your money. But, I mean, maybe we can start there and sort of reset, like, what are the correct lessons that you think should endure from The Lean Startup? And then we'll go into Incorruptible and sort of all of the evolution. But I'd love to sort of have a reflection.

Yeah, I would just say, like, super incredibly influential on my career and journey.

Really, like, unlocked entrepreneurship for a lot of people, Totally.

But I mean, it was the perfect time.

You needed $20 million to be a business.

Well, yeah, for me, as somebody who just grew up obsessed with startups, I'd be on TechCrunch every day. And all the startups that I thought were cool and crushing it were in TechCrunch every 12 months raising all this money. And it feels like out of reach when you're a teenager. And then you realize, like, hey, capital is way less of a constraint than— than you would think. So, but yeah, thank you for that. Well guys, thanks.

You— thanks. And first of all, congrats to you, uh, on the success. You know what's really held up? Like a lot of the techniques and the specific tactics from Lean Startup are a little dated now. I mean, you know, Groupon, it's a case study, like it's, it's, it's old now. It came out in 2011. Yeah. But I think the principles have held up really well. And especially if you think about like from a mega trends perspective, the book said that the world's gonna get more and more and more uncertain. So our ability to plan and forecast is gonna get worse. I think We think we nailed that one. And that the democratization of technology is gonna mean that more and more and more people are gonna be able to build faster, cheaper, better products. And so when you put those two things together, every industry that's been hit with a double whammy with those two things, Lean Startup holds up real well.

Yeah. Do you think startups are getting leaner or less lean in the modern era? And what I mean is that I will see, we have folks on the show all day, oh, $200 million seed round, it doesn't feel lean. At the same time, time we hear about the mythical one, one person, $1 billion company. And although there's been some reporting that's been a little bit debunked on has it happened yet, it feels like it is becoming more attainable. You, you can run, run leaner even if you're just using SaaS products. But also AI agents can do a lot of things. You can answer a lot of questions. You might have slightly lower legal bills just because you're a little bit sharper going into that negotiation. And so I'm wondering on the, the net leanness, how are you processing the modern era?

Well, every time we have a mania or a bubble, you know, whatever you call it, right? Yeah. The, the, the situation goes bimodal real fast. Sure. And you have people who are struggling to raise money if they're not in the favored category. And then, uh, obviously the money is flowing ridiculous. What's funny is I've been at Lean Startup long enough that people periodically write these articles that are like such and such company proves that Lean Startup is over. Sure. And they always pick a company like Quibi. Okay. So it's like, you know, like you just never know what it's gonna be that I think fundamentally, like, using resources well is an eternal entrepreneurial virtue. So even the people that are overfunded, a lot of them run into trouble because now you don't have that reality kind of barking at you all the time to make sure that you're actually building something that people want. It becomes easier and easier to delude yourself the more money you raise.

The other kind of startup that's emerged is the lean startup that ends up raising a lot of capital, but simply because they were lean and they were, like, really scrappy, and so they grow super quickly. I'm thinking of, of like a TurboPuffer, right? TurboPuffer, yeah. Our friend's company, where raised very little money, is at a 9-figure run rate now, but extremely attractive to capital. But his entire approach is like, how do I maintain that scrappiness even once I have a fortress balance sheet? Because that's what made the company great from the beginning, is just doing things that customers want, that they'll pay for, all these things.

When it's so easy when you take in that level of money to lose that ethos. Sure. The thing that made it worth investing in in the first place. And I think it's interesting, like, I know quite a few companies that, like what you're describing, where the fundraising was done for some other reason than for the money. In fact, I know a bunch of founders who brag to me, we raised this money and never spent it. Yeah. Um, because it can, it can make sense to have a fortress balance sheet, but to me the real question is not about like how big or, or small is the organization, how much money was they raised, but how much control control do the people who are locked into that mission actually have over what happens next? And sometimes when you raise too much money, especially too much money too early, you think, you know, you ring the gong and you're really proud and that's great. You know, like it's okay, that's really fun. But then like, have you actually, yeah. Or yeah, I get the air horn. How you guys get the sound effects? And like sometimes, you know, this, you know, the media environment, like steadily building a product that people love day in, day out, like it's hard. That's not the sexiest story. And so sometimes, you know, we get, we get distracted by all these other things that take us away from the one and only one thing that truly matters, which is can you build a great product, build a great company?

Yeah, yeah. I mean, there are so many— and a lot of financial reporting sort of misses the changes of control that happen. Like, there might be a company that's raised a $1 million Series C and then a $5 million Series A, and there's 2 VCs on the board and 1 founder. And then there might be 5 founders on the board and VCs are stuffing $100 million checks, and they can't even get a board seat because there's so much demand. And which one tells you more about the future of that company? Potentially the governance side. How are you grappling with the, just governance in the modern era? I mean, I feel like that's a lot of what this book is about. There's so many different paths. There's, you know, PBCs, and really diffuse, lots of, you know, lots of co-founders having even stakes, and then you have, You have the SpaceX AI, immense control in a single founder. Both can produce fantastic products and good financial outcomes, but like, how should we interpret all the different roads that are available to founders these days?

Yeah, it's really confusing. That's actually part of the reason I wrote the book. The book is meant to blueprint to actually show a new, better way forward. Like the extreme founder control has its problems. You know, psychologists call it hubris syndrome. Not to name check any particular founder, but you know, that can cause some issues. Issues, but also investor-dominated companies really underperform, uh, precisely because we have this financial system that has this gravitational force that pulls companies down into mediocrity or worse. And the book I document, like, over and over and over again, we reenact the parable of the goose that laid the golden egg and just stab it right through the heart when we— by removing the thing that actually made it worth investing in in the first place. How many times have you gone to a restaurant and you like look on your phone You're like, take one bite. You're like, did private equity buy this restaurant?

It tastes disgusting. No, I have the best— I have the best example of this. My favorite— my favorite hotel in the world was bought by private equity. And one of the things that every guest would talk about, didn't matter at all, is just like barely contributed to the cost of like, you know, having a guest there was that every night the hotel would walk around and they would leave a warm chocolate chip cookie and and milk for each guest. And private equity bought the hotel, which only had like something like 20-something keys. And they immediately removed the free chocolate chip cookie with milk at night thing. And I just, it was such a funny thing to like take out, but is exactly the kind of thing when you met, transitioning from, you know, this like founder-led, you know, family-operated business —invest around.

Yeah, what's sad about it is we've built an economy where people are routinely rewarded for cutting costs, but never held accountable for the downstream brand and quality consequences of that. So like, on the balance sheet, getting rid of the cookie is immediate ROI positive.

Yeah, and you can justify it, you can justify it because, well, the cookie's still on the menu, so people want the cookie, so let's order it.

They get the cookie they want, why do we have to get rid of the free?

We looked at the data, we looked at the data, a lot of people don't even eat it. Eat the cookie, right? And, and so it doesn't matter.

And of course, no, you got it right. Like, how is it possible that the capital structure of a company has a flavor that you can literally taste it? And because, like, notice how when you said that private equity took over your hotel, we're all ready to give you condolences, right? Like, you could— in theory, you might be like, well, having those resources made it better, right? Go, that's great. Now they're gonna— no, no one ever feels that way. And everywhere I go, you know, I've been— I'll be doing this book tour on the new book. People are coming up to me to be like, I know that story. Yes, that happened to me. And they've named like 20 different restaurants to me, hotels, like so many service products where— and again, it's not about private equity per se, it's that we've built this pervasive force that is just dragging companies down. So if we're going to get— now get to the governance question, and I know for founders listening, it's like, oh God, governance, so boring. But like, important, as I say in the book, if you don't get the governance of a company right, no other decision you make will matter in the long run because you won't be the one making it. So we have to figure out how do we create that like incredible alignment. You've seen it in mission-driven companies, right, where everyone's on the same How do we protect that special thing from outside pressure? And when you put those two things together, we can create what I call mission-controlled companies that cannot be corrupted by this temptation.

Yeah. There's a bunch of different things that I wanna like click through to get to interrogate that. The first is probably quarterly results, quarterly earnings. I've seen proposals to go to every 6 months reporting, and it seems like, okay, that would align public companies with like, the CEO could think for 6 months instead of 3 months and take bigger risks and think longer term. That feels very good. At the same time, it feels like the rug that you sweep things under is potentially just getting bigger. Twice as large, yeah. Twice as large, or the closet where you hide the bodies is getting twice as big. And I'm wondering, is there a tension there? Am I wrong to think that there's a tension there? Because a lot of, like, I think about problems in the public markets with long-term value creation, long-term alignment, but then I also think about the transparency that comes with being public, the regulation that comes with being public, the access to public investors, retail investors that can participate in a company before it's a trillion dollars, if it's gonna be a great company, company. So how are you dealing with those tensions, if there are tensions?

Yeah, okay.

First of all, the tension is completely real. Okay. And the thing you gotta know is, is Long-Term Stock Exchange, the company that I founded, um, is the one who filed the petition last year to the SEC to switch from quarterly.

Okay.

Obviously I have a, I have a, a strong, strong view about it.

Oh, nailed it.

Exactly. So, uh, and what's funny about it is, okay, so first of all, we have to understand the scale of the problem.

You're not going to believe this, but we have, by the way, sorry, sorry, Before we continue, you should have named it like, you know, Eric's, Eric's Law or something like that. You're not getting enough credit. You're not getting enough credit for this.

That's, listen, the memes and everything, that's your department. Okay. I got it. I got it. So, okay. But you've got to understand the magnitude of this problem is insane. Yeah. If you look at other countries, there's these natural experiments where certain countries have switched from semiannual to quarterly reporting or vice versa. And they happen to do it in such a way that not every company changed at the same time. And it was random who did. Bid which. So we actually know the valuation consequences of quarterly reporting, and it's roughly a 5% loss of total equity value. Wow. Companies are 5% less valuable when they report quarterly than semiannual. So the academic research on this is pretty good, and the magnitude of the cost— we're talking about so much, so many billions of dollars of lost value. It's not because the, the, like, you know, effort to do a quarterly report is expensive, although it is expensive and rather, when people report quarterly, they start to run the company for the quarterly report. So companies no longer make products. They start to view the quarterly report as the product, which means they're basically meme factories. What do I have to do to generate the report that will get me what I want? Now, getting rid of quarterly reporting just by itself, I don't think is a very good idea. And we'll see what the SEC ultimately decides to do. I think we should replace quarterly reporting with a better, like, more fulsome disclosure project where long-term investors can actually find out what the eff is going on at the companies they invest in, where today At the end of the day, companies are strongly incentivized to give out as little information as possible, but that's kind of broken the partnership we need between long-term companies and long-term investors. That's of course part of why we created the exchange in the first place. Yeah.

Talk about public benefit corporations and how incentive alignment might play out like in the longer term when there is, you know, when you get to a stage of a company that's a lot more like Apple than a founder-run, like Anthropic is a unique example with a set of co-founders, but like, The normal Fortune 500 company has a leader at the top that might have 1% equity and a board seat, but there is a chairman of the board, there's a board of directors, it's much less controlled. But in that scenario, they're reporting to shareholders and they have a fiduciary duty to shareholders. If you have a company that's broadly held and has diversified board and diversified ownership structure, he is a PBC. How does that play out? Like, what are they doing differently? Is it that the CEO has two different hats and they're mentally taking these on and off throughout as they're decision-making? Or, or what is— how does that actually play out?

Yeah, that would be too hard. The so-called double bottom line, triple bottom line, I think, has not worked out very well precisely because it leaves CEOs really confused. Okay, you want to be multi-stakeholder? Great. Customers want lower prices, but employees want higher wages. Now what? Yeah. So it kind of leads to compromise. Yeah. But what's interesting, PBC is actually not that new. Okay. For the vast majority of time there have been joint stock corporations on this planet, it was considered obvious by everybody that they should be incorporated to do a specific thing. When they're just trying to make money for themselves, they wind up hollowing themselves out. That's what makes them dangerous. It was only in the 1980s that the idea of so-called shareholder primacy came into effect. So if you walk by your local park, you will see trees that are older than this idea. This is not some like pillar of ancient pillar of capitalism. And in the book I make the case for, first of all, we gotta get rid of shareholder primacy. I think it's a, it was just a terrible idea. But the question is kind of like attacking it is easy 'cause the data is so good about all these best practices being so bad. The issue is what do we replace it with? What does mission primacy look like? And I think the key to that is to understand that being a for-profit company is actually great. Making a profit is actually about making the world a better place. That's literally the definition of it. It's like a positive margin transformation. So in the book I argue, and I feel weird doing it on the same day that like Pope Leo made this same point in way, in way better fashion, you know, hundreds of pages. I only mentioned it in passing, but like literally to make a profit. Yeah. Is to maximize human flourishing. That's what it means. So now coming back to the PBC, all a PBC does is give the CEO and the board the legal cover cover to pursue long-term value creation in the face of hostile investors. So if you go there and say, listen, I want to sell the company to Philip Morris because they're willing to pay $1 more per share than it's worth, you need the tool to be like, no, that's ridiculous. Of course, we're not doing that. And that's what PBC allows you to do. Interesting.

What do you think are some of the most underappreciated companies in history that you feel like had mission prime to see.

Yeah, yeah, obviously these are profiled in great deal in the, uh, in the book. And what's really interesting is if you talk to people about corruption and say like, why does companies go to, you know, go to bleep after they get big or whatever, most people will be like, it's inevitable, it's human nature, it's companies get old, they get big, there's a lot of money involved, blah blah blah. But those same people, if you're like, are there any companies you trust? You're like, man, I love Costco. Yeah, it's like, interesting, like, how come? But I thought it was inevitable. Costco's a $400 billion public company. Oh yeah, well, they're the exception. You're like, well, what about Patagonia? You got a Vanguard mutual fund. What about, you know, John Lewis Partnership? Or you ever eat a Hershey's chocolate bar? You ever taken a Novo Nordisk medication? Like, there's all these weird exceptions, many of which are decades or even like more than 100 years old. And what's interesting to me is if you take that whole category of companies as a data set and say, what do they have in common? Every single one of them violates pretty much all of today's so-called best practices about how companies are supposed to be structured. Built and run. So I think we actually have really good data that this is not some abstract thing. So like, so for example, when the founders of Anthropic left OpenAI, so what is that, like 3 or 4 OpenAI crises ago? I can't track. But anyway, it's like hard for me to keep track. But anyway, it's like, it's been a rough, you know, it's been a rocky road. Um, when they left, like, I was one of the people that they talked to setting up their governance structure. And not only, and again, I am not taking I'm not taking credit. Okay, don't do the meme thing, okay? I'm not taking credit for Anthropic's success. Obviously I played only a very big part.

They wanted to call it the Eric PVC, but you say, and I had to talk them out.

I was like, guys, please, please, no, no, I don't, you know.

They were looking for an idea and you told them like, I think you should work on AI. That's what happened. Yeah, yeah.

They were like maybe thinking of pivoting out 'cause they left open AI and they're like, maybe we should give up on AI.

They were gonna do protein shakes or they were gonna do an energy drink and you were like, I think you should— Don't do this.

I just talked to you guys, said about Dara's CEO. Don't get me in trouble here. People are gonna clip this outta context and get me busted. Yeah. Okay. Well listen, so I'm not, for the record, I'm not taking credit for their success, nor am I trying to talk smack about OpenAI. I know you guys love them. Yeah, yeah. The issue, but the specific thing I think is really interesting is because they were really worried about this specific issue, when I gave them my typical litany of like founder loss of control horror stories, they could see how bad that would be. And in fact, it's funny talking about the Pope. I was at an event at the Vatican last year talking about AI governance, and I was on this panel with every major AI company, OpenAI, Anthropic, Cohere, Palantir, Google, Meta, everyone on the one panel together and me for some reason. And I'm looking down this row and I'm like, oh my God, not a single one of these companies has standard governance. They all consider it to be too dangerous. Interesting. They gotta have somebody playing the role of what's called the mission guard. Guardian. Yeah, but Anthropic, to their great credit, I think, did not want it to be the founders personally holding that, uh, that special responsibility, because it's stressful. As I know many founders who are trapped in this situation, so they created something called the Long-Term Benefit Trust, which is like a multi-branch government, right? So you have the, the, the for-profit PBC, and then you have the board of directors accountable to a second entity, this, this outside trust. And the data shows that companies with that structure are something like 5 times more likely to live to year 50, and have like way better long-term value creation metrics too. So again, I think we have the evidence that there are these better structures, yet most founders are never given this as an option. And by the time they find out about it, it's too late, they've already lost control. I wanna talk about—

I think one interesting thing is, if we move to biannual reporting, there's gonna be a lot of work, accountants, lawyers are gonna have less work, but you're creating a new structure, these complicated structures, they can just shift their attention to working on mission-aligned companies.

Maybe, maybe. Yeah, sorry.

That wouldn't be that bad, would it? No. I think I would like, compared to what they're working on now, I think that—

No, no, I'm sort of joking, but at the same time, I think it would be much better use of their time.

I want to talk about Mondragon. Is that how you pronounce it? Oh, sure. Yeah, yeah. I'd like you to introduce it though first for those who aren't familiar, and then I have some questions about where we go, what lessons we learn from it, but first, how do you understand that?

See, I don't get to talk about Mondragón very often, so I know you did your homework and I just, A+. Awesome. Okay, so it's funny you're talking about the day of the Pope's encyclical. So a Catholic priest walked into the war-torn Basque region after the Spanish Civil War. So this is not the setup for a joke. It's not like a priest walks into a bar. He actually went there. And instead of like preaching, you know, just comforting people who are being devastated, he had this vision for a new kind of economic reality where workers would be empowered to learn a trade and to own and to control their own destiny. And to make a very long story short, he started to create this network of worker cooperatives where the workers themselves own the means of production and they build all kinds. It started with like industrial equipment and now make all kinds of stuff. And if you zoom out today, Mondragon is this gigantic company that employs 90,000 people in Europe, one of Spain's largest companies, makes elevators, and have a grocery store chain, and all kinds— like, if you look at it from the outside, you say, oh, that's like a fully diversified industrial conglomerate. Makes sense. Like, making a lot of money, that's perfectly sensible. But if you zoom in, there's nothing about Mondragon that actually resembles a typical for-profit corporation. At all. It is a network of, I think, 80 or 90 of these independent worker cooperatives that work together. They have like a Congress where they send representatives and they self-govern. And any of the cooperatives can leave the network if they don't get benefit from the central services that it provides. So this is an example of what I call a mission-locked constellation, which is a set of entities that when you zoom out, the customer, the investor, anyone from the outside perceives it as one thing. But it's actually many things. Now, be honest, if I pitched you this as my business plan, that I was gonna create a 90,000-person network of 80, like if I pitched it to you, wouldn't you say it was impossible?

Well, that's my question. That should never work. Yeah, I—

I would say it's not that it could never work, it would just be extremely hard to reproduce. Like I think if you got a really talented team talented group of people and you tried to rebuild something like this, even knowing all of the mistakes and challenges that this last one had, it would still be very difficult and probably end in failure. But— Right. So— But it's clearly possible.

Well, the fact that it exists obviously proves that it's possible. But I think most people, when they're thinking about how to start a company, like, just have a very narrow view of what can be done. Corporatives employ, I don't have the stat in front of me, like millions of people worldwide. Like it's not some like weirdo niche thing. It's actually like, it's a tool that we can use. Now in the book, I try to go through all the different ways you can create mission lock.

This is one of the— REI. REI.

Yeah, you guys will probably acquire this in a huge Vanguard episode, like REI as well now.

I guess my question with it is that, so I agree with you, like you got me. If somebody came to me and pitched me that, I'd be like, ah, that's too complicated. That doesn't pattern match to like the usual Series A, They're like, "I don't get it, I'm out," right? But is that why we don't have an American Mondragon in the modern era? You know, like, why is there no, why aren't there as many, like, you know, Mondragon-style counterparts to the monolithic traditional founder-led companies? Because I've heard people pitch this as like, America would be better if we had more co-op network like Mondragon-style entities. And my initial pushback has always been like, well, it's a free country. Like, I don't know that that's illegal. I think it's legal. I think you could just go do it if you wanted to. So is it that people don't want to, or is it that like Jeff Bezos is secretly out there like killing people who wanna try to start the Mondragon of Amazon and like compete with him? Like, what's going on?

That's a really good question. And like, so for example, so credit unions. Credit unions are the closest thing we have in the US that serves like, I think it's like 40% of American households have an account at a credit union. Pretty big. They're all not, you know, they're not-for-profit member-owned financial institutions, and the fact that they exist holds big banks accountable in really interesting ways. So that's like maybe the closest. The, the point that I was trying to make in this book is not so much that we need to copy Mondragon or any particular company, but rather collectively these were called alternative structures control something like 5% of world GDP. Yeah. So I don't want to convince anybody to do anything, but for founders that want to attempt something like this, most of them have never been given the permission to even try. Like, if you talk to most lawyers, bankers, like, and you just say, I'm thinking about doing this, they're always like, oh honey, that's so sweet that you're concerned about mission.

How about a Delaware C-Corp with a safe? Why don't you worry about getting your first customer?

Yeah, yeah, right, exactly.

Just go focus on this other stuff. But one of the most important ideas in the book is this principle I call it's always too early until it's too late. So what happens is you talk to all these advisors and like, oh, it's too early. Oh, they're so condescending about it too, like, don't worry about that, just get— and then one day I've actually been in the room where the CEO is like talking to their CFO and bankers and GC and everybody there and being like, hey, whatever happened to that like mission protective provision thing that Eric was talking about? Did we ever get around to doing that? And they're like, oh, you were serious about that? Yeah, I told you to do it. You said it was too early. Like, yeah, now it's too late. When was it the right time?

That's wild.

Yeah, you should have said something, man. Like, I did say— so I just feel like that is big has become the way that this is done, and it's why so many founders lose control.

Japanese keiretsus, alternative? Do they fit in the category of alternative structures? Are they good? Are they bad? Like, I only know about them from the very highest level. Tell me, I imagine you've interrogated them more. Do they fit in? And is big tech emerging into keiretsu? Like Google owns Anthropic and SpaceX, and Microsoft owns OpenAI. Like we're sort of maybe walking our—

Nvidia owns a piece of everything.

Yeah, we're maybe walking our way into a keiretsu. I don't know.

Uh, but let's see after the financial engineering recedes.

Yeah, yeah, yeah. Who owns what?

Yeah, I got into the— I originally got into all this from studying Toyota because remember, Lean Startup comes from lean manufacturing. Yep. And it's really funny, I can remember when I first was going around, just like when we met 2012, talking about Lean Startup, people would sometimes be like, hey, you're telling us to create the next Toyota, but you're also taking up telling us to build a venture-backed company and take it public? Yeah, like WTF? Like, I thought public markets are super short-term, but if you read any books about Toyota, they're super long-term. So I feel like spent a lot of time on that question of like, have we just grandfathered Toyota into the modern economy? But even when I was in Japan, I remember people talking to me about we don't even create them anymore. Yeah, like we have these legacy companies that have this really unique, cool structure that are kind of a hybrid of public and family-run. Like, it's a little bit in between both. I think if you look at the the data, these structures only work if the company in question has a really strong ethos to accomplish something other than making money. That really is like— that's what you see, like, that's what unites everybody from like these like really progressive companies we've been talking about to Elon to everybody. If you have a larger vision that is long-term in nature, that is like trying to, to— whether, anyway, whether something really lofty like I want to fix climate change or I want to go multi-planetary, or something really simple like I just want to create high-quality products, no matter what it is, if you have that vision, you are a business revolutionary, whether you know it or not, whether you admit it or not, because the economic system we have has been designed to destroy these companies, to suck the marrow out of them because they're too weak to stand up for themselves. So if you look at the historical examples, whether they're talking about Mondragón or the caretsu or all these different structures, like, they're only good if the thing they're protecting is good. So the question for me is, like, as founders, as investors, as leaders, as board members, like, how can we create more and more and more of these companies that have a real long-term mission, that are what I call mission-driven, not just like mission-hopeful. And when you do that, you see this like really counterintuitive economic benefits that you get. So it's like you also get moral and ethical benefits too, you know, like, but that's not even really the reason to do it. You can do it just on the basis of the economic argument alone.

Do you think that AI will force companies where it was otherwise maybe too late to maybe over time massively rework any of their corporate structures. I mean, the example I'm thinking of that is notable recently is Samsung had 48,000 workers basically say, give us a much greater share of AI-driven profits or we're not going to work anymore, and started a pretty big negotiation. I could see over time that happening at more companies, specifically ones that are facing disruption due to artificial intelligence.

Yeah, there's two things I think that are pushing in that direction. The first is the data on employee ownership creating commercial advantage is actually really strong. So I didn't I didn't know this. I, I was always a big— you know, everyone at Silicon Valley, like, we're into employee ownership, but I didn't know it was like an ideological thing. I thought it was just good, good practice. Actually, we have really good data. There was a big meta study of like 55,000 companies with various levels of employee ownership, and they found that employee ownership exhibits dose response. Like, 10% ownership is better than zero, 50% is better than 10, 100% is better than 50. Not just in terms of employee welfare, but in terms of commercial success of the company, revenue growth, stuff like that. The second thing is I really think AI is going to make collective action problems like very different, very different than it was before. So for example, an old Toyota Production System piece of wisdom was that if you're doing a lean transformation, taking cost out of a business, it's not ethical, nor is it effective to ask the workers themselves to contribute to their own firing. Like nobody wants that. So, so they're going to sabotage the effort, but also it's just not right. You're, it's just fundamentally not right. You should take the savings you're from whatever the thing is and use it to grow the business. Like if all these CEOs who are like, I'm getting a hard-on for laying people off using AI, like if they were serious about how powerful they think AI is, they'd be trying to use it to gain competitive advantage. Like I call BS on that whole thing. So I think you're gonna see a lot of companies who actually sincerely believe in this possibility realize that we have to enlist our employees in it. This is existential for our business. We're going out of business if we don't do this. Do it, we need to be allies with labor to get it done together. I think that alliance is going to be far more powerful than what we currently teach, the way we teach leadership today, which is this very zero-sum game thing. What was called shareholder primacy is really the idea that companies should treat their employees and their customers like a resource to be mined. Yeah, one of my favorite quotes in the book is, if you'll indulge me, there's a Wall Street analyst that was criticizing Costco. He said something like, Costco takes money that rightfully belongs to shareholders and instead invest it in improving the customer experience? That's supposed to be a criticism. Like, WTF, what are we doing here?

That's how you get $1.50 hot dogs.

My favorite bit in here from Costco is, I'd heard this quote before, I thought it was just a meme, but from Costco CEO Jim, is it Senegal? Senegal, yeah. Senegal. If you raise the effing hot dog price, I will kill you. I will kill you, figure it out, to then-CEO Craig Jelinek in 2008. I seen that quote before, I thought it was just a joke, but I guess he actually said it, which is remarkable.

No, he actually said it, and in fact, he said that and another quote, which is he said that if Costco raised the price of a dollar bottle of ketchup by 3 cents, they would sell the exact same number of ketchup, right? No one would notice. Yeah, yeah, yeah. They did that across the whole store, 3% across the board, prices, they would increase their net income by 50% and not lose any sales. Yeah. So why don't they? He says it's like the business equivalent of taking heroin. You do it once and then you got to do it again and again and again. Next thing you know, you're not the low price leader. Low prices are the, are the easy way. Now that quote and the hot dog quote are the source. Yeah, there are memes online and I was like so worried that I was going to quote him incorrectly that I actually contacted Costco PR and they put me on the phone with— I was so nice to them, they put me on the phone with them. I I was like, is it— is this really true? Did this really happen? He confirmed it to me. He confirmed it to me personally. So yeah, I think this like very distinctive countercultural way that they have run that company now for 40 years, the $1.50 hot dog and everything. Like what's interesting to me is when I tell people that story about the hot dog, nobody ever says like, how come the COO was trying to raise the price? Because of course he was. Like we've all been trained that if you can get away with screwing people people over, you always do it no matter what. You raise margins. Margins are a source of strength. But Costco is, I think, built on a very different philosophy, which is that margins can be a source of weakness. Jeff Bezos understood it. He used to always say, your margin is my opportunity. So when you are too— you're making too much money, when you are being too extractive, you're actually harming your competitive position in the long run. And the fact that we're consistently incentivizing that all across our economy is, I think, a bit of a travesty.

There was a recent story, Everlane was acquired by Shein. Everlane, you know, darling of Silicon Valley, you know, raised a bunch of venture, very strong mission, ultimately to get swallowed up by the beast that it sought to displace. Michael, the founder, is a buddy of mine. He seems very fired up. There was a leak earlier today that he's working on something new in apparel. How would— what is your kind of general advice to somebody that wants a mission, a company to have mission primacy? Like, what is kind of the— there's no Stripe Atlas equivalent today. You can't just go press a button and make one of these, but how does somebody get started?

I'm working on it. I'm working on it, obviously. Yeah, check out the book. The book has a QR code actually that has a really detailed implementation guide. And we have like an incorruptible term sheet, all kinds of legal docs, the whole thing if you want to— for those that want to do that. But for your friend and for so many people who've been through this, I've personally counseled— I can't tell you how many mission-driven founders who get betrayed. The company gets destroyed. They get ousted, whatever. And you talk to them afterwards. I just had this conversation with Whole Foods' John Mackey. I tell a bunch of stories in the book of people who've been through this. And you ask them about it and they really take it personally. They're like, "I failed. This happened to me. I should have tried— I didn't trust the right people." I tell a story in the book of a founder who on their deathbed was like, "I just didn't trust the right people. I put the wrong people on my board." We personalize it, which means we keep the structural causes invisible. We don't see how it's not personal. This is a force that is dragging us down. This down. So I tell the story even of a really close friend of mine, great entrepreneur, who was just tragically ousted by his employees onto a new mission-driven company. I remember asking him, dude, on the new company, what are you doing differently by way of governance? And he was like, like what? He didn't even occur to him that there was like any possibility that the new company could have a different outcome. So for your friend, there's two things we got to do, okay? Just two. One is what I call the path of ethos. We have to build the company operationally personally to stand for something. The great Sol Price, the father of modern retail, the progenitor behind Costco, he called this being a fiduciary to the customer. Who would you rather die than betray? Write it down. Make that the operating system of the company in its management structure, in its business model, and its culture. The second thing we have to do is what I call the path of integrity. We have to create companies that are capable of making and keeping promises, like that have structural integrity, so they don't give in to inner temptation. They cannot be bullied from the outside. You try to them, they can say, "F you." If you try to incentivize them to do some bad thing, they have the structural strength to resist. And that's where things like PPC, board mission pledge, the long-term benefit trust, like that's where many of the kind of so-called governance structural best practices that we currently are taught have to go by the wayside. When you have that special formula of ethos plus integrity, you have a company that is— wait for it— incorruptible.

This is great. This is great timing. That's what I love. I was talking to a founder yesterday. I was giving them advice, and they're with an idea that a lot of people have raised venture to do. And the same way Bezos talks about your margin is my opportunity, I was telling this founder, like, your competitors raising venture is your opportunity because they're going to have to do a bunch of things things that aren't really aligned to what would make the product great for customers or what would make the product that you really want. And what I like about this approach is setting things up in a way that a lot of the problems that you're talking about are problems where you have other shareholders and there's other people that have a stake in what you're doing. And that's— most businesses will end up that way over time. But if you can find a way to create a corporate structure that mimics this insane mission-driven founder and allows allow that, you know, the entity to maintain that even after the founder is gone, this sort of permanent structure, I think it will be incredibly powerful. So, thank you for coming on.

Oh, thank you. Thank you for saying that. I will say, you know, obviously, you've heard I believe in feedback. I really like it. It's kind of my thing. Anyway, so I had a lot of people test read the book. You know, maybe 600 people generated something like 10,000 comments. It's like I really— I eat my own dog food, you know. Yes, why? And the thing I'm the most proud of, of that set of people is I think we're up to 5 or 6 of them now. You know, it's like, well, coming up on 1% of the people who read the book so far have reached out to me to say that they had a new business idea that they wouldn't have even considered before because they were able to use this framework to see new opportunities to make a profit that they just were blind to before. And a bunch of them have that, just the thing you were talking about a second ago, like that there's some category where everybody hates all the vendors 'cause they're all like, they're all assholes, you know, they're all extractive. Oh, what if we had a category, what if we had a company in that category that competed by being trustworthy to companies? You're seeing that obviously in AI, but you see that in so many categories where it's like, oh, that's actually very simple to make a business like that if you take this idea seriously from the beginning. So anyway, very excited to be here on launch day with you guys. What else, what else can you but TBM to get the word out about?

Congratulations. Super, super exciting. I'm proud of you too.

Hopefully we can talk soon. We'll see you. Yeah. Bye-bye. Alex Atallah has some news. We're seeing a Cambrian explosion of AI models and it's happening on OpenRouter. The future of AI is neurodiversity, agents choosing the most cost-effective model provider tool for the task. He's back. And he's back. Welcome to the show. How are you doing? Doing well.

Thanks for having me back.

Thanks for popping up. You've been very busy.

Been busy. Give us the news. What happened?

So we actually raised this round back in February February, um, but we, uh, from Capital G as the lead and our existing investors participating, and a lot of strategics, uh, from, from different, uh, corporate VCs participating too, like NVIDIA, ServiceNow, Databricks, and a bunch more. Um, and we're growing the team, so, you know, we not only do we believe in neurodiversity as a good thing that every company will need to leverage but also like neurodiversity within our team as well. So if you're smart and you get things done and you think in a unique way, we want you. How much did you raise? We raised $113 million.

Good number. Now let's talk about ROI, you're obviously pushing tons of tokens. People need to measure the ROI on these tokens. How have you been processing like the next KPI? Like there's this back and forth with Uber, I'm sure you've seen this, where they started token maxing, they're pushing tons of tokens through. Now they gotta see what did we get done? How are you actually talking to people about cost optimization, ROI? Like what are you hearing around the value that people get? Where are the best use cases? Places? What, what are the places where you're telling people, hey, uh, you might have gone too far on the token maxing that way?

Yeah, there's a really important trend that we're observing among all of our customers. Sometimes you just don't need Uber Black, but yeah, you're all the time. Yeah, um, you just don't know what else to do. There was a time where everybody was in the pre-product market fit phase for leveraging AI for means. And now many companies are past that phase, um, and they're realizing that most of their OpEx is going to inference. And that's pretty insane. That means that if you make cost-cutting decisions and if you optimize your model usage, that directly flows to your margin. And now the business is directly more efficient. This is not, you know, like optimizing your Datadog bill. Sure. So, uh, so I think the future is going to be be multimodal for many reasons. And that's, that's a big one today. And it's a big one this, this, this coming year. And there are a lot of companies who are also just doing one task that should be broken up into multiple tasks. Yes. Served by specific lower-cost models. And they're getting massive cost savings out of it in addition to improving their recall and accuracy. Yeah. So it's really important to do. And then down the road, another use case will be getting better than state-of-the-art performance by using multiple models. And that's something we're also helping our customers with.

So like mixture of models, like ask the same question in multiple models, synthesize the results.

Yeah. Orchestrating multiple models that were trained by completely different companies to do something for you, and then using a judge or some other set of heuristics heuristics to select the best result or combine them together.

Can you talk about opportunities or entrepreneurs or small operations that are bringing compute to bear on OpenRouter? I saw George Hotz talking about he found some building that had a bunch of power. He was going to rack a bunch of NVIDIA GPUs in there and sell the tokens on OpenRouter. Like what, what, I think everyone's familiar with what the hyperscalers are doing. People are familiar with what the neo clouds are doing, but how diverse is this compute supply on OpenRouter these days? What does a small shop look like in the modern era?

Good question. Yeah, a lot of people think that basically everybody's just using one model and that's completely untrue. Yeah. 350 models that are being used by hundreds of active users per day. Yeah. And while, and the token diversity is growing over time. If you go to our rankings page, we have a chart that just shows the graph getting more and more diverse. We're doing about 120 trillion tokens per month now. So there's diversity on model selection, but there's also a ton of diversity in providers. Providers for specific models. It used to be the case that like being a provider is, yes, just really hard because how do you get distribution? Yeah, even if you decide to specialize in like very, very, very, uh, low cost but, but slow inference, so stuff that's like optimized for batch agentic workloads. Sure. Um, how are people going to discover it? So we're building all these SKUs in the marketplace so that providers can find a market really, really quickly. And so we become the, the go-to-market strategy for the long tail of providers. We've built an enormous number of tools to do quality checks and rigorously test these providers on the SKUs that they aim to support. And then we, we send them back all this reporting so they can really easily optimize their patterns and get better and better over time.

Predictions for American open source. Hmm.

I think American open source will become a mixture of taking existing models, some of them, some of them might be foreign, might be Chinese, and improving them and then creating a, like, new models from a new foundation. And I, I, it's hard to make a prediction on it. It remains to be seen because we're just seeing so much adoption right now from foreign open source models and domestic closed source models. I think the, the, the best thing the American open source models have to is some enterprise demand that really wants only American open source models. They're American companies and they're aiming at it directly. So we provide easy ways of exploring the model providers on OpenRouter by their family type. So you can easily look at which models follow a specific family. And only filter down to those. And we do want to help model labs that are like trying to aim for some kind of niche use case in the market or some kind of niche demand in the market, find that market. It's really hard to discover that otherwise.

Mm-hmm. How are you thinking about personal AI routing? Obviously with companies, you have this very economic calculation around OpEx and there's an agentic workflow that's running running for every customer. So millions of times worth squeezing every cent out of the equation. But we are also seeing growth in OpenClaw, Hermes, like these personal agents. There will be some closed source providers there, but memory feels like an important piece of the personal agent puzzle. A lot of that can be offloaded to the context window, to MD files, Is, do you expect the shape or the cost constraints to be any different in sort of personal AI or consumer AI versus enterprise?

Yeah, I think, I mean, this is not gonna be that big of a surprise, but local context is the number one difference that we've seen over the last year. Like if you build an agent that can really leverage leverage the full computer. Um, it works very well for personal AI use cases, and that's because people have a personal computer. Um, what's interesting is that there isn't something that works on the phone very well, even though a lot of context is stuck on your phone. So we may see a cool, uh, personal agent develop in that direction. Um, what's also interesting is that we don't have something very social yet. There isn't something that like pulls your social media data and like really leans into that part of a, like a person's life. So I am curious if we'll see something there. And we've also seen like shockingly few games, I think. And there may be like a really good opportunity for something that looks like a game, but turns out to be much more.

How big can OpenRouter become?

I mean, we want, we really believe that the, the, like, everybody in the future will want to use multiple models in the same way that, like, even if you could hire a 250 IQ, you know, chief of staff, um, and you— but you had the option of hiring 5 instead for the same, if not lower, cost, uh, you would go for 5 because, like, you know, the 5 people are just going to be, like, significantly more likely to flag issues that one person would have missed. And not only that, but, you know, it helps you cost optimize significantly. You don't need Uber Black all the time. So inference, I think, will be the largest software market, potentially the largest market in the economy. All knowledge work will, will need to leverage it. Otherwise, you're just handicapping yourself dramatically. And OpenRouter aims to be a very large chunk of of that. We do help the model labs find customers as well, and we work symbiotically with them, and same with our providers. So, well, a lot of OpenRouter is about building things that enterprises need. When you bundle a bunch of models together, immediately you realize that there are all these boundaries between models that you have to secure and observe. Serve and manage the costs. And so OpenRouter is a really good way of managing and securing the boundaries between models and between server tools. So we're building a bunch of like new agentic tools that you'll see in the coming months that help do this, both for enterprises and for individual devs. What are your scaling challenges?

Are you CPU constrained?

We are memory constrained, I think, first on, you know, like server memory. And I don't think we're CPU constrained quite yet, but memory is—

But uptime is particularly important for you, I imagine. But there are probably other considerations around, you know, multi-cloud availability, interaction connections with different geolocations and being, like, you have a different set of optimization parameters from other companies.

Yeah, so we, that was the first problem we aimed to solve is like, given a large set of providers for a given model, how do we really perfect the router to like send you to the model will be up as, as quickly as possible and send you the provider that can like best serve the parameters requested. So, um, we've been doing pretty well there, but I mean, we can do even better, and it will get better soon. We do a lot of like internal benchmarking against, uh, against the rest of the market, against going direct to providers, and, um, and so we can kind of track progress and hill climb in internally. I think what becomes like a real constraint for us is like brand new models that don't have much capacity because only one provider is serving them. You know, there isn't a ton. Sometimes we host them all ourselves or we work with a provider to do it. And sometimes we just tell other providers like all the market signals that we're seeing and be like, guys, you should host this model. Like, look, you know, there's in this region of the world, there's like this going on. And we, you know, we blast this out and that sometimes solves the problem. Mm-hmm.

Jordy, anything else? No, very good. Congratulations. I'm very bullish. And thank you so much for taking the time to come chat with us. Thank you. Have a great rest of your day.

Congrats to the team.

We'll talk to you soon. Cheers. Goodbye. Well, we have some words of wisdom to end on. "you can lead a horse to Baja, but you can't make it blast." These are wise words.

I'm angry that we didn't think of this.

We've talked a lot about Baja blasting. If you're in a Code Red, when you finish the Code Red, you got a Baja blast.

You gotta make sure that that part leaks out.

But we never thought of, "you can lead a horse to Baja, but you can't make it blast." Also, Michael Timms ran into some problems here. He said he's been trying the whole 2 grams of creatine creatine per 1 pound of body weight thing for a month now and he's never felt worse. How do you guys do it? It's also like $1,000 a week of creatine. Hilarious. Also, it's supposed to be, what is it, 1 gram per body, per pound of body weight for protein, I think is the joke, but 2 grams of creatine. What's a normal creatine dose, 5 grams, right? 5 grams a day, maybe 10 grams a day. About 1/100th of what he was doing. Doing in this joke, of course. Anyway, anything else we need to— we will be off tomorrow and Thursday. We have a short week. We'll be back on Friday. We are heading to New York for some business trips.

I asked ChatGPT for a phrase like, you can lead a horse to Bob, but you can't make it blast. And what did it say? It said, you can lead a horse to Taco Bell, but you can't make it live Moths. It's terrible, but kind of good. Kind of funny.

Anyway, well, folks, thank you so much for tuning in.

It's been an honor. We hope you have an amazing rest of your Tuesday. We'll see you on Friday. It feels like a Monday.

Leave us 5 stars on Apple Podcasts and Spotify. Sign up for a newsletter at tbpan.com, and we'll see you on Friday. Goodbye. Cheers.