Tesla Robotaxis, Saudi Arabia, AI in Big Tech, Art Market Update + Guests

You're watching TVPN. Today is Tuesday, May 13, 2025. We are live from the temple of.

Technology, the fortress of finance, the capital of capital. We are wearing pit vipers today. Chris, the founder and CEO of Pit Vipers.

I think these are great.

These, to us, these look perfectly on brand for us. Yes, they look very on brand.

They're fantastic.

And I'm going to take them off because I can't see very well.

Yeah, it is.

But thank you to Chris for sending them over.

And anyway, we got a great show for you guys today, folks. We're talking Saudi Arabia. Technology has taken over Saudi Arabia. All of our hardest hitters, all of the absolute dogs of Silicon Valley have crossed the Atlantic Ocean and technology to the Middle East.

Yes, To Riyadh.

To Riyadh. So we'll cover that. Talk about what's happening, why folks are there. Alex Wang's there. I saw Alex Karp there. Bunch of Alexes in tech there. Out in Saudi Arabia, Jensen Huang and Nvidia's announcing stuff. Different trade deals going down. Bunch of interesting things happening. Then we're going to talk about Tesla's Robotaxi timelines. What's going on with their Robotaxi launch. It seems like they faced some setback. There's an article in the Information that seems to make it all doom and gloom, but I didn't like one of the quotes that I saw in there. So I want to talk about it.

Truth Zone.

Truth Zone. Um, and there's also some stories about just how big tech is grappling with artificial intelligence generally there. We've been talking about this a lot. The innovator's dilemma, the problems of trying to build a product. When you're a massive tech company, even though you have all the resources possible, you're still struggling to get something to work.

This is why Zuck started doing Jiu Jitsu at some point last year.

Yeah.

So he could.

They're one of the companies that's doing okay, but, you know, the rest are struggling, I think. Um, but we'll dig into it. The art market, we say it's absolutely ripping. There was a big sale, wasn't quite where people wanted. But we'll break it down for you because we know that you need an update on what's happening in the art market. And then we are going to hopefully talk to somebody who's out in Saudi Arabia. It's going to be like midnight or 10pm their time, but hopefully we'll be able to get on a call with somebody in Saudi Arabia breaking down. What's exactly happening with all the technology folks who are out there in Saudi Arabia. And then we got a great lineup of founders and investors and analysts to take us through the stories of the day. So let's kick it off.

Do it.

Trump has lift lifted sanctions on Syria and touts deals in his Middle east tour. This is from Riyadh. President Trump has decided to lift sanctions on Syria, giving the country a financial lifeline after a lightning campaign overthrew its decades long dictator last late last year. I will be ordering the cessation of sanctions against Syria, Trump said during a foreign policy address in Riyadh, his first stop on a four day swing through the Gulf. I wonder where else he's going. We'll have to figure that out. Track him, Cutter.

Yeah, right.

Probably wouldn't be surprised.

I'm assuming they want to give.

He has to pick up the plane.

Yeah.

He's got to go.

They can't just fly. These things don't fly themselves.

Yeah. Even though it's a gift, it's such a meaningful gift. It's such, you know, he wants to make sure he wants to, you know, he's not going to take the gift sight unseen.

Trump is going to break the bottle of champagne over that new plane.

Yes. That's.

He's not going to let, he's not going to delegate that.

He's.

Yeah.

No way.

There are things you delegate and there are things you do not delegate.

And he's in founder mode on that one. He's not in manager mode.

That's right.

Now it's time. Now it's their time to shine. We're all, we're taking them all off. The announcement sets the table for Trump to speak with the new Syrian president, Ahmed Al Shara on Wednesday in the Saudi capital, which the White House has billed as a quick meet and greet. Like the structuring of these deals. Like, oh, I, I asked him to call me and he didn't call me. It's not a meeting.

We requested that you request a meeting with us.

Yeah, that's the key, too. Maybe we should port some of that back to venture capital. If you're pitching a vc, request that they request a meeting with you. If you're a founder, you're going out raising your Series B. Hey, Andreessen. I would request that you request a meeting with me.

I would request that you reach out to me cold.

Yeah, exactly.

With a preemptive term sheet. I would request that you preempt my round.

Yes, Yes.

I always think it's good the way that founders will message rounds. It's like they'll be raising for two months and then they'll be like, yeah, we were preempted.

Exactly. Exactly.

Yes, buddy. You've been raising for months, for weeks, you've been taking meetings with investors. Getting a therapy is not the preempting branding.

I mean, I know a friend of ours who said that to me at one point.

Also, preempting on a pre seed is.

Hilarious too, because it's like, what are you preempting?

You were going to bootstrap.

Oh, yeah. We definitely weren't ready for pre seed. Definitely weren't ready for pre seed.

We weren't ready yet.

Just totally jumping ahead on the value.

Yeah, we were really going for more of a friends and family. But, you know, once somebody, you know, once this pre seed friend.

Yeah.

Offered 100k, well, yeah, we felt, yeah, maybe we're okay with getting preemptive.

Yep. You know, it's become such a meme to use the preempting thing. I feel like the next stage is putting in the press release, like, we announced instead of we, you know, we announced a seed seed plus a B. All of these rounds have kind of shifted around. So an A is now the size of a B or whatever. You should just announce, hey, we're announcing a preempted series A and just put that on the news wire.

Yeah.

Or companies should just announce that they're in advanced talks. Like, just say, like, yeah, we're calling. I mean, that's basically. That's basically what company? It seems like if sometimes a fundraise will leak and it's like, okay, this company is in advanced talks. Other times you can tell it's the company itself. Yeah, just like going to the press and being like, we are in advanced talks.

I love this segment because we were like, let's talk about what Trump's doing in the Middle East.

Let's bring it back to early stage technology invested. Because that is.

I really don't care that much about this story.

I really don't care. I'll dive in a little bit.

So there's some interesting stuff here.

But Trump's remarks capped an eventful first day of his Middle east visit. 300 billion in investment deals. Let's see here. We love 300 billion with Saudi Arabia with an eye toward doubling the total within four years. I believe that the White House was highlighting $600 billion.

So where does that even go? Is that us investing in them? Them investing in us both ways? One hand washes the other, I assume.

Who knows? Why don't, why don't you figure that out? I mean, I think it's primarily in the U.S. that's what Trump cares about. He heaps praise on the kingdom's Crown Prince Mohammed bin Salman, promising that we will always be friends.

Yeah. I mean this is one of those things where like.

He also encouraged Riyadh to move towards normalization with Israel as soon as it's ready to. Even though war rages in Gaza and Palestinians are no closer to self rule.

The fact that you restrained your yourself on the soundboard when we had the Secretary of the army on, you know, this is a really, it's a, it's a safe show.

He would have loved it business in hindsight.

He would have public company CEOs, you know, presidential appointees, really the most important decision makers in the world. Come on. And they all get sound effects equally.

Yeah, yeah. I really need to adopt and equal.

Opportunity not just with the policy. You hit the, you it's, it's very clear who you're friends with.

Yeah. Tish, yesterday was, was, you could tell he was just like, it really meant a lot. Yeah.

Feeding off the energy. It's great but I think, I think it's universal. I think everyone loves a soundboard effect. So yeah, let's try and space it out today. Try and hit everyone.

This, this article is extremely politically charged.

Yep.

I'm going to read this next point. Still, the main message of the first day is that Trump values the transactional nature of U.S. gulf relations. As long as money pours into the American economy, the US Will remain engaged and close to the region. He just said we will always be friends. He like, he just said we're boys.

Yeah.

Mbs, we're boys.

Yeah.

And now this journalist wants to say that it's just about the money. I mean, come on, come on, give him some, give him some credit. You achieved a modern miracle the Arabian way, Trump said of the Gulf's oil rich monarchies. The Gulf nations have shown this entire region a path towards safe and orderly societies with improving quality of life, flourishing economic growth, expanding personal freedoms and increasing responsibilities on the world stage. Trump stop in Riyadh was always billed as a glitzy spectacle. But few could have predicted the warmth displayed between the two leaders and the nations they lead. Trump's visit to Riyadh kicked off with a Saudi F15 escort as Air Force One touchdown at King Khalid International Airport on Tuesday. Drums boomed and horns blared as the Crown prince, the country's de facto ruler greeted Trump on a lavender colored carpet rolled out beneath the American plane. It really rolled out the lavender carpet for him. There it is. Then they walked into the airport for a private ceremony lined by waving US And Saudi flags to welcome the President and many of his senior officials, including Secretary of State Marco Rubio and Defense Secretary Peter Pete Hegseth and former Andreessen.

Horowitz partner Sriram Krishnan.

Yeah, I hope he got a chance.

He got a bunch of photos. He's a heavy hitter over there.

Heavy, heavy.

Love it.

Very cool. And again, you know, they, they clearly understand, they understand that, that Trump loves showbiz. And so the more that you can lean into that.

Yep.

The better, you know, the relations you'll have with the U.S. yep. So.

So Elon Musk is there. FIFA President Gianni Infantino is there. Trump landed in the Middle east, transformed by near nearly two years of war, which responded with a devastating military campaign that has killed tens of thousands of people trying to shut it down, trying to bring peace to the Middle East.

Yep.

It's rough. Anyway, we should go to some of the other announcements that relate to this. So unusual Whales has a post that U.S. and Saudi Arabia agreed to $142 billion in defense sales. You have to imagine that that's important to defense tech one way or another. Although we haven't seen a lot of stories about this. Most of the stories that we've seen out of defense tech have been around Ukraine. But I was wondering if we're going to see, you know, the story of Neros, the drone company. How Soren, Great name. Monroe Anderson, Nominative determinism. He went out to Ukraine. He's one of the, he's, he's literally the world champion in FPV drone flying. Have you seen this?

Drone racing?

Drone racing. So, so he's, he's incredible pilot like you, you go out and you think, oh, he's going to fly the drone. And it's like the most intense whipping around a tree. He's crazy. So he went out to Ukraine and was helping train drone pilots there to use drones as weapons. Basically comes back, builds a company around it. It's an incredible story. Raises from Sequoia, obviously, lots of com. Lots of competitive dynamics with Anduril and stuff. So a lot of questions and a lot of problems they need to solve, but still like an incred, like going and getting experience on the ground as a young technologist and then going and building the exact thing that, like, they need and then eventually Selling it to the Ukrainians. But we haven't heard those stories as much from Saudi Arabia or the Middle East. And I was also wondering with the India Pakistan conflict, if there was going to be a Neros type company that grows up out of India. Obviously there's a lot of folks from India who work at Andrew or who work in defense tech or, or even don't even come to America but want to work in defense tech. It'd be interesting to see someone who cuts their teeth in the Indian Pakistan conflict, then build a company out of that. And that's something I'm like tracking right now.

Didn't have that much time to cut their teeth.

Well, yeah, because it was very, very short. But still I like. And America the whole time was like, we're hands off on this. Like we're not taking sides. But if you look at the actual numbers, America has kind of taken a side in the sense that just in the last year, America has sent $5 billion worth of military equipment to India and zero to Pakistan.

Yeah.

And so like the numbers are pretty clear. And when I see $5 billion, I don't see. Okay, yeah, like that's, you know, there's a generational company to be built right there for American and oral for America, for India or whatever. That probably doesn't make sense, but is there, is there someone like an entrepreneur who could go over there and get one contract done for 10 million and then take those lear learnings from that unique conflict because I'm sure it's different from other conflicts, and then build a real company around that. That was something I was kind of tracking, but. And I've heard some folks saying, like, they want to build like the enduro for India and that'd be interesting to track, but haven't seen that actually happen yet. Anyway, back on Saudi Arabia, Saudi Arabia brought in a mobile McDonald's for President Trump on his visit. Incredible. And it's just like a portable McDonald's.

Like his reputation with the wooden siding that looks like not just any old.

McDonald's, that looks like top tier McDonald's. Pretty sweet. And then Vittorio kind of summed it up all in one post here. He says, Trump, Elon, Sam Altman, Jensen and Saudi royalty. This might be one of the most important events of the decade. Trump signs the peace accords, sets up the largest bilateral deal in history. Elon brings autonomy solar grids, orbital access. Sam Altman brings AGI and Stargate infrastructure. Jensen bring silicon and compute. Saudis bring capital, land and energy. This is how post scarcity begins compute for carbon swaps and desert solar powering AGI fabs. Instead of oil rigs and starship landing pads on Arabian sand. Petaflop replaces petrodollar and sun replaces oil. This is the birth of a post western, post scarcity, post democratic world order. Interesting take, Vittorio. Let's hear from.

Let's go.

Which is the most aggressive take by possible out of like, you know, something that they described as like a meet and greet and they're like taking some photos.

But you know, I mean, yeah, you.

Got it directionally correct that there's like this is the beginning of partnerships and the continuation of partnerships because obviously Saudi Arabia through investments as exposure to a lot of these and you know, there's been discussions here. It's not like all of these deals are going to get signed today. But I like that he's putting a quote on it.

We are entering post scarcity today. I like some even, even post democratic. Yeah, right. Yeah. Love Victorio. Thought provoking to say the least.

There's some other.

We should talk about the. Specifically the Nvidia thing.

Yeah.

Deal. So I'll pull this up.

So Humane and Nvidia announced strategic partnership to build AI factories of the future in Saudi Arabia. We're hearing the AI factory term again.

Humane is the AI subsidiary of Saudi Arabia's public investment fund. So they're making a major investment to build AI factories powered by hundreds of thousands of Nvidia's most advanced GPUs. Over the next five years, Nvidia will work with Humane to train and empower an AI ready workforce. Sounds awesome. When did Jensen start calling data centers AI factories?

I don't know and I wonder if that came from him, but it felt.

Like a month ago.

But it does seem like a more general term. Like anyone can understand AI factory, like everyone does.

Factory data center. Data center is very.

It's like, are you just storing data?

Yeah. All right, add another 1 trillion to the market cap. I've seen enough.

So the projected capacity for one of the first factories is 500 megawatts, which is not massive by American standards, but it's up there. And that will have several hundred thousand Nvidia GPUs over the next five years. The first, first phase of deployment will be a 18,000 cluster. 18,000 GPU cluster of Nvidia GB300. Grace Blackwell AI supercharger computer with Nvidia Infiniband networking. Man, they really like the jargon in here.

And Nvidia popped on the news. They're up another 5% today. Back into the 3T club.

Let's hear it. Let's get some soundboard for them. That's fantastic. That's really good.

Here's a good.

This is what we were talking about. Here's a good point. We're talking about like the path to the biggest company on polymarket, how it was a race between Apple and Microsoft and we were like, yes, that makes sense. But the one company that could just absolutely pop would be Nvidia.

If it was a wild card still.

Yeah, of course, of course. But, but like if Nvidia does a couple more huge deals out of nowhere, all of a sudden it's gonna, it's.

So funny because the gap between Nvidia and Microsoft is like $200 billion.

Oh, that's it. I thought it was like a trillion dollars. I don't even know.

$200 billion. There's just not.

Oh, they could close that in a weekend.

Yeah, yeah, that's just like a 1 swing. Here's a good quote from Jensen. Jensen says AI, like electricity and Internet is essential infrastructure for every nation. Together with humane we are building the AI infrastructure for the people and companies of Saudi Arabia to realize the bold vision of the kingdom. So Anyways, big news and 28 to.

Be the largest company by the end of 2025. It's Microsoft at 37%, Apple at 31% and then Nvidia at 28%. And the market caps are 3.33 trillion versus 3.17 trillion.

Wow.

Yeah, doable, doable for Jensen. Couple deals and he makes it happen.

Yeah.

Interesting. I wonder what they'll be training. I mean they've, they've done Falcon 9B. I haven't heard more about their LLM development. Are they, are they okay being a buyer of OpenAI and anthropic and the other foundation models, or do they really want to own their own? If they're really close with us and they are boys. Right. Like you shouldn't care. It shouldn't be that big of a deal. Should be like, yeah, it's fine, I don't care if I use an American LLM. But we'll see where they go with it anyway.

We will see.

Alex Wang was over there. He said good discussion on AI leadership with President Trump and my colleagues from across the AI industry shaking hands emoji. Thank you to our Saudi hosts as well. Seems like he had a great time. And Elon Musk posted a eight minute interview from the Saudi US Investment Forum and there were some details that came out of here. I don't know if we can play this video. Do we have audio for this?

Imagine the tension between and Sam.

Yeah.

To celebrate a US Saudi and a.

Saudi US relationship that is 92 years.

Old, about how we move from an.

Oil based economy to an innovation based.

Economy powered by wonderful technologies that definitely.

You'Re one of the pioneers in this industry. We just showed to His Royal Highness.

Some of your optimus robots and to President Trump. Let's talk about that.

Tell me about them.

Yes. So we just showed several of our Tesla Optimus robots to His Highness and President Trump and I think they were very impressed. In fact, one of our robots did the Trump dance, which I think was pretty cool. To ymca. Yeah, yeah, to ymca. So yeah, robots can dance, they can walk around, they can interact. I think we're headed to a radically different world. I think a good world, an interesting world. My prediction actually for humanoid robots is that ultimately there will be tens of billions. I think everyone will want to have their personal robot. You can think of it like as though you had your own personal C3PO or R2D2 or. But even better then who wouldn't want to have their own personal C3PO? R2D2. That would be pretty great.

And.

I also think it unlocks an.

Immense amount of economic potential.

Because when you think about what is the output of an economy, it is productivity per capita times population or capita. Once you have humanoid robots, the actual economic output potential is tremendous. It's really unlimited. Potentially we could have an economy 10 times the size of the current global economy where no one wants for anything. Sometimes in AI they talk about. I think it's actually going to be universal. No one's clapping in the actual audience.

Yeah, it was kind of low energy. Come on guys, where's your soundboard?

I was falling asleep.

Saudi U.S. investment Forum. Step it up guys.

Anyway, very cool.

We should stay on Elon and talk about the Tesla taxi stuff.

Should Tesla get credit for those tens of billions of humanoid sales today? Because I don't think that's priced into the stock. The market is not quite pricing it. It's priced into figure, right? Yeah, 38 billion. You gotta think that figure's priced in for sure. But if I'm looking at Tesla, I.

Mean you're half joking, but there really is.

Tesla's back. Over 1 trillion. Let's.

No, I never doubted it for a second.

We're so back. It's so crazy. Even so, you could buy Tesla at $227 a share a Month ago, less than a month ago. It's at 335 today. All it took was giving up the Doge dream.

Terrible time to be a techno pessimist. It's really awful. Anyway, I do think the Tesla story is interesting because there are two narratives right now that are kind of rivaling, like, you're jok about, like, are you pricing in all $10 trillion worth of GDP or whatever that they're going to add. But I do think that there are a significant number of investors that are saying, I'm investing because of Optimus, and there are a different set of investors that are thinking, I'm investing because of Robotaxis, because these are the two major transformative technologies that, if they work, will be big new markets. Right? And Tesla's working on both of them. But there's questions internally about timelines on each of them. Optimist, obviously, seem farther, farther out, potentially bigger market, even. And then also there's like, reports of, like, you know, how far along are each of the technologies? How are the teams actually doing on this stuff? But the thing that I keep coming back to and the thing I want to dive into is just there's a lot of negativity around Tesla, like missing deadlines or, oh, the robots are actually teleoperated or whatever. But I think it's always useful to step back and benchmark against what else is happening in the market because, like, the idea of a robot that dances is not science fiction. Like, we've seen it with Boston Dynamics, we've seen it with Unitree, and it seems like the question is not, can Elon build a robot that dances that's as good as Unitree or as good as Boston Dynamics? Like, that seems like pretty commoditized right now. He should be able to do that. The question is, can he dominate the category and really scale up production to a point where the economic flywheel works, it's profitable, and the products are so much better that they're winning, winning, winning. Just like in the heyday of Tesla, the Model 3 was winning, like, best car of the year by car and driver. Like a pretty nonpartisan group that was just like, yeah, on paper, for the price. This is an incredible car. Go 0 to 60 in 2 seconds. If it's the Plaid and it's like under 100k, you could never get that performance for price ever before. And it drives itself. So anyway, the big discussions about the Tesla robo taxi deadline, the information says the deadline is nearing and it's the start of a key testing phase that is uncertain. And so in Austin, Texas, there is a deadline that's just weeks away. But the company hasn't started testing its cars without a human safety driver as of last month, according to an engineer close to the testing and former employee. That's a crucial step required before Tesla can launch the pilot service for customers. And so Waymo is going through the, the approval process for self driving taxi services. Obviously all over the place. They're in Los Angeles now, they've been very successful in San Francisco. And there's clearly stages and gates to that rollout where there's a human driver in, then you pull the driver out and the car's driving around by itself at low speeds, then higher speeds, and as you get approved, you move forward. And so Tesla's been training its most popular model, the Model Y, in Austin since at least last fall. According to internal emails, Tesla employees are now testing the Robotaxi service cars on supervised rides in which a human safety driver sits behind the wheel. Testing without a safety driver is the next step, although it's unclear when that will. When that will start. Much is at stake. Musk is betting Tesla's future on Robotaxi ambitions, which will initially rely on existing Tesla vehicles before using Cyber Cabs, the specialized vehicles without steering wheels it plans to begin manufacturing next year. And making the Cyber Cabinet, that does not seem complicated because it's Basically a Model 3 without a steering wheel. It's like less parts.

Yeah.

And it's all the same infrastructure. So like, I would, I would be shocked if they don't hit that goal to make that because it's like paint it gold and you're good to go, basically. It wasn't like a radical reinvention of what the vehicle is. Yeah, yeah.

I mean, the most exciting thing was the doors go up, right?

Yes. Yeah. The butterfly doors are important.

Yeah, the doors go up.

Musk is also. Tesla can catch up to Alphabet's Waymo, which already operates a commercial robotaxi service in several US Cities, but employs a different approach to training and operating cars, which we'll, which we'll talk about. So when Waymo wants to offer its city its service in a new city, it uses data from sensors on a handful of test cars to prepare detailed maps of each city so its vehicles can safely navigate the streets. The process took a decade to develop and can take at least a year to complete. In Austin, Waymo tested for about six months with the safety driver in its vehicles and six months without them. Waymo cars don't yet ferry passengers on Interstate 35, but they are training on highways in California.

Tesla, on the other hand, trains its cars mostly on data accumulated from existing Tesla drivers. Preparing to launch the service in Austin has forced the company to confront mundane operational problems like rerouting when cars get stuck and providing customer service. Essentially the struggles of not having a human in the car, the engineer said. Waymo and other competitors have spent years grappling with these issues. Musk told investors this month the launch in Austin could include as few as 10 Model Y vehicles. The company is looking to hire a team of people to work remotely, using virtual reality headsets to supervise the cars when they encounter problems.

So this is teleoperation. Very normal. And also used in Waymos. This is the George Hotz contention. It's never been confirmed, but he said Waymos don't work when the cell phone towers go down. So you know that they're connected to the Internet and you know that people are watching them. But the VR headset thing is interesting because I haven't seen that as necessary. I always thought that when you had a teleoperation team working on self driving cars, what you'd see is somebody at a big screen or series of screens and they would be looking at maybe four cars simultaneously and it would have kind of like green, yellow, red. And if it's green, it's just cruising down a clear day on an empty street, no problem. But then it sees a cone that it doesn't understand, it goes yellow and you can kind of look at it. And then red is. I'm really confused. I'm stopping the car now. You need to hop in and take over. And then you're not, you're not driving the car in VR. You're saying, hey, I've double checked as a human and I see no humans there. So you can, you can go for it. Car.

Yeah. And it's not.

I mean, that's fine.

At the end of the day, it's not unreasonable to think that Tesla rolls us out and there is perpetually somebody monitoring every single minute that the car is operational.

Why not? It's not that expensive.

And it's not that expensive.

Yeah. And obviously it doesn't work over the very long term, but it's fine as a way, as a path to market. And so the Tesla. The Texas Department of Public Safety, which oversees the highway, has not yet received an emergency plan from Tesla, but said it's prepared for the launch. Such a plan would help emergency responders engage with cars if they fail to pull over or if they Block traffic such as other robo taxi services have done. So it seems like the government's actually catching up to this thing stuff and is putting a plan in place to say, hey, like, we want this and people want this, but we got to figure out what to do if this car freaks out. Basically.

I saw a video somewhat, somewhat unrelated, but I saw a video of somebody figured out how to trap a Waymo. A Waymo had was you just put.

A cone on it and stops.

Yeah, so. So apparently a Waymo was in front of this guy's house and so he went and just took tape and just put four pieces of tape around like the main sensors. And so the car's like on and it's like running, but like. And I was like, I don't support abuse of any type of robot.

That person's first to go when the. Yeah, when salvation day comes, they're cooked. Yeah, the terminators are not going to look kindly on that behavior anyway. Robots full self driving could take over most of city driving on city streets. FSD launched to the public in 2022. By last year, more than 2.5, 2.4 million cars were using it. That's a lot of data. Several. Several autonomy researchers and engineers said Musk's confidence in Tesla's ability to quickly expand its autonomous vehicles to new markets fails to account for the logistics needed to operate ride hailing fleets. Scales at scale. Yeah, whether they're driven by a human or computer. It also glosses over some of the regional differences, such as traffic light and lane design that have slowed other companies that they try to scale. And this is the key thing we'll go into. But this is like the really, really important. This is a very, very important underlying strategy to the way Tesla is approaching this versus web. So Tesla receives video clips from. From an array of cameras mounted around its cars and processes them at a cluster of supercomputers, which it calls dojo. A primary goal is reducing the frequency with which a human has to intervene in the car's driving. This was called on policy learning versus off policy learning. And so the car is driving itself. Whenever the human interacts to take the steering wheel or apply the brakes, that's sent as a negative reward to the neural network to say, hey, whatever you did there, that was wrong, the human didn't like it. And so go back and do more of the driving where the human isn't taking over and you get a lot of data on that. You build a big transformer network and eventually you get a very strong Machine learning model. Essentially the computer systems handling the data learn differently from humans and sometimes stumble over issues that would be obvious to people. The engineer said, like this is obvious. We've seen this with hallucinations. With LLMs. The development has at times relied on feedback from Musk and from YouTubers driving the semi autonomous modes who map out parts of the roads in San Francisco and Florida where the cars struggle.

Tesla, this is citizen. Citizen journalists, AI.

Yeah, I guess. Training Tesla sole reliance on cameras rather than laser and radar based systems in Waymo means its autonomous approach is more prone to mistakes, critics say. Cameras only is not enough and likely will never be enough, says Seaton Merceli, the co founder of the autonomous trucking and logistics companies Locomation and Atlas Robotics. Tesla's approach doesn't work, period. Said Missy Cummings, an autonomous vehicle researcher at George Mason University. Computer vision is simply not enough for this task. And I betting disagree with that.

Betting against Elon Musk.

It's not just that it's betting against, it's betting, it's the way humans do driving. Like humans don't have lidar, we just have vision and we drive fine. And so I've never, I've never buy, I've never bought this, this argument, this line of reasoning that, that you, that you definitely need something more advanced than just a camera because humans are able to drive, 18 year olds can drive, 16 year olds can drive. And yes, you need, you obviously need to create something that's you know, human level intelligence and very, very capable and you need a huge amount of data. But there's, there's nothing like this is such a reputation.

Director of the Mason Autonomy and Robotics Center.

Yeah, and I, and I understand where she's coming from.

She was a naval pilot in the 80s.

Yeah, I mean I understand where she's coming from in the sense that like right now LIDAR and radar based systems and GPS based systems are seeing better results right now. But to just throw out the bitter lesson and disrespect scale is all you need is a really, really tall order that's been wrong many, many times. And so it's, it's a very risky position to be in. And I don't, I don't think it'll pay off well. And the whole theory of the scaling laws and the ideas that you want to, that you want to just get a whole bunch of data and crunch it down into a huge transformer essentially has proven correct many, many times. And it also puts you on a different path to scaling because as if you if you have a system that's more hand coded, more, more customized based on the particular locale, every time you go into a new city, you need a new, you need a new team to spin up new record scan and whatnot and do all these things.

Yeah. And her broad point is that laser based LIDAR systems also make errors like computer vision is making today. But it's just that layer of redundancy that allows you to avoid. It's just mistakes that pure, pure computer vision systems are making today.

It's just, it's just a very strong statement say camera only will never be enough.

Yeah.

Because it's literally enough right now in a human. And so I just don't, I just don't buy this line at all. I just think the timeline to actually scale this up is long. It's going to take a long time. But, but the idea that you will never be able to operate a car safely with just camera is ridiculous to me anyway. Her analysis year of Waymo Cruise and Zoox and other testers found that computer vision systems are very brittle and likely play an outsized role in crashes, in part because they miss obstacles and.

Yeah.

And can hallucinate imaginary.

This is what I was saying. If you add that LIDAR system, you can add redundancy. And so it's just another effectively, you know, check on the pure computer vision approach.

It's difficult to gauge safety of either approach because Waymo's developed deployments are still limited to specific cities and Tesla's system is not yet fully autonomous. Federal regulators are examining how Tesla cars handle relatively common traffic occurrences such as sun glare, fog and airborne dust, which is legitimate. Musk has counted counted counter doubters by saying that humans manage to drive with only their eyes. Got but. But acknowledge last month that Tesla's. Tesla's robotaxi services won't work in snow, prompting some followers online to offer to help train Tesla by driving more in poor conditions. They're just like I will do.

I volunteer as tribute volunteer Musk.

Musk also said it's been difficult to train on enough incidents to make sure the cars can handle them safely because if the Teslas don't get into a lot of crashes, there's not a lot of data there.

If Elon can add a. The Tesla camera system to a Lamborghini Stirrado, that'd be great. I'm happy to put 5,000 miles on it in, in harsh winter conditions.

Yeah.

You know, at this point, you know, summer's approaching. Probably need to take it down to Australia. But doing, you know, a road trip through, you know, the Australian winter. Sounds great.

Yeah. I mean, this also, this also ignores simulation learning and transfer learning, which is obviously something Tesla's invested in a ton and has a very proven, proven track record. There was a researcher from Nvidia@ Sequoia's AI ascent talking about transfer learning and how they're using generative AI to generate essentially video from the simulated data. So they'll create a physics simulation, basically a video game of a robot picking up an orange or something like that. That's a physics simulation. Then they'll create a ton of variation in the different physics properties to try and inject a lot of noise into the system, basically. But then they'll use generative AI to convert that into video feeds that then they can feed back into the system to train on. And they've seen a lot of success with that. And so I'm skeptical that this is that big of an issue. But also, you could just put lidar on the cybercab, like it hasn't been built yet, and if the price comes down, you throw that on and then, then, and then all of a sudden.

There are Tesla, there's companies that, yeah, Tesla could acquire that would immediately give them a massage edge there. So, yeah, anyways, let's move on.

Okay, well, there's some other commentary around this piece. With the Robo Taxi Network, your Tesla will be able to earn money while you're not using it, essentially paying for itself. It'll go, it'll go to work just like you says Tesla. Very bullish for buying a Tesla Wild.

That big public company can tweet like this. Don't use periods anymore. Oh, yeah, I saw. Yeah, it's an interesting evolution, but periods are over, done.

And then Dan o' Dowd is another account on here pouring some cold water on the Robotaxi launch. You can almost hear Elon Saive release a sigh of relief. He now has his excuse for canceling Tesla's June Robotaxi launch. It won't be long until Elon claims Tesla was totally ready. But the pesky regulator stopped him. Mighty convenient. Do you think Elon ordered NHTSA to send this letter? And so the NHTSA said, get him.

A tinfoil, get him a tinfoil hat.

And then Cole Grind says, people say you should sell Tesla because it's hard to build a ride sharing system like Uber and Lyft. But little do they know, Tesla already has over 20 million people using their app. Once the Robotaxi launches, they'll be able to use the existing Tesla app for their ride sharing service. This will allow Tesla to gain new customers through app downloads and cross selling of other Tesla products. Once those members become come online. I would not be selling here, I would be buying. He's given some financial advice folks, but we aren't. And then Rami, who's clearly a Tesla fan, his handle is Tesla Explored, says please send me a video of any other company that can drive me in New York in the rain, door to door without any interventions. I didn't need to be in the car. I could have easily been in the backseat of my own Tesla robo taxi. And the result is that it took me to lunch autonomously. So he's a fan.

The level of conviction from the some of these Tesla fans is huge. Incredible huge.

It's similar to the level of, it's.

Even, it's even beyond our little corner of town. Right. It's an entirely new level.

But I mean we see this with other companies. Like we see this with the gramp fans. Like they go crazy. There's all these YouTubers and people with.

Like defend Eric Lyman their life.

Exactly. Yeah. I mean they, they know that time is money and they want to save and so they create whole YouTube channels all around. Just easy use corporate cards, bill payments, accounting a whole lot more all in one place. They're just obsessed. It's crazy.

Seeing people get time is money save both.

Lots of tattoos. Lot of lots of ramp tattoos out there for sure. Oh, some people start whole live shows, whole podcast, just totally just to promote.

Ramp in service, in service of devotion.

Yeah, they call them like, you know, there's like the Tesla Roddy. They're like the Ramparotti. The Ramparotti?

Yeah.

The Illuminati.

Yeah, it's great.

Well, if you're looking long Tesla, short Tesla, whatever your decision is, go over to public.com investing for those who take it seriously. They got multi asset investing industry. They're trusted by millions. Thank you for the soundboard, Jordyn.

Thank you to public.

Should we talk about the giants of Silicon Valley, how they're having a midlife crisis over AI? This was an interesting post in the Wall Street Journal because it was, it kind of all stemmed from an interview with Sarah Guo who's been on the show. And so she did a podcast with the Wall Street Journal. Bold names venture capitalist Sarah Guo. Surprising bet on unsexy AI. And they did a nice little write up here. So they say one minute you're upending established industries. Essentially the younger disruptor, the Next, you're staring into the abyss, eating glass, as Elon Musk likes to say, watching the disruption at your door. Most, if not all, of the Magnificent Seven are in that position, weirdly trying at the same time to figure out the threat of artificial intelligence to their kingdoms. That dynamic has been on display for the past few weeks. Alphabet stock dropped more than 7% after a senior Apple executive disclosed that Google search traffic on its service, on its devices using Safari fell for the first time in 20 years. You they've had Safari around for 20 years as a Google partner. That's crazy. It's so long, Google clarified. It continues to see overall search growth, even from Apple devices, putting Apple in the truth zone. Don't knock our stock down, Apple. We're still growing. For his part, Chief executive Tim Cook is trying to buy time for his company, pushing investors during his latest earnings call to be patient with the iPhone makers. Delays around AI features. Then there's Facebook. Mark Zuckerberg is attempting to paint a bright future for his ad dollar juggernaut as something of an AI buddy for the lonely. That was kind of taken out of context from a Dwarakash interview. Do you see this? Dwarkesh said something and they attributed it to Zuck. It's like every time. So bad.

Anyway, how about an AI buddy?

Even Musk seems to be sweating things as he returns from his Doge sojourn to Tesla, seeking to counter slide an electric carmaker stock price with promises of deploying driverless cars. We're not on the edge of death, not even close, musk told analysts recently. We love to hear it and we saw it in the stock. Over a trillion dollars now. Not bad. His protest sounded like that Monty Python and the Holy Grail character about to be thrown on a pile of corpses. I'm not dead. I feel happy. To be fair, none of these giants are dead yet. And they have lots of reasons to feel happy. They are wildly profitable pillars of corporate America, which we love to hear. Corporate America. And together they represent around $7 trillion in market value. Yet the crossroads they all stand at collectively and how they react individually look like ready made case studies for 21st century update to the classic business school.

The innovators to learn on the Tesla note. Yep, people that were shorting Tesla over the last couple months, right? Sales of the cars have been abysmal. Literally every market is down like double digits. It's like so bad just getting crushed by every other EV manufacturer. They're having to sell cars. Clearly.

No black pilling. No black pilling no, black.

I'm not, I'm not, I'm just, I just have to. The. This is why never be a short seller. Because you could have looked at all the data for Tesla and said this. Where's the bottom here? I mean it's like where, like why is Tesla. You know, and it's like Elon Musk don't betting against, never bet against. It's okay not to invest with him, but betting against him, that is rough, dangerous.

And again, it's like, are these, this is what we keep going back to it, like the Trump tariff things and stuff. It's like, are these things stuff he can roll back? Yeah, like, okay, so what, what, what's going wrong with Tesla in this theoretical bad scenario? Well, like Elon's not spending enough time there. Right. He's spending too much time at Doge. Well, can he quit his job at Doge and go back to be CEO of Tesla? Like, yes. Okay, and is that what he did? Yes.

And that's worth about $350 billion.

It's like somewhere. Oh, like the lidar isn't working. Like, could he add lidar to his cars? Like, yeah. Like could he map every city? Yes.

Could he?

You know, there's like all these things that people are like, oh, he'll never, he's not doing this. Impossible. Oh, he's like, he's over, he's politically, he's too right wing. Like, well, could he come out and endorse Gavin Newsom? Like live out?

Could he live out?

He could, yeah.

Like anything, it's never too late.

Anything's possible.

It's never too late. Well, let's talk about the art market. I wanted to have my dear friend Dylan Abrascado on potentially the most important topic to talk about. The most important story of today and certainly potentially the week.

Yes, I think so. It's, it's shaking up Silicon Valley. There's a lot of, there's a lot of venture capitalists, a lot of exited founders, post exit founders and a lot of technology journalists who have generational wealth who are at Christie's right now bidding on modern art. And so they'll want an update.

So we'll running up the price on.

These to the studio. Welcome to the stream. How you doing?

Thanks.

Thank you for joining. Dylan. Dylan, it's great to have you on the show finally. Long overdue. You've given us a first time caller, a lot of great pointers. But anyways, we were going to cover the story, so thank you for being able to Hop on. On short notice, do you want to give a quick intro and then we'll dive into the story just so people have some context?

Yeah, sure. I'm Dylan, founder of Cryptothe Game, which is an interactive crypto survival game, Think HQ trivia, where I worked for the Rise and Fall Meets Survivor or Squid Game or Hunger Games. We've had a couple viral seasons and before that I was Jordy's head of marketing over at Party Running Capital. So we go way back and way.

Back to be here.

Way back.

Awesome. Why don't you give some context on your. Your background as an amateur but successful art collector as well?

Yeah, yeah. Always been an obsessive collector of things. You know, growing up, I collected Beanie Babies, Pokemon cards, baseball cards, sports memorabilia. Always collecting. Fast forward to, I don't know, probably like 2017, 2018. My wife and I move into our first apartment together, had very sterile white walls, and decided that, I guess, like, collecting art would be a good way to kind of scratch. Scratch that itch of collecting and be something that we could do together. So kind of just started as something we could do together. I kind of browsed Instagram back then. There was like a much more intuitive kind of like explore tab. You were surfaced, kind of like art, if you followed artists and pretty much just cold dm. This artist, also coincidentally named Jordy, Jordy Kerwick, whose art immediately spoke to me, sent him a dm. He didn't have any gallery representation. He made, you know, buying a piece and commissioning a painting as easy as, like, texting with a friend, you know, I think the art market historically has been so hard to get into for young collectors, and there was like zero friction in the way that we went about it. I think we got a little lucky in the sense that he eventually, like, blew up, got kind of like gallery representation and tier one gallery representation. He was breaking records, you know, in similar auctions to what we're about to discuss. And kind of because of that, I don't know, I almost like, made a name for myself in this, like, Instagram art community. And yeah, I've kind of just like catapulted into the art collecting scene.

How's the P and L though, on paper? I'm sure that the returns are fantastic. Have you ever. Do you ever sell or do you just buy?

I don't. No, I just buy. I don't know. The. Everyone always asks kind of because of that, like, what to buy and how to go about it. And my advice is always just to buy what you love and buy what speaks to you. And it kind of sounds like, you know, pretty simple advice. But anytime I've looked at a piece or like had a recommendation from a friend or a fellow collector on a piece that was going to be a great investment or was going to do really well has never worked out. And I've always kind of regretted buying and having my wall and kind of like looking at it versus the stuff that we do buy and collect and kind of like do it for the right reasons and have always been kind of like rewarded on paper bas for for those early bets.

Yeah, great. Well, let's talk about this story and then I'd love to get your update on kind of the broader art market. So we'll read through it. So the Journal covered it this morning, but the Mond mondrian sells for 47.6 million. Christie's Modern Art Sales kickoff a week long series of art auctions that will gauge the art market's strengths amid broader economic uncertainty. People are wondering will art values soar or flop? Or in general, what the liquidity will be like.

So this was at the kind of low end of the estimate. The 1922 work Composition with large red, plain, bluish gray, yellow, black and blue was expected by Christie's to sell for between 40 million and 50 million. But only one bidder emerged and it sold quickly for $41 million or 47.6. With the auction house's fees, the work still ranks as the third highest price ever paid for the artist. But the record remains 51 million paid three years ago for Mondrian's composition number two. Both examples feature a large red square which the auction house hoped would help because collectors tend to pay a premium for Mondrian's spare abstracts that contained cherry hues. Said Alex Rotter, Christie's president. Red always helps. Simple as it is, because it's a people that color, it's a color that people like, said Roger.

There you go. That's what Dylan's talking about.

Never, never buy brown. Never buy brown.

It's also particularly small. It's only about like 2ft by 2ft or something. And so I saw on X bornosaur A An NFT profile picture says this tiny Mondrian just sold for 47 and a half million dollars last night without anyone batting a batting an eye. And yet people think AAA natively digital grails are overpriced at 2 to 3 million, much, much higher. Kind of saying, hey, maybe we should pump the market of the bored apes. Yeah, let's get bored apes in the conversation.

Yeah, let's get it back in the conversation. Anyways, were you surprised at how this, this got priced, Dylan? Were you following it at all or what?

I mean, there's a lot of like, there's a lot of uncertainty in the overall economy, right? So I mean, you would expect that like art kind of oscillates, but yeah, I mean, do you follow this or like, how do you even track the overall art market these days?

Yeah, I mean it's exact, it is so similar to venture investing. I know you kind of joked about it at the top, but especially when you look at emerging markets and if you buy from their studio in the same way that I did with Jordy Kerwick, it's basically getting into a friends and family round, at least with kind of like living artists and artists that still have gallery representation. If you do, if they do basically sign with an up and coming gallery, that's the equivalent of a seed round. And then by the time they do get that kind of like tier 1 Gagosian level representation is the equivalent to an Andreessen or a, you know, tier one fund, like backing them in like a growth stage round. But yeah, I think you, you referenced that kind of like Mandarin record that was set three years ago. There were emerging artists. Everyone basically, like at the time of zirp, like everything was going crazy and we saw that both in, you know, basically across every single market are not withstanding. So I think the way that I personally judge it is, is basically just off of the information that I receive. In 2021, 2022, I was reaching out to galleries kind of cold and being told that there were wait lists and the deal flow was based on basically like very, very hard to come by. Fast forward to, you know, a few, a few years from then, you know, galleries were kind of like reaching out to me, you know, hey, I know you were initially interested in this artist a few years ago. Here's all this work that's available. I'm willing to offer discounts. And that immediately signals to me that, you know, times aren't good for galleries. But I do think that the, the best way of predicting like how these auctions are going to go are based on basically how New York Art Week goes. And that was this past week, which was kind of headlined by Frieze, but they also had Tayfaf as well as Nado, which is kind of like the more emerging art fair. And from what I can tell from everyone that I've spoken to, that was kind of like on the ground. It was a much more optimistic New York art week than years past. Gagosian sold a $3 million sculpture on the floor. They sold out, you know, tons of boots that were sold out kind of like on day one.

$3 million sculpture. Sure. Selling on day one. That's great news.

Yeah. So I think like that usually sets the tone for how these kind of like auctions go. There's been a ton of buzz around the Bass house. I'm not sure if you guys are familiar with the Bass house, but it was a commissioned.

We both are. But can you explain it for the fans who might not be sure?

Yeah. It's an architecturally significant home in Texas that these two kind of like well known collectors commissioned a very famous architect to design this mid century modern house in Texas specifically designed to house their collection of Rothko's and, and Warhol's and you know, pretty much every big name and they are auctioning off the collection which everyone is in, in our market is very surprised by because you would think you, you know, you commission this home to specifically house this collection, it should eventually become a museum. And I think that kind of like bodes well for what they think and what a lot of people think is, is going to be a lot of liquidity kind of like heading into these auctions. Having said all of that, I would say if we had this conversation like a week or two ago, I think it would be a lot more pessimistic or concerned. But given the very like recent kind of like positive news and kind of like market turnaround, I think there's some buzz kind of heading into, heading into tonight.

Yeah. I have a follow up question. I mean the size seems significant. I feel like there's probably a sweet spot for the scale of a particular. You mentioned that sculpture we're recording not too far from the broad. You walk in, there's this massive Jeff Koons balloon animal. Yeah, I, I, I walked in when I was in New York once I walked into Jordan Wolfson. I don't even know if it's a sculpture, but it's like a performance art piece. I don't know if you're familiar with Jordan Wolfson, but it's like this crazy interactive like machine that has motors and stuff and at a certain scale it becomes like how do you even collect that unless you have like a museum to put it in?

That's who's buying it is, is the institution.

It has to be like.

I would imagine, you know, the three million dollar sculpture that goes in sold that I mentioned was a Kun's and I, you know, the broad bought their Kuhn sculpture from Gagosian. And I would venture to guess that the bidder or the person that bought this $3 million sculpture was an institution looking to build out their collection for the museum.

Yeah. Is there a difference?

I mean, yeah, I'm curious not to, not to switch gears too much, but I'm curious, is Christie's Even slotting in NFTs this week at all, or are they so over it that they're not even.

Because it was a big thing like three years ago.

Yeah, I mean, Sotheby, you got to give Christie's Sotheby. Yeah, you have to give them some credit for moving quickly and getting NFTs into these auctions early. But I'm curious if they're doing that now.

So this week is kind of like the hero week of every year. And there's, there's no way that in like a, you know, 21st century, like masterpiece auction, you'll see an NFT. But I do think they are still accepting crypto and selling NFTs. All the main major auction houses kind of have of daily auctions that they're running. You know, you probably won't see a beeple in something as kind of like highly publicized as this week's auctions, but I definitely think they're still selling digital art for sure.

Yeah.

Yeah. There's one NFT that I think belongs in the conversation. Have you heard of this moxie marlin spike nft? So he's the founder of Signal, and during the NFT boom, he wrote a very technical deep dive on kind of some of the flaws with the way NFTs were structured in that he, he basically designed an NFT that displayed differently on OpenSea than in a phantom wallet than in an ethereum wallet. And he was making this commentary around the importance of platforms and the role that a firm like OpenSea plays in the art market and how like, the code is not purely on chain because it can be represented differently in different places. And it was kind of this, like, it was kind of a top signal at the time he wrote it when NFTs were super hot. And obviously he came to it from a very engineering mindset perspective. And I think that it, even though he never sold it and it doesn't have any value and it never like minted in the traditional sense, it is an nft and it has this historical provenance in this story around it that I think as we look back on The NFT boom. We could remember that particular story as an interesting commentary on the entire industry that could actually drive the value up. So I was considering buying it from him for a while, but I didn't have the guts to throw out an actual price.

Yeah, yeah.

Well, I do think similar to how there's paintings and there's sculptures and there's basically all different forms of, you know, there's mixed media art. Like, I do think digital art definitely has staying power. Probably just like in the more experimental guys that you were talking about. And then just to quickly touch on like size as being a blocker. I think once you're talking about these like, you know, eight, nine figure pieces, it's almost always someone that can house or store either in their, in their museum or in their home, like a massive piece. But just for like the everyday collector or someone that might be listening to this, like, personally speaking, like, I have gigantic canvases that are still rolled up that I have absolutely zero wall space for, but that is like an addiction and a problem. And I do think that, you know, buy for the size that feels right to your home and something that you actually want to hang.

Well, we're moving into a new studio very shortly and we're certainly going to have some wall space, so we'll only charge you a small storage fee. I'll pump my bags as a. Yeah, family. Family and friends. Anyways, great to have you on. Come back on again soon.

Thanks so much.

We'll talk more and let us know how things shake out this week in the art market. Later.

Talk to you later.

I was just pulling it up. So opensea, let's bring Jared because he.

Just has five minutes. And all the way from Saudi Arabia, Jared Madness reporting live.

Reporting live from. From Riyadh.

He's there on the ground.

He better. Better be in the traditional.

In the traditional. Oh, we were expecting a suit. We were expecting more pageantry.

Yeah, no, no thobe from me today, boys, but I am calling in from an undisclosed location in Saudi.

Can you hear me?

Yeah, yeah, you sound great. You sound great. Loud and clear.

Give us the breakdown. Why are you there? What's going on? What's the mood on the ground?

Yeah, so I'm here mostly just to see friends.

Okay.

But. But beyond that, there was an event today where there was a US delegation. President Trump was there. The Crown Prince Mohammed bin Salman was obviously there. And a slew of top tech leaders from the US Also came. So we had Jensen Huang, Elon Musk, et cetera, et cetera. You know all the big names, you can look them up online. Yep. Can we hear. Yeah, I'm at this. In terms of the big, the big headlines. Look, you guys can look them up. The big ones are 600 million in new committed capital.

Billion.

Sorry, 600 billion in new. Yeah, 600 billion new committed capital. But I don't want to talk about that at all. What is the most interesting thing from today is the fact that sanctions on Syria have finally been lifted. Now I know between the three of us, every time we get together it's like, when are we finally going to be able to enter the Syrian market? Well, boys, that day is today.

That's today.

Yeah.

This is the day everybody's been waiting for.

We should start distributing the show there, there for sure.

Yeah.

No 100%. A lot of people don't realize, look, Syria after the civil war started in 2011, our companies have just not really been able to serve customers. So the Syrians don't really know the joy of US big tech yet and they missed the whole web 2.0 mobile development. So most of the groups that are servicing them are from the Chinese sphere versus the American sphere. And I am beyond excited for the new crop of talented founders that are going to descend on the Syrian country to spread them the joys of American big tech. So you know, if anyone is watching and is going to be launching any number of companies In Syria, my DMs are open. I could not be more excited.

Very cool.

Wow.

23 million people in Syria.

Go get them.

20, 23 million people. They've had double digit inflation for like the past decade, which means that they are a prime market for stablecoin adoption. So every stablecoin neobank needs to be descending into Syria and seeing how quickly they can dollarize the entire country. If anybody is using the Syrian pound in five years instead of US dollars on blockchains, we have just massively screwed up as an industry. So please request for startups we are looking to fund.

That's very cool. What about artificial intelligence? Nvidia launched some stuff. Have you been hearing any rumblings about AI stuff going on?

Yeah, look, the fact that Jensen was here today on the main stage shows that we are likely softening some of the restrictions on being able to export GPUs to the Kingdom and other parts of the Middle East. I might have the numbers off, but I think there was an announcement that like a purchase order of 18,000 GPUs has just been approved for the Kingdom. If you're listening. And that Sounds small. Not enough to build a hyperscaler or a massive cluster. You're correct. But this is clearly the first of many. The entire region is rapidly searching to turn their, you know, petrol based capital into token based capital in the future. So expect continued investment from the region trying to diversify out of their kind of one main industry.

Yeah. Humane is just for extra context. So Humane, the AI subsidiary of the pif, is going to be purchasing hundreds of thousands of advanced GPUs over the next five years. So starting with I think the number that you said 18,000 and scaling.

Yeah.

And the first plant is I think half a gigawatt. Right. Something like that.

What's your take on why do you think that we started calling data centers AI factories? Do you have a take there? Does it just sound cooler?

Yeah, it lowers your cost of capital.

Yeah. And that's, that's the most important thing that anybody can be focused on at any given point.

Yeah. What is the word on energy? Obviously with AI training it makes so much sense to put big data centers there, but at the same time they're trying to get away from the, hey, we have a whole ton of free energy because we have so much oil. There's also a lot of sunlight, so maybe there's solar in the future. What are the hot energy sectors that people are looking at?

Yeah, so a lot of people are with regard to energy, talking about a potential nuclear deal. While there is an abundance of oil in the Kingdom, burning oil to power power plants is not necessarily the most efficient use of oil. You know, I don't have the numbers off the top of my head, but if you look at the amount of oil that is burnt in order to air condition all the buildings in the Kingdom, it's like an exorbitant expense. So some Gulf states are slightly more advantaged in that they have larger deposits of natural gas versus crude or shale, which is just, you know, it's more more efficient in terms of converting into energy. And with regard to solar, solar in the desert has not really taken off as much because my understanding is there's a lot of wear and tear that comes from the sand and that you need to build a series of protections and the elements are not necessarily kind and you know, 130 degree Fahrenheit weather as sand rapidly batters them. So we'll see what happens. But yeah, obviously there's been a bunch of companies that are super interesting, like Crusoe, I might be mispronouncing that they're doing things like capturing excess Flare using that to generate energy at first to do crypto mining and now to run data centers. So expect there to be a lot more. More, as Jordy put it, AI factories coming out of the region. And there's a massive focus on renewables and alternative sources as well to power these things because people would rather sell their oil versus use them to spin water turbine.

Yeah, that makes sense. Do you think you or Jensen go to more conferences?

I really don't go to that many conferences, guys. I'm about to hit my quota for the year and then I will retreat to a dark room and sit on my laptop for the next nine months.

Yeah, you do it right, though. You do it right. You go to. You go to just the right ones. We've been just like, not, not even intentionally, but paying attention to Jensen's travel schedule and he's at a new conference pretty much every single day. But.

What'S the rest of the mood around crypto, broadly? Is there a push for Saudi Arabia to build a position in bitcoin, kind of a Bitcoin national reserve, from their public investment fund? Are they into Ethereum Solana? Is there, is there. Is there even a thesis from the. From the sovereign wealth fund around crypto? Or is it kind of just general hand waving around, hey, we want crypto to be friendly generally.

Yeah. So the holdings of PIF are public, or pif, the public investment fund of the kingdom. As of now, there is no crypto holdings in that except via, you know, funds that they're invested in downstream. In terms of if it is going to emerge as a crypto hub, that is still yet to be seen. Crypto is largely legal in Saudi. What is interesting though is when you look at countries that have been super friendly to crypto in the region, mainly the uae, right. There's a lot in Abu Dhabi, there's quite a bit in Dubai. The customers that they tend to cater are not born Emiratis.

Right.

The number of Emirati citizens that necessarily will make use of crypto products, in terms of giving them access to banking is fairly low. Right. These are nations that are mostly staffed.

By.

Immigrants, you know, expats that are choosing to live there. But when you look at Saudi, even though crypto is legal here, there are some studies that show that in terms of Gulf region, it has the highest penetration from a individual user adoption space. Just how many individuals are holding the coins. So I think that as the regulatory framework fleshes out a little bit and as more and more voices inside of the Ministry of Finance and the Central bank here grow louder, we should expect to see a softening of the rules and then the end state of that is probably a pretty robust environment, specifically in the kingdom. But remember, the people that can benefit from crypto the most are regions that have high levels of inflation, low levels of banking, highly mobile first in terms of payment infrastructure and things like that. And that doesn't necessarily describe all the Gulf states the best. So Guri's still out on how much and how quickly penetration will come outside of just like investment speculation, which of course you hear rumors about tons of family offices here building massive positions, but it's just very hard to validate that.

Yeah. With the new 3006-006000-00000,000 investment. Is that one of those things where the investment was already going to happen and they're tagging it for this press release or what is the structure? Is there any, is there any clarity on like the structure of that deal? Is that just investment dollars flowing into American investment funds or specific buying of American goods? Do you have any clarity on what we're going to expect here?

I haven't really broken it down yet, but I think the right way to think about it is it's going to be a lot of infrastructure investments and a lot of purchasing of American goods.

Sure.

Right.

So when Jordy's talking about the hundreds of thousands of GPUs that are going to be acquired, that's the pool of capital where that's going to be coming from. But no, I mean they specified they want to invest in energy infrastructure, they want to invest in data centers, they want to invest in ports and just anything.

I mean, it could even be like more oil rigs in the short term as they, you know, they're moving away from oil, but you know, they're obviously still producing a lot of it. And American companies have kind of a dominant position in the, you know, oil and gas infrastructure market. So they might be buying for that.

Totally. So we'll see. Also, part of that is a massive defense spending bill or a defense spending agreement. I think it was 143 billion that they committed. And you know, just socially talking with some of the people from the Ministry of Defense that you ran into at the conference, they were like, oh my God, have you heard of this company called Saranic? Have you heard of this company called Anduril? They're really gung ho on some of the non prime upstarts coming out of the States. And yeah, I had like three different guys from the Ministry of Defense. They're like, hey, if you Meet any founders building interesting new defense companies, refer them to us. We want to potentially pilot them, we want to potentially invest in them if we want to make a purchase contract. So yeah, it's an exciting time for sure.

I would like to see somebody with a Daytona SP3 using it as a launchpad for a Roadrunner. So like you're driving the Daytona, launching the Roadrunner off the back.

I mean, in terms of like early stage founders, like how early is too early to start engaging with someone like as senior as like a Ministry of Defense official, I feel like you need to have a product that can be demoed. But when we talked to the Secretary of the army, his message was very much like, like we want to hear from startups. Even at the early stage. We have a proving ground. You can come test here. We want to work with Silicon Valley. That seems like it's certainly a vibe shift in America, but it sounds like that's happening over in Saudi Arabia as well.

Absolutely. I mean, I mainly do not focus on defense, so I don't want to say anything too out of turn, but I think post the Ukraine Russia conflict, people saw how important it is to have the most up to date equipment for the battlefield. So in the same way that a lot of companies immediately went over to Ukraine and Russia immediately went over to Israel following October 7, there's probably an increased appetite to try all new things and see where it goes. And if you have a prototype, it's probably better than not having a prototype. But if you have good contacts, it probably is a good idea to get in touch earlier rather than later.

Yeah, I think oftentimes the conversations start, but no purchase activity can actually happen until the US has actually basically approved it and said, this works, we'll buy it now, you can export it to allies. But anyways, we don't need to get into itar sh.

What's the mood around the trade war generally? It feels like we're almost in like post trade war discourse. It's a distant memory at this point after Sunday and Monday. But are people still thinking about tariffs or has the conversation just completely moved on?

Yeah, the day opened with tariff conversations. So Scott Bessant started the day and it was very calming. You know, he got up, he talked about the negotiations with his Chinese counterparties. He made some very interesting points around how while President Trump and Xi had a very strong relationship, some of the people more junior in the CCP perhaps did not share his warm feelings towards our President. So he mentioned that a lot of the talks in Switzerland Were about showcasing and building favor with some of the second and tertiary level folks within the Chinese government and came out and was very much, we don't want to trigger an embargo on Chinese goods. We don't want to trigger a double embargo. So the tariff rates came down and talked about a number of other countries he's going to negotiate with. And it was very much a non escalatory tone. And I don't think it's a surprise at all that the US delegation chose to start the day out that way. So no, tariffs weren't really talked about after that because Dustin kind of kept everybody at ease. We'll see how much that remains and if we continue to lay off and have more 90 day reprieves and more agreements negotiated or if, you know, tomorrow things ramp back up again. But for now I think people were pretty, pretty calm.

Very cool. Thank you so much for taking the time.

I know there very clearly. Thank you for just throwing on the suit. Just to pop on.

Yeah. Just for us. Thanks for throwing us every time.

Great to see you.

Jerry.

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Coming in the studio, he's talking about stoves, but also trade tariffs, manufacturing. I want to ask him about what it takes to build a BYD in America. And I want to know the history of byd, what he's learning from that company. And I also want to get him to sign up for numeral because I want him to put his sales tax on autopilot. I want him to spend less than 5 per month on sales tax compliance. But Sam, welcome to the studio. How are you doing? Sam, welcome.

Welcome.

Sam.

It's great to have you.

Good to have you.

How'd you, how'd you sleep last night? Better than you have for the last few weeks.

Yeah, it was pretty good. I think I got the notification at like midnight on. On like was it Sunday night or something like that? And I was like, oh sweet. I didn't expect that, but I did and that's why I didn't panic. But. And so. So for clarification, basically we, I guess Ashley Van scooped this, that we do a decent amount of marketing our manufacturing in China.

Yeah.

At impulse, which is the highest performance stove you can buy. And you can go check out his latest video on core memory, the Core Memory YouTube channel, if you want to learn more. But the fun part about that is we probably spent a couple weeks being like, hey, do we have to pay this 145% tariff on a bunch of the stuff we build? My immediate calculation was this will stop trade between China and the United States and a bunch of businesses will not like that. And feedback will land from everyone from Ryan Peterson to someone that makes Bratz dolls to.

I don't know.

Yeah, everything. So, I mean, it's only a 90 day pause. Are you trying to get as much stuff in the country right now? Are you scrambling to import a year supply or are you thinking that this is the end of the trade war and we're going to be more or less smooth sailing from here on out?

Yeah, I mean, I, as much as I would. So one big thing with hardware companies is like a year supply is like a gazillion dollars. So you got to be, you got to be, you got to be a little strategic about what to grab. When we made sure that our suppliers are multinational and have manufacturing sites in Southeast Asia and other places, including places that are likely scoped to have deals of, you know, coming together in terms of, of, in terms of like favorable treatment on the tariff side. Vietnam, other places in southeast Asia, Mexico, etc. And so basically the, the idea is just like make sure that like all the customers that are already paid, we already told them, hey, we're going to cover this crazy 145 tariff back in the day or a couple weeks ago. We sent them a mess then, you know, like that. Obviously it's a little easier for us to do that now. Still, still holding, still holding to that. But, but yeah, the, I think the big thing is like now at least I've got some breathing room to think conscientiously about what the next steps are for manufacturing of not just our stuff, but technologies that we're going to be powering other devices with as well?

I mean, I know, I know you're a relatively new company, relatively small, but did you actually have to pay any tariffs or were you able to kind of like do a little bit before and a little bit. You did. Okay, so break.

Oh yeah, I think we paid the 145% on a couple things.

Actually.

On a couple things.

We, we, we the customer, the bulk of the customer orders that, that are coming in are not Subject to that. But like yeah, we got, we, we've started mass production already and we're a bunch of kind of. The beginning of that ends up being kind of samples and like VIP influencer units and other fun things like that. We've definitely paid it on a handful of those. The balance of the balance, even that tranche of units, it is landing like pretty soon. So we mostly avoided all of this. We're kind of lucky that this was an April thing, not a May thing. Nice to be blunt, but yeah, there was a lot of fun on that side where I think if our battery pack build hadn't gotten delayed like three weeks, there was actually a small chance that we would have had to decide whether or not to pay a very, a very large amount of money to get them out of the port.

It's better to be lucky than good, right? That's the, so the calculation.

So I'll give you kind of like what I thought about and what was in my head as this was happening because I don't think I actually panicked at all. I was like, this is actually an opportunity to talk frankly about what it's actually like running hardware startup up in 2025 with a large supply chain with a pretty complicated product with, with, with, with all these constraints, right? Yeah. And finally people care about me, right? Like, you know, finally this is the main, the main news story of the day. So I viewed it as like, let's turn the lim you made didn't panic.

You coped and it all worked out.

And I get on odd lots and you know, ready. So, so, so that was the opportunity I saw. And then the second piece was I was like, okay, so how long does it take for a boat to go from China to the US and, and then I was like, okay, so by like the first week of May there's probably going to be some motion on, on something here. And so I kind of had that in my head of like there is a shot clock going on before. We're going to have to do some sort of relaxation of some sort of thing. And looking at the shapes, the negotiations and kind of the various players that were, you know, swarming around and what I've heard privately from, I probably can't say who and what but like just, just, just in a sense of like there were there, there were, there were, there were well known folks that have complicated supply chains that were not going to want to pay 145 duties on their stuff.

Pretty quickly with Apple, right? And Apple was kind of like the largest thing they got the exemption pretty early, but then there was a lot of other discussion about other companies and at a certain point, you know, the, the noise gets so loud, it's deafening.

The climb down from Amazon on the like, we won't put the tariffs in the checkout was interesting because it's like, I wonder if there was, it kind of felt like maybe there, there could have been some negotiation behind the scenes on this where they're like, yeah, don't put it in there because we're going to just come back in two weeks kind of thing.

Well, I think they threatened to do it. Right. They actually rolled out the UI and then they got slammed by the Trump administration for doing that and seeing it as like, hey, you're, you're blaming us, but you shouldn't.

Never has a question. The question I have is, does the debacle of the last month or so change your long term planning in a meaningful way? Because we were talking in some, we were talking about on the show and off the show yesterday around this idea that okay, what did we get out of this? Right. And it didn't, it didn't feel like we got a lot out of the Geneva negotiations. If anything, we got rare earths back which was a reaction to the initial tariffs and de escalation is just generally good. Market obviously likes it, but we just kind of like round trip back to where we were. And John made a point which is that okay, well if a generation of CEOs like got into their head, the reality of decoupling does.

It's not happening right now, but it's not happening.

But it could.

And you had a plan around during this chaotic period. And so I'm sure during that board meeting you guys thought really seriously about, hey, if this actually sticks, what is our plan? Maybe that wasn't plan A, but at least it's a plan in the plan document now. And so, so decoupling, they had concepts of a plan.

So, so, so I, I actually have this like I, I, I, I, I, I don't want to get super political, but I do think there's this like Trump tariff cycle, like image that, that there's a meme. There's a meme. It's called like the Trump tariff cycle. It's like I add tariffs.

Yep.

I like take them off.

Art of the deal. Yeah. 40 take them away from.

Yeah.

So, so I, I, I actually think there's one interesting wrinkle to this which.

Is.

The, the Democrats have been often space like you can argue they've been Often spaced with like, you know, you, you, you can blame like wokeness or some of the. More like, like some of the Elizabeth Warren coded economic ideas in terms of like, oh, we should just break up all our big tech companies because, well, that would be. And, and like there's a bunch of these, these sort of, like, these, these sort of ideas that have been, let's call it anti tech or, or kind of on the wrong side of a culture war balance or something like that. Yep. What's been very interesting is. Or like let's legalize homeless encampments in San Francisco or whatever. And what's been interesting is systematically so like grow SF has like really. And Daniel Lurie and all sorts have really reset San Francisco in a, in a positive way because like they had to get the egg in their face to learn the lesson.

Yep.

But I'm actually excited about the Democrats being negatively polarized into a free trade party.

Oh, interesting. That's a funny take. Yeah.

Because, because, you know, this is a reaction.

This has a reaction. Yeah, no, no, that makes a ton of sense. That's funny. I, we have five more minutes. I want to, I want you to walk me through. I'm sure you've studied byd. I'd love to know kind of the history of that company, what your takeaways are and what it takes to build an American BYD In America. And what makes byd. What does that even mean, an American byd? Why is that different than an American like Tesla or something? Yeah, exactly. Yeah.

So I spoke to, I spoke to an ex Tesla person and I was like, I was like, would Elon ever build stuff for other people? And it's like. And I've actually asked this question for, for, for a number of different folks and I've actually gotten good in a variety of answers. And it's kind of like he'll do it if it's on the main path of like getting something, getting to, getting to, getting to the like vertically integrated goal. If that makes, if that makes any sense. But like it's, it's Unless, like, unless Tesla was forced by the government to be like, you will build tanks or something like that. Like, like that they're not in that business and they're never going to be.

Yeah.

And so if you think of like, what, what, what like BYD has in terms of capabilities, it's like it's a car company and a car brand, you can buy a car from them, but like everything inside that car is also like fractally built by them. So like the infotainment system, they're the manufacturer of that. Whereas, like Quanta, like, whereas like Quanta or Pegatron or something like that may make that system for Tesla. Yep. And this goes down all the way into the battery cells and all this other stuff. So there's like, they're, they're like, like the most vertically integrated company you could ever imagine.

So interesting because you'd think in like a command and control economy, you'd be able to force a Koretsu, like in Japan even more. Right. You'd be able to force cooperation between a bunch of different companies. But it seems like in China maybe that hasn't happened with byd. Am I understood?

It's interesting because I think it's, it's the DNA of the place more than. There's like a. More than, more than the policy side. But then the flip side of it is, so BYD makes stuff for other people and that's like what they do generally. That's what they, historically they did. They just happened to be a nickel cadmium battery manufacturer that just kept acquiring businesses and like bringing them into the fold until they basically had a car business, a lithium ion battery business, and kind of like all of the, all of the like IP needed to build any electric, electric device. So like that's everything from like a smartphone to a car to like, like.

Your dreams, they, or whatever.

And so, and so what's really interesting about this is like I can like, I could go to a firm like this and I can say, hey, build me soup to nuts. A whole device. They will commit substantial engineering resources, but those engineering resources, it's a little bit less. Like, maybe it's, it's. There's like contract manufacturers in the west and stuff like that, but this is like, no, they'll do it with the BYD parts and the BYD process. It's like they almost have like the best LEGO set in the world and they're able to leverage all of that IP as just a really high starting point to be able to kind of develop all these devices.

Yeah. So I mean, what does it take to build an American version of that? Should we be even thinking about that as a goal? Is that a different company or is that a be, you know, a cultural shift in Tesla strategy? Where do we go from here?

Yeah, I mean, there'd be one way to do it should be like defense production access. Hey, Tesla built for other people, but I think that would not go over.

That would go over like a lead.

Balloon and probably is not a Good strategic choice. Yeah, I do not want to accept that idea. I don't think it's a great idea for Tesla for a bunch of reasons. But, but I do think that there's, I've been focused on like what parts of the value chain in kind of the electrify device universe. And I say that very broadly. Like this is everything from EVs to stoves to phones and stuff like that where part of the value chain is not made in the United States. Really high level of integration, both like hardware, software, etc. And if you have better components, you can make better products. And this is where we realize that on the appliance industry. Just if you go and build appliances in the United States today, you buy electronics from China or Japanese Germany and all the guts inside. It's kind of like you're getting your graphics card from a Taiwanese manufacturer and your motherboard from another Chinese manufacturer.

Have you taken any trips to Germany, by the way? They've been asleep at the wheel in many ways.

I, I've actually never been to a German factory which is saying something that's judgmental against myself and I intend to fix that soon. Yeah, the it I think a lot of what's been going on is all of like China's been just incredibly good at the final assembly and like that part of the value chain. And it turns out that's where a lot of the software defined technologies start intersecting is like automated assembly, computer vision, like, like building all kind of like the firmware and software to make stuff work in an integrated way. And like that's the thing that I think people miss about the car industry. And this is probably the, the thing to say is the, the legacy car companies don't build cars like phones, whereas Tesla does and China does. And when and I. That's a really broad statement but it's really like you're building an integrated electronic device, not a bunch of individual boxes designed by different firms that you've like.

Plugged together.

And, and you need manufacturers like byd, like a BYD or like a Tesla that can actually go and span all of these disciplines with the same people being to. Able to. The people in these various groups being able to talk to each other versus how like a Ford car or a, like one of a major US Appliance companies like stove is put together where in some sense there's like a corporate firewall between electronics box A and metal enclosure B. For instance.

For instance, can you talk about like zooming out in terms of this re. Industrialization reshoring industrial capacity. What's at the top of the priority stock? I mean, there are a lot of memes about, like, do we really want to be doing screwing in iPhones and making those here. We've talked a lot about dji. It seems like there's a huge gap between Chinese capability and consumer drone manufacturing versus American.

Well, guess who makes dji?

Is that byd?

I won't say.

Okay, but, but, but then there's also like, lower level, potentially like higher skilled activities like battery manufacturing, lithium, you know, mineral extraction, all sorts of stuff. What. How should we be thinking about it, not just from a consumer perspective, but from like a industrial capacity, governmental perspective.

Yeah.

So what's really interesting is if I go take an iPhone and I like, part it all out on a table in front of you and I say, who's actually doing the core engineering and IP of everything in the iPhone? Yeah, it's actually like the US and our Asian allies.

Like.

Right. Because Foxconn's a Taiwanese company.

It's, it's, it's, it's, it's Taiwan.

But.

No, but even all the parts like LGBT in a tech makes the camera.

Right? Yeah. A lot of Korean tech in there, for sure.

A lot of Korean and Japanese technology in there. So, so, so the point though is where, where is China really good. And it's like, it's like, it's the assembly, the integration, being able to kind of span all of these disciplines. So. So if I was to f. If I was saying what. What I think is really important is I think. I think Noah Smith has a. He's my tenant, so I have to show him, but I think no, Smith has a good take on this, which is basically like the US is missing out on the technologies of the future. And China actually has explicitly said this where they believe that the tech stack of the future is the electric tech stack.

Basically.

It's like, it's like batteries, power electronics, motors, that whole thing. And it's like you can build a robot, you can build a drone, you can build a car, you can build smartphones and consumer electronics that spans the gamut of like, that is the technology stack.

Yeah.

And in some. And it's rare earth magnets, stuff like that. For some reason, the US just like, I think it's basically the 08 recession and like a lack of manufacturing investment afterwards meant that, like, we never actually picked up that stuff. With one notable exception, which is Tesla.

Yeah.

And so, and, and actually SpaceX as well. So like, Elon did this twice. We should Reverse engineer Y.

That's why we're talking to Elon Musk of Stoves. We're very happy.

Many people have been saying this. The other people have also been calling you, you Noah Smith's landlord, after you drop that he's your tenant.

Thank you so much, Sam, for joining.

Sounds good.

He's great.

Yeah. Before he can even say goodbye, just sound effect.

What were you going to say?

Thank you so much.

Great to have you, Sam. I'm excited for you and the team.

And keep us updated. I know there's big news coming, so drop it here first. Talk to you soon.

Talk soon.

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Vanta makes compliance fun. They didn't say that. I said that because I've used Vanta.

Fantastic. Well, we got Vince from Prime Intellect coming in the studio next. We're talking about a bunch of stuff related to crypto and AI GPU mining. I think this is gonna be a very interesting conversation. We talked. Well, welcome to the stream. Vincent, love to hear how you doing.

There he is.

Perfect.

What's going on?

A couple of months ago. Yeah, yeah, thanks for joining. A couple months ago we had Bridget from Founders Fund on gave us the high level overview, but I'd love to get it from you. Can you just introduce yourself and the company to kind of kick us off?

Yes. So my name is Vincent and like I'm the founder, like co founder and CEO of Prime. And basically our goal really is to commoditize AI and compute more broadly. Really also by almost like networking all the compute in the world together and making sure no GPU goes idle, but rather can contribute to almost like an interplanetary compute cluster that can fund, for example, open source AI models, but also that people can just use to ultimately save on compute. Ultimately the goal really is realizing that compute is this gigantic market which will ultimately power all of those different areas. And it's quite inefficient and very distributed. So a lot of it is ultimately research challenges to make sure we can network compute that is quite distributed throughout the world, but also verify it.

Right.

It's like you can't trust the thousands or millions of different data centers and GPU nodes distributed across the world. So there's basically a challenge to scale trust. It's like you can trust one data center or one company, but it's hard to do so at scale. So basically we're attacking those two problems.

Okay, why don't you talk about the launch Sunday? Yeah, you guys, I hadn't seen, I hadn't seen the launch like that on a Sunday since the last seemingly few Trump executive orders. So you guys kind of realized Sunday? Yeah, Super Bowl Sunday, why not launch a new model? But. But break down the launch just a couple days ago.

Yes. So basically we like kind of like to take a step back, almost like did this first very large scale distributed pre training run Intellect, which was building on like deep minds distributed low communication training to train basically a model across the Internet across multiple data centers in similar efficiency as in a centralized setting where we, where all the computers network in one data center. And now that we switched to this kind of like O1 like post training, like reinforcement learning paradigm, it's actually kind of like a paradigm that is like perfectly set up for distributed training because most of it is like those rollouts and basically you can distribute them extremely well. There's basically less needs to communicate every training step. So what we did with Intellect 2 was really scaling to the larger model size, like roughly 30B model that we basically trained distributed across the globe with different people contributing compute. And we basically built this on top of quen. So basically the goal was also to like take the best open models out there and improve them further for like actually quite like small amounts of compute. It was honestly like more like a proof of concept where we basically proved four different pieces. Like on the one side, basically we proved this like verifiable compute piece that basically anyone in the world could join with their compute. We don't need to trust them. There's very efficient basically ways to make sure that they're basically like an honest compute contributor. And then the other piece was really making basically distributed reinforcement learning work. So basically decoupling those role generations from the training itself so you basically can train across the globe with less frequency of communication. And what we basically prove is that with quite a small amount of compute, like roughly $100,000, which is not comparable to obviously kind of like the, the more close AGI labs, we've basically been able to improve upon qent and it's kind of sets the foundation for us to actually scale this much further and Ultimately actually have kind of like a repeatable recipe to basically improve the strongest open source models out there continuously for quite small amounts of capital across different domains. So we made it much better on math and coding, but the goal is also to make it much better on other domains and really like how to do so is like really scaling those like reinforcement learning environments. I think you had Will Brown on like he joined us to work on this.

Yeah.

I was going to ask what was, what was the, what was the process like recruiting the big dog?

Wb Absolute dog.

I mean I just have to imagine he's such a good poster. He's such a great guy to chat with. He could have gone anywhere but he ended up with you guys.

Yeah, I think it's, it's two things like you should ask himself. But I think like a lot of talent is gravitating more towards like open source AGI and like to basically build in the open, to publish in the open. Right. Like to be able to also like contribute to the frontier of like the most exciting research. And in a sense like I have friends at Open AI and whose name you've never heard because they can't publish, can't really talk about their work. Right. So like I think there's, there's this component but I think then we are basically, I think like now especially in the Western hemisphere, I think one of the only places that is really catching up to the frontier. There's obviously Quinn and Deepseek and others in China, but I think it's really a fumble by America I think to basically be the close guy that is not really almost standing in for the values of democracy and freedom to the same extent. But I think he's obviously extremely passionate about open source AGI and kind of distributed reinforcement learning. So you immediately hit the ground running on basically scaling this much further so we'll have more work. We are building on top of this direction of distributed reinforcement learning in the next few months already out, which should scale this much further.

I remember a couple of years ago I was using Octane Render and they have a distributed rendering network where you can render cgi images on GPUs all over the world. And they actually have a, a crypto layer for render tokens as well. But this idea of distributed computation makes a ton of sense in that context because each frame is unrelated to the other frame. So you can, if you're rendering a 90 frame sequence that's a few seconds long, you can just send, you know, each frame to a different machine. What have you learned from the successes and failures of the render network and what Otoy did with Octane. And is there any difference between those discrete individual frame generation and something as complex as training a whole model where in theory you'd need to load it all into one instance every single time?

Yeah, great question. I think there's a few players like them and others that have tried this in the past and I think they've been almost in some ways I think too narrow and unambitious.

Right.

It's like rendering, it's nice, but it's not not the general purpose use case that we now have with AI. So I think there's basically our goal is really making this much more general purpose useful for every single compute and AI use case. And I think that has been one big learning basically being most of our team are AI researchers and they come from the AI world, including the people that build for example the verification mechanisms. The verification in our case has tiny OBAT, like 1%. The more crypto native verification mechanism have more like a 1-10x overhead which then make it completely unfeasible to compete with centralized clusters. So I think that has been like a big learning is basically being very pragmatic and close to the AI researchers. So that's like the main community we're like building with and engaging with and basically building for.

Right.

So all of our users are AI developers and ultimately I think the biggest lesson has been is like, like just creating value for them from day one. Right. It's like we launched basically our compute platform like two or three months in with like two or three people and immediately got a lot of users and scaled. Since then basically any kind of AI startup or developer can just basically with our platform almost have a global market. On the one side we aggregate all the hyperscalers, all the different data centers, even working with folks like Aaron like later on from Hydra and all these guys to basically aggregate and orchestrate all these different data centers and hyperscalers. And I think that has been another lesson. We are not trying to be like the exclusive maybe marketplace where supply onboards. We just aggregated all the supply out there, which gave us a huge kind of wedge maybe to enter the market.

Okay, talk about some of the hardware where this is actually running a 30 billion parameter model. At floating point 16 you're going to need 60 gigs of RAM. You're probably going to be on H100, not gaming cards. But are you thinking about bringing residual capacity online in the gaming market or are these like small data center operators that Just have a stack of H1 hundreds that are not using and then they're bringing them online.

Yes. So basically I think what's been exciting is like actually this run was hit to genius. So H1 hundreds and A1 hundreds could join and I think maybe even like H100 standards and for future ones actually for next one we're starting even 3090s and gamer cards can join. And I think what's interesting is you can basically with this rollout generation and basically synthetic data generation, you can distribute the tasks basically based on their difficulty to different cards and to different models. So the goal really is to have a fault tolerant, heterogeneous pool of compute.

Right.

So what's also a big one that we did already in the first run but also in this one is fault tolerance. So it's not only that you have like H1 hundreds joining and A1 hundreds and 3090s, but they can also drop out.

Right.

Like they can join for a few hours when they're idle. And I think that's like the border thesis. It's like almost like every GPU that is like idling is like a market failure. Right. Like especially in a world where increasingly like my theory is like the biggest almost like commodity in the world will be computer and it will be one of the biggest slices of gdp. And it's unfortunate if half of that is sitting idle instead of curing diseases, generating movies or creating basically technological progress. And I think the goal is to basically just get to 100% utilization of compute. And we're very, very far from that.

Yeah. What are you seeing in the trend in chip size and scale? Obviously, obviously Nvidia is pushing, pushing those like djx, like rack mounted units, racking everything together with NV links. You can do even bigger models. Cerebrus is scaling up the single chip size to wafer scale. The, the, the theme of the last few years seems to have been let's not decentralize, let's actually centralize further. And so where does this go? What is your take on kind of the ever bigger racks and ever bigger chips? Large Azure compute training?

Yeah, I think we'll see both. And I think actually ironically like an Nvidia actually has an incentive to fragment the market. Like they don't want one buyer, they don't want AWS to be the only customer because AWS is building their own chips or like, like the big tech clouds basically like have their own chips competing with Nvidia.

Right.

So Nvidia is very happy to Give a bunch of chips to Corey, a bunch of chips to Cruiser, a bunch of chips to Lambda and all of these other guys. Right? But then. So I think we'll see both at the same time. I think we'll have thousands and millions probably over the next few years of data centers. There will be these gigantic clusters like Stargate from OpenAI. But I think at the same time there's increasing amount of capacity in almost the mid tier of smaller data centers. But then I think also on the other side there's a lot of compute sitting idle everywhere, whatever, like autonomous cars, robots, like everything else. So we actually had some of the biggest car companies in the world reach out to us or phone manufacturers that are like, oh, we're sitting on hundreds of mints, billions of phones or cars that have idle compute capacity. And I think we're not there yet, but I think we'll have just much more compute everywhere. Right. We'll have more mega clusters, but we'll also have more mid tier and small clusters.

Mega clusters. Mega clusters. I have a question before you leave. Can you, can you give some. Any expectations around deep seek R2? I've seen some crazy rumors flying around online. I don't know what's, what's real and what's fake. News, information warfare. Curious what you're expecting out of the next release.

Yes, like I think they'll, they'll definitely catch up to the frontier. Like again I think to some extent I think they'll, they'll probably be. Not as good would be my guess as like Gemini or OpenAI and. But I think there, there's obviously this trend where I think like and, and all the closed lab cos have admitted it. Right. It's like that open source has catched up like very uncomfortably close to their lead and I think that will continue. I think the, the, the close guys obviously have some advantages, but I think there's also huge advantages obviously the open source AGI space has. So I think the trend will continue that ultimately the deep seats and the coins of the world, but hopefully also players like Llama will catch up a bit more. Obviously they've been a bit disappointing with Llama 4 launch, but I think they might also actually catch up again. And then obviously I think our goal is to be able to basically build on all of that progress. It's like basically we kicked off our largest synthetic data generation run the day deepseek dropped and generated basically a lot of verifiable reasoning data that we could then use. For example, in this recent model So I think.

What I see more is.

Basically we can improve open source AI progress literally day by day, week by week. It won't be a thing where we need to wait four months for some progress to come, but it's more like continuous basically progress.

Well, thank you so much for joining. This was a fantastic conversation.

Yeah, I really enjoyed this. And congrats on scooping.

Yeah.

WB man legend.

It's really, truly congratulation. Legendary pick deal.

Yeah. But come back on again soon. I know you guys are going to have a bunch of launches coming up and appreciated your perspective.

We'll talk to you soon.

Appreciate it.

And if you're looking for distributed compute, go to Prime Intellect. If you're looking for distributed advertising, go to adquick.com out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only Ad Quick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the globe.

They just make it too easy, John. I want to spend every single dollar on ad billboards.

Anyway, we got the CEO of Backbone in the studio. Let's bring him in. Maneet, excited to have you here. Welcome to the stream. How you doing?

Thanks for having me.

Appreciate it. I feel like I walked into the middle of an ad revenue.

You did, you did, you did.

We are 100% corporate sponsored in independent media is dead. The future is corporate media and we are leading the charge. But good to have you here. Can you introduce yourself and explain what Backbone is? I'm a fan but some people might not be aware.

Sure.

My name is Maneeth. I'm the CEO and founder of Backbone. Backbone is the leading platform for the future of gaming. The way I describe it to people is that every time there's been a shift, shift in streaming media, it's resulted in some of the biggest consumer businesses. So like music streaming you had Spotify, Sonos and then in TV streaming you had Netflix and Roku. And you can think of Backbone as the analog company for streaming games. We have a number of products. We sell devices that you can use to connect to your phone or any screen and play games on them. And then we also make an app that aggregates all the different streaming services like Xbox, Game Pass and others. So you can access them all in one place. You can buy our products in any major retail store, Walmart, Target, Best Buy, etc. And we're backed by investors like Index and Sound Ventures.

Yeah, so I got one a couple years ago. I was not getting a lot of time in front of the PlayStation 5 and so would drop my phone into the backbone and stream from the PS5 over the WI fi to the phone with the backbone. It gives you the whole gaming experience. Very fun. What has the relationship been like with the big console providers? Can you break us down the different strategies? It seems like Sony has been very competitive, launching something that's kind of like a competitor with the PlayStation, I forget what they called it, but it has a screen and device and does remote play. Microsoft's taken a much more open approach, letting you even stream Xbox games on PS5 and Forza Horizon is on on PlayStation Now. And so what. What has been the relationship with the different major gaming platforms been like over the last few years for sure.

So I think of course each one has its own strategy. Microsoft in particular is really interesting because they're running this campaign now called Xbox Everywhere.

Yeah.

Where the idea is that, that you can turn any device in your life into an Xbox and run games on any screen. And the way they're doing this is through streaming games from the cloud. So Microsoft's subscription service, Game Pass, if you subscribe to it, you can basically access the entire Xbox games catalog on any device that you own. And of course, the devices and software that we're making work great with Game Pass and make the experience work really well end to end. So you can do it on things like smartphones. So I think in Microsoft's case, their goal is really to drive more Game Pass subscriptions and just gather more MAO and Dao for their service. And it's super strategic to their overall roadmap with cloud and all that as well.

Why wasn't Google able to pull it off? I feel like they were early to that party. Game streaming. I can't even remember the name of the product, but it never really hit like major takeoff or do I have it all wrong? And actually it's better than ever. I don't even remember, remember.

So you're talking about Stadia.

Yeah, that's right.

Stadia.

Is Stadia still around?

What's that?

Is it still around?

No, no, it was shuttered, unfortunately.

Yeah. Classic Google Classic. But I mean, you would think they have all the resources, they're Hyperscaler, they have GPUs in the cloud, they can do rendering. And they're also somewhat platform agnostic. So any game developer could go to Stadia. It just seems like super additive. I'm sure you had intimate, you know, interactions with them as Stadia as you were building the company. What do you. Why do you Think Stadia didn't take off for sure.

So I was at, I was at Google when they were working on it. That's actually was sort of part of the basis for the idea. Yeah, I went into the office one day and there was a demo that an engineer had built where you could use Google's cloud technology to stream games to like basically a two generations old Android phone. So you run GTA on like a two generations old Android phone?

Yeah.

And I picked up this demo and I tried it and I completely lost my mind. I was like, we've seen disruptions in gaming across every single vertical.

Right.

Business model, audio, content, but this has got to be the single biggest disruption in the history of the games industry, at least that I'm aware of in a long time. And so, so that kind of became the basis for the idea behind Backbone. I basically made a slide deck on why I thought it would be like a really big opportunity for Google and I sent it to the head of product for YouTube Gaming and then I realized I could go a bit wider. So I sent it to a bunch of the vice presidents internally and basically a bunch of people ended up reading it and it became one of the most viral slide decks internally in the company. Like 15% of the company read it by my last day. And so I got to meet with some of the executives that are working on Stadia and other initiatives. I think there's no doubt that this technology was incredible, but I think other players like Microsoft just had a better go to market strategy and more content.

Yeah, that makes sense. I mean the content's really, really key.

Switching gears a little bit, how have you seen the industry react to the news last week around the App Store sort of payment policies? I imagine you've been hearing a bunch of chat about.

Yeah, I mean certainly if Fortnite were to return to the App Store, it'd be pretty big. I think it's been like.

It was resubmitted. Right.

It hasn't been approved yet. Normally Apple approves and 90% of apps get approved in 24 hours. We're on like hour 46. So everyone's saying Apple, what's going on? Dragging your feet anyway?

Yeah, I mean, I think it's huge. I mean it means that if you're able to link out to external payment systems, you're basically going to be able to take in more margin as a game developer. And I think it'll, you know.

But how do you expect, how do you expect users to actually respond? Right. So like let's Say you download a free game and you're like, okay, I want to pay. I'm willing to pay for this game. And you get the option to just subscribe in the app. Maybe it's at one price, or subscribe outside of the app at a lower price. Right. You'd have to offer, I imagine, have to offer some type of incentive to get somebody to want. Want to go to a separate web page. Right. So I can go outside of the app and I get maybe some.

So you're splitting the difference?

You're splitting the difference, kind of. But then I imagine some users like the fact that their subscriptions are native and they can go into the App Store and churn if they're not using something. And so how do you expect that? How do you expect developers to actually play it? And do you think it's. Are they really getting back 30% or is it more like, again, splitting the difference?

So I think what we're seeing right now, and in Epic's implementation, they posted a tweet online, like the revenuecat CEO replied to Tim Sweeney's tweet and was asking, like, how did you implement this? Did you use in app purchase? So in Fortnite's case, they show an option to do in app purchase, and they also show the webflow through Stripe or whatever, and that one is 20% kind of cash back or something like that. You get like 20 back in epic credits.

There we go.

So there's like an incentive people might have to incentivize customers to transact through.

The web and that, but giving them.

Back free credits, like points in a game, which they're going to value on a cash basis.

Absolute dog.

What a dog.

I want to talk about the actual technology roadmap or tech tree to make mobile gaming even better. What's more important? Better devices, faster chips, more memory, better screens, or just ubiquitous 5G Starlink, better connectivity, lower latency. Because Call of Duty, you can stream it on your phone, probably Xbox Game Pass allows you to do that. There's still a Call of Duty Mobile that's optimized for the phone. And I think people probably play that one more on their phone than the streamed one. And so we're still not in the fully streaming era. What are the blockers to get us to just one installation of the game everywhere.

So, I mean, both of those things are bottlenecks. And we often used to get in these furious debates internally over which one was going to overtake the other. And then we kind of realized after a while, it was a bit aimless because we just want the overall basket to succeed. And I think you'll see a lot of hybridization where you'll have games that are relatively thin clients, but a very significant cloud component to them versus right now. We think of this dichotomy of fully streamed versus native, and I think maybe there'll be some games that float across the boundary line. I mean, Fortnite is one such example of that where there's a pretty heavy cloud component to the game.

What are you playing right now?

Now.

Right now. So I don't know if You've heard about Expedition 33.

Oh, yeah, I haven't played it. I heard about it.

I'm just about to get into that.

Okay.

That's been popping off on the Internet. Yeah, I've been playing a lot of Fortnite.

Yeah, that's good.

Were you surprised about the GTA 6 release date? It seemed like the market had been pricing in a 2025 release, and then all of a sudden it was like, up 2026.

I mean, it takes. These games take forever. Now the production costs of. There's some really great articles online talking about, like, how the development costs for these titles have ballooned because of, like, this need to have really lifelike graphics and realistic gameplay. So not surprising.

No.

What about tariffs? I imagine that that was a tumultuous time for you, obviously. Sigh of relief recently. But what's your outlook and what did it mean? Take me through the emotional journey of the last couple weeks of the company.

Yeah, I mean, definitely short term painful. It was awkward timing given the Backbone Pro launch which just occurred this past week. And this is a huge launch for us. I mean, we generated, I think, around 700 million media impressions, which is more than, you know, Beats and Aura and Sonos generated for recent product launches. And so it was a big launch and it was an awkward time because of the tariffs that made the pricing strategy a bit complicated. That being said, we think in the long run, anything that promotes free trade or reduces tariffs, like, globally, is beneficial to the company because then we can offer our products in more markets than we do today at more of a fair price to consumers.

Yeah, I got to pick up a backbone Pro. I'm looking at it right now. I'm adding it to cart.

Jon has always said the biggest risk to the show is that he just gets sucked into some. Some.

It's like my one vice. Like, you'll never find me, like, passed out drunk, but you will find me, like, 70 hours into, like, Metal Gear Solid for the third time anyway. This is fantastic.

Anything else? No. I'm happy for. For you and the team that you get a little relief on the terrorist. Congrats on the new launch and good luck. I know you guys are shipping in about a week now, so I'm sure there's a lot of work to get to that point.

Head over to backbone.com. pick one up if you're a gamer. Check it out. Anything else?

That's all.

Thank you.

We'll talk to you soon. Have a great day.

Cheers.

Bye. Speaking of sleeping easier, post tariffs 8 sleep. Go to 8sleep.com. 5 year warranty, 30 night risk free trial free returns free shipping pod 4 ultra. I got an 88 last night. 7 hours and 11 minutes. Not too bad. What'd you do, Jordy? Did I beat you or did you smoke me? A hundred. One hundred. He knows Brian Johnson's coming on the show. He's prepping.

Proof of work.

He's prepping. Anyway, we have our next guest coming in.

Put it up. Put it up.

100.

See, it's not a screenshot. I'm moving it around. There we go.

Yeah, the new app is beautiful. Beautiful. Go download it. Anyway, folks, we got Aaron Ginn coming in, breaking down a new Wall Street Journal article wrote. Aaron, how are you doing?

He's back.

Yeah, doing well, man. Can you put on those sunglasses, Jordy? I can't recognize you.

Yeah, yeah, yeah. These ones. These ones. The pit vipers, unfortunately.

So.

So there's some crypto. There's some crypto coin that. That people are using pit vipers to promote. So we got to be careful.

We do have to be careful. But.

But they were sent to us from a. From the CEO, I think from the CEO of pit viper. He just likes tvpn. He said have some pit viper.

It's pretty cool that they like rotate up and down like this. Yeah, I've never actually worn any of these.

Anyways, it's great. It's great to have you on.

Always great.

The prime intellect CEO was on earlier and he said that you guys are working on some stuff together, which is cool.

Yeah, they're handling the higher level training layer. We're doing the underlying infrastructure or distributed layer. But yeah, like going back to. About the op ed that I wrote. I've been more or less battling slash, encouraging the administration to take a more reasonable approach to the threats that Huawei has against our dominance on AI. And when the. I met and know the people who under the Biden administration that wrote the January 15th ruling that, that we don't really know by the way, like what's going to happen. We just heard rumors that things are going to change and they're going to be more positive towards Jensen and Nvidia. But generally speaking they wrote this kind of the, the precursor framework that people understand is it created a G18 of AI countries which included like Japan, South Korea, Taiwan, America, Canada and some European countries, about half of Europe. And the original Biden ruling or these are bureaucrats. Like there's not, there's no, it's not. It's very vague law area on their governance. They're basically operating under 1980s Missile technology proliferation law that was written back whenever we had Soviet Union but, but so they're kind of regulating or that. And the Biden administration, you know, a couple days where they're leaving decided that they would create this kind of G18 of countries and then a hundred ish other countries that were going to be basically prohibited or require a license and then you know, absolutely no good countries. CAR tier 3. The tier 3 countries are quite logical right there like Libya, Venezuela, right. It's like oh okay, this makes sense. But it's your two countries which required license was like Greenland, Portugal, you know, Switzerland, Austria and all of Eastern Europe was on the crap list. All you know, the presidents right now and Jensen's in the Gulf region, all that was on the crap list. And then like kind of random countries like Mexico, Mexico makes all of our servers. And the original kind of premise around this was regulating cheap power. So it was mostly anti competitive. They didn't believe that Mexico got GPUs they're sending to China. They just thought oh, they have cheap power so we should just say oh, that's bad for America. And so I've been advocating for this kind of idea of like this new Monroe Doctrine of thinking that AI is more of a forward operating base of America due to the neocons and neoliberals. We have over 300 operating Ford operating bases of the world world where our special forces are active and doing things that they don't tell us. And so I basically been trying to kind of think about the AI as kind of something similar where every deployment that is an American deployment is real estate that we own and that running the world growing on our infrastructure is better than growing on Chinese infrastructure and it's either or. And I think that under the Biden administration there's this view that, that they couldn't do anything like oh, they just make icons tend not to be overly tried But I think they had a kind of a less view of where China was. And as the data came out with more and more advancement on the ascent line under Huawei, more advancement under Deep Seek and Manus, it became very much clear that this actually was a race and that they were significantly closer than we thought. And so the goal then is proliferation. And that's essentially what the Trump administration, the Congress Department announced, announced last week, was that they were going to embrace a trusted proliferation model, which is what I've been advocating for of this forward deployment of Nvidia gear, running on an infrastructure or running on our frameworks, because it's either us or them. Either the world uses dollars or uses something else. Like there's not this kind of secular world where trade happens and it doesn't include a country, it involves us or involves somebody else. And that's becoming more socialized and more accepted. And so now they're trying to think of other ways to try to manage proliferation. Tom Cotton introduced a bill to GP track. GPUs not very bullish on that. But you know, like there, there are other ways now people trying to think about doing this rather than just saying, hey, Portugal, you have good beaches but no gpus for you. Saudi Arabia, we can sell you F35s, we can sell you even, you know, ICBM. So no Dukes on it. But hey, you can't get the Blackwell series. That's too risky for, for us to do for you. So there's a great resetting that's happening as good for America.

Yeah, yeah. What is your take on the recent Saudi Arabia deal? 18,000 Nvidia Blackwell chips going in with.

Hundreds of thousands, with hundreds of thousands on the way.

It seems like it's an affirmation of everything you've been saying. But what's your interpretation?

Yeah, like I think it's one way. Huawei is already deployed there. So I think that was a wake up call. And there's also a ton of Chinese cloud companies are doing deployments in the Gulf region. But you know, it's, it's positive because it's, again, it's, it's, you have to realize that people are going to get this regardless. So another good framework is because this is all like leading edge stuff and people get confused about what's actually happening. They also overly express our actual dominance on a particular area. But, but think of it as like a MiG platform versus Lockheed or Boeing. Like you're not going to tell a country, hey, hey, you just can't have a fighter jet. They're like, we're gonna go get some mix, right? We're gonna go get some. I forgot the rain of the French one, right. That drops, you know, baguettes from the airplane, right. Whatever that French land. Right, Whatever that, that one is, right. It, like I forgot the name of it, but the, the. So, so it's, it's like that, it's like, it's like, it's an either or question. So we either have a decision to engage with country or not. And then if they don't, they're gonna go somewhere else. And with Saudi Arabia, which is a very clear ally of ours, very clear ally of Israel, the leader in the region. With Israel, we have to be in a position of. They understand this. Like, like the, the Gulf region kind of gets real estate and put crap in the, in the building. They kind of like, they understand that. Right. And, and so this is something they can feel they can be very successful in. And as well as it gets to kind of the, the, you know, the Jeddah Tower, Burj Khalifa thing of like, we're ahead, we're winning the line. Right? Like all these like crazy projects that won't happen until.

Yeah, but our data centers. But, but our data center, you know, and obviously Saudi will have fantastic partners and Nvidia and I'm sure many other hyperscalers for their new AI factories. That's the new aim. We got to stop saying data center. It's AI factories.

Yeah, tokens.

But, but yeah. Isn't. Isn't this not. Is it, is it, is it it correct to call it real estate today or is it something else?

Well, well, I, I think the dynamics behave like real estate. Like that's how the actual investors think.

That's how they get financed. The execution is different.

Yeah, yeah. So, so I, but like the way that this flows out. What I believe this is what, like the premise of our model, why we're a part of like over about almost a dozen sovereign, sovereign projects. We're kind of the, for. For Nvidia. They, they advertise us to a lot of their growing data centers internationally as Hydra is the best sovereign AI go to market provider in the world. So we're really, really good at this. And our operating model is much more. I think I mentioned this last time that think of it as like the airlines industry, that the commercialization of AI really resides in the platform. And that platform is Jensen. It's not anybody else, it's Jensen. That's just like Boeing and you have these kind of like rare birds that are coming out, which is OpenAI. But the technology mode around OpenAI as we come knowingly accept, is relatively commoditizable. So its real value is the brand. It's the accidental consumer product company, as Ben Thompson likes to say. So when you have the commercialization happening at the platform hardware layer like Boeing, you create lots of billion dollar companies, American Airlines, et cetera, Emirates, whatever, but you don't really have this parabolic power law outcome like you had with software definers like Google or Airbnb or Twitter or something to that effect. So when you have a world of works like that, Jensen becomes the play. Jensen is the platform. You can still create lots of different successful companies that are very large. But I'm very skeptical you're going to see this huge outlier into the stratosphere like we saw with other software defined modes. Rather, it looks more like the airlines industry where there's lots of very successful people, lots of very successful winners, but there's no clear category leader, there's no clear so far ahead that nobody kind of will ever touch it because the fundamental product is a product that gets deployed in a data center, that gets run and commercialized and all the value is created there and everything else just kind of plugs into it.

The fastest way to become a millionaire, start as a billionaire and buy an airline. This is a famous thing because, yeah, the value doesn't really accrue to the airlines in the way that it does to consumer tech companies. Of course. I want to talk more about this idea that it is valuable to America to have foreign AI models running on American infrastructure. And maybe we could go back to the F35. If we send an F35 over to another country, they have the ability to use that however they want. We don't really have control over that. We don't necessarily have a kill switch. Obviously it's good economically because we sold it to them, we get some money. That's nice. But is there, is there, is there some downstream benefit to. Well, now we're really allied with you because yeah, we sold you the planes, but you're still going to have to remain friendly with us as we resupply and send you more screws and bolts to to menu to maintain these planes. Is there a similar analogy in AI factories or data centers where sure, yeah, you bought 18,000 Nvidia Blackwells, but if you don't keep working with us, those are going to die. You're going to need to replace stuff and you need to keep us an ally. Is that the goal.

Yeah, that's my goal because I believe America should win. I don't believe in a multipolar world. I believe in a new Monroe Doctrine. I believe that we should resort to the Americas and, and some of that will be here, some of that be Mexico, some of that will be in El Salvador. We're already, you know, monetizing El Salvador with prisoners. So like why not then make fiber optic cables? Why don't they make fans? Why don't they like for in this, in the service supply chain or textiles like Mexico is the cheapest place for us to manufacture. It's been that way for over a decade. But they don't have the technical capability to do it, which is why you don't see that there. But in the new Monroe Doctrine, my thesis is that we reshore critical things to the Americas and then we have these, we have these external allies that reinforce that just like the old Monroe Doctrine was Americas and we had Britain that enforced it and with us. And so the same thing goes to the ring of fire from South Korea down in Singapore. That becomes our allies in that region. We ship America goods there. They become America enclaves. But they're relatively sovereign. They're, they're, they have their own identity, their own military and, and partnerships like that not only advanced, you know, like you said, like sell goods. Like there's announcement with the Boeing like I mean they already bought Boeing like so it wasn't in both Riyadh air and said yeah believe they're, they're Boeing platforms. They don't, they don't have as many Airbuses out there because Airbus has a, is a just so you know, like the, it's a very technical thing but their engine design is not really compatible with sand that well. So that's why they, they prefer Boeing because it's more adaptable, high heat. So like either way like that, that's an advantage to us because it's a form of soft power that we can allow the proliferation of not only safety for Americans global, but it makes us rich. Like trade is American. It's not secular. It's not something that just happens. Like if we define it, the dollar is a platform. Trade is us. We define we do. We rule the open oceans because we say that it's important for us to trade. So there's kind of like this weird thing happening on the right that there's like these two types of like China hawks. There's like OG Channel hawk hawks which is like me who believe that the way you beat China is You win. Then there's these new China hawks, which are like protectionist, semi socialist and want to withdraw from the world. They believe in a multipolar world. And, and they kind of crept in, but they're actually little. They're more on the left side of the spectrum. And the tariffs and kind of attitudes around Nvidia, that's when you hear these things of like, we shouldn't sell the world, like kind of can wait on us or we don't need their goods. We shouldn't trade versus the original OG China hawks were like, no, we should trade. Trade is peaceful, it's great. It decompresses issues between countries. But it doesn't mean we give away the farm. It just means that we rebalance and we make it fair. And, and it was kind of this hot minute where like these like new Neo Chinahawks got in charge and started doing these kind of crazy things with terrorists where we had no freaking deal. What was going on. Like, like believing that terrorists make us rich is one of the most profoundly illiterate things like I've ever heard from. My background's an economist. But, but like it's, it's literally stupid. The places that have highest terror in the world are absolutely poor. And the places that make.

But it's the External Revenue Service.

No, like, again, I'm, I'm pro that, right? Because I don't want to pay taxes, but taxes are theft, right. So the, the. But I'm, I'm willing to engage in some type of thievery if it means that I'm safe when I go, go to. I just came back from Belize, but I'm safe when I go to Belize. I'm okay, I'm okay engaging that. But, but America only wins when we have this peaceful economic transaction that occurs in countries that want to adopt more pro Western frameworks. We should support that because when the world becomes more west, it becomes safer, it becomes more prosperous, people have rights.

We had Sam from Impulse Stoves on, on earlier and he was saying that, that free trade is almost becoming a liberal policy. You know, it's a liberal position now to just be like free trade, you know, just because as from a reactionary standpoint, I'm curious if you what you're expecting out of the Qatar visit, which I believe is happening in the next 48 hours.

Yeah, like I. One as a cutter, we, we've already been talking to the royal family there. Like they, they, they definitely want to get in GPUs. They're, they're. Have you ever been To Cutter, by the way. It's so you, you have.

Yeah, briefly.

It's, it's absolutely bizarre. It's a. Imagine like the largest country club in the world as a country and there's like, everything is clean and well done but like in the street and you're walking, it's mostly just like servants. There's like no people. It's like, it's very weird. And they have so much money. It's, it's, it's, they, they, they even build like the cutteries, right. There's Only I think 300,000 total citizens and the total number of like the broader servant class is like around 3 million in the actual city. But they're so wealthy they have, they, they do these, you know, sand duning thing which I went to go do and they build these homes in the middle of the desert, like these massive camps and they just like have these hundred thousand dollar, they just going up and down sand dunes all over the place, right? And there's like these huge encampments like that. They have so much money, money. And they're trying to get into power and energy as well as the data centers. But there's a tricky problem which is that they have a habit of being anti Israeli. Obviously something happened to Benji and Trump. Nobody really knows something happened. Benji could not be the most friendly person to deal with. So something happened there. But the Qataris like to think themselves as the Switzerland of the region. In reality they're just more pro Iran and pro, pro Al Qaeda. And, and so that, that's a, that's a, the one thing though, never understood me is that the ultimate goal of every Trump, you know, conversation is a deal. That's what he loves, he loves deals. And, and so us being particular hawkish on any type of country I think is kind of not who we voted for. It's, we voted for somebody to make deals for America and that includes a jet which I don't know if it does or not. I, I heard it was, it was not a rumor. Yeah, yeah. 747 or something like that.

Yeah, it seems like a rumor at this point. Like no one really knows one way or another what's happening with that. But it's interesting story certainly.

No, I had no problem like he went to go see Kim Jong un, like whatever.

No, no, I completely agree with this. That's a great take.

Yeah.

So like I have no problem meeting with people and if that means more, I want them to be more pro Israeli and I want them to, they will get the release Last American. That's a win for our country. And that's what I voted. I voted for Trump and I wanted him to do deals. I wanted him to break the mold, reset relationships and make it more pro.

And create more allies, like swing more people to our camp, regardless of the history. Figure out how to do deals and build more allies in the American sphere. I want to talk about the learning curve, Huawei versus Nvidia specifically. Is that a dynamic here with, with pushing Nvidia chips abroad? Is there value from actually advancing the technology, staying on the cutting edge just by increasing the volume of shipments and manufacturing? We've obviously seen this TSMC on the learning curve, but what is your take on The Huawei Ascend vs. Nvidia Hopper Blackwell kind of fight that's, that's unraveling right now?

It. Americans didn't realize that like, like lithography is not like a white technology. It's not like white people like own it.

Right.

It's a technology math. It's available to anybody that can work on it.

Sure.

And their, their ability. Yes. It's not TSMC level stretch. They're probably at 5 nanometer. They're more likely at 7, but probably stretch at 5. TSMC is at 2. It's about to go to like, you know, 1.5, I think, or something to that effect. But, but the thing you don't ever underestimate is that China from a, from a supply chain perspective is it's almost completely sovereign. Not only do they dominate rare earths, but they have the entire manufacturing infrastructure to make Huawei.

Yep.

And, and that is a type of competitive advantage that we don't have.

Yep.

And, and so now again, like, it doesn't mean we become central planners and like, drift into, you know, Linus or Trotsky thinking that like, oh, we should just centrally plan this entire thing. Like, that's not my view view I view as comparative advantage. It works like, as, as Jordy was saying. Like all of a sudden liberals remember that Adam Smith exists. And, and you know that TDS has benefits. Right. Is pushes people to. Because it's, because it's not a philosophy. It's a, it's a, it's a, it's a psychosis actually. So. Yeah, yeah. So it doesn't have an orientation. It's just not that big.

Yep.

But, but you know, like we, we have the ability to, to win because we still are the best, but they're just going to take a different approach. They're going to take advantage of their Power. They're going to take advantage of the fact they move fast and they're cheap. But a new AI Belt and Road Initiative has already started. They're already around the world. We know this. We see them at different data centers that we work with selling their stuff. And it comes as a fully complete solution with Deep Seek open Manus models, combined with infrastructure, combined with support.

Manus has that kind of distribution already.

No, like, Huawei is designing for their open source ecosystem. So Huawei is being the hands and feet, right? They're building.

I think what Joy's asking is like, have you ever run into a country that's not China, that's like, yeah, we have Huawei Ascend and then we have Deepseek and then we have Manus. Because Manus came out of nowhere just a couple months ago. Feels like that would be a very quick ramp to be like it's deployed in another country as a part of the AI Belt and Road Initiative initiative.

Deep Seek, I can believe Manus. I believe it.

So, yeah, give us the update on that.

Yeah, yeah, yeah. It's the point. Deep Seek and Manus are everywhere in Europe, like, they're everywhere. And again, it's open source. Open source works as a distribution strategy. They're not open source because they give. They try to care. They don't care about open source, they care about defeating us. The approach that this is why OpenAI made that announcement of we're going to do this combined deployments of software plus infrastructure is because they're mimicking what China's doing. But the proliferation of the open source models. Go look at open router, like, you can just see the growth in other models. Those other models are Chinese. So it's a race that actually is legitimately an arms race where there's not much of a. What is the ceiling? Right? We have to kind of think of it as imagine you're multiple countries, that someone invented a new technology. Like the nuclear weapons happen. Like, you're the reason why uk, France, Israel, ussr, India. Basic proliferation that happened was because America said, no, we're not going to give you any intel, even though we promised, like by treaty actually, that the UK and France would have our intel after Oppenheimer did what he did. And then that's what started the race is like, okay, well we can't just have America have it, we need to have it. Right? And so what is the actual breakpoint at which all of it stopped? It's like, how do you. It's like, it's like it's A kind of different. It's not an economic question. Right. It's, it's a sovereignty question. And that's why the, the Gulf region announcements are really exciting is because fundamentally that region is going to serve Europe. It's probably not going to serve America. It's really going to serve Europe because they could say all they want, they want to build this many data centers or whatever, but that trying to make the EU do anything is, is, is, you know, it's trying to convince an obese person to stop eating. They'd rather just use Ozempic like it, they, it's not going to go anywhere. Like they, they need some kind of like injection to finally do something. And the, the Middle east region and Gulf region is just really good at this stuff. They're good at real estate, building power, deploying crap. And in, in the airlines world, that market is dominated by Europeans. Europeans use Emirates and Qatar to fly to Asia to fly to the region. I think it's going to be really similar. So we're able to dominate Europe through those, the, those relationships ships. But, but if we're, if we weren't gonna do it, my guess is like a year or two, Huawei would have some big announcement of doing with probably Qatar or probably the country I think of first, maybe Kuwait. But, but yeah. And we still have to lead. But we have to realize that Huawei is going to make inroads and places that we have decided to not. And we just have to accept that we can't stop. Yeah. I'm trying to think of another like.

How did the, how did the Manus investment from Benchmark sit with you? A lot of people that are. A lot of people have pretty much everybody has opinion.

Sparrow hover well about it.

Yeah, everybody's got an opinion on it. Yeah. But there's varying.

A lot of no comments. Actually. I think everyone has an opinion, but not everyone's willing to share them.

A lot of people really.

Why not share it? Why not?

Because of like competitive dynamics of the benchmark. They don't necessarily want.

Yeah. If you're competing another firm. Yeah. And I think that's the right stance generally. For the most part.

Yeah.

But we're, I mean, no, I mean.

I, I don't care. Like we could free change it if, if they want to do that, that's the prerogative. If the Treasury Department wants to, you know, go after that investment as they told me they're going to, that's their decision. Like, okay, is this a free market for exchange of ideas I believe your capital is your capital and if you want to deploy it to a Chinese model then would I question your patriotism? Probably. But you know, it's your right to do that and, and it doesn't need to go much farther than that. Vanis has serious adoption and we should think of it as, I think that's a maybe benchmark we think about it is like you know, one that they're going to create, you know, a tick tock style like relationship. It's not real. All that stuff is a figment of our imagination. I think it actually matters to Chinese. It doesn't but it's that that's just an excuse. The reality is like they want to win, they want to make money and in some respects I understand that and we're capitalists here and in other respects you have to think about it from the patriotism perspective of like we're not really interested in. It's one thing to like Maybe even allow GPUs to be sold there which is going to happen. And by the way gpus are, all the trade deals include gpus. Man like to think that, that we're really that serious about like we don't want them to have infrastructure. Right. It's like it's, it's total baloney. Like they, it's such an easy gift for the administration. We're the best. We want to make a crap ton of money. We like that Nvidia is rebuilding here. It's an easy give. It's not, it's not, it's not even hard to, to debate over. It's like oh you want that? Sure. Now give me reduction of fentanyl.

Right?

Give me you know, stop tariffing auto imports by 100% like that's the stuff they really care about. So this is just an easy win. But, but there will be see a like a separation is happening to where China clearly is embracing and winning open source. They will have comparable advantage. Sorry at least a reasonable alternative on Huawei probably in like 12 months which will basically be like an H100ish and it'll be cheap, large scale, easy to install, all open source. So the, the next phase if we want to actually when China is what the Trump administration is doing now, which is trusted proliferation. The second phase. Look, we gotta get serious about open source and we have to be, we have to be very intentional that the closed model thing is just not going to work. It's not a serious durable moat. I think most investors would probably agree with that. Now it's a myriad of Models approach and we have to be in this game. Otherwise it doesn't matter if. If we have the best infrastructure in the world, if the LLMs themselves are all behind closed door, which is never going to reach distraction, which is never going to reach this level of adoption. And there are, there are so many levels of advantage China has on open source right now that we have to.

Yeah. What are you expecting from deep? Deep seek R2 we've been. We just asked the. The prime intellect CEO that he had his own take. What are you expecting?

I think you'll be. The rumor is like mostly on Huawei. I haven't validated that. That's the rumor. I keep hearing it probably again will be very good because this is accessible. This is math. It's open research. It's like physics. It's like thinking that we can control physics. Physics is available to everybody to explore and discover. I think it'll be very good. I think Quinn 3.5 was very good. And managers had an update again. It shows that that unless we heavily invest with I guess Gemini or Llama to really up their game that Europe's gonna continue to use that. The Middle east is continuing to use it and it just is what it is. We can't stop people from doing this stuff. It's available to everybody.

Yeah. So I mean walk me through this hypothetical scenario where let's just use like Switzerland as an example or something like Switzerland wants to control their own AI for their own population. So they build swissgpt.com and every Swiss citizen is going there as the front end to their AI experience. And but that in one scenario, you know, that is run on air gapped Huawei ascend data centers running Deepseek and Manus to actually do the computation. But the data is not being exfiltrated. What is the risk there? Is it just that we're losing the economic power from selling into Swiss the Switzerland market or are we worried about some sort of like Manchurian Candidate in the weights shifting the minds of the Swiss population or something like that. Like what is the risk of the power accruing in that scenario?

I don't really worry much about like. Like everyone knows what happens in 1989. Like you don't need your T score happen. It's not them. When Deep Se tries to delete itself. Like yeah, yeah, everybody knows. Right. It's very obvious. Like you know, is President Xi, you know, Winnie the Pooh could possibly be like, you know, we don't really know.

Right.

He did, he did disappear for six Months after Covid. So maybe he's Winnie, Winnie the Pooh in a, like, little outfit. So, yeah, like the, the, the, the issue with the I. What I believe about sovereign AI is that most of the content Internet is American. English.

Yep.

The estimates are like 70%.

Yep.

So that's most of the training data. Although if you look at the proprietary data. What does that mean?

I just did it. 70% of the Internet is American.

Let's go. We're just excited about that.

So they think like sovereign AI, what is the data that they're going to be training?

Yeah.

And because if the Internet is English, American English, it's our slang. It's our, you know, it's our. The second is Spanish and the third is Ms. Mandarin.

Yep.

It's, it's actually government documents. That is how most people are training. The governments are training their own subset sovereign AI legal cases in law. Right. And none of that crap is going to Amazon. None of that crap is going cor. Like they're, they, they're going to build that to, to their, like.

Sure.

So then, okay, so what is the end use case one is that most of this is mutual surge destruction sort of frameworks that if Switzerland doesn't do it, then maybe Austria does. And if Austria does it, they have a leverager of Switzerland. So like, why can't have that? So I have to do that. Think of it as. Do you ever watch show Billions? Yeah, love that show. So Axelrod, right, Everything he thought about was like both him. It's like, it's like two lanes of thought. It's like him winning and him not being owned by one of his competitors. And that's the way GPUs and AI works. It's like, it's like, I think from the perspective like, sure, there's an advantage to my, my country like I saw doing the investment, but most of it's just like I want to screw over that other person. And investing like traders Today, they're doing GPUs, AI stuff. Not necessarily because necessarily as a return today, because they're trying to figure out is someone going to screw over me somehow now. Because when you, when you put something into an LLM, it's immediately everywhere, right? Like anything now, like, private information is even more valuable than ever before because LLMs make information so accessible and can substantiate content even easier. And, and so private information becomes significantly more valuable. And so how Switzerland would deploy that, in my view would be basically spying other people to providing an alternative within its own government about like how to actually use LLMs internally. And so I think we as Americans need to just kind of take a step back and realize that not everything the world does has to make money. People just kind of do stuff sometimes because they think they should do it. And how we as Americans don't really get that it's hard for us to kind of put our hands around so commercial. Exactly. It's like the, we were so far away from Reagan where we just built crap because we're like, Soviet Union could do this to us, we're just gonna do it. Yeah, we're so far away and we're so dominant for so long that we're lazy. We're. We're self absorbed lazy people who think that Pope Leo had, you know, is a Chicago Democrat. It's a. I'm not a Catholic, but he's certainly not. And like, oh, he said this about immigration. Like do you know anything about Catholic doctrine? Like do you read anything? Like do you know anything?

I.

It's we. What I mean by that was that we define so much international dialogue by America's framework. When the world doesn't work that way.

Yeah.

Yeah.

Real quick.

I want to have a couple, a couple more questions and then we have a pretty hard stop here. But who is going to be the American open source AI frontrunner? Xai did an open release of Grok 1. OpenAI is planning to have some strategy around open source. Do you have any type of, do you have any expectations here?

I don't think it'd be OpenAI. I think it's either going to be Zuck Elon or somebody else that we just don't know about yet.

Yeah. Cool. Last one. Do you expect to be satisfied when a TikTok deal gets announced or extremely disappointed it? Because the rumors that we've heard so far are that it doesn't necessarily get at the core the inference.

What's wrong with that? Inference is the important part. Right?

Yeah, that's a good question. So do I think it's propaganda? Oh absolutely. Do I think it matters in terms of the trajectory of our culture?

No.

Like creating blaming Chinese boogeyman but like on the fact that our kids are lazy and stupid is asinine. It's, it's classic like white guilt sort of sucking Freudian frameworks. And like the reason why isn't it's actually, you know, like your kids will actually be fine.

They're.

They're leaning very heavily libertarian. So they're actually good just kind of like late millennial. Because I'm a midlife millennial. So I'm more Gen Xer. So this kind of like late millennial, early next gen that are very Marxist in their kind of like frameworks and they've been told things about there were objectively lies about our country about how like life works and success works. And yeah, I feel bad for them like because they were told things that were not true but like saying that oh, the reason why you know, Chinese kids are doing math is because tick tock like encourages math. Is, is, is pretty stupid. Like it's like, it's like no. Maybe just like no.

My, my frustration was, you know, if you're, if you're in the middle of an ideological war, trade war, you know, sort of great power conflict, we're not, you know, multi polar is not possible. It's just sort of like the US or, or nothing. Why would you allow your adversary to own what is effectively like the one of the largest news channels into the US population And why would you kind of of ignore that? Right, because even, even yeah getting you know, delivering brain. Brain rot. Like Americans are going to get brain rot from somewhere.

Right?

They have an insatiable appetite. But I'd prefer to be. No, I'd prefer to be an American made brain rot. No, but the, but the, you know, you know these platforms do influence public opinion and, and, but anyways, probably a longer conversation. We'll have you back on with the news gets announced and always a pleasure Aaron.

Have a good day.

God bless guys.

Cheers.

I want a hat.

Jordy.

I want a hat.

Oh, I got you. I got, I got you. You get a jacket too. You're gonna get the full set. You're gonna get the full set. Thanks Aaron. Great chat.

Bye.

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Long time listener, first time caller. Glad to be here.

Yeah, Great to have you. Can you take me through your. Oh, actually, first, let's kick it off with just the introduction. How. Who are you? What do you do? Break it down. Down for everyone.

Sure, yeah. I'm, you know, my, my kind of day job is head of insights at ecdam. We're a startup valuation platform. And that's kind of the perspective from which I come at all of this.

Yep.

I think what I'm, what I'm most known for is like long walls of text on Twitter about the venture industry.

And what was the most recent long wall of text that you put out?

Yeah, that was kind of like a.

Summary of the, like the last year or so of, of observations. Like, not a very optimistic title. It's like the venture capital and ailing asset class, addressing a lot of the challenges that we've seen, but it moves towards solutions, better practices, some ideas for how the industry can evolve so everybody comes out of it better. LPs, founders, GPs.

So what are the key cracks? Why is venture capital ailing? What are the key problems that you're seeing? What are the indicators? What are the metrics that you're tracking? Because a lot of people have been saying, we're so back, it looks really good. There's big funds, everyone's doing well, everyone's making money. It seems like it. So this is kind of an odd take to see, but open to hear the argument, obviously.

Yeah, I think kind of what we see at the moment, if you look very broad, big picture is like stagflation. There is, I would say, less activity than before, but prices in concentrated areas are much higher. And for a lot of people, that's a very bad thing. You know, if you're a founders fund and you can win on merit and get into any deal you want, you're doing fine at the moment. That's okay. If you're Andreessen Horowitz and you have the scale to buy into any deal, you're also doing fine. But a lot of my writing is actually really aimed at like the middle of the market GPs who, you know, could be doing better maybe if they, if, like, better practices were more accessible to them or if the market was a bit more stable. And similarly LPs who have a difficult time picking, you know, if they're not already in like the founders funds and USVs, how they can be guided towards better Decisions and better returns.

So yeah, is this just affecting new managers who raised funds maybe during zirp or are you seeing cracks in kind of the legacy firms that have dropped out of the public eye? They're not as competitive but they've been in the game for a decade. They have kind of an institutional structure. Maybe they're not raising multi billion dollar funds but they have a model where it's like yeah, $300 million fund every two years you deploy it. It's great business. All the partners are going to retire wealthy. Is there risk for that type of mid market VC firm?

I think the, that the ones that are struggling the most at the moment are perhaps the ones that haven't evolved as quickly as the market has shifted in the last year. So we've seen this much talked about bifurcation into what I call venture banks, Andreessen Horowitz and Thrives, et cetera and the traditional model of VC which is contrarian investing, bit more disciplined you could say on that front there's a few people, a few funds kind of stuck in the middle, you know and they're a mid sized series A firm who's still trying to invest their AI and they're having a very difficult time right now. So you kind of have to pick your lane a little bit these days and lean into the strengths of what those two different lanes offer.

Did you ever read Everett Randall's post on like the Tiger Global and the. And this and like the squeezing between. What was he calling it? He had some great phrase for it, playing different games. Why Tiger is eating your lunch and your deals. It was kind of talking about how Tiger and the crossover investors came in and they were just commodity capital that you just show up with a deck and get a term sheet same day. And it was very much like venture bank versus the. How did he describe it? He said the, he described one of the funds as like JCPenney funds which is very rude. That is the dead zone. So there's Tiffany and company which he said was like benchmark Founders fund, like the really like prestige Sequoias of the world. Low velocity, higher irr. Main advantage is signaling building a board of directors but it's expensive capital. Then you have the Walmart which was Tiger Global, higher velocity, lower irr but they're building built to accept a lower irr although that didn't play out very well for Tiger specifically. But in theory these venture banks are kind of playing in this Walmart category. But the dead zone was the JC Penny where you're not super differentiated, sending a really strong signal to the market that we have picked the winner. They're going to the moon. And so get in or get out. But you're also not super founder friendly, not taking a board seat, just dumping cash in a company. Is that dynamic still real in your mind? Has it grown or has. Have things changed?

Yeah, I think it's very real. It's definitely real and you can see that in a lot of the liquidity issues today. So you have you know, the big like venture banks, let's call them. Yeah, they're finding more opportunistic liquidity through. Through secondaries for like the, the huge winners that they invest in who have the strength of brand and the size to generate a lot of liquidity in that manner where other VCs would traditionally get liquidity. IPOs and M& A we all know has been very slow and that slowdown for a range of reasons. But it's part of because the industry became so bloated and confused for a while. Hopefully as this bifurcation is better understood, those more traditional managers are teeing up companies for exits in a healthier way. They better understand the kind of exit metrics you need to as opposed to the venture bank model.

Do we need to kind of redefine these terms of venture capital? Because it used to be there was like angel investors, then venture capitalists that would do series A's and maybe series B's and then there was growth equity, private equity and then like yes, a hedge fund might take a large position in a late stage firm, but they weren't seen as VCs. Now you can have a VC firm that I'm pretty sure this Venture capital firms that have never invested in a company at less than a $1 billion valuation because their whole business is maybe we buy secondary or we buy common or we do growth stage and we're really only trying to be along for the unicorn to $100 billion ride. And we'll do that all day long because there's so little downside. And by the time we're investing the company has durable revenues, is growing product market fit. So we're not even trying to underwrite the founder or their ability to explore the idea made. We're just piling in. But we still call that venture capital and maybe that's. Is that a problem or do we need to think about the market differently?

I think it's definitely helpful to think about it as a slightly separate beast. Venture capital in my mind is finding the non consensus companies and then you fund them through into legibility, into growth, growth capital, and ultimately to an exit. That's how you generate your liquidity. The new game today is, is kind of like this financialized version of venture capital where it's not necessarily about finding great companies and taking them to exit. It's about funding through the incremental milestones and hitting those incremental metrics to raise bigger funds. And you do that through pursuing TVPI in a way that is slightly disconnected to generating value in the traditional sense. TVPI is a, has slightly different drivers.

You could say, yeah. Do you think that part of the reclassification as somewhat other asset classes into venture capital is driven by a desire to mimic the fee structure of a traditional venture capital firm in other industries? So I'm a, I basically were doing public markets investing and I might be able to get 1 in 10, but if I call myself a VC for, and I play a little bit differently, I get 2 and 20 or something like that. Do you think that the branding matters when VC firms go out to LPs and try and raise money?

That's a good question. I'm not really sure about that, to be honest. I mean, I'd hope LPs were scrutinizing that a little bit more, but perhaps not.

Do you look at any data on the health of the sort of retail and the private markets? Right. Like the everyday angel and investor. Are you seeing more or less activity today than in 2021, early 2022?

I would say quite a bit less. Probably like a third less at the moment because so much attention is concentrated on AI. And I think a lot of angels frankly have just resigned themselves like they're not going to get in on that game.

Yeah, interesting. Yeah. I was thinking I was even going to consider doing a poll to anybody within, you know, just a poll on X or whatever. But I think if you ask the average angel investor, would you sell your entire angel Investing portfolio for $0.15 on the dollar today? And I bet you that, I bet you the honest answer is that like 90% of, of people would because angel investing is this like weird dynamic where to me I, I legitimately feel addicted to angel investing. Like it's a weird thing. But. And I joke about this, right? It's like all these kids, you know, these kids that grew up in San Francisco and their, and their parents are addicted to angel investing. You know, just like refreshing their, refreshing their email on the 1st of the month, you know, waiting, waiting for, waiting for the update. But it's, but it's this interesting, you know, dynamic where it's honestly one of, you know, to me it's one of the most just interesting ways to spend free time. Just like meeting exciting founders, but at the same time, liquidity timeline, timeline.

So long, literally, even if you make money, it's like, well, I didn't get to enjoy that in my 30s. Yeah, yeah, totally.

And I have, I have buddies that are, that are towards, you know, the end of their careers or maybe even retired that are, that are basically like somebody recently said to me, I don't want to make net new angel investments because I don't want to deal with, with this when I'm like potentially in a retirement, potentially retired to Hawaii. Right. I don't want to be worried about figuring out when should I try to exit this position.

Dan, can you break down this idea that most venture capitalists don't understand risk management and only 10% of venture firms are making it to fund 4? What do VCs get wrong about risk management? What does risk management even mean? I thought the whole point was to be risk on swing for the fences.

That's a great question. It's a real fundamental point as well. I talk about the importance of risk management in venture capital and people do give me a slightly crazy look like the point is risk. But if you properly manage risk in a systematic way, you can take more risky bets. That's kind of the point if you understand the mass of portfolio construction, how big your checks are going to be, what the outcome is likely to be, how many you have to write, what maximizes your exposure to potential unicorns, what discipline across the whole portfolio looks like you can take more risk on an individual investment basis.

What does a poorly risk managed fund look like? Is it just not building concentration in the winners, not leaving money in the fund for, for pro rata and follow ons to kind of ride the winners up as they become outsized winners. I feel like that was something that we heard from like the last generation of managers that got a $50 million fund. Then everything got marked up in ZIRP and all of a sudden they had to make these decisions on huge pro rata checks out of their main fund where there really was no new data about the company and they were still at a seed level, but some big firm had come in and preempted a series A or series B. And so all of a sudden you can't do the normal thing of wow, there's so much traction on this company. I need to really make sure my Fund has a significant ownership because I did get a foothold in. But I need to build that position. Is that what's going on or is there something else? Another dynamic?

Yeah, that's a part of it. That's quite a big part of it. I think the fundamental thing is the having a right sized initial portfolio. The number of investments that you make to begin with, that should be diverse, diversified enough and the average might be like 25 today. Maybe it should be 50.

How do you even calculate that? Is that based on historical trends in the number of unicorns or something? How are you thinking about that?

Yeah, exactly. There's great work done by a few people. Dave McClure from 500 Startups, he has an article on this. He talks about 100 startups should be the portfolio size for a seed fund.

Wow.

Because of the, the small percentage that eventually become unicorns or decacorns.

Yeah.

And you, you fundamentally don't know to begin with which, which ones are going to work out. That's kind of the problem is VCs over concentrate. And of course if you're, you know, I've spoken to some great GPS about this concept and they always push back because they have 15 companies and they're all doing great and that's like fine, good for you. You're in the top 2%. It's the other 98% that I'm kind of thinking about.

But is that really a way to get to like by definition the. Don't you. To be in the top 2%, don't you have to behave like the top 2% and just actually like consider it a skill issue and just make sure.

Well, if you're trying to, if you're trying to get, you know, I can see the argument if you, if you're trying to get past fund four, which is like the milestone, you need to have bangers in the first fund. Right. Like, like, even if, even if you're not necessarily, even if your ownership is not amazing, you need to be able to prove that you can get into winners at all to some degree. And so I've seen that strategy play out fairly nicely where as long as you're in a handful, you know, just get. Showing that you can get in is kind of like key proof points even if you're not able to concentrate, you know, five plus percent of your, of your fun in a single company.

Yeah. Do you think, do you think LPs are more willing to forgive on mistakes of portfolio construction? Not sizing into winners easier than missing winners and having like, okay, yeah, you built the portfolio perfectly. You got concentrated into your winners properly but you didn't have any of those really sexy companies in the portfolio.

Well, I'd like to think ultimately what matters is, you know, the end multiple, the irr, the performance of the fund fund and everyone, the majority of emerging managers come out swinging for the fences every single time. They want a 10x fund and in doing so they are themselves boom or bust. If they fail and it's less than returning capital, they have no room to learn. They can't improve for the next fund. There's no step two. If they are a bit more conservative, a bit more diversified and they return like 2.53x, maybe they get a fund too and they learn and they can improve and earn concentration over time.

Isn't there something beautiful about the fact that both startups exhibit a follow a power law and venture capital firms exhibit a power law? Like there's a kinship here that it's like, hey, we're all either going to be rich or poor here. There's no median outcome. You're not just a bank to me. You're not going to be around unless this works out. You're living under the power law just as much as I am. As the entrepreneur, I would disagree with.

That, to be honest with you.

Please.

I think it's a better world for Everybody if the VCs are more stable. Okay, they are very power law. They are boom and bust. They don't really have to be.

They don't have to be.

Interesting. Interesting.

Well, yeah, this is great.

This was great. Thank you for coming on and sharing. Next time you have a report, give us a heads up and love to have you back on.

Yeah, we'll talk to see you. Dan. This is great.

Cheers.

Thanks so much. Let's run through some timeline, let's give some updates, whatever else is in the news.

I've got an idea. Before we jump into the timeline, should we talk about Figma?

Of course.

Figma.

Tell us about a. Figma is the design tool of my dreams. It's a tool that, that I have used for my entire career at this point.

Think bigger, build faster.

That's great.

Redesign how you design, explore your ideas freely and iterate quickly.

We should make an actual old school style radio ad for this. But anyways, Figma launched a bunch of new features last week at Config, one of which is very cool. They allow you to generate marketing various types of assets based off of your brand book. It's called Figma Buzz. Very cool. So exciting new feature from them alongside sites and kind of the core, you know, design tools that you probably already use and love. So go check out Figma Buzz and sites and thank you to Figma.

Thank you.

Should we talk about some timeline?

Let's do it. Jason Calcanis of the all in podcast is is taking the movie industry to task. He says the movie industry is effing clueless. Make a $19 a month all you can watch $10 plus $10 for each kid and $49 for a family of five. Watch the money pour in. He wants a subscription. Movies would be huge if you made it a season pass like the ski industry did with the epic pass show old movies too. For bonus points, AMC will slash prices on Wednesday as the news by 50% starting in July. The goal is to get more people in theaters between weekends. What's interesting is that I saw a separate article about how the modern instantiation of MoviePass is wildly successful. Have you heard of this?

I think it's like, well yeah, apparently AMC has a subscription product already.

They do stuff.

I think the interesting thing that Jason called out is showing old movies. I think one of the challenges is that there's so few new movies coming out that people are genuinely, you know, wanting to get up and go see.

Yep.

I don't know if old movies would do it, but they do re releases.

All the time and they are available and I don't think they build as much hype because I, I think there's some weird dynamic in the movie industry where I think unless you billboard and the hype and like you're texting your voice.

I think it comes down to scarcity. The the they need to pull movies off of every off the Internet entirely for a year. It's good and then just build it up and being like we're bringing it back. You know the people, some people will be like well I have a dvd. I can watch it anytime. Good luck playing a DVD on your home entertainment system if you go it in the last five years. Not going to work anyway.

Stan with the all in podcast Chamath Polyhapatiya says not nearly enough people are talking about the implications of Klarna rolling back some of their AI bets. Not knowing any of the details, I can guess why replacing determinism of HU or humans with probabilistic code is fraught with edge cases and require new ways of software development and process engineering that aren't well solved. The implications to an entire generation of AI action apps will be as severe will be Severe as. As more companies come to terms with the difficulty in getting products to work reliably in production. With AI in the loop, customer service may be the first funeral signpost. The result will be that many startups need to pivot to simply use AI for narrow use cases and otherwise act deterministically. So what will, what will. So what have people funded then an AI company? No, not really. Just a really overpriced SaaS company at AI valuation. Interesting. What do you think?

I mean I thought the conversation with OWN yesterday from Intercom was super insightful. Right. They are incredibly well positioned to deliver AI to CX teams and unlock the power of it. But they're not saying he wasn't coming on and saying 99% of tickets are solved by AI today. He believes that we can get there over time. And his hot take was that AI was better than humans already at a lot of things. It stays on script, it doesn't get tired, it doesn't get short. It's not temperamental. All these things that end up creating a better customer experience once the quality is at a certain point.

It's this idea that we overestimate what can be done in a year, underestimate what can being done in a decade. You got superhuman autocomplete for every single one of your customer service agents. You got much better ways to navigate a knowledge base effectively and just serve up a better Google search, use it as a knowledge engine and so that should drive those. But trying to go full Klarna mode and saying, you know, we're not hiring anyone, we're going to be a one person company. Probably a little aggressive.

Yeah.

Anyway, Avi Shiftman, founder of Friend.com says I met my investors LPs and realized I'm just working for college endowments and family offices.

Yeah, you are. And it's good. It's an opportunity. It's an amazing blessing.

I mean we heard about this from Andrew Reed talking about when he was pitching Dylan Field at figma. I brought him into the, the Brown conference room and said hey, like we work for Brown.

You have an opportunity to run it up for Brown.

Yeah, you have an opportunity to run.

It up for Brown.

It up to go long Brown.

Exactly.

It's not just college endowments, it's teacher pension funds. It's, you know, you're supporting firefighters, all these things. So you're supporting, you're helping big oil. Right.

I mean that is part of the beauty of like the intertwined financial system is that losses are born across the entire economy so that any one company that blows up doesn't destroy everyone's pension, but when there's big winners, everyone kind of benefits. If you have a pension or you go to one of these schools, like their endowment is enriched and they do more research and science and all sorts of stuff. And so you have kind of a. I mean it's just diversification, right? It's just diversification. And so, so like you don't hear as many of those stories about an individual Main street investor that lost all their money on a risky startup bet. Because angel investing is, while addictive, it is for high net worth individuals and accredited investors only, but they still have exposure to the venture markets through LPs. Yeah, Prime Video has renewed beast games for not one, but two more seasons. Y' all are not ready for the big stuff. We have plans, says Mr. B. Beast. Very interesting. This was one that was like hotly debated about whether, whether, whether it was good. It's hard to track because you can't just, you can't just look at the YouTube metrics to understand if Beast Games is truly successful for Amazon Prime. But we have the data now. Season two and season three confirmed. They probably wouldn't have done that if it underperformed. So interesting watching a YouTuber transition to mainstream media or, you know, bigger platforms. I mean, Amazon Prime's new media, but still, still a huge company, major network. He's clearly worked out a fantastic deal and we've seen a bunch of this and it feels like it's more of a. Increasingly social media is a proving ground for Hollywood. You talk about Pat McAfee, what he did with his podcast, took it to ESPN eventually. I think we're going to be seeing a lot more of this as people build independently and then ultimately leverage the distribution that comes from something like Amazon Prime Time. So congrats to Jimmy. We should have on the show. Dalton Caldwell says the S P 500 now has three YC companies. DoorDash, Airbnb and Coinbase. Let's hear it for YC. Can we get the, can we get a size gong or some clapping or something? Congratulations.

I can't wait to go back to the next demo day.

Yeah, me either. It is, it is actually crazy how big that YC has done this because no other incubators even close. Right?

I'm excited for the update in 2055. The S&P 500 is now 60% Y.

Combinator company for sure. Certainly if you expand that to YC.

Founders running companies, probably PG says 497.

To go 497 to go. PJ. I like it. On a conquest. Good job.

And all are consumer tech, Right? Everybody says build B2B SaaS until you see some of the biggest outcomes.

Just wait. I mean, a couple of those payroll companies will be in the S&P 500 pretty soon. I'm pretty sure. Anyway, all three, hopefully. Aiden says Uber would be a lot cooler if it was called American Express. I just love this guy. 7 likes Low Tam, but low tam banger.

Yeah.

He also had another post that we didn't get to yesterday that was like, if. If. If the airline's calling your name personally as you board the flight, it's basically like flying. Flying private. I thought that was funny. Anyway, shout out to Aidan. Great, great programmer, great hacker. Airbnb is launching. They're unveiling their next chapter. This is going live today. I don't actually have the update, but yes, they're launching.

So they're launching new services businesses. There's a redesigned app. So remember, they condensed a bunch of launches into one.

Yep.

And they were doing like Airbnb experiences for a while.

Yeah. Expanding beyond homestays. And I guess they're gonna invest a quarter of a billion dollars into this new sort of business line. It seems like an extension of their kind of experiences product.

Sure.

But anyways, hopefully they can.

Hopefully not can. Hopefully they don't crush under the weight of competition with Wander. Yeah, honestly, that's. That's my only hope. Because I love Brian, founder, Mode CEO. Love him.

But they're gonna be feeling the heat.

They're gonna be feeling the heat from Wander for sure. Adam d' Angelo said at Quora, we recently tested switching from Zoom to Google Meet for a week. Google Meet is better in many small ways, but bit worse in one big way. Audio quality, particularly background audio. Noise cancellation. Echoing that kills it. So we're staying on Zoom. This is funny. Just like, hey, I did this a B test. And we're sticking to. We're sticking to Zoom. And Sundar Pachai responded.

Sundar.

We'll follow up offline as we have an experience case. As read notes below. It works pretty well in my experience. We will debug to understand the root cause and fix. Thanks for flagging. Thank you. Would have. Would love to switch if this is fixed. And Nathan, a buddy of mine says I have the inverse experience. Zoom is, well, rubbish in it. And he's British or French. I don't know. He's over in Europe somewhere. I don't know the specifics.

Rubbish.

Anyway, Innit hilarious. Anyway, Teddy Blank had a coinage once your VC has what was it the actual coinage was something about once your Once your company's LinkedIn profile picture is the founder holding a microphone at a.

Conference, you're cooked with one of the.

Yeah, with one of those. Which I don't think is really true necessarily because a lot of the big CEOs, they wind up doing that anyway. Bezos, Steve Jobs, I'm sure all these guys have been pictured with lav mics. But still funny to see that. Yeah. If you grow up too much. So anyway, shout out Teddy. Anything else you want to cover? Should we get out of here? It's 205. Thank you for watching.

2,05.

Any more plugs go to rora.com I.

Mean you should always go to. You should always go there but. But no, I'm excited for the show tomorrow. We got Brian Johnson calling in as well as Mateo from eight Sleep Great. And yeah, go and leave us a five star review on Apple podcasts or Spotify. It helps us. I think it helps us. I don't know what it does, but if you do leave a review we will talk about it on the show.

And head over to polymarker. Keep tracking the largest company at the end of May. This is the super bowl of big tech. Microsoft's at 60% right now but they dropped just recently down from 80%. This chart is actually Nvidia is climbing fast. Apple's climbing as well. It's a knockout drag out fight for the largest company at the end of May. Head over, check it out. Anyway, thank you for watching the only market that matters to you soon. Cheers you tomorrow. Goodbye.