Studio Ghibli, Andrew Reed, Rob Mohr, Tanay Jaipuria, Immad Akhund, Steven Schwartz, Jeremy Levine, Anthropic Copyright Dispute

You're watching TVPN. It's Wednesday, March 26, 2025. We are live from the temple of technology, the fortress. The fortress of finance, the capital of capital. We got a great show for you today. I'm sure you've seen all over the timeline. It's Studio Ghibli too cheap to meter. Everything has been Ghiblified. There's been a movement by Jordi to try and move us past the Studio Ghibli era. Seuss era. I advocated for a Simpsons era. Didn't really get much traction on.

But there's people on the timeline. I got Jarrett Callan replying to me right now. He says that Dr. Seuss is out and actually where the wild things are.

Is in wild things are.

We're entering a new era.

But people have a lot of fun.

People said we're entering this era of abundance. And clearly we're here. Everybody.

This is post scarcity.

Yeah. Post scarcity.

Post scarcity. Yeah.

Food. Eggs. Yeah. You know, are still, you know, $10 an egg, I hear.

But Ludnick was saying he brought down the price of eggs or something. I haven't. I haven't checked the facts on that, but that's what I heard in the last.

Well, we were here to spread misinformation.

Yeah. And not do the research. But we did the research on OpenAI's new model. If you haven't seen. They just updated. It's available in chat GPT right now. You can get the app. Check it out. It's in GPT4O. I think, oddly, it doesn't really show up. If you're using the. The O3 high reasoning models I would.

Use, you would almost think that they are intentionally making it difficult to find.

Yep.

Because it works great in 4o. Really, the enthusiasts are the only ones using it.

You can take a picture, anything from your camera roll. You can even just snap a photo right within the app and then just say studio Ghibli style and boom, you have a meme that you can share.

Yeah. And I think the wild thing about this iteration is that there's zero prompt engineering required to deliver an exceptional.

Yeah. I mean, with Mid Journey, you have the SREFs and all these different prompts and negative prompts. Remember, no six fingers. You just have to say that and tell it, remind it. And now you can just go in there with two words, three words, and you get exactly what everyone else wants. And it's fascinating because I wonder how. I mean, there's so much to talk about here. But I wonder how enduring this will be. Like, you could imagine now that the like the JD Vance memes where they made him look like a child and then like a very furry person and like a gigachad and all these different iterations. I'm wondering if like the studio Giblification of iconic images will happen like the same day.

Well, and it seems like we could be 24 or 48 hours away from somebody figuring out how to make, make the Matrix as Studio Ghibli. Right. Like if you like the whole movie, you think, or like a trailer, it would take quite a lot to figure out how to do that today. But we're maybe six months out.

Well, we have a video that actually someone we interviewed at YC Demo Day made. I don't know if we can pull it up, Ben, but someone made with this new image prompt, they made a whole bunch of Studio Ghibli style images about San Francisco and YC and their life in Y Combinator. And then they animated it probably with Runway or one of these video image to video generators. So it just adds a little bit of motion, a little bit of character to the, to the visuals. And I hopefully, I think we're going to have the founder of Runway on soon, Christabel Valenzuela, who I'm a big fan of. But anyway, let's, let's go through Ben Thompson's analysis because he broke it down really well. The Verge also covered this and the Verge really sets the table for exactly what's going on here. So OpenAI is integrating new image generation capabilities directly into chat GPT starting today. I think it's interesting because with, with the video model Sora. Sora is now a separate website that you have to go to and there's a link to it from ChatGPT to take you over to Sora. And Sora is more of a. It's almost like a nonlinear editor, like a Premiere Pro. Like you start with a prompt, it generates a few videos and. And then it can kind of cut them all together and you can make edits. And it's a little bit more of a UI based paradigm. This is different because. And if you Remember, when Dall? E2 launched, it was its own website separate from ChatGPT, separate from GPT3, 3 playground or any of those. You'd go over to Dall? E and then it would have a whole bunch of UI functionality to do inpainting and touch ups and expansion. You could do really cool things. But it was a separate thing. This is clearly you know that, that Google mindset of like, there's the search bar. Go to chat.com, chatgpt.com, openAI.com, you're just going to get. What do you want to do? Oh, you want to do an image? We'll do it right now. Ben, can you play that video? Okay, so I'll keep reading from the Verge. This feature is dubbed images in ChatGPT, so they're not giving a crazy new name to this structure. Product users can now use GPT4O to generate images within ChatGPT itself. This initial release focuses solely on image creation and will be available across GPT plus, Pro, team and free subscription tiers. I'm sure the servers are absolutely melting today because everyone has been dumping prompts in there and these. And you can just tell from how long they take to render that there's something going on.

Yeah. It's interesting to think of this as effectively a marketing expense for OpenAI. Right.

Celsius. I love it. Cheers.

Crazy.

And we are in this. I believe so. I think that's Brian Chesky speaking at yc. And then the Golden Gate Bridge. And then just a little bit of. Little bit of motion. Nothing crazy. It's not a full movie. It's more like moving paintings. But it's very cool. And hey, that's us. There we are at YC Demo day. I love it. Thank you for including us. It was fun interviewing you and. And yeah, this is just. I don't know, this is. This is. This is lovely. Like it, it's. It is sloppy, but it's cool.

I don't know what's. Very clearly less sloppy. Yeah, like that, like the, the sort of. Yes. Slop is flooding the timeline, but at the same time it's better than ever. They're getting the text right. The fingers are right.

Yeah.

I'm one shotting every single generation that I'm doing while we, after we had started the show. Look at this. I'll post it in a second.

That's great. Yeah, post that. That's great.

But yeah, just one shotting prompts left.

And right, including text, which has been really hard for a long time. The text is phenomenal. Of course, if you're doing really detailed sub layer text, like it's just a few pixels high, like font size 10, it's gonna get a little bit confused. Some people took our banner and overlay and put that through the studio Ghibli filter. And some of the smaller logos from brands that we know and love were kind of mutated a little bit, but it got pretty close, obviously. And it did really well with the ramp logo. It did really well with a lot of other icons. Oh, yeah. Oh, we have a soundboard now, by the way.

We have a soundboard now. When certain things are mentioned on the show, I might hit the soundboard.

We're upgrading the show every day and we hope you enjoy it. So the free tiers usage limit is the same as Dall? E, the spokesperson told the Verge, but added they don't have a specific number to share. These may change over time based on demand per the chat GPT FAQ free users were previously able to generate three images per day with Dall? E. 3. That'd be terrible. On a day like this, you don't want to be on the free tier now. As for the fate of Dall? E, Christensen said fans will still have access via a custom GPT, but they're clearly moving towards aggregation around this one box. One text box. The model is.

I mean, it's so crazy to think about as, as a dad, I know you've done this kind of thing in the past, but you could go through, take pictures of every picture of your kid's favorite book, swap your own faces onto all the characters, and you could do that in like maybe 10 minutes right now. And somebody could build software that does it all automatically. I mean, and that's like probably the biggest opportunity today if you just wanted to figure out how to make a hundred K is like printing kids books by just doing the sort of like face swapping thing, you know, remaking these things.

Yeah, I think it's probably a business that you don't raise a ton of money for. Yeah, but, but, but you start today.

Something that makes sense.

Start today, you figure out the exact cost of what it'll cost to generate all those images. What are your printing costs? And then you go on Facebook and you market to people over 65 years old that have grandkids and you say it's $100. But this Christmas, make your grandson elated with an amazing book. And I think you have a good business on your hands if you can figure out the acquisition funnel. So let's.

Creativity is too cheap to meter.

It really is so cool. I mean, we were debating about this earlier, like, does this put Studio Ghibli out of business, or will Studio Ghibli just have tools to make more content faster?

Yeah, we were debating whether or not OpenAI. It's possible. We have no insight into this, but it's possible. That they actually did a deal and said, hey, we're launching this new image generation tool. We already know.

Yep.

Let us basically like actually do this because I was messing around with it last night and I was running into a bunch of copywriting issues that then seemingly went away.

Yeah, it wouldn't let me make a studio Ghibli image of Winnie the Pooh, but it would let me make a studio Ghibli image of Donald Trump or anyone or us. Because I guess like the likeness of public figures is a little bit looser and the style is hard to copyright, but you can copyright specific.

The idea of making right now, it's inconsistent. I'll upload a picture on my phone and do a prompt and it'll say, can't do that. And then I'll go on my computer and do the same thing and it'll work.

Yeah, it's definitely. People are dancing around it, trying to figure out what it can do. But it's fun and clearly the technology is advancing very, very quickly and these, this functionality will probably be all over the place. And you know, GROK is going to be getting wild with it and letting you do way more stuff.

You know, the meme of the soldier, sort of like tossing a grenade over. Couldn't do that. Frustrating.

Oh, interesting. So no violence and stuff. Yeah, I mean, I'm sure there's a bunch of filters around adult material. It is, I am very interested to hear, you know, is this a change in scale or is this a change in algorithm? And. And that will probably be open sourced at some point or discussed on Door Keshe's podcast. Probably someone will explain what's going on here. I don't understand it at this point, but it's. That's really cool. Let's go to Ben Thompson. He says the big change here is that Dall E and most other image generators use diffusion. The model start with an image of nothing but noise and iteratively denoise it to create an image. The unit being operated on, being operated on was in fact the image itself changes in ChatGPT on the other hand, is auto reg images in ChatGPT. The new product, on the other hand, is autoregressive, which is to say it works the same way ChatGPT works. First one token is predicted, then that token is fed back into the context and then the next token is predicted, etc. And in this case, however, the next token isn't text, but rather pixels. This pixel by pixel generation makes images in ChatGPT particularly good at iterating on images or stylizing them. For example, here's a picture of his cat next to a picture of his new water fountain. I love that he's sharing pictures of his cat. And then, boom. Studio Ghibli style. The Studio Ghibli stylizing was inspired by this viral tweet, which almost certainly horrifies Hayao Miyazaki, the creator of Spirited Way. And this one went super viral. 29,000 likes when Ben Thompson screenshotted it. I'm sure it has more now. Grant Slatten said, tremendous alpha right now in sending your wife photos of y' all converted to Studio Ghibli anime. I did that last night before I went to bed with. With. With my kids. I took my son out to ice.

Cream and I studio kid thing is an issue. I tried to put my. I tried to make my.

I didn't have a problem with it.

Kid. And they said, we can't generate images of kids.

Just stick to the boys. Stick to Jeremy Giffon. Stick to Will Menitis and David Senra.

Yeah, your Jeremy generations were fantastic.

Yeah, this is a cute one. I'll show you this. I think that's good.

Wow.

Yeah, it's funny. Anyway, so it is particularly good at handling text. Now, you can also iterate on an image with high fidelity. And he gives some examples of editing a minimalist sticker of a raccoon. Let's have the raccoon eating a strawberry. Let's give it a thick white border. Now let's make the raccoon gray. Can you make the raccoon actually take a bite out of the strawberry? And it does that. It's all very progressive. And it's a very different style of prompt engineering because you're not starting from scratch because the image is being fed in every time you prompt. And so that leads to character consistency and a lot stronger. And it's just a. It's just a more natural feedback loop. Like, a lot of people were. Would get frustrated when they were prompting previous image models because they would say, oh, okay, it's really, really close. Like, this is amazing. It looks great, But I just need that. The tree on the left mountain needs to be on the right mountain.

Yeah.

And it'd be like, well, here's a whole new image. And you're like, no, no, no.

You.

You really were close. We just wanted to move this over here.

No. And it feels like working with an actual creative partner where you can say, okay, this is great, but you need to change this small part or change the color of this.

Yeah. And so more natural. He gives some, he gives another example here. You can, as noted above, use an existing image as inspiration or draw on the model's world knowledge. And so draw a design for a vehicle with triangular wheels. Use as reference and then now put this, now make this a photo that's taken in New York City and it just makes this photo real, which is very cool. So anything that you have and I saw a bunch of, I think the underrated discussion right now. Obviously the Ghibli memes are really fun, but a lot of people were showing how they could use this for e commerce advertising. Take a picture of your product, okay. Put it in a hand, put it on a table, put it in an everyday carry. Get my Ridge Wallet. Take a photo of that. I actually saw some people generate Ridge Wallet ads that looked extremely convincing. And we're well past the uncanny valley at this point. Point. What is so striking.

Yeah, this is the kind of thing I imagine this massively improves icons product totally.

Yeah. What is so striking about these examples is the clear day to day utility diffusion is probably still better for original image generation. Given its global nature, autoregression can get stuck in local maximas. The clear barrier to actually using diff diffusion for day to day image workflows, however, was the relative lack of control that images and ChatGPT excels at. And he goes on to talk about graphic design and Google. I wrote earlier this year, Ben Thompson says in the introduction to Deep Research and Knowledge Value, when did you feel the AGI? This is a question that's been floating around AI circles for a while, and it's a hard one to answer for two reasons. First, what is AGI? And second, feel is a bit like obscenity. As Supreme Court Justice Potter Stewart famously said, I'll know it when I see it. And Ben Thompson has given his definition of AGI. What O3 and inference time scaling point to is something different AIs that can actually be given tasks and trusted to complete them. I'm certainly feeling this when I use deep research or fire off some huge query. It feels like it's going to take a while, but it's going to get it right. And I don't do nearly as much fact checking after as I did with the original ChatGPT product which was built on 3.5, which was had a fair amount of hallucinations. And so he goes on to write this by extension looks a lot more like an independent worker than an assistant ammunition rather than a rifle sight. That may seem like an odd analogy, but it comes from a Keith Raboy talk that he gave at Stanford. My definition of AGI is that it can be ammunition. It can be given a task and trusted to complete it at a good enough rate. My definition of artificial superintelligence is the ability to come up with tasks in the first place. The feel part of that question is more recent discovery deep research from OpenAI feels like AGI I just got a new employee for the shockingly low price of $200 a month.

Pretty soon we're going to get ASI and ramp it up to artificial giga intelligence and that will just be the new sort of what we're all sort of racing towards, right?

Yes, yes.

Talking about definitions of giga intelligence.

Yeah, we're going to need a new term pretty soon for sure. Well, good news for me. I just got another new employee. I already gave it a job for the section below. This employee was like deep research, one that I wouldn't hire have hired otherwise. Making a cartoon helped make my point, but it was hardly necessary. At the same time, however, you can certainly see the level of control afforded by images in ChatGPT. Making a real Making real a lot of the fears that accompanied the first wave of image generators. What's also notable about imaging images in ChatGPT is that it wasn't the first autoregressive image model. Google released Gemini 2.0 flash native image generation two weeks ago and I remember seeing a lot of screenshots on X about this Gemini 2.0 flash native image generation. Another great name. And AI, of course. And, and people were talking about how good this product from Google was for specifically editing images and saying, okay, you know I have a Celsius here, let's remove that from the image. It was really, really good. But Ben Thompson's pointing to two limitations compared to what OpenAI just launched. So Gemini 2.0 flash image generation Experimental, that's the model name, is only available in the Gemini API and Google AI Studio. So those memes about like the, the, the virgin Gemini that you get from Google and then the Chad Google AI Studio because AI Studio was vending in the latest and greatest model. So when you saw those AI influencers on X posting, they were using the best model from Google AI studio or the API. But Gemini 2.0 flash image generation Experimental doesn't support converting images to new styles. It's designed to start with images it generates from scratch, which then you can iterate on. And so you so when, when he Went to Google's product Gemini 2.0 flash image generation experimental. What a mouthful. G2F, I, G E. I don't know. It says, make an exact version of this. With Studio Ghibli style, it creates an entirely new image from scratch. It's not doing the proper style transfer. And style transfer has existed for a long time, even before Dall E, and has been really cool, but it's always been just not quite right. There were all these examples of, like, make this like a Van Gogh painting. I don't know if you've ever seen this, but they were always, like, close but not super reliable. So. But now you can literally go and just, you know, take your kid to the park, document it with a couple photos, and then say, make this a comic book. And boom, it will look exactly like you expected it to. All the framing will be the same, all the characters will be the same. It'll capture the essence. It really captures the soul of the person that you're taking a picture of. It's kind of crazy.

Yeah. And you were saying every time somebody makes a Ghibli version of you, they take a piece of your soul.

I think.

I think the native, they were onto something.

I don't know if it's even a true story, but we've certainly been taught that in. In grade school, that idea of the image of the. Of the camera capturing a part of your soul, it feels more real than ever today. In short, Google released some very cool technology, but they didn't release a very cool product. Something we've talked about before. OpenAI did, and that's why everyone's talking about it. And oh, by the way, Google also just released Gemini 2.5.

Ben has this uncanny ability to say something very plainly that just is devastating. Devastating.

Yeah.

Cool tech.

Now build a product.

Now build a product. Ouch.

Well, yeah, I mean, it's a good point. More on security. One day I will learn not to wade in with orthogonal takes on current political topics, but apparently not this week. This is OpenAI's depiction of me reading all of your mostly thoughtful emails to yesterday's update. What about? What about? What about. And Ben's sitting there thinking, I've already written about all of that. Specifically, I received a lot of emails noting that secure communications. And he goes on to talk about signal. I don't know if we want to get into this. I think we should stay on Ghibli. Very fun. But you can go read the full update and of course, go subscribe to Sir Techery one of the greatest writers to ever do it. But let's move on to the next slide because lots of people are having fun with Ghibli on the timeline, and I wanted to get into it because none other than show sponsor Ramp. Switch your business to ramp.com put up a beautiful Studio Ghibli image of Saquon Barclay.

There it is.

Super bowl ad.

There it is.

And there are a couple of cool things about this image. So, I mean, you just see, like, the level of detail. Like, the hands are perfect. It's really, like, past the Uncanny Valley. But it does a great job of. In the actual super bowl video, they're using a camera that has shallow depth of field, so you can't really see what's behind. And you could imagine it just maintains that depth of field. It's just like, oh, blurry stuff in the background. Let's just make blurry comic book in the background. But that's not how the Studio Ghibli style is like. Like these cartoon anime Studio Ghibli style. It doesn't have depth of field, and so it has to figure out what's back there and then render it properly. And so you can see in the background of this image, there's, like, very sharp lines on the paintings on the wall, and there's things that actually make sense, like there's books stacked on top of boxes, stacked on top of other boxes, and all of it kind of follows, like, a very clear logic. You don't have this situation where there's just something floating or something that doesn't really feel right. It feels great. The other thing that's interesting is that in the super bowl ad, I didn't realize that the snow globe that's sitting on the table says World's Best Boss. But in the Studio Ghibli version, it read that, understood that, clarified that, and created it even clearer to read text. Did you notice the World's Best Boss?

I never saw it.

I never saw it, but it was actually there because I saw this, and I was like, did it just think to put that in there? And I looked back at the original image, and it did say world's Best Boss. It was just very subtle in the actual super bowl ad, so I thought this was very cool. The logo is not a hundred percent right, but it's pretty close. They certainly got the font right on the ramp.

It's just wild. This kind of image was possible to generate through extremely intentional prompt iteration and massive iteration.

Totally.

But we were going back and forth with the Ramp team this morning about a bunch of stuff. And I know that they generated this basically in a one shot. And that's just what's so powerful about this most recent iteration.

Yeah. And it's interesting because clearly cuts corners and takes, like, creative liberties. But it doesn't take creative liberties that wine that bring it to a negative place or a place that degrades the image. And so, like, even the expression on Saquon's face, it's not exactly what was happening in the super bowl ad, but it. It tells this, like, emotional story that makes it just feel like, oh, okay, this is actually thought out. It's not just a screen cap that's been colored over, like, line for line, which I thought was really cool. And so Ramp on X says, we're assembling a team and they put both of their star athletes up in Studio Ghibli form. And this is a great time to tell you we are talking about using Ramp Song. Yes. If you haven't seen it, we haven't talked about Ramps so much that we made a whole song about it. And our editors edited together every time we've said ramp and made a little jingle.

Not every time. I think it was like one.

Yeah, 1% of the time. Anyway, time is money. Save both. Go to ramp.com easy to use. Corporate cards, bill payment.

Thank you to Ramping and a whole lot more. Not just sponsoring the show, but presenting the show.

Presenting the show.

We love you, presenting sponsor, Anthropic.

Should we go to Anthropic? This was kind of interesting because it relates. This happened like, the timing is unrelated, but it's an interesting story because it obviously relates to what's going on with image generation stuff. So Anthra, this is from the Wall Street Journal. Anthropic scores win an AI copyright dispute with record labels, music companies, claimed the company was harming them by using copyrighted material to train its AI chatbot, Claude. And so I'm sure with all these Studio Ghibli images, there will be a big question. Where'd you get the data? And was that was, did you have the right to train on that data?

Where'd you get the data, buddy?

Where'd you get the data? That's always the question with these, with these AI training runs. But I've always said that there we have a process for sorting this out. It's done in the courts, and there, there's. We have fair use. Is this transformative? Is drawing Saquon Barkley like, like an anime? Is that fair use of that anime style or do you have to pay some sort of royalty? And that, that, that economic equation can be solved and it will be solved by the courts. And the mere fact that there is, there are lawsuits is not indicative of like true wrongdoing any. It's more just like, hey, there's a new thing going on and we need to decide where the, where the dollars flow. And this was true when music streaming started and whatnot and eventually got to a place where I think everyone feels like they're getting their fair share. So Anthropic scored a win this week after a US Court denied an injunction that Universal Music Group and other record labels had sought to prevent the artificial intelligence company from using copyrighted lyrics to train future AI models. So of course if you hold back all of the lyrics that are associated with Universal Music, AI is going to be a lot worse at writing lyrics and also just less aware of the world. Like you ask it, you know a question about Taylor Swift and it just is blind to everything that Taylor Swift has ever sung about. Like that could be a pretty big hole in world knowledge, right? Even if you're just asking for, hey, write me a biography of her or write me or just answer a question about what she's up to today. Like, it's important to have that extra context. But at the same time music is copyrighted. So how does this, how does this sort out? So Concord, abkco Music and Records, Universal Music and several subsidiaries sued Anthropic in October of 2023. This has been going on for a year and a half, saying the company was harming them by using copyrighted material to train its AI chatbot, Claude. The record labels alleged that Claude's responses to user queries contained verbatim or near verbatim copies of the work, saying their their reproduction violated copyright. The music companies, which represent a large cohort of artists ranging from Taylor Swift to an Ariana Grande to the Rolling Stones set. Anthropic infringed copyright in lyrics from at least 500 so and sought a preliminary injunction that would prohibit the company from using the works to train future models. However, a judge in California on Tuesday denied a motion for that injunction, saying the record labels hadn't demonstrated how using the works to train Claude caused reputational or market related harm. So this is a good, this is, I always go back to just like the most normie analysis of fair use is just like could you imagine a Taylor Swift fan saying, no, I'm not going to listen to her new album. I'm Just going to go to Claude and ask Claude to reproduce the lyrics and then I'll read the lyrics and that will be satisfactory, right? No, no one's doing that. It just doesn't make sense. But there are plenty of scenarios where fair use gets a little wonky because someone is like. There are examples of streamers who are streaming the like, yeah, I'm streaming the whole boxing match, the whole UFC match. And I'm just kind of being like, cool, yeah, that was a good one. And they're not really adding anything. They're not breaking it down. They're not really reacting to it.

The bigger streamers, from what I'm aware of, are not actually showing any of the imagery or the sound. They're just providing this sort of additive commentary that you can position as a, you know, a watch along or watch companion. So you would still to get the, the full experience.

And it depends a lot of the pay per view and it depends a lot on who owns the ip. Like some video game companies love, they actually pay streamers. I think Call of Duty right now is, is promoting their new product Black Ops 6, and they're paying streamers to stream it.

Yeah.

And effectively like share that intellectual property, which Nintendo, for a minute, I don't know if it held up, was saying, hey, maybe we don't want streamers streaming Nintendo products because it could be seen as a substitute. It's kind of silly to think about, but. Because playing a video game and watching a video game is a very different experience. But for some people, they might say, hey, yeah, this, this particular game is very story driven. I'm just gonna watch some pro play it and they'll be better at it than me. And I'm too lazy to press buttons, which is kind of sad. But I understand people are busy and maybe they want to fold laundry instead of actually hold the controller.

Yeah. I remember being probably 10 or 11 and I would watch Call of Duty sometimes.

I talked to this guy yesterday, Sam Potesh.

Yeah, yeah, yeah, he was extra.

Yeah, he was like, oh yeah, Jordan fan.

Yeah. When I moved to, I was a fan when I was probably 10 or 11.

Yeah.

Sam was only a few years older than me, but was one of the biggest gaming YouTubers.

I think he hit a million subscribers on YouTube for his call of Duty content.

So he was massive. And I would watch it because my parents, like were kind of against video games and let me get a console, but it only could be in the living room. We had a small house and like, it just. I didn't Want to play video games like with my family as a, you know, preteen or whatever. So I'd just be like, cool, I'm gonna watch it. YouTube. I'm gonna watch X Jaws or whatever. So Shout Out. Shout out to Sam is extremely Zoomer coded. Yeah, exactly.

Watching video games.

Yeah. But that's where back in my day.

If you wanted to watch a video game, you had to sit on dial up Internet for 12 hours downloading a two minute highlight reel. Counter strike.

In many ways, 360. No. Scopes are a form of art.

Right.

It's performance art.

Yes, right. It is.

It's high stakes.

Well, let's move on to more of this Wall Street Journal article. Despite the court's narrow ruling, we remain convict con confident in our case against Anthropic more broadly. Representative for the music company said this case remains vital to protecting creators from the wholesale theft of their copyrighted works by Anthropic and other AI companies. We expect that as we proceed with this case and fully develop and develop a full discovery record, our claims will be validated. There's going to be, you know, emails saying, yeah, we got to get Taylor Swift lyrics in here. The AI just won't work without them. It's impossible. We'll never. Will never.

It is interesting because many people are paying OpenAI as like a writing a writer as a service. Right. It's like writing as a service or image creation as a service. And what do writers do when they are being paid to write? They sort of look at various sources. It informs their, you know, approach and it informs the content, even though it's new content. And you don't see record labels, you know, suing some. Some author and saying like, we know you read our stuff. You know, stop. Yeah. Right. It just doesn't. There's no case there. It's not causing humor because it is transformative, threatening this. And. And from the record company's point of views, they're fine if they just sue the model companies until they get a big settlement and then it's like, cool.

Yeah.

Like we're still in the music business. People still want to buy music.

I mean, a lot of this is just figuring out where the value accrues and what's the bigger.

The bigger threat is that you get this AI generated music that becomes so good.

Yep.

That people stop streaming. Gonna. Yep. On Spotify because they can just generate unlimited Gunna songs, which I've done. At one point I included a Gunna song in a video because it was fully AI sounded Exactly like gunna. And it was a cool vibe and whatever. So that, that will be more contentious and I think they'll have probably more of a case potentially because, hey, you're using our content to generate a substitute for that content that is harming our business.

Yep. So the. So the judge noted that the company doesn't meaningfully dispute that Claude's training data included copyrighted lyrics. Anthropic said Claude's intended purpose isn't to reproduce existing works in our user queries, but to generate original output. So they said, yep, it's in the training data, but we think that's fine. It's fair use because we are transforming it. Earlier this year, Anthropic struck an agreement with the record labels to apply guardrails that would prevent current and future AI models from generating responses that might infringe copyright. The judge said the deal effectively resolved one one aspect of the case, but didn't prevent Anthropic from using songs to train the models. What's interesting is like I feel like the real, the real company that's getting maybe wrecked more than Universal Music Group would be like genius.com like rap genius or like a lyrics website. Because a lyrics website, you, if you're just looking like, oh, what's that lyric in that Rolling Stone song? I don't really know the name, but it goes like, you know something like you know this like and that's why the pain. And then it just gives you the answer.

Typically you end up on the lyric website because you're making monetize such and such song. Yep, that by hip hop artists that says these three words and then it'll pull it up. But now you can just go into the. Directly to the LLMs for that kind of thing.

Yeah. The case is the latest in a string of disputes between AI companies and publishers on whether and how easily accessible content like music or news can be used to train AI models. Publishers are moving to shield themselves from what they see as violations of their work from AI startups. Last year, the Wall Street Journal, parent Dow Jones and the New York Post sued Generative AI search engine Perplexity for alleged copyright infringement, saying the company used copyrighted news to generate responses to user queries, siphoning away traffic that would otherwise go to publishers websites. Meanwhile, the New York Times is suing Microsoft and ChatGPT maker OpenAI for alleged copyright infringement. Kind of the same idea. Very rough. Well, I mean, it's good that this is working its way through the courts because I think it is. I mean, we Have a lot of, you know, free speech and fair use doctrines to build off of. But there clearly needs to be foundational settlements and like, new case law created essentially.

Anyway, we're always talking about supporting private equity, making sure private equity sponsors, fund managers are thriving and doing well. Lawyers got to get paid too, right? These guys are levered up on fantastic real estate all over the country, and they got to keep driving fees. And one way to do that is suing big companies and getting big settlements.

Yeah.

And so, yeah, there's another. They got to get in on the AI boom somehow.

Yeah, I mean, there's another lawsuit going on between one of the legal AI companies and one of the legal data providers saying that there's like these case notes that kind of define the case law and summarize it. And they say, hey, you scraped all those and you're reproducing those. And so this is going to keep happening in every single industry until there's a lot of, like, a very clear path to how AI companies can partner with different troves of data and different intellectual property. But I certainly hope that the, in the long term, these products are monetized in a way that there's enough money to go around to kind of keep everyone happy. Like, one of the cool things about TikTok was that they. They started by bootstrapping the lyrics and the music off of the iTunes Preview API. Have you heard of that? This, we talked about this, I think, during TikTok. So, so iTunes, when you go into itunes music library, you can pull up a Taylor Swift song and it costs 99 cents to buy the song, $9.99 to buy the album. Now everyone just streams everything and it's a all you can eat plan. But you can still, and many years ago routinely did buy single songs for 99 cents. And that was the itunes promise. Right. But you could play a preview of that song and they would give you 15 seconds of the song for free. And so I believe apps had access to that API and could pull in song previews basically for free. And so those little snippets became very easy to create vertical video lip sync videos around.

And it was all hugely innovative because before that, everybody's spending hours a day on social media, but you had no. None of the music that people really loved. Yep, it was just a huge. It was just a huge missing element of content on these social.

Yeah. And then on YouTube, like, you could just download a song, put it in Premiere Pro export, and upload it with and, you know, have Your, you know, driving video or vlog with like a popular song, but you would get flagged and potentially demonetized so you wouldn't be able to make money off that content. For a lot of really professional creators, that was not an option because they're making thousands of dollars in ads on every video they upload. And for, for other folks, you could get content strike or content warning. You could actually get your channel deleted if you did enough. It was a risk. And so now there's services like lickd that allow you to pay for rights to licenses to really popular songs. But also there's a lot of libraries out there that are licensed by the social media platform. So when you go and you use a popular song on TikTok, that artist is actually getting a cut of that ad revenue and it's all happening seamlessly on the back end. Your creator payout might be a little bit lower, but you don't even notice. And so the real like good ending here would be a situation where, hey, ChatGPT is making $200 a month from people generating Studio Ghibli photos and Studio Ghibli's making a couple bucks from every person that's doing that. And there's enough to go around and everyone's getting paid, but we'll see.

Yeah, the real company and this was going around. I think Justin texted us something about his is Fiverr being just absolutely like the, the I'm interested to go public and see what this was.

Something that you would normally go to Fiverr for. Find an illustrator to do a little one off thing for you. Their logo, is it down?

I mean they're down 2, 2.7% today. Hard to say.

But I want to know more about like over the last two.

No, but this historically the best way if you wanted to get a nicely photoshopped image, hey, swap this person's face onto this person's face and you didn't. Couldn't do it yourself.

Really good at Photoshop.

Somebody do it for $5. That was the best way to do it. And so they're just gonna have to go more upmarket. But anyways. Well, should we go through some of these.

Let's go through some of these Studio Ghibli reactions because they're all golden. The timeline's been on fire this morning. We had a lot of fun. We tried to add to it in creative ways. Some hit, some flopped. But that's the name of the game. You had a hit on your hand hitter with.

I mean this is, this is Just so perfect because it feels like it. It just genuine. When you have the text there, it feels like it's actually a real scene.

Totally. It is so cool that it kept the text. And the text looks fantastic. It's not wobbly or rough around the edges like that is text. But at the same time, it's text that you would expect to see in a cartoon or in an anime. And it's not. It's not actually perfect perfect. Like, there's slight changes in the kerning. Like I'm looking between the C and the A there and it's like slightly better, but. But it's so good that it looks like it was done by hand.

It looks way better. Way better. If you think about the font generation in these previous models was always the worst.

Yeah.

It was always the fastest thing to expose that it was AI slop.

Oh, yeah, yeah, yeah. I remember see a picture of a car and immediately go to the license plate and say, oh, does the license plate look like garbled junk? If it does, then it's AI.

Yeah. When we had Lesson and Seth on to talk about just AI broadly, Seth came on with this background.

Yeah.

And there was a bunch of text in it. And it was all just.

It was like, it was like the vibe was correct. It was like, generally, like, okay, there's some San Francisco text back there, generally. But you'd get repeated characters, you'd get fonts out of alignment, you'd get extra rows or stuff would just kind of trail off. But this nailed it. So Sam Altman saying he's doing this because he love it. He loves it. I mean, at this point, I believe.

Him, honestly, like, he's got to be loving it today. John.

This is like, it's the best technology to be working on. It's so much fun. And like, you get to drive these like massive moments online. And like, yeah, obviously he's getting paid now, but that's good.

And think about it.

I want the for profit.

This is going to be have a bigger impact on OpenAI's consumer awareness and than any super bowl ad. So even if they lose $20 million today from every everybody and their mom, just like generating images over and over and over, it still doesn't matter because it's the best marketing that they could possibly do.

And it really shows. This cycle of it is a really, really intense race right now to level up the models, launch new products. There's clearly different forks in the tree that people are going down, whether it's image generation, deep research, just humor. And chat. Just natural feel. And OpenAI seems to be the first one to hit these breakthroughs. The first one to issue to do ChatGPT. That felt like you passed the Turing test. This feels like crossing the chasm, getting out of the uncanny valley moment for these AI generated images.

And you can imagine that Elon is meeting with the XAI team today being like, why is it OpenAI dominating the timeline and not us?

Yep.

It's like we actually. And this will be the cool thing. You can imagine a very close future in which you see an iconic image on X, you can immediately generate. Oh yeah, like some variation of it and repost it.

The Grok button right there should just take you and be like, hey, what style do you want to restyle this image? Like get a prompt or use one of our pre populated templates. You should just be able to click, click a button and say, I want this to be cartoon, I want this to be CGI or 3D render or something, or whatever else. It's kind of crazy how much the Ghibli style has dominated the timeline today because they launched a whole product that you can do a ton of different stuff in. But everyone seems obsessed with this. It really became a meme and it really shows like our, our propensity for like aggregation. It's a shelling point, I guess. It's like everyone kind of gets this one. And so even the Dr. Seuss posts, which are funny. You haven't shifted the entire timeline to that yet. Yeah, maybe it'll happen. So we got some more iconic tech pictures. Studio Ghibli edition. We got Jensen Wong signing a female's body. Very iconic picture.

And it looks this, this treatment just.

It's so funny in this style.

Yeah. But Arun absolutely went off. I think he had one of the better. He was. This was last night.

Oh, yeah.

And he also posted one of us.

Oh, really?

That same thread.

That's so nice of him.

That was sweet. But. Yeah, yeah.

Yes. Trump in front of the. The McDonald's got a thousand likes on that.

Yeah, it was this one. You remember we were in the same thread.

Oh, he posted that. That's great. Yeah, I love that one.

Yeah.

Delian posted a picture of his wife Nadia, who's actually coming on the show on Friday. She has a new book out. You should go pre order it. It's called Anti My Anti Mimetics. Why Ideas Don't Travel, which is very interesting.

Delhi and always snapping into the Borat.

Yeah, he loves the Borat.

You can tell he's Genuinely, like, thrilled. Oh, yeah, because he's like my rockets.

My wife. And yeah, I mean, it's a fantastic photo. And again, just like even the painting in the background is, is like just super high fidelity, but also fits in the. Fits in the world and the vibe of the studio Ghibli stuff. Sam Altman has been enjoying the moment. He says, be me grind for a decade, trying to help make super intelligence cure cancer or whatever. Mostly no one cares for the first seven and a half years, then for 2.5 years, everyone hates you for everything. And then finally wake up one day to hundreds of messages. Look, I made you into a twink. Ghibli style. Ha ha. Wild. I love it.

Banger.

When you're having a good day on the timeline, when you get the hot hand, you gotta just keep posting. Have fun. I like this image of Alec Baldwin in Glengarry Glen Ross. He's wearing a gold Rolex Presidential. He says, look at this watch. This watch costs more than your car. He's giving a motivational speech to the. To the car salesman at this dealership. And it reminded me of Bezel, where you can shop over 23,500 luxury watches, fully authentic, in house by Bezel's team of experts. Go to getbezel.com and every brand. I mean, this is like, just like a freebie today. Just take your brand images, throw them through the studio Ghibli filter, put them up on the timeline. You know your job. You can, you can go home early as a social media manager today, you can have some fun.

Yeah. And I saw on X, Jeremy, Jeremiah Lancaster was working on taking my Dr. Seuss image of Marc Andreessen and swapping a Patek minute repeater onto his hand.

There we go.

So it's still in the works. But excited to check this out, you had another post.

The. The good morning with the Saratoga sparkling water. The. The ice bowl. The bowl of ice water and the bananas.

Feels very calming.

And there was something else going on here. You said that not to go back to the Ashton hall viral morning routine that broke Monday. But you said that there were some brands that were partnered that did not go viral, and there were some brands that were not partnered with him that did go viral. And so painful moment.

So painful moment. So I posted this and a company called Hostage Tape responded and said, I think you forgot something. And if you actually think about the video, at the very beginning of the video, he's taking off his mouth tape. I don't know if you've ever tried sleeping with mouth tape.

I haven't, Patrick o' Shaughnessy recommended it to me.

Yeah.

Didn't take his advice.

But I've gone back, I've gone back and forth on it. I, I, I think it's worth doing. It's certainly worth trying. It's kind of annoying to tape up your mouth, but it just helps you breathe through your nose basically so that you're not mouth breathing.

And does that mean if you're a.

Mouth breather, try some, some mouth tape. But super painful for hostage tape to be in that video be so front and center. It seems like they're nobody, right? Maybe.

Okay.

But nobody is. It's unclear because I would imagine memeing them basically.

I know that you can just use athletic tape. You can just go buy cheap athletic tape. Hostage tape is like a premium version of that. And I think hostage tape might even have some branding on the tape. But when I saw it in the video, I didn't notice hostages brand on the tape, which is kind of a weird problem. Saratoga water of course has their logo front and center the entire time because the blue bottle, not only is the blue bottle iconic and it doesn't just look like any bottle of water, it looks like a blue bottle. And so you're wondering what that is. But the Saratoga logo is very clear throughout that entire video. You see it constantly. And I didn't see the hostage tape logo. And so little bit of a miss if they are partnered with him. But his videos seem to continually go viral. So I imagine he will drive a.

Lot of next, the next routine video. He's got to go and say, hey, I average a billion views per video.

Yep. And I imagine that he that that if you Google mouth tape right now, you will get an ad on Google for hostage tape and maybe wind up in that funnel. And so hostage tape is probably going to have a good month just because the overall awareness of mouth taping went up this month. And so they should be doing well. And already I think it's a fantastic business.

I think they're doing like over $100 million selling tape.

It's pretty good.

95% gross margin.

Pretty, pretty good. Good business anyway, zero interest rates. Rahul Sunwalker, the founder of Julius AI was spotted on the Timeline studio giblified with his buddy Growing Daniel and their boxes outside of X headquarters after Elon Musk took hold.

Dwarkesh Patel and still under discuss that he's holding up. I think Michelle Obama's book really leaned into the bit.

It's great.

Leaned into the bit.

I love it. Leopold Aschenbrenner and Darkesh having their chat iconic moment in tech, podcasting and AI after situational awareness dropped, we were talking about but essays with Lulu that had major impacts and we had identified going direct and founder mode. And I think we were digging into this more with David Senra this morning. And I think that it's not so much that those essays were groundbreaking, it's that they were compressed into memes that had even more impact than the essay themselves. And so I think people use the term founder mode more than they actually reference the ideas in the actual essay.

Yeah.

And Leopold's essay Situational Awareness is kind of the opposite. That essay was really, really widely read in AI circles. But people don't use the term situational awareness as a meme in the same way that they use founder mode. But it's interesting. A little bit of a Coogan's Law moment there. Leopold should have come up with something a little bit spicier maybe, but I don't know. He's using it as his brand for his fund and I'm sure, sure it's. I'm sure it's doing well. Luke Metro posted. This really works on everything, huh? And do you know who this guy is?

I'm blanking on his name.

Mike Vining. Mike Vining was a special operator for the US Military and is the basis for the. The special operator in Sicario who wears the glasses. Ah. And is in that car bridge. Yes. And so if you look up pictures of Mike Vining you will see this is his military photo. But you'll see a photo of him in very thick glasses in a, in a, in a white shirt, white button down shirt and a tie, looking very buttoned up. He looks kind of like Ben Affleck in the Accountant. He looks very, kind of just dorky almost. But he's known as like the deadliest operator in history. And is that like been in like serious, serious like operations and is just like a fantastic shot and a fantastic operator.

And yeah, there's something, I think what Luke's hitting into here, it's extremely easy. Everybody's one shotting these.

Yep.

And the style is just very fun and iconic and it makes people have seen so much of Studio Ghibli online and memes and stuff like that. Even if you don't know the show or you're not a fan of the show, the style is just very cool.

Even just like repurposing the memes from even just a few weeks ago. There's this White Lotus meme that Brandon Gorell over at Piratewire shared. He took that. This was all over the timeline after that episode dropped and now it's been Studio Giblified and it's very fun.

I was just thinking of one other image that you generated that won't make the cut. That was from a screenshot of a post from a long time ago, over a decade ago. That was a good one.

Yeah. Bad content for the show though. But yeah, that's another thing. You don't have to post them on X. You can generate these images.

Just share them with your chats.

I was telling Jordi that, you know, sometimes it feels really good to get a thousand likes on a post on X, but sometimes just getting five heart emojis in a group chat of six people, that'll do the trick. That's the dopamine you need for the day. Did you see this Studio Ghibli image of a billboard on the 101 in San Francisco?

I did. A lot of people have been talking about this show.

This was a really cool one and it really reminded me of Adquick because if you wanted to do a real life billboard like this one pictured in.

The studio Gilead only place to go.

Adquick.com advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only Adquick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the globe.

That's right.

And the studio giblification continued. Stage four. The sign. No reality. No relation to any reality whatsoever. It is its own pure simulacrum. And of course, those bizarre J.D. vance as a child memes have now been giblified. And so it's just a snake eating its tail and ouroboros of slop at this point. But there's still a little bit of JD in there and I'm sure he's having a laugh looking at those.

One on the left is too good.

It's really fun.

I want versions of of us with those.

We'll go to the next slide. We're getting there. No one has made us into children. And then Studio Giblified us.

But Arun, I mean, we kind of look like children in some of these.

It does look. We do look very childish here. So it's us at the desk with the Polycom. They nailed it. And a TV in the background that doesn't quite exist. It got some of the background objects correct, but it nailed some of the podcast mics. It definitely got the idea of what the show looks like us at a table in these chairs, wooden desk, Polycom suits, white suits. Of course we're not wearing the white suits today, but it looks pretty accurate. Oh yeah. Ben. Showing you what we look like and then what they look like. And this is one of those iconic tech images. So we were very appreciative to be included in this. In this, in this chain. This thread right above Zuckerberg with the chain looking good. We already watched the Sebastian Voelkel thing. Dwarkesh enjoyed his studio Ghiblification. Dan Romero shared the PayPal mafia in studio Ghibli form. You got Peter Thiel, Keith Raboy in there.

Lots of such a cool image.

It's a great image. Iconic. And did you see this image of this beautiful house? I mean this in studio Ghibli form just looks fantastic. Looks very warm inside, very welcoming.

I wish I could stay there and. And guess what?

You can on wander.com find your happy place.

Find your happy place.

Book a wander with inspiring views, hotel grade amenities and dreamy beds, top tier cleaning and 247 concierge service. It's like a vacation home, but better. I like that. Augustus Giblified himself for his Florida Senate Rules committee hearing. He testified he looks great there. Looking a little surprised and I'm sure he was surprised because by some of.

The comments by audience.

Shared the video with a little takedown of Augustus.

What a. What a username.

I'm not gonna say this says. Ever wonder who's really behind weather modification? This guy is the CEO of one of the most powerful geoengineering companies in the world. That's right. Rainmaker from El Segundo. He showed up to Augustus Derico, folks. Augustus coming on down into the temple of technology. We'll have to have him back on the show to discuss this and put this guy in the truth zone.

I mean, perfect marketing for Augustus.

Really. It's great.

I mean you can't pay for this.

For every 10 haters you get one die hard new fan. So I wouldn't worry about it, Augustus. But maybe put on a bulletproof vest because they're coming for you, boy. He just showed up with. He just showed up to defend cloud seeding, chemical spraying and even electric weather manipulation. And he's fighting to keep it going in Florida. Why is he pushing for so hard for this? What, what are his motivations? Why would he want to do this?

We all want to know.

Yeah, Gus, maybe he has questions to answer, man. And there's already a community note on it. We'll see how that bites out in the. In the comments.

I think it's proposed. Community proposed. Because we are. We're ex hall monitors.

Yeah, we are.

If you ever need help. Community noting.

I gotta get on there and be.

We're happy to.

Community note. He's the best dude ever. He loves White Monster. I love him. He's the best.

Well, we have.

Some breaking news today. Should we finish up with two more slides and.

Sure. I was gonna say we have Ahmad joining in less than a minute. Okay, we're already there. But what was the breaking news that you had?

Oh, just that Ahmad is raising a trillion dollars.

Oh, yeah. 1T. 1T.

And that we're gonna have him on the show and we're excited about that. Do I have a. Do I have a slide? What's the actual announcement? We should read through that to introduce him. He is the founder of Mercury. Do you have the.

I'm pulling up his post.

We actually discussed this on the show when it. When it was breaking or when it was leaked, but the news is out now. They're announcing a $300 million Series C in a mix of primary and secondary funding at a $3.5 billion valuation. Congrats to the whole team over there. They're excited to bring on Sequoia as the lead investor. Like the. The soundboard's better than the physical thing. Here comes the boom. Ready or not, they got Spark Capital, Marathon, MP, CO2CRV and Andreessen coming in and participating in this round. They say since our founding in 2017, we've been on a remarkable road to reimagine banking to truly serve the. We got them in the waiting room of ambitious founders. Welcome to the show. Ahmad. Thanks for joining.

Yeah, thanks for having me.

It's always cool when you listen to a podcast and now you're on the other side and you get.

I love it.

You're live.

I'm so glad you've been listening. I hope you've enjoyed the content. Great to have you here. Can you give us a breakdown of. Introduce yourself, introduce Mercury, introduce what's going on today with the round?

Yeah, I'm the co founder and CEO of Mercury. Mercury provides banking to startups, e commerce and professional services. We started in, I guess we launched in April 2019, so relatively young company, but, you know, a ton of startups use us, especially after SVB and that kind of failure. And then, you know, we just announcing our cbc Sequoia is leading the round with Spark and Marathon coming in as new investors and all of Our previous kind of VCs are participating. So it's a 300 million round with the combination of primary and secondary.

We're having Andrew Reed on the show later. Who at Sequoia did the deal? Who's the rainmaker?

Yeah, Sonia Huang. She's, she's been doing a ton in AI including LangChain and Glean and she knows a lot about Fintech as well. So excited to have her on board.

Talk about what it's like now raising these rounds that are in the hundreds of millions of dollar range. Is it still kind of feel very similar to the early days where you're just like, hey, let's grab coffee and hang out and you talk about the.

Business and I haven't built a spreadsheet in years.

No, like I'm curious.

Surprisingly similar process to an earlier round.

Right.

I did this in about four weeks and you know, at least as a founder you really still like pitching the big vision. Like how can this be, you know, another 100x. Right. Like that's, that seems odd to believe, like that's 350 billion. But like, like I want to do that. It's the bit that's different is there's a lot more support. Right. Like when I was doing a seed round, it's all by yourself. Whereas now I have a finance team, I have a data science team and like a ton of stuff after that first meeting is done by them. It's like, you know, you have to have a great data room. You have to paint this picture of like where's the finances going in the next kind of year or two. But you still always have to tie it back to like how, how is this going to be like, like you know, even bigger and, and what's the long term vision and, and paint that picture.

Yeah, just talk about this moment for you and the team. I mean the SVB crisis was obviously net positive. It was, you know, tumultuous. But you guys benefited in a big way from it. But then there was also an entire, maybe it felt like a two year period where it seemed like fintech was just over. Everything in the public markets was so bad, but at the same time interest rates were way up. So you guys were benefiting from that. Does this feel like you guys feel, you know, finally kind of like validated in this moment to say like, hey, we're getting you know, repriced well beyond where you guys were at in 21 and you're sort of like here to stay? It feels like.

So we've been profitable for 10, 10 quarters. And you know, I really want to build a long term company. I really like, like the time where no one cares. Right. Like I think that's a great time to. Yeah, it was a great time to hire great people. Right?

Yeah.

Hiring in fintech was rare. There was amazing fintech talent out there. It was a great time because we didn't have that many competitors. Right. Actually, of course I'm always worried that. I think actually this is surprisingly uncompetitive space for how big the opportunity is. Yeah, like banking in the US makes $2 trillion. Like this is an insanely huge market and I don't think it's like as competitive as like, like freaking B2B SaaS. Right. Like that's actually a smaller market. So I like those quiet times but obviously it's nice to get like a big valuation boost. Our last round was at 1.6 billion valuation. This is 3.5. And you know we made a ton of progress. Like we were a relatively small company. We had 140 employees back then. I think we announced we had about 40,000 customers. Now we have 200,000 customers. We're almost 860 employees. So we made a lot of progress. It's nice for I guess the world to see that and us to be able to talk about it publicly.

How do you think about Mercury is in many ways the bank of X. Right. Like it's almost like it'd be hard to have been on X the past few years and not be aware of Mercury. Like you have a big following, all this stuff. How do you think about reaching founders that maybe aren't on X and kind of like scaling up. Right. Because every single day there's entrepreneurs that, that walk into banks and they are building a startup and they just walk into Chase or Bank of America and they create an account. And how do you think about kind of reaching that next generation that maybe isn't sort of hyper online or already in the community?

Yeah, we've been kind of, you know, I've always thought about Mercury is targeting digital entrepreneurs. So that's beyond startups, that's E commerce, that's professional services. Like anyone that spends all their time in front of a computer to run their business and these people, you know, most entrepreneurs have friends that are entrepreneurs or they are in communities. So it's not just on X. Right. Like it's Facebook groups, it's YouTube, it's Reddit, et cetera. And like Mercury is all over those things as well. Right. Like we more than 50% about 60% of our customers come through organic word of mouth distribution. And that's not just in the startup space, that's in all of these spaces. And our NPS is 82. So customers really like Mercury. No one's out there saying like, go use Chase. It's the best customer experience ever. Like, you love it, right? Like, Mercury kind of stands so far apart from kind of these incumbent banks that we are still growing from that core word of mouth. But we do invest in other things as well. Like we built a bunch of kind of virality into the, into the app and the product. So last year we launched invoicing and bill pay. And part of that is that those are like viral payments methods. Right. If you send an invoice via Mercury, often you're sending it to another business. So obviously they can just pay it, but they can also sign up to Mercury and the next time they have to pay an invoice, it's instantaneous and super easy to do. So trying to think about these things as creating this kind of payments network that every business and now consumer as well is part of, creates this kind of added.

Yeah, talk about focus. Maybe. I think people had been asking for Mercury sort of personal banking for so long and it was an obvious opportunity for you guys. It felt like something you could have sprinted towards and launch. How did you, you know, what was kind of the thought process there? Was there a certain scale that you wanted to be at before you launched personal or what did that look?

Yeah, it was definitely like the biggest feature request for us for a long time. Yeah, it's definitely a matter of execution, doing it at the right time. We did it with a relatively small team. I'm a big fan of doing these new things with initially fairly small teams and seeing if it works and then investing. So I think we had a five person team. One of the drivers was. We found this amazing guy, Alexi, who previously had his own kind of startup, Neobank, in the consumer space. And then he, he helped Albert launch their consumer bank and then did the same at Mercury. So, yeah, having great leaders. What's the term Keith Rabois likes having like shotgun barrels or whatever is part of like knowing when the right time is. But yeah, you know, we do a lot, but we also try to be really focused. Right. Like banking and doing an amazing banking experience for startups is the core and that's where we have like the biggest investment.

Can you talk a little bit about underwriting at the earlier stage? The online businesses, how is that different? Is it Riskier. How are you thinking about the risk profile of like a non brick and mortar customer coming on the platform?

Yeah, I mean we don't give them loans. So like underwriting isn't necessarily about like credit risk, but it's about like KYC and kyb. Like how do you really know someone? Definitely startups are actually easier. Right? Like people have a pretty big digital presence. They have better websites, they have LinkedIn, they have X, et cetera and their descriptions and their VCs. Like if a Sequoia funded company shows up, you can underwrite that very quickly. I think it's a lot trickier when it is like a professional service consultancy and they don't have online presence and you have to kind of learn more about it quickly there. We think of a tiered approach. If we understand less, we'll ask you more questions, ask for proof of address or that kind of thing and then we end up setting lower limits and things like that as well. So a startup will have a lower risk tier. We'll give them a lot of flexibility. A company that we know less of will initially they won't be able to send like a million dollar wire. They'll have to kind of earn their way to building up our understanding and the kind of like features we give them.

Yeah. What do you think is the future of venture debt? Over the last year it's been in the news because of some sort of high profile shutdowns, but obviously it' important tool. Does that is that like you know, become a meaningful part of the business over time or is it just something that you guys want to have available but you know, it's not a, not a huge focus?

Yeah, venture debt is actually like a smallish market. Like people talk about it in the VC community, but even svb, which you know by far was the biggest venture provider, I think they had like $7 billion portfolio when, when they failed. So. So I think there's a good way to do it and a bad way to do it. A good way to do it is like you're a revenue generating company and maybe there's some cash flow need because your AR takes a while or you have some equipment, et cetera, and then you do it. That's great. I think the cases where I don't love it is you're some AI company that's not making any money today and you want to go extend your fundraise and that Runway by like 20% or something. I think in those situations, like when you run out of that, you know, as you start getting into that 20% or like it's, it reduces your options. Right. Like when you have a fundraise, a VC fundraise and you're in that last 20%, sure you do layoffs, you kind of reprioritize, you cut your founder salary, you do whatever the hell it takes to survive. But if you have like a kind of this fixed burn rate that like is caused by venture debt, that's not a, a healthy position to be inside. I think if you use it in the right way, it can be quite beneficial. In my last company, I raised a million dollar venture down and it saved the company and actually got us to profitability. So it's really important for us and I think people kind of with most things on the Internet at least people tend to say these extremes like never do it, blah blah, blah. I think it's the right thing at the right time.

That'll be the caption.

We do, we do provide venture debt.

Yeah.

When we post this clip it'll be like breaking news. Never use debt venture. Watch for the full reaction. I had a question about interest rates. Do you want to go first?

Go for that and then I have.

A. Yeah, I want to talk about how interest rates affect your business and what, how you think startups could prepare for this. I mean high interest rates, you're making more money on interest, low interest rates, there's more business formation, more venture capital flowing in. Is it, does it just net out where you don't care? Do you have a preference? What's your view on interest rates right now? Now?

I mean obviously we can't control it. So under every circumstance we will try to, we'll try to win. I think the ideal interest rate for us is like something like 3%. I think there's lots of kind of VC funding and business formation at 3% but we also have the opportunity to make money on our deposits better at 3%. And you know, for us and I think most startups, like, I think you want to operate like whatever the macro economy is and like try to set yourself up in that way. So, so we grew a lot when interest rates were zero, especially during kind of the big bubble. And there was definitely a struggle in terms of growth during some of that 2022 period. But since then it's picked up and we've obviously grown our market share and things like that as well.

You've invested in hundreds of other startups. I imagine the first of every month is pretty chaotic. In your inbox, you're just getting flooded. You're like great. I have another 300 emails to get through. Talk about your sort of personal investing process. I imagine you have such an amazing. You have one of the craziest networks in startups because so many of the best companies in the Valley are running on Mercury. But talk about your personal process. You're busy running a multi billion dollar business that's doing hundreds of millions of actual EBITDA at this point. Are you ever making investments where it's just, you know, a good friend or a founder you back says hey, you should invest in this company and just email them say sure, I'm in. Or is it, you know, what does.

Your process actually look like? I talk to every company I invest in. I do, I probably do like 20ish this year. I've done about 300 altogether. You know, main reason I do it is I just like talking to entrepreneurs and hearing like these crazy fun ideas. Like I've done a bunch in space and defense and things like that where, you know, it's very new to me, very different from fintech and it's always like a great learning experience and I really want to give back to entrepreneurs. Like I've been doing startups since 2006 and I think it's a great way to actually be helpful to people. But you know, if I invest I really want to believe in them. Like my, my rough criteria is if this person texts me at like 5pm, am I going to be excited to like do a call with them or am I going to be annoyed that I have to talk to them? So like I definitely want to do that 30 minutes to like have like a bar of saying okay, you know, I won't be excited because I like, like I love this space and I want to help this person out. So yeah, yeah, that's definitely a key. And yeah, yeah, it tends to be a broad set of kind of things and I'm still an active, active investor. So hit me up if you, if you're raising.

No, it's amazing that it's actually most people have to like really justify. Oh yeah, I'm angel investing and it's going to, you know, benefit me in these ways and maybe get some return. But for you it's like hardcore customer development feedback, talking to customers and maybe you invest as well. So, so very cool. You got anything else?

Yeah. Can you talk about how AI is impacting the business? I'd love to know. There's the boring stuff which I feel like is just LLMs are great at text processing. I'm sure, you're there's a lot of stuff that's no longer paperwork. Maybe you're scanning documents, OCR ing them, throwing them through LLMs. Is that working? And then how does that compare to just having your engineers be more performant because they have have cursor cloud code and Devon cognition in the mix? What does the AI strategy look like right now?

Yeah, I think the most exciting kind of short term stuff for us is the back office stuff. So my part of the thesis of starting Mercury was like what if the marginal cost of serving the next user is 0?

Right.

Like if you think about a normal incumbent bank, like you're walking into the bank branch, you're talking to someone, everything is actually quite expensive for them to serve a new user. And that's why they have these on railroad is fees for small businesses. Right. Like it's just hard for them to make money from like a small business. For us it's like how do we get it to be a database row? But it turns out like there is a lot of customer support, there's a lot of compliance, there's a lot of onboarding and a lot of that is like text based stuff. So how do we make it so if someone submits a utility bill to prove their address, we can like automatically process that and not just. It's not just cheaper, it's also instantaneous. Right. Like instead of waiting three days for a human to look at it, we can give them a great answer straight away. So lots of applications and compliance risk and onboarding and support and lots of it we have rolled out already. Lots of it. We are rolling out. I'm really excited about it. I think it's like a genuine improvement for customers. Engineering productivity, I haven't seen as much of a boost as I would like to see. I think it's really good for making an app from scratch. When you have a huge code base that's all interlinked, it's just not as good. And we also built in like a weird programming language, Haskell, which has been great, get amazing engineers. But I think a lot of these kind of coding LLMs are not trained on Haskell as well. So like when we were like a late adopter, at least on the backend side. And then lastly I think the user features, there's some interesting stuff coming. I'm not a fan of just like shove a chatbot in front of it as an interface I think it's easier to have structured data and be able to do things. But we've done some stuff around search and ocr and I think like in the long run, right, like if we have your finances, if we have your financial workflows, we have all that data. There's lots of ways to help you automate your business, help you, help you speed up getting insights and things like that. So yeah, I think there'll be lots of like kind of really meaningful ways to incorporate AI that customers like.

Yeah, on that last note there, are you guys thinking about LLM result optimization? You guys benefit. You said something like 60% of your growth and new customers are from word of mouth. Obviously LLMs are just another form of word of mouth because they're just sort of like taking all this, you know, content and then, you know, sort of organizing it and channeling it. How are you guys thinking about that or is it just happening by default?

You mean like a founder that goes to ChatGPT?

I go to ChatGPT and says what bank should I use?

What bank should I use? And you hope it says Mercury?

Yeah, yeah.

I did a tweet or Z to whatever they call it now and we've got a graph of how number of signups is going with LLMs and it's like fully exponential, especially in the last two, three months. Still a small base, but if the growth rate continues it'll be significant. And I'm using ChatGPT to ask about services and what should I use And Mercury actually just naturally gets shown up.

Right, because that's what I would expect.

So much of the content is like this kind of community based. So if you, you ask for it, like what's the bank I should use for my startup? Mercury is likely to come up. One thing that I'm thinking about is how are you even more active on these communities. So obviously I'm on X and I'm very active there, but a lot of our conversations that are happening on Reddit are not with me or someone at Mercury kind of participating. So I do think you can change the sentiment and improve your visibility by being active in communities and I think that's a big part of how you influence LLM. I think like you want to basically create like real content, right? Like it's a new type of SEO. This is like community based kind of SEO and recommendation and I think that's like that like probably genuinely aligns with like building a good online community. Anyway, 100%.

Well, thanks for stopping by. Congratulations on the round.

Big milestone, massive milestone and the whole.

Team and yeah, good luck to you. We'll talk to you soon.

Take Care talk soon.

On the Fed rates issue. He wouldn't take a stance, but thankfully that's why we have polymarket. Polymarket has an open market on what the Fed will decide at their May 7th meeting. This is the FOMC meeting. It's 41 days, 16 hours, 40 minutes and 27 seconds away. I know you've been counting it down, Jordy. What do you think Poly markets expect right now? They are the options are 50 basis point cut, 25%, 25 basis point cut or no change. The market's pricing no change at 86%, but they are expecting a 25% basis point cut in on the next meeting. June 18th.

Yeah. Wild. The volume on this is pretty substantial. There's 8, almost 9 million of volume just on this one poly market. Wow.

Yeah. Useful tool if you're monitoring rates. I think Ahmad's probably sleeping pretty well these days with an extra 300 million in the bank. And that's right, he's probably sleeping on an Eight Sleep, folks. Go to Eight Sleep.com nights that fuel your best days. Turn any bed into the ultimate sleeping experience. Do you have a snore sound on there or something? Oh, just the gong.

Okay.

The gong.

Wake up to the gong.

Wake up. I bet there's a way to add a custom sound in here.

But we also got the Studio Ghibli photo of the eight Sleep. Looks fantastic on the previous slide. I really enjoyed making these and yeah, they should throw that up on social.

Throw it.

I'll send it over.

I got a 95 last night, my eight sleep autopilot, but made adjustments to the temperature of the bed overnight to boost my REM sleep by a whopping 17%. So double digit increase.

You're doing great.

Thank you to Eight Sleep for supporting the show. You can get an Eight Sleep by going to Eight Sleep.com tvpn get $350 off your pod.

Just do it. Totally clipping the audio. Someone just had to take out their headphones for that one. Rough. Well, let's, let's let's move through some of the timeline. Then we got more guests joining in about nine minutes. Salma says okay, GPT4O cooked. I fear. I generated this creative ad for Bic Pen. The prompt was Create Bic creative ad. Add the pen as a hair accessory used to tie models hair up. Compelling message.

Wow. She didn't even say what ad copy to use. Yep.

And it says twisting hair since 1945. And that's a pretty good ad. Now with these things, you know, you're in this like uncanny valley where it's possible that the prompt was a little bit more like. You never know if somebody did a little bit more work on the front end. Right? This is, this is what's happening with like the vibe coding thing where people are saying, oh, I just vibe coded this game. And it's like they actually spent more time on it. But I think this is real. I think this really was the prompt and I think, I think if you went and tested this right now, you would get there and it's photo real, not uncanny valley at all. And it looks great. And yeah, if I was Bic Penn, I'd be printing this out and putting in the New York Times.

Send it to the printer.

Send it to the printer. Anyway, it's a knockout drag out fight for the next format of Studio Ghibli. Web Weaver Deepfates is advocating for Rick and Morty anime, which is terrifying in my opinion. I don't know if we can even show the full image, but it's very funny and it does look kids like. Like Rick and Morty. I liked this Studio Ghibli of the New York Stock Exchange on the next on the next slide. And it reminded me of our sponsor Public Investing. For those who take it seriously. Public.com industry leading yields and they're trusted by million folks. Go over to public.com and sign up. Fantastic. I like that one. Theo says sir, another giblified historic photos.

I wasn't done doing an ad for public.

Oh, you were.

Public.com.

Okay.

All right, that's enough. Go to public.com thank you to public for supporting the show.

People are having a lot of fun with these Studio Ghibli photos. There's George Bush receiving the information about 9 11.

I actually don't think good effort. I don't think they. They did dubya that well on this. It just doesn't really look like him.

Yeah, you're right. Missing some of it.

I've seen it botch the likeness a couple times thing a couple times.

Well, the Fiverr illustrators still have a job, I guess.

Yep.

Memetic theory Mass who we've been has been on the show before for that fun swing project he did. If chat got. If ChatGPT has rejected giblifying multiple of your ideas, you're not trying hard enough. You were running into that yesterday.

Big issues there.

Someone giblified his swing, which is very nice to see. Sam Altman says tremendous alpha in images in ChatGPT right now. It's very true. The new Version of images in ChatGPT is still rolling out, so please try again later today if you don't have one. It's an incredible technology product. I remember seeing some of the first images come out of the model and having a hard time thinking that they were really made by AI. We think people will love it and I think they have loved it. They're really enjoying.

Yeah. And this is why I was saying this is, you know, very clearly sort of Sputnik Hoover for dogs kind of moment for AI.

Yeah, exactly. It's like Sputnik of iPhone moments and sprinkled in.

Sprinkle a little deep seek moment in there.

Yeah. Should we talk about Nikita Beer? He's making moves. He's over at Solana now. Officially an advisor.

Yeah, officially an advisor. Not a full time employee, but cool moment. I think he had been a pretty big critic of crypto historically. He went on this sort of generational shitposting run where he just kept saying, like, I'm gonna launch a coin. I'm a launch a coin lunch coin.

He never did.

I don't think he ever did.

Okay, well, maybe it's coming soon then.

And anyways, big, big pickup for Solana. Yeah, Solana, especially after the rough. And it's just like a new, it's a new surface area for Nikita. It's, it's, you know, undoubtedly one thing that we know is some of the best social products or many of the best sort of social products are providing entertainment. And crypto is very good at providing entertainment, right?

Yep.

Anybody that's sort of invested in one of these tokens, it's like you're, you're watching the chart all day long, you're following it. There's sort of this team oriented element to it. So.

And yeah, I mean, when you think about the hope for. Pretty much every cryptocurrency project over the last decade has been, let's cross into the average users on the consumer side, not purely just as an investment vehicle, but let's help developers create crypto projects like Polymarket that really, really broke through during the election cycle and was just a news source for people, basically. Even though there were crypto rails underne. I'm sure Solana wants to power that. And that's what Nikita has been writing about online for years, talking about how to grow consumer apps and specifically take advantage of a bunch of different APIs and iOS, figure out how to link contact books and whatnot. All techniques, growth hacks that should benefit Solana if it's building its own apps. Or developers in the ecosystem. And so Grok summarizes it, saying, this development is viewed as a significant boost for Solana, particularly due to recent favorable changes like regulatory clarity, increased app store openness, and the upcoming launch of Solana's mobile device Seeker. The community is highly optimistic, seeing this as a critical moment for Solana to expand in the mobile app market with expectations that consumer crypto applications will see accelerated growth. And so Nikita writes, while the jury is not out yet, Solana has a the fundamental building blocks for something to break out on mobile. And certainly many apps are making headway. So today I'm joining Solana as an advisor to help select companies and help select companies launch and grow their apps. So let's hear for Nikita some personnel news on the timeline. You love to see it. Some people making moves.

Spoke with Nikita last night over DMs. We're going to get him on the show at some point, which would be cool. And speaking of crypto coins, we have massive drama going down on Hyper Liquid involving Jelly. So for those that don't know, Hyper Liquid is a sort of decentralized exchange. It's very popular right now. It's already publicly listed itself, trades at around a $14 billion valuation. And so this one is there's some drama involving Jelly Jelly, which is a token that was launched by Slow Ventures portfolio company. So Sam Lesson was, was helping them out with it, which, remember we covered it sort of ran up TO I think $300 million valuation in 24 hours or something crazy like that. It came back down to earth. It's been at a $20 million market cap. And sometime in the last 24 hours, a trader opened a massive $6 million short position on Jelly Jelly.

Oh, I just need to pause you because like when you say like as I process this, like Jelly Jelly. Like Sam has posted some images of what the app is supposed to do. This new social format, I'm like, you know, could work. It's kind of ridiculous. Like, I like people taking shots at wild apps. You tell me it's a $20 million market cap company. I'm like, yeah, like that's awesome. Like that sounds perfect for this. Like it's a seed stage company. Like, go for it, guys. Like, I'm in full support. If you tell me the tokens trading at like 20 billion, I'm like, okay, let's maybe, let's pump the brakes.

Real.

Yeah, but it's so funny that you can have a $20 million market cap startup essentially like a YC stage startup in Terms of size, someone can come and take a $6 million short position out on you. That's like it's only in crypto is this possible. And it's very, very weird dynamic. But take me through what's happening.

You know, they're getting a slack message. Hey, somebody's shorting us with size. Yeah, it's like we're actually just a pre seed precede company.

But Fortune 500 companies.

Yeah, we're being shorted with size.

Actually shorted with size.

So the trader deli deliberately self liquidated themselves by pumping Jelly Jelly's price on chain, essentially forcing himself out of the trade.

Weird.

Hyper Liquid was left holding the toxic short position, currently at a massive loss to negative $10 million. P&L. Jelly Jelly pumped from a $10 million market cap to 50 million in under an hour. Due to the force squeeze, Hyper Liquid could face full liquidation if Jelly Jelly races reaches $150 million market cap, which would be a 3x away.

Yep.

Market is watching closely.

But is that, is that that big of a deal for Hyper Liquid? I mean, we were talking about this earlier. It seemed like a 14 billion dollar organization or coin. It seems like, yes, obviously losing 10 million or even more would not be great, but it seems sustainable. This doesn't seem like a true run on the bank situation.

Yeah. And I'm looking at Jelly Jelly right now and it appears. What's the market cap that they are still at around 20. So liquid seems to be doing just fine.

So massive drama but not a full crisis.

Yeah.

Over at Jelly Jelly. Very interesting though. Yeah, we'll have to talk to Sam.

About it and get. Because this is before we get our next guest in here. He's actually ready.

He's ready.

Let's bring him in.

Let's bring him in.

There he is. Hey.

Welcome to the show.

What's up guys? How are you?

We're great.

How are you?

I like your bananas.

Oh, thank you.

Yeah, we were inspired.

We're doing the morning routine. We got the Saratoga water right here.

We're taping our mouths. We can't tape our mouths during the show. Yeah.

But it's been good. How are you doing? Can you give us a little brief intro on yourself? Your company, what's new?

Yeah, so I'm Stephen Schwartz. I grew up, up learning how to program pretty early. And I basically spent all my childhood going Facebook group to Facebook group and selling different people's software and met some people really early on that I'm still working with. And you can kind of consider us like chronically online kids. And we figured out a lot of ways to make money on the Internet and segue that into a platform called wap where we help people make money on the Internet. And a lot of is going on right now. I think we just released a lot of new products and someone leaked our fundraise a year ago. So I think there's been a lot of, a lot of people reaching out to us and things are really busy right now, so it's getting pretty crazy.

Where'd the name come from and why didn't you release the funding information?

Yeah, the name came from. We actually just purchased a ton of domains throughout our early years. And we just. Every project we had, we picked a random domain off the shelf and we always buy like auctions ending soon and domains are about to expire. And we had WAP I.O. and, and looked like a cool phonetically sounding name. And now it stands for We Help Offers pop. And I think was super random. So that's where it came from. And we didn't announce the fundraiser because our goal is not to raise money. And I think our customers don't really give a shit about how much money we raised or anything like that. And I think it's more distracting than not. And even the people that we want to work with and whatnot, I don't think that the good people really care so much about all the buzzy stuff that you might want to talk about online. So I think we were trying to just stay pretty low key. It's more distracting than not.

Cool.

Yeah. Talk a little bit about. More about the team dynamics. Sounds like you had just worked on a ton of different projects with the founding team. Was it faded that you guys were all going to work together forever? Like, yeah, talk about that.

Yeah.

So I met someone named Cameron in a Facebook group. We were like 13 years old. He made a post saying he's looking for an iOS developer to help him build some projects. And I slid into his DMs and. And we started building different iOS apps together in like 2013 and selling those apps to people in the Facebook group. And from there we built games, we built chat apps, we built marketplaces, we had our own agency and kind of just like so many different things. And then I think during COVID it became clear that everybody in the world, they didn't really like their job, they didn't want to sit behind a desk all day. They either got fired or they didn't really like it. They wanted to travel, they were at home and people were Pretty addicted to the Internet. So it was kind of like the whole world is waking up to what we had done our whole life. And when that happened, we found a lot of forums were actually meant for selling software. And we started selling software in there just for, for fun. We was trying to make a little bit extra cash and Cameron found one and we were starting to make like a couple thousand dollars a week from it. Like, what the hell is this? People are cash apping each other, zelling each other for desktop software. And, and it was the same desktop software we built when we were younger. So we were like, why don't we just start selling it? And made a lot of money. And we were like, like, let's build a platform where we can actually sell it and structure the delivery of the software and accept payments on it. And people like that a lot more than the, the forums. And pretty quickly people asked if they could also sell on the platform. And we added the necessary functionality for that to happen. And over the past couple years, I think people were asking us, hey, can we also sell this? Can we also sell this? Can we also sell this?

And.

And I think we started to build a lot of that and now people are selling all sorts of stuff. I think maybe for the first couple years of our business it was really like, like we're building a better shopify for more digitally native businesses and maybe you can kind of think about it like Retail Stripe. And then before we knew it, we had a couple hundred thousand people coming to the site each month and buying something. And we were like, how can we make this a little bit better where we reduce the barrier of entry for people that are trying to sell something so you don't actually have to program software. You don't have to have a Discord server where you have to come plug it into our website. Let's just build Discord and, and at least the parts that matter. And we started to build things like chat and forums and live streams and all this, different ways to engage and connect with your customer base. And that's where we are now. And yeah, so I think on one end we have like retail Stripe, Retail Shopify, and now we have a lot of consumer functionality to chat and message and interact.

Yeah, Question going back a little bit to the raise and then I have some stuff related to the product. Have you guys been profitable this entire time? You guys are the make money app. I imagine you guys like running a good business yourself. Maybe talk about that.

Yeah. So when we first started, we were bootstrapped for like the first six months. Then someone tried to acquire us and we said no and raised our first money from a couple people. And since then we've definitely had a couple profitable months. I think usually before each fundraise we had some, a lot of months that were cash flow positive and to take it up a notch when we raised a little bit more money. And I think after we do that, we obviously ramp up spend and start investing in some pretty cool areas. So we've had profitable months. Right now we're definitely not cash flow positive, but I think it could be if we wanted to stop investing in the places we're growing. And I mean, our model is lent itself pretty well to making money. And I mean we only make money when people make money on the platform and people are making a lot of money on the platform. So we're certainly making good amount of revenue and we're also investing a lot of that back into the platform.

Talk about hype. Generally you don't care to announce fundraise, that gets hype in the venture world. But at the rate that you're growing, I imagine at some point, you know, I can imagine WAP as a public company and you know, you are going up against giants, right? You know, Shopify, you are, I'm sure, directly competitive in many ways and I'm sure you're going to enter other areas. Will there come a time when you want to, you know, you know, do the tech podcast circuit? You know, you're on our show, which is, which is awesome. But it seems like you've been very intentional about. I remember hearing about from carried no interest about wap like last year, at some point he's like, WAP is the most under hyped, just absolute monster. Like nobody's paying attention to them. They're absolutely crushing it. But do you ever see a moment where you'll kind of like flip the switch or are you guys just going to stay focused on your customers forever?

I mean, I think we definitely stay focused on our customers forever and I think we do the right marketing to the right customers. And I think that it's no shock that, that the people in tech don't necessarily know about WAP so much because they're not really the ones who are starting many businesses. Right. They're trying to go for the super scaled up businesses. And I think we, we have generate millions of views probably per day at this point across social media for wap. And that's mostly targeting our core customer base, which is super scrappy young people that want to do something that's entrepreneurial and start a business. So I think we're definitely loud where we need to be. And I mean we have a YouTube channel now that that generates several hundred thousand views of video and we're definitely loud where we need to be. But I don't think that, I mean, recently we released a new product that's like getting a lot of attention that people are in tech are also finding a lot of value on and I think that's going to become more relevant to go on. What's that product types of things and be loud. It's called Content Rewards. It's basically kind of think about it like a probably a 5-10x cheaper CPM than any other platform that exists right now and all. UGC doesn't really feel like an ad. It's not exactly an ad and people are getting a lot of views from that and we certainly are experiencing a huge lift from that.

And that's like productizing the sort of clipping which has been happening. Right. You know, remember I think people first realized that like Andrew Tate was doing it because you know, you, you, you see videos of him that just were made by him, but then also, you.

Know, shared by completely other people that were funneling into his program.

And is that, is that the, you know, we've talked about kind of the different eras of making money online. It was like selling Pokemon cards or trading sneakers and is like clipping is that like if you're in high school today and you have no skills but you just want to hustle, is that like how do you see that as like that's the sort of it entrepreneurial activity?

Yeah. So I would look at it as almost like a big funnel. Right. So maybe you start with that and I think you graduate towards maybe operating your own business one day, even on the platform. So I mean what's happening right now is we're having, it's the fastest growing way people can earn on wallet tops right now. And we already have thousands of people that are earning money, some actually a pretty significant amount. I think we've paid out some people even for our own marketing, over $10,000 total. And those are definitely people in high school that are really good at just making videos and they know the trends on social media. And I think the future isn't really about like everybody kind of is an ad when they see it and it's not really as effective as it used to be to just run an ad on Meta and expect people to resonate well with it. So I Definitely think it's the future. And I definitely think that, that we'll see a lot of the people that are clipping and making UGC content right now go on to build really awesome businesses because they, they, one, they have a little bit of a taste of making money on the Internet. They have a KYC payments account all set up. They know how to market very effectively. They know how to what the content rewards are, they know what they're marketing, and they're in pretty in tune with everyone that's actually paying them to market. So they know it works. And. Absolutely. I think that's a, it's a huge part of the future. And we look at it as maybe like the, the first step in earning your first dollar online.

Can you talk a little bit about the differences between Gen Z and millennial entrepreneurs these days? Like what, what's changing? What's better, what's worse?

Yeah, I think I would say Gen Z's prioritize fun. And it sounds kind of silly, but I think, like, nobody really wants to work on something if they're not having fun. And I think that even if you give somebody a lot of money, it's, it's difficult to actually get up out of bed every day and start to do the work. And I think that we're seeing that all over the place where people are just fine making $3,000 and traveling throughout Asia. And that's like, like a very, very different mindset where it's like, I need to go to college, I need to make $200,000 a year, otherwise I didn't do it. And I think people in Gen Z are kind of just doing it. And, and they're having a lot of fun with that. And I mean, we look at WAP as like, WAP is we, we, we are building the future of work. And I think that the future of work is very fun, should be engaging. People are making a lot of money by making funny memes. And like, that's a, that's a complete shift of like, value creation. And, and I think the Gen Z's all over that. And, and they must bring fun into work. And that is, I think, the key difference of what Millennials versus Gen Z.

Talk about live streaming. You guys support live streaming. It's been something that's been big in Asia. It's probably big here. I'm not, I haven't purchased a product through a live stream myself, so it doesn't feel big yet. But is it, Is it already. Do you feel like it's already mainstream? Like, you're, you're obviously bullish enough on it to like, integrate it into your platform. I would love your take on it.

Yeah, I mean, I think that the saying is like, you can say a picture is worth a thousand words and then maybe a video is worth a thousand pictures. And I think that a live stream is like the most effective way to communicate with an audience at scale, and it allows for people to repurpose the clips afterwards. And it takes very little effort to go live to thousands of people and maybe tens of thousands or hundreds of thousands. So I think live streaming is definitely the future of how you connect with an audience at scale and it's probably the future of shopping as well. I don't think it's necessarily that different. I mean, you look at QVC and that's obviously a long time ago. You look at HQ trivia even back in the day, and, and now you look at Tik Tok Shop and even Amazon's integrated a lot of live, live shopping and nobody cares more about something than what's happening right now. And that's what Live Stream is all about. So it's a very, very, very bullish on, on live streaming, not only for actually the, the point of sale, but also what happens after the sale. If you, if you're running a E commerce brand, I'm sure you'd want to have a weekly seminar where you actually go over with your customer base and say, hey, do you guys like the product you just purchased? Why don't you drop the comments right here? Maybe we can do a demo live and show everybody how to use the product. So I think live streaming has a lot of good use cases, not just for the point of sale, but even after to engage a customer base.

Is there a cohort on WAP that you think will be particularly resistant to the relentless march of AI? There's a lot of people worried about, oh, ChatGPT, the next version is going to put my business out of business. Business. What do you see as being like, yeah, this, this person on WAP's going to be here for two decades or more?

I think, I think the people on WAP are really special because what happens is as the trends evolve on social media, the people don't just stop doing what they're doing. They don't just fall off the face of the earth. And I think that they adapt really well. And I think a lot of people on WAP start one business and then second business and third business and then all the way. Still 10 businesses later, they're finding their niche in the market. And just because the niche change doesn't mean they're going to stop trying to provide value for people on the Internet. So I look at AI is actually a pretty awesome driver of our business and it makes it. Unless we're going to hypothesize that everybody just stops living and doing anything with AI, which I think is certainly maybe some people's perspective, but people are still going to exist and they're still going to be here, and it's not like they're going anywhere. So when that happens, it's like I need to figure out how to make money for myself and maybe how to have a purpose. And I think that WAP is all about that. So I actually would say say WAP as an entire platform lends itself very well to AI, or maybe AI lends itself well to wap. And I look at, we have a lot of AI products on the site and people talking about AI, doing AI courses, AI software, AI, AI in their live stream. We have some video features that you can send people avatar messages and creating ads with AI. So I look at AI as a huge plus for almost every single person.

On W. That's awesome.

Makes sense. Last question. How do you think about hiring? I'm sure you've got maybe your core team and then basically an army of like a hundred thousand people that are sort of your users that also want to support wap, because if they can make WAP better and bigger, it's good for their individual businesses. But yeah, what does your team look like?

Yeah, our team is actually mostly like users of our platform. And I mean, people. Some of our earliest users, we were our first users and some of our earliest team was our first users. And I think that the best place to recruit from companies broadly is actually a user base. They know the product well, they're building for themselves. And I think that we have a saying, it's build, you're your own customer. And we don't use anything else other than wap. We don't use Slack, we don't use Discord. Everything's on wap. And I think that's the best way to hire. Also, we have a great community of hundreds of thousands of users that use the product every single day. And I mean, they're giving us the best feedback and oftentimes they're programming for us and building little features in the site and doing our marketing as well. So way we hire is people that are in our space on our product and that really are passionate about our Mission.

I can random thought. I can imagine, you know, a boomer VC talking to you, saying, you know what? I really think what you're doing is the future of work. And you're like, bro, this is the present of work. We're living it. But it's funny how these sort of platforms emerge. Where I look at WAP and I hear you talk about it, it's like, yeah, I believe this is the future of work in many ways. It's people being entrepreneurial, like finding new ways to, you know, like you said, create value on the Internet. And it's just very cool to see. So I love it.

This is such an awesome experience.

Congratulations on the progress. Hopefully we don't create too much hype for you. I think another year, but your days are numbered, dude. You got maybe another. You got basically another six months, relatively low key. And then people are going to be like, wait, these kids are doing like hundreds of millions of revenue. But it's great to have you on. We'd love to have you on again.

Thanks for coming on. This was fantastic. Fantastic, awesome, guys.

Have a great day.

Bye. Bye. Thank you.

Bye. That's great. Yeah. What a fascinating company, dude. That's completely discussed.

That's the final boss of Gen Z entrepreneurship. I would love the Charger.

Oh, yeah, sure.

We share one Charger.

Hey, you don't become the most profitable podcast while spending money on duplicate technology. But we got Underdog coming in. We got Jeremy from Underdog Fantasy.

There he is.

He's got a beautiful background. How you doing? What's up?

You were, you were ready for the. For the full live stream for tv. Love the, love the setup.

Looking great.

We got the background.

I love it.

There you go.

Can you give us just a quick intro? Who you are, what your company is, what's new?

Yeah, for sure.

For sure. Company is Underdog. We just turned five years old. We focus on building games for sports fans in America. I've been doing something much the same my whole adult life. 15 years now. Started a business called Star street in 2009. Actually started as a sports stock market, but it was very early real money fantasy sports days. And I've been trying to make sports more fun for 15 years now.

That's awesome.

Talk about the news today. You got a new.

Yeah, we just announced our. The first close in our Series C, Spark Capital's leading 1.225 pre money valuation.

There we go. There we go. I got this new. I got this new soundboard.

Some nice validation and acceleration for what.

We'Re Doing size gong.

Sorry. I got this. We're very excited.

We got a soundboard.

We haven't thought about it today. I don't know if you can actually hear it, but there's some great, great sound effects.

I don't hear it.

I want to get it. No, so. So my first thought goes, goes one, you know, super validating to get this round done. But I remember around the time when you started this company, it was every round. I don't know about every, but at least the first one or two rounds that you're raising were, like, very hot. Like, people were, you know, chasing it. They got priced almost to perfection. Right. I don't even remember. I remember it was like. My recollection. It was like a. Almost like a seed, pre seed getting priced like, well, well above 50. I don't know exactly the price, but a lot of people when they see rounds getting done like that that are just like super early and, like, expensive, end up saying, like, well, this company has to execute perfectly. And, you know, clearly, you know, it's hard to execute perfectly, but you executed very well. How do you, you know, talk about kind of that journey in terms of, like, making sure that if you want to go from whatever, you know, wherever is initially priced to 1.2 in five years, you kind of have to, like, hit these sort of perfect milestones all along the way? Yeah, definitely.

It's definitely not been perfect. It never is, of course, but it's gone fast. Look, I think we had the luxury of the founding team at Underdog was seven. We all worked together at a prior company draft and we built products that people really loved. So we kind of had. Had, in a way, the customer base, the fan base when we started the business. And we built games that ultimately, through some M and A, got taken away from them. So that was the kind of start and that allowed us to move fast. I spent my whole adult life in this community, so we had the community and the support of the community early. And that's something that's been really important to us, is the people we build for, the customers we build for making sure that they love our products, they love our games, and the. They've. They've been. They've supported us the whole way through. So that really helped. Those seed rounds, the first ones weren't as glamorous. I think our first valuation, the. The first money we raised was at a 6 million valuation.

Oh, wow.

So it's not that glamorous. But I went.

So I was not early.

We did, we did.

We did the first close, then a second one at a higher valuation, then a third and then a year later I think was our Series A. The partner who led our Series A was my very first investor in my first company 15 years ago. He then was a partner at SB Angel. Kevin Carter's his name. He runs Night Capital now. He's was the first person I called when it was time to raise a big round. He had been in every seed round obviously and he stretched kind of well outside his fund to lead our round because that's not what his, his fund was meant to do. But he's kind of seen this for 15 years and knew the journey. So he's been a great backer and a great asset to the company.

Can you tell me more about the. I mean you mentioned it's a very community led. What's the marketing mix right now? I see a lot of, of the, the, the big sports companies partnering with Pat McAfee or ESPN or there's the Dave Portnoy universe. Where have you found success?

Yeah, it, it, it's a real mix. Look, the, the top acquisition source for us always has been our existing customers. Almost a third of our customers come from directly attributed referrals from other customers.

Sure.

It's always going to be the best source. Right. That's a sign of us building products that people love and that's our whole opportunity.

Yep.

Wap, who is just on. We have partners on WAP so that they're a big partner of ours and partners in general. We, we do a lot of our own content as well. Two years ago we, we made the decision to start a show and we built a set in Gilbert Arena's basement. That show is now Gill's arena. And that show is, we think by, by kind of any forms of measurement, the fifth largest daily sports show in America right now. Now.

Wow.

Wow.

Massive success for us and that crew, Gil Gill and the whole crew have been amazing to work with and amazing partners to the business. We have a couple other shows as well and just continue to invest in trying to meet sports fans where they are and add value to their lives.

That's awesome.

Talk about building in a hyper competitive space. I think you don't even have to be aware, you don't have to know anything about, you know, sort of like anything sports gaming related to know that, that you're competing with some heavily, heavily funded, you know, sort of public companies that can outspend you on kind of every dimension. But, but clearly you guys have been able to like break through and become a real player despite, you know, being able to invest far less. How have you guys. Is it like raw execution and just building the product that you know, you guys want so you know your customers are going to want or what do you think has been your guys kind of winning formula today date?

Yeah, look, we started Underdog with kind of a really simple thesis. It was, there's so much more to be built for sports fans in America. And if we can be the best at building product, we'll build the biggest company in this space. Right, that, that's always been the belief five years in. We have obviously more confidence in that than ever before. And look, we can be the best at building product and, and can with a lot of confidence, say in the space, we are the best at building product not just because it's our DNA and what we prioritize and what we look for in people and what we really care about, but also just by the kind of function of how this space came. Almost every other large player is largely reliant on legacy tech that was initially built for a different market for different customers for the UK and Europe. And we had the opportunity when we started this business to really play a long game and say, hey, we're going to build this for the future. We're going to build the best product. So we should build all our own technology. And that's what we've done. Both fantasy sports, now licensed sports betting technology. And that gives us the ability to build a differentiated product, to build a better product and to just have the fastest product velocity. I think the whole company's sick of hearing me say it because every two weeks when we do our big company meetings, the two things I make sure I say every two weeks are it's product and it's people. Those are two reasons we're going to win. And we have to have the product, fastest product velocity and the best people here. And that's what we focus on.

Can you talk a little bit about regulation? I know the products are legal in Wikipedia says 31 states. I don't know if that's exactly, exactly accurate, but obviously there's a march from the whole industry. And even though you're competing, you're probably working together in some ways. Is there a lobbying group that you're part of? Like mechanically, if you're part of an industry and you got to kind of team up with your rivals, what does that look like day to day?

Yeah, so there's a lot of different, there's kind of a lot of different pieces to it because there's we, we offer games right now in 41 states.

Okay.

We offer our core game, our, our pick EM game in 36 states.

Sure.

Where? License sports betting in one state. When Missouri launches later this year, December 1st, it will be a second state or so we hope. We obviously need to get licensed by the regulator there. And for us it's all about like we, we want to always build games within the laws and build the best customer experience we can within the laws and kind of the wants of the regulators. This space is definitely highly political. There is a lot of competition and a lot of people who candidly don't have the means to compete or the ability to compete on products. So they try to compete in other ways. That's definitely something we faced. And when we do that, we always try to team up with the people who care about customer experience, care about delivering the best products to customers and say, hey, that's how people should compete. That's how people should win. It should be all about customer experience.

How do you think about focus specifically with the team? I'm sure that everybody, or not everybody, but I'm sure a lot of the people that join Underdog do it because they like, they're just obsessed with sports and they love the products that you guys make. But at the same time, like, you know, if you've got a lot riding on a certain outcome, it can be distracting from actually building the underlying product. And then I'm sure for you and, and other people on the team, there's also a lot of, you know, distractions around some athletes like, hey, you want floor seats to this game? You know, like they're a fan. Like how have you guys stayed focused? Because clear to clearly to accomplish what you have in the last five years, like you've had to be pulling some, you know, very late nights and, and really leaving it all on the court. On the court.

There we go. Landed it.

It's fun anywhere. We're maybe signing a lease for a new office and we have this vision of putting a basketball court in there. Basketball court. So it will really be on the court. Then there we go. Look. We're really lucky we get to work in sports. Sports is fun. Sports brings people together. I've been a sports fan my whole life. That's obviously kind of how I got into this. And I just think there's so many wonderful virtues of sports and the communities it creates and the bond it creates. I just think that that's a blessing for us. Look, we. It's funny over the course of my career, people, and not as much anymore, but people used to say, oh, we don't invest in hit in games businesses because it's hits driven businesses and it's tough to predict hits like the sports are the hits and the hits keep coming. We don't have to worry about that.

Yeah.

Can you take me on a little bit of a historic like historical tour of the industry? Like when I was a kid it was like gambling. It only happens in Las Vegas. Then in college people were playing online poker and then there was like a poker pocalypse or something where all those things got shut down. Can you give me some just historical anecdotes? What were the key turning points in the industry?

Yeah, let me start post Black Friday. I believe that was 2006 and that's when poker really kind of went away online in America. It's now come back, but just in a few states and nowhere near to kind of what it was then got it. Real money. Fantasy sports as we know it really started in 2009. Fanduel. That's actually when Star street was born as well. Fanduel kind of being the largest of that early generation, obviously, and have continued to be the largest. There were a lot of incumbents who weren't so pleased to kind of see their success. And in 2015 there was kind of this regulatory storm that hit the fantasy sports industry for a period 15 Attorney General said the business was illegal. They were under an FBI investigation, they were under a DOJ investigation on like a six month stress. The industry then got together and said, hey, we need to clarify the laws. We believe what we're doing is legal. We need to clarify the laws and got together and passed legislation. There's now fantasy sports legislation In I believe 22 states. So that happened then. Then there's always kind of been fits and starts of hey, maybe legalized sports betting is going to come to America. But it never really did until 2017. A court case called Passport went to the Supreme Court. It was being kind of pushed by New Jersey who wanted to offer sports betting, went to the Supreme Court in 2018 when Paspa was overturned by the Supreme Court that made sports betting no longer federally illegal in the US and from there states can legalize it as they so choose. Somewhere around 28 states, I believe have now legalized online sports betting or sports betting in some form. And so the companies that were best positioned for that early set were FanDuel and DraftKings. Because of the fantasy sports advantages, the customers they had the ability to operate a digital business. And that's kind of wave one of sports betting in America. Now, when passable was repealed, There were 31 days until New Jersey was launching sports betting. And then a quick wave of six dates came soon after. So every company that wanted to be live for the market open in had to take tech that was already built and operational that was built in the UK and Europe, where there was a way more mature market and. And bring it to America. And that's why if you look around the space today, you kind of see products that look almost all the same, right. There's different colors, there's sometimes different prices, but the core experience is the same. We believe. I believe that's not the right product for American customers. It's a very hardcore product. It's very transactional. And Scandiji is not that much fun. We believe that the games we build and the games that should be built are to make sports more fun for someone who's watching a game and wants to increase their enjoyment with the game or who wants a reason to watch the game or something to do with their friends. And so that's specifically what we build for an analogy I use quite often, and I've never been a fan of using a company's analogy for another, but I think it just fits so well for what we're about and what we believe the opportunity is. Think about what Robinhood is to stock brokerage. That's kind of what we are to sportsbook, right? Simpler, more intuitive, more approachable, more fun, less transactional, less about big dollars. And thinking about it from a financial perspective, more. Put $10 on an experience tonight on your opinions. Express your opinions on sports and have fun with that.

Cool. Very, very awesome.

Very cool. Congratulations. Massive milestone. It's great having you on.

Yeah, congratulations.

Looking forward to the next market up, I'm sure.

Thank you. We're working on it.

Yeah. Awesome, dude.

Good luck.

Thanks for coming on. See ya.

Bye. That's great. We got Rob coming in soon. Another hit. Who led Jordy. How did Jordy wind up with the soundboard this show? I feel like I would be a little bit more responsible with it, but.

You can trust me with the sound with incredible sound effects. So we got Rob Mower joining right now.

Hey, Rob. How you doing?

What's up, gents?

How are you guys doing?

We're doing great.

Doing great. It's great to have you. Why don't you. You introduce yourself before I do and do a silly one more.

More clean.

Yeah, definitely. So I'm not sure if you guys are getting any introduction here, but I created the Huberman Lab podcast with Andrew. I now run the podcast along with the media company that Andrew and I create, Psychom Media. The long and the short of it is Andrew, as I'm sure many are familiar. Neuroscientist at Stanford, natural born teacher who has a real gift for explaining, you know, how to better your physical health, mental health and performance. So my job with Huberman Lab is basically to get out of his way and just make sure that he has the tools he needs. And I'm running the business to make sure that we're putting out, out, you know, really a high quality episode every Monday and then also now on Thursdays with, with our Human Lab essentials, which are our 30 minute episodes that go out on Thursdays.

Was, was there a key turning point in the business where it was taking off or was it gradual?

Actually start maybe go a little bit earlier than that. I, I've heard it, I've heard it. But like I, I'd love for the audience to like give talk about the story of, of. Of just like how it all kind of like started.

Yeah, let's start there. That's cool.

Great.

Okay. Yeah, definitely. So let me bring, I guess, best starting place. In 2019, I met Andrew. We had lunch together because I was helping interesting people get booked on podcasts. After about 10 minutes of talking to Andrew, it was clear to me that he was one of the most knowledgeable people I've ever met on topics that were of interest to me. He, you know, like whether it was how to manage stress, how to optimize sleep. He had studied David Goggins in his lab researching fear. He had done MDMA tests on mice, studying thermogenic effect of that compound on them. So basically I was like, this guy knows more about things that are of interest to me, interest to my friends, and probably of interest to folks like Rogan, Tim Ferriss and other podcasters. And my goal from then became, okay, how do I help in terms of brokering some of these introductions and just selfishly wanting to hear him on some of these shows, chopping it up with folks like that. In 2021, Covid broke out. Stanford basically encouraged Andrew to get out and start talking to media. And that's when Andrew and I reconnected. Just given the fact that his lab and a lot of his research was around fear, circadian biology, things that people were struggling with during the early days of COVID did, being kind of like locked down indoors a lot of stress going around. So it just kind of seemed like a natural fit to go on a lot of these podcasts. And after doing a bunch of them and, you know, getting just really positive response from audiences, Lex Friedman actually encouraged Andrew to start a podcast. And then Andrew and I talked about it, you know, end of 2020, launched the show in 2021, and it was kind of off to the races from that there.

Did you guys have instant product market fit? It's sort of historically extremely difficult to grow podcasts. Right? Like, people don't really realize they. They see you guys at the top of the charts, they just imagine you get a couple viral clips, all of a sudden you have a big show. It's very difficult to grow. I'm sure you guys had the benefit of like, getting Andrew on these shows and, and maybe having those other podcasts promoted or whatever. But how. How quickly was. Was, you know, was it a rocket ship or maybe slow and steady, steadier than people might think?

Yeah, it was definitely a bit of a rocket ship. I think, you know, a lot of times people will look at the success of the show and kind of see it as this, you know, overnight success in some ways. But I think what is important to remember is that at this point, Andrew had, you know, 30 years of researching biology and speaking to it from, like, a deep love in terms of understanding the mechanism of how these different systems in body work and how to kind of optimize health based on those, and had, you know, at least a decade of teaching experience doing lectures and things of that nature, and then just kind of like putting the camera in front of him and his, you know, ability to speak to these topics that are, you know, rooted in science, but kind of coming at them from the angle of, you know, how people can better their health in both the short term and long term through using them, I think is where the kind of like, product market fit was where, you know, whether it be on YouTube or on the pod, you know, RSS podcast platforms, people were interested in these topics and Andrew could speak to them from a. From a place of, you know, deep experience and understanding. And yeah, just kind of thinking it through in terms of what. What topics are going to be of interest to folks, but really just kind of perfect her kind of. Of following the path of where his interest lied as well was. Was key.

Give yourself some credit too, because you had a, like a decade, like, you know, basically, you know, managing, you know, diff various brands and whatever. How do you guys think of just sort of like distraction and avoiding distraction and focus. You guys spent a very long time just doing the show. Sort of simple. You've branched out more recently, but it still feels very focused. And then at the same time, I'm sure if you guys said yes to all the great opportunities in front of you, you would never even be able to be in the studio. So how do you think about what's been your framework for deciding what to do, when to do it, when to say no, that kind of thing?

Yeah, I would say our default answer is no. Basically, we look at it through the lens of.

Of.

Everything is a. Is a. If we look at it through the lens of. Our goal is to put out the best possible episode every Monday morning. Everything that is competing for our time against that is really needs to be fantastic for us to. For it to make sense in terms of us pursuing. Andrew wants to spend all of his time prepping for either guest interviews or solo episodes on the podcast. So, you know, basically we see everything as competing with that. So our goal is always to weigh opportunities to not, you know, just foolishly pass things up, but really to think about it from the context of this is pulling us away from what our, our main goal is, which is those Monday morning episodes. And if we have the bandwidth to take on something that's not going to interfere with that and maybe even will be additive to that, then fantastic. Otherwise, it's a no. And I think, you know, you hear a lot about this from, folks like, you know, Steve Jobs and other leaders where it's, you know, the challenge is not saying no to things that are easy to say no to. It's saying no to things that seem like fantastic opportunities and, and ultimately are going to pull away from what our bread and butter is, which is just creating that best episode every Monday morning.

Can you talk a little bit about the evolution of the product with the introduction of the Essentials show and then distribution and how you think about repurposing the content and everything that happens downstream from that one really canonical piece of Monday show.

Yeah, this is something I think a lot about and it's something that our team is very focused on. We view it as like, we put out these three hour plus episodes and then all the way down to a tweet that Andrew does. And it's like, how do we fill in the various kind of like subsequent time domain elements that span that spectrum? So it's like everything from full length episode to Essentials episode, which is 30 minutes, to clips on YouTube or X or wherever we're kind of putting those out on social media, to newsletter, and basically all the way down again to a tweet. And the goal is always to get the information out to as many people as possible and help people, regardless of how much time they have to allocate towards consuming the information, get the information. So. So there's obviously the monetization strategy that kind of spans across those too, because at the end of the day, we are a business, but the real goal is, okay, how do we just get this information out there to as many people as possible? And the Essentials episodes were a genesis of that, where we're looking at our content, saying, a lot of people just do not have time for a three hour episode. We were hearing from a lot of folks, this is actually pretty fun. Funny that they'd love an episode, but they were like, if I'm sharing this with someone and it's a three hour episode, it's almost like I'm giving them like a to do or like an obligation. Where we were hearing, especially from like a lot of, you know, CEOs or business leaders, they're like, listen, you know, I loved this episode, but I'm not going to share this with my friend because it's basically like, hey, I'm going to suck three hours of your time away or basically be requesting this of you. So the Essentials episodes were kind of like birthed out of that concept of, like, how do we make our content that more shareable? How do we make it, you know, more digestible for those who have limited time?

What do you think the future of RSS is? The actual underlying technology as we've gotten, you know, we're a new show, but working with Apple, podcasts and Spotify and all this stuff, it's just genuinely hilarious and feels wrong how little it seems like Apple cares about, about just podcasting, despite it being such an important medium. Do you think it all kind of like shifts more towards streaming or, you know, what's your take broadly on rss? Is it sort of the cable technology and maybe there's a future, or are we stuck with it forever?

Oh, man, I have so many thoughts on this, especially the Apple piece. You know, it's funny because, like, I got into podcasts in the very, very early days where it was like you download on itunes and you kick it over to an early ipod to listen to it. And I just became obsessed with podcasts again. This is like probably 2010 timeframe, and obviously at that point it was like Apple was the only player. And then, you know, they launched their podcast app and slowly over time, other players have entered into the space. And Apple's kind of just like been caught flat footed maybe. I think probably some of it has to do with the fact that, that it was a part of their business that was, you know, never earning money. So if you start with a zero revenue stream, then, you know, anything is a benefit. Whereas a company like Spotify or YouTube, they are, you know, very focused on P and L and looking to do things to dominate the space. To get to your question directly though. So, you know, it's interesting, like, I think this is how you guys view your show and how we view our show. Even calling it a podcast is weird because it's been, you know, a podcast is just the medium through which it's being presented to an audience. And we see ourselves as, you know, content creators and we're always going to put ourselves on the, the platforms that make the most sense, whether that be, you know, RSS feed and people are getting it there. And I do think that, you know, there are a lot of people just who listen to podcasts while they're, you know, doing various activities and whatnot and are just listening to them. That having been said, I think there's a huge percentage of most shows now that offer video where, you know, I would say half of our audience is either watching our content on YouTube or on X and, you know, another half is, is. Is listening. It's the, the benefit of the RSS feed is it's far more consistent. So we'll have episodes on YouTube that get like, you know, 15 million views, but then we'll have other episodes that are kind of, you know, in that 300 to 400, 000 range, whereas on audio it's a much tighter window. So it's like a kind of more consistent basis. That having been said, RSS feed is set up in this weird kind of like, rel. It prioritizes recency over relevancy. So it's basically like, here's the most recent thing as opposed to serving it up in a meaningful way like YouTube does. YouTube is really good at understanding the algorithm and serving it up in terms of, you know, what's most relevant as opposed to just what's most recent. And, and I think RSS feeds need to figure that out. I think Spotify is working hard on that, but we haven't seen much movement from Apple on that front. I put a tweet out recently on the fact that I believe X is going to be a dominant player in the podcast space in the future, just by virtue of the fact that it's inherently social. If you think about it, we'll put out an episode on Spotify and on Apple and on YouTube and we, we in large part are announcing it to our audience on X, and we do that as a means to, you know, broadcast it. And then people, oftentimes we also put our episodes on X, but oftentimes people are then leaving the platform of X to then, you know, pay attention to the podcast elsewhere. And I think as X gets better and better at allowing users to easily, you know, navigate content and can watch full shows on their platform, there's no reason why people should be then migrating off platform to pay attention to the content. So I think that that's a major thing that, you know, Spotify will have to contend with. I think that, you know, YouTube has a pretty dominant place in the market with just their. Their monthly active users. I want to say it's like 2.5 billion or something was the most recent number on that, whereas X and Spotify are kind of in the like 600 million range over the course of a month. So a lot of ground to make up. But I think it's a lot harder to build a social platform than it is to build a content hosting platform. So, like, I think X would find an easier job of creating the ability for people to easily consume content on their platform as opposed to something like Spotify by trying to build a social network as part of their app.

Yeah, that makes sense. Last question for now. Quick 30 seconds of advice on how you guys have handled AI impersonation. A lot of people have an incentive to generate an image of or video of Andrew saying, I love this product. I take it every day. It's like, it helps with my tea. And then it's just completely fake. Any words of advice for people that that might be dealing with impersonation or just sort of fake AI content as well?

Yeah, I think being vocal about it. So, like, we've made sure that Andrew's been pretty vocal about it. We had this thing where it was the Jawser Sizer, which was a complete nightmare on our end. We basically filed legal action against them numerous times. They kept, like, shut. They'd basically like, file bankruptcy and spin up another company and kind of like all this craziness. A lot of people to this day still believe that Andrew was like, promoting this, you know, plastic ball that you put in your mouth and chew on, where basically a large part of that was, you know, AI generated or clipped out of context from a podcast, no affiliation with the company. So we've. We've basically been vocal about, like, listen, if it's not being put out on a Huberman Lab handle or it's not listed on our, you know, hubermanlab.com sponsors, it is not a company that we have any association with.

With.

We also very intentionally have very few sponsors. Most of them you're going to be familiar with. They're the sponsors that are, you know, basically always featured in our episodes over the course of a month. And, you know, we're highly, highly selective with who we allow to be a sponsor of the show. And, you know, if you ever question it, just go to huberman lab.com sponsors. That's where the sponsors we work with are. And, you know, if you're seeing Andrew say something ridiculous and it's being put out by, you know, some bizarre company, then it's probably AI or it's probably just like, you know, faked in some manner.

Believe half of what you see and none of what you hear.

That's right.

It's words of wisdom. Well, thank you so much for coming on the show.

And we got. Last thing, we got Andrew himself in the chat on X. He says Rob is the secret weapon behind Human Lab and no one can steal him. He's a loyal bulldog and he's also super generous with no knowledge to help others. And he's a great triathlete. We didn't get to cover your athletic career, but would love to have you on again, you know, anytime.

There's so much more to talk about. I mean, I know in the same business.

I'll see you back in Malibu. You're the man. Thanks for coming.

Yeah, thanks, Andrew. Andrew's the best. We'll talk to you guys soon.

We'll talk later. Bye. That's great.

We got another Andrew coming on.

We do. Andrew Reed from Sequoia Capital, creator of Reid's Law. Are you familiar with this?

Yeah, yeah, we gotta try to find that post.

Oh, yeah, we gotta find that post. It was to run was saying sometimes the person who popularizes a phrase accrues more value than the person who creates the idea. And Andrew replied and said, I call this Reed's Law. And here is none other than the creator of Reed's Law himself. Andrew, welcome to the show.

Thank you for having me.

Thanks for being here. How you doing?

I'm good. Yeah. That's going to be my tweet that's going to live in infamy, hopefully. There's been various attempts from people to get that it's on Wikipedia page. But I think there's an actual Reed's law that keeps canceling it out, so.

All right, well, we're going to work on it. Yeah, that's our new mission.

Yeah, get on Wikipedia. We got to make it happen.

Very blue today. I love it. You're really owning. You're owning, owning it. You know, end to end. You're verticalizing blue.

It's great.

Great intro, but great, great to have you on. John, you want to kick it off?

Yeah, I mean, we wanted to have you on to talk about this, this post from Harry Stebbings. He says, oh, I'm hoping that's why you asked.

I was hoping that's why you asked me to come on the show.

Yeah. He says, through my role at 20 VC, I studied investors for a living. Andrew Reed must be the best investor of the last five to seven years. Eleven Labs, Vanta, Figma, Odo, Bolt, Klarna, Zapier or Zapier circa average ownership of say 5%. Andrew will have made 3.75 billion for Sequoia. And he ends it with an emoji that has star eyes. So we wanted to go through those companies. Tell us, how'd you meet them, what'd you like, what is the business doing well and kind of go through how you, what your process is like. So maybe we could kick it off with 11 labs.

Well, sure. I guess the timing of that tweet was particularly good because it was, you know, I think on Wednesday of last week was in the whiz deal was announced.

Yep.

And you know, yet another $3 billion gain for Doug Leone. And you know, of course, you know, everyone at the time is saying, you know, that guy Andrew is just so amazing, you know. Oh yeah, you know, I spent like a few days in the typical Sequoia wallowing of self pity of like, how is it possible for Doug to have yet another one? And I'll never live up to people who came before me. And then Harry's like, you know who's been amazing is Andrew.

That's great.

It's like, yeah, everyone's been saying that this week. You know, that's been the real talk track at Sequoia.

That's awesome.

Anyway, yeah. Before we dive into all the individual companies, how, how did you end up at Sequoia? You started as an analyst at Goldman and then how did you transition into venture? Was it something you always wanted to do? And yeah, just break, break that down for everybody.

Sure, let's see So I, I was 2012 from school. I started my career at Goldman Sachs where they, you know, they have the blue background profile pictures. As the, the originators of that spent 18 months at Goldman and left to join Sequoia. I had an one of the all time amazing happenstance introductions. It was Sarah Guo who's now at Conviction. Back then she was in my class at Goldman and she was then dating and now married to a guy named Pat Grady. And Pat sound my partner here at Sequoia. And Pat, have either you ever met Pat before?

I haven't, no.

Pat is like one of the all time great technology investors, massively underrated and he is a very interesting guy. He's one of these guys who has, the way I like to describe Pat is his brain is so structured and framework oriented that it ends up like when ideas enter his head and ping pong around for a while at the other end of his system spits out like very creative ideas despite having like not one like kind of like he's not like a creative minded guy but he ends up with very creative ideas which is why he's a great investor. Anyway, his idea at the time was to have a class of two associates at Sequoia. One guy who was like maxed out finance and one guy or girl who's maxed out out startups. And I was the finance guy. I was, you know, whatever, top of my class at Goldman. And the startups guy was Matt Huang who now runs Paradigm.

Oh yeah.

Who had previously started and sold a company to Twitter and did a bunch of angel investing. So they put me and Matt on a desk together. So we were the class of two associates February 2014 at Sequoia. And it was, you know, it was a very interesting time to be entering the VC world. I think for those of us who are fortunate enough to enter at that time you sort of had a few years of earning your stripes and learning and by the time you were able to start doing your own investments, you know, you still had many years of this like big cloud wave ahead of you and you caught the tail end of mobile. So you were able to get, get a few really good investments under your belt early on and then, you know, since then it was kind of off to the races but and Sequoia is a great place obviously to start an investing career because you look around and you know, it's like legend. And there's Doug and Mike and Jim G. And Roloff and Alfred and Pat and Carl, you know, it's you kind of like all the first name basis investors are pretty cool to be around, you know.

So yeah, there's, there's this meme that like founders want to raise from other founders. I think the reality is like founders want to work with very successful people that can help make their business more successful. In the early days, did you have any sort of self doubt around sort of like coming into this industry? Like, you know, a lot of investing is just like, you know, being a clear thinker and like not, you know, know, just believing all the hype and like, you know, likability is a big factor. Like there's a bunch of different factors. But did you have any self doubt like in, in the early days prior to this? Like absolutely generational run? Hopefully you don't have too much self doubt anymore, but just I've totally stomped.

Out all the self doubt now. Now I wake up every day just, you know, feeling so good about everything.

You should try hubris. Hubris is really popular these days.

Exactly.

After, after your investment. Investors that try hubris after a generational.

Run, it always works out.

Yeah. Ask Masa.

Do you have a crystal ball yet? We have a crystal ball here.

There you go.

Yeah, you need a crystal ball.

Yeah, yeah, yeah.

This is great. That's perfect.

It's funny you mentioned the self doubt thing and kind of getting started. I actually think, you know, I was, I think I was the first person at Sequoia to, to actually tweet. You know, it was like this is my. And the origins, this is probably 2017. I remember thinking I started in 2014 and you know, I was doing well. I had sourced some investments, I helped out on things, you know, GitHub we did in 2015. The company was acquired in 2017. So I felt like I kind of gotten my feet underneath me. But then I imagined, you know, imagine you are, are a founder and you are, you know, invited into Sequoia and you have your pick of Mike, Doug Roloff, Jim, you know, Pat Alfred. You know, why would anyone ever choose to work with me? You know, I was 27 and I was like, well like the one thing I do have is like I think I'm reasonably likable. I have a pretty good sense of humor and I am, I guess less, less self conscious than many people when, as it relates to, you know, the Internet. So I started, you know, with my 14 followers. So like I'll make some jokes on the Internet. And it felt so countercultural at the time, you know, because I think this is kind of before VC was not yet as online as it is now, I think the pandemic was sort of a, you know, like the clubhouse era pandemic, you know, last dance tweeting phase of venture was, I think a bit of a paradigm shift anyway. So the origins of that was like, how can I possibly be relevant to founders? And the Internet is a fairly open playing field where if your profile picture is pixelated enough, no one really knows how old you are. Right. And so then the first investment that I was truly led for Sequoia was Robinhood in 2017. 17.

And anyway, I have a question about that famous Sequoia memo that went out right as the market was collapsing. I believe this was during the housing crash. And it's this really deep macro econ analysis of what's going to happen. And I'm wondering if is that macro DNA still alive and well at Sequoia? Do you guys still look at consumer confidence and what's happening in the credit markets and all of that or is that less relevant today?

No, it's, you know, Sequoia is a, interesting business, you know, in the sense that there is, people talk a lot about, you know, multi stage VC firms and what that means. And you know, Sequoia, we have this, you know, thriving seed and early stage business that's sort of the heart of Sequoia dating back to 1972 and a growth equity business that spans Series Bs up through crossover investing into the public markets. We have this overlay Sequoia Capital Fund vehicle which is the permanent capital behind all of these funds. We have Sequoia Heritage, which is a multifamily office that is, you know, it's this independent business affiliated with Sequoia. We obviously, obviously, you know, we see them all the time. Sequoia Capital Global equities, which is I think at this point the largest TMT long short hedge fund in the world. So you put all that together, it's, you know, one of the benefits we have, I think, you know, for being quote unquote multi stage is you get, you know, different bites at the Apple as companies scale and you know, you try to catch everything at the seed and if you missed a few, you can do the A and et cetera, et cetera. But also you do turn, you know, know it's hard to really lose your mind on things if you have the forcing function of the public markets, you know, around the corner every single day. And, and also it occasionally does provide us with interesting, interesting insights. I think the RIP Good Times memo, which is the one I think you're referencing, you know, the pig with a knife and the, you know, tombstone, I think, which is, you know, it's actually. That's a great, great. That style of presentation of, you know, it's all substance, no flash. Right. Every page is its own independent study. And I think that's held up so well in hindsight is, I think, something that Sequoia. We try to do those sorts of things, you know, speak from the voice of Sequoia very rarely. So we did this Black Swan memo right at the start of COVID which was kind of a similar warning. But, yeah, you know, it's like a. It's a nice thing to have, and obviously it helps both on the upside and the downside, spotting new interesting things and also making sure we don't just lose our minds.

Yeah. The Black Swan memo was obviously really key because everything was about to change, but it did feel a little bit lighter on the macro econ. And I was wondering if that was because of the structure of the fund and RIA regulations or anything like that. But I don't know, maybe it's just different style. I mean, it was very. It was happening a lot more suddenly than the previous crisis, certainly. So there's less.

Yeah. Well, also, I think, you know, going back in, you know, in 07.

You.

Know, like, we're like, we're out in Silicon. Silicon Valley, and, you know, not every founder was reading the journal every day. Right, Right. So there's a way in which you sort of had to shake everybody. And, you know, it's this. Oh, there's this, you know, it's a New York problem. Right. It's like a, you know, it's a housing problem and sort of it was shaking everybody and saying, no, this is a you problem.

Yeah.

I think, you know, 2020, everyone's on Twitter all the time. No, you know, nobody was like, wait, this, you know, the China virus, like, it's over. I think we all remember when it hit Italy and when it hit Washington State, you know, so anyway, it was different in that sense.

Yeah. What you got.

What's your approach to working on boards? Sort of broadly? You've sat on a ton of different boards. You've been board director at a number of important companies. Like, do you have a playbook and a system now that you come in and you say, like, you know, kind of grab the reins or, like, what does that even look like? What is. What is partnering with you look like at the board level? Every.

You know, every situation is like, you know, every Good board is, you know, is the same. And every bad board is bad in its own unique and unhappy way. No, I think like the, in general, a paint by numbers approach to anything in technology and anything in investing is bad. And I think the worst board members tend to try to be the people who come in and take the reins and run their play, run that company through their playbook, because playbooks age very quickly, especially in a world of accelerating change. So I think the first thing you have to do when you join a board is just take the time to learn what business you're actually in. And I think this is one thing that I found is you can get to a pretty good sense of, of a company and its market at the end of your diligence process when you're writing the memo. But you haven't seen the people in that company respond to adverse events. You haven't seen what the real bottlenecks in the business are. And you can have opinions, but you sort of, it's much more easy to feel those opinions when you have dollars at risk. So I think in general, the first thing I try to do is just figure out what business we're actually in and where the bottlenecks actually are. I think one thing I like to do pretty soon after leading an investment is do an executive search with the founder. I think it's a very nice way to get from the opposite sides of the table. When you're negotiating an investment, the first thing you want to do is make sure you feel like you're on the same side of the table and going on the same side of the table and grinding a recruiter on how many leads we have in the funnel for our VP of engineering search, it's like a great way to align. And then there's this concept that Rule off talks about a lot of being a shock absorber on the board, which is something that I really, really believe in. You know, when things are going well, many board members love to do the rah rah cheerleading board meeting. And one of the nice things about being at Sequoia is in the portfolio review, if you're beating your number but your page is next to the Wiz financials, it's like, okay, there's levels to this. And I think it's helpful to remind the best companies that there are current generation companies that are performing even better than this and here's what they're doing thing. And then similarly, when things are going poorly, you know, and poorly is almost always relative. Right. But you know, you can have A company that in a vacuum is doing amazing. We come in at 80% of plan and everyone's ho hum in the board meeting. You know, it's like, oh, and then we need to change our strategy. We need to, we need to change this executive. We need to, as always, we need to fire the VP of sales. Like, you know, I think oftentimes the best thing you can do is just like, cause everyone to take a deep breath. Yeah, we're actually in decent shape. We have a lot of Runway. You know, look at these metrics. Here's what's going well. You know, it's probably not a VP of sales thing, it's probably a product thing. You know, that, that sort of, of work is, is good. And then every now and then, maybe once every two years, you have a major thing you got to deal with. Yeah, an M and A, the capital raise, et cetera.

But can you talk, can you talk a little bit about the importance of concentration? I feel like just observing from the outside, the Sequoia playbook has basically been like, find the power law winner in whatever market, but then also get the most concentration and the highest ownership percentages. And we see that with the S1s go out and, you know, a lot of VC funds are saying congrats, and Sequoia is the one showing up at the top of the cap table. Has that been something that's been kind of a drumbeat internally or has there ever been like a moment when it's been kind of harder to establish that foothold because of like crossover investors coming in or overpaying or valuations or anything like that? There's the WhatsApp example, which is like really famous, but I'm sure there's a million others. Right?

Yeah, I think our, you know, our North Star, we want to be the largest outside shareholders in the most important companies of tomorrow.

Tomorrow.

And it would be amazing if we were the seed investor in every single most important company of tomorrow and we actually do a decent job of that. And if we don't do the seed, we try to do the Series A. If we do do the seed, we'll often try to do the Series A. And at any given round, you know, there's a relative risk reward. And also we can't forget that we're in the net multiple of money business. We're focused on investment returns. And if being the fourth biggest investor of the most important company is a good investment, we'll do that too. But I think the ability to double down and triple down on companies that we really believe in and hold them for the long term. Like that's the other thing that, you know, often gets lost is, is, you know, there's a famous example of like Sequoia and Apple. Like do you guys know how much money Sequoia made on Apple?

No.

Okay, well, I'm not going to tell you because it's not nearly as much as you might think.

Oh, right, yeah. I think it's coming back to me.

In a single digit. I think it was, I think sequoia made a 40x on 150k. Okay, wow. So single digit, million dollar gain. And when you, you know, when you have experiences like that and then you realize, you know, Square owned 10% of Google at the IPO, you know, the list goes on and on and on. So this idea that, you know, we don't necessarily need to be the first investor in every single company, but we should be the longest term investor investor. And for the really special companies scaling up with them and compounding, you know, that's like the business that we want to be in.

How do you balance both competition and partnership, both within the firm? Like you want to put up the biggest and best numbers, right? Like imagine you're competitive and then externally too you're, you're oftentimes competing with other firms that are sort of your friends to win rounds at certain moments. But you're a multi stage fund. So sometimes you're going to do a round and they'll do the next one and then you'll do the next one and then you got to be on the board with them. So like how do you approach, you know, you have to sort of show up at some points and be like, I'm going to win this deal and then at other time and then the next day you're back to being, you know, boys.

Yeah, well, it's funny, there's been, you know, there's, this is one of those like really wonderful things about Silicon Valley. You know, I remember one time, time, you know, I'm sitting in a board meeting and I'm sitting next to somebody who I know has a term sheet in on a company that I also have a term sheet in on. You know, I think he must know and I definitely know, but we're not going to talk about it. You know, it's like, it's. Anyway, so I, I think it is actually quite wonderful this ability to sort of, you know, or you're being like, it's constant, right. Like you know, we're co investors in this one company. But we're investors in the direct competitors in this other situation. To me, the lesson is just like always try to do business with good people and trustworthy people and try to find front stabbers, not backstabbers, is a good rule of thumb. And you know, like, if you do that, by and large people are like good and ethical in the Valley, like it's a pay it forward place, it's a repeat game. I think there's a reason why a lot of the, you know, bad behavior comes from people who aren't from Silicon Valley. You know, the, it's like, yeah, it's actually a wonderful place to do business in that way. But Sequoia, you know, we are as cutthroat as it gets, right? Like we are front stabbers. You know, we'll like, we don't hide that in general, we want to do usually as much of a round as we possibly can. We'll tell you what we're willing to pay. We're not externally necessarily with investment banks or with search firms known for being the easiest group to deal with. But I hear often like, oh, Sequoia, I've heard it's really tough internally, like really sharp, elbowed. And I mean the stakes are really high. It's a small team. Expectations on performance are, are insane. Right?

Like that's where the, it's a consensus investment process as well, where you, you don't need to just basically close you, you got to close. If you're an entrepreneur, you got to close all your partners. Correct?

Yeah, exactly. And the part, you know, the partner meeting there's like, you know, I would, I've seen founders, you know, some founders really rise to the occasion. In the Sequoia partner meeting room. I've seen people just totally wait built. But it's an amazing, it's actually an amazing culture inside the building because of that, I think because the expectations are so high and the team is so small. I think this is one of the things that Doug has this presentation, he calls it the laws of physics, where one of the laws of physics is that fund returns are inversely proportional to team size and also fund insurance inversely proportional to fund size. You know, we've been very disciplined about keeping the number of people on the team and keeping the funds to like a relatively stable size and then working together to kick ass. That's the key.

Talk a little bit about paths to venture. You mentioned that in your analyst class there was the high startups maxed out on startups versus maxed out on finance. Finance Are both of those paths still viable today or have they shifted over time? How do you think about hiring new people?

I think with venture and funny I read and you know, I do, I help lead Coy's growth stage investing business. So I think venture, like true venture, you know, seed, it's a different thing. From my perspective, it sort of doesn't matter, matter at all what you did before because nothing you do before joining a venture capital firm prepares you for how truly like multifaceted long term successes in venture, like you can divide the job into, you know, sourcing, picking, winning and company building. Like those are probably the core four core competencies. And what we try to do, or at least what I try to do is I want to find somebody who can really hit the ground running on one of those things.

Things.

So with finance you'll have people come in and you know, they can be really good on the, you know, the picking, like the investment, the investment process, due diligence, have a real point of view on why a company should succeed. But maybe you've never taken a meeting before one on one with anybody in your life. You know, for like that was me. Like when I joined Sequoia at Goldman, I was the, you know, headphones on behind the Excel sheet, you know, like that was, I literally had never done a one on one meeting before in my life. And I got to go, turned to Doug and I said Doug, you know, like, is there like a sector you want me to cover? And Douglas Orphan, he goes, you know what, that's what we hired you for. Like noted. So I like to find somebody who can hit the ground running on one of those things, but clearly has like the potential to max out on all of them if given enough time. And then we just really try to invest in young people and give them opportunities to, to try things and take meetings and sponsor investments. And you know, if you look at a lot of, a lot of the people at Sequoia started in the early 20s here and apprenticed, you know, were nobodies for five, six years. And then all of a sudden people started recognizing them when they had, you know, amazing, amazing portfolios. And that's sort of what we try to, we try to do.

Last big question I have for you. How do you think about underwriting generative AI investments today? There's been a lot of chatter on the timeline this week about what's, what's ARR, what's not. And you're in a lot of the companies that feel like they will be these sort of Power Lodge and AI winners like even Figma itself is like such a sleeper, right? And that like they have like most of the important creative people in tech in the app all day long. They should be able to launch a ton of different products that end up dominating in some of these categories. But what's your sort of like broad approach to sort of. And the way that you sort of look at all the revenue that's sort of just like popping up in all these new novel categories and will probably lead to big businesses, but some will kind of evaporate as well.

It's a terrific. Yeah, figma. Stay tuned everybody. The, the, it's in. You know, it's the most transformative, it's the most interesting time in technology that I could possibly imagine. I actually think moments like today on the Internet, you know, when you have the gation of, of, of, you know, all the last five years of memes happening at once, it's like a nice, it's like a nice reminder of this. You know, unlike prior technology waves which were, you know, distribution extending waves where a small group of people had this at first, you know, now a billion people have access to ChatGPT and are logging on and doing the same thing. It turns out we have like a, I don't know, a zillion computers in Virginia just making cartoon memes today, which is, it's, you know, it's like a small power plant being burned.

These are coal powered memes, everybody.

Another one of these. We can do so much so it's amazing. But because of that fact, everybody's on the Internet all the time and most of these technologies are available at the get go to everybody. You can see revenue ramps like nothing we've ever seen before. Right? Because it's transformative technology with full distribution from the get go. And some of that will certainly be easy come, easy go revenue. I think some of it certainly won't. It makes each individual, each individual investment decision nuance and complex in its own way. I think the important thing is going back to that law of physics presentation that Doug gave when I first got to Sequoia. You know, there are some things that never change in business and there are some things that change all the time. And I think the important thing is knowing which one's which.

Powerful. Powerful.

I can see why you close so many deals. You're great.

You closed us.

Yeah.

Great having you on.

This is fantastic.

Yeah, thanks guys. Thanks for having me.

Come on, come on with. We're gonna have Dylan Field on hopefully at some point. You Guys should come on and just, just, we can all, you know, hang out. It'll be fun.

That sounds wonderful.

Good old days.

Thank you, guys.

Awesome.

This is great. Talk to you soon.

Cheers.

All right. Yeah, you know, he's. He's in a quiet period for some of the. Thank you. Jordy, we heard your feedback. The fan. To the fans. Jordy is keeping the soundboard and getting wild with it. He's in a quiet period on Klarna because they're about to ipo. And I've been saying that the SEC should ban Klar quiet periods because I just think that people should be able to yap 247 regardless of what's happening in the public markets. So that's what I will be lobbying for the next time I'm in Washington, D.C. ban quiet periods. Also ban lockups. Anyway, we have our next guest. Welcome to the temple of technology.

What's going on?

How you doing?

Hello.

Thank you for having me. Long time listener, first time caller.

Fantastic.

Let's go. Let's go.

Amazing. Well, we were just talking about Klarna. We were talking to Andrew Reed. We were talking about how he's in a quiet period. Can't talk about it, but maybe you can. Maybe you can take us through any of the interesting S1s you've deep dived. But first introduce yourself. What do you do and why do you deep dive these companies?

Sure.

I'm Tenay. I'm a partner at Wing, which is an early stage venture firm. We invest at the seed in series a in primarily B2B companies, heavy emphasis on data and AI. My journey with S1's dates even prior to being an investor. I think I've always been just a huge business nerd, I guess. And I find I view S1s as the time when a company kind of, you know, lifts the curtain and gives you a peek into, into the business. And typically these are good companies, right, because they've made it to the point of publishing S1. Maybe once in a while you do get like a wework or, or something out there. But by and large, these are generally good companies. And I think in every S1 different ways to read it. Obviously there are public market investors that are making a decision on, hey, should we invest in this? How should we value this thing if we would invest all of that? I think the lens that I generally take on it as someone that's not necessarily actively trying to make that call, at least in a professional setting, is more, what are the lessons from this business? That one, you can Just learn to learn from about business in general. But then two, I think there are a lot of interesting things about many businesses that could be applicable even at the earliest stage. Both is in terms of what's going on today. So for example, any S1 today, a lot of AI washing in them. Whether or not AI is related, I think it just tells you where things are at in the current state of the market, which is I think an important thing to know just given how quickly things are changing and how there's so much kind of noise and unclear where the signal comes. And I think you do get some signal from it. And I think the second is like depending on the kind of company it is, is there's a lot that kind of similar startups maybe that are even 10 years earlier can take from it in terms of almost like lessons and playbooks of oh, did like, you know, how did they solve that? How did they grow their tams over time? How did they figure out reaching these customers that are maybe difficult to reach? And so one good example of that is a company like Service Titan, which went public recently. I think any company building a vertical AI, any founder building a vertical AI company should be understanding service tied in to figure out how do they expand all the products that they have, how do they grow their ACVs within that customer set? Because it's a problem and a question that they're going to get in every financing round, but a problem they're going to face as they grow that business. And there are some good kind of lessons in there about that.

I remember when, I think when Snapchat published their S1, it revealed how much they were spending on the cloud and that might have moved cloud budgets. Have you ever seen an S1 that's been almost like a bull signal for a startup in the sense that like you can see a line item on some company that's going public and hey, they're spending a lot of money on this series B company. We got to go talk to them and see if we can do the next round.

Oh, I think there have been a few like that in terms of. It just tells you that some spaces are ripping as well. And I do think like this core weave one is going to lead to a lot of other interest in for example, the data center more broadly. Because I think what's happening is that, that these basically all the big tech companies are spending $200 billion a year of Capex on, on that buy, right? And obviously Nvidia is like the big, big, big winner and the Beneficiary of that. But reading through cor, I mean COR is like such a small pie, but it's like Microsoft's like 60% of their revenue in like a year.

Right.

And they're growing their revenue from 20 million to 2 billion in like two years. Like you know what companies have done that in the past. And I think what it tells you is that there's just so much demand at that layer of the stack right now that if you have a compelling solution there, even if you take up like a small, small buy of like the budgets, you can race into these hundreds of millions of revenue very quickly. So I actually think this one is going to be like part of, is going to renew some of the interest and there has been a lot of interest in that chip companies and all of that, but in other areas and almost like that data center stack just because there's so much spend and so much build out still happening. And so I think that's actually a good one in terms of in present day even.

Yeah, you got some.

How have.

Feels like Core Weave is actively sort of positioning itself to make sure that they're trying to sort of like get in front of the core questions, which is like, hey, you have some of these big contracts, they're not, they're long term contracts, but they're not super long term.

Revenue concentration to.

Yeah, revenue concentration issues. They added they've been working on this big, you know, OpenAI deal deal. Do you think that investors will even care? Obviously you're not a sort of a professional public markets investors, but do you think the market just wants like a pure play stock like coreweave? Is that part of why they should just get out? And maybe the revenue concentration doesn't matter because we're in this market, we're in the meme market still. And in many ways business fundamentals don't matter. It's so much around narratives, vibes.

Yeah, no, I totally agree with you. I think in this initial period, I think the how Core Weave trades is very much going to be about narratives and vibes and memes. And speaking of memes, I mean this is a company that was started by three former commodity traders that basically got a bunch of GPUs together to mine crypto and then pivoted to AI. Right. And this is the web three to AI pivot done. Right. And, and it's going to be like whatever $25 billion company in six years basically. So it's kind of incredible in that sense. I think onto your core questions. I think so much of it is going to be around that. I think the public market investors who are going to think about it professionally are viewing this as do they have the potential of becoming this kind of AI hyperscaler or this AI cloud. And they'll talk about like, you know, we have the 15 billion from open air commitments over the next seven years, six years coming through. We have a bunch of 15 billion of performance obligations from prior contracts that are already going to hit over the next three to four years. But then on the flip side, you have Satya going on podcasting that, hey, I'm glad that we're at least capacity because there's going to be a, there's going to be a surplus of, of supply or three, four years. So that isn't a farewell for, you know, is this going to continue beyond that, potentially for that. And I do think it's one of those where the timing, I think it's, this is the moment in time, right? This is the time when markets, when there are some people that feel like they missed the boat on Nvidia, especially including the retail investors, right, who are like, oh, this is now a new Pure Play generative AI AI workload company. And so I do think it's good timing from that. The other thing though is they need the capital because they do lose a decent amount of money on like a free cash flow basis. I think they lost like five, six billion dollars last year. And so they, and they have some cash in the bank, but they do need the capital and so it feels like a good time for them to get out and you know, play into these memes and narratives and, and, and also, you know, obviously allow some of their early investors to like, you can't.

Hear it, but he just played the loudest gong sound because of how loud this, how big the billion dollars we.

Got to figure out. How can you hear the sound?

You don't get the joke. It's not going to land. We're just cracking up anyway. I want to stay on Core Weave. There's been this narrative of like, will they get out? Won't they? I saw Martin Shkreli say, oh, they're 5x over subscribed now. Can you just take me through like, what is the emotional roller coaster that a company or CEO or even a public markets investor goes on when one of these S1s drops, there's the quiet period and then there's the S1. And then later there's the IPO and like, what is the normal cadence and what should people be paying attention to.

Yeah unfortunately no personal experience in that it would have been nice to take a company public. But yeah no I do think it's. It's definitely a stressful period for them in terms of just and especially when there is so many questions around it. Like there was some rumors about Microsoft not being like trying to break free of some of the obligations which they've now dispelled. So with this one there's some added kind of just question marks on is this going to happen? The Cerebras which filed last year had similar issues and there was some cfius kind of just investigations have taken longer and it's kind of held back their IPO and so it is one of those where now I think there's some rumors that the founders here have sold a decent amount of secondary already. So I'm sure you know they're. They're probably that. That probably helps a little bit especially when it's like 450 million words but ultimately it still is. It does look like it's going to go ahead now but I can imagine it's. It's going to still be crazy kind of first few months once it does start trading as well just given so much uncertainty around it.

Can you comment on what you think might else might be going out in the next year? What people are excited for what kind of names are people chomping at the.

Bit to read the wasn't it Stripe?

I mean you imagine it's everything on that most in demand secondary once you're in the Decacorn category. But I want to know.

Yeah yeah. And I'd even love your take on do you think. Do you think. Do you think figures going to bring back the spac. Have you. Have you heard any rumblings? Probably can't say but I'd be curious.

Yeah I think in terms of what people would be excited to get out I do think stripe is definitely one of those. I don't know if they plan to go public anytime soon given that they seem to be tapping into the secondary markets pretty often and providing liquidity to employees potentially to some other investors as well and certain so maybe not an immediate need. There are a few that are rumored to have been to be filing soon such as Chime, which I think will be an interesting one on the fintech side I think the markets would really love an AI company going public. I think Core Weave is one example of that. But I don't see an OpenAI or something like that anytime soon. But maybe if one of those labs decides to do it. I think that would be like pretty interesting. I think the application layer companies are probably still a bit too early is my guess. And so I do think we'll see some. And I think one of the interesting things is that core weave is relatively young, right? It's about seven years old as a company. But Klarna, which filed, is like almost 20 years old. And then StubHub, which also I believe is five, she haven't gone through that one yet, is also like a 20 year old company. And so these are, these are some of the ones that have been like, know people have been waiting for these to go public for a really, really, really long time. And so it's nice to see some of them start to get out. And I do think we might see some of the, some younger companies start to go just given how fast the AI boom is. But I think it might be another couple of years before we get like, you know, like a true AI native company out in the public markets.

I've heard a little bit of rumbling from investors that track, track the CFO hiring cycles at the large later stage, growth stage decacorn companies. And they say, hey, this CFO that just got hired at this company, he took his last three companies public within 18 months of getting hired. We know what's up. Is that a valuable signal for anyone or is that just some like kind of fun fact in Silicon Valley?

I think there's a lot of truth to that. I think the timing can vary though from that higher in terms of. But generally, generally, especially some companies don't even have a cfo. And so when they bring one in, some people believe it's like this now, starting to at least think about it. But I do think it could be that it's imminent like a year from now. It could be like it still might take two to three years because some of the internal controls and things like that, like Corey for example, had like a note in its filing that it found like weaknesses in their internal reporting and controls, which obviously is not, is not great from like someone who would be a prospective investor looking at that. And so, so some companies just like to do it a little bit earlier to make sure that there's none of that ahead of when they start, when they actually file.

Yeah, Any questions?

You got one.

I just want to have you back on the next time a big S1 drops.

Yeah, I'd love for it to be a regular.

Yeah, it'd be awesome when you drop a new deep dive. And I still, I definitely want to know. Yeah. Just what the next big S1 will be. It's. Is there poly market for this yet? I want to bet on that.

That would be good. Yeah, that would be good. And it might actually incentivize them to actually go public, which maybe isn't the worst thing in the world. I did want to leave with. I'm sure you've seen the doordash memes about Klarna.

Oh, yeah, yeah. Please, please break that down.

Here's a fun fact from the filing. So Klarna is registered, has like a banking license in Europe and so they basically had deposits from people in Germany and Netherlands and, and places like that. And so that money is being used to fund the interest free loans. And so basically what's going on is that the European savings are being used to fund like the Americans ordering burritos.

Let's go.

I thought it was just incredible. It's like American exceptionalism at its peak. Like the American consumer is the winner yet again.

Amazing. Undefeated. Nothing can stop the American consumer. It's the most powerful force in the world. World.

Yeah.

Well, I mean, thank you so much for coming on. This is a wonderful chat.

Give us a heads up when next time you're dropping.

Yeah.

On the same day and we'll slot.

You in and I look forward to it. Awesome.

Really enjoyed this and thanks for having me. And yeah, looking forward to the next one.

Yeah, for sure. We'll talk to you soon. Cheers, thanks.

Bye.

Yeah, Ben, tomorrow's challenge to make the show 1% better. Let the guests hear the sound effect effects so we don't just. They're just saying like some, you know, normal thing and we're just cracking up.

Yeah, it's great. Well, we should close with this, this timeline post from Gokul Rajaram. He says prediction one or both of Canva and Figma will enter the AI builder market in the next few months, likely with a product very similar to Bolt new or lovable.dev but tightly integrated into their existing products. There is no way these two very smart companies will tolerate being disintermediated by this next generation of AI native companies which are essentially verticalized builders. Design plus engineering platforms. It also supports their stated strategy to democratize building. I say this with zero knowledge of the roadmap or internal discussions of these two companies. You mentioned it on the chat with Andrew, but what's.

Yeah, I mean for me as a Figma enjoyer and active user, it's always been very frustrating that I, I can design something in the app that's pixel perfect that I can even mirror on my device and it's pixel perfect. But then I can't even get the simple functionality of I've got to go to webflow or Framer or you know, actually, you know, build it out and Vercel or whatever.

Yeah.

And it's just always, you know, it's such a natural extension for them. And that's going to be the challenge for Bolt and Lovable because all the they do some of the design side stuff as well or they'll use like templates or you can just prompt it.

Yeah.

But there's something about the sort of precision design that end up being the most sort of like durable creative properties or the most durable websites are probably the ones that are actually sort of designed. The sort of high quality customers end up caring like a lot about precision design.

Yeah. I mean I'm so excited for this because I feel like the business that we're building here with TBPN is great and cool, but it's not one that can really support a software engineering department. But we will have problems that can be solved by small apps. And with this new wave of generative AI with better tools from figma and integrated AI building products, we will be able to either personally in a weekend, build something that makes the show 1% better or hire someone to work on that for just a weekend or a week, or even have one person on staff that can actually build and maintain systems that speed up our workflows. And then of course, some of those will turn into SaaS products that we'll wind up building. And we'll just say, hey, yeah, that thing that we built internally, we're shelving it. It doesn't matter. We built it in a few days as opposed to previously. The idea of building custom software at a media company was crazy, right? Yeah, it was a huge waste of resources in almost every scenario.

Totally.

So I'm really excited for this. I have a bunch of ideas for or little apps I want to build deploy to my phone. I was reading a post from Andrej Karpathy and he was saying that he's now gotten to the point where even though he doesn't know how to program for iOS, he was able to vibe code an iOS app, deploy it to his phone and he doesn't need to.

World's most talented programmer. It's like you probably learn it in.

A weekend, let's be honest, or in an hour. But, but, but yeah, he was saying like he could kind of program in languages that he was familiar with and still deliver in iOS, get it running on his phone. And the really cool thing about that is that you don't. If you're just. If you're a customer, a developer of one for a customer of one yourself, you don't even need to go through the App Store. You can just deliver it directly to your phone. And so all of a sudden, that opens up a whole new world of things that you can do that the App Store might see. Say, hey, no, this is a violation of some sort of TOS or we need to review this. We can't change this. And by the way, it's going to take you two weeks to approve this. You're going to be able to just say, hey, I. I have an idea. I need it on my phone. Boom, the next day it's there. And so I'm really excited about that. Anyway, great show today. Thanks for everyone to tune in. Do we want to our review?

Oh, yeah, we have a review. I'm going to pull it up.

I think you're the best.

I got a review with an ad ad in it. And this is from Amalon. It says the Espresso Martini podcast TBPN has immediately become one of my favorite listens. Awesome guests and great conversations. Also incredibly bold for being the first U.S. podcast on a996 schedule.

Thank you.

One thing to improve. I have no way to get notified when they drop the TVPN branded Italian suede driving slippers. They should get set up on Lelo, which powers drops for the world's biggest creators, musicians and lifestyle events. Other than that, great show.

I've been the drop CRM.

We actually 100% at some point we'll have Italian suede driving slippers. So go to Lelo.

Is it Lelo.com Shout out.

Great domain.

We will pump the stock. Go to Lelo.

And this business just makes a lot of sense. Drops are the sort of default model for the Internet. It's what the Internet likes. So building, building a tool that you.

Do a drop if you don't set up. And even if you have a Shopify store, you're like, okay, now I have one SKU that's only gonna be up for a couple days. It's like it can be a hassle. So I mean, I haven't used the product. I think it's a great idea and I'm happy that they wrote this in and sent us the message because I'm gonna check it out.

Yep.

And it seems like there's fantastic. They worked with Nicki Minaj. Rolling Loud. Speedway Motorcycle sports.

We love cars. Porter Robinson.

This is great.

Outside lands. Yeah.

Thanks for writing in. This is very Rufus.

Crushing it. Lalo. Com. Go do it. And thank you for listening today. I'm excited for tomorrow.

Yes. Thanks a lot.

Flying by.

Yeah.

Cheers.

We'll see you tomorrow. Bye.