Trump's Tariffs, Market Crash, Zachary Perret, Scott Wu, Sam D'Amico, Peter Goldsborough, Nathan Mintz, Michael Laframboise, Fil Aronshtein, Chris Power, Brandon Tseng, Akhil Iyer

You're watching TVPN. It is Thursday, April 3, 2025. We are live from the temple of technology, the fortress of finance, the capital of capital. This show starts now. We have a great show for you today. It's a terrible day in the market. Stocks have plunged. The dollar sinks after Trump's tariff blitz. The NASDAQ down 4% S&P down 3%. Dow Industrials plummets 1300 points. Bad news, but we're going to take you through it. And it's a little bit of a defense day, a little bit of a manufacturing day. We're calling it America America Day.

America, that was the best word we could find for it.

We got a bunch of people joining the show. We're going to kick it off with Chris Power over at Hadrian. He has been beating the drum on American manufacturing. A lot of people thought he was crazy, thought it could never be done. Now he has a pretty sizable advantage. It's kind of crazy to watch. So excited to hear him talk about what the tariffs mean for his business, what they mean for other businesses and break down how he's taking advantage of the new tariff regime. Then we got Delian and a ton of other defense investors.

We got some absolute dogs, John.

Yeah, we also the CEO of Plaids coming on talking about the fundraise that just dropped today. And of course, Scott Wu from Cognition is coming back for his second TBP and appearance.

This is a guest record for us, John. I think, do we have 10?

I think we have 10. It's all in a hard day's work. JD Vance chimed in on the tariffs. He says we need change. He has a quote here. He went on Fox and Friends says a lot of people have gotten rich from American companies moving overseas, but American workers have not gotten rich. And frankly, American companies have not gotten wealthy from increasing growth of foreign competitors manufacturing overseas. And so this is kind of the trade off. I think we'll go through this again and again and again. But most economists would say that these tariffs are net harmful to humans or like the global economy. But of course, there are always winners and losers within these whenever these rules like, you know, pencil out. And so yes, Nike is getting hit really hard. They manufacture abroad, they sell to Americans. They're going to be hit particularly hard. But if you've been running a business that's making shoes in America and the only benefit you had was just you throw the Made in America logo on there and hope that people bought them, well, today you have a serious economic advantage. And so you're probably pretty happy and you're a winner. And Trump and JD Seem to be saying, you know, that's who we're speaking for. That's who we're representing with these. There's also this argument that over the long term, this will be better for America. Maybe this is even better for humanity as a whole. We're going to hear from various people, hear them out and see what they have to say. I think you and I were talking about this when we were working out this morning. Just that, you know, it's, it. I'm not entirely black pilled on these. I'm also not entirely wearing a golden age. A lot of the timeline seems to be much more split than we are, which is kind of odd. I mean, I feel like I.

It's one of those things. Nothing is gonna ever be as bad or as good as you think it is.

Yes. But on my point, it's like I experienced the Studio Ghibli moment very much in tune with the timeline. Like the timeline was like, this is the greatest thing ever. And that's what I felt. I was like, this is the greatest thing ever. I'm having so much fun. I'm in tune with it. And then, and then as the, as the mood shifted to like, what is the meaning of this slop? Is there, are there negative consequences? I was engaging with that too. And I was, and I was interested in those arguments. And I don't know if I agreed with all of them, but I was, I was here for it. And with the tariff stuff, I feel a lot more split. And a lot of the hot takes that I've seen, I haven't been like, oh, this is, this is my belief. Like, this is now my take.

It's one of those things. We're clearly running an experiment on the economy and we haven't seen the results yet.

Yep.

So it's dramatic.

Yep.

It's thrilling. It can be scary.

Yep. But I mean, it's the largest, it's the largest drop in the stock market in more than five years.

Since March of 2020.

Yeah. Yeah. Since COVID And at the same time, I remember those drops and they were more significant and more and more scary and crazy in my opinion, because there wasn't as much signaling going into them. Like this is very much a human decision that could be reversed, whereas Covid was. Felt like something that couldn't be. Just, oh, yeah, actually we're changing course. And so the stock market should immediately go up. It wound up going up really quickly and bouncing back.

Yeah. And the wild thing is the market is The S&P 500 is up 4.3% over the past year. So we're still.

Over the past 12 months.

Over the past 12.

But it's down this year, right? This year has not been good so far. Sure, because we had a Trump pump at the end.

It's down 4% over the last six months and 7% over the last month. But for the prior 12 months it's up.

But just this one move wiped 2.7 trillion in market cap off of the Dow Jones and the US market broadly. And I think that you know, what JD is trying to say is like yes, the 2.7 trillion was eviscerated and eliminated from the market caps of these companies but we hope that more than 2.7 trillion is distributed in the forms of better and high payer, more high paying jobs for Americans. It's an experiment. We'll see how it goes.

And we will hear everyone say interestingly Nvidia is down almost 7% today even though, well, semiconductors are excluded. Okay, so probably a smart exemption. But yeah, I mean a lot of these things have feeling the kind of.

Second order ramifications where you know a company that does business abroad is going to be more conservative. So they might buy less GPUs because they're like you can play all this out to, you know a lot of, a lot of goods that are Chinese are bought on Meta. And so maybe Meta makes less money because there's people less advertising less E Commerce products because E Commerce has hit so hard by this. And there's just a whole bunch of different knock on effects. So very complicated. But Max Meyer had a good the. What is this the Norman Rockwell painting of the man standing up saying something contrarian says putting 17 to 34% tariffs on high quality industrial machinery from Japan, Germany and Israel, Holland etc. Will hurt American re industrialization and make it more difficult to operate factories and produce goods in the United States.

Hard to argue with this.

We got to talk to Chris about this because he, he buys the Hormle like cnc, the six axis thing that he that they have like copy pasted 25 times in there in their massive facility. And I'm sure the prices of those machines are going to go up but maybe there will be a carve out at some point. Again this was just one of those like here's how we're thinking about it. A lot of it did go into effect very quickly but all this stuff is always up for negotiation. It's the art of the deal, baby. This was a funny one from AF Post. So apparently Trump has levied a 10% tariff against the herd and McDonald Islands, which are inhabited only by penguins. And so if you're a Penguin in the McDonald Islands, good luck selling goods.

To America penguins, I mean, because it's.

Going to be 10% more expensive.

Legacy media has taken a victory lap on this one. USA Today says penguin, seals and other wildlife.

Yep.

Only inhabitants of two islands hit with Trump tariffs. Npr I mean Trump's tariffs are so far reaching they include several remote uninhabited islands.

Yep. I'll come out and say, but hey.

I will say if you're, if you're Switzerland and you just got hit with 31% tariffs, maybe we'll see Rolex move some manufacturing out to the Heard McDonald Islands.

Yeah, I mean I think that it's a little bit edgy to say, but penguins on American hard work for years and they got to pay their fair share. So if you're a penguin, get ready to pay some taxes. The external Rev Revenue Service is coming for you. Anyway, very, very funny story. I liked Atlas Creatine Cycle. This is one. Get ready to learn how to put together iPhones, buddy.

I love it.

I can't wait. I can't wait. The thing is, if you can put them together, if I could know how to put this thing together, I could also know how to potentially take it apart and then I could swap the battery out.

That's why they outsource manufacturing. They don't want.

Yeah, they don't want you to replace your own battery.

Yeah, yeah, I get it. That's a good, this is a good conspiracy theory.

So we go through some of Joe Weisenthal.

Yeah, Joe Wiesenthal dropped a beautiful blog post in the iconic orange Bloomberg font because he of course is delivering his newsletter not just through email but also through the Bloomberg terminal. As any self respect expecting financial journalists should, we should really start syndicating on the Bloomberg terminal.

That would be absolutely, I don't know.

What it takes, but we got to make it happen, he says. Once again, I'm just going to list random thoughts that are going through my head right now. I want to start with Nike. Actually at the time of this typing, the Stock is down 14% pre market. As far as I'm concerned, Nike is the perfect specimen of American capitalism. The profitable design work is mostly done in the US the manufacturing is done in countries like Vietnam and the whole brand exists as it does because the US is a global powerhouse for exporting Culture like star athletes. It just makes perfect sense for the stock to get nuked like this as both its basic business model and the American brand values get trashed. Other American Apparel brands like Lululemon and Deckers are similarly getting clobbered this morning. Speaking of Nike and Vietnam, in his chart book today, Adam Tooze notes that 50% of Nike's products are made in Vietnam. And of course the Vietnam shift. Ryan Peterson pointed this out, that a lot of companies were trying to be proactive about relocating from China. Also manufacturing in China, that was also.

That wasn't just tariff risk, that was geopolitical risk as well.

And just, and just economic factors in China, like yeah, like as China has gotten more skilled. Yeah, gotten more skilled. Like it's more expensive to manufacture there. So yeah, stuff has moved. AirPods are made in Vietnam, famously. And that there are half a million people in the country working for the at at least 155 factories that make Nike goods. Now we're slapping massive tariffs on them. But the question is, to what end do we think there are hundreds of thousands of people in the US eager to work in sneaker and T shirt factories at the wages that sneaker and T shirt factories pay? T shirt factories pay. Are there people eager to work in sneaker factories even at good wages? Do we think that the US has the level of robotic capability to replace these factories without having to hire a lot of workers? And if not, what is the administration trying to accomplish? I think the steel man here is like, is like there's a learning curve to the robotics capability where if you don't have the facility in America at all, it's very hard to get the reinforcement learning data to train the robots. And so yes, it makes sense to potentially, in the very long term, if you're super AGI pilled, you should overpay for human training data, essentially. And yes, maybe those, maybe because of American working conditions, the output would be lower, the prices would be higher. But if the tariffs lead to a situation where you're willing to take that trade, that puts us on the learning curve to develop humanoid robotics. Again, I'm just steel manning here. I'm not, I'm not fully convinced of that.

I think broadly, and this is what I'm hoping to get from a number of our guests today, is for America to re industrialize, we need to lead with innovation. Right? We don't have the skilled manufacturing labor base that is going to allow us to onshore all this stuff overnight. Even if, you know, you could immediately snap your fingers and have the facility. So it needs to be innovation led.

I heard a very, a very hot take at some sort of reindustrialized conference where someone was saying like, I'm extremely bullish on American manufacturing, but I don't think it's ever coming back. I think we're going to rebuild it with robotics from the ground up and we will be a manufacturing powerhouse. But it's not going to be American labor led. It'll be innovation and technology led. And that's an interesting, like that has its own problems you've got to grapple with. But I thought it was interesting anyway.

And to be clear, that still creates jobs because somebody needs to oversee the facility. And it's not, you know, you're not going to have end to end autonomous.

Factories, thousands of people.

OpenAI is still hiring software engineers.

Yeah, yeah.

Same with Anthropic.

Yeah. And you can imagine a lot of different higher leverage operations where you're puppeteering 10 robots at a time and doing teleoperation. A lot of interesting paths to making American manufacturing great.

So he says, oh, you want to.

Keep going on this? We have two minutes.

Okay.

I was going to move on to Shield. He says $1 was worth €1 at the beginning of the year. The dollar is declining in value now worth €90 cents. Your European summer just got more expensive.

Well, hopefully for the VCs that were planning trips, they can get another fund closed before then and just make up for it with management fees.

Should we talk about Jeremy Tsai, very successful entrepreneur who runs a company that the whole plan was direct from the factory to delivery to American consumers. So why buy the Hermes bag when you could buy an identical bag from.

A facility that was built and it's even less Hermes?

This is maybe not the right example, but it's like luggage and stuff, restoration hardware. Towel. Sure, sure, we'll give you the same towel or the same quality of towel for a fraction of the price.

And so he says consumer prices are built with percent targets, not absolutes, meaning cost increases are exponential. If the cost is 10 and the price is 50 to maintain product margin, a $1 cost increase equals a $5 price increase. A $5 cost increase equals a $25 price increase. These are multiplicative. And so he's, he's arguing that this will lead to consumer inflation, which of course is a risk taking. The other side of this argument, Sean McGuire. He says that this is the first long term thinking president in my lifetime. He's obviously supportive and it seems like he's excited about It I'm excited to talk to him about how he's processing this and, and playing.

Yeah, this is playing into, you know, short term pain, long term gain. And that's what, you know, you got to be oriented around if you believe these are good policy decisions.

And Palmer Luckey came out in support as well. He said unprecedented embrace of protectionism. They say no, reciprocal tariffs are the opposite. The whole point is to encourage free trade rather than lopsided free trade we currently have with so many countries, it's very simple. If they charge us, we charge them. And so this would be an interesting long term play. What if this triggers a reduction in tariffs and, and, and Trump says, yeah, we're going to stick with reciprocal and as you lower your tariffs, we'll lower ours. And all of a sudden we go to a truly free trade. That would be a very interesting outcome. I don't think a lot of people are expecting that are pricing that in. But I think Palmer saying that that could be a potential outcome here. Anyway, we got, we got Chris Power coming in the building. I wanted to play this video first. Do we have the video?

We're cultivating Chris Power.

Yeah, we're cultivating Chris Power in America. I wanted to hear Howard Lutnick talk about the tariffs and give us a little breakdown and then I think Chris could get, could do some analysis for us. Let's see what else is going on. There's some more posts here. Tyler Cowan did not love Liberation Day. He said Trump's reciprocal tariffs impose hundreds of billions of dollars in new taxes on Americans without public congressional input. So arguing that this should not come from the executive branch, they're based on calculations. Okay, I think we got the video. Let's play it on the show.

Now happened to the world is the global governments have backed taking our factories away from us.

I mean, there's nothing about Taiwan that.

They should be making semiconductors. There's nothing about corruption.

They should be making all of the appliances and the electronics of the world.

What's happened is they had a policy of their governments to let's back our.

Companies and let's take this business from.

America while America is not paying attention. So our factories went overseas, but what you're going to see is the most modern factories of the world come back here. We are going to start on one of the great training programs of the world to teach our employees what tradecraft is, you know, how to build factories and not the old kind of factories. I'm talking the most modern, the most high tech factories. When you say H Vac. What we're talking about is cooling a high tech semiconductor plant. Probably one of the coolest jobs you can have, right? Mechanics fixing robotics, that's what's coming to America. The coolest factories, the highest tech factories, they're all coming home and Donald Trump is bringing them home and he's going.

To create a renaissance of high tech manufacturing in America.

That's why America's going to win.

He's newsmaxing, he's Max and he's given the pitch for why these tariffs are good. We're going to hear from Chris Power who's in the temple of technology talking about these tariffs.

How you doing back?

We're cultivating great guys. I would argue that we are sitting in a high tech factory, but it's nice to see you on the show again.

Fantastic. How did you process the news? Give us the high level breakdown.

I think it's incredible for all manufacturing businesses and I think the pushback you're seeing from people who've got crappy e commerce businesses built on the backs of Chinese Temu textile facilities are the problem. I mean, what happened since the 70s through the 90s is we offshored all manufacturing to developing countries because we didn't want to deal with it. And all great power conflicts hang off the back of commercial manufacturing being able to pivot to defense when it really matters. And Ludnig is absolutely right. And what people miss is China especially. But all developing countries are not just cheaper in labor. They've been actively subsidizing basically to make it free energy, capital, equipment, labor. And when they export manufactured goods to the U.S. often they are, you know, they're getting refunds of the government of 30 to 50% through this kind of export tariffs. So this is not, you know, us raising tariffs unfairly. It's just leveling the playing field of what's already been happening. I mean, often what we see with competitive Chinese prices for CNC machining is that the cost of the raw material we can buy is more than the part that Chinese selling to a US manufacturer. And that's just all through subsidies. Right. Of all these key areas and these export tariffs and what that's done to the country is you can think about this as kind of like a balance sheet, right? It's kind of like what, you know, Deep Seek is doing, that obviously doesn't cost a cent per query. They're subsidizing it. So they draw the consumer into that platform. They gain all the leverage over OpenAI. It's the exact Same thing with manufacturing. And then what happens over three decades is you offshore all the skills and the capital equipment to developing countries and then when we go into a conflict, they've got all the manufacturing capacity. So I think this is a very accurate response to the forced deindustrialization of the US through aggressive trade policies from China over the last 40 years. And this is just barely making it even now. Yes. Are some goods and services going to be more expensive? 100%. What this is going to cause though for American manufacturing and bear in mind I would say 90% of what American manufacturers buy, even if their revenue is on the NASDAQ, is offshore. So we're flowing 90% of the volume from NASDAQ revenue or Nike shoes to developing countries and paying them to do our stuff. And then they're subsidizing it by 50 or 60%. What you'll see from here is this forced re industrialization of the US because now we're going to have to build more factories. More factories, More factories, More factories in the US which is going to cause this now huge boom in manufacturing skills and talent to serve those factors. And because our skilled labor in the country is aging out, because we told all the kids in the 80s and 90s that if you didn't have a four year college degree, you're an idiot. Is now we have to build factories that are highly advanced, used a tenth of the people and are exciting for kids to get into. And it's not about replacing jobs, it's just going to be different jobs. You're going to be a robotics technician, you're going to be running 10 machines at once versus doing absolutely everything with your hands. This is the way we prepare for, you know, 2029. And this is, this is the strategy, right? As you tariff everything, we bring back manufacturing to the US in the next four to five years, you're going to see the greatest re industrialization of the country so that we actually have the skilled trades on shore so that, you know, God willing we don't get into a conflict. But if we do, we might have a hope of doing it because you can turn a dishwasher facility into a missile factory pretty quickly. And I think everyone who's kind of complaining about this is like, you know, kind of part of the problem where, oh, we don't want to deal with manufacturing here. Oh my, like Temu, my, my, you know, shitty rapper over Temu and my E commerce business. Yeah, that's the, you're part of the problem. You've been like Trading dog and cat pictures on the Internet for 30 years. And we gave away the farm to China. Like what are we talking about? This is a real country. You know, we're going to make stuff in America. We've been pushing through this, through NIA and obviously through Hadrian for, for a while. And I think the administration has got it absolutely correct. The second thing I think people miss of I've heard a lot of complaints about targeting Vietnam, targeting Taiwan. What people miss is a lot of the Chinese manufacturing volume so they get out of the kind of export controls is they just ship it across the bridge to Taiwan and then sell it to an American company. It's kind of like fentanyl coming from China through Mexico. So this whole cluster of Southeast Asian manufacturing, often behind the scenes, you know, it's like a Taiwan CNC is kind of a dodgy wrapper over Chinese cnc, you know, to use the technology. So I think yes, it's going to hurt some industries that have based their business on selling high priced goods to consumers while they've got a cost of goods of $5 in China or Vietnam 100%. But for the country it's an incredibly good thing. And the jobs in the Midwest and in places like Ohio are going to go through the roof because we're going to have to re industrialize based off this balance of trade equation that's just massively correct. I think it's an incredible thing for the country, it's certainly an incredible thing for the business. And I can't say enough good things about how seriously the administration is taking the re industrialize of the country. And not through subsidizing companies. They're just recreating the dollar cost of the market to incentivize all these global companies and American companies to invest in manufacturing. Because now the price equation is such that people need to buy American and then let the private markets invest behind that market signal. I think it's a brilliant strategy because otherwise they would have had to spend a trillion dollars subsidizing a handful of companies to build in America. And now they kind of get that investment for free. And you're going to see this huge multiplier effect of every 100 people who work in a factory. Great, you need a coffee station, you need like support and trade services. You're going to get towns built around these factories and more housing and more construction. And that plus deregulation is a huge bone.

What do you in your world. Obviously semiconductors were excluded from the tariffs, but a lot of industrial machinery from places like Japan, Germany, Holland weren't excluded. Do you think that that kind of, those kind of products should be excluded from the tariffs in order to help? You know, Hadrian obviously purchases machinery from, from countries outside of the US Just because you have to.

We have to. I don't think anything should be excluded. We said this in the last show, is that why does us not make CNC machines or foundry machines anymore? We offshored it because they got subsidized. So let's add it to the stack. And for our business, my capex just got 15% more expensive. But our capex is free because we just use leveraged debt and financial engineering anyway. But I think people miss the fact that American manufacturers are somewhere between 40 and 200% higher than China. We see this because a lot of our customers do source things to China and they competitively bid us if they can't even force to manufacture it in America. Right. And right now we are as a business because we're highly automated, often 30% more expensive than China. So you add the tariff back on that and now you've got like a $20 billion machining TAM in the US now becomes 100 because all the US companies are going, well why wouldn't I reshore this? Because now my parts just got 50% more expensive.

Yeah.

So like let's just bring it back to America, you know, how are you.

Thinking about Polymarket has the chance of a US recession just jumped to almost 50%. There's kind of a narrative that like the best case here is maybe it's taking some medicine. Short term pain, long term gain. Is that a reasonable framework to think about this or do you think that there's a way that we avoid any of the short term pain other than of course the market sell off today?

I think we're going to take some short term pain. But I think that's really like do you care about the S&P 500 or do you care about what actually underpins GDA GDP, which is jobs and like the American heartland who like you know, can't get food or you know, I mean, look, I'm Australian, right? But like here's a great example. American farmers have not been able to export beef to Australia, haven't sold a dollar of it because it's banned. We as a country, I'm saying this Now, America imports $29 billion of Australian, you know, beef and cattle products. So okay, all the American farmers are getting screwed. So like, I don't know, we should probably be eating American beef Realistically though, knowing the administration, I think what you're going to see is they are forcing a very hard reset to reset the economy, which means deregulate tariff up, rebuild the United States so we have the productive capacity. But bear in mind the interest rate is extremely, extremely high right now. It hasn't really been leveraged down. And inflation and by the way, re industrialization is a deflationary event. Yes, it might make some goods and services come up. What you'll see is wage growth and jobs growth behind it so that the balance of inflation comes down a little bit. What I expect to happen is that everyone complains for about three to six months and I don't know what the interest rate is sitting at now. But bear in mind, I think it's like 4 or 5% on the Fed rate. You can notch that down 1, 1.5%, maybe 2% over the next three, four quarters and we're going to get back to ZURP mode and then the S and P will come up as everyone puts their cost of capital in the spreadsheet. So yeah, I think we're taking some short term pain. I think the Federal Reserve and the Bureau of Labor Statistics have been lying to the American people for the better part of two to three years. I think we're already in a recession. It's just like we're fudging with the numbers and not talking about it. But realistically, no, I think the boom starts in two quarters or so as the federal budget gets cut with Doge, people are going back into the economy and being productive. Tariffs come up and there's a bunch of volume and activity happening in the country that's producing real gdp like jobs in factories. And then I think he took down the interest rate like 1 or 2%. And I think you've got three years of ZURP mode, of cost, of capitals going down. All the valuation is going to go up. I think it's going to be a banger. We just got to sit here for a quarter or two. It's going to be great.

Is part of the issue that tariffs and trade balances are just so complicated that it, it's almost impossible for anybody to fully understand, much less somebody who's just sort of passively reading the news or not involved in it. Because I've gotten messages today, you know, I got a message from my mom who is, who is, you know, just basically seeing everything red, just being like this is bad, you know, and so like there's this sense of this, you know, people are going to have this emotional reaction to the market because it's the most like real time indicator of sentiment. But do you think the administration could do a better job sort of communicating? You know JD Vance was on TV earlier and I think he had some, some pretty good comms around tariffs broadly. But do you think there needs to be better communication on why this is happening and how there, there might be some, you know, you know it very well could have a very positive long term impact.

Yeah. And I think they can be communicating to the American people a little bit better. I think the communication that's come out is actually pretty good. It's just that it hasn't reached many people. And you're right, they just see like stock go down. But I think over the next six to nine months I think it's going to be incredibly positive both for S and P and Dow Jones and da da da Nasdaq and for the actual underlying real economy. But yeah, you know it's like you feel pretty bad going to the gym for the first four weeks when you're a little bit overweight and then you start feeling good in the first four weeks, feel pretty bad because you're like wow this is really tough. And then you realize okay, I'm just out of shape.

You know we're gonna repping two plates.

Yeah you gotta. And then we'll be repping plates. You know Jay Powell drop the hammer and we will be deadlifting.

You know Jay Powell's the creatine.

On top of exactly how as your as your phone been ringing off the hook from investors that maybe passed two years ago saying reindustrialization is not going to be a thing.

Anybody, anybody capitulating comment on whether or whether or not we're getting calls from customers trying to resource massive volumes from China and accelerating our factory build outs. And I also going to drop in a minute and I'm not going to make any comment about future or potential fundraisers in case the SEC wax me on the head with the band.

Yeah it's been great having you. We got to have you on more regularly to kind of track this story as it develops. This is fantastic than so much for taking the time to join and you're welcome.

Great having you on and thanks for having me. Back to capital. To capital.

Keep cultivating Chris Power over at Hadrian. We'll talk to you soon.

Bye.

In the meantime let me tell you about Ramp time is money save both easy use corporate cards, bill payments, accounting and a whole lot more all in one place. Head over to ramp.com. and we have a ramp investor coming on the show next. Delian Asprujov is joining partner at Founders Fund, co founder of Varda. He'll be joining.

Many people have called him a global expert on tariffs, trade wars, real war. The list goes on.

I mean, he's really dialed in.

He's dialed in.

He's also an investor in eight sleep nights that fuel your best days. Turn any bed into the ultimate sleeping experience. Go to eight sleep.com tvpn for an eight sleep.

Do it.

Get it, get it.

Oh, I put up fantastic.

I put up 100.

You did.

You're killing. I really.

Well, we got to ask. We got to ask Delian how he do. How he did because I know, I know he's on one and I know he hasn't been traveling. I got a 95. I was a little bit low on proof of work.

Look at this.

I got the 80. 95, 95. You got 100.

100, 100. Look at this. I guess. Look at this.

I was like a hair's breadth away. If I'd gotten two more minutes of sleep, I would have gotten 102 more minutes. But you know how to keep the. Had to keep the alarm at 5:40am Got to get up, got to get in the gym.

Got to start where you get up.

You get up an hour after me.

After you. Yeah. But you go to bed two hours before me. So you know, it works out.

True. Anyway, somebody's got to be up late just Texting to get 10 guests on a single episode. Yeah, it's not easy.

Exactly. It's hard work. Anyway.

Yeah. One thing I, one thing I wanted to ask Chris that we didn't get to was what, what does Nike do here? Do they figure out how to make shoes in America? I know they have probably some American made shoes, but it's certainly, it's got to be less than half a point of of their revenue.

Okay.

Delian is out. He. We just messed up the invite, got double booked. But let's go through more tariff reaction because I want to talk about Tyler Cowan's Liberation Day post because I think he gives. I mean, obviously Chris Power at Hadrian lays out a very, like a very reasonable and bullish scenario. And as someone on the ground building a factory, it makes a ton of sense. Like it's his thesis that he's had for years.

The thesis wasn't actually predicated on massive global tariffs.

Yeah, no, no.

It was more so predicated on we should make things in America, specifically products necessary for defense Manufacturing, Yeah, right, yeah. Aerospace, yeah. Sort of super critical industries.

But yeah, it's interesting to hear the other side of this, kind of the more buttoned up economists take. And so Tyler writes that markets have responded accordingly with the Canadian currency hit especially hard and spa SP S and P futures sinking immediately. And we saw the market actually did sell off quite a bit. I'm not exactly sure where it is now. Maybe you can hop on public.com and check that out. Investing for those who take it seriously. Go to public.com and sign up because I actually would love to know, like what, how is the market trading during the day? Obviously we saw it opened down 5% and, and some stocks were hit very hard. But I'd like to know overall how things played out.

S And P is down 4% today.

4%. So a little bit of a pop off the bottom, maybe bouncing along the bottom, the dead cat bounce as they call it, potentially. It's interesting, you know, be greedy when others are fearful potentially. Or maybe get everything out while you can, who knows? We don't give you financial advice here, we just yap and you make up your own decision anyway. With President Trump, one never quite knows what one is going to get, says Tyler Cowan. So any assessment needs to be provisional. But that is a big part of the broader problem. High and persistent uncertainty about the basic rules of the game. And this was the question that I was going to ask Chris if he had a chance to stay on longer was okay, I understand that you're excited about the current, like what happened yesterday, the breaking news.

But and to be clear, it's phenomenal for Hadrian.

Of course, of course.

Like I'm sure they will have more customer inbound today. 100% probably. Any other point.

100% because I mean there are, there are young company, they are using American labor, they're based in California. Like things are expensive. There are a lot of places where, even though Chris is great, he's a really great founder, like there are just structural elements that make his product less price competitive. And he wants to get there with software and automation and eventually get to a place where he's completely price competitive. He's always differentiated on pace of play time. If you're in Southern California building a defense tech company or an aerospace, an aerospace company and you need a part tomorrow, Hadrian will stay up all night, get it done and you won't have any of the shipping times. That's been the key differentiator. But now it seems like he could potentially be more price competitive. But the question that I wanted to ask him and what we were talking to Ryan Peterson about yesterday was, is there is. Is what's going to happen with this rose garden and this reciprocal tariff framework? You might have seen some of these, like, mathematical formulas floating like, is this enough of a framework to bring confidence to the market? Because there's a. There's a huge difference between, okay, it's, it's 20%, it's bad, we're ripping the banding off, band aid off. But you know that this is the end of the story.

It's 20 forever.

You can plan for that, you can update your Excel models, your financial models. You can plan for that versus it's 20 today, then it's 10, then it's 15, then it's 50%, that it's 10%. Like chaos.

And this is like two people pointing a gun at each other, you know, sort of waiting, no more, no more. The James Bond day is over. James John. But the squirt gun down. And anyways, it's like, who's going to sort of make a move?

He's going to blink first. Yeah, yeah. And, and what's interesting is that I think that, I think that this is potentially enough of a framework to understand where, okay, all I need to do is monitor, you know, what is the reverse tariff? How much would it cost for me to import my product to the country that I'm making in it, Making it in. And then I can expect that that will be the tariff that goes the other direction. The question is just like, is this a. Will these tariff rates stick around for years, for four years at least, or maybe eight years, who knows? Or is this going to be something where literally every single one of these countries comes to the table and starts renegotiating immediately? And we're seeing tariffs jump around all over the place, week to week, and we're seeing, oh, turns out, like, Swiss, Switzerland came to the table and they cut their tariffs so that now Switzerland, Switzerland rates are lower. And like, all of these different things happening, like, you imagine that there's going to be big discussions between China, Vietnam, like the major countries, but it could be all of the countries. And so that uncertainty, I think, is something that businesses really, really detest because it makes it really hard to plan, especially things like Capex. Right?

Yep. So this is a good line. Like a game show host. Trump announced a series of tariff rates on many of America's major trading partners. How did he come up with the rates? It seems by a crude formula, a given nation's Trade deficit with the US divided by the nation's exports to the US there's a base rate of 10% to be applied to the UK, Costa Rica and some other friendly nations. For India it is 26%, for Japan it is 24% and for the European Union it is 20%. And the most incomprehensible are those on Vietnam, the new tariff rate is 46%. Sri Lanka 44%, South Korea 25%, Cambodia, 49%. In Taiwan, 32%. Are those not some of the major countries we are expecting to hold China at bay? Do we not want Chinese manufacturing to end up moving to those in other countries so we are less dependent on the Middle Kingdom? What could possibly. And again, Chris was highlighting that, you know, some of these countries are basically sort of producing goods and then, you know, passing them through China.

And yeah, yeah, he was making the argument that it was that some of these countries are kind of fronts. I would be skeptical about the, about the idea that, you know, like 80% of what we import from Taiwan is Chinese made at the source. But I think his point is probably correct that there is some amount of, of product passed.

What he says, what could possibly justify the fact that Taiwan, which is a US ally being threatened by China, now faces almost the same tariff as China?

34% is a very, very good question.

Trump calls these reciprocal tariffs. And the claim is that we are taxing foreign nations at only half the rate they are taxing our imports. The numbers are illusory, however. Some of them apparently made up Brazil at only 10% and others counting a VAT as a net tax on American imports, which it is not. In any case, we will be moving into a future with higher prices, less product choice, and much weaker foreign alliances. The tanking of the stock market and other possible asset price repercussions may tip America into recession and increase joblessness. This is perhaps the worst economic owned goal Tyler has seen in his lifetime. I cannot think of any credentialed economist, economist, colleague, Democrat, Republican or independent, who would endorse it. And I haven't even mentioned the risk that some foreign nations will retaliate against American exporters, damaging our economy all the more.

Pavel Asperuhov had a great tweet about this. He said, texting all my close friends to go F themselves so I can learn to be more independent. Short term painful, but there was literally no other way. It's a good take that. It's like we're not making a lot of friends with this policy, folks. This is going to be rough.

Yeah. And one could argue that if you truly are America first, that means putting America above even people that are allies.

Yeah.

Pavel's point is that at some point when he was starting his company, he basically had to tell his friends to F themselves, so he could.

I mean, he's joking there, but.

No, of course.

But yeah. I mean, there was a little bit of that, for sure. I think this gets to this interesting idea of like. Like, this America first stuff is not just people think of it as, like, you're either like, a nationalist or a globalist. Right. Like, you're either, like, you should be able to manufacture anywhere. It doesn't matter where the jobs go. Have every company be completely global. It doesn't matter where the jobs are. And then there's the other side, which is like, everything needs to be made in America. And, like, I don't care about Canada. I don't care about the uk but then there's this. There's a. There's a pretty wide middle here where you have something like the five eyes and like, all the different allies between. I mean, we sell nuclear submarines to France, right? Like, they're a very, very close ally. And this is what Alex Karp talks about at Palantir. Like, the idea of the west and the idea that like. Like, yes. Like, if America goes it alone and China builds a bunch of allies through the belt and road and not only has more than a billion people, but also has a much larger economy when you bundle them together with Russia, Iran, all of Africa, a bunch of other countries, North Korea aside. And, like, tons of other countries are like, well, if partnership with America is off the table, all of a sudden, partnership with. With China seems a little bit more reasonable, then America could get really, really smoked. Right. And so there's this question of, like, how important are these alliances? How important is it to have friends in the global community? I'm obviously all for making American jobs viable and lucrative and fantastic, but, I mean, there is a cost to some of this that I think Tyler's right to point out. So where do you fit? Where did you leave off at damaging our economy all the more.

Yes.

Okay. So you might think there is something to be said for a reciprocal approach to tariffs. Usually it consists of cutting off your nose to spite your face, but it can sometimes work. It requires a president and Congress who is predictable and trustworthy. That's. Now how. That's not how foreign nations view the current administration. If you're wondering about the trade treatment of Canada and Mexico, that remains Cloaked in mystery, the threatened 25% rate on those two nations from earlier in Trump's term violates the NAFTA redo that was negotiated by Trump. Trump himself. Why trust in reciprocity here? Oh, and did I mention that tariffs, according to the Constitution, are supposed to be the province of Congress, not the president. Congress did voluntarily turn some of this authority, negotiate again, and we will be in for yet another round of tariff musical chairs. But it's not a game. There is real money and therefore real lives at stake here. And so he was not a fan. And I think that. I think that the tariff musical chairs could potentially be the bigger issue and the bigger fear here.

Bill Ackman. Yeah, the activist man posted earlier. Sometimes the best strategy in a negotiation is convincing the other side that you are crazy. And it is very possible that Trump is being very effective there. Logan had an interesting point. He said it was basically a meme that said, I'm adding tariffs. And it's a guy with a make America great again hat that says, this will create jobs. Trump. And then it's, I'm removing tariffs. He goes, art of the deal. I'm adding tariffs. This will create jobs. I'm removing tariffs. Art of the deal. And I mean, there are.

It sounds really crazy and copy but like, how many times have you been in negotiation where there's back and forth like, this does actually happen in real life. Like, it sounds stupid when you say it that way.

Classic, classic negotiation strategy is to, to start and just be completely extreme and.

Then know that you may on negotiation strategy. Do you buy into that philosophy? I have found and a lot of negotiation consultants that I've talked to have kind of advocated more for come in with something that's first, build vision. Make sure you're talking to the right decider, like the person who can decide, build a really clear vision of what you want the partnership or the deal to look like and then come in with something that's reasonable that you would accept. Never bluff and get a deal that actually sticks instead of just wildly oscillating. Say, I think their budget's 100 bucks, so I'm going to open with 300 and be prepared to negotiate down. That's actually like a harder way to get a deal done.

But I don't know.

What do you think about negotiation generally?

No, I aim for deals that I think are fair and great for all parties involved.

Yeah.

And then I'm very explicit if I feel like it's drifting into a territory where it doesn't make sense.

This is another thing interesting from Ryan Peterson. Eliminated from all countries as soon as the systems are ready. And so we talked about this a little bit with the TEMU de minimis shipping tariff from China, but apparently it's being eliminated from all countries. And so this idea of, oh well, if we can't do the TEMU exclusion in China, we'll just do it in Mexico and still slide in under that de minimis shipping threshold, well, it seems like it's off the table entirely. Yeah, the market's crashing, we're crashing our streaming software, but we're back up. Thanks for paying attention. Thanks for sticking with us as we continue to run the show.

Do you know if this charger is working?

Yeah, it was working for me.

You should, you should.

There we go.

There you go. We're back. So there's a quote from JP Morgan I don't know if we want to read through. This is pretty interesting.

On a static basis yesterday, which is more or less a lifetime ago.

Yeah. On a static basis, today's announcement would raise just under 400 billion in revenue, or about 1.3% of GDP. Static basis meaning like if all the goods stayed the same and people just pay the taxes, which would be the largest tax increase since the Revenue act of 1968. We estimate that today's announced measures could boost pce prices by 1 to 1.5% this year and we believe the inflationary effects would mostly be realized in the middle quarters of the year. The resulting hit to purchasing power could take real disposable income growth in Q2, Q3 into negative territory with the real risk of consumer spending could also contract in those quarters. This impact alone could take the could take the economy perilously close to slipping into a recession. We of course saw in Polymarket that the probability of recession is now up around 50%. Headlines about retaliatory measures about by U.S. trading partners are already coming out and we expect to learn more in coming days. The somewhat confusing nature of today's news, coupled with the uncertainty over how long these tariffs will remain in place should make for an even less friendly environment for investment spending. We mentioned that with the capex stuff though that is one way to narrow the saving investment balance imbalance and hence narrow the current account deficit. We plan to revisit our forecast later this week. So JP Morgan is not very optimistic.

Joe Weisenthal highlighted a chart from Polymarket. It's he says the odds of US recession in 2025 just jumped from they were sitting at 40%, jumped 25% to.

Did you see the Restoration Hardware CEO reacting live?

Oh, yeah.

Finding out their stock is down 25%. So Restoration Hardware was having an earnings call after the market closed, as one does, but it happened to coincide with this tariff announcement, which of course, Restoration Hardware, probably sources from all over the world will be very seriously hit by this. And he just has some expletives, okay. Oh, oh, shit. Okay. I just looked at the screen, I guess, I guess, you know, the stock went down, you know, based on some of the numbers we reported. And then it got killed because of. Oh, really? I just looked at the screen. I hadn't looked at. You know, it got hit with. I think the terrorist came out. And, you know, I think everyone considered 10k where we're sourcing from. So it's not a secret and we're not trying to disguise it by putting everything in an Asia bucket, you know, and he's just like having a really bad day. Rough, very rough. Logan Bartlett took us back a couple months ago from a quote from Stanley Druckenmiller, the billionaire investor. Stanley Druckenmiller believes Trump's reelection renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses. Quote, I've been doing this for 49 years and we're probably going from the most anti business administration to the opposite. Druckenmiller said on CNBC Monday. We do a lot of talking to CEOs and companies on the ground, and I'd say CEOs are somewhere between relieved and giddy. So we're a believer in animal spirits. That was certainly the case during the Trump pump shortly after inauguration and the election. But then things have been cooling off, let's say potentially in free fall because of how rough things have been. You liked this post by Trevor Scott. Tariffs on Bangladesh, Vietnam are like a hedge fund manager fighting with his cleaning lady to get the right back to clean his own toilet. Saying that, like a lot of the jobs that we've sent over there, America doesn't want. That's always, that's always, that's always up for debate. Because when, when America does something, we do it a little bit differently. We still wind up producing the product. Obviously, we use a lot of automation and the things that are made here. And there's been, there's been a shift to bring, yeah, you know, auto manufacturing back to the US And a lot. But although a lot of that's still done in, in Mexico and Canada. But it, but it, but it is interesting to see, you know, if there really is big onshoring efforts. What will those new factories look like? I would imagine that they are highly automated, at least. At least. Hopefully.

Yeah, that's wild. Apple's also down 9% today so far. Still just barely over the 3T mark.

Rough. But hopefully it doesn't affect Tim Cook's comp package because he was just scraping by.

Yeah, poor guy.

Yeah, poor guy.

Poor guy.

Should we go to Ryan Peterson? He says remember that these duties are on top of existing duties. So for China, you have the original duty of 7 and a half to 25% duty from section 301, then 20% from earlier this year, then 34% today and 25% for China's purchases of Venezuelan oil. So it's over 100% just in the past few years based on. On Chinese products. And so we should see that work its way through the economy. I do, I do wonder. I mean, a lot of Chinese products, like, they're just so cheap that even if you double the price, it's like, well, a DJI drone is still going to be cheaper than a GoPro drone because like, they were never price competitive to begin with.

Yeah.

But it will be interesting to see, like, this is all just news right now. It's not really something we're feeling, but the next time I'm like walking around a Best Buy or scrolling on Amazon, I wonder if the prices will actually shock me. It's kind of unclear. I don't think of myself as like shopping that much generally, let alone shopping for international goods. But again, so much stuff comes from abroad. But a lot of times the things like, I mean, these water pistols that I bought, they're probably like $2 and if they go up to $4, like, like it's hard to notice that you're still just like, wow, that's the cheapest thing I've ever seen. Like, a lot of the prices were suspiciously cheap, honestly. Like we talked about this with Temu where Amazon launched a clone and they were saying like, okay guys, if you're gonna sell couches, the couch can't be more than $25 to be on this app. And it's like, I don't know if I would even wanna sit on a $25 couch. Like, that doesn't seem safe. They were like, guitars can only be $8. It's like, I feel like a guitar is like a hundred dollar item, right?

Yeah.

So like, if that doubles to $16, would people still notice it? I mean, certainly there would be an effect on the economy. Like people would Buy less guitars. This is just supply and demand. Obviously demand for guitars is not fully price inelastic but it is just very funny that some of these prices were so, so low. I mean Nike, you know, obviously the cost of goods is going to get is going to go way up but I feel like Nike shoes are $100 plus and so if those go up, you know, people are still going to want to buy Nike. Maybe it's unclear to me. I mean it certainly hurts their margins, certainly hurts their business, but it's unclear.

What it actually it's just interesting. Again it's hard because Nike react with how many shoes they need to make and then not having. If this was going to be, if these tariffs were going to be steady state indefinitely, they would have to make massive, massive changes. But if they think they're going to be rolled back, it's just.

So I was thinking about ways to capitalize on this and I think the price of billboards in America probably unaffected by these tariffs. So you should go to adquick.com, out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising Billboards folks only Ad Quick combines technology out of home expertise and data to enable efficient seamless ad buying. And yeah, I mean if you have an American made product, like you really should buy a billboard right now and you should tell everyone because it used to just be yeah, rah rah America fourth of July, like we're made in America. There are plenty of companies that have been beating that drum for a while but now is like really, really the time. It'll drum up investor interest, it'll drum up employee interest. Like if you are, if you are long America, like it's a great time as we saw with Chris and Hadrian. Anyway, there's another post in here I want to go through through. I want to finish out some of Joe Weisenthal's thoughts. Yeah, let's do that. Okay, so this is Joe continuing writing in his Bloomberg newsletter. He says okay, well maybe we shouldn't set economic policy for the whims of the stockholding class. Yeah, I'm down with that. But what's interesting to me too is just how reviled all of this seems to be across the board with the only real specific voice of support, the old legacy industrial unions which are not a big part of the economy. Again, go back and look at the comments from the manufacturers in the latest ism. They all hate it. Or go back and look at the comments from the latest survey of oil and gas companies by the Dallas Fed. It's just really hard to find a major material constituency for this level of trade. And the reason it's hard to find big supporters of this policy is because the logical or sequential link between trashing trade and creating new wealth is very hard to see. What are the new growth industries going to be? Who is going to finance the redevelopment? China famously crushed its own real estate and Internet sectors a few years ago, but at the same time, it directed its banks to lend more aggressively to its hard tech and manufacturing sectors. And so I think Chris would say, yeah, that's exactly what we want to do. We want the government to direct the banks and the venture capitalists to lend more aggressively to hard tech and manufacturing sectors. And we're kind of seeing that. But it's interesting because we, I don't think broadly in America, people believe in the American dynamism movement. Yeah, I think in B.C. people think it's cool. I love, and I feel this way where it's like, yeah, we're talking to a kid from Stanford today who like makes laser weapons. And I was just like, that sounds awesome. But when I really think about it, I'm like, look, I don't know if you have a real business. You probably don't. You're young and you're just figuring it out. And I don't know if there's like a program record and a really good easy way for you to scale this business up and create a power law company, blah, blah, blah, blah, blah. But I just think it's cool. And I think that's how a lot of people perceive these hard tech and manufacturing projects. They're like, it's a cool science project. I don't know if it's going to work out, but I want to support it. So I'm just going at it. Whereas I think, I think China was a lot more rigorous about. This is a good financial bet for us. We're going to lose a lot of money in the short term, but we're going to gain a lot in the long term. And I don't think as a country we're thinking like that yet. Like, there's a lot of people that go to the re industrialized conference and they're like, this is awesome. I hope it happens. But like, I'm not really going to pull my money out of fang to do this.

Right.

I'm not going to move, you know, $100 billion over for this. There needs to be the AI narrative for it to get like the Masas of the world to do it. And then even when Masa does it, you have plenty of people that are like, this is a top signal. This is too crazy. It's impossible. And I don't think they were saying that in China.

Yeah.

Which is interesting.

It's a fascinating situation right now where so many people in our industry and in our corner, the Internet broadly think this is just a terrible idea. We have some people that think it's great, but a lot of smart people think it's a bad idea.

And.

And I'm sort of sitting here hoping that the admin as somebody that ultimately wants America to win and thrive. I'm hoping that we're at a very crazy time right now, but I think I'm sort of hoping that the admin has a crystal ball that the rest of us don't have and is clearly they were convicted enough and in this initial decision yesterday to go out and do this press conference like the first time they're doing. Yeah, that's true. It's also true. But yeah.

Let's continue with Joe. In fact. Oh, I think we got our next guest coming in. But first, let me tell you about bezel. Go to bezel.com getbezel.com Buy a luxury watch, folks. I know the stock market markets down, but there's never.

Yeah. We were talking with Quaid yesterday after the show, but you know, prices are going to have to go up.

Yeah.

From ads. But if you go move quick on marketplaces like Bezel, it's very likely that people won't immediately price reprice their.

Yeah.

Their watches. So it'll be interesting to see that.

The market goes down.

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Thank you to Bezel. Coming into the studio, we have Akel from SHIELD Capital. I'm very excited to talk to him.

Boom.

Yesterday. How you doing?

Good job. Good. Jordy. Good to see you guys. Thanks for having me on.

Yeah, thanks so much for taking the time. Would you mind just giving us a little brief overview, maybe some of your history, what you're doing now and just kind of generally how your week's going.

Yeah, absolutely. And a great discussion prior to, I think a good tee up to what needs to happen by 2027 and what needs to happen by 2020, by 2049, when it comes to our own national industrial base. But by way background. Akil. Yeah, from. From Buffalo. Originally did RTT in college, wanted to go serve. Had the opportunity to serve in the Marines as an infantry and special operations officers. Left my time in active duty in 2019, like many other vets, Brandon included, that you'll have here soon. Both amazed by the type of technology we had that the US and its allies could provide and also incredibly frustrated by the lack of some of the basic commercial tools and had the opportunity via some mentors to connect and help build a new fund, a new venture capital fund, SHIELD Capital, where our focus is this nexus between commercial technology and national security. We cover early stage, so as early as a dream. And a team on day zero across autonomy, cybersecurity, AI and space. That's great.

Jordy.

You want me, I mean, I'd just be interested to get your immediate reaction to the news yesterday. And then we got a bunch of other questions that go into did you have an immediate reaction yesterday? Our point of view, I'm sure you heard, is, you know, it's hard. Some stuff is going to, you know, go poorly. Some stuff, you know, some, some groups and companies and industries will benefit. But I'm curious what you thought.

Totally. Yeah, I guess I'll, I'll reemphasize. The point that I, that I made to start off it is we had to look at this near term 2027, this Admiral Davidson window, for those who are familiar with it, how do we protect our interests in the Asia Pacific region and how do we look at it in 2049? Structurally. Right. So tariffs, whatever you want has immediate near term structural effects, but a lot of that's not. We are going to have the industrial base we have by 2027. Right. That's not that, that's 18 months from now. So we have to figure out what we can do with the capacity we have. And I'm always reminded by, you know, Churchill's quote, while America might be first, the only thing worse than fighting without allies. I'm sorry, fighting with allies is fighting without them. So there's an aspect to that. But ultimately, how do we make the structural changes long term? So as we look at this 2049, particularly as again, looking at this in the national security context, how do we beat and win out technologically, geopolitically, against the prc, what that structure looks like far beyond four years worth of tariffs?

Can you break down the significance of 2027 and why we need to be sort of like orienting our defense planning around that date just for obviously people in the, you know, understand it, but a lot of our listeners are, you know, in other industries.

Absolutely. Well, you know, this comes originally from Admiral Davidson who used to, prior to his retirement run the Indo Pacific Command. So this is the Asia Pacific four star Command that's really in charge of protecting US interests and deterring would be adversaries, namely the PRC from conducting actions, whether that's Taiwan or elsewhere. And 2027 came about as this sort of potentially vulnerable moment in which we as a nation and those that willing, that are willing to support us to be ready to defend our interests. And so you'll see that a lot in the narratives and you'll see that a lot in terms of what capabilities can we really deploy at scale and at speed to defend our interests come 2027? And that stands obviously that's super near term guys. Right. Only so much can get done within that period. And so there's this two horizons, just like any coming from the venture world. Right. You want entrepreneurs to be looking at multiple horizons, the near term one, but then also look for what that long term structural changes will be. And so that's the 2049 and really that's, that aligns with the, you know, hundred years of, of the Chinese Communist Party.

Can you talk a little bit about Chinese competition with regard to robotics? There's some high flying startups in America, there's some just young hacker kids building cool stuff, a lot of awesome demos. But it feels like the financial markets aren't taking humanoid robotics as seriously in America as they are in China. Is that a mistake? What are you seeing in humanoid robotics?

Yeah, great question. And I'll tie together with AI just because there's just so much intersection between the digital AI world and then AI applied to hardware. Right.

Yeah.

I grow increasingly concerned that we are just frankly behind. Yeah. In terms of the model development, the application of hardware and the synthesis therein, both from a hardware standpoint, from the software standpoint, and then critically the ability to test. I mean part of it is just let's get the things out there. As a prior Marine, I'll always remember we get taught in sort of military history class. The French had better tanks when World War II started, but who tested them better? It was the Germans. Right. They just got them out there and they just started testing with them and experiment them at a pace and scale that was far greater than anyone else. And so you see this environment now and you Know, a lot of the things that need to happen are actually regulatory in nature. Right. How do we reduce the barrier for folks to actually go, go, go out and test either all sorts of robotics applications. Right. It doesn't actually have to be pure humanoids. It can be autonomous systems too. And then how do you combine that with actually getting some of these deployed, you know, at a scale that you need to. The last point I'll say specifically around robotics and autonomy is that I don't think, well, let me say from a capital deployment perspective, I think there's a real interest in. You had some folks come on last time last week when we talked about defenses, is being willing to make some really big bets and be able to provide the necessary capital to help them deploy at speed and scale. Obviously we're an early stage small fund to start off with. We have big dreams, but we want to be a part of that journey, particularly if that journey is here in.

The us that's very cool. Can you talk a little bit about logistics and just how can we increase resiliency there and what startups are kind of tackling that or how should they even think about tackling that?

Yeah, great, great question too. Let me start framing it by. I look at the defense national security, space and again we at shield, we think pretty broadly when it comes to national security, right? So that is anything that touches autonomy, AI, cyber and space that has an application to both. When I think about the national security context, it's how do you sense, make sense, affect and sustain. Sense is easy, right? That's that satellites like Topher came on one of our portfolio companies, right. He's sensing the environment and making sense of it. How do you affect it? So what are you actually going to do about it? And that could be something physical, that could be Brandon and Shield AI drones, or that could be non physical digital in nature. And there's this and then there's a sustainment part. And I think this is just such a huge opportunity. There's a lot of companies working on it and so much more to do. And I specifically call it sustainment, not logistics for a couple reasons. One, this term of contested logistics, while important, doesn't get to the root of the issues, which is how do you both operate in a constrained environment? So how do you do things when you know you're going to run out of fuel or you're going to have these certain constraints and then what are you going to, how are you going to sustain it more broadly, not just from a physical movement. So there's two aspects.

There's a.

There's a very physical hardware component to it. We need just more munitions. We need more capacity here to do it. Knowing though back to the two horizons, by 2027 we may not have all of that. So you just need to be able to digitally operate and be more efficient with the things that you might have now or within 18 months. And so I think there's just so many opportunities here in terms of how you deploy at the edge. So what capabilities do you decide to go produce in the edge? Being some location where it's just easier to get to. How do you combine the two together? And then how do you use artificial intelligence to actually optimize it all?

How do you think about 2027 as a wedge for new defense tech? You know, companies that are emerging, A lot of companies come in and they're just focused on legacy systems. Like I want to build a better version of this missile and I think I'm going to be able to get a contract because the, you know, the DoD doesn't want extreme vendor dependency on like one or two old primes versus, you know, looking at 27, 2027 in Taiwan and saying, hey, we want to build a capability for this specific potential conflict. And is that an opportunity or is that not even the right way to think?

Yeah, I mean, a lot needs to happen in 18 months. Right, but that's not the only timeline. I thought you brought up some great points in the group that came last week about trying to build a feature within the defense space. There's only going to be so many andurils, right? Yeah, there's only be so many that can speed and scale. Now do I think there's more opportunity to do so? Absolutely. That's why we're in this business. It's not the only business though. I think there's a lot of enabling features. To your question, some of the most interesting things that I found from say the conflict in Ukraine weren't necessarily the missiles and drones. It's how did they move their administration to a digital environment using outposts and snowballs to actually make sure that the state functions. You wouldn't necessarily think that it's like core national security, but to me, that absolutely is half the challenge with a lot of the AI applications is you don't have the models accredited, you don't have the models deployed in a way that they can actually be used. And obviously that has a compounding advantage. The more times you can get hardware, the software and the data together, but directly to Your question? I mean, I still think there's a ton of room. Right. There's a really unique moment in time, especially now with the desire to want more startups within the ecosystem. My colleague just testified to the Senate panel with regards to Cibber reform. So how do we actually use our small business innovation research dollars to actually incent. Not necessarily just small business or ones that are churning that through, but the ones that actually want to go and scale it and go scale to something bigger like a traditional pilot program should be.

Can you talk a little bit about Edge AI? We've seen the Studio Ghibli moment. We've passed the touring test. Waymos are driving around. Is there something that we should. We've seen those drone shows that seem like, okay, that's a weapon system. What AI kind of Studio Ghibli moments are we waiting for in Defense? Is there anything that you're excited about in Edge AI?

Yeah, you know, with you guys at Founders Fund, we're invested in a company together called Armada and it's really kind of giving me a new glimpse into what not just Edge. So Edge being where am I going to deploy compute again, go back to the sense, make sense of the environment, but how am I going to connect together with some cloud based. Right. It's always going to be some disaggregated network there. But what I'm excited about is, I mean there's just so much that can be done with smaller models and with reasonable compute. Knowing that we're only going to get so much compute. We talked about tariffs earlier, right? There's, there are those bottlenecks that exist. We're not going to produce the best in semiconductors overnight. And so we have to be able to do more in those environment. And you know, Anduril is an early pioneer at that in the national security space. How do you bring computer vision and other aspects of sensor fusion with other modalities together? And that's just only the start. So I'm super excited by that and I think it meets a lot of the customers where they're at, not just for national security. Right. People are worried about cloud bills, people are worried about how much like what am I actually getting for AI return on investment with all the compute that goes into it.

Do you think there's enough private capital going into defense tech? Broadly? There's been talk of, we've seen over the last year investors that have no background in national security sort of fomoing into the category, but maybe that's actually good for America because We just should have more private investment coming in.

Yeah, I guess. Let me first say I'm glad that there's more people interested. I mean, I don't think you need to have a military background to do this. I think there's amazing American patriots that just want to get involved and they have really core technical skills elsewhere. I think it's helpful that, you know, folks came from the visceral operating experience, but that's not necessarily necessary nor arguably is that. Is that why you should go pursue that path, right. Go serve because you want to go serve and you want to go defend the nation. It just so happens that I came out of that experience having some really, you know, interesting insights that I thought I could go leverage and go help out, you know, with within the space and be able to support actually my. I love, most importantly, I love when non military, non national security, just amazing entrepreneurs and technologists just want to go tackle these problems and we're able to help them out. I'm not the best when it comes to, you know, what's next in computer vision or distributed models, but you know what? I can help you find the right customer set or identify the right contract vehicles. That's what our fund does. And so that part's actually most exciting is how do you get the folks who may go to Snapchat working on some background filter to actually work on some really cool problems within national security space that have the same technical aspects.

I think our audience is probably familiar with the idea of if you're starting a defense tech company, you might start with some SBIR money, then you're kind of sprinting towards program of record. Maybe there's the Valley of Death where you have something that's working, but you're not ready to really start producing it at scale. What are the other pools of revenue that defense tech entrepreneurs should be thinking about? And can you give us a little more granularity or sense of scale of how should I be thinking about an sbir? How should I be thinking about a program of record and everything in between?

Yeah, absolutely. I'll keep it quick because I know we're on a clock here. Let me give you a financial answer and a non financial answer. I think both are important.

That's great.

The first is right. It's not just sbirs and program of record. Right. And you saw the Secretary of Defense's memo around use of the newer software acquisition pathways and specifically other contract vehicles or other transactions to help facilitate this. And that's exactly what organizations like Defense Innovation Unit Are there for. So there is this middle ground that I think is being tapped now far far greater by the new entrants within the national security space. I'll give you a non financial answer too. Sometimes an unpaid pilot is super helpful.

Oh yeah.

Going on a crada, which I think you know, Saronic and others had done in the early days. Access to data, access to testing environments is just as important. Particularly for those within the Autonomy space. Right. That need to go test and validate, get access to the right data or just have ranges where you have at least. At least a little lower barrier to entry when it comes to flying, certifying, et cetera.

That's great. Last question.

No, this is great.

Yeah, this is so. This is awesome. Thank you so much for stopping by.

Yeah, it's great to have you.

Thanks guys.

Thanks for having me back.

Yeah, we'll have to have you back on soon. Thanks so much.

Yeah, we'd love to. Cheers.

Talk to you soon. Well, next we got Phil Ernstein from Dirac coming in the building. We'll see when he gets here. Any minute now.

Do you remember my brutal mispronunciation?

Oh yeah, what was that again? Was it that you mispronounced his name or was that you called him a kid and he was upset about that? There was something.

It was probably both.

Now is your opportunity to say you're sorry. Mea culpa.

I did. I did.

Yeah.

We made. We made up.

Never apologize. I always claim victory.

I always claim victory.

More correctly than you pronounce your name. No, I love Phil. I met him must be a couple years ago, probably through Augustus. And I think he moved out to El Segundo. Was like sleeping in the factory with Augustus, getting the company off the ground. But has done some amazing work building out his business. And we're excited to talk to him today. So welcome to the show. Phil, how you doing?

Boom.

Living life.

Life's good.

Rocking and rolling. We're out here in New York. Very apt introduction. Thank you.

Mr. Coogan. Yeah. I heard you're in the Empire State Building, is that right?

That is correct.

Fantastic.

We are in the capitol building of the capital city of the Empire. What better place to help rebuild the American empire? If I take my camera and pivot behind me, you can kind of see overhead.

That's the view.

I love that yards back there. That's lovely. A little bit of a foggy day, but on a clear day you can actually see New Jersey.

Very cool.

We've intentionally positioned it such that we can keep an Eye on them, make sure they don't invade.

Okay, okay. Yeah, yeah. A little Manhattanite nationalism. I like it.

Have you thought about getting. Have you thought about trying to get logo rights on the building?

Yes.

Funny enough, if you text like one of those five digit numbers, you can actually get daily updates on how they'll change the colors for the building.

Oh, really? Okay.

You know we got something cooking.

Yeah, you got to get like an iconic colorway for the company so that when you throw it up in the building, everyone knows these guys are working late tonight. They threw their colors up on the building. You know, like Ramp owns yellow, YC owns orange. You need to pick a color.

You know, we're building the blueprint to the future. So maybe blue, Some variant of blue.

I love it, I love it. Just, I mean, we jumped right into it. But can you give a little background on like the company, what you're building, where you are in terms of kind of stage and size?

Sure. Give everybody a little bit of background about myself. Background's originally in electrical engineering and robotics. Was over at Northrop Grumman for a little bit. Got TS clearance. Worked on some pretty cool radar stuff over there. Did a little bit of EE work, a little bit of mech e work bit, a little, A little bit of technician work over there. Just got to see how absurdly archaic all of the infrastructure was on the manufacturing side of things. Was starting to get the feeling that the west was forgetting how to build great things. And I wanted to make sure that that didn't happen. So got my best friend and co founder and went out to go start Dirac. So as a company, we are building the first automated work construction plan. Sounds like a very vague, very niche thing, but turns out everybody actually has had experience with work construction. If you've ever built like IKEA furniture. Oh yeah, A little paper instruction book that tells you how to build a thing. Turns out that is actually basically how they make missiles and cars and everything in between. So that process is like imagine you're a dune to factory. Somebody says, here is a CAD file or a 3D model of like an engine. Go figure it out. Like literally go figure out. They will like pull this assembly apart. They'll figure out what order to do the assembly in. So super duper manually, take hundreds of screenshots or photos and then throw all that together into a several hundred page document or word doc or PowerPoint over the course of weeks or months. Super brutal, super manual. Sounds as awful as it is. Almost as bad as being like a McKinsey analyst with like 100 page PowerPoint. It's like making an IKEA slideshow by hand.

Yeah, yeah. I think we saw this week some videos went viral of folks painting artillery shells by hand. And, and the artillery shell moves from one station to the other. And there's the basic commentary was like how are we still doing it like this? This is not great. But you could imagine some work order system was built at some point for that and that kind of concretizes what you're building. So yeah. How's it going? Where's the business now? Are you live in public beta? How much does this thing cost? How does the business actually work?

Right. So what CAD, you know, CAD software was for mechanical engineers. We're building basically that 21st century update to the process for their blue collar counterpart. Firstly called the manufacturing engineer.

Got it.

We price pretty similarly. We price 5k per seat per year.

Okay.

A seat based system. We actually. Great timing for me to come on the pod and chat with you guys. We actually just went live and announced Buildos V1 yesterday. You know, fully live. We are now enterprise grade.

Congratulations.

I talk compliance.

Compliance. We love an ITAR client company on the show. Congratulations.

Ah, epic. Thank you fellas. So yes, we can now deploy on prem to defense customer. We're already working with some defense companies, working with a bunch of automotive companies. We love tier one through three suppliers. OEMs got a bunch of really cool companies that are not just you know, aerospace and automotive. These are like the two, the only two industries that apparently most could be think exist. But you know, we're working with like agriculture, construction manufacturers. These are companies that like recent, recent one that we just started working with super cool company called Sputnik. These guys make the potato harvesting equipment.

That you drag behind the Sputnik.

I love it. Sputnik. It's the Sputnik moment for potato farming. Apparently they're saying yes.

So we're, we're off to the races. Product is live, we're deploying.

Congratulations. What is it like deploying on prem? Does that mean you have to package your software up and send them like a CD or, or floppy drive? Like not the cd.

The, the caveat here is that they have to have their own cloud based resources themselves. Got it.

So you can still interface with APIs as you need to?

Yeah, yeah. It's. It's a little bit more complicated than that, but I'll sort of leave it at that. Like they have to have some sort of like cloud based infrastructure. Okay. Deploy it by a terraform. This is a thing we can now do, ladies and gents. Oh, cool.

Yeah, it's, there's process for it.

I'm sure you've been talking to your customers constantly as one does, but what's their broad reaction been over the last 24 hours? Are people, I imagine some of your customers are super excited about the tariffs, others unsure, others negatively impacted in varying ways. But you know, give us the update there.

Yeah, so on the whole tariff thing, man. So some of our customers are a little bit upset because prices are going to go up for them. It sort of depends where you are. Industry.

That's. Yeah, so that's, that's like the input costs are going to go up because maybe they're sourcing in the short term.

In the short term, you know, they're pretty upset about that on a couple of different vectors. But it again depends like if you look at the, what's really cool about like our company is we get to see like the widest varieties of like the coolest CAD files, coolest assemblies you'll ever see. And so you know, if you look at like the hierarchy and the structure of a CAD file, it's very tree like. And so that hierarchy of like an assembly of sub assemblies, of sub assemblies, of sub assemblies really neatly mimics the supply chain of that product. There's some really, really neat, novel insights that we get to see. And so if you are like a, one of those sub assemblies, you're called like a tier one through three supplier. If you're making like the top level thing and you're like, you know, an Anduril or a Toyota, you're an OEM. The OEMs are a little bit more upset than the Tier 1 to 3 suppliers from what I've seen. So more broadly, material input costs are closer to the Tier 1 through 3s than the OEMs. The OEMs get the final markup, which is sort of like a pain. And so that's kind of what we've seen. But I think by and large people are short term upset, long term pretty excited because what it means is it's going to force a lot of capital to be allocated towards rebuilding domestically, which is honestly what a lot of the folks that we work with want. Right? You want your supply chain proximal to you, you want to have expectable lead times. You know, that's been like one of the, one of the worst things that a lot of folks we work with have seen.

So for a company, for an at scale company like you know, like a prime, like Northrop. What percent for the average product at Northrop? Do you have any sense of what percentage of the parts that go into a specific end product are American made today? And do you think that companies at that scale are going to feel like they need to react and even invest in some of these tiered suppliers?

So I don't have a perfect number for you, but what I do know is that companies like Siemens, companies like Stellantis, these are companies that are global in nature and actually not like traditionally headquartered in the US and we're seeing a lot of them shift more of their production to the US immediately. Like over the past couple of months we've seen huge announcements from Siemens and Stellantis to move production to the US and open up new facilities, triple down on, you know, American based production. Because if you are selling to the American market, you want your cost to be as low as possible. And so it only makes more sense to have your production be domestic. So yeah, yeah.

How do you, how do you think about. I feel like one of the bottlenecks to Dirac's growth. I said that right, Correct. Dirac, Dirac, Dirac. I'm gonna get it this time. It's Iraq with a D.

One of.

The bottlenecks to Dirac's growth is gonna just be having enough. If you're selling by the seat, having enough manufacturing engineers. Right. I don't, I wish I knew more myself. How do you think about kind of like the talent equation to solving, you know, to re industrializing.

So there's okay, I can get on my soapbox. There's like a couple, there's like two.

To three pieces of this. Get on it, get on it, get on it.

You know, broadly kind of interesting, the number of manufacturing. I'll give you a little bit of like the history lesson, please. The blueprint in general. So basically until like the like early 70s, mid-70s, engineers and manufacturers were connected by one thing and that was the blueprint, right? Like classic Cyanotype blueprint that you imagine in your head when you say blueprint. And then like the, you know, late 70s, early 80s CAD software emerged and became ubiquitous. And basically all of the mechanical engineers who were on the shop floor, super well integrated production, they were more blue collar than white collar generally. All of them basically moved to the back office, went from being generally blue collar to white collar. And basically since then like manufacturer, like the mechanical design had become like totally divorced from reality. You often now have like mechanical engineers never going to shop floors oftentimes designing systems that are generally, like, not manufacturable. And so the blueprint was basically like, fractured into two parts. CAD software on the design side, work instructions on the build side. CAD software got a ton of upgrades for 50 years. Work instructions never did. That's what we're working on. And so when that happened, you also saw like the, you know, the archetypal mechanical engineer also fractured, you know, fractured into two different people. Like the mechanical engineer that's like your more typical design engineer and a manufacturing engineer. So actually, if you look statistically in the US There are actually roughly the same number of mechanical engineers as there are manufacturing engineers. So there's like around 300,000 of these folks in the U.S. i mean, globally. So it's actually like a really big popular job. It's just like, you know, this is where you would, like, get a mechanical engineering degree. And like, you know, half the time people will just go into manufacturing engineer. And so there was an enormous. So back to like, the portion of the labor base. These are the folks who will get a CAD file and like, figure out how to put this thing together. And their documentation systems suck. I mean, it is like, oftentimes if it's not PowerPoint or Word, it's a post it or like the back of their head. So what we've been seeing, unfortunately, is, you know, especially post Covid, you know, a lot of these folks are retiring. A lot of these folks have all this information locked up in the back of their heads as tribal knowledge. And so, yes, like, we're automating, like, a good chunk of the grunt work of making work instructions. You know, we take a CAD file in, we automatically figure out how to put it together, automatically generate 80 to 90% of the work instruction. But that 10 or 20% that we can't automate, that is like the tribal knowledge component. And that is what we serve as like a data aggregation platform for. So a lot of what we see is, you know, average age of the American manufacturers, like somewhere between like 45 and 55. I like to say 55, just to be a little bit more precautionary. And, you know, in the US we do not want cheap labor, right? We want smart labor. That's what we want to be advocating for. We want to build new technologies, and we want to build new manufacturing systems that take advantage of automation. But we do not want to, like, replace people in general. We want to augment and aggregate as much of their tribal knowledge and bake it into the systems that we use for the Next generation of American manufacturing. Like that's kind of how we see it. However, what we've seen like for our customer base generally speaking is you know, the classic question of like, oh like I buy like some Dirac software now because I can do the work of 10 people with one person, I can lay nine people off. And it's like no, no, no, it's actually that, you know, because nine of your people retired, you're still left with one. Now I don't have to shut my manufacturing facility down. So like that's where we see a lot of the value add and value generation. But also more broadly as a company, we're not just staying in work instructions. That's just, you know, where we're interjecting.

What do you, what do you think about MBAs, you know, buying small manufacturing businesses, rolling them up.

Last question.

Brutal. Brutal as a concept, awful idea. I'm actually generally pro engineers and manufacturers rolling up like SMBs, like mid market manufacturers. This is you know, I think a very interesting concept as a whole. If you were to like, you know, if you as a, as somebody with like a hardware background had a very specific like search fund for like pumps or valves and you like really knew who to like where the optimizations could be generated. If you came in and you were like, we're going on Google Drive, guys. Like no, more like writing stuff on post. Its like that could be very interesting. That's useful. But like an MBA comes in, they look at the P and L and they're like ah, like cut everybody over 50. And it's like no, the tribal knowledge, that's like where those guys knew how things fit together. You didn't write it down. And now your factory doesn't know how to build shit anymore. And now we're subservient, we're kowtowing to China and it's over and it's over. But we don't want that to happen.

Never kowtow. Never kowtow. Well thanks for coming on the show. This is fantastic.

This is great.

You gotta come back and you have more news. I'm sure there's gonna be a ton this year. It's a crazy time, crazy year. And we're excited for what you're doing out in New York. Keeping Manhattan safe from those New Jersey folks.

Yes, thank you guys for having me and I will catch you guys later.

Looking forward to the next one. Cheers.

Hello Phil. Greg. Dude, always.

What a guy. Very well spoken.

Yeah, just high energy, knows his business, lots of good takes tapped in. You Love to see it. Well, speaking of tapped in, we got Zach from Plaid coming right next.

He had some big news today.

Fascinating story, fascinating company. If you ever authenticated an oauth with your bank, you've probably seen the Plaid pop up. And he is here now. I'll let him explain his business because he probably knows him way better than I do. Zach, welcome to the show.

Hey, guys, thank you so much for having me.

Great having you.

Yeah. Can you give us a little background? Maybe brief introduction to the company I think most people know. But then specifically, what are you announcing today?

Totally. So, Plaid, we build infrastructure for digital finance. Broadly, the core thesis is banking was built for a world that didn't envision the Internet. We wanted to help people be able to get loans, open bank accounts, pretty much do anything in their financial life online. So we created the API for your bank account. You probably utilized it when you linked your, let's say, Wells Fargo checking account to the Venmo app. And any bank account that you linked to, pretty much any fintech company. We build the plumbing for all of that. Increasingly, it's not just fintech companies now, but it's the big banks. The way that you open a checking account with Citi goes through Plaid and then a ton of enterprises. So the way that you pay your rent with invitation homes or a bunch of those, all that stuff's going through Plaid. Last few years, we had a big change to our business. We historically just focused on bank account linking. Now we're very focused on kind of utilizing a lot of the aggregate data that's coming through our system to build things like a new version of fraud scoring. If we can see your patterns, you see that you committed fraud in Robinhood, we can tell Venmo that you committed fraud, we can tell your bank that you committed fraud, so on and so forth. We built a credit scoring division that builds alternative credit scores. We built a bunch of tooling to do better bank links payments. So it's been a big evolution for the business over the last two years or so. Yeah, yeah.

Talk about the time period. I guess it was, like, late 2022, 2023. Everybody just said, okay, fintech is over, but you obviously have, like, more better data than everyone. And so you could see that, like, no, in fact, like, fintech was not over, despite VCs, you know, maybe opining on podcasts. Yeah, Talking on podcasts. I'm sure you never lost faith, but I guess, like, talk about, you know, where we were a couple of years ago versus now.

Totally. I Mean, look, fintech had a winter. Crypto has winter as fintech definitely had a winter. Basically there's a crazy amount of fintech demand pulled forward into 2020 when people couldn't go into their bank, they needed to figure out a way to do financial services online. 2021, zero interest rate environment. You had things growing like crazy. You had tons of ad budget, so on and so forth. First half of 2022 is kind of a continuation of all of that. And then interest rates started going up in the second half of 2022 and in large part the fintech market wasn't prepared for that kind of change. Certainly not that kind of change at the speed with which it changed. A lot of fintech businesses were predicated on lending and lending slowed down quite significantly and a lot of them were predicated on, on investing or crypto and those markets slowed down quite significantly. And so you saw a slowdown of FinTech in the second half of 2022 and then kind of like a bit of lethargy throughout the first half and almost in the second half of 2023. And a lot of that was the businesses themselves, like retrenching, going into focusing on profitability, it was no longer growth at all costs. You got to build a model in which you're actually profitable. You're not just gross margin profitable, but your operating margin profitable profitable. And a lot of it was also like retooling from focusing just on investing and crypto to also doing things like core banking and a bunch of other services. And so you saw this whole rebuild of all of the fintech companies and then going to 2024, there was a rebound in 2025. You know, we've seen very much a fintech spring, as I like to call it. And so things are moving really quickly. There's a ton of startup formation at the earliest stages, in the mid stages, these companies have retooled, are now back to growth at the late stages. You're about to see a couple of IPOs. So Klarn is coming soon, we think. We've heard that China is coming soon. I've heard that a bunch of others are coming soon. And so it is very much a sense of optimism right now. But going through these cycles of difficult times, I think it makes companies and in our sense, I think an industry a lot stronger. But I can't say it's fun to go through.

Can you talk about stablecoins? How are you thinking about that in general? It seems like there would be some cross pollination there but also it's a wildly different industry in many ways.

Yeah.

And specifically, you know, you don't need to speak to this, but we were covering the Circle also brilliantly.

There's been a lot of news.

It feels like they benefited from some amount of a monopoly temporarily and maybe that's fading but just creates more opportunity for other fintechs, SMBs and banks.

Totally. Well, I haven't read the Circle S1 yet so I wish I could comment on it.

No, don't. Don't comment on that. To be clear.

Yeah, broadly stablecoins look huge opportunity in the U.S. if I want to send you money over the ACH system it takes three days. That doesn't make any sense. We have this whole new thing that's rolled out over the last few years called same Day ach. Great. I can send you money in the same day. There's an RTP system, real time payment system where I could send you money theoretically instantly. Except not every bank accepts it. It doesn't work universally. There's still some issues with it. And stablecoins I can just send you money really easily. And so there is no question in my mind that stablecoin is going to grow quite massively. I think there's still a question on consumer utilization. How is it going to get actually into consumer payments where no one's going to walk into a Starbucks and buy a coffee with their bank account? No one's going to walk into a Starbucks and buy a coffee with a stablecoin. Certainly not for any amount of time that I can think about, maybe 10, 15 years in the future. But for a lot of the core business to business especially cross border where it's really messy types of transactions, I expect it to grow quite a lot. So definitely the area that we're participating, we're working with a lot of companies on and we're excited to support on.

That topic of the slow ACH transactions that feels like something that I understand the value of crypto but also databases are fast. Now is there a world where if you were put in charge of DOGE for Finance DofE or something and you just had carte blanche in the government, you could speed it up or is it not like a personal issue? You think you can do it?

Yes.

How would that actually work?

The Federal Reserve has a system called FedNow and FedNow is actually just like instant bank to bank transfers and they're cheap. The interesting thing is it's actually a new revenue line so the bank would make processing revenue from this. So there haven't been a lot of new revenue lines for the banks recently. The issue is getting banks to install it. Getting banks setting up the right incentive systems to get banks to actually set it up. There are like, you know, a few hundred banks and they're mostly small banks that are using it. And I think there are like four or five easy changes. You change the incentive structure, you create a mandate that every bank has to support it. They're like, like this, this. The small set of changes that you could get instant bank payments running in the US Very quickly. Now it's a question of like, does the government have the appetite to force things upon small banks? And like, sure, it is costly for the banks to implement it. It's not crazy costly, but it is not zero cost. And so does the bank. Does the government actually have the appetite for something like that?

That's really helpful.

What, what are you. It feels like there's so much to build still. I had to go to the bank yesterday to send a large wire and it's still like every time you do that, you're like, you know, they're looking at your phone and they're like writing down the wire instructions and they print it out and they're like, can you confirm it again? And then they're like, can you sign this and can you sign that? And then I got to text the recipient the whole thing still.

Do not copy and paste your account number twice. You can copy paste it in the first box.

No.

I feel like this is such a beautiful time for Plaid. You're founder run company, you have incredible distribution and there's still so much yet to build. Sort of what gets you most excited in terms of, I'm sure you just spend a lot of time talking to big bank CEOs and startups and your position is just like, how can we enable you to do what you want to do or improve existing products? But kind of what are you most excited about in the Plaid ecosystem or Roadmap?

I get to have the most fun conversations in the world with our customers and with the banks. I get to go in and say, hey, what frustrates you about the financial system? And they will just talk for 30 minutes. I'm like, amazing. We can't solve all that. We can solve these things and we can work together to solve those things. And like, maybe over time we can as an industry find, find a way to make it better. So they're incredibly fun conversations. To your point, like, financial services is just barely becoming digital. You know, it's crazy to Say that because you know, you have online banking and you know, maybe use Venmo and maybe buy some Coinbase Bitcoin on Coinbase and you can make a trade on Robinhood and that seems really easy to you. But to most people in the US most of their financial life is still not fully digital. And so I think just the core, the core of our business has a lot of room to grow, a long way to keep running. We've got to get rid of that. Hold your phone up, like type in your account number. All that stuff can become instant and easy. I would say the two big areas that we've really been investing in that I think will be game changers kind of over the longer term. So obviously the core business matters a ton. But the two new areas, the first is fraud detection. So online financial fraud is going up at somewhere between 20 and 25% a year off of a gigantic base. Deepfakes are having a big impact on this. A lot of AI tooling is having a big impact on this. I mean there's like, you've probably heard of like the pig butchering stuff that's going on where people are like, you know, calling folks and tricking them into sending Zelle payments to crazy places, so on and so forth. Like that is at an all time high and going up really quickly. And so we built a set of tools that look across all the data in our network. They ingest a bunch of third party data, we have customers reporting fraud data back to us and you can kind of think of it like Palo Alto Networks for financial services. So like how do we notice if something is weird over here and then tell everyone over there that they should maybe be on alert for it? So that's one big area that we've been focusing on. The second big area is around credit scoring. So right now, if you get a new job tomorrow, your income goes up by 3x. It will take a very long time for that to show up in your credit score. Right, because you have to get loans, you have to then repay the loans for the whole thing to trickle through the system. It doesn't make any sense, but you are a better credit risk today because you got that new job. And so we've built a series of tools, including our own credit score, that looks at real time data and brings it into the model and then increasingly will allow more and more people to get loans that are based on today's data, not five years from now's data. So that's what I'm excited for.

Yeah, on AI, specifically in Plaid, just in fintech generally. Do you think it's, it certainly hasn't felt like the most hyped category. And maybe that's because, you know, 10 years ago people were promising sort of like AI based lending and all that stuff. And maybe it was AI, maybe it wasn't. Do you think it's getting enough attention? I'm sure you guys are taking it seriously internally.

We're taking it very seriously internally from an internal efficiency standpoint, like leaning in hard and frankly a lot of the banks are leaning in hard and so I think that'll be a big step forward. I don't need to talk to you about that. You've talked to everybody in the world about that kind of stuff from a financial services product specific lens other than like, you know, AI causing fraud and then using AI to fight fraud. But like from a like core banking product standpoint, I don't think you're going to see a lot of changes fast. I think behind the scenes, if you go to a bank and you talk to a teller or more likely like you do a zoom call with like a wealth advisor, they're going to have an AI dashboard and a bunch of AI tools that are real time telling them like, hey, what's, what's, what's going on with John's portfolio, you know, what recommendations should be making, you know, how might it be different? But you're not going to get that direct like AI bot style interaction for I think a long time. Mostly because there's so much regulatory overhead, so much trust overhead that goes with it that I think the banks are going to be hesitant and slow to launch. Look, I'm on the furthest edge of this. I would love to have a set of AI bots that just move my money across my accounts, leave it in Treasuries until the minute that I needed to pay whatever bills I need to pay and then if I have excess left over, move it back into Treasuries or balance across my loans to pay the loans to interest rates. But I'm probably like way on the furthest edge of that.

I have two questions. Out of the big bank CEOs, who's the best DJ?

Well, you know, only one of them plays a.

Serious note. I feel like there's this interesting dynamic with Plaid where you guys have, it's a financial infrastructure company but you take design incredibly seriously. Where does the design chops come from? Like, how did that become so instilled in the, in the company?

So from the earliest days, our Mission has been unlock financial freedom for everyone. Like, it is a consumer centric mission. Like, our goal is to help consumers and small businesses that have a greater amount of financial freedom have more control over their financial lives and be able to do things that they want to do that are out there. And so, like, we took the position that we need to fight for the consumer, even though we built a B2B product and thus we're B2B2C or like B2B to small business. And with that in mind, we knew that we needed to build a brand that resonated with consumers. It doesn't need to be the loudest brand, but, like, in a lot of senses, we take inspiration from Visa. Like, a lot of consumers don't know what Visa does, but they certainly know that it helps them make payments. All right, well, we want to learn from that. Like, we would like every consumer to know what Plat does. We're also realistic to understand that not every single one is necessarily going to fully understand it, but we want them to have tools that come from us. We want them to have trust in us. And so we focus a lot on building that type of consumer experience. And then you see us also, like, in the press, in the media, like, try to go fight these battles on behalf of consumers. So fighting the open banking battle, like, fighting against the debanking stuff that's going on, like, being very public about saying, like, hey, we believe that every consumer should have access to every financial product that they might want. Like, we think that if we continue to live up to this, like, this somewhat idealistic view that consumers should be financially free, that's going to drive a lot of value for the company and that then flows through into the products that we build. The way that we act, the design, design sensibility, so and so forth.

Last question on my side. Do you have any advice for founders in maybe defense tech or AI that are sort of like riding the high that fintech maybe felt in 2021? Like, is it time to. I'm curious because, like, you know, this is such an amazing moment for you and the team to come back. You obviously, you know, the company's been marked up. You have a bunch of, you know, a world of opportunities, but you had to go through a couple darker years. Any words of advice?

I mean, as the saying goes, things are never as good as they seem, nor as bad as they seem. I would say that the dark times, honestly, it's my favorite. And it's the time that really forms the company and it lets you Know who you are. It lets you know who's really on your team and it forces you to make, like, the most important decisions. Nothing's ever going to be easy in startups. Nothing certainly is ever easy for Plaid, but knowing that we've, like, formed kind of an amazing team, a good set of customer relationships, like, we've made good product decisions in the times that are really hard, allow us to go fast in those times where it gets a little easier. So. So I don't know if I have any specific advice other than, like, just keep on keeping on.

It's great.

Yeah. I mean, that is the best advice you can give, I think.

No, I'm genuinely excited and I can't wait for you guys to build more products because every time I use Plaid products, it's a breeze. And every time I use anything from the legacy banking world, it's absolutely brutal.

So don't talk too much trash about.

All those partners we love to banks that are gold.

We're very.

We're very thankful for everything.

Make the banks better.

Good luck and congratulations on the round.

Yeah, it's great having you on. Always welcome and congrats to the whole team.

We'll talk to you soon.

Thanks for having me.

Thanks, bye. Next up, we got Nathan Mintz coming in from CX2. Very excited to talk to him. Going back to defense tech. Had to give you the update because there's some breaking news about Plaid. Not a defense tech company, but still got. Still snuck in a defense tech question. Jordy, I like how you did that. That was very.

No, it's just we're at this moment. Plaid was started, got to form itself when fintech maybe wasn't so hyped, and then went through this period of exuberance and insane valuations. The same multiples we were seeing in AI today. Fintech companies were getting even. Lending companies were getting.

Well, we're talking to a veteran of defense tech. Nathan, welcome to the show. How you doing?

Hey, good, John, good. Good to be here with you. I was just listening in and I'm bummed that I don't have as good a hair as Zachary or around.

He has fantastic hair. We get some compliments on our hair every once in a while, but he blew us out of the water, I think. So the fans are just gonna flock over to Plaid now, but. Yeah. How are you doing? And can you give us a little intro on yourself and some background and what you're building now?

Doing great, actually. Yeah. So, you know, right now it's sunny and 72 degrees outside in, in El Segundo. And you know, it's, it's, it's a great day to be in defense. We're seeing just, you know, it seems like every hearing that I watch of these appointees for this new administration seem to be echoing our talking points. So it's kind of nice to know that the last few years of, of pushing for a transformation in the way we do our force mix and, and how we fight wars is actually, someone's actually been listening. So as you know, I've been in defense for about 20 years. I started out at the big Soviet tractor factory primes. I spent 14 years at Boeing and Raytheon as a radar systems engineer, electronic warfare engineer. I worked on programs with names like Next Generation Jammer and the radar for the F15 and the F18 and a bunch of space programs and stuff. And then in about 2018, an old friend from college, Joe Lonsdale, called me up and said, hey, we're starting a defense vertical. Do you have any ideas? And I came to him a couple months later for, with the idea for what turned into Epirus, which is high power microwave to kill drones and other electronics. So got that started, ran that for a couple of years, then moved over into the automotive radar space. Started a company called Spartan Radar that does, you know, software that makes automotive radars have higher resolution. That one we ended up selling to a, a major equipment OEM in the past year. And so we've, we've exited that one at this point. And then about a year ago, I got together with my co founders, Mark Trefgar and Porter Smith and Lee Thompson. And we started CX2 with the goal of transforming the way that the US fights warfare in the electronic warfare domain. So that's where we are today. The company's about 24 people. We're here in, based here in El Segundo. We're backed by HVC and Andree Horowitz. And right now the office is pretty empty today because most of my team's out participating in an exercise. So exciting times abound.

Yeah, you know, you see those viral videos of the Chinese drone displays where it looks like a dragon and, and everyone immediately quotes it and says like that's a weapon system. At the same time, as scary as that is, it feels like between Epirus and Anduril and you know, Allen Control Systems is just pelting bullets. And we're talking to a company today that's building laser weapons to take down drones. There's a lot of different companies that have addressed this. Is it as dangerous as we think? Or is it more of a solved problem maybe than we already know? Or is it just like we need to scale up the. The systems we have?

So I'll give you a couple statistics. When I was over in Krakow at the NATO Innovation summit last year, the Ukrainians throw out a statistic that 30% of the, of the casualties that they were experiencing were due to drone strikes. I think today in the Kursk offensive, for the Russians, it's the majority, if not almost all of them, for certainly for the tanks and vehicles. So it's become a mainstay of modern warfare. And right now that's where we are today is just the beginning. Most of the systems that we see used, it's these fpv, first person view with some guy sitting there with goggles like he's playing a video game. And it's very 1v1. Well, in the next few years, it's going to become one v many. And at that point, those command and data links that today are essential for that drone to get there, and we're figuring out how to make them work more autonomously because there's all these countermeasures, like you mentioned, to try and jam that data link or deny it. It's going to become even more vital because one, one person, suddenly that archer is going to be firing 100 arrows. Right. We're kind of taking a step past that at CX2, and we're trying to develop the systems that shoot the archer, not the arrow with that in mind. And a lot of it comes down to finding the drone controller, which becomes an increasingly harder problem as the cat and mouse game continues in modern warfare.

So what does the device look like that's sending out the signal to find the drone operator? Are you putting up your own drone? Or is this something that can be tracked from satellites or UAVs or any sorts of other devices, or. Can you even talk about it?

Yeah. So we're building our own electronic warfare stack to find, fix and finish on those emitters of interest. And that starts with a drone that does sigint and finds and fixes on those signals. We call it Wraith. It's a. It's a Group 2 drone with about, you know, 45 minutes of loiter time, or 40 kilometers of range, depending on how you think about it. That takes off and geolocates those emitters. And by that I mean it finds the position of those emitters. It's a little different from systems on the ground. Today that mostly kind of give you a line of bearing and say it's out there. We'll actually give you a fix on it and identify what it is. From there, through our Nexus operating system, we'll hand off to an attack drone called Banshee that'll go out. It's a loitering munition with a home on emitter seeker that'll go out and take that emitter out. So you go find the controller and then you, you have another drone that follows it and, and actually takes it out kinetically. Right. So that's, that's the current, the, the, the full, when I talk about the full attack stack that we're building. Right. And alongside that we've actually built an FPV kit with a version of the Banshee Seeker that can snap onto another drone, we call it Vedras, that will actually go out and seek that emitter out and it provides an overlay. So the FPV user sees a line of bearing and kind of the strength of signal and you're getting warmer, you're getting colder. No, no, no, fly left, fly right. And can hone in on the particular signal. So that's kind of our product mix. Wraith, Banshee, Vaedrus, Nexus. You're kind of seeing a Halo theme in here.

I like it. Very cool. You have a question or I have another one. I can.

Yeah. As you're talking, it feels like there's plenty of companies in the Gundo and just defense tech broadly that can just sort of think long term about capabilities and trying to win these bigger programs. It feels like you have to take a much more iterative approach because things are kind of evolving in real time and potentially that's like going to be the case for the entire life cycle of the company.

Right.

Where you're just always trying to stay, always trying to stay whatever, a step ahead of adversaries. Is that different than you think working at you said Boeing and Raytheon back in the day where they're just sort of thinking in sort of big programs and big capabilities and you're now having to be like nimble and constantly trying to stay at the edge.

Yes, absolutely. The way that we used to do product development in aerospace was very much a bell curve with a long tail of sustainment. Right. So pretty much all the effort would culminate around critical design review. And then at that point most of the systems insurers and stuff would roll off and program would go into manufacturing sustainment. Whereas if you look at software products If I was to look at how Facebook does a rollout or you know, Google or any of these others, for instance, it's much more of kind of a, a logarithmic plateau. It gets up to a certain point there might be a little bit of a hump in effort once the, the posts are kind of put in on the house, so to speak. And at that point there's a software sustainment tale that's much more, much larger that takes place over time. And that's what we see in Ukraine with like the drone manufacturers that are over there. There's like 200 drone companies in Ukraine that are out building the million or so drones that they're putting to use right now. What they're able to do is that they're able to rapidly iterate using commercial cicd. Commercial was it constant integration, constant delivery type of processes? The most extreme report I've heard of this is they had cases where the Russians were rapidly changing tactics and employing new systems where they were updating software at a rate of six times a day. And like with, with the systems I used to work on, I mean the missiles would get software updates so infrequently they called them tape updates because they had to manage to go out there. Yeah. And so, you know, they were lucky if they had an update every two years, much less, you know, six times a day. So the way that we do software acquisition in the DoD has to fundamentally change. There's been some good stuff signs in that respect with the rules of the SecDef has pushed out for software acquisition pathway where they're saying we really need to buy software using commercial processes as a default as opposed to still using the traditional waterfall. You know, I call it the Soviet tractor factory way of procuring things. Right. And you know, I think on the hardware side we eventually need to move that direction as well. It's a little harder when you're building a multi billion dollar aircraft. I mean just realistically that is building a drone. But let's start with software and iron that out because that's where the most palpable need is right now.

I love, I love all those phrases. They're going to stay in my mind forever. Can you, can you break us down? Can you break it down for us about dji? There's a lot of fear that we're never going to catch up. There's also just a general fear of like are all the DJI drones going to rise up one day and attack us? You've probably seen like the internals of these drones, you know how to probably take them over at the drop of a hat. You can probably do it on your phone if you wanted to. How much of a risk is dji? We've had other guests on the show say maybe we should ban the importation entirely. Where do you stand on dji?

I mean, you know, we already have export or import controls in place and like, they're banned from use from US Government agencies, for example, with, with exceptions. The solution is we got to build our own drone, you know, industry here in the States. I think we're doing a good job in that. The CX2 is part of that, but we're also partnering with Ukrainian drone firms. I don't know if you saw there was a big piece in the Wall Street Journal talking about us and, and Skyfall, which is a Ukrainian drone firm. And so like partnering with the guys that are already building a million drones a year overseas and try to take their lessons learned and scale it over. Here is one cheat code that we can apply to catch up faster. Right. The, the big advantage that the Chinese have is they applied consumer scale technology and manufacturing to the drone problem and they took advantage of our own regulatory, you know, blockers that we're putting in place. I don't know if you're aware of this, but to fly a drone in the US you had to have a. I think it's a FAA type 109 license.

Yeah.

So it's called. And the Chinese got around that by labeling what they were doing a toy. So anytime that the US Drone manufacturers, you know, we've been building FPV drones since 2005, 2006, but nobody could get funding to actually scale it because of these regulations and the fact that, oh, it's too hard to train the pilots. It's not scalable. The Chinese, on the other hand, found the loophole and they scaled up as a result. Right. So our own barriers from our own regulatory infrastructure what need to be revisited and that'll only show us innovation, allow us to, to compete with them toe to toe.

Got it. Are there any considerations for indopacom versus what's going on in Eastern Europe? Clearly you're very focused on Ukraine, but are you looking ahead to any other theaters?

Yes. I mean, in Indo, Paycom, the ranges are just a lot larger. So you're going to have bigger drones with, you know, larger scale. Right. That's the main difference. Also, the Chinese are just more likely to, to bring out, you know, more sophisticated systems. I mean, you know, the Russians, for all the talk about, you know, the zoo 57 felon, the reality of it is, is they fielded all of 12 of them. The Chinese J20s and J31s are starting to get into the hundreds. That's their quote, unquote, fifth generation stealth fighter. I can make an argument that it's not quite fifth generation, but anyway. And then. And then just their. The amount of drones that they're talking about bringing at scale. They. They recently disclosed that they have an order for a million kamikaze drones that they're putting forward right in Indo Paycom. Right now. Our plan is to deploy a whole bunch of legacy Battlestar Galactica assets with names like Rivet, Joint, Compass, Call that are mostly on older aircraft. Some are on 707s, some are moving into Gulfstream Fives to do a lot of these capabilities. And they're going to be pushed way back from the Taiwan Strait. The only thing we have that can really get close is the Growler. And all of our missiles that we're using to do this mission cost millions of dollars. That's what we're seeing over in your Gulf of Aden right now. You need a $6 million missile. Take out a $20,000 drought. So we're here to help bring the cost parity back.

Well, thank you for everything that you're doing. We certainly appreciate it, and we appreciate you stopping by. You got to call back in when there's more news, more updates. Those are some great.

We could keep.

Yeah, we can keep talking to you for another hour. I'm sure we're just gonna go into. I mean, it's the fact. It's the most fascinating geopolitical situations, the most fascinating technology. And, yeah, we thank you for taking the time to chat with us today.

I'm sure we'll thank you for what.

You do again soon. So thank you.

Absolutely. Happy to be here. Thanks for having me on.

Have a great day. Talk soon. And we got Brandon from SHIELD Coming in to the studio in just a minute. I believe he's here. Let's bring him on in. We got one minute. If you're not familiar with S.H.I.E.L.D. aI develop, test, and deploy autonomy faster than ever. Autonomy for the world. Another defense tech company, and he is here now. Brandon, welcome to the show.

What's up, guys? How you guys doing?

We're doing great.

How are you doing?

Great. Fantastic.

Thursday afternoon.

That's great.

Yeah.

Thanks for taking the time to be with us. For those who don't know, could you just give, like, a little intro on yourself and the company?

Yeah, sure. Quick intro on myself. Mechanical engineering background. I went to the U.S. naval Academy, became an engineering officer on board a ship, deployed to the Arabian Gulf on that ship, then laterally Transferred, became a US Navy Seal and did three deployments, two to Afghanistan, one to the Pacific. Got out in 2015 while concurrently going to business school. Started Shield AI with my brother and have been at it for the past 10 years. That's background on myself. Quick background on Shield AI mission is to protect service members and civilians with artificially intelligent systems. In pursuit of this mission, we've been building the world's best AI pilot. Easiest way to think about an AI pilot is self driving technology for unmanned systems that enables them to maneuver without gps, without communications. It enables them to maneuver without a remote pilot, enables the concept of swarming or teaming. Notable milestones along this journey. We're the first company in the world to put an AI pilot on the battlefield. In 2018, we put it on a quadcopter. It would go inside buildings ahead of special operations forces that was deployed to Iraq, Afghanistan, Syria. Most recently used in Israel to rescue hostages, which was really cool. Have the text messages back from Israeli counterterrorism forces during from October 2023. And then also we were the first company in the world to put an AI pilot on an F16 and fly an F16 autonomously. We won the DARPA Alpha dogfight in 2020 and 2022. Did the first F16 flights. In 2023, we did the first ever AI piloted F16 versus human piloted F16 dogfight. And then in 2024, the Secretary of the Air Force flew our AI piloted F16. We're finalists for the Collier Trophy which is given to the greatest achievement in aeronautics or astronautics. Wright Brothers won it. Chuck Yeager won it for breaking the sound barrier. We were finalists and lost to some NASA asteroid mining. Cool. Whatever. Yeah, but he's paying attention.

Yeah, I mean it sounds like an overnight success. The type of overnight successes we like to highlight on the show.

Overnight success, that's always the way it goes.

All the greatest overnight successes take decades in my experience.

Yeah, I mean it's a 17 year overnight success if you count the naval experience.

Yeah, exactly.

What's it like going having your first real startup become a multibillion dollar company? Most founders have the benefit of starting a couple things that don't. Maybe little ideas or things like that. Is it going back 10 years ago at this point? I guess nine years and 11 months. Did you feel like you knew what to do from the beginning? Or you had good people around you. I'm curious.

One is you don't know what to do in the beginning. You want to surround yourself with great people just to be directly responsive to those aspects of the question. It's I, I don't think too much about like, you know, that, that aspect of, like, the aspect of, oh, it's now a multi billion dollar company principally because it's a knife fight every day. It's a lot of pain and suffering. I tell everybody that, like when Jensen Huang from Nvidia talks about pain or suffering, when Elon talks about the pain and suffering that goes into building these, these types of businesses, it's absolutely true. And so like there's a massive amount of stress, there's a massive, like number of times that you fail. There's a massive amount of immediate embarrassment, like when you fail in front of customers, when you disappoint customers along that 10 year journey. And so, you know, I think the, you know, one of the reasons I think we've been successful is the ab. The resiliency, the ability to keep moving forward, the ability to pick yourself up once you get brought to your knees, like when you get gut punched. And it certainly happens. And so, you know, in that sense, you know, I think we had that when we started. I experienced that in the SEAL team. So I was, you know, grateful to have those experiences and basically used to the life of suffering. So, you know, that's, that's paid off well over the past several years.

Can, can you talk a little bit about the path to full autonomy for fighter planes? We saw this with chess where, you know, Deep Blue beat Garry Kasparov, but for a long time, a combination of AI and human, human would outperform. They called it like Centaur chess. Some people say we're in the centaur era of AI image generation, or a lot of people use ChatGPT, but then they're editing it themselves. It's not a pure AI creation. It's not pure human. Are we in the Centaur era of air supremacy right now or are we getting there? And how long do you think it'll last?

I think at this stage in the game, autonomy is at superhuman levels of performance. And so I don't, yes, people will always augment machines and make those machines better and more useful to the people, but the level of involvement in doing that is becoming minuscule in terms of like what's required. And so look, you know, that journey, right, for us to fly. Starting to fly in F16, unfortunately, in 2015 when you're you know, three person founding team with zero money, zero track record, they don't hand you to the keys of the keys to the F16 right away. And so we had to earn our right, you know, our path, you know, our right to fly that aircraft. And it took a long time and we stair stepped our way to get there. Right. Took seven years before first flight caf 16 proving it on a quadcopter, proving it in simulation with the DARPA Alpha dogfights, proving it on our VPAT aircraft. And eventually, you know, they, you know, more and more people now are giving us, quote unquote, the keys to their jet aircraft. Yeah, but it's, I, yeah, I'll just say like autonomy is a really, really hard problem. It's also a really, you know, valuable thing to create and think. We're at the stage now where, you know, I, yeah, I'm a big believer. I think the entire future is going to be an autonomous future. I think I agree with Elon Musk when he says there's going to be, you know, millions of autonomous systems in the world. His goal is to put a billion humanoid robots on the planet. You know, we'll have millions of self driving cars. I believe there will be millions of self driving aircraft and millions of other autonomous systems and shield AI. Our objective over the next 10, 20 years is really to enable that future.

Can you talk about the developer platform that you guys were building? I know that's part of the, that was part of the announcement that you did with the new round at the beginning of last month.

We asked ourselves the question, you know, how do we put a million AI pilots into customers hands in the next 10 years? We spent 10 years building the world's best AI pilot. For all the reasons I mentioned, I feel like we've checked that box and then it became how do we put a million AI pilots into customers hands? And the answer was we have to supercharge the aerospace and defense market. We have to supercharge the autonomy industry. And we took a page out of Amazon Web Services playbook, right? If you're unfamiliar, Amazon Web Services, they had basically built a great internal product team said hey, what if we brought this to market? What if we commercialized it? Would it be valuable for other people? All this infrastructure, these data pipelines, these developer tools and obviously the rest is history. Massively valuable for Amazon Web Services, most profitable business unit they have. And so we basically said let's package up all of our developer tools, our infrastructure, our pipelines and enable the rest of the defense industrial base and again the rest of the, the autonomy industry and those interested in autonomy to actually develop, evaluate, test and deploy autonomy. And so spent, you know, the better half of last year or more than last year really focused on building that product, enrolling out to beta customers. And we're going to general availability here in May for that product. And the response has been game changing. It essentially enables you to reduce the number of engineers, reduce the time to actually build autonomy, and take it to market by 10 to 50x. So it's just massive improvements. We're flying first flights on a jet aircraft, two engineers in six weeks. Right. Wow. If we had these tools back in 2015, they may have let us fly the F16 right out of the gate. So it's incredibly powerful.

Powerful, yeah. Speaking of 16, what is actually the hardest part of flying an F16 in a military scenario? I can imagine that dog fighting feels like the most intense, the most high stakes. But then it also sounds really hard just to fly an F16 like into the theater for six hours straight. You get tired and then landing on an aircraft carrier in like stormy seas, that seems really hard. Are you trying to do it all? Is there, is this the idea like self driving, you kind of turn it on when you're on the highway. What's the most difficult?

So just to be clear, the work on the F16 was to burn down the technical risk for this next generation of uncrewed fighter jets.

Yeah.

But in terms of like what the, you know, the most technically hard, like the technical, technically hardest part about it is actually around safety and certifiability. Right. The US Air Force, the US Navy, they're not putting up 20,000 pound aircraft in the air. Right. That are just going like not perform. Right. Especially in a, you know, in the dog fighting scenario when we have relative closure rates between two 15,000 pound aircraft going 1200 miles per hour closure rates within like, you know, call it 50 meters of each other, you have to be able to say, I can guarantee the safety aspect of what's going on here. Yes, there's risk, but this is how it's been burnt down. This is why it's safe. This is why we believe it's going to do exactly, or why we know it's going to do exactly what it said it's going to do. So as people think about, I think that's where shield AI has really shown is our understanding of not just the autonomy aspect, but that intersection of autonomy, jet aircraft safety, reliability, certifiability. That's Where SHIELD AI stands out. And it's been a long time working on.

Do we need a new Top Gun movie where the protagonist is a software developer.

It probably wouldn't be as entertaining as Maverick too, but we're open. Or as Maverick, but I'm open to it.

Yeah, I'm open to it. I'd love.

How do you, how do you think about M and A going forward? I think you guys have made a couple, or at least a couple acquisitions to date. There's now a ton of new investment, but you guys have spent 10 years winning customer trust, you know, winning, you know, contracts, et cetera. And I imagine there's going to be some companies that develop, you know, cool technologies or have great talent but don't quite reach the. Where you guys are, you know. How do you, how do you look at that opportunity going forward?

Certainly we, we built an acquisition muscle and acquisition arm in our, in our company. And we are constantly looking at opportunities and there's just a very, very. It has to go through a lot of different wickets for us to say let's, let's get serious about something. Right. Ideally, it's strategic because it takes up a lot of executive time if it's truly going to move the needle for the business. At the same time, you'll see us do smaller acquisitions. We'll announce like a really, you know, a smaller IP type acquisition here in the next several weeks. And so there's that range. But in the ideal world, you know, strategic needle moving for the business, you know, gives us better market access, gives us, enables us to build a better product, one that's aligned with our strategy, roadmap with our product, roadmap with our vision for the business. And so we're always on the lookout for new companies.

That's fantastic. Last question or we good?

No, that was it. I mean, come back on when you have news.

This is fantastic. I mean, such a fascinating business and like such an entertaining and just dramatic in so many ways. I mean, we could go way deeper. But thanks so much for taking the time to talk to us. Really fun conversation.

Thank you, Brad.

Thanks, guys. I'll see you.

We'll talk to you soon. Bye. Jordy's hitting the bathroom, but in the meantime, we have Peter from Roon Technologies here. Let's bring him in and I'll have him do his intro and then Jordy will hop on in just a second. So, Peter, are you there? Can you hear me? Hey, Peter, how are you doing?

I got you.

Cool. Yeah, thanks so much for joining. I've heard a lot of great things about the company. I actually haven't gotten a chance to really dig in too much. So could you just give me a brief intro on you, your backstory and kind of what the company does today?

Yeah, absolutely. Absolutely. Happy to give you an intro and then tell you more about the company. Great. Myself, I'm the CTO of Roon. I lead the product engineering team here. And before Rune, I was at Anuril for four years as a software engineer. Had some incredible opportunities there with some amazing teams. And before that, I was at Facebook for three years. Facebook AI Research. You're the meme.

You're the meme of, like, you were building ads. And then Palmer said, hey, come do.

Something meaningful with your life and you're over by Walmart.

I love it. Yeah, that's amazing. It's real.

And actually dropped out of college to join Facebook when I was 19. Intern in London at the time. And I'm originally from Austria, so I like to consider myself the most patriotic Austrian American since Arnold Schwarzenegger.

Arnold Schwarzenegger, I was gonna say.

Exactly. But I had the opportunity to come here when I was 19 and participate in the American dream, and I'm grateful for that ever since.

That's fantastic. What about Rune? Can you tell me.

Yeah, so about Rune. So, in short, we're a military logistics technology company. And really the realization was that over the past few years, as defense technology companies have emitted on drone swarms and hypersonic missiles and autonomous submarines, you know, what they haven't had the focus to think about is, you know, well, if. If that drone breaks down in the fight, you know, where do its spare parts come from? Right. Or if you shoot one hypersonic missile, or do the next 30 come from, or if you have a collaborative combat aircraft, where does the fuel to charge the battery to get it off the ground come from? Right. Those. Those logistical considerations. And, you know, as I. As I looked more into logistics, I realized that it was sort of the forgotten part of the military, especially at the tech technical level. And I realized there was an opportunity to bring, you know, the great innovation that other companies have brought to intelligence and command control and fires, but now bring it over to logistics because, you know, I also knew that, you know, the great quotes of amateurs talk tactics and professionals talk logistics. And, you know, I knew how much logistics mattered to Patton's 3rd Army. And so it was just such a stark contrast between logistics really matters. But then when you look at logisticians in the field, they're using whiteboards And Excel spreadsheets and, you know, scraps of paper and there was a gap and that's why we found a room to fill that.

Yeah. I don't know if you ever played like hearts of Iron 4, but it's very funny that, you know, Call of Duty is wildly popular, but hearts of Iron 4 is this like intense military simulator where you can spend 12 hours just optimizing like the flow of oil to the front line. It's very logistics based and people say it's like never, never play the game because it's too addictive and you'll just be playing it all the time, but you're playing it in the real life. Can you, can you talk to me more about what contested logistics mean? I've heard that term thrown around, but I don't really understand it. Is that, is that relevant to your business?

You know, it's an interesting term because when I, when I started out with Roon, I also really tried to dig into what does contested logistics mean? Because that, you know, it's a buzzword. It's out there.

Yeah.

The more and more I spoke with logisticians, they actually laughed when they heard that term because all the logistics of military they've ever done is contested. Right. The military operates in contested spaces.

Yeah.

So the contest logistics is really not, you know, it's actually not necessary. It's just logistics. So, you know, what we're building is not software for contest logistics. We're building software for logistics.

Got it. Can you take me through some of the history of logistics? Obviously it was like pen and paper and I don't know, even before that, probably like carrier pigeon. But then of course, you know, we've heard that like Microsoft has actually been a great partner to the DOD and they've vended in everything from Microsoft Outlook to Excel. And those tools, although they seem silly, they're probably very helpful in terms of just understanding like how many bullets do we have in the bear in the, in the armory, or how many rations do we have? But, but has there been. What has the progression of technology and the adoption of technology look like over the last 20 years? Like post global war on terror?

Yeah, I mean, you know, logistics always has mattered. Right. There's actually a great quote all the way back from Alexander the Great where he called his logistician a humorless lot because they were the first to be slaughtered if anything went wrong. Right. So it's always mattered, always been important, you know, when it comes to technology. One thing that's interesting about the global war on terror is that logistics wasn't actually really the focus there because, you know, we really had air support. So every shipment from, you know, Germany or the US that had to get to the Middle east made it there in one piece. Right. It really wasn't the primary focus and it's really now more so as we're looking towards Ukraine and you know, future conflicts with near peer adversaries, the logistics are starting to matter again the way it did in past large scale conflicts. Right. And you know, seeing, you know, Russia, for example, really almost fail at taking Kiev in large part because of logistics where people up to that problem again. Now in terms of the technology, there's been less focus on it. And you know, of course, you know, Excel and PowerPoint are great general purpose tools, but you know what, logistics is a really, you know, focused specialty with lots of doctrine and tactics and procedures. And so you can solve any problem with PowerPoint, but that doesn't mean you should. And so the software we're building is really focused on what does a logistician need when they're in the field and solving their problems.

Yeah. How do you think about the trade off between flexibility of the design of your system versus creating something that's more deterministic, more enforcing rules on the user? Obviously the worst thing when you're building software is like, yeah, we did the demo, we did the install, and then a week later they fell back to Excel. Right. I'm sure you want to avoid that.

Yeah. You know, working with your customers, it's often a back and forth between understanding their current workflows and supporting them, but then also showing the art of the possible with what new technology can bring into the fore. Right. You know, what you can do in Excel isn't what you can we do with AI, for example. And so it's actually showing them what's possible as well as supporting their current workflows, you know, at the same time. And you know, when it comes to generalizing the software, that's where, you know, we work with a lot of different service branches now. You know, with the army, with the Marine Corps, you know, we're looking, you're looking very closely at the Air Force on their branches. And so looking at how logistics is done in different parts of the military helps us build really general purpose software that can even scale beyond just the military one day. And disaster and rescue, you know, oil and gas also have similar logistical needs. And also comment you mentioned earlier, you know, Microsoft, there's also something that, you know, is a unique realization for US is that, you know, the military doesn't always have perfect infrastructure available when it comes to its Internet bandwidth and whatnot. And so we've also really focused on, you know, building the software to run on a laptop in the jungle in the Philippines, in the trenches. And the way you would write your software in that kind of environment is very different than in a stable data center with infinite bandwidth and infinite resources. And so supporting that tactical trench warfare kind of environment is also what's unique about what we're doing.

So you're not GPUs every time you fire up a query in roon.

Yeah.

To me, the interesting thing is if you look back at the start of the Iraq war, the iPhone didn't release for years after that. Right. So I'm interested to think about how you think about mobile. And now there's just like. Like, in theory, like an order of magnitude more devices out in the field that theoretically could be used for. To make the sort of logistics operations more efficient. So is mobile sort of widespread with these systems to date, or is it, again, like the sort of laptop scenario in the jungle and just. Yeah. I'm curious how you think about mobile broadly.

Yeah, mobile is popping up a lot, especially at the lowest levels, where you really have, you know, soldiers or marines with their phones typing in logistical reports. That's happening right now and are working on projects to integrate with that. But, you know, what's I think, even more interesting is how do you get away from humans, even doing the county right now? So you're very honest. The way the military right now knows how much fuel is in a certain place is that you have, you know, private dipstick in and see how far up it goes. Right. And so, you know, that's how it's done right now. And phones get you to reporting that perhaps more quickly. But what we also want to get to is how do you not have a human in the loop in there at all with sensors to just measure that, whether it's ammunition in a base or fuel, ideally, that's all automated.

How much you talked about Ukraine and learning maybe what not to do from the Russians? How much do you think that the US has to learn in Ukraine around logistics? Or is Ukraine doing anything really well? Are we being sort of efficient there?

We hear from Nathan they're making a million drones a year already, so it seems like there's some industrial capacity there.

Yeah.

And then I've also heard there's reports that, like, Russia was, like, ripping, like, semiconductor chips out of, like, washing machines and like old Ford F150s because they were so out of like supplies and I don't know, I never know what to believe with these stories, but I'd love to hear your take.

Yeah, I certainly think the United States would have fared better in Ukraine. Right. The way we fight is different, but you know, what's not too different is how we track logistics at the tactical level right now. You know, the Ukrainians are using, you know, papers and whiteboards and that's why there largely isn't data at the tactical level and what they're actually consuming. And the United States military isn't too different from that right now. So, you know, even when it comes to tactical legit, you know, the US Military has a lot, it can modernize on that front and that's what we're interested in doing right now. And so, you know, that's, that's what our focus has been.

Do you find who do you connect with most on the customer side? Like, are there people, you know, within the DOD that are just like clearly logistics nerds? And you guys just like, you know, have a 30 minute call and end up going two hours and it's just like, you know, you finally are like, yes, like you said. Because I feel like if you're, you know, anybody that's a true sort of student of history, you know, could get to the point where they're like, yeah, I'm actually, I care less about like the sixth generation fighter and more just like the basics of like how we get one thing from point A to point B. Yeah.

You know, honestly, from, from the get go, the one thing we've never had to convince somebody of is, is that what we're tackling is a problem. Everybody understood that logistics matters. Everybody understands that, you know, the, the technology that logisticians have in the United States military is not where, where it's supposed to be. And you know, there's obviously the logistician branch of the military and when we work with them and they've been, you know, our closest design partner so far, you know, they understand these problems because they live them every day. But even other war fighting functions and other, you know, military members understand the problem as well. They, they sometimes need to be, you know, they need to understand why logistics needs to matter to them. You know, when you're talking to, to an artillery officer, for example, they do sometimes have to be led to understand how can AI for logisticians allow them to be more lethal. Right, because they're going to have munitions when they need them. Before they need them in the right place. So that's sometimes something that we show the art of the possible. But in general, everybody understands this really matters.

How are you thinking about the go to market and the revenue side of the business? Is this the standard like get some sbir money then make it through the valley of death landed program of record? Or is there just like a very different model because you're selling software in logistics?

The good thing is that over the past few years the military has woken up to logistics really mattering a lot. So there's a lot of buzz around it now. And in terms of what that allows us to do is one, we can both go to operational units in the field who actually need the software. They'll most often be our design partners and help us develop. That's not going to be the big dollars, but it's really important for us to build the best product. And then we're also going to the innovation labs. Across the services, there's organizations that help field technology from the innovation stage and then there's also the program offices themselves. And across the services there's very large projects or programs underway that include sustainment. Now they maybe wouldn't have two years ago, but they do now. And so it's really across the board. From the largest modernization project in the army to the innovation labs to the operational units, we're going through all of them and having success with all of them as well.

What kind of skill sets are you hiring for? Right now it feels like AI would be really important, but maybe not today. What's the type of engineer that fits in really well at Rune today?

Honestly, we've been scaling rapidly. We're 12 people now and I've had an engineer on board every single week for the past four weeks. Nice. So that's been really exciting growth for us. We're actually now looking for more product minded individuals or product managers that have lived the dream and perhaps were veterans themselves, but now want to build technology and understand that as well. So we're looking to scale our product team right now. And as we grow further, engineering will always be our greatest asset. So engineers that have really cared about the mission before, we both care deeply about the mission of what we're building for as well as having the right engineering skill sets. So engineers that identify with wanting to, like I did not build ads anymore, but build military technology, we're always going to be looking for those.

Jordan, that's it.

I had one more question about kind of just on the data integration side. Is it Important for you to build integrations into different data lakes, data warehousing. Is it important to just do really great, like PDF ingesting? How are you thinking about actually getting. I mean, I'm sure as you grow and scale, like, there will be times when you run into like, okay, there actually is a lot of data here. Let's bring it in. And onboard it is Palantir, a piece of all this. Like, how do you see Rune playing into, like the broader ecosystem of like military data?

Broadly, yeah. So it's important about logistics that it does really require very holistic decision making. And then you can't just know what you have on hand, but also what transportation. You have to get it from A to B, along which routes with what crews to actually move that equipment. If you don't have any of those pieces, you're not making holistic decision. And it might actually just break down when it comes to the real world. So we're very interested in integrations. We have a super open architecture that lets us integrate with programs of record in other systems. We're talking to lots about the companies that want to integrate with us. And then we're also allowing manual inputs as well. Like you said, whether it is PDFs or Excels or your manual inputs too. It's kind of like a mix of other integrations, manual input. And you're combining all of that to give that real world recommendation that connects all those pieces that I just mentioned.

Yeah. That's great. Well, good luck to you. Thank you so much for stopping by. This is a wonderful conversation. Have to have you back when there's more news.

Yeah, yeah, thanks.

Great to meet you.

Yeah. Have a great day. Very cool. We got Sam. We're switching gears here. We're going into from defense tech into hard tech, impulse stoves. I want to talk to Sam about what Big Stove is doing in reaction to the tariffs.

Well, before we get into this, you know what somebody that's selling stoves online should use?

Oh, I know.

I think you know, John.

Numeral.

Numeral for sure.

Put sales tax on autopilot. Yes, they put it on autopilot for thousands of leading e Commerce and SaaS businesses. It is the platform for sales tax compliance.

You want a guy like automation spending any more than five minutes per month.

Five minutes is honestly the perfect amount. You want to be dialed in. You want to be paying attention to this guy. You don't want to be reverse searing.

A steak and posting a great video and doing interviews. You don't want him wasting time on Sales tax as he sells all over the country.

We should film an ad where we give an ad for numeral while searing, you know, a steak.

You probably do your sales tax faster than it takes a steak.

That's right. You could maybe make it a ritual. You could maybe make a ritual. Just say every month I'm gonna spend five minutes on sales tax compliance.

Yeah.

And while I cook a steak and.

You know where I expect to see a lot of these stoves installed.

Where's that?

In wanders for sure.

That's right.

Check into a wander. You find your happy place.

Find your happy place. Find your happy place.

Book a wanderer. Inspiring views Hotel grade amenities Dreamy beds top tier cleaning 25.

John John Andrew Kyle. Let's get some Impulse stoves and wanders. People are going to be begging for it.

I want to be able to filter for it. They have a bunch of filters you can filter for. Great. Wi fi has pool, king bed, all these different things. I want to know if there's an Impulse stove. Anyway, we got the founder of Impulse coming into the studio. Welcome, Sam Boom. How you doing?

Great to. Great to chat with you guys live. Yeah.

Yeah. I'm so glad to hear we've. I think we featured your post before. We've talked about you. We've always said that it, it's interesting that I feel like in some ways Impulse is kind of like a dividend of Anduril. It's not anduril for stoves, but it's something that like people didn't think that you could start a new stove startup in a few years ago and now you can and so give us the pitch.

So basically for context though, I think I overheard you guys talking about me before. But basically we make a stove that's about 60 times, seven times faster at boiling water than most other stoves. So like, like you can boil like 10 cups of water in like a minute and a half or something. Crazy. So like your Mac and cheese is immediate.

Yeah.

But then it also lets you set an exact temperature, sort of like an oven. So it's like instead of low, medium and high, you can turn our like cool magnetic knob to an exact number and you don't get smoke. You can like fry with seed oil without seed oils for all of your esteemed health conscious followers. Oh yeah, there's lots of fans. And you can buy it right now@imulse labs.com, we should have about 12 weeks.

That's amazing.

And you can lock in current pricing at that point. I'll joke about that later cool.

And just the technological innovation here is that there's a massive battery power inside.

There'S a massive battery inside. So basically it's like value prop is you get this cool stove and it has all these capabilities you can't get in the native stove. It's a fundamental leap in performance, but it wedges a battery into your house. And once we install enough of these, we actually deploy a decentralized battery network, work kind of across the grid and you can actually get like more distribution of batteries than like Tesla Powerwall relatively straightforwardly if you essentially intercept the like 55 million major appliances sold every year in the United States. So like there's been like 400,000 total Powerwall installs in the US and Canada apparently. But like there's always an appliance installation truck on your block like every couple days. So like it's actually this really interesting, interesting thing of you can actually deploy a crap ton of battery storage that way.

Yeah. And so that's the big vision, right?

Yeah. And then we've actually figured out how to get the distribution unlocked. So one is you could buy the stove@imulse labs.com it's awesome. But we're also partnering with a bunch of major appliance OEMs to get the tech in there. And so that means that you can go to some random appliance showroom like Joe and Bob's appliances, buy a brand you already know, and it might come with Impulse inside. And so that starting to roll that out next year.

Are you thinking about even. I'm sure you've thought about this, but I'm curious if you're doing it partnering with people that are building homes because that's a big.

Yeah. So it turns out interest rates being high means that that's a little less like, like high volume. It turns out that like you want to intercept the, like you want to intercept like where expensive appliances are made to start because you, you, you're putting a battery in it. And like we managed to push the battery cost down substantially, but it's, it's still something where it's like there's an item that's not in the bomb of a normal stove. And so you kind of want to start high end, very similar to Tesla and all this other stuff, but then where the high end appliances sold kind of diffusely. So getting into these brands, having a standout brand of our own, but then also getting into brands that people are already buying lots of is, is, is is the way to do that. And like I then have to talk to, like, 10 different OEMs versus thousands of developers. Basically, it's actually. And then you monetize the battery the same way. Either way, like, once the battery's. Once the thing is installed, the battery is under our software control, and so we can sell that battery to utility, we can rent that battery to utilities for grid services and stuff like that. So we get access to revenue either way.

Awesome.

Wait, talk more about. Talk more about that. Like, talk about the grid integration and. And, you know, getting that extra leverage and specifically recurring revenue.

I mean, is the. Is the base. Is the base value prop. Even beyond, like, selling energy back to the grid? Is it. Is it more just like, if the power goes down? In my neighborhood, this stove could potentially power my house for a couple hours a day. What am I thinking?

Stove itself works, and it's got an inverter so it can share power with.

Rest of your house.

So if you've got, like, whole home backup, it will support that whole home backup. So it'll add, like, it's like a quarter of a power wall, basically. And so the vision is, once we've rolled this out to multiple appliance categories and multiple brands, like, you could just turn this thing on, and you'll have, like, you won't have to have a powerwall. You'll just have this tech.

I love the design of the product. How do you think about making smart tech stupidly sort of easy to use? Right. I have this. I got a.

The other day, I have an app on my phone.

We don't have an app.

No. So the other day. The other day, I walk into my bedroom, and I. And I go to, like, raise the blinds.

Yeah.

And it doesn't work. And I ask my wife about it, and she's like, oh, yeah, we need to charge the blinds. What do you mean? And I look up. There's like, a cord. I got to, like, charge it once a year. I'm like, give me a break. I don't want to think about charging my blinds. It's hard enough keeping this thing charged. So I think, like, we're entering into, like, there was, like, the last 10 years have been, like, the smart home era.

Yeah.

But everything going back many ways. And we need to get smarter, but also dumber.

Yes. We've been in the midwit, the midwood home era.

It's the Midwood home. It's the midwood home. It's like. It's. It's like, okay, does your smart home require someone who's like, an it expert to set it up. And then you don't want to touch anything because you'll, like, disconnect your light switch. And then, by the way, like, Google Home still doesn't have an LLM to it, and it still doesn't know how to set an alarm properly. And, like, if I ask it to play a certain piece of content, it thinks that I mispronounced it, even if I always request that content. Like, it is actually crazy how bad this stuff is.

Yeah, it's wild.

What we realized was, like, okay, people hate these touch panels on the stoves and stuff like that. So we figured out a way to do knobs where, like, they're magnetic and removable so you can clean all the gunk underneath them. So that was pretty cool. But then, basically, the UI is really simple. It's like you. It's the same as, like, a gas stove. It's like you basically push in and twist and you get heat. Like, it's not like any sort of. Yeah, it's like.

It's like.

And then the smart feature we realized was make it hold temperature accurately. So instead of, like, you can say low, medium, high. We still have that, but, like, you also can say 315 degrees. And then, like, your eggs come out exactly the same every day, and the butter doesn't burn. Maybe it lightly browns. If you don't want the bottom of the egg to brown, you can set a lower temperature. But, like, basically, we just give you, like, direct control over the thing that people actually want to do, which is not playback a smart recipe and, like, be on rails with New York Times cooking. It's like, no, I just want to be able to do the thing that good chefs are able to do by, like, hovering the pan over the burner and, like, doing all the right motions that.

How do you think about what's your vision for. For humanoids in the home? Because I. It's not hard to imagine, you know, my. My humanoid going. Grabbing the steak out of the fridge, slamming it on the impulse, and then, you know, just, like, you know, doing that. But. But maybe they don't even need to touch the knobs, right? If you just have the integration, like, they're just like.

You don't really have to touch the knobs with our thing either, because you just turn it on once, and then it's just like. It's just, like, at the temperature, you don't have to mess with it. But, like, I realized that the number one automation in cooking was actually just holding temperature consistently on a. On A pan. And if you can do that, you elevate a midwit cook to a decent cook. And so do that. And then that's, that's kind of the 8020 of. That's the 8020 of kitchen automation. Like, I, I cook at the office. I made some like, crazy braised thing and it was like super simple. I made rice without a rice cooker. Like, you don't even need these accessories.

Yeah. Do you have a rule with your team where it's like you can't order out? Like, you have to use the product every day at lunch?

Yeah, I gotta, I gotta tell everyone that the tariffs are, you know, cutting into the lunch budget now. Oh, yeah, yeah.

Let's talk about the tariffs and your supply chain. I'm sure you're impacted. It's impossible not to be.

Yeah. And, and one, one thing I'll lead with is like, we're, we're in an interesting space because all of our competitors are also impacted. So, like, basically, even the US Made appliances. Like, so if you go to like a whirlpool factory, all the circuit boards in there are actually like, made by like, German or Chinese companies, so. Or a German company in China in many cases. So it's like, basically if you tear down any induction stove, you pretty much like, see Chinese and German components inside, even if it's made in the US and so for that reason, it's like, okay, we're. We're building our stuff overseas. We're going to figure out, hey. What the lowest tariff regime is. You know, make it in Vatican City or whatever. Whatever, Whatever, Whatever works.

Hopefully blessed by the Pope.

Yes. Yeah, we can commiserate over our Italian heritage. But, but the, our shared Italian heritage. But basically, but basically the point is, like, everyone's going to be impacted because inputs are impacted. So like, even if I go in, if I build a factory in, in, let's call it like Phoenix, Arizona, I'm not. Like, my sub suppliers haven't onshored yet in volume. Like an example is like, I'm like, I'm an investor in Hadrian. Like, Hadrian, like, does not have enough CNC machines to make all the world's iPhones yet, for instance. Like, it would take them, it would take them a second. I'll overestimate. I'll be optimistic. But it'll take them at least a second to, to, to. To get that capacity up and running. And this is going to happen across the board. So, like, the lesson from the last wave of tariffs was Vietnam. Basically, Vietnam was this like kind of quote unquote loophole country that now is seeing like 45 plus percent tariffs or whatever. But Vietnam was, the tariffs were only on China. There was a lot of Chinese manufacturers that just basically just drove across the border and set up a factory. And all the, all, all the engineering staff, Chinese like they're just flying in. It's kind of like two hour flight, one hour flight situation from Shenzhen. But effectively it's a Chinese run factory now. To get the made in Vietnam you had to actually get make some of the components there. But what this meant was all of the large format injection molding machines because when people move their first televisions, they moved all the like 600 TVs and stuff like that, they moved them there. But that meant all large format molding machines are just completely occupied. And so like if we want plastic parts like our like induction coil assembly or something like that, want to do that in Vietnam, we probably couldn't find the machine. We'd have to import that part from China. We're done regardless because the machine would be occupied. And then there's a backorder of those machines and like all this other stuff. So it ended up like even to get to this point where a ton of consumer electronics from like Samsung, LG Meta, et cetera moved to Vietnam, it took like six year or five or six years.

Wow.

From when those tariffs kicked off. And so if you want like a preview of what like US reshoring would look like, it's going to be something of that nature or prices are just going to go up a bit and people want to put it in the, putting in a line item on the checkout. So like weirdly enough it's like we're insulated from this a little bit by making a high ticket item that's cool and like maybe we'll get permission to raise prices by, by other folks or whatever. I don't want to be the leader in that space because I think that would stick my neck out. But it's something where. And then additionally like as a component supplier to all these appliance OEMs where we actually make our money in software and recurring revenue from the battery storage. We're very insulated in that respect to the business. But it's something where like I had kind of a reaction to this being like it would be really cool if I would have a different approach to reshoring manufacturing in the US and it would be more around like making it legal to build a factory in San Francisco again and stuff like that. And stuff. Or the Bay Area, the San Francisco Bay area again without getting like angry NIMBYs on your, your ass or having to build a tent in the parking lot like Elon did like five times. I mean, I mean he was the only guy who did it. Because you have to basically operate in this like legal gray area.

Yeah, yeah, yeah. Where else are you seeing the most opportunity in home appliances or just like tech for the home ovens seem adjacent. I don't know what you can do.

You can make pizza in 90 seconds. We can do that with the battery. Really?

Well, you think so that's fun. Anything else come to mind?

Yeah, so I mean, I think there's actually, there's some interesting. The home tech and the humanoids come to mind is like, I think just making a launch laundry machine that folds stuff at the end would be sick.

That'd be amazing.

People would spend like five grand on a laundry machine if it did that.

Totally.

Yeah. And you would basically reprice the whole like laundry market if you, if you like. I think. And I think the tech for that is going to exist like next year. Yeah.

I think you just spawned like five YC companies with that.

Yeah. They can go license like PI's models or whatever.

Yeah. But I'm excited for that. That sounds amazing.

Yeah, but so, so you can do that. We're actually thinking like I want to be the index startup for anything with a power cord, effectively. So anything with a power cord. Realize that like most appliances are used intermittently and even within that intermittent use, they're not used at full power. Like you're, you're not like blasting a turkey fryer level power, which we can do. We can actually fry a turkey indoors on our thing. But you're not even when you're frying a turkey, you don't need full power all the time. You just need oil and so, and.

So be able to blow dry my hair in two seconds. And it's just there's a problem with.

Like maximum temperatures and you know, you don't want to burn your hair and stuff like that.

They've tried it. They've tried it.

But basic. Basically I, I think that there's this play where you can essentially realize that energy is used super intermittently, but the grid is sized for peak use all the way around. I think our companies had really good explainers on a bunch of these things as well. But basically we solve a similar set of issues. Kind of like even at the more hyper local level that, even at the home pan panel or something like that, sure, sure. But it turns out you can basically any device that kind of has like high peak, low average draw shove a battery in it and have an inverter in it. So when the device is not active, it's able to share the battery with the rest of the building. And so that's the vision. Get that into as many devices as possible. Turns out stoves are a kind of juicy target to start and then. Then go from there.

And why don't you just drop the link one more time for the fans who want to pick one up? Where do they go?

Pulse labs dot com. And if you order it now, it ships in like, I think it'll ship like early summer. And we just got most of our compliance certs all, like, officially granted. And the rest of them should come very, like momentarily. So it's legal to install in your house as well, which is exciting.

Fantastic. Well, thanks so much for stopping by.

This was fun. Thanks for hosting. I'll be around for peanut gallery on tariffs and trade and all sorts of stuff whenever you want.

So fantastic.

That'd be great. You're a take Smith. I can tell.

Yeah, yeah, I take Smith. That sounds terrible.

Okay. Oh, no, it's a good thing. It's a good thing. You got good takes.

Ready to fire them off?

Yeah. We need to slap an impulse. We're getting a new studio soon.

Just put the stove in the middle and you guys can do some hot pot or something. It'll work.

Yeah, yeah.

I just want to be. Yeah. Eating steak all day long throughout the show. That's my future for sure.

Do let me know if you want one down in la.

Yeah, yeah, yeah. We'll figure it out. Awesome. Thanks so much, Sam. Great to talk to you. We'll see you soon. And we got Scott Woo from Cognition coming in to the studio. He's not here yet, but I did get an interesting question for him. I posted tune in to TVPN today at 1:45 Pacific for our interview with Scott Wu. If you have any extremely complicated math problems you want him to do in his head, leave it in the comments. And we got one. Someone said, no, no, no, no. That was more of a joke. Brian Chow says ask him if he really did cheese Ioi 2014 problem 6. He'll know what I mean. Scott, welcome to the show again. Great to have you back. We will get to the amazing cognition news, but I gotta know, did you cheese IUI 2014 problem number six?

You know, I can't answer that question actually, but no, it's great. To be back and it's great to see you guys again.

How are you guys doing?

We're doing great.

Congratulations on the launch. Can you break it down for us? What is different about dev and cognition today?

Yeah, absolutely. What we rolled out today is essentially an agent native ide. What that means is I think there are a lot of great products out there that are about really accelerating you in a synchronous workflow. What we've always built Devon for is to be truly asynchronous and to be able to. To delegate and to have your own team of Devin that's taking on tasks and to be able to manage several Devins at once or to be doing other things while you're working with Devin at the same time. And what we're rolling out essentially is a way to really cleanly, interactively work with your dev ins as you're using it. And so it's a full IDE experience. It's a collaborative planning experience at the start of each session. And then some of these other features like Devin Surge and Devin Wiki that we've been rolling out.

What else do you have? I want to question.

No, no, go, go into it.

Well, I want to just get into your Overall thesis for AI and why and how the market's moving broadly. Almost 10 years ago to the day, Sam Altman posted a blog post called Bubble Talk where he said, everyone was saying, we're in a bubble here, let's format it as a bet. And he said, the top six U.S. companies in terms of unicorns are Uber, Palantir, Airbnb, Dropbox, Pinterest and SpaceX. They're currently worth just over 100 billion. He thinks that in 2020, those companies would be worth over 200 billion. There's a few of those companies that are worth over 200 billion alone. He also said, Stripe, Zenefits, Instacart, a bunch of other companies will be worth more than 27 billion. And he was. I think he was off, but only by a few weeks. And it was this interesting thing where everyone felt like it was a bubble he formulated into a bet. He was correct. But how are you. How are you feeling about the overall murmurs about, oh, is AI a bubble?

Yeah, yeah. And I think he was forecasting like a 3X or something in just a few years. And so whether he was like, barely off or not or barely made it, I mean, I think it's like, certainly if you just hear that list of companies, Uber and Airbnb and SpaceX and Stripe and all you Know, it's, it's. I think the point was very clearly there that those companies did have real merit and real value and they proved out a lot more of that, actually. I mean, it's almost comical to, it's, it's, it's been 10 years now since then and to just think, wow, like these are, these are some of the, the great public companies, right? And I think that, you know, I, we were talking about this, but I, I was thinking about it a lot because it's been almost exactly 10 years and it's also, I mean, it's super cool. Sam was running YC at the time, which is why he put that out. Obviously now he's running OpenAI, but, but yeah, I mean, I think people talk about bubbles so much in AI, and I feel almost the exact opposite, where the value that we are suddenly proving out in AI is almost underrepresented in what we're seeing and what is going on. And you see this in all these different spaces. And I think, as we were saying earlier, code is one of the first ones because it's so nicely automatable. There's a clean feedback loop and, and all of these things that you can really train models to get really good at code. But I think we're really starting to see it basically everywhere. And it's a crazy thing to think about, but a lot of these businesses that we just mentioned, these are really, really amazing businesses and really powerful businesses, and a lot of what they do arguably is they make particular flows of your life 1% easier, something like that. They come in, in this particularly painful process and solve that hard part for you and deliver this. And obviously these are incredible, incredible businesses. This is less about the businesses and more just about just how big the world is out there and how much value that there is to provide. And now when we're talking about AI and we're thinking about what AI can do for consumers, it's an AI assistant that does all of your work for you, it does all your hobbies and takes on all these things. And in enterprise, obviously we're talking about multiplying every single person's output by 5x. And so I think that the. I was thinking about it especially because it really does feel like across a lot of these different layers, the foundation model layer, the application layer and so on. Sure. It's a tough question to decide which one is going to succeed, which one's not going to be. And only a few companies get to be the Google and Amazon and a lot of companies obviously Have a tougher time. But if you just ask the question overall, is, is AI as a space going to deliver massive, massive value and is it going to build these multi trillion dollar companies? I mean, I think at this point it's pretty clear that it will.

Yeah. Can you talk a little bit about the Studio Ghibli moment happened last week and I'm wondering, like with the levels IO, flight simulator vibe, coding, Andre Karpathy coined that term. It kind of took fire. It really was a great term for something everyone was kind of dancing around. Are you expecting a Studio Ghibli style moment for programming? Because I think what was so magical about Studio Ghibli was that it took the, it took the onus of creativity out of the process and it made it personal because you could just take any photo from your camera, roll any selfie, you could take your own dog or your own profile picture, type one word and you get something that feels cool and different. Is there a world where we get something where it's like, hey, make a video game about my life or something? And it just does it? What would a mass adoption moment for AI driven programming look like?

For sure, yeah. So I think there's two kind of different categories I would say within AI coding. And one is, I'll call it kind of the more general purpose, like let's say single use software type or more hobbyist type work, right. Where you want to build a cool website, you want to do this, you want to make a nice game or you want to put a lot of these elements together. And I think that's going to, I mean it's, honestly it's already taking off pretty massively. It's, you know, you don't have to know how to code anymore and you can put together like a really cool website and you know, set things exactly as you want them and so on. Right. And I think there will, I'm sure there will be more exciting moments to come where, you know, as we cross these new tiers of capabilities, you know, the interface is going to change for that. And the set of things that you can do on the other side, I would say is kind of the, the massive, kind of just software engineering industry, which is a little bit more obviously is a little bit more oriented towards, you know, a lot of big companies that are spending maybe millions of hours of, you know, software engineering time developing like really, really great software, right. And making it super resistant to, to all the different things you can think of, you know, figuring out all the little details of architecture and so on. And I think on that side, you know, I think for the time being, that's going to be primarily focused on software engineers, just because, you know, it's. While we're still working with these layers of abstraction, you still really need to have all of these kind of concepts in your mind and the ability to really just reason with the computer architecture. But there, it's kind of like we'll see like a 5x there. So maybe one way to describe it is I think there will be a level of kind of programming and being able to interact with the world through code that everyone will have access to, which is super, super exciting on the one hand. And then on the other hand, I think for a lot of the deep technical work that we do, I also think that, you know, engineers who are focused on that and working on that are going to be able to do like 5x more. So we're kind of seeing both of those sides at the same time.

How do you, what advice do you give engineers that are just joining the Cognition team? You guys have such a ridiculous sort of, you know, sort of probably, I would assume the average engineer at Cognition is a 10x engineer in any other organization. And so you're looking for, like, you know, there's, there has to be this pressure of joining your building the tools that build the tools. How do you think about sort of ramping people to the sort of, to the output that you want to see out of engineers at every level of the organization?

Yeah, yeah, I was going to say, I mean, there's very little advice that I can give because these folks are all way smarter than I am. But no, I mean, I think, you know, it's interesting. I mean, one thing that comes to mind is, you know, people ask me all the, the time, like, should I even be studying cs? Should I even be, you know, how do I even think about software engineering? And I think the main thing I would call out here is just as the capabilities change, the interface of AI product changes a lot as well. Right. And so it's one thing, for example, there was a phase where text completion was the main thing, and that was where the model capabilities were at. And you could get a lot of value from just pure text completion. And I think we're already past that and pushing into a lot of new things, but each new era that we get into in terms of capabilities is going to unlock a new product experience in AI code. And I think that the main thing to call out, because I think a lot of this is going to happen so quickly is just, it's really, really important as an engineer to stay on top of all these tools and to understand how best to work with them. I think at this point it's, you know, there's no shortage of things to do in code. You know, I don't think we're going to run out of things, software that we want to build anytime soon. And so I think it's more a question of how do you stay maximally.

Effective.

At building software. And a lot of that is just really being up to date with everything that's happening and understanding each of the new waves and learning how to use these new technologies because it does take time to learn.

How do you think about AI adoption among engineers broadly? There has to be, I think about the example of the Japanese soldiers that didn't know the World War ended and so they were just like on an island and like, you know, still like in like, you know, war fighting mode and it would been like 20 years.

Or something like that.

And so I think there has to be engineers out there that like, you know, maybe they don't know about cognition or they don't know about OpenAI or any of these other tools and but it has to be some like, I would imagine like 90% of people that are just obsessively writing, you know, code every single day, 90% plus are sort of aware of these tools. But how do you think about adoption broadly?

Yeah, yeah, for sure. No, and I mean, I think at this point there's a, yeah, I mean a pretty significant fraction of all the, of all the top engineers in the world are using these AI tools every day and they're getting a lot of value out of them. The main thing I would just say here is this is where you know, folks sometimes like to get a little kind of wishy washy about, you know, AI is going to come in and then suddenly all of our problems are going to be solved. Right. And I think one of the things that we're finding, you know, even in good is yeah, there's just a lot of practical work to do out there in the world.

Right.

And so I think it's one thing to, you know, to be able to solve these theoretical problems in a vacuum. It's another thing to, you know, all of these different, all of these different code bases out there, all of these different development environments, all these details. You know, there's a lot of COBOL out there in the world still. You know, there's a lot of all these various different languages or all These crazy, idiosyncratic setups. And so I think one of the big things, honestly, that. That we're solving as a space is actually not just the capability itself, but just solving for a lot of these practical constraints and getting the technology to the point where it works for everyone and not just the subset of people who are building the latest and greatest apps and Python and Typescript or whatever it is.

Can you talk a little bit about the importance of multimodality and image diffusion and understanding images in the context of coding? I think a lot of people assume that, well, it's just code. You don't even need to think about the advantages of being able to process images effectively. But at the same time, it feels like the more data you throw at these models, the better they get, even if it feels completely tangential. Just having the ability to not just know Python, but also speak Russian and Chinese and Japanese and all these different languages, it seems to increase overall intelligence, even though it's not the narrow set that you thought it was.

Yeah. And by the way, it's actually a fun exercise if you've never done this before, to basically a lot of the queries that we feed language models of just like, raw, massive blobs of text to try to do those yourself, like, as a human. And one of the things that you find is like, wow, it's actually really hard if you're just looking at some massive chunk of text, of just finding the thing that you want and getting the right thing. Like humans naturally, there's just like a lot of systems and how we process information visually and all these things. And what I would say, yeah, I mean, I think in terms of code, for example, I think it's one thing for it to be. Call it theoretically possible from the set of information I'm giving you, it is theoretically possible to extract out exactly what needs to be done. And you could say this, for example, with. Let's say you're trying to build a new feature and you just say, all right, here's the entirety of my 1 million line code base. Just tell me what I need to do to build the feature. And obviously no human can do that on the first try and just tell you exactly what needs to happen. And really, for most of these more complex tasks, no AI can either. And in practice, the way that we solve these things is obviously through a much more iterative process that involves using all of our different tools. And it might involve, for example, running the front end locally and then clicking around on the website and seeing what happens and you're trying to fix this button, so you go around and click on it and you move around and you see what errors come up in the logs when you do that. And so that's how you solve your problem. And so a lot of it, I would describe it as almost like setting the stepping stone instead of the rock, cliff face, where you can make the incremental progress towards a solution. And this is what we do all the time in software engineering. Similarly, I think being able to use image or being able to interact with these other data sources is what really gives AI that same capability.

Please.

One question that you are uniquely suited to answer. Do you think we see an AI win an IMO gold medal this year? It was silver last year and I imagine we made some progress since then. But what's your take?

Yeah, I'd be pretty surprised if we don't. We have. So the greatest competitive programmer of all time is a guy named Taurus. His name is Gennady, he's from Belarus and he works at Cognition. Actually, you can look this up.

That's true. It's true.

It is objectively true. It's. And, and, and so Gennady, you know, we, we have kind of a bet going internally on mainly the question not of whether it will be like a, you know, like a, you know, top level high schooler, which is essentially what the IMO or IY gold medal is, but whether it will beat Gennady, who is, you know, the greatest of all time. And I think most folks think it's probably going to happen this year.

Yeah.

And if not this year, then next year. Yeah, I think Genadi is, he's pretty adamant that he'll still be able to do it. And so I'm kind of looking for, I mean, I feel like we should have the, we should do the whole show match, you know, Gary Kasparov style and do it with let's do it Live.

Let's do it Live on tv.

Well, can you give us the call to action? It sounds like cognition and Devon are much more accessible. How can people get started? How can they sign up? How can they play with this tool and see if it works for them?

Yeah, so we rolled out a whole new experience. And then on top of that, we, you know, we would really love to hear what folks think. And so we're making it a lot easier to try out. And so we have a new plan that starts at a $20 minimum and it's all available at app.devon.AI so you can, you can Sign up immediately. It's fully generally available and you can try it out on your code base. Very cool.

Well, I hope those GPUs don't melt. Hope the servers stay online. And good luck with the next couple of months, as I'm sure it's going to be a continued rocket ship.

Yeah. Congratulations to the whole team.

Appreciate you. We'll talk to you soon. Thanks a lot, Scott.

Talk soon.

Bye.

Yeah, he's actually on the team.

Yeah.

Well, I've met Gennady because he worked at Ramp and I interviewed him and a lot of what he said went over my head, if I'm being honest. But he's a beast.

And so on polymarket, there's. It's only at a 59% chance that AI wins an IMO.

They're selling dollars for 59 cents, folks. Not a financial advice, but you heard it here. Like, it seems pretty obvious. Anyway, we got Michael from Aurelius coming in the studio. Welcome to the show, Michael.

What's up?

How you doing?

How are you breathing today? You got the nose strip? Is the oxygen good? How you doing? Going well.

Dude, one of my nostrils, like barely works, so it's just all jacked up. I got. I gotta figure that out at some point, but you're out for a while if you get like a. Like an ENT fix.

Oh, yeah, yeah, yeah.

It'll be fine.

I think I have the same. I've tried those. I've tried the nose strips for sleeping at night. They're pretty. They're pretty wild.

This guy's the Alex Hermosi of laser weapons. Yeah, but.

Yeah, I gotta get a new thing then.

Yeah, I appreciate you DMing me. You just said, hey, let's talk about laser weapons. And I was like, I've never heard of this guy before this company, but I'm in. And, and, and so I. I did a little research. I want to hear about your experience at Stanford. I want to hear the basic pitch for the company, your background. Can you just take me through kind of the. The 101 level of who you are and what you're building?

For sure.

Yeah, for sure.

So I'm an engineer, worked all across a bunch of different heavy industrial systems I've worked in. A lot of my time was spent in electro options system development. I helped work at the biggest US laser company on laser weapon systems and an R D capacity. And then I went into sales and I sold a bunch of systems, including some components into a lot of the primes for the big laser weapons that are that are out there. I didn't, I didn't, you know, I didn't go to Stanford, but at. We had a Stanford. We were essentially when we first started the company, we were hiring the first round of engineers. We had sent out hiring calls to a bunch, you know, among LinkedIn and X and stuff, also to a series of universities. And all of them were cool with it except we got kickback from Stanford where the Stanford hiring board was like, you cannot, you know, post here because you have like you're a weapons company.

Right.

And, and you know, that's really bad I think for Stanford students, but great for us because we just start posting it. We're like, dude, this is, this is a bs this doesn't make any sense. And it's great. That was, that was, you know, Larson Jensen and made it, made a bunch of posts about it and we'd continue to, to kind of chat about and got a lot of interest on that front, especially for hiring. Like if people want to work in defense, there's aren't that many companies and the one that's getting flamed because they make weapon systems. You know, if you want to make weapon systems, there's a good chance you've applied their company. Yeah.

Can you, can you talk about the history of lasers?

I was gonna ask the same thing you said. The big laser weapon systems.

Yeah, yeah.

You know, and just laser weapon systems right now.

And after you talk about the real history, maybe you can sort of talk a little bit about. I have a big tinfoil hat here.

The Death Star is real.

And now there's been a lot of, there's a lot of conspiracy theories about directed energy weapons, space lasers, things like that. But talk about the sort of the history from your point of view. Yeah, definitely.

Well, you know, the Death Star doesn't exist yet, but the Death Star and stuff like that is how would become, you know, like a trillion dollar company but eventually become an orbital weapons platform company. So probably the only way that you do like low Earth orbit translunar or trans Martian warfare is through light. You know, if you're going to take the missile system up into low earth orbit and there's 50,000 Chinese satellites, there's almost no way that you can do it shooting that in a cost effective way. But orbital weapons platform is great. But history of directed energy weapons, you know, maybe 40 years ago when lasers started to kick off in the, in the, you know, commercial space in terms of cutting and welding and then also in the communication space, people like wow, I can cut sheet Steel with this can I shoot down a missile from like a thousand meters away? And that kind of kickstarted a bunch of effort and interest. Those systems haven't necessarily panned out over the last 40 years. I think in the last 10 years we started to get a series of systems that are deployed by Lockheed and Northrop. And so you know, there are massive warships that will have, you know, when you're building the ship you have to, to build a laser weapon system turret into it. But we deployed, I think there are eight ships that have a series of like multi hundred kilowatt laser systems on it. And you can cut the wing off of a plane from 10 miles away with those systems in about 10 seconds. So they're pretty, they're pretty metal, they're pretty rad. And that's what a lot of the directed energy supply chain has looked like, the direct energy R and D development has looked like in the country.

Does blue is blue effective against lasers? The color blue. I know that like, isn't there something about like a specific frequency of blue that sort of prevents damage from lasers? Am I making that up to the.

The power density and the lasers we're talking about like you need some very, very specialty materials to kind of defend against them in any kind of, you know, scaled capacity. So like the color blue. I'm not sure about that. I mean you could like, you have mirrors that reflect the laser light, right? But they're very small and they have, they have extreme like extremely expensive rare earth materials that are kind of doped in those mirrors for reflectance.

It looked like one of the first things you were starting with was anti drone counter UAS systems. We've seen a lot, we talked to a lot of these companies. Allen Control Systems, kind of putting a gun on a truck. There's electronic warfare attempts. We just talked to Nathan Mintz and or has a variety of systems for counter UAS projects. Why is that the landing? Why is that the beachhead for you? Why are laser weapons so effective against drones?

Yeah, definitely. So fundamentally directed energy systems, the promise there is that if you are using electrons as your ammunition, then you have an extremely low marginal cost to shoot down. Like you bring the price to shoot down a drone. You know, if you're using a missile, it could be millions of dollars. If you're using an Andoril drone, It could be 100 to $250,000 per drone shoot down. You know, that's an improvement, but it's still extremely expensive and you don't have a cost differential. On your side, if you turn a laser for three seconds to shoot down a drone, that's like 25 cents in electricity cost to, to, to shoot those down, essentially. So that's, that's really, that's really what we're looking at on, on that front. And then your second question was. There was a second one.

Oh, I mean, I mean, I, I just love to know, like, like it feels like this technology is still somewhat sci fi. I mean, you said that they've been deployed, but you know, we haven't seen like videos of this. Like, oh, in Ukraine, it's changing the battlefield. Or like, or like with the, what was it? The, the shoulder mounted rocket during the, during the Ukraine war. When that broke out, we were like, like there's not enough in the supply chain. Like, it was like, not just. It's real, it's like it's having such an impact that they're using too many of them. And now we need to figure out the supply chain. I haven't seen any stories like that about laser weapons or directed energy weapons. So where, where are we actually in the rollout of this technology?

Yeah, so there are large laser, like we were talking about earlier, there are large laser weapon systems that are deployed across, like the Navy, for example. Those are really, really big prime. Primes generally are interested in making extremely expensive bespoke systems. This is like the end of play, right? Is that their business models do not, do not allow them to do anything other than like the particularly heavy, expensive bespoke system. What we're doing is we're coming from the bottom up and saying, what is the lowest swap? Like, what is the lowest weight, what is the lowest size, what is the lowest cost for a directed energy system? Coming from the bottom up and doing it. We're approaching our target for, we're approaching our target for distance very rapidly on our RD systems that will then go out and we'll look to deploy early, early to mid next year in kind of fielded capacity through some of the, through some of the DOD units. I think a really salient part of what we do is like when you're talking about some systems like maybe microwave systems or radio frequency systems or even bullet systems, is the range is extremely limited. I mean, when you're firing a round out of a M249, the bullet, the muzzle, the muzzle speed is like 700 meters per second. So you have to lead something. You know, when you get up to 700 meters, it takes one second for the bullet to land. You're arcing A bullet. The drone is flying dynamically. That's a very hard control problem. We are, we are shooting things down at the physics limit like the, like the speed of action. Essentially this where you know, when we shoot a pulse of light at something a thousand meters away and it's moving left to right at maximum speed, say 100 miles an hour, the, the drone moves that droves 30 microns, 20 microns in the period of time that it takes for the light to hit it. So we have some salient control benefits and we also could continue to move out further and further and further. You know, as we kind of build out the system and build more products on top of it. The pathway that 1, 2, 3, 4, 5 kilometers is, is right there.

Have you, I'm curious, you've thought about defending various assets against drones that are non military. So you could imagine if, if somebody has let's call it an oil rig somewhere and it's threatened by drones for one reason or another or potentially a better example is something like an NFL stadium that's worried about potential drone based terrorism. Have you thought about putting these turrets? Because one of the issues with traditional kinetic anti drone weapons is you're shooting bullets into the air, those bullets are going to land somewhere. Theoretically with lasers you could take the drone outs without any risk of, you know, you know, undesired damage.

Yeah, definitely. So you know, in an urban environment or at the border, right. You know like you're not going to shoot a missile or a bullet, you know, in an urban environment at some drones. But there are, you know I think that the super bowl had, had something like 50, 50 to 100, something like, like on, on, on unseated airspace like injections of drones where that were not supposed to be there and you couldn't really do anything like DHS couldn't really do anything about it. So you know, we go forward and we become an option where we're probably the only option in an urban environment where the laser is invisible, it is silent. We can autonomously target detect, track and destroy drones in that is that are threatening civilian infrastructure. So that's a great point. That's exactly what, that's exactly what we want to do. And you know, when we, you know, when you focus the laser onto target to get a high density, there's a, there's a small depth where you get a very high density. You also de conflict and defocus past targets. So we have this kind of depth where it's fairly lethal to targets but then we can deconflict Pretty easily as well.

Interesting.

Do you.

Yeah. This is sort of a scary thought, but do you expect there to be drone based terrorism, like some type of drone based terror terrorism event in the next five to 10 years? It seems like a huge threat that we don't necessarily have any. It's not like a police officer standing outside some, you know, soccer stadium somewhere is going to see a, you know, drone coming in and take it out with a handgun. So it doesn't seem like we necessarily have any defenses for that kind of attack. And you don't need such a sophisticated actor to pull it off necessarily.

Yeah, definitely. I mean there's almost certainly there have been attempts that the FBI has thwarted. So I think maybe three months ago someone was planning an attack in Tennessee on a, on a, either a power plant or nuclear reactor. I forgot which. But they thwarted the guy in advance. They found him, checked his communications and stopped him.

Wow.

But you know, almost certainly, I think one of the main dangers in the people are afraid about with drone warfare is that it allows non state actors to inflict massive damage on trillion, trillions of dollars of human and infrastructure assets. So you know, I don't think that we're too far off from a major attack happening. Obviously our, our state defense apparatus is doing everything that they can to stop stuff and they're fairly successful. But like if you miss one out of a thousand, that's, that's pretty, yeah, that's pretty damaging.

How are you thinking about the revenue and growth side the of of the business? I can imagine pulling in some SBIR money. I could imagine this being kind of like a DARPA project almost long term. You probably want to be a program of record. But how are you thinking about staging things out and what does it look like so far?

Yeah, you know, we have a lot of interest from a lot of the, from a lot of the national labs in terms of going straight to ota. In terms of procurement contracts. We are moving like people didn't really think that this could be done. No one was looking at small scale, lightweight edge deployed directed energy. And at this point we're moving so quickly. Like it'll like by the time, by the time a SIVIR like is written for like exactly what we're doing right now, we'll be like a year down the line and we'll be ready to produce like 50 to 100 units. So at this point, you know, our, our customers are pretty, pretty well receptive to that. If you're deploying directly to, if you're deploying directly to, to dod. And then we just have an unending list of people that want to. Want to demo the turret on their vehicle platforms. Like, so extreme vehicle companies, like all the way, like small startups, mid startups, prime, stuff like that. And so I think we're trying to find that sweet spot where, you know, where do we deploy?

We have.

It's like, we have. We've done a good job building for system. Everything that we're doing makes sense. And then what we're going at is like, where do you go from here? Which of the. Which of the promising opportunities do you tackle with limited resources?

Yeah, well, I'm a potential customer. I'm big into big game hunting and I'd love to take this on hunting trip, dude.

And it'll be cooked. It'll be cooked.

Yeah, that's. That's what I'm looking for.

And then you can just like eat it right there.

Yeah, that's. That's exactly what I need. I'm sure Peter will love that. So thank you.

It's great. It's great to meet. Michael. Thanks for doing what you're doing.

Yeah. Thanks for the message and thanks for hopping on. Really fun chat and good luck to you.

Thank you, guys. Thank you. Of course. Thank you so much.

Talk soon.

We'll talk to you soon.

Cheers.

Well, what a fantastic tour of defense tech. I feel like I learned a lot about all the different companies and got to talk to some really interesting people. Do you have anything else you want to cover before we jump off for the day?

America Day.

America Day was a success.

I just want to say that America Day doesn't end when the stream stops. It's gonna keep going forever.

Forever.

Actually sort of a perpetual day.

Yeah.

Regardless of what the market's doing.

Yeah.

But no, I want to say thank you to ramp, Polymarket, public bezel numeral ad quick eight sleep and wander. They make the show possible. We are 100% corporation supported.

Yes.

And we're very grateful for it.

Yeah. Thank you, everyone.

We will see you tomorrow. Can't believe it's Friday tomorrow, John.

It's crazy.

Flew by one more stream this week. Yeah, it's going to be a rough weekend.

It's going to be great. Thanks.

All right, thanks, guys. Cheers.