Pop Mart: The History & Economics | Max Levchin, Jim Belosic

You're watching TVPN. Today is Friday, August 29, 2025. We are live from the TBPN Ultradome. The temple of technology, the fortress of finance, the capital of. Let's go. Jordy's fired up because we got.

Oh, we're live. VHS on vhs.

Live on vhs. It is crazy.

They said it couldn't be done.

They said it couldn't be done.

But we did it.

Here we are.

Ben did it.

We're here.

Our champion.

We're talking about. We're channeling the vibes of the dot com boom because we, of course today we are talking. The history doesn't quite repeat, but it rhymes. Today we are talking about Labubus and the story of Pop Mart, which to me really stands out as a similar. Like in the dot com boom, there was this. The Beanie Babies went on a similar run. Incredibly popular, built on the back of dotcom technology. I remember going over to a friend's house and loading the beaniebabies.com website and it was so heavy because it had all these images.

Did it take like minutes to load?

It took minutes to load because they like whoever built the website just didn't kind of think about how long it would take.

But even then it was like, this is so cool. Yeah, it takes 30 minutes to go to the store.

Exactly. If it takes 5 minutes to load all down. And so yeah, the page would load, the HTML would load and then slowly, one image after another would load in. And you could really feel the difference. At the time, many people were on dial up, which was 66k, which is like a staggeringly slow speed compared to what you get even just on like a plane. And then DSL was one level up.

Posted that United has Starlink now.

Yeah. And I think it's 300 megs per second. 300 megs. So that's what, 6,000 times faster than what we were experiencing back in like the mid 90s.

Yeah.

And so then you could upgrade to DSL. DSL was between 256k and 1.5 megs. I had a friend who had a T1 line which was like enterprise level Internet in the 90s. One meg up and down so you could get equal upload, symmetrical line. And he could still, he could load the Beanie Baby website faster than anyone. It was like true status symbol at the time. Yeah, it was alpha. His parents were very successful.

What was the most expensive Beanie Baby transaction ever? Do you know?

I don't know. I do know that prices peaked throughout. Just they perfectly Track the dot com boom. So in 1998, Ty, which is Ty Warner, his company is called Ty Ty, they make Beanie Babies. They made $1.4 billion in sales, making it one of the fastest growing toy companies in history. Two years later, the market crashed almost overnight. Prices on the secondary market plummeted as supply overwhelmed demand and speculative buyers ex. So people were in the habit of. And yes, in the chat, he's correct. Ebay was a major, major driver of Beanie Baby's growth because people could buy them and then the secondary market was way more liquid than ever before. Before, it was like, okay, if you buy some rare drop or some limited edition thing and you want to go sell it, you have to go to like a trade show that maybe happens every once in a once a year. You have to find maybe your local shop, but there's not that much liquidity. Remember when we were talking to about the collectible card market, Beatles memorabilia, He was saying, like, I only need two buyers. It's very easy to find two buyers if you're interacting at Internet scale. It's harder if you're in some town and you have a rare Beanie Baby and you need to see, are there any other crazy Beanie Baby fans in this town? So ebay was a huge. Yeah, Beanie Baby is the original unicorn startup, essentially. I mean, it was an overnight success in the sense that I think the business was going for about a decade before the boom, but they rode the wave of the Internet.

Interestingly, the most expensive Labubu ever sold was 170,000 in June of this year.

Yep.

And the most expensive Beanie Baby ever sold was something around half a million dollars.

So we got room to run. We got room to run in the Labubu market. So my question is, like, what is driving the Labubu? Yeah. Enjoy your victory lap. Get. Get out there, get some exercise, do some push ups halfway through the lap a. Enjoy it.

Beltsky. Did we say that right?

Beltsky's. Yes, Beltsky's.

You said your full name now. There we go.

Thanks for watching the. Yeah. So Labu clearly, clearly a beneficiary of the social media boom of TikTok, of the unboxing culture. Temu culture, Live shop, Flex culture. Flex culture.

Because people put them on, you know, their purse.

Interestingly not. Even though it's like, it's like money is cheap right now. Everything is going up into the. Right. The market is booming. I can't find, Yeah, I can't really find a bridge between, like the AI Boom and the. And Labubus. It seems like it's just the social media boom that we're continuing to see.

Yeah, it's the fart coins. The Labubus.

Yes, yes, yes. Yeah, there's a little bit of that. There's a little bit of just like gambling culture has. Has infiltrated everything from sports betting, obviously, as being. Is legal in more states and has been on a tear for a long time to folks big gambling on crypto and stocks and out of the money options all the way to, you know, the collector culture on all sorts of different platforms. Like, there's a big. There's just a broad boom happening here. And then there's also the China angle, which I think is interesting. We were talking about this yesterday, that China hasn't had a major cultural export. And this might be sort of the first one more or less. Like TikTok counts in some ways. But TikTok, I see it as like a bucket that fills up with the local culture of the people that open the app. Like, if you're in. You're in la. You see LA Chinatown when you go. Yeah, exactly. But you can certainly access that if you wind up in that filter, if you search the right keywords and then you can go there. Yeah, yeah. Same with Instagram. But by default, I don't see TikTok as like a uniquely. A uniquely Chinese cultural export.

It's an export, not a cultural.

It's a technology. It's technology. And of course, like, China has been exporting like manufacturing technology and manufacturing prowess for a long time. And so my got a.

Got a real win with the demon dolls.

They do look crazy, right? I just. I don't like them. I. They just rub me the wrong way. I don't know. There. Something is weird, but I'm just not into it. I don't know.

That's why we bought one for Bill Bishop's dog, Toshi. We're excited for Toshi to rip it.

Rip it apart. Yes. Feels it just. It's not a good look. I don't like the aesthetics at all. It's very odd.

Anyway, not buy one for my child.

The bigger question that I have that I think we want to answer. So we're going to dig into the history of Pop Mart, take you through some of the history of Labubus. The. The question that I have is, like, the horse is out of the stable with, like, gambling on toys. Clearly think about the TikTok story. There was a big discussion, nationwide discussion, a few years ago, should we ban TikTok is it spyware? Is it influencing our culture? Is it causing brain rot? Where did we land on that? As America? We said yeah, it's fine, we're good. The answer was YouTube will compete in shorts and YouTube, Instagram will compete in Reels. And you know, TikTok will be out there and you know, buyer beware. Like you know what you're using and you're an American, you're a free person and if you want to use that app, you can. And if you want to come over to a different app and you trust.

Mark Zuckerberg stated versus stated revealed preference, people are like, I just want to follow my friends. Yep, the you know, feeds that are algo driven get used more.

And so my pitch and what I'm, what I'm kind of digging into what I wrote about in the newsletter this morning. You should subscribe at substack to our site tbpn.substack tbpn.substack.com is is the conclusion to the TikTok debate was the YouTube team and the Instagram team need to launch direct competitors and take it very seriously. And Mark Zuckerberg invested like tens of billions of dollars I think in like data center build out to actually support reels and the algo feeds. And they took it really seriously and they executed very well. So what's the conclusion to the Lubu Boo story? Well, it's probably like Ty the maker of Beanie Babies or Mattel, the maker of Barbie has to get getting into blind boxes. Like that's the only answer that, that's the where the like the arrow of progress moves in one direction. They want to gamble. And so I think that that's the end state here. And I'm just, I'm, I'm, that's the situation that I'm monitoring. I'm not holding my breath being like, oh yeah, Labubus are going away anytime soon. Yeah, sure there might be like a bubble and then it's, it subsides. But in general I think that the future is like more mystery boxes under the Christmas tree. Generally, broadly in American culture, like we love gambling, we love freedom. Pick your poison.

That's buying somebody gambling as a gift is crazy. I buy you this blind box.

You never give someone scratchers. Give someone scratchers. It's great.

We should give the team scratchers, send them off into their three day weekend.

I bet somebody I'm into scratchers. I had a friend in college who was into scratchers. Really, you know, the thrill of a scratcher. I bought One lot of ticket in my life. And it was electric. I was like, I'm going to win. Like this is going to happen. And then it didn't. And I was like, okay, I'm never spending $2 ever again. But anyway, this is what happened with video games. They went free to play. Plus microtransactions. The whales drive everything. Price discrimination and everything. We see this with OnlyFans, we see this with the future of romantic companions. Price discrimination is key and this will probably unlock some of that. It'll be interesting to see where it goes. But I think if you're a toy maker, you got to get into mystery boxes, unfortunately. Maybe, Maybe unfortunately, but like that's where the, that's where the culture's moved.

Late stage capitalism pretty much. Which I would say we're just getting started pretty much.

Anyway, let's go through. Brandon Gorell has a fantastic thread on, on Popmart and Tyler has the story here. Do you want to take us through the history?

Yeah.

What you got for us?

Can we pull this up on vhs? Ben? I think this is, this is going to be important.

There we go.

There we go.

So I think we should.

I just love the way this looks. I can't help it.

Okay, let's first go through some big, big numbers here. So Pop Mart, public company currently at what, like around 55 billion. So yes.

Hong Kong, Wong Ning is now the 10th richest person in China. He's worth $28 billion. Wow. Pretty, pretty crazy. And a lot of these, a lot of the data sources here are Chinese. And we tried to double check everything by translating, but there might be some details that are wrong. So, you know.

Okay, so yeah, they have almost 600 retail stores, 2500 vending machines. Revenues at 1.8 billion.

Vending machines. That's.

That's really the big thing. That was big. It kind of. So the kind of main story of Pop Mart is that they basically took a lot of things that were first in Japan and then brought them to China and then exported them basically worldwide.

Yeah.

But yet the revenue is 106% growth year over year, and then 700 million of that is just overseas.

Yeah, the stat was crazy. I think in the first half of this year, they beat last year's total revenue.

Yeah.

And they're already like a scale pretty huge company.

Is that good?

It's, I think it's better than Nvidia. It's the backbone of the economy. Okay, so take us through some of these.

So 2010 in Beijing, Wang Ning starts it originally Basically it's just like retail store for these little collectibles. Yeah, they don't. There's a bunch of stores that do like license other people's ip. So there's like, I think they originally started with some Marvel, but then really, I mean, the majority of the revenue is just from like their custom IP that they basically license from artists they find.

Yeah. So that's the nature of like Pop Mart. Like it's like pop culture market. And Brandon says a single variety mall store. Think Spencer's are hot topic. Couldn't get, they couldn't get investment at the time because no one thought adult toys would work. Now he's the 10th.

And when Wang was growing up, his parents ran small shops. So in the DNA family.

Okay.

Yeah.

So then 2014, this is when they basically bring over these Sonny Angels. These are the Japanese like figurines.

Yep.

And this is when they start the blind boxes. This is like really the main thing that spurs the rest of their growth. Yeah, 20.

Wait, wait, before this. This is, this is actually crazy. Brandon has some extra context here. So starts the company in 2010, a year out of college. He had an undergraduate degree in advertising and a short stint at the Chinese version of Twitter. His single variety store in Beijing in a Beijing mall. It's essentially a reseller. He has seven employees. Spends two years selling third party stuff on thin margins, trying to scale with debt. But it's hard to finance because investors don't get selling toys to adults. He manages to raise $320,000 equivalent in, in R&B and then $1 million around there in 2013, which he opens to use. Which he uses to open three new mall shops. And then in 2014, he hits his first lick, finds a repeatable format, blind boxes. So take us into that.

Okay, so then, so they start with that. These are still different figurines from Japan.

Yeah. These sunny angel blind boxes. They look kind of like 90s troll dolls. Interesting.

Yeah.

And then.

Yeah, and I don't think we already. We covered specifically what a blind box is. It's. You're going in, you're paying a generic price for something and you have no idea what's in it. It could be the super generic one of, you know, 100,000 item, or it could be ultra, ultra limited. And so you just get this massive buyers get this massive dopamine rush when they're buying it, they're paying. And that whatever item they unpack might immediately be worth like some significant multiple of what they paid.

Yep. Kind of like angel investing.

So it has, it has, yeah, but, but way more condensed. It's like I buy this and then I immediately figure out, am I, am I going to get.

10 cap?

But unlike angel investing, I think there's like a floor. Right. Angel investing easily go to zero. Labubu is like, have, you know, somewhat stable.

Yeah.

Like, it has some market value.

So if you're trying to like gamble less and you're addicted to angel investing, maybe, you know, downgrade to just Labubu boxes.

A big attraction of especially the Labuuos, which we can get into later, is like, they have like these sets that come out.

So you would collect the full set.

Yeah, it's like 10. And then they're basically all the same except like the color of the fur is slightly different or something.

Yep.

But then, so people are trying to.

Create a complete set which will then sell for more.

But Obviously if there's 10, you can't just buy 10 of the boxes because you're probably not going to get all of them. So you have to buy.

Do you think that Porsche should get into blind boxes? Imagine if you just imagine if like a 9, you could just buy 911s, only with blind boxes. It's like 200k. You might just get a bait. You might get a Carrera T, like super base model. You might get a GT3RS.

You might get an ST. Wow. Yeah. Yeah, there might be something there. I don't know.

I mean, people would be. People would be sending it on those.

I think so. Yeah. I mean, and you just work out the expected value. Right. So you charge whatever the, the expected value is that there isn't quite enough of a Delta. They need to throw in like a Carrera, Carrera GT as well. A few of those as well.

Yeah.

Used to see a similar thing in the sneaker market when that was like a really big thing. On ebay you would see these, like a third party, like, mystery boxes.

Oh, ebay would just do it. Interesting.

It wasn't people on ebay.

But that's crazy because, like, that's even like less regulated because they can just totally like cook the books.

Oh, yeah, for sure.

Versus like a real company that has probably some sort of oversight.

Yeah. I mean, you don't really know how many people were actually buying it or if it was just like for YouTube that they would make the videos like, oh, I bought this $500 mystery box.

I remember I bought a mystery box of cords on woot.com which was an electronics reseller that was bought by Amazon.

And that's so Coogan code. It's incredibly box.

Of course it was just electronics. Electronics. It was like so woot.com would go around and find like, like a bunch of electronics that have been discounted. I bought a. I bought an HD projector that was probably like 3 grand for like 600 bucks. Because like they were like going out of stock and they just needed to like liquidate. And so we would go and buy the liquidation and then put it on the website and you could just buy it, but it was limited time. They would just do one daily deal every day. And one day they just did a mystery box and you could just buy. It would just be like literally like whatever was in their facility. They would just pop back like, like pack up for you. And who knows, I got like, oh, this like HDMI to DVI cable or something.

You can probably trace back to something like. Do you remember Storage wars the show?

Yeah.

Where it's like they open it. You can't go in, but you can just see the front and then you try to estimate the value.

Yeah.

And then.

Yeah.

So there's probably some lineage there.

That's great.

So when did China figure out that this was gambling? Because they banned the sale of Labubus to kids under 8 years old.

Yeah.

But that still means you got 10 years before your legally adult here in the US at least. Where. Yeah.

Also I gambling. I don't know how many like actual 8 year olds are going to the store and buying it. It's not their parents.

Yeah.

So it's kind of unclear.

Well, if you're worried about your employees gambling with your company funds, get on ramp.com Time is money. Save both easy use corporate cards, bill payments, accounting and a whole lot more all in one place. Very easy to set a rule in Ramp. No Pop, no Labubu. No pop Mark. Anyway, continue.

Okay, so let's go back. So. So 2015 is when Lulibubu first appears as it's in a picture book. So it has nothing to do with Pop Mart. It's just this other artist, Kai Singh lung. And then 2016, this is Pop Mart's first like kind of real IP that they created that like went super viral.

Yes. Ning site. In 2016, Ning tries something new. He flies to Hong Kong and meets with artist Kenny Wong who had created the trendy toy figurine Molly in 20066 and was a big designer in the toy niche there. He negotiates exclusive an exclusive license with Wong to develop and sell Molly products and Blind boxes. Interesting.

So I think this was. It's done around 800 million in revenue.

Whoa.

Since 2016.

So selling Molly not only gives Ning more control and capitalizes on trendy toy plus blind box signal, but it capitalizes on Kenny Wong's fan base and leads Ning to his next big unlock. Betting big on controlling existing toy IP with a built in fan base instead of selling third party. So in 2017, sales of Molly are going nuts. Total 22 million by end of year. For Molly, Pop Mart rolls out vending machines, reducing rent they had to pay in malls and establishing way deeper reach with fandom. Company begins repeating.

Great. It's replicating the Molly unregulated slot machines.

Yeah, basically. And then they. Pucky is another Hong Kong artist derivative. They launch. And then they launch a Seder. You know, it's like half, half like goat legs. Which is very odd. They're getting.

Not beating the Antichrist allegations.

Yes. If you've been at the PT lectures in SF for who the Antichrist is. I think we got a lead here. I think we got. Did you already write that?

Yeah, this is already there.

Yeah, yeah.

Many. There's a lot of allegations here. I mean it's unclear whether you know what the original.

I think we solved it, folks. Yeah, we've solved it. Is there really a star on them? Is that.

No, I just.

The pentagram.

Okay, well that's why. Yeah. Question mark.

Max over in the substack chat says we need to tokenize the Labubus. I think that's. I think that's how happening next.

We know that's going to happen. We know that's going to happen. CS go loot boxes walked so Labubu could run.

Brandon. Brandon in the X chat says we got to get a bezel bo going. Totally agree, Quaid. Let's get some. Let's get some blind boxes going. You might. You might get a Nautilus. You might get a tutor.

Yeah, there you go. There you go. Okay, so where are we? Okay, 2019.

So now 2019, Labubu is then licensed to Pop Mart.

Yep. So just in. In 2018, right before this sales spiked to 73 million on the back of Molle. Around this time, Popmart builds its own in house design team, the Pop Design Center. Like a Porsche design center, it becomes a powerful pipeline alongside ever more exclusive artist licenses and big non exclusive entertainment licenses. If you want to entertain people on a stream, get on restream 1, livestream 30 plus destinations, multi stream and reach your audience wherever they are.

Continue okay, so they license in 2019, but they don't actually release like the modern Libubu doll until 2023 in the book.

Whatever.

Yeah.

So they're starting to build the lore, build the ip.

They do characters, they do little figurines, but it's not like the kind of modern instantiation. So then let's go to 2020. They IPO at 7 billion in Hong Kong. And then.

Wait, hold on. So continuing with Brandon 2019, Pop Mart begins selling Labubu Blind Box as an exclusive deal with artist Ka Singh Lung. Labubu's original character in Lung's picture book trilogy called the Monsters, but was selling his figurines and Hong Kong by 2015. At time of the deal, it's only popular among niche toy collectors. And we do have some images in the deck, by the way. Guys, if you want to pull up the pictures of these. These monsters. Yeah, if you scroll down a bunch, there are some photos of the Labubus. It has like kind of a street art vibe. Very chaotic drawings. Keep going. There's one more. Keep going. One more. Keep going. That's Molly. That's the first Labubu the Monsters trilogy by Ka Singh Lung. The story of Puka Pato and the Girl Miro's Requiem. And so these start selling in 2020 19. In 2020, Pop Mart raises $100 million on a $2.5 billion valuation. Hit the gong. I see a large IPO and a few months later, IPOs in Hong Kong stock rips 80% on open day, opening day. You thought Meme stocks were just an American phenomenon. Meme stocks are a worldwide.

Got them across the pond.

Ning's net worth doubles overnight. He's worth 3.2 billion at open, 6 billion at close. Pop Mart has a 12.5 billion market cap at close. That's a big company. That's a big company. So let's continue.

Okay, so. So 2023 is when the Blind Box Labubu like phenomenon really takes off. This is, I think probably it's mostly due to TikTok. You see a lot of this and then, yeah, 2025. Right now it's like around 55 billion.

Now it's at 55. Absolutely incredible. What a run. Should we pull up the Wall Street Journal video? Watch some of that? What do you think?

Yeah, let's do it.

While they're pulling that up, let's tell you about figma.com, think bigger, build faster. Figma helps design and development teams build great products together. Folks, get to figma.com design your next labubu drop.

Yeah, I mean, developing real IP this quickly is incredibly impressive.

Yeah, yeah.

IP that can do billions of.

Yeah. I mean, it just takes so long. I remember learning about the Lucasfilm acquisition that Disney did, even the Marvel acquisition. This is. These are like, they were big acquisitions at the time, but like single digit billions, low double digit billions. Yeah, like, and then they just created so much value as they actually monetized the IP and created like shows and merch and like ran the Disney machine around it.

Yeah.

Seems like Pop Mart's capable of running like a Disney esque monetization playbook on top of somewhat new ip, which is pretty crazy. Anyway, let's pull up the Wall Street Journal video and watch a bit of that. Aiden says, nightmare fuel. I agree. Whenever Chinese retailer popmart drops a new.

Levu Boo designer, it sells out within minutes.

It does seem like it's truly like a worldwide phenomenon in a sense. Like, it's not just women that are doing it. It's not just men. It's like it's really people all.

Not just adults. It's children.

Children and playgrounds. Yeah, yeah, you would think it's like, oh, it's just kids. So, yeah. Their revenue double boxing have flooded social media. Fans flock overseas to buy exclusive products. I mean, it just has the natural dangling off of celebrities. Look at Madonna promoting it.

Pop mar everywhere.

But can the company continue to grow.

Beyond this viral moment that has seen.

Its share prices rocket more than 1,200% here. Pause it. So economics, the.

Are you rooting for their downfall?

Mm, Preying on it. Even the. I don't know. I think, I think the bigger question is like, there's something that. So it's easy to say, like these go viral on social media. Like it's a beneficiary of social media. But like, if you actually think about why is. And why is a Labubu more viral than, you know, the latest iteration of Barbie or Beanie Babies? Like, there is a reason and it's directly related to the nature of the algorithm. So when you do an unboxing, it naturally takes about one minute if you edit it down to do it. And the reveal comes at the end. So when you watch it, you say, oh, someone's doing an unboxing. They're introducing what the stakes are. It hasn't done.

It's good for the creator because they get that retention.

Exactly. It drives retention because it has a natural storyline of like, okay, how did I get this box? How much did I Pay for it. What are my expectations? Do I have something on the line? Maybe? I'm hoping to build the set. Right. I want to build a set. I really am hoping for the red one or whatever. And, and then, and then you, you're, you're taken on this journey. And I believe when they, when they unbox them, there's like two stages to the unboxing. You, you take it out of the box, and then there's packages.

Yeah. So there's a box and then third.

Stage is when you have your dog.

Rip its head off and see what's inside. What was, what was this?

So there's the box, then there's like a nice, like, opening. Like you, like, rip it. It's like, nicely packaged. And then inside there, there's a little bag, and then inside the bag is the actual toy.

Yeah. So. So even that, like, lends itself to, like, keeping you engaged for 60 seconds, which is going to drive more virality. In the, in the feed, Aaron Frank.

Partner at Lightspeed, says, I have the largest single collection of Labubus.

No way.

No, I'm kidding. He texted me and said, this is hard to watch.

This is hard to watch.

So sorry we're forcing you to sit through this. Aaron.

Let's play a little bit more of the journal video.

Yeah, let's pull it back up.

Yeah, keep going. Look at this culture.

Crazy entrepreneur Siobhan Lawrence in the chat says, my startup has done 75 million in unboxings. Say more.

Yeah. Elaborate, please. 2019 over 70. Tamagotchi, for real. Should come back. AI powered Tamagotchi. That's a good business.

Is just added our own flavor to that.

Yeah. Now the company has more than 500. Look at how international Southeast Asia, when you decide to splurge on a Popmart blind box, which could cost around 20 to $30, you don't go in totally blind. Take this collection. There are six possible characters you could.

Unbox and a secret one that you have a 1 in 72 chance of getting.

One of the things that the brand.

Can do to keep engagement, to encourage.

Consumers to get a little more excitement.

Out of it, is to label the box. This one says, have a seat. You know, people, people throw the satanic panic around a lot. Like white monster monster energy drink. There's like a whole 666. It's satanic. And it's always unclear if it's like the founders are, are like poking fun at Satanism. Like, like no one accuses, like, John Carmack of being satanic by I mean, I guess people did when he released Doom, but in Doom, it's like you're clearly playing as a, as a mortal, like killing the demons. And that's the name of that. That's the, that's the virtue of the game.

Aaron just sent me the stock chart for Build a Bear. Have you seen.

Oh, yeah. Build A Bear is ripping too. Does Build a Bear have loot boxes yet? That could be the next unlock.

Build A Bear is up.

It's outperforming Nvidia, I believe, 475% over.

The past five years.

It's absolutely ripping. Who's clapping?

Build A Bear blind boxes. No more building. Just. Just gambling. Children just come, come into the store.

Yeah, yeah. If Labu is like the slot machine that you could be pull out of the, the vending machine, Build A Bear should turn it into like a game of like high stakes.

Has anybody done like remote Labubu openings? So it's just actually like.

I think I've seen that. Yeah. Who was it? Blake Robbins posts about this a lot, how there's like apps in the App Store that are.

Oh, it's probably happening on like whatnot, to be honest.

Well, have you seen, have you seen the claw game? So there is a, there is a, an app that you can download and you can pay real money to use a claw in the real world to pick something out of a, out of a, you know, a machine or like a bucket. And whatever you pick out, you get to keep and they will mail it to you. And so it's not technically gambling. Somehow they got some like, loophole there.

Very, very right now on whatnot. There's like seemingly hundreds of streams selling Labubus.

Wow. Don't gamble, folks. Don't gamble. On compliance. Get on Vanta Automated compliance, Manage risk, prove trust continuously Vantage trust management platform takes the manual work out of your security and compliance process and replace it with continuous automation, whether you're pursuing your first framework or managing a complex program. Anyway, the last two years of. What's interesting is the last two years of sales in. In of Labubu have been heavily driven by international expansion. They've definitely figured out how to take the brand abroad. It was predominantly growing in mainland China and I believe it's still growing. It's doubling in China, but it's also like seen maybe like a 10x increase in international sales over the last two years. So it's on a tear. It's on a tear. We'll see. We'll see how people respond. We'll See how the American toy companies respond. I feel like this is like the horses left the stable, the cow has left the barn, the dog has left.

The children yearn for the slots.

They do. They're gonna. They're gonna figure out how to gamble one way or another. I mean, what. What's the alternative? Like ban Labubu?

Erewhon. Erewhon. Blind boxes? Combo plates.

Yeah.

You might just get the worst slop bowl of your life. How about sweet green blind boxes?

Or you get 12 ounces of blue.

It's like you might get a bunch of steak, you might get a bunch.

Of kale, you might get some caviar.

Never know.

Anyway, should we pull up this old clip? We're going back nine years ago. Apple missed earnings and Tim Cook went on Mad Money with Jim Cramer to talk about the business and explain what was going on. It's called Executive decision. I wanted to play this and revisit Apple CEO Tim Cook on Kramer. It's a very interesting discussion.

Let's pull it up.

There's a curious, really strange disconnect between what I read and hear on Wall street about Apple and this. Because if you. It's going to be an impossibility to pry this for me. Cold, dead hand time.

Can't.

And yet when I read the stories, it seems like people think it's over. How could it be that you can't have this ever, or the ecosystem, but it's dead.

Yeah, it's crazy.

The narrative in 2016 was like, Apple's dead. It's Hewlett Packard of the era. Like, it's gonna just be flat.

Let's keep playing 50 billion plus in revenues and 10 billion in profits. To put that in perspective, the 10 billion is more than any other company made.

We literally made the most money of any company. And you're hating.

Clearly what we're seeing is that people are upgrading at a different rate. A lower rate than they did last year.

Okay, pause.

But still higher than.

If you go back a couple frames to where it's on the close up of him. This one. It's very weird framing. You're not supposed to frame someone where they're looking off to the side and they're framed like this. If you go to my close up like this. So go to. Yeah, so if I'm like this, it's like. And I'm looking off, it looks like I'm cornered in a wall. Like it's bad framing. What you're supposed to do is you're supposed to have me in this Third. And then I'm looking across the frame, and this looks more cinematic, and it looks like there's room. I'm not, like, backed up against a wall either way.

Yeah. It's a 2016 ERA CNBC team Free Alpha.

Free game. Yeah. I don't know, but it is an interesting question because sometimes this stuff's deliberate and sometimes it's just accidental. Like, sometimes, like the cameraman just, like. I wanna put the.

Are you saying that they're trying to make him look like he's backed up into a corner?

That is something that happens in production. Like, it also happens accidentally every once in a while. But it just. It was just something that stuck out to me that it's like. It makes it look like. Like Cook is, like, kind of. I don't know, it looks like he's in this, like, more tense scenario than just, like, having a nice conversation. It doesn't look as, like, cinematic and relaxing. And Kramer's in this odd position because Kramer is relaying what the. What Wall street is saying about Apple, but he's actually kind of steel manning the bull case. And he introduces the whole segment by saying, like I always say, Apple's not a stock you buy, it's a stock you own. Like, you're supposed to own it. You're supposed to just hold onto it. It's a great company. He's super bullish, but then he's like, but I got this hedge fund guy who just sold, and he thinks you guys are done. Like, explain this, debate this. And so he's doing. I think he's doing a good job, and I like the way he frames the conversation, but we can continue. I want to get to the part where he. He talks about the upgrade cycle. So let's keep playing at a different rate.

A lower rate than they did last year, but still higher than the year before. And so we had this abnormally high upgrade rate last year as people bought into the iPhone 6. And now we're comparing to that along with the other things going on that many companies are facing with currency rates and macroeconomics, etc.

But so basically what he's saying is, like. Is like we'd been on this tear where, like, no one had an iPhone. And so people were just, like, coming on. And then. And then there were huge leaps between iPhones. So everyone was, like, upgrading constantly. You go from, you know, not having 3G to having 3G or not having a retina screen or, you know, for the first time, you have multiple cameras. The cameras get dramatically better to like that kind of slowing down. And he's kind of defending that and being like, but it's gonna be fine. And he actually calls out services revenue for the first time saying like, hey, it's like, it's like this. It's like a pretty good business.

Basically a toll booth.

And it turned into an absolute monster of a business where now he has to say like, oh, don't even talk about that. Services. You want to talk about movies? Yeah, we make some movies. Anyway, continue.

I couldn't disagree more.

So.

Well, here's what I see. We're in some incredible, incredible markets. The smartphone market. Eventually everyone in the world will have a smartphone penetration. Today is in the 40s. Long way to go. Emerging markets like India.

Yeah.

LTE penetration is zero. We've got great innovation in the 2016. New iPhone.

Did not have willing.

Did not have people that have iPhones today to upgrade to new iPhones.

I will need something else because I don't need something, but I can't think of anything else that I need.

This is good, but we're gonna give.

You things that you can't live without that you just don't know that you need today.

Okay, this is great.

This is great because Tim later, he says like, I don't want to like leak what we're working on, but they came out with iPod, AirPods, Apple Watch, AirPods Pro, HomePod, like some of those were not huge. But the. And the Vision Pro, still early. But the AirPods and the Apple Watch, like went on to like become like massive, massive drivers of growth for Apple. But you just can't really leak it.

Versus what we know, which is that other than say the Netflix bill, maybe the Amazon bill, you can put things on this. Whether it be my music, I've got the family plan. Whether it be because I've got a lot of pictures and I do the icloud backup the Apple pay. Why do people not talk about the fact that this is not a dead device? It's something that we belong to.

I think in fairness, we didn't talk about it a lot until recently. And so I take that. But, but as you say, services now is the second largest revenue segment at Apple. It was for last quarter. It was for the first half of the year as far as that goes. And so last quarter we were at 6 billion, up 20%. It's a fast growing. And you look at what it is, it's things like the App Store. You go and you buy apps after the sale. You might subscribe to Apple music You might use Apple pay, you might buy songs, you might rent movies. And so it's all of these things.

It's a toll booth for your life.

And that of course is based on how many people are using our devices, how many devices out there. And there's over a billion devices in use.

This is huge, See, because. Exactly, I figure when it gets to 1.5 billion some, there's a number where we'll be thinking of the average use each month and the average pay to you. It's not there yet. In the interim, what defines the story would be that China's fallen off. That China, which you said in the previous quarter was going pretty good, but the beginning of this last month, of the last quarter was not that good, has now become clouded out everything else. Right, wrong. Should be, shouldn't. You've talked endlessly about China middle classification, what's happening there and how did it happen so fast that many didn't see it coming.

Here's what, here's what we see going on in China in the short term. In the short term, the iPhone upgrade rate affects all countries, including China. The great thing is the switcher rate in China is huge. 40% up over the first half of last year. The first half of this year, this is huge. So these are people switching from Android smartphones to iPhone. In China, economy clearly not as strong as it was a year ago. Softening, currency weakening. And so you've got a confluence of items in there, some that are Apple specific, like the upgrade thing that we talked about, some things that are more general, that affect everyone. However, here's the way I look at it, okay? Two years ago we had enormous sales and so last year we, and last year we did even better, 80% better. So we grew 80% over the previous year. This year in constant currency in mainland China we were down 7. So if you look at it on a two year basis, Apple grew 70% in China. It's hard pressed to say those aren't good results.

I want to stay on China for a second because the first leg down the stock last week was because your guidance. Second leg down was a man, Carl Icahn, who had been closely affiliated talking about a no brainer Apple who says look, China is an issue now. He sold before, before we knew anything about the China state administration of press, publication, radio, film and television blocking Apple ibooks and itunes, movies, but was concerned.

At least I was like, yeah, you can sell iPhones but not we don't want your books, we want your American books. In this country.

How about the fact that there is an encroachment issue at the lower end? And is that something that could have slowed Apple sales down?

No, I think what you see in China in general is a smartphone industry isn't growing. There's movement between different suppliers of smartphone. But I think in the areas that we play, we're doing quite well. And in the last month I'm thrilled at what we've seen with the iPhone SE launch that's been there. This is the phone that we just shipped that that packages a whole bunch of our technology from iPhone 6s into the 4 inch form factor. And so that looks very strong in terms of the, the books and movies.

Yeah, it is interesting. A lot of the China issues have really just started to hit totally in the last.

Yeah. And so it was like icon was like correct that there was like something happening in China and like maybe you should read into the ibooks ban and the itunes ban and like Apple is.

Not in the top five.

But it took, it took almost a decade for that narrative to actually play out. And even now I don't think that they're like weighed down. I think they're just kind of flat. And so like there's. They're still have a big business there and it's just like that, that thesis like didn't really play out and I feel like, I feel like Warren Buffett invested like right around this time and so must have like seen this interview and been like, yeah, the market is, is wrong. The price to earnings ratio was, was like crazy, crazy low at this time. It was very much like this like huge stable business.

And Tim was, Tim was certainly right about AirPods or just net new products that people didn't even know that they would want. Last year, AirPods did around the same amount of revenue as Square and Cash app combined. So Square blocked at 24 billion. AirPods did 22 billion.

That is insane. Okay, we can, I think we can wrap that up there. There's a bunch more there. You can go watch the full thing. It's on YouTube. Anyway, let me tell you about graphite.dev code review for the age of AI. Graphite helps teams GitHub ship higher quality software faster. Get started for free@graphite.dev this is a crazy story from Eric Bergman. He says, I got scammed for 1.25 million. I feel ashamed and stupid. The story starts with me getting a phone call from Mr. Beast and Mark Rober. They asked me to donate money to Team Water to build wells in Africa and help people get clean water. I'm surprised by their call. We've met before but haven't spoken in years. I take a few days to think. I focus on learning more about the water crisis in the world. I decided to donate $1 million. Mr. Beast gets excited about this and tweets to the world about the donation. I'm proud and excited to be part of this amazing campaign. About a week later, I get a message from team water on WhatsApp on my personal phone number. They are excited about the donation. They invite me on a trip with the top donors to Africa to see the wells being built and to do a few days of wildlife safari. To go to Africa and see wells has been a long time dream of his. He says he's excited to go. He immediately says yes. Then they add him to a WhatsApp group with some other top donors. Mr. Beast is in the group. Mark Rober, there's other folks. Toby Lutke from Shopify is there. Aiden Ross, the streamer is there. Says he can't believe he's in this group. He feels like a 13 year old boy. They're all chatting, having good banter, going, find myself writing a message, then deleting what I wrote because I didn't feel cool enough. I write it again, then I delete it. I can't believe I'll be traveling with all these people. The conversation goes on for about a week. It's Friday. I'm heading in for a weekend trip with a bunch of my friends. I've been looking forward to this for a month. We have a packed schedule and very excited. On Saturday, Jimmy writes in the chat, it's Mr. Beast and tells us about this other opportunity. He just signed a deal with Coinbase, one of the largest crypto exchanges that will launch their own crypto coin. As part of marketing collaboration with Jimmy, he's gotten the chance to buy in early on this coin. As a thank you, he wants to extend this offer to anyone who donated over $1 million. Everything is secretive and it's important to act fast. This is where I should have stopped. When someone needs you to act fast, it's often to get you to do something without thinking. But I didn't. Everyone in the chat gets excited about this. I know some of them are real crypto experts and they jump on this opportunity. I don't know much about crypto, but the 13 year old boy in me wants to belong. If they are excited, I want to be excited. I also don't want to be the only One on the trip to Africa that didn't join in on the investment. I find myself calling a crypto friend telling me about this, and he says that if Coinbase is launching a coin and you can get early access to it, it's a sure win. I get even more excited. I'm very distracted. He doesn't want to be in his head right now, blah, blah, blah. He says, let's go. Within a few hours, he sent $500,000 in crypto to a wallet that he was given. Chat. The chat's going strong. People are even more excited. Other people want in, but he's too. Eddie from Stake wants in, but he's too slow. When he asks if he can get. If he can get involved. After the deadline, he's told that he's too late. I read, and I can't believe a guy like that gets rejected. The next day, Jimmy writes again and says there's a new chance to invest. However, the price has gone up from $15 per coin from $0.15 per coin to $0.30 per coin. The maximum investment in this round is 750,000 dol. I call my friend again. I tell him the billionaire that got rejected and how everyone else is buying in again. I'm still at the event, I'm still super distracted by other things. And we end up falling forward again, sending another $750,000. Now it's Monday, the retreat has ended and I'm heading home. I still have a good feeling about all this and I'm excited. I'm also exhausted after the weekend. Lots of experiences to process and far too little sleep. On Tuesday, Jimmy writes one more time in the chat saying this is the final chance to get it. The price is now 45 cents and everything up and up, up until now, has been taken. Once again, I call my friend and we say, let's go. We're about to send the money. But this time, something makes me stop for a second. Something. And I see some of the. Some of the details are off. I know that. I know that Aiden Ross is American, but his phone number is British. The first time since the chat started, I called Jimmy just to confirm everything. And he says, what are you talking about? That's a punch to my stomach. I say, please say that you're kidding me. And I send him a printout, a screenshot of the chat. He looks at it and says, wow, I don't know what to say. Please tell me you didn't send them any money. And he says, I sent them $1.25 million. The realization sinks in. The first phone call from a week from a few weeks ago was the real Mr. Beast, the real Jimmy. The fundraiser for Clean Water was Jimmy, the real Jimmy. But the person reaching out from his team wasn't on his team. It was a scammer. He just saw the post that he had donated and said, hey, I'm on the team that, you know, is involved in the donation. Come into this chat, I'll set you up. And everyone in that chat was fake. And so it was all very skillfully orchestrated. All the people in the chat were fake. All the banter was fake. The trip was fake. I feel the shame inside, the regret, the sadness, anger. I've been fooled. I so deeply wanted to belong to this group. I acted way out of character. I trusted the fake Jimmy. I followed peer pressure of the billionaires and superstars. I broke many of my own own principles of how to make decisions. At least there was a silver lining. He's been scammed before. It was a fortune. Silver lining. Silver lining is that he'd been scammed before. That time. He felt so ashamed, he didn't tell anyone. The shame kept haunting me. This time, the first thing I did was tell my wife. Later, I wrote to tell my parents and my brother that. Then a group chat with many of my closest friends. I've gotten so much support. He's sharing the. He's sharing the story now. And it's a pretty wild. It's a pretty wild scheme to set up all these fake accounts and have someone, you know, pretending to be Aiden Ross. And Aiden ross, bro raised 12 million for clean water and he's drinking it all himself. Crying emoji. Crying emoji. And it's like somewhat believable in tone. And they did like these scammers really, really did a crazy, crazy job here. So be careful out there. One of the hottest takes on this is that this guy runs some sort of gambling company or something like that. So people are having fun with that. The fact that his business is gambling and he got. And he clearly likes gambling and so he took a gamble on kind of a wild investment.

But, yeah, how do you run an online casino and not an. And send one, one and a quarter million some random address claiming that Coinbase is going to launch a token when they already have a chain that doesn't have a token and they have a public stock and plenty of information stock. And I think, I think this is. Reads as like, this feels karmic.

Yes. Because. Because it should set off red flags as like this would be insider trading if it was actually going on. Even if people I respect are insider trading from first principles, I should think like, no, I shouldn't do that. This is wrong.

He has one of his slot machines is called Le Bandit.

Le Bandit. That's the one. Armed Bandit. That's what the slot machine is called when you buy. Like the actual machine is called stealing Bandit your coins. That is hilarious. Deter name. I didn't realize that's that I never put those together.

Great dot com. Great domain.

Insane domain.

Funny to use it for gambling.

But yes, it's also funny to bring it as like a Swedish initiative. It's like maybe it shouldn't be. I don't know. Like, apparently the. The site helps you find like the correct.

What were the comments like on this for people?

People were upset. People were like, yeah, this like they're. They're not a fan of this guy's business. But it is. It is a good cautionary tale and it's a wild story.

It's very. I'm sure Eric's. I'm sure Eric's a nice guy, but the fact that he's advertising his online gambling website as great.com, a Swedish initiative.

It's pretty crazy. Pretty crazy story.

It's a Swedish initiative, online gambling. To do what by Sweden?

Yeah. I don't know. Anyway, stay out of the. Stay out of the trenches. Stay out of the casinos. Just focus on analysis. Data analysis. That's right, Julius. What analysis do you want to run? Chat with your data and get expert level insights in seconds. Ask Julius to analyze your data. You pour all that information in Julius, probably get a better result.

That's right. Or you get that new Garmin.

Yeah. Horse tracker.

Horse tracker.

Yep.

Take that data into Julius.

Of your horse.

Better than anyone else.

Yes. Well, another more enjoyable this is.

You can do extremely important. There's a new food item at Air Force football games this year. Are B2 bomber nachos.

Amazing.

They didn't just go with the black.

This is American innovation right here.

Yep.

This is great.

The chips are. The chips are not B2 bomber shape.

So they are. The chips are B2 bomber shaped and the box is B2 bomber shaped.

This is capitalism at its best.

Oh, this is. This is like the Air Force Academy like every single one of their football games will have.

Yes.

That's really cool.

Has Bubble. Crazy nominative determinism. Sorry. Has Hubble. I just read it as has bubble. Has. Has a banger here. Overheard at yc. An investor just took a call outside the Hospital while his wife was giving birth and then didn't invest. This is insane. Levels of angel investing addiction. Seriously, this is like, can you imagine? How is this different than going to gamble?

I mean, there are some crazy, crazy stories. I heard one about an influencer who's like, the kid was like, in the pool. Did you hear this story? And he was placing a bet that was very, very dark. Very, very dark. Yeah. One of my buddies is like, very Sagar. And Jetty is very, very acutely worried about the online gambling epidemic and has been tracking it very closely. And we gotta have Sagar on the show and just chat about that because he has a bunch of good takes anyway. Yeah, maybe log off. Touch grass. Touch the inside of the hospital when you're giving birth.

Get yourself some grass.

Get yourself some grass. And, you know, maybe you get into the series a good company. Have you heard of concentration?

Or just text and say, I'm in. Can this wait 24 hours?

Totally, yeah. Can it wait 24 hours? Or also just like, hey, I'm the type of person that will turn down your phone call while I am at an important family.

Every time I'm having a kid and my wife is giving birth, I won't be available.

Yes, exactly.

And you can expect that out of me for the duration of your.

Yes.

Of your time.

And that should be a massive green flag for wanting to work with someone. It should make you want to work with them more. It should be like, okay, you're the type of person that actually has some family values. I'm going to sneak you in late to the deal. I'm going to let you in on an uncapped note so you can get into the next round. I want to work with you because you actually have some, like, backbone. Crazy.

Posted last year. Imagine you're three years old and your parents are addicted to angel investing. Nonstop refreshing Carta and Angelus and cold emailing founders. Sad that many kids in SF grew up like this.

It's crazy. You were joking and it's like a real thing. It's terrible. Anyway, let me tell you about Profound. Get your brand mentioned on ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. You can get a demo. Go to Profound this post by Steve Maguire. Let's read through this. They were cracking up not simply because grades had gotten so high, but because they knew how little students were doing to earn them. Harvard faculty recognize that grade inflation has.

Become absurd during the final meeting of the spring 2024 semester. After an academic Year marked by controversies, infighting and the death.

Fenestration thrown out of a tower. Defenestration. But this is a metaphor.

Yes. Harvard's faculty burst out laughing. As was tradition, the then dean of Harvard College, Rakesh, had been providing updates on the graduating class. When he got to gpa, Khurana couldn't help but chuckle at how ludicrously high it was.

About 3.8 on average. The rest of the room soon joined in, according to a professor present at the meeting. Everyone's just laughing, just like, yeah, everyone got an A plus. The average was A plus. I'm pretty sure 3.8 is A plus, right? Like, isn't 3.5 A. 3.2 would be A minus and 3.8 would be like A plus.

It's different in high school, though, right?

I don't know. I mean, like, it's supposed to be out of four and 3.8 is really, really close to four. And so I would assume that. I thought it would be, yeah, 4O is a perfect score. So it's like, extremely close. And Steve gives more context here. He says, 25 years ago, Harvey C minus Mansfield, decided he would, quote, distribute two sets of grades to his students. An initial grade he thinks they deserve, and then a second grade, the one that will go on their transcript, which will be based on Harvard systems.

What's the point, really? What's. I mean, because he wants to just.

Give the feedback of, like, you.

I'm saying, what's the point of grade inflation at a school like Harvard, right? If 99% of the value is that you went to Harvard and got the degree, and then GPA is, like, tacked on.

Well, HBS does that. HBS does grade non disclosure. So you cannot find the grades. Like, if you are hiring someone from hbs, I believe, I don't know. This was told to me by somebody who went to hbs. You can't email Harvard and say, like, I want to know their, their grades. And so there's a whole bunch of other. Like, whereas law school, I think it's like, perfectly ranked. And so you just know your ranking. And so even if there's inflation, it's like, we still know where you are on the curve. Just very different cultures. I would imagine that in undergrad, it's more about, like, basically nps. Like, if it's discovered that employers are seeing that, oh, everyone that goes to Harvard is dumb because they get Cs and everyone that goes to Yale gets A's and they're smart, then it's like the buyer, the, the person that pays full tuition will say, well, I'm going to pay and donate and get my kids into Yale because that's where they get A's. It's like a very weird perverse incentive, but I think that's probably a little bit of what's going on. And then there's just like immense pressure from everyone in the ecosystem. And there aren't that many people that want fair grades or downward pressure on grades.

Well, speaking of a student of the game, Pat McAfee is set to play the role of US Marine Drill Instructor in the Mosquito bowl, which is directored by Peter Berg and now in production. Following the attack on Pearl harbor, four of America's top college football stars set their fame aside to enlist in the Marines. As they prepare for the brutal invasion of Okinawa, they'll play in a legendary game featuring some of the greatest players in history. A game that for many will be the last they ever play. Doesn't he. This is going to be crazy.

He looks for this role. It's crazy. You see this image and I'm like, oh, yeah, he's been acting in Hollywood for two decades. Like, I feel like I've seen him in this role before. It's amazing. Congratulations to Pat McAfee. Pat says, an honor of a lifetime. Thank you for the opportunity. It's fantastic.

This is going to be amazing.

And then, and then he's.

How's he going to fit filming into.

His college sports earlier? Like, need this in the film and it's Pat laying on the ground drinking a beer. It's great. So funny. Anyway, if you're planning a movie, you're trying to plan everything out. Get on Linear. Linear is a purpose built tool for planning and building products. Meet the system for modern software development. Streamline issues, projects, product roadmaps. Maybe your project is building a movie. Start building it Linear. The New York Times profile snack shot.

Let's go.

Congratulations, Andrea. She says it's been the most fulfilling five years of her life. Getting to work with the biggest food and beverages companies in the world and swaying the conversation around what we find in grocery stores. Thank you to everyone who has supported her journey.

Really amazing to watch and this is why I love the Internet. You can be, you can, you can build a business. Obsessing over topics that, yes, one would have thought at some point, yes, you know, just weren't, weren't large enough to justify.

Yeah, very deep, but very insightful.

And she's huge impact focusing on something that I think is real. She says. I like to call our generation the.

Snacking generation generation, says Andrea Hernandez, the creator of the Snack Shot newsletter and Instagram account. She knows your favorite snack before you do, your next favorite snack before you do, says the New York Times.

And she really is a snack critic. It's not all new. CPG is good. She's willing to call out the silly stuff. Maybe we don't need the 20th prebiotic protein creatine.

Although that does sound what was the latest thing. It's like combining protein with a psilocybin that was it an a psilocybin gainer, mass gainer. I think that's what's on trend right now with snack shot. Ms. Hernandez is doing the antithesis of what I grew up doing, positioning herself less as myth buster than as cultural anthropologist. Whether prebiotic sodas are effective is less less interesting to her than why everyone seems to suddenly be obsessed with them. In the five years since, Ms. Hernandez has become, at least in certain circles, a kind of snacking Nostradamus. When Andrea covers a product or a shift, it tends to ripple within the industry, says Melanie, the founder of non alcoholic aperitif brand Ghia, in an email, noting that Ms. Hernandez's observations have a way of showing up in group chats, brand conversations and beyond. SnackShot offers observations, analysis and industry scoops presented breathlessly, often without punctuation. A new nicotine energy drink is evidence we have entered an era of the cocaine induced opulence, a sharp pendulum swing from the past decade of adaptogenic and mushroom coffees. J. Crew retail releasing limited edition pasta is just the latest example of youthful appetite for affordable affluence. And man cereal, which we covered here, packed with 2.5 grams of creatine per serving. Well, that remains to be fully deciphered, but if you think that's the craziest thing I've seen containing creatine, you'd be wrong, says Andrea. Anyway, congrats on the post. They even got the New York Times, even got BJ Novak to comment, he said. A whole at the same time, she still operates with a modicum of anonymity, a whole swath of her followers, among them the actress and comedian BJ Novak and Ellie Sussman, the chef behind the Sussman's Instagram account, know her only through snackshot's Instagram, where she posts a steady stream of brutally precise memes. It's a little bit for everyone, says Mrs.

Precision Memes.

Precision memes.

Well, did you see that company Buddha Juice?

Yes, they're going public Going public.

Buddha Juice, which makes branded and private label citrus drinks, filed on Wednesday with the SEC to raise up to 22 million in an initial public offering. Buddha Juice states that it is pioneering the ultra fat, ultra fresh juice category through its end to end cold chain platform. Yes, it's Anyways, they have company was founded in 2013 and booked 12 million in sales for the 12 months ending June 30, 2025. And so you don't see this.

What's this screenshot? Because this screen, like the screenshot of the financials, looks like something that was made in the Microsoft Excel template. It doesn't look like a normal SEC filing. It's not a screenshot of like what I would normally. I don't know, it stuck out to me as like particularly like early stage financial aesthetics, but I don't know. Good luck to them. If they're going to get out, what's going to happen. I have no, I really have very little idea of what's involved in going public as a small cap or micro cap. I'm only familiar with the, the traditional ipo, the dpo, the big, big companies going out that way, direct listings and then, and then the SPAC route, which seems to always hover around 4 billion. It's like you go out at 4 billion. When you're ready to be a $4 billion company, you go out as a $4 billion SPAC. I don't know why the number settled around there, but that seems to be the kind of default price.

I mean, Look, John, growing 20% a year.

Yeah.

I mean it seems 3 million of net income.

It seems like a fine company. But like, you know, this is probably like a $20 million business, maybe $50 million business. Like, I don't know, like we got to get the Ridge guys on and get the actual, actual value.

It's very possible that retail loves the stock.

Do people love Buddha Juice? Is it a popular.

Well, I've never heard of it before, but it's just, it's just funny.

Well, they probably have to pay sales tax, so you got to get on numeralhq.com sales tax and autopilot spend less than 5 minutes per month on sales tax compliance. Let's go through.

They didn't put this. I don't know if this ended up in the S1, but they have 7,000 followers on Instagram.

Whoa.

Count everything for something.

Do you mind? You and Tyler.

They've posted once this year, by the way.

Once. Wait, hey, that's strategy.

Yeah.

I mean we've Posted like hundreds of times. I don't think we have 7,000 yet.

Yeah, it's a barbell strategy.

I mean, one post that just does that. Well, that's very impressive. So congrats to the team over Buddha juice. We have some breaking news. In the chat, XAI has sued a former employee for stealing trade secrets about GROK and taking them to OpenAI. I want to learn more about that. The lawsuit said you and Tyler to talk through this. Chief scientist of Meta Superintelligence Labs potentially threatening to resign.

Yeah, I can give a little bit of info here. I'm just pulling it up now. Open. Sorry. Xai's lawsuit against Shushan Lee says he took trade secrets in July shortly after accepting a job from OpenAI and selling 7 million in XAI stock. Lee admitted to stealing XAI files during a meeting on August 20th 14th. Xai later found additional stolen material on his devices that he had not disclosed. XAI asked the court for an unspecified amount of monetary damages and a restraining order blocking Lee's move to Open AI. I'm not sure if there is much more info on this, but.

Yeah, this is like just breaking, right? Yeah, it's kind of weird to physically take materials, right? Like you can imagine most of the secrets are just like, oh, it's like this new kind of activation function or something that we use that you can just kind of like you don't have to actually store like a big file, I would imagine for like training secrets, stuff like that.

Yeah, you can imagine that A lot of what he learned at xai, he would be able to pretty quickly implement over at OpenAI when starting. He wouldn't actually need the files, but. But who know, who knows? Sounds like if the complaint is correct. It sounds like he already admitted to doing this, so we'll see what the damages amount to. But it'll be interesting to see if he can actually. According to his profile right now, it doesn't appear that he's at OpenAI at the time. So we'll see if they're successful in blocking the move to Open AI. But clearly Elon is not playing around. He's happy to use the courts to further xai's goals. There was some more reporting. Shangjia Zhao, which the co creator of ChatGPT. Within days of starting at MSL, Meta Super Intelligence Labs threatened to quit and return to OpenAI. He actually even signed employment paperwork with OpenAI to rejoin. That's crazy.

That is very, very crazy. This is extremely dramatic in my opinion. Tyler, what's your take? What do we know about this particular AI researcher.

This is like very. This is not a good sign for msl. I mean, he's like the head of msl, so he's leading the entire.

He was on the board when you put up the whole chart, right?

Yeah. I mean, he's the head of MSO directly to Alexander Wang.

Yeah. So do they have anything in here about his motivation? One of the few remaining big tech founder CEOs, Zuckerberg has relied upon longtime acolytes such as Chief Product Officer Chris Cox to head up his favored departments. But in the battle to dominate AI, the billionaire shifting towards new and recently hired generation of executives and including Zhou Scale AI CEO Alex Wang and former GitHub chief Nat Friedman. There's a lot of big men on campus, said one investor who's close to some of New Meta's new Give it.

Up for big men on campus.

I love is a campus. Adding to the tumult, a handful of new staff have already decided to leave after brief tenures. What could you have possibly learned in.

A month by the way? We spend so much time on the show in normal, everyday conversations that I have off air. When someone says something like, there's a lot of big men on campus, my immediate reaction is in the actual conversation, let's give it up.

Let's give it up for bringing your work everywhere and randomly clapping when you're interacting with people.

It really adds to the conversation.

Okay. So he said that while. So Rasab Agrawal, a research scientist who started at Meta in April, announced his departure in a tweet on X on Wednesday. He said that while Zuckerberg and Wang's pitch was incredibly compelling, he felt the pull to take on a different.

This just sounds like he's starting a company.

Well, so.

So yeah, that researcher was never in msl.

Okay.

He was just. I think he was another player.

So he's like, they wanted me, but.

Like, you know, you guys are incredibly compelling.

Yeah, I just got to go a different direction.

Asked me to join the team, but I'm. I'm going to take my talents somewhere else.

Yeah, we're actually good.

You never. We never.

Yeah, he was on. I think. I don't know exactly if it was fair or just like Meta AI team.

Yeah.

I don't think the MSL team was like, even really there when he was during his tenure.

Yeah, it is an. It is. It is such a funny dynamic because, like, MSL is like the hot new thing, but like, at the same time, like, you could wind up being at A different. In a different org, not like a new hot thing and actually have like a huge impact and have a great career and like really enjoy it and be comped well. And so it's got to be a whole bunch of like, you know, odd dynamics back and forth. They don't, I don't think they got anything about this motivation. This is just purely like, you know, some leaked like, you know, this is.

One, one Meta research scientist, me, Mansa Judge Wall said, one more reorgan, everything will be fixed. Just one more.

That's hilarious.

Said that on X. Yeah.

Wow.

I think like it's good to have.

A little fun with it.

The only possible reasoning I can imagine is like the promise to join Meta was basically that like you're going to have a ton of free compute, you can work on whatever you want and then you get there and then Zuck or Alexander Wang is just kind of like, actually we're going to do, you know, Instagram companions. Like you've to work on this like random project.

It feels like, yeah, I don't know.

Or you have to work on ads or something.

I mean even the, even the Instagram companions, like, even if you like, say, even if you want to tell that story of like, oh, like, yeah, Stepmom and Cal or whatever, like that doesn't feel like an MSL project. That doesn't feel like, oh yeah, they built a team, they launched something. The idea that those, those that chat with a celebrity thing that's been going on for like a year.

Yeah.

And the idea that he would, you know, have this maxed out offer to some cracked researcher and then say like, get ready to work on the ads product. Like that doesn't seem like what you would immediately put somebody like, no, no.

It feels like don't work on any product. Work on the foundational research. Build the, build the amazing model. Get us to the frontier.

I think it could also be like, imagine like, okay, you give these massive offers to a ton of people. Yeah, you can probably expect some of them are going to be like, okay, I just made like a billion dollars. I'm not going to work that hard. And then the rest of them are just like, well, the team is like only really half into it. I'll just go back to OpenAI where everyone is like actually grinding. Like they have this vision of AGI. Yeah, everyone is super driven. Even though here I might make a little bit more money at the same.

Time, just the idea of being on any sort of implementation. I just would be shocked if any of that's left up to msl. It feels like their job is to build basically an incredible AI API that can be vended into every single product team at Meta. And so like if you're on the ADS team, you're like, cool, we're going to get a new capability, like we're going to get better AI researchers. But it's not like the AI researchers can be like now in charge of ads. I don't know.

Anyway, Financial Times has multiple company insiders describe Zach as deeply invested and involved in the TBD team, while others criticize him for micromanaging, saying that can't wait. Surprised that, that, that, that Zuck is going to micromanage something that he's investing tens of billions of dollars in. Yeah, seems silly. Wang Welkins struggled to align on a timeline to achieve the CEO's goal of reaching superintelligence for AI that surpasses human capabilities, according to one another person familiar with the matter. Obviously this is going to be a debate. It's like how do we move as fast as possible but at the same time what's realistic?

Yeah, yeah.

Meta said this allegation was quote, manufactured tension without basis in fact. That's clearly being pushed by dramatic naval gazing busy bodies.

I think that's the real line. I think that's the real story here. Someone went to the press with like a very salacious headline that's like sort of ridiculous and doesn't really, doesn't really have a solid narrative.

Meta also said while TBD Labs is still relatively new, we believe it has the greatest compute per researcher in the industry and that will only include increase.

That's fun. That's cool. Well, instead of chatting with the cow, chat with AI agent for customer service, go to Fin AI. Number one in performance benchmarks. Number one in competitive bake offs. Number one ranking on G2 Fin AI. Let's go over to Doge designer. He has a video of SpaceX landing. He says this isn't CGI. We'll be the real judges of whether or not it's cgi. Doge designer, let's play the video of Starship coming down and landing. What do you think, jordy? Real or CGI? Maybe it's not CGI. It's generative AI. It's Nano Banana. It's Grok 5. No, this is incredible. Obviously this is the higher res video from that camera that was live streamed.

And wait for the explosion. Wait for the explosion.

You think they're gonna black beforehand? Wait, wait, wait, wait, wait, wait, wait. A fade to black. Fade to black is a technically, it's technically a computer generated image, right? Because you are taking the frames of the video and you are adding an opacity, you're adding a black layer. What do you think?

Can you do a fade? Like practically?

Yes, but do you think that was practical fade?

Do you think that it could have been on film? Yeah.

You think they had a neutral density filter that they were rotating over the lens at that exact moment? You think that was done in post using computer generated imagery? I'm calling cgi. Not on the rocket landing, but on the fade. I think the fade is cgi.

I think you called it.

I think the faded black that looks.

Like this video of the liftoff.

Yeah, yeah. Let's see the lift off. This is the real tinfoil hat.

Ahi in the chat says clearly VO3.

Yes, VO3 could pull it off. I would love to see if somebody tried to generate that in VO3, what it would look like. Anyway, let's look at the liftoff of Super Heavy, the most powerful launch vehicle in history. On sparse on Starship's 10th flight. I believe this is slowed down, right? I think this is a slowed down video, but it's. It is incredible. So this, the first question is like how, how are they filming this? You would immediately imagine that the camera would melt. Apparently they're using a high speed Phantom camera in custom water cooled nitrogen pure purged housings. They use sapphire windows and protective enclosures to survive the extreme heat from Super Heavy's Raptor engines. Either that or Photoshop one of the two. It is remarkable.

Sapphire and really strong air conditioning.

Basically. Yeah. Yeah. Well, water cooling like an eight sleep. Eight sleep dot com. Get a pod five. Five year warranty. 33, 30 night risk free trial.

Wow. I got a little cocky last night.

Yeah, How'd you do?

Had so many good nights of sleep this week.

Yeah. Look at Jordy's drip. The chat loves the outfit. They're really. They're really happy. Eight sleep. How did I do? I. I was up late last night. I got an 84.

Got a 93. Monday, Monday 86. Tuesday 84. Wednesday 68 Thursday, Thursday I got a 95.

I did great. What about yesterday? Last night I got an 84. What'd you get?

68.

Hit that soundboard for me. I think it's clean sweep this week.

Wait, what did you get on? What did you get Monday night, Monday night?

I don't know. Let me check. Monday night in 83.

93.

Okay, you beat me then. So not a Clean sweep, but I think I won best of five. Anyway, there is a battle, the timelines in turmoil, over a partnership between Cloudflare and Browser Base. Paul Klein, he's been on the show a few times, says, today we're announcing an unlikely partnership. We believe that agents need reliable, responsible web access. That's why we're partnering with Cloudflare to support in support of web bot auth and signed agents, a new standard to allow good bots to authenticate themselves. Here are the details and Varunam Ganesh says, I get why Browser Base is doing this, but if Perplexity doesn't step up, we'll be in a world where for no reason, Cloudflare gatekeeps the entire Internet and dictates how agent interaction will evolve in the next few years.

What's Perplexity's role in all this?

I don't know. Maybe Perplexity has the ability to get around Cloudflare's agent user agent blocking. I don't know. I mean, I know Google has the ability to get around Cloudflare's user agent blocking because they have two bots. One is the Google Bot that scrapes your and indexes your website and the other one is the Gemini bot. And you can turn off the Gemini Bot, but you can't turn off the Google bot without not showing up in search rankings. So like they're going to get your data and they're going to. And you're going to show up in the AI search review search like the AI overviews. Maybe Perplexity is building something similar where it's like the option. Perplexity has leverage over Cloudflare potentially. Because if, if you're using Perplexity and Perplexity says, look, if you don't let agents interact with your website, we won't show you in Perplexity at all. I guess that might be a theory. I don't know.

Yeah.

Anyway, Gary Tan's not happy with it. He says the Cloudflare browser base Axis of Evil was not on my bingo card for 25 legalized AI agents. And Paul Klein quote, tweets it and says, good morning from the Axis of Evil and they're all wearing bucket hats having fun on the timeline. I don't know how Axis of Evil this is. I mean, I guess people are unhappy with the Cloudflare thing. I mean, it is just a default. People can go, like, if you want to legalize an AI agent coming to your website, like, even if you use Cloudflare, you can go turn that on. You can, but, but the main thing is that by default Cloudflare blocks AI agents, so you have to go and configure it, but you can. I don't know, I don't know how disruptive it is to. For Cloudflare, they don't control 100% of the Internet. And then also there are plenty of other companies that are being probably way more proactive about blocking AI agents. And really it's like it's a, it's a cold war because, you know, the company says, oh, we don't want, you know, to be disintermediated by, you know, an AI company. And then the AI company is like, well, we're going to go and build an RL environment with verifiable reward and be able to get over your captchas. And when you watch ChatGPT in agent mode, it's often like, oh, I hit a captcha. I'm going to try a different browser now. It just did that for me yesterday. Tyler, what you got?

Yeah, you can also like, you can kind of always get around these things. It's like there's like the meme of like the Chad web scraper versus like the virgin, like API user.

Yeah, yeah, yeah.

Where it's like you can kind of.

Always just the front end is the API is commonly said.

I don't know. I think it's not like a massive deal.

Yeah, I don't know. We'll have to keep tracking it. It doesn't seem like it's too much of a fight just yet, but we'll keep monitoring anyway. Adeo customer Relationship Magic Adeo is the AI native CRM that builds scales and grows your company to the next level.

It started Coterie. According to Drew Fallon, Coterie nearing deal to be acquired by mammoth brands for $650 million. Reuters reported the Mammoth Brands, owner of brands like Harry's and Flamingo, is nearing an acquisition of the baby care diaper brand. Coterie is reportedly doing over 200 million in revenue with 50 million in EBITDA. A 650 million dollar price tag would represent 3 and a quarter times times revenue and 13x EBITDA. I remember when Coterie launched and it was long before I had children.

Yeah.

And I thought, is this that great of a business? You sign up, you get a customer and then like, you know, they use diapers for a little bit and then, and then they, they're going to churn because they learn how to use the potty.

Yep.

And then I realized I've. Now I've Spent like thousand thousands and thousands of dollars. Coterie, they probably.

Yep.

Who knows what our family's CAC was early on, but seems like a fantastic business. And they're always, they're, they're like we've been on a subscription I think for years now and we run out and then we go to Whole Foods and they're out. Like it seems like this infinite demand for, for the products they make.

So yeah, I wonder how big the actual market is for diapers because that seems like the cap is that like you actually can't get a user for life. Kids do grow out of them eventually, but it seems like the business is certainly solid. What's interesting is are you familiar with Mammoth brands? Are you familiar with where that came from? So Harry's. You know the story of Harry's, right?

Yeah.

So Harry's D2C shaving company, they launch with this massive fundraising round. They buy their supplier, they buy a razor blade manufacturing company. The razor blade and shaving industry was highly oligopolistic and very hard to break into because there were only a few companies that owned basically everything. I think it was a Unilever and Gillette and there were a few others that like had like vast majority ownership. And so Harry's figures out that if they want to break in, they got to buy the, they got to buy the manufacturer. They do that. They scale. They, I believe they tried to sell the company and they got blocked and then they were thinking about ipoing or something, but they just rebranded.

Is this going to be another antitrust victory where they end up getting blocked in the. Maybe. The thing I like about this acquisition is Mammoth. Like it feels like if Mammoth just executes for 20 years and buys starts like acquiring the breakout brands instead of P and G, they'll actually be a real, a new consumer conglomerate.

Yeah. And there's something, there's something sort of maybe differentiated about. So Harry's rebranded as Mammoth brands. Like it's not like Harry's sold to some sort of roll up Holdco. They just became a parent company.

Still Harry's.

Well, no, no, no, no, no. The parent company now is no longer Harry's, it is Mammoth brands.

I know, but Harry's is what they sell products.

Yes, Harry sells products. But then they also own Flamingo and then they're going to buy Coterie and Harry's like the team at Harry's, the owners of Harry's have become like this Holdco. And so instead of trying to spin up new D2C products and try and Become like launching new things. They're actually just going out and using the cash from the business that's working to acquire new stuff, saying if we can't get, if we can't sell, we're going to buy. This is basically the takeaway. I don't know.

That was my interesting data point here. So Align ventures led a $23 million Series A in Coterie in 2022. Align is the venture fund that was meant to lead figure AI's round at a 30 and a half billion dollar valuation.

Wow.

So line had invested I think previously in Figure AI. And so when Figure the news broke that Figure AI is in talks to raise one and a half billion at 15 times its last valuation. Everyone's like, okay, who's leading? And it's like, okay, it's just like CPG fund.

Yeah, that's interesting. That feels not aligned ventures. That doesn't feel particularly aligned. It feels misaligned to invest in both. Babies that wear diapers, new humans, new human labor and then robots that don't wear diapers, new robotic labor, labor. Those two things are actually at odds.

What if, what if the figure robots have diapers back here that they can.

Pull out and then they can diaper the babies? It's a beautiful symbiosis.

How much would people pay to not have to change a diaper again?

Potentially billions. Potentially billions.

Jeff Dean made the time AI100 the.

Soundboard for Jeff Dean. One of the greatest to ever do it. Congrats to Jeff Dean.

He finally is going to pat himself on the back and think I'm good at AI Now I actually might be decent at this stuff. I made the time AI 100.

Yes. And I saw in the chat, I didn't verify this, but somebody said that Google is hitting all time highs. Congrats to everyone at Google, including Jeff Dean. If you're looking to go long or short, Google, do it on public.com investing. For those that take it seriously, they got multi asset investing industry leading yield and trusted by millions.

Dave Grampol in The action says TLDR diaper LTV industry sources confirm the average spend per US child over their diaper using years is between $1,800 and $2,100. That makes sense. With coterie you get to spend even more. They're clean. Yeah, microplastics or something.

Tyler, would you mind pulling up the TIME AI100 list, putting it in the truth zone. Let me know who, see how it.

Tracks with the meta's list.

Who didn't get on. Did they include Sholto. Did they include.

Wait, I think wait. Ilya has a new profile picture. We might need to update the Metis list because it's a great.

Oh, for sure, for sure. Okay. So anyway, Tyler, dig into the TIME AI100 list. I want to know who sticks out to you, who's interesting. In the meantime, let's go over to Mechanize. They said we built a Twitter vibes engine for AI labs. Evals are important, but the Vibes are hard to fake. And it's the vibes for OpenAI and Anthropic over time. And you can see Anthropic had great vibes throughout 2024. Then the vibes started dipping a little bit. After 3.7 sonnet they were on a high and then they went negative, negative net sentiment score and then have been climbing back up anthropics about even. OpenAI has been lagging a little bit. The vibes seem to be flipping back and forth between the two. Very, very interesting analysis. Of course, you gotta take it with a grain of salt. It's just a bunch of scraped posts and then run through sentiment analysis. We of course love looking at the Poly Market best AI model and seeing who's tracking their the Vibes. Google is running away with it. They're now at 71% by the end of the year, predicted to have the best AI model and they seem to be chopping wood over there. The vibes are getting better too. I saw Logan posted an interview with the team behind nanobanana. People are getting good with the naming and nanobanana. I mean, major reversal from some of the earlier Google AI image projects which were kind of hated on for a variety of reasons. This just feels like. Like it's a very useful tool. I was playing around with it, some amazing results where the generated output looks so much like the input that I couldn't even tell if it was doing generation. It was actually just like, oh, did it change anything? Had a few errors where I was trying to get it to swap outfits from one person to the next and it wouldn't. It was getting confused or it just wasn't doing and it was sending me back the same image that I put in, basically. But you had some luck with it. You were trying to turn yourself into a centaur or something. That was kind of a bizarre outcome, but I've seen some good ones. Tyler, have you been having fun with Nano Banana?

Yeah, mostly I've just done like change the outfit or something. It works perfectly fine. But I did try making myself look more Jack. And it didn't work. I think I was already like, max.

Yeah. TJ Krasinski says takes longer than GPT5, but does better at turning people into Chads.

Does better. Interesting.

Maybe my prompt was just wrong then.

Yeah. So let me show you. I think it's interestingly particularly good at posting. Let me see if this works. So did I post this? I'm putting this in the chat. I took one of these trade deal alerts, kind of like the meme formats that we do that we would normally do in Photoshop. And I fed it an image of Ilya and the logo and just asked it to kind of recreate the same image. And if we can pull up the ESPN one, there's an alert for the Green Bay Packers. The packers are trading for Micah Parsons. And you have an image of the football player on the left. You can see this. And then alert and then the logo. And then the other image is from Ilya. Sutskever changes his profile photo and I put the corporate logo there and like, look at this. Looks like it came from Photoshop, but this was actually just a nanobanana prompt. And I guess it's like it kind of re rendered his face. It's probably not 100% perfect, but in terms of just like.

And they watermark it.

Yeah, the watermark is weird because the watermark in this, in this image is. It just says sports. It's not. It's like a random hallucination of a watermark. But it. So in terms of just like take some images and make the meme, it can now do that very, very reliably, which is just kind of a new unlock. And we were talking, Tyler, about the nano banana chatgpt moment and I feel like I'm starting to see that on the timeline with people posting. Take Sam Altman's face and put him at this pose on this.

Yeah, like ballerina.

Yeah, the ballerina one. You saw that? And I feel like that's kind of the meme is like, he's like, make a super photoreal image of this person doing this funny thing and this funny place. And it requires a lot of creativity to come up with a good. With a good concept. But once you do, it can instantiate something that's photoreal, like extremely quickly. So very cool.

Yeah, I mean that's what we kind of talked about. It's like the consistency is like vastly better. So you can actually do like photorealistic stuff.

Yeah. I think it's at a point where it's good enough to put on a billboard. If you have a. If you have an out of home advertising campaign idea generating a nano banana. And then head over to adjective.com out of home advertising.

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Daiko by Easy and Measurable. Say goodbye to the headaches of out of home advertising. Only Ad Quick combines technology, out of home expertise and data to enable seamless, efficient ad buying across the globe. We were debating whether or not we should do a Cheeky Rack and react to Cheeky Pint, the podcast hosted by John Collison at Stripe, where we.

Cheeky Rack would of course be where John and I drink. And 30 racks.

30 racks.

During an episode of Cheeky Pie, three.

Hours of John Collison interviewing founders while drinking. He drinks one Guinness. We would drink 30 light beers. But there was some debate over how much he was drinking. And so obviously the bar has been. The gauntlet has been thrown down. Is any podcaster capable of drinking 30 rack within the context of one podcast? But I think we just solved how bad that would be because even a single Diet Coke makes me incapable of doing a clean show. Anyway. Forbes is undefeated, says Rob Froond. Yeah.

Do you remember this company, irl? Oh, I remember they got marked up to a billion in 2021. Of course, led by none other than Softbank.

Interesting.

At the time, when I saw this round, yes, I didn't know a single person that was using it. But I also just realized that people still use Snapchat because the younger guns on our team use Snapchat. And I don't know anybody. I didn't think I knew anybody that still used Snapchat. It's out there, but it's out there. It's real. So I wasn't quite.

And there are.

I thought maybe it was real social.

Networks that pop up from time to time, the anonymous social networks. There's always something new, and if you're not really tapped in, you can miss that. So the narrative around IRL was if you're not using it, maybe you just missed it.

Yeah. Or maybe you're not. You're not in the.

But I remember that. I remember the timeline kind of turning on them as they raised more and more money and more people started saying, well, and it was, wait, does anyone know anyone who uses this product?

Yeah. And it was. It was employees that were also wondering, yes, do people actually use this product?

So the allegations were that they were cooking the books and it was a rough go. And now a federal grand jury returned an indictment charge of a Hawaii man with wire Fraud, securities fraud, and obstruction.

I think that's the founder. The founder, yeah. Apparently 95% of their 20 million users were fake automated bots.

Wow.

And the actual number of human users was around.

Yeah. What's so interesting is, like, Reddit started as a platform that was seeded with fake users, but I think that from.

An early, it was also Alexis just.

Using a. Yeah, yeah.

So it was actually just very different if he. If he was telling. I'm sure at the time he was telling investors, like, yeah, we're trying to kind of kick start this network, so we're. We are using the product ourselves.

Yep.

And he wasn't necessarily saying, you know, we have millions and millions of.

Yeah, totally. It makes. It makes a ton of sense to have like. Like some sort of flywheel early on, but you have to disclose that and it's wire fraud if you don't make it clear. And so if Alexis Ohanian had gone to investors and said, like, yeah, look at all the usage. It's all real. Instead of being like, no, like, we're seeding it. Like, don't value us on the basis of our maus, yet value us on the promise of what this platform can do. And I'm sure the first round was like $5 million or something like that, like super, super low. Not $175 million going in this crazy company that. That had a lot of fake use.

Sad story.

What should we talk about next? Should we talk about bezel? Go to getbezel.com, your bezel concierge is available now to source you any watch on the planet. Seriously, Any watch.

Blind boxes, Quaid.

Yeah. Oh, yeah, do them. It's easy money. Make it happen. It's the end of the.

We would just be hitting that button over and over and over on the show.

Yes. Should we talk about the $25 million home that's listed in the Mansion section?

At least There another article here in the Journal about Lovable.

No, that one is in the Financial Times, so. In the Financial Times.

This is crazy.

Page six on the. In the Financial Times. AI startup nears $4 billion valuation. Swedish vibe coding startup Lovable is fielding inbound investment. It's a Swedish initiative valuing company. I mean, I like the company a lot more than that gambling company, for sure. We talked to the founder. He's a nice guy. Swedish Vibe coding startup Lovable is fielding in inbound investment offers valuing the company above $4 billion, more than double the price at which it raised funding just weeks ago. So that's like the rare double tap we saw this with. I mean, Ramp did this. There are a number of companies when, if you're on fire and all the metrics are up and to the right and there's more and more demand for your stock, it's not the craziest thing to sell one tranche, one tranche at one valuation and then go back out to the market and do the second tranche at the next valuation. So Lovable was valued at $1.8 billion in a deal in Excel by Excel in mid July, cementing its position as one of Europe's hottest AI companies. Now, this is one of those things. Where did Excel do that deal three months ago? And it just released now. And then we're getting leaked information about a new deal happening.

Is it early talks? Is it advanced talks?

Exactly.

Saying that the deal was actually done. I mean.

I mean, but in February, they just raised 15 million. So, like, that is a big jump up, going from $15 million raised to $200 million raised in something like six months. I mean, the company is on fire. Apparently, people with knowledge of the new investment approaches said that Lovable's chief executive, Anton Osica, was not engaging with investors on the latest proposals, but he was weighing fundraising options for the coming months. So, again, we're talking going forward.

Jason Turner in the chat says lovable is the ISH. I have, like, 15 prototypes. Do you have any production products, though?

Yes, plan for production.

I mean, the big question around Lovable is like, clearly they've caught fire with the product. People love it. But what is. Great metrics.

So arc crossed 100 million just eight months after crossing the $1 million threshold. That's a huge ramp to do two orders of magnitude in eight months. You can see why VCs are piling in on the momentum and that more than 10 million projects had been built on the platform. So if it's 15 per person, that's. That's pretty crazy. However, it is yet to demonstrate that it can generate a consistent profit amid questions from some investors about whether AI coding tools can make a margin in a highly competitive market. So, I mean, look at this. Beautiful, everyone. What we got? Louis Vuitton looks nice. Love it.

Very nice print ads. It's the new meta.

Yeah. So the trick is, like, I think that reporting suggested that for free projects, they're definitely losing money because they have to use reasoning models. They generate a ton of tokens. Inference is pretty expensive. And so if you go to a. Just let's zoom out to website creator tools. If there's not. If they're for free and you're just generating a bunch of them, you're probably losing money on inference because you don't own the GPUs, you don't own the foundation model. Like you're paying pretty high inference and you've got to use the best to be competitive. But the light at the end of the tunnel is that you get someone who stands up a website and then they use that as their front end to their business or their restaurant for a decade and people stick around. And so that's the pitch for everyone from Weebly to Squarespace to. There's a whole bunch of these companies that have all done. And what's weird about those companies that they've all done very well. I've seen tons of squarespace ads on YouTube for a long time. I've seen a bunch of those website builders and this is kind of like, like the next generation of them. And if you can get someone to build a website that they get value from and they don't want to re platform from and the hosting cost is zero marginal cost. Even if there's a, even if there is a non zero marginal cost like onboarding process, which is the generation of the website, you can imagine that most people would spend a ton of tokens generating the first version of their website and they'd be like, yeah, I'm good for like a year. My business is basically, they're not hammering it with prompts every single day. So there is a way where the math can math out. And I feel like that's probably what the VCs who are underwriting Excel and we just talked to the framer guys yesterday. It's a kind of similar business model. Get someone to build a website. Maybe it's expensive upfront, but if they stick around for a long time, you can be reaping a reward.

Yeah. When Anton was on the show, he was saying they're clearly fixated on enterprise and that that will be an important market.

Yeah.

For them. That's very interesting. And I don't think it's a market that they're, you know, dominating in.

No, no, I, I know them as like particularly good at like go viral on social media for like build an app in a second and then people go and build a bunch of, a bunch of stuff. My, my weird like question about all the.

Oh yeah, obviously I'm biased here as, as a Figma power user for a decade and obviously they're a partner of ours. But Figma is just so dominant in the enterprise. And people love Figma make, right?

Yeah.

So they have Lovables, I think in a struggle in the enterprise.

So this comment in the chat from Paraclete says I'd imagine lovable customers will have high churn and not stay long because. Because it's for starting and not finishing ideas and you won't be finishing them as final web products. And that is like the second act that I think the lovable customers stay for a few months, whereas a real platform like webflow has lifetime customers. And I think that that's probably the second act that all the VCs are betting on. They're saying you filled the top of funnel. You've gotten people to show up long enough to actually build and deploy a website. Can you charge them 20 bucks a month forever? Can you charge them 100 bucks a month for 10 years? Which is certainly the story of Webflow and the other site builders, Squarespace, if.

You remember, their site builder did 1 billion in 2023.

1 billion in revenue.

Yes.

Okay.

But was taken private at 7 billion last year.

Year. Okay. And. And Lovables at 4 billion on 100 million in sales.

Sure. They're well beyond.

Yeah, they must be well beyond 100 million run rate. Yeah.

But as. As one knows, it's fascinating. Well, anyway, Kyla Scanlon has an essay around how do workers actually feel about AI? Yes, she does survey 1200 people across various industries with the main goal of learning what they actually wanted from AI. The results show a workforce that isn't really blindly off optimistic or totally resistant. But negotiating a rather messy middle makes sense. Workers hope AI will take over repetitive tasks and boost efficiency, but they worry it could erode career opportunities and work quality. Trust is fragile too. Most people somewhat trust their employers on AI. While some industries lean heavily toward no trust, the biggest ask was training and a seat at the table. 62% want shared decision making and how AI is implemented. But overall, this wealth wasn't really about job loss worries. It was about why we work and what makes work meaningful. The policy asks weren't about banning AI. It was about training, transparency and actual input in implementation decisions. It was about preserving the human parts of work. And that makes sense as AI is making us reckon with what it means to be human in a way that not many of us have ever had to do. One of the human parts of work that I think will endure for a long time is power lunches. Right.

Throwing a couple back.

A couple cheeky pints.

Cheeky boot, a cheeky booty out of the beer boot is the way to do it for sure.

A cheeky round of shots.

Yeah.

At lunchtime with your team.

What are the other takeaways from her article in the executive summary, she says 85% of people are familiar with AI. But even among the very familiar, more than a quarter don't use AI at all. Workers want AI to take over the boring parts of the job.

The 15% of people she surveyed just being like AI? No.

What are you talking about familiar? I've heard about it. 62% want shared decision making and how AI is implemented at work. 15% want 30 want full authority. Fewer than 2% are collected comfortable with no input. There's a trust paradox. Most people somewhat trust their employers on AI, but in many industries, a majority report no trust, no industry reached a majority of complete trust. Only 60% of respondents have received training with especially low rates in creative industries and entertainment. That's interesting. I would think creative industries like you definitely want to push the creative tools. You'd want to have training on Nano Banana, but maybe you just want to turn your folks loose and let your teams know. If you're in a creative industry like, just go figure it out yourself. The AI tools are out there, so maybe you don't need formal training anyway. There is a beautiful house available in Alpine, New Jersey.

Pull it up.

We got to pull this up. Ellie Taharie, co founder lists European inspired New Jersey home and these photos are. I think that's. I think you got the wrong one pulled up. I think that might be 50 cents house, which we can do next. Arvam Tahari, co founder of New York based fashion brand Ellie Tahari, is listing his property in the affluent suburb of Alpine, New Jersey for 24.75 million. His roughly 21,000 square foot home was completed around 2016 with a slate roof and a backyard landscape that reminds him of the south of France. And look at that car. Jordy, can you ID that?

It's Countach.

It's a Lamborghini Countach in red. I love it.

It looks fantastic in red.

It fits in with that.

Doesn't it belong in white so often?

Yes. You see it in white a lot. Of course, in the Wolf of Wall Street. It has eight bedrooms, indoor and outdoor pools. You got to be having multiple pools these days. He bought the 2 acre property 15 years ago for 4.25 million. The previous owner had built a foundation and then stopped. They finished the job. The home has eight bedrooms, a mosaic tiled indoor pool and an outdoor pool with cabanas walls were hand plastered and stenciled by an artist from Portugal. The Taharis raised their three children there and had many parties, including a white party and a friend's engagement party for about 150 people. I hate to move from here, he said. But they have children and they decided to move out. They plan to spend more time in Florida. Located across the river from New York City, Alpine is a borough of Bergen County. Homes there sell for millions of dollars and often span over 15,000 square feet, according to Sirhant. Oh Sirhant, nice. Who lists the home is under contract with a 22.49 million listing price. So go pick that up. There are a few other stories in here that we should cover In a bunker no one can hear you scream the question that the Mansion section asked real estate brokers is have you ever encountered a secret room or bunker in a house you've listed or sold? And Scott Bayans, a real estate broker at Aspen Snowmass, Sotheby's International, yeah, wouldn't.

You want to know about the secret bunkers in the houses I've sold? The whole point? If it's truly a secret bunker, it shouldn't be on the listing.

Yes, so in May, this particular broker listed a property in Aspen for 15.95 million that has two structures on it. One of the structures a contemporary home with three bedrooms and the other is a detached three car garage with a one bedroom pied terre above. Below the garage and accessed via a hydraulic door that leads to a hidden stairway is what we call the Smuggler's Den Speakeasy which includes a lounge and bar, LED lights like a high end dance club, a fireplace, a tv, sound system, a powder room, a photo booth and a reverse car lift which allows you to pull your collector vehicle into an elevator and transport it down into the speakeasy where it's on display behind glass. Right now there's a classic motorcycle, a drum set and a disco ball to provide a little something for everyone. The owner who built the speakeasy was one of the founders of a well known, nationally franchised chain of restaurants, so he has hospitality in his blood and a love for a good bar and a well crafted cocktail. Since he was active on the Aspen social scene, he conceived of a truly unique space designed to surprise and amaze everyone lucky enough to get an invite. When showing the house, we always save the speakeasy for last and enjoy seeing prospective buyers Mouths drop It's a very specific listing with a feature that cannot be replicated and I know There's a buyer out there who will love it. Let's go on to Renee Roberts, who says, In September 2018, I met with the owner of a five bedroom contemporary Cape style home in Canton, about a half hour south of Boston. And it had a lot of desirable features. It had a one acre private lot, a grand foyer, large eating kitchen, and a wooden stove with high end appliances. The owner, an older gentleman, wanted a market analysis. I didn't know him. As we were touring the house, we got to the basement, where I learned that the house had two hidden soundproof concrete bunkers. The bunkers didn't have any technology, cameras or food storage, but there were electrical outlets and air exchange systems in both of them. Both of the bunkers were accessible from secret doors located inside the basement. As the owner showed me the basement, my heart sank a little bit because I was in the house alone with a stranger and nobody knew I was there. When he opened the door to one of the bunkers and invited me to see it, everything in my body was saying not to go in. But he was excited to show it to me and I was curious, so I went in to peek around. But then our tour took a chilling turn. When he closed the heavy steel door, the kind that banks use for their vaults, to show me how soundproof the bunker was, I started to get anxious. But after a minute or so, Superstar opened the door, which had a keypad. And when we left the space, when he showed me the second bunker, I didn't go in. It definitely made for one of the most scary and unforgettable listing appointments of my career. Ever since that day, when I go to a listing appointment, I tell everyone and give them the address of where I'm going to be going. This guy was just like nerdy, nerding out about his silly bunkers and scared the living daylights out of his scaring the realtors. In other news, 50 Cent's former estate has hit the market. Look at this thing. 51,000 square feet. It has a nightclub, it has a recording studio, it has pools.

A thousand square feet.

He really should have. He should have remodeled and taken a thousand feet off. So a tricked out Connecticut estate once owned BY Both rapper 50 Cent and fame boxer Mike Tyson is listing for 9.9 million and Jordy. Tell me. I feel like we could move the entire crew here and this might be a solve for everything. Look at this. It has 19 bedrooms. That's more than we all have combined for sure. It's 51,000 square feet, probably more than we have now. The suburban home in Farmington is in central Connecticut, about halfway between Boston and New York. You, you can get back and forth to either. The 17.6-acre estate has a recording studio where 50 Cent said he recorded the 2005 album The Massacre. Tyson, who paid about 3 million for the property in 1996, sold it to 50 Cent for 4.1 million in 2003. Not that much of an appreciation in what, nine years? The rapper bought it as a real estate investment following a lucrative tour, he said. On Million dollar Listing New York the current sellers are food and beverage investor Casey Askar and his wife Shira Askar, who purchased the home from 50 Cent in 2019 for 2.9 million, about 84% less than what was first sought in in 2007. So 50 Cent went out to market trying to sell it for like 12 million and only got 2.9. It's crazy for a 51,000 square foot house, 2.9 million. That's like, like in LA. That's like a normal house. Like it's crazy.

Two bedroom, yeah.

The property underwent several price cuts and was adjust. It was listed by various agencies until the Askers purchased it. They live primarily in Florida and own Dunkin Donuts franchises, pizza places and chicken restaurants around the country. Another example of owning a bunch of franchises. They spend summers and holidays at the Farmington house with their seven children. Wow, seven children. What a flex. Tyson's former ownership was an added incentive, said Casey, who had been a fan since childhood. The Askars renovated the circa 1985 house, investing more than $3 million over the course of their ownership. After buying the house, they installed the cigar lounge and upgraded the commercial kitchen. The Askars also redid the indoor pool and spa, which has a steam room, red light therapy, sauna, showers, a massage area and a hair salon. The nightclub called Club tko, a reference to the boxing term technical knockouts, was installed by Tyson. The Oscars used the space as an event venue for parties and company retreats. Recently they hosted a surprise party there for Shearer's parents 50th anniversary. It was the best family gathering they've ever had in their life and that property made that happen. The Askars are selling because they don't anticipate using the house as much now that their children are grown. So if you're in the mood and if you're in the market for a 51,000 square foot house halfway between New York City and Boston, head over to the mansion section in the Wall Street Journal. And if you're looking to just get a weekend away. Head over to wander.

Find your happy place. Find your happy place.

Book a wander with inspiring views, hotel grade amenities, dreamy best top tier cleaning and 247 concierge service. It's a vacation home, but better.

Well, in two minutes we have Max Levchin from Affirm joining. Very excited about that. Tyler, do you want to give us a quick review of the Time 100 list? How are we looking?

Yeah, it's pretty mid. Okay, so it's like basically. So there's a couple different sections. There's like thinkers, innovators, creator of the.

Midas list, calls other AI lists.

But so it basically has most of the lab CEOs, but it's missing Demis for some reason.

Oh, weird.

So kind of strange. It has Nat Friedman and Alexander Wearing share a spot. A little bit odd too. Okay, but it's like, okay, it's like reasonable. Obviously CEO Lab CEOs are influential. They're missing a lot of big researchers.

Right.

Ilya's not there.

What?

Basically most of the big researchers are not there. But it's like maybe. Okay, maybe it's like not technical. There's some like, big.

Do you think it was pay to play? Do you think it was pay to play?

And Elliot, you're getting that vibe a little bit.

I'm not paying to be on your list.

Yeah, especially as you go down, you see there's some good picks. Josh Kushner, great pick.

Oh, nice.

Love to see him there. But then, you know, you go down.

Rick Rubin's in there.

Rick Rubin, you see the president of the teachers union. Okay, a little odd.

Wait, which teachers union?

The American Federation of Teachers.

I mean, that makes total sense. Like they're on the bleeding edge.

Scale.

Is all you need. There's a lot of teachers out there.

I suppose there's like some senders.

I think it makes sense in the sense of like, influential. They're going for influential. So it's like if the head of the teachers union decides that AI will be used in every classroom in America, that is an influential decision that will steer how AI is implemented.

Yeah, but up until now, has the union affected AI progress in any way?

Probably. Probably in the sense of like, I mean, maybe not yet, but I'm not exactly sure what they put up. But if they signal that like we are in full support of AI in the classroom, let's get universal basic, ChatGPT, let's go all in. That is an important moment for the AI industry. Just like if they say, hey, teachers don't want AI in the classroom at all. We're going to ban it. We're going to ban phones, we're going to ban technology. Like that is an important, like, fork in the road of AI progress. Even if it doesn't. Even if it's not tied to capabilities.

Okay, okay, what about this? Minister of Communications, Innovation and Digital Economy for Nigeria. Thoughts on that?

I'm not sure. I don't know what's going on there.

Seems. I don't know.

I like this quote in the chat though, from Gabe. He says Alex Karp never learned AI. He was too poor and now he's too rich.

Wait, John in the X chat says the Pope is on the list.

The Pope is on there.

The Pope is on the list.

Let's give it up for the Pope.

Let's give it up for the Pope. He's a Chicago boy, right? Isn't the American Pope?

I mean, the American Pope should be on the list.

Broadly, I would say the list is extremely word cell oriented. There's almost no shape rotators.

Okay. Rough.

I think a good, good Easter egg. Pliny the Liberator. You know the no X anon. No, I'm serious. It's the very last spot. Digital jailbreaker.

Wait, really?

Yeah.

Wow. Okay. They did get some crazy ones on there. Yeah.

But it's like, I mean, sure, it's like good pick but like, I would like to see Gwern. I would like to see Dwarkesh.

Yeah, totally. Yeah. No, Dwark has got snubbed for sure.

Yeah. I don't know. A bunch of the researchers.

Okay, okay. Download the HTML, fix the list, repost it in the next 20 minutes. Anyway, we will move over to our first guest of the show, we have Max Levchin.

Welcome to the show.

How you doing?

I'm good, thank you. That's cool. Walk on music.

We're working on it. Yeah. A little bit better every day.

We have expect more sound effects too. Just fair warning, you guys just had a great quarter, so we might do something like this.

Yes.

All right.

Where should we kick it off? I mean, yeah, maybe we should start with the quarter update. How is the business going? Give us like the high level overview of how you are positioned in the company. What is next on the horizon for you? And then obviously I have a whole bunch of other questions that we can dive into.

Quarter speaks for itself. It's pretty killer if I do say so myself. Gmb, which is a fancy acronym for merchant sales powered by us, grew 43%, which is a fourth in a row. Quarter of accelerating volume growth, which is pretty powerful for this company.

Incredible.

This is in the. For those not watching the quarter we just reported, the GMV number was 10.4 billion. So compounding at 40%.

Ish.

Pretty solid.

Pretty solid.

Sorry.

Pretty solid. Extremely solid. Extremely solid. I'll take it. Extremely solid. We're very happy. Congratulations.

Accelerating growth at scale.

We love it.

You don't see it often.

Exactly. Just hit GAAP profitability, which for Internet companies are not expected to do that. We're 15 years in. It's well expected of us. So we delivered on that. It's not a huge surprise to anybody. We said exactly a year ago it'll take us exactly one year to exit with GAAP profitable. And we delivered on that. User growth accelerated for the sixth quarter in a row. So it's another really nice result. Every metric is anywhere between mid-30s to low-40s.

How are you breaking down the GMV growth? Like, what do you think is driving that? What can we read into that on the health of the American consumer or the broader consumer market? What's the story that we should be telling around GMV growth?

Yeah, how is macro driving it versus just your team execution?

Yeah, it's actually a really good question. So normally. So every quarter I get asked 12 different ways, hey, so what's the standout segment? And there's always like, oh, you know, people are really traveling because Covid's over, so airlines and tickets. And then everybody upgraded their electronics during COVID and then it was like a dead lull for electronics for a year and a half. And then poof. Electronics. Everybody needed a new tv. So this quarter is special because there's not a single category that is like, oh, wow, that thing's exploding. Like literally every category is, generally speaking, contributing on par with the average or the weighted average. And the best explanation I got, which these things, you think we know everything about American consumer just given our scale and we kind of do. But it's also now big enough where parsing it is more and more of a spelunking process. And what I think is really going on is we've hit inflection points where buy now, pay later as an industry is just such a part of the vernacular. People like, oh, of course I'm going to pay over time for this thing and I'm going to use a firm. So I don't have a great like, oh yeah, it's a standout industry. X. The only thing that sort of jumped out at me when I was looking through the category Results Services, like in home services, things like that are really growing nicely. In part that's because our card, which we launched a couple years ago, that's growing at 120% year over year. So it has a sort of its own very, very strong earth curve. That's a really nice product to pay for things that are not traditionally bought online. So as an offline tool, it's just surging really nicely. So services are kind of a standout story, but even that is just distributed across many, many different things.

Yeah. What about that narrative that was kind of bubbling up around tariffs where there was this thesis that consumers would be fearful about the iPhone price going up, and so they would lock in current prices by pulling forward demand. Did you see any evidence of that being true or wearing out or not a little bit.

I would call it as a. I think a bunch of public company CEOs spoke to this last couple of quarters, sort of pulling forward, some purchases people expected, et cetera. Not a major contributor. I don't think I could stick a finger that that's the root cause of growth.

What about interest rates, broadly? How are you thinking about profitability in a high interest rate regime? There's a lot of discussion around should rates be lowered? Is that a tailwind, a headwind? How are you thinking about the interest rate environment?

Yeah, I feel like it says a lot that you guys are. Yeah, I was putting, putting these numbers up and I would say critics five years ago, or not five years ago, only a few years ago would have.

Said it's, you know, the model will never work in a higher interest rate environment. Right. That was the, that was the criticism and you've kind of proved it wrong. But walk me through a little bit more of like the actual flow from interest rates to the business.

The interest rates are certainly an input. So we're non depository, non bank lender, which means that, that our own capital or the capital that we lend out is some form of sourced. And there's multiple ways of doing it. We're extremely diversified in a source of capital. You have to be, because at any given time somebody may choose to no longer participate. We, generally speaking, have an extremely strong set of relationships. At this point, I kind of lost count. It's so many different folks that we work with, both at sort of a huge depositories, insurance companies, banks, funds. Some of these people buy our loans. We now are big enough where we securitize in a fairly regular basis, which means people buy our securities, the receivables that we securitize and then we have a whole collection of what's called warehouse lines where you finance the receivables or you borrow against the receivables as a security. And so all of that comprises our capital markets program. Every one of these people has their own benchmark which of course is dictated by fed funds rates rate to a pretty significant degree. Majority of these agreements, majority of these contracts are reasonably long dated, which means that an increase in interest rates or decrease in interest rates is a sort of a slow trickle into our cost of capital. So it's not a tomorrow morning we go back to zirp, which I think we won't. But as the rates will come down inevitably there's now enough conversation about it. It will accrete to us as a tailwind to the business. But it won't happen overnight. Just like even the sharpest increase in history, which is what we saw in the tail end of 23, I think didn't really impact us overnight, but required quite a lot of maneuvering to make sure that we consistently deliver yield to.

The people who buy our loans or.

Lend to us against it. But it'll be nicer, it'll be easier perhaps to run this business when the rates come down. But a couple of quarters ago I had a headline in my letter saying higher for longer is just 5. We obviously printed great margin. We call our margin rltc revenue less transaction cost. It's a very fancy term for essentially the bottom line of the business. And that's been between three and four, with I think one exception. Every quarter since we were public in the first month of first month of 2021. And so rates have changed quite a lot from then to 23 to now. And we've been able to maintain a very consistent margin that should tell you everything you want to know.

Are there any new uses or unlocks in the buy now pay later world that you're thinking about? We were talking about Coterie Diapers earlier on the show. It's a subscription product. I always thought that there's a world where you get a year supply delivered, you pay for a year's supply and then you use Buy now pay later to just do the virtual financial transactions every month. But you only have to pay for one shipping fee. And so the like the cost to the consumer. There's some savings there for both the consumer and the probably doesn't work if it's a really big object. But for small things that are that are subscription, maybe there's a match there. Have any of the smaller dollar merchants or more regular purchase merchants investments been beneficiaries recently?

Yeah, actually if you look at our average ticket, I think when we went public I already screwed this up today once, so I don't want to myself again. But I think our first quarter, the public publicly traded company, we were on the order of $900 maybe.

Yeah. People think about it as like you're getting a peloton or something, you're buying a TV, you're in the $1,000 range roughly and it makes sense to. And you're going to have that thing for five years. So you make sense to match the payments exactly to the price.

So this quarter our average ticket is just under $300. So that should give you a really good sense for the trickle down. All the while our transaction frequency went up, I think over 20% just in the last year. So as people realize that this is a great alternative to credit cards, we're getting more and more acceptance in all kinds of places. The thing you're describing kind of this reverse factoring if that may be the right term for it. I don't know if that happens too much yet, but it's a good idea. I didn't actually think of the shipping savings but that's very real and it's good for the environment, all sorts of things. So I'll suggest it to our sales team immediately.

Fantastic. Let's give you credit for that. Amazing.

My kids are out of diaper age, but this would have been helpful.

If it works. I will expect you to send me a year supply of coffee because are you still into coffee? I read that about you. Okay.

Oh yeah.

How explain to me coffee. I'm not, I don't know anything about coffee. Where should I get started? What should I avoid? Give me the TLDR on how to become a coffee expert quickly.

You've opened a can of worms or can of folgers that you may not have wished for really quickly. So I'm a huge espresso aficionado so you got to sort of put that's a bucket in of itself. There's plenty of people who think that the highest form of coffee is something else. But I love espresso. The easiest way to get into it is finding a great what's called third wave coffee shop nearby. And that's typically a place where they don't sell food. They don't. Or they may sell like some pastries in a corner. But it's a coffee centric small coffee shop and chat up the barista behind the counter and ask them to teach you about tasting espresso.

Okay.

And like, from I no idea what this is to I can understand what you're talking about when you say crema and sour versus bitter shot. And all sorts of fun jargon and minutiae will hit you. And you'll either be like, oh, I can totally taste the sour apple in this shot. You're like, I have no idea what you're talking about. If you're in the former group, you've hit the right rabbit hole. And like, six months later, you'll be buying your first La Marzocco for $10,000.

When do you have your last espresso? When do you have your last espresso.

Shot of the day? Yeah. What's your caffeine stack look like?

So I wake up pretty early in the morning and before I brush my teeth because I don't want to mess my palate. Exactly. So I'll have some water. But sparkling water is the right thing to drink before espresso. I'll head downstairs and do what's called dial in my espresso machine, which in fact a very expressive La Marzocco, of course. And not the only one I own either. But you asked.

Please.

This whole competition is now going to be.

You got a blowout quarter. We can just talk about coffee for 20 minutes.

We should go back to affirmative.

Yeah, I've got a couple of work.

So I'll dial in espresso machine, which means that I'll grind and pull. And two is like a good. Like, I can get to a really good tasting shot by two shots if I feel at the time and feel especially passionate or it's not working out.

You mean you're making. You mean you're making the first shot. You're tasting it, seeing if it's where you want it, and then you're trying to iterate on it to get.

Yeah. And dialing in is basically two things. You're setting your grinder, fineness, setting, and then you're playing with the time of the pull. The two are not entirely independent variables. Like the finer the ground, the longer it takes to pull the shot. But you control when you want to stop it.

Interesting.

And I have three different tenth of a gram precision scales in my kitchen just to make sure.

What's the most you've spent on a single bag of beans? Because that's one thing that's interesting about coffee addiction.

I mean, people.

Yeah.

I mean, the upfront cost of the machine can be high, but then the actual habit Enjoyment of it doesn't actually, you know, it feels like something that everyone can get into.

Espresso is expensive, but it's not outrageous.

Sure.

I think at any given. I mean, it's also amortized over time of consumption. So on the one hand, yes, you can blow a lot of money on extremely rare espresso, but even if you tried, you couldn't spend more than than $100 per bag. Unless you go into like crazy outlier. But like really rare, very time sensitive, you know, only roasted in this particular time of the year from this particular single origin espresso farm in some far away land. Like even that will run you like $150. There's some exceptions, but that's a good high tensile average. I spend probably $30 per espresso bag that I buy and I try to buy larger sizes so to save on shipping.

That's great.

Smart. What's the going back to the business, what do you think is the number one misunderstanding around the category from investors? Because I feel like buy now, pay later is something that people experience as a consumer all the time. They're seeing it all the time. They think they might have a good sense of, of how the business works, but it's still relatively new, at least in this form.

Totally.

Today's market reaction actually tells me maybe we'll see what happens in the days and months ahead. But I think for the first time, the reaction correlates pretty well to our perception of our performance.

Performance.

We've been printing exceptional quarters for a very long time. The stock has been essentially not a good predictor of our performance, fairly uncorrelated. It's gratifying to see we have a blood quarter. The stock does really well. So that's us. Putting that aside, there's a bunch of things that are still misunderstood, probably, but I feel like they're less misunderstood now, at least today. I think a lot of people think, oh, that's for people that can't afford to buy things. They borrow money. And that's why. And that's such an arrogant point of view. It frustrates me a lot. And maybe that's the thing that angers me the most. Not sure it's the most important thing that's misunderstood, but it's the angriest thing that I have to have a beef with. It's fundamentally a better product than credit cards simply because credit cards are designed to get you into revolving debt, which is a exponential function, like the simplest form of Math. You borrow $1,000, make minimum payments Sit on a balance. It looks like this. It just goes up and up and up. People on coast U.S. generally speaking, look and be like, I don't understand. I just paid off at the end of the month. A lot of people don't. It doesn't make them poor, it doesn't make them dumb. They actually have much better facility with interest rate math because they actually pay interest. And for a lot of those folks, it's not a matter of I cannot afford it, in fact. But we will not lend money to someone who cannot afford it. Our whole model is built around the idea of no late fees, no gimmicks, no compounding interest, which means that we can only lend money to those who can't afford it. They're discerning customers, they're not poor. They have jobs pretty much 100% of the time. And they are the very middle Americana that fuels this country in every way imaginable. They use this product as a gray alternative to credit cards. But they're not like, this is not the last resort. This is not even near kind of a bottom of the economic strata. So that's been a business suit for a long time. I think it's a lot better now that people have seen the performance of our securitizations are public in terms of their results and they're updated more frequently than our quarterly earnings. And so you can pretty easily see that the loss rates are meaningfully below those of credit cards, which even the casual observer can be like, okay, so clearly this thing is performing better. That will be competing with.

Yeah.

And how have the competitive dynamics changed over the last few years?

It's a competitive space. Payments has never had a monopoly ever in any version of payments, which is not a surprise given how enormous it is. It's the single largest industry in the world. Maybe energy gets close and it's very competitive, which is good in a sense that it forces people like us to or everyone to compete on substance. It's very hard to compete in a highly competitive market on things like clever slogans and temporary promos. You have to perform day in and day out and year in, year out. And so our competitive edge has always been underwriting just depth of understanding of the borrower, of the end customer, better usage of data, better modeling, living in the cutting edge of whatever most interesting math thing that happened in the research world for us. And so in that domain we're unmatched and that's always been our strength and we continue to win there. But there are plenty of competitors and many Banks that looked at us 10 years ago and said no one will ever use this thing. It's stupid that it's barely understandable, have now come around and said actually we have our own buy now, pay later product. It's going to be great, you guys should use us. So that's probably, that's pretty outside of.

The, outside of the narrow competition within this particular category. Bnpl, what does it look like to think about the next like 10 or 20 years? There's this interesting dynamic that I've noticed where there are a few kind of broadly fintech founders who are still at the helm. They're in double digits billions market cap, they don't seem to be slowing down and they're somewhat on a collision course where they're starting to build products in the other spaces. And the legacy players, the really big banks are maybe less in founder mode. And so just as like a startup Silicon Valley guy, I kind of root for the next wave and I'm wondering obviously like the current product is working well. Everything you've been on this for a long time. Like is there a desire to build like a mega firm and expand into a bunch of different categories? What are the risks associated with that? How narrow do you want to stay and over what time do you have a vision for where you want to go over the next like several decades?

Yeah, for sure. So if you look at our mission statement, which very proud to note has not changed a word since the day we started the company, we're almost 15 years old, so we're still a startup. We're definitely in founder mode. I am the founder, but we're 15 years.

Sorry, that's one of our sound effects.

Gotcha. Love it.

I'm urgently in search of a soundboard here.

We'll set you up as one.

Excellent.

Anyway, so our mission is to build honest financial products that improve lives that is not nearly as narrow as let's have some loans at the point of sale. Now loans at the point of sale turn out to be a roughly trillion dollar tam. And so we're pretty busy trying to claw our way. Every quarter we print 10 billion. That's a round off error. So we'll continue trying to get our way to a one or multiple percentage points of the overall just in the current plan. But the consumer that we attract.

And.

This speaks to your broader question, where's this whole thing going? The thing that's really amazing. What a time to be alive. Sort of like the thing that I wake up to every morning. We're all getting so much smarter. It's so cool. This whole AI revolution and the various offshoots of the idea even before and certainly what's to come next. It's like the general increase of the IQ of the universe that we are familiar with, certainly a general increase of the IQ of the Internet savvy consumer, which naturally increases to the younger player. People 25 years older than me have a harder time catching on to the current thing. People 25 years younger than me, they're born with it. They have no idea what it's like not to have an iPhone. They have no idea what it's like not to talk to ChatGPT about. My kids just pull up their phone and be like, what's the answer to this thing? It's a lot of steps. No it's not. It's just one bicep movement. As we all get smarter, lots of things are changing. And the idea of I got tricked into this stupid financial product, man, I'm so unhappy about the dumb loan I took out or the sale I did with my stocks or all the many things that people regret about financial products is going to start trending down because you will have a PhD level advisor, as Sam Altman likes to say at all times in your ear telling you, hey, that's a good idea, that's a bad idea, that you will trust, that will be completely dispassionate and will have a really deep understanding of who you are and where you're going financially and in your life with your goals. As a company that's built to create products that we are proud of, lending is kind of a dirty industry. The reason we tackle this thing is because I've done payments my entire professional career on and off. And lending is the thing you don't touch because it's kind of yucky. You want to maybe stay away from that because ultimately it's all about late fees and compounding interest. And we started the company specifically to not have late fees, to not have compounding interest to all the things that people hate. We want it to be on the opposite side. And I was told over and over again by people like, this is stupid. One, that's where the profit is. But two, you can't survive. The whole industry depends on this. Don't be an idiot. And we just kept on going, yeah, we'll figure it out. And for the longest time people look at us be like, okay, you have less margin and less opportunity for margin. And, and boy, that's going to be tough. And it wasn't easy but with every passing day, as people get smarter, it gets easier because the machines will not make the mistake that consumers make when they're like, oh, it's a big zero. The asterisk. I don't care about the asterisk. You should care about the asterisk. We don't have an asterisk. The rest of the industry is about to find out what it's like when APG level advisors are like, mind the asterisk is about to screw you. That's like a. Anyway, lyrical digression. But where the world is going in financial services is there's tons of opportunity to apply the same level of purism that we brought to lending to other things, from mortgages to banking to auto loans, to all sorts of fun things where if it's not good for consumers, it will be naturally demoted by the next generation of search engines, which are the AI bots. So there's a lot to do. It's not just point of sale loans for sure.

I want to play out a hypothetical counterfactual. What would the world look like if you couldn't sell PayPal? No one could ever leave PayPal and the original PayPal mafia was still working together on that business.

Well, you wouldn't have SpaceX, you wouldn't have Tesla, you wouldn't have Founders Fund, you wouldn't have David Sacks, the AI czar.

The world would be a boring place, I suppose. Yeah. Do you think PayPal would be like a trillion dollar owning everything, like financial institution for everything, like get your mortgage, trade your stocks, crypto, everything. Would there be any chance for an start fintech company?

You'd have a first true monopoly.

Yeah, yeah, yeah. You said it's, it's competitive space. Would it still be competitive if the entire team was there?

I don't think so. This dates me, but it'll date anybody. There's a great comedic musician math professor named Tom Lehrer. If you don't know who he is, he is worth knowing. He had a great quote at a great time in high school. But I certainly wouldn't want to repeat it. I think PayPal was a little bit of a high school for all of us. It was crazy times. We're super young. Some strange things happened, some tough words were spoken. And the fact that we're all friends now is a function of the fact that we're no longer working together in some ways. And so I think we all graduated with decent grades and went on to everything from graduate school to other fun projects. But I think in many ways PayPal was as successful as it was in spite of some of the decisions we made and some of the behaviors we exhibited, than because I think all of us went into our next set of ventures with a very strong view of I would love to do that again. And I'm definitely not doing this other thing ever again to myself.

So.

The learnings of the crucible of PayPal are unique. But I'm not sure the original crew. Starting another company together would be a really fun thought experiment. That would be quite something because we're all older and presumably smarter.

Avengers.

The Avengers. Yeah. Well, what. What lessons from PayPal have you codified in sort of like the employee handbook at a firm? Or like, what. What are the stories that you tell to a new hire at a firm where you can go and say, this has been true not just for the history of a firm, but it's been true for every business I've been involved in for my entire career.

You know, it's not necessarily true for every business. So I had my own educational journey, if you will, where after PayPal, one of my erroneous conclusions was, man, PayPal was such a tough environment. It was not out of character for any one of us to storm out of a meeting because that is the dumbest thing I ever heard. You're wasting my time. F this and F all of you. Not quite.

But.

I wasn't kidding us that tough words were spoken. We could tear down each other and our ideas on any given Tuesday, etc. And when I left PayPal, I was like, I'm going to definitely start another company. I would love to start with people like these or even these people. And by the way, one of my firm co founders was one of my closest collaborators from PayPal. So the band still comes together and builds interesting things, but I was so over indexing on the tough interpersonal relationship side of things was exhausting and I don't want to do that again. And I really overdid the let's make a family, not a team. And that was an error. I had since realized that one of the huge benefits of PayPal was this no holds barred. Your idea.

So stupid.

I'm going to tell you, comma, and you're not. I may be driving this idea of yours into the ground and stomping on it and trying to kill it, but just so you remember, we're here because you're brilliant and I'm not so dumb myself, and let's work together to make a better one. Figuring out how to package that Into a conversation that holds across 2,200 people is the team strategy at a firm. You should be able to tell someone, that's a dumb meeting, it's a dumb idea, I'm out of here. Please do better than this. While not tearing them down personally, while not damaging their conviction around their place in the team, company's mission, all those things. And so that's a tricky balance to strike. I think we do a pretty good job here. But that is probably the single most important lesson.

Yeah. Embracing disagreeableness as a character trait of a high performing employee or co worker. It's so underrated. And once it clicks and you feel it and you feel someone disagreeing with you, but they're not disrespecting you, they're just actually making their own decisions and bringing their own information, their own perspective, it's extremely refreshing when you first feel it, at least in my experience.

The thing that stuck in my head is, and then we'll let you go. Is this idea of the entire lending industry being built assuming that the average person doesn't have access to legal services. Right. Traditionally a wealthy person will get a loan agreement and they'll have their counsel, you know, review it, spend thousands of dollars, you know, making changes or potentially walking away. And I'm very excited for, for what you guys can do in this space. In a world where anybody in the world can take a loan agreement or fine print, drop it and get. Maybe it's not the best lawyer in the world, but it's at least decent.

And it's dangerously close to the best lawyer in the world. Yeah, it's really. Yeah, that's exactly right. And I think that's we built the company on the assumption that that's coming. The fact that it's coming so quickly and in the way that is conversational and easy is just deeply inspiring. I am very pro AI because the notion of everyone's IQ is just getting lifted every day more and more is so powerful. Like this whole, the sideshow of oh gosh, the jobs, everyone has gotten so much smarter. They can do the jobs that work always out of reach for them. The whole thing is just going to elevate.

That's also one of the most interesting. Like AI is a tailwind for my business theses I've ever heard. Instead of just like, I'm going to use AI to lay everyone off and cut my costs. It's like, no AI will make consumers pick me over the competition. Incredibly confident. I love it.

That's right.

Thank you for sharing Brilliant. And thank you for hopping on the show. This was fantastic. I'll talk to you soon. Thanks for having me. Have a great rest of your day. Enjoy your weekend.

Email me if you want coffee advice.

Yes, we will definitely ping you about more coffee advice. I think the entire team in the studio would be.

Yeah. Congrats. Congrats to the whole team on the market. Finally. Finally waking up and seeing your guys level of execution. It's really fantastic.

That's getting started.

Amazing. We will talk to you soon.

See you next quarter.

Thanks so much. Bye. Up next we have James Balosic from Send Cut Send. One of the hottest customers companies in defense tech. Anyone who's building anything, they know Send Cut Send. They use them regularly.

I'm very excited to bring custom sheet metal MVPs.

Yes. World Champions from the Restream waiting room into the TVP and Ultradome. Welcome to the stream. James, how you doing?

What's happening?

Great, great.

Thanks for having me. Guys.

Did I get this right? So I'm not a customer, but I know a ton of your customers. Why don't you just like explain exactly who your customers are, how you grew the business. I'd love to kind of kick it off with like an intro on you and the company.

Okay.

Yeah. Our customers are everyone, I guess usually the way I describe it. Like my mom. My mom has a silly sign that we cut for her that says live, laugh, love. And then we also have parts that are in orbit right now.

Wow.

We have parts at the bottom of the ocean and parts in Antarctica. You know, we do work for 60 to 70% of the Fortune 500.

Wait, how big can you go? You might. You might be the solution.

Can.

You're looking for a bigger gong? We're looking.

Okay.

I was hoping you would ask. Yes.

Because we are trying to get a rather large gong.

Yes.

And this gong is relatively modern.

It's not big enough. And be even bigger.

This is incredible. Yeah.

I think we could even put logos all over it. That might be some sponsorship opportunity.

There we go. You're talking our language.

Fantastic. Can you. Do you have any update for the business? Can you share anything about the scale of the business, how many employees or size of the business? Anything you got.

Yeah, yeah. We're in our seventh year of operation. We're profitable.

Profitable. Let's head if.

Hitting the gong for profitability. There's nothing better. There's nothing. You know, the big fundraises are great. But.

Congratulations. Yeah.

We're doing nine figures of revenue.

Wow.

About 350 employees. So, yeah, we're doing it.

Yeah. And. And. And all in America. Right. Like, what does the actual footprint of the business look like? Where are you based? How. What's the scale right now?

Yeah, yeah. 100% in the US including support staff, remote staff. We have staff in 22 states, I think right now. Our headquarters is in Reno, Nevada, which is not known to be a big manufacturing tech hub or whatever, but we're doing it.

Biggest little city.

Yeah, yeah. It's known for a lot of things, but, yeah, we love it. We have a facility in Paris, Kentucky.

Yep.

Which is a town of 10,000. Yeah, yeah.

And then.

And then Arlington, Texas.

Yeah.

So just about 200,000 square feet under roof right now.

Okay, so. So, so 2018, seven years ago, you start the business. Like, there was not an American dynamism meme at that time. People weren't writing breath.

Yeah. I was going to ask when the American dynamism meme started, did you?

Look, I invented American dynamism. Like, come on. But seriously, was it a happy accident or was it deliberate that you saw something on the horizon about America's need to manufacture things domestically and you made the conscious decision, or was it just like, hey, you're here, you're making your thing, you're building the business. Why not build it where you grew up?

Yeah, I'm not that smart. I don't see the future very well. Really. It was for selfish reasons. I needed parts made. So I've always been a car guy. I'm always working on weird side projects, and I needed some custom parts made. No one really wanted to make them, especially in a quantity of one, you know, they. I could get them made in a thousand or I could wait eight weeks, but no one would make something, you know, high mix, low volume. So I was like, well, I'm a software guy. I should be able to figure this out.

Yeah.

So that's really how it started. I told my wife of, hey, I want to buy this machine. It's like $600,000, but I think if I can get just enough customers, it'll pay for itself, and then I get to use it for free. And for whatever reason, she was like, yeah, go for it. So I told her it would print money. Took about seven years, and now it prints dollar bills. So hoping to turn that into hundreds at some point.

That's amazing.

Talk about the actual automation and software that went into, like, increasing profitability of a given machine. I imagine that that's like the secret sauce. That's the proprietary platform that keeps Margins reasonable in a world where probably anyone can go out and buy the same machine, but they're not going to get the same yield. How did that evolve? Where's the status of this now? How autonomous is manufacturing in America?

Yeah, it's got to be a mix. It's got to be a mix of robots and dudes. And no matter what, I think you can over robot, you can over autonomize, if that's even the word, or you can go with just too many humans. And I think we've figured out the right mix. You put guys where guys are really good and put robots where robots are really good.

Yeah.

I think our secret sauce was we approached this whole thing as software guys. We weren't manufacturers. We're like, oh, how hard can it be? Software development is supposed to be the hardest thing. We make all the money.

You're a computer science manufacturing. Yeah, how hard can that'll be?

But it was a gift because we approached things completely differently than anybody else because we just didn't know any better. And we made a lot of mistakes. Like we had to throw stuff away that people have learned 100 years ago. And we were just learning for the first time because we were trying to figure it out by ourselves. But some of the things we discovered being software first, it helped us. You know, like you said, we, we can beat everyone on efficiency and, and waste material uptime or material utilization and machine uptime. So, you know, our, our original vendors for our big equipment, they didn't want to sell us the machines because I showed them how we were going to use it and kind of hack their software and use our own. And they're like, oh, it'll never run. It'll never run. A few months later, the sales guy came back and saw our numbers and was like, like, oh, holy crap. Can you teach us how to do it? So at one point, you know, we thought, why don't we just license our software? Yeah, you know, that's. We're software guys and I keep getting caught on metal and it's heavy and stinky and whatever. But, but it's, it's really not possible. Our software would not work for anybody else. Yeah, we're so weird with the way that we approach things. You really have to start from scratch. And I think really vertical integration is the way to do it. You know, if, if I could, you know, buy a bauxite mine and smelt my own aluminum and have my own ships to transport the aluminum and everything, I would. I don't know if that's the future for us. But really controlling everything from software up.

Jordy, you can go.

Yeah, I. It feels like, I mean this is. We've had a lot of your customers on the show and this is your first time. Have you intentionally stayed out of like the avoided kind of the hype cycle? I know you got a Jason Carmen video as of today, but it feels like if you wanted to, you could go out and raise like a billion dollars right now if you wanted to play that game. But it feels like it's just not something that doesn't seem like that's interesting. You seem to be just focused on this.

Yeah.

That's the motivation.

I, I don't know that world like I don't know finance and venture capital or anything. I have a really tough time understanding our balance sheet. But it's, you know, I have a, I have a high school education. I just like to make parts. Like the way that I run this business is like a lemonade stand. You know, we sell lemonade.

This is incredible. Yeah, I make parts, sir.

I make parts. So if we sell enough lemonade, I can take my profit and go buy more machines and make more lemonade. And that's really what I love. So I've kind of had my head down for seven years and we've been doing it. We've been self funded and able to buy all of our own stuff.

That's great.

And what I realized is if you want to shortcut that and go the VC route, you can light money on fire so much faster in manufacturing than you can in software. The capex is just absolutely wild. So thank God we didn't go down that path. We're a little smarter now. We do need to expand at a very, very rapid flip here in the next couple years. We just got into CNC machining which is an order of magnitude more expensive. But honestly, I don't want to raise. I want to show people that it can be done with our method, with our dumb finance method and it can work.

It's great. Talk to me about how steep the distribution is in your customers. You said you're in. I think you said somewhere in nine figures in revenue. And I imagine that there is a tension between I want to serve the mom who wants to cut a live laugh love sign or whatever your example was and then the re industrialization process and there's a, you know, a billion dollars.

They work with ways.

Yeah, exactly. And so obviously you want to say yes to both. They're both profitable. But there tends to be a Tension in just every company of we have an enterprise, we have a B2B, we have a B2C business. Have you bifurcated the business at all internally? Are there trade offs or tensions? Talk to me about how that evolves.

We treat everyone the same. We try and emulate In N Out Burger. You know, I don't care who you are, everyone gets a double, double the same way. You can't ask for it medium rare, you can't ask for a filet of fish. The menu is small, but it's good. Fast, inexpensive.

Yeah.

So we're actually very proud that, you know, all these, you know, rocket launch companies that use us, they get the same exact treatment as some guy who's building a Harley in his garage. So I think building a system that can serve everyone equally, maybe, maybe the Fortune 50s get a little worse service than they're used to. We're not bending over backwards. We're not giving them, you know, net 300 terms, they get a little worse service. But then the guys in their garage get an amazing service and then they, they grow. We help them grow. I want to see people do a prototype and then 10 units, then 100 units and then a million units. You know, everyone should be making a business out there.

Yeah. And I'm sure at some point, like if we're talking about, you know, the, like some huge, huge customer that's going to be making trillions of things, like they always have the option to bring that in house and do that themselves and that's their financial calculation. But you're going to keep scaling and it's a race between, you know, hey, yeah, like you might be able to bring it in us and do it a little bit better this year, but I'm going to keep going next year and then the year after. So maybe you stick around.

Yeah, it's a huge incentive for us because in software and SaaS we had the concept of Churn. Churn was absolutely terrible. Here we don't really have a concept of Churn until the company gets so large that they purchase their own equipment. And we've actually advised on that a couple times. But it's a reminder of we should be the ones scaling, we should be the ones growing with them and we've been able to do it.

That's good, that's good. Jordy, you have something or.

It's just incredible.

Yeah.

Our friend David Senrose someday I think is going to make a podcast about you. Allow me to be a biography first, you know, to reference on approaches.

I do Have a question. The chat loves you, by the way. Everyone is like obsessed, it's going crazy. But I have a question about like position against like American made products. Like the narrative is there's always the narrative that like China's cheaper, but then there's also, and they respond faster. The responding faster thing. There was this viral YouTube video, I'm sure you saw it, of like I tried to make something in America versus China and like the Americans couldn't get it to me and blah, blah, blah. And so when I've heard the initial narrative, a lot of it's been like, look, we're gonna be a little bit more expensive, but we're gonna be higher quality, more reliable, more compliant with DoD rules and government rules. But how do you, how do you see the landscape of comping your business to international competitors evolving? Like what's at the top of the stack in terms of benefits of going with you over international competitors? And how is that evolving?

Well, I think, I think no matter how fast we are and how much better the service, people always will shop with their wallet. They vote with their wallet. Right?

Yeah.

So our goal is we have to be equal if not better than offshore options. And we are. So, especially on the CNC side because of everything we've learned, we've been able to leverage our software and our efficiencies and so we can compete. We have a lot of customers that are coming to us now and going, hey, you guys are maybe a dollar more or a dollar less, but you're faster. So I'm using, it's, it's 100% possible. There's a lot of people that are coming back onshore. I think the climate right now with tariffs and the, and the no de minimis shipping and everything, it's, there's a wave right now of stuff coming back onshore.

Yeah.

So if you're equipped so that you can respond or you can do instant quoting. You know, a lot of these shops, they were set up in the 80s and 90s and it was based on facts and it was based on like, hey, let me look at my, your blueprints for two weeks and then, and, and then we'll, we'll send you a letter in the mail or something and they still operate that way. That's why I'm encouraging people to go start manufacturing now because you're going to start with a totally different tech stack than anyone ever has.

That's good.

There's email first, chat first, texting first. That's really where the business is. China Does a good job of it, but all the new startups that I've interacted with are doing it even better.

Yeah. So speaking of those new startups, I'm interested to hear from you since you're so far upstream of the next tech shift. You know, we've heard about like drones. Like there's been a boom in drones, there's been a few industries. What are you seeing on like the next breakout interesting industry of like things or objects or physical products that's being made in America that you have an early insight into where you're like, oh, I didn't actually know that we'd have that as a customer. And now they're here making cool stuff and I see their products and that actually could be big. I'd be interested to see what your, what your take on like the, the hard tech world is broadly, even outside of like defense and, and B2B.

I'm actually really excited about the basics. It's not necessarily a category like drones or automotive or aerospace or whatever. It's. People are making nuts and bolts here again. They're making washers, they're making just simple brackets, stuff like that. It has been offshored for way too long and a lot of people don't want to make it because offshore could always, you know, out compete. And so you'd lean on something like itar in order to like do your aerospace work that couldn't be done offshore.

Yeah.

But what we're seeing now is just dead simple stuff that is going into OEM components. And I was like, okay, once we get that base, then you can add complexity as we go. So I don't know what the next thing is. I think drones is a, is a great one. Yeah, we're seeing a lot of movement in automotive just with OEMs that were producing stuff in the U.S. they have factories in the U.S. but the castings maybe came from offshore. Some of those castings are coming from here in the US now. So it's really exciting at the basic level.

Yeah, automotive is interesting. It feels like Tesla's obviously vertically integrated very heavily, but it's kind of caused like a rethink of all the oem. They all need to rethink their strategies anyway. Well, anything else?

I'd like to see you guys acquire intel and that would be great. I'm on the right track because I think your, your system of dumb, dumb finance or whatever you called it, plus just hardcore engineering. It's clearly working.

Yeah, this is working. Anyway, thank you so much for hopping.

We are we're going to be your next customer. We're going to go definitely go to the website.

I got the gong. Yeah, I'm ready for the call.

We'll talk soon.

You're the man.

All right, thanks guys.

Thanks so much for joining.

Bye. We should end with this story of an OEM about the Cadillac, an electric Caddy with Rolls Royce aspirations. It's in the Wall Street Journal. Today, GM is betting that the Cadillac Celestique, with its ultra luxurious customizable design and striking silhouette, will become a coveted electric limousine in the new gilded age of the hyper wealthy. What do you think, Jordi, about the Celestiq? It's deep in the stack, but the boys are going to pull it up. There it is. It's blue, it's got a little wagon vibe to it, a little hatchback. So this job requires an open mind, obviously. Our car test this week, says the Wall Street Journal. The Cadillac Celestique, a sultanic custom crafted electric limousine priced in the mid six figures, has some explaining to do. But it's so gorgeous, I'm prepared.

This isn't a concept.

This is a real car. They're shipping this. They're making it. For starters. What the hell makes GM think it can compete against ultra luxury legends like Rolls Royce, Bentley, Aston Martin and Maybach when it struggles to even build full size pickups properly? GM has one of the highest warranty costs and recall rates of any manufacturer. As for the Cadillac brand, most sales come from glowed up versions of mass market products such as the Escalade SUV and XT5 crossover. What does the Celestique, a visionary four seat, six figure electro yacht built to ply the oceans of global privilege, have to do with that riff raff? Almost nothing. That's the point. The contradictions are largely a matter of optics. Unlike Jaguar, now on a production hiatus while ownership figures out how to retool and rebrand the classic British. This is a four seater. Cadillac is reimagining itself in plain sight. While the division's profits currently depend on internal combustion powered people movers in the North America, the Celestiq maps the brand's ambitions beyond the US in a gilded age of hyper wealth. And you'll have to be hyper wealthy because I imagine the depreciation on this thing is going to be insane. Can you imagine buying a $400,000 electric.

Electric car when you could get a Bentley?

I mean the Bentley is going to depreciate by 50k in the first year.

What's the Cadillac?

What's the Cadillac going to do.

It's going to look like a SPAC.

They got F1 now. They got Zuck, they got Coogan driving Cadillacs. And so maybe the brand's on an upswing. November 2024, Cadillac announced it would sponsor a team in the biggest, brattiest, most mammoth worshipping of all International Motorsports. F1. Brick by brick, Cadillac is building itself an ivory tower. It wouldn't surprise me to see the division relaunched as an independent manufacturer in the next decade with its own IPO and everything. Let's just hope nothing ever happens to disturb the free flow of goods among our global trading partners. This is hilarious. Arcella Stiq arrived at my hotel in Monterey, California two weeks ago, leaving no head unturned. The sense of occasion is partly owed to the car's luxuriant size. 217 inches. Do you know how long that is? 220 inches is the size of like a full size. Like an Escalade, basically. So it is insanely long. The thing makes a full size Lexus sedan look like a toy.

How long is it?

217 inches.

Wow. So it's longer than the Maybach?

Yes. Wow.

MOG Maybach is 215.

215. Well, they got you by two inches. Has 130 inch whale base. The status seeking proportions oblige designers to use the largest wheels and tires that could reasonably be fitted. Custom 22 inch Michelin Pilot Sport EVs wrapped around forged alloy rims. For extra swagger. You can specify 23s.

You know, the talking with Jim at Send Cut Send made me think that we should get a cybertruck, lower it, put it on smaller wheels and cyber send to make a Huracan.

Yes, yes, yes. I've seen the demos of that. I would 100% be in Tyler next project. Yeah, build a sports car version of the Cybertruck.

Just send, cut send.

Just send cut send. The design signature move is obviously the fantabulous fastback glass and the tapering rear deck lid. The hatchback of the gods. Here I detect top notes of Jensen Interceptor and Maserati Marathon. The brand's boomerang motif is restated in sizzling LED side markers in the sail panels. I chucked my suitcase into the cut pile spaciousness of the cargo compartment and closed the privacy shade on the rear window. What a fantastic idea. The fastback four door configuration creates a chic futuristic cabin with arranged more like an aircraft than an automobile. With two sets of identical sport seats. Gorgeous. Divided by central consoles with armrests. And interactive touchscreen displays all under the blister like canopy of tinted glass. I was pleasantly surprised. Over the years, Cadillac has rolled out a series of ultra of ravishing ultra luxury concept cars. The CN, the 16, the El Mirage. Have you seen those cars? The Cadillac cn. The CN looks insane. We should pull up a picture that never made it to production. For want of a business case, Cadillac's standard of the world mod grew increasingly pitiful. Indeed, much of what makes the Celestiq compelling might have been nixed by an earlier generation of bean counters. The technically demanding carbon fiber hood. The radio transparent material in the grill form allowing the lidar emitters to be hidden behind the glass surface. The shaved exterior doors with hidden push buttons replacing door handles. The nifty panoramic dynamic roof. That's the CN. Yeah, that's the 2002 Cadillac CN. They got a ship.

I can see I. You're such a. You're such a Cadillac guy. I can just see you building out like the most, the best.

Well, you can't buy that. It was just a pro. It was just a.

There's always a price.

There's always a price. I don't know if there's a price for that. I think that's only in automotive museums.

I think that it has butterfly doors too, right?

Yep. Yeah, that's pretty cool. Yep. They should have shipped it.

It would have been great option for.

Could have been the Audi R8 of the Cadillac brand. But they're. They're going back into halo cars. How does it drive? Its stupendous a nuclear.

Are they calling halo car?

This is definitely a halo car. I don't know that they're calling it, but it clearly is. The Wall Street Journal says it's stupendous to drive. It's a nuclear attack sub with heated massaging seats. Mecha Godzilla on little cat feet. Odd parts of California Route 17 winding over the mountains between Santa Cruz and Los Gatos narrowed down to just four lanes separated by doom threatening concrete barriers. The traffic is fast, close and competitive. I dialed in the car's lane keeping driver assistance and pointed it downhill, overtaking Porsches as I went. I could have driven with one finger. The unsprung mass of large wheel sets can provoke a grainy, noisy, undamped ride response. The Celestique chassis is says we'll have none of that. The car hangs on a variable skyhook of gravity defying interventions including four corner adaptive air suspension, active magnetic dampers, active roll control, rear wheel steering, adaptive all wheel control. If drivers want, they can almost entirely eliminate dynamic body roll, so the car stays absolutely flat in corners, even as the lateral GS throw Personal effect into the footwells.

Maybach does have some body roll, especially when the way that speeder drives it. Well, folks, I think that's our show. It is a three day weekend. We will not be live.

We'll see you on Tuesday.

Folks, our team has been absolutely grinding. They're gonna enjoy three full days away from the Ultra Dome. Yes, but Tuesday, we'll be back next week. We've sensed that. Apparently people are going to be announcing some fundraisers next week.

It's going to happen.

Summer's over. Well, I guess summer will be over Tuesday.

Yeah. And the fundraising will be.

Enjoy the weekend. We're back on vhs. We love you. Good night.

Good night. Bye.