Weekly Recap: CEO Affair at Coldplay Concert, Elon Musk's AI Girlfriend, Cognition Acquires Windsurf

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This went insanely viral. The CEO of a company called Astronomer was caught on the kiss cam hugging one of his employees, the head of hr.

Oh, look at these two. All right, come on. You're okay.

Either they're having an affair or they're just very shy.

And I said, but in the video.

Chris Martin is like, something's going on here. He clocked it.

Startup CEOs can't even hug their chief people officer at a concert in this country anymore.

It is crazy when the Internet descends on a current thing how viral it is. You have to jump in on the current thing.

Well, before we talk more about this, I wanted a quick word from our sponsor. Astro by Astronomer is the orchestration first data ops platform built on Apache airflow. It's empowering your team to build, run and observe data pipelines that just work all from one place.

Do you believe the conspiracy theory? Put on the tinfoil hat.

Yes.

Will you Steel man the tinfoil hat? What is the tinfoil hat explanation here?

Tinfoil hat explanation here is all press is good press. Is that Nathan for you? This is just part of an elaborate stunt?

Yes.

And Nathan's plan was have the CEO get caught having an affair with a coworker to increase brand awareness and get a buzz going. This was Charl Light over on X.

They definitely got the buzz going.

And yep, a lot more people know about astronomer today.

100%. 100%.

But hard to see how it would have been planned. There's been a bunch of jokes. Ryan Peterson said board should give him a raise. Without this viral moment, I'd never know that. Astronomer is used by enterprise clients to manage Apache airflow and achieve 70% higher uptime than self managed airflow. So lots going on today. Alex Cohen says, imagine losing half your life savings at a Coldplay concert.

Why half? Oh, because he's gonna get a divorce. Okay, I thought it was about him.

Getting a vesting joke. These are adults that made their own decisions. Yeah, and they now have to live with the consequences. But I doubt either of them would have paid half their net worth for those tickets.

Yeah, rough. Very, very bizarre. I was reminded of what Emily Sundberg told us when she came on the show. I was asking her how the Hamptons has changed since the era of social media, the age of the Internet. And she said that there are so many tiktokers documenting everything that happens in the Hamptons now that you can't even leave a party with someone else's wife. That's what she Said to us. Do you remember this?

Yeah.

And I'm wondering like what does this actually mean for birth rates? What does this mean for like this seems predictable at this point. This is the first one that's happened.

I've seen these other videos having debate this morning which is that Find my friends is the best thing to happen to monogamy. Monogamy, yes. Potentially ever.

Yes.

Because if you are in a committed long term relationship. Yeah. And you do not want your partner to have visibility into your whereabouts and you can make a pretty bad argument for privacy. But it ultimately it's really hard to stand behind and I think it's potentially a really positive force against social media, dating app culture and things like that.

Yeah.

So the answer to technology problems is more technology.

More technology maybe. Yeah. It was like this. It's this countervailing force because what was it like? Instagram is constantly flooding you with recommended like look at this girl. Look at this random person. Look at this thing. Look at, you know, like go down this rabbit hole and then find my friends is maybe pulling you back. But I mean he probably told. He probably said I have to go for this for work or some clients.

Fix this issue.

Doesn't really fix this issue. Lulu the Kiss Cam does. The Kiss Cam is a Lindy technology.

So Lulu had some advice. She says just giving out priceless comms. Crisis comms for the Astronomer team. She says don't bother with crisis comms here. The CEO will try to get you to protect him, but it's not his company. He's a temporary steward. Your job is to protect the company. The CEO is a professional manager who's only been there two years. The HR person has been there less than a year. Neither is tied to the identity of the company. Preserving trust is more important. Your business model is to handle sensitive data and your priority is scaling. And that's tough to do with multiple known liars on the senior leadership team. A better comms plan than trying to save the situation. Andy Byron is on the board, but he's not a founder doesn't have control. The other five members should replace him. You can then use the new CEO announcement as a reset and get people to focus again on astronomers actual business instead of its drama. So we did reach out to Andy this morning to see if he wanted to tell his side of the story. Felt like an extremely. You gotta be a little bit crazy like Soham to want to come on after you have the current thing.

Yeah.

But in this case we should have the new CEO on of Astronomer when, whenever that comes. So there's a poly market today on whether he'll be out by the end of next week. Odds are currently sitting around 38%. I would not be surprised if there's somebody new stepping into the CEO role at the company. This seems to have been a way, way bigger than just the current thing on X. It seems to have really broken containment.

So is this a databricks competitor like Apache Airflow is? It says open source workflow orchestration platform used to programmatically author, schedule and monitor data pipelines. I wonder if their business is just exploding. DAG directed graph.

So quite the lineup of investors. They've got Bain Capital Ventures, let's go G just led a Series D this year. Let's go into Astronomer. So let's hit the size cone for that.

It's probably a fantastic business.

And Insight is also led the Series C in March of 2022. So Venrock was in the Series A as well. And then Sierra Ventures, who I'm not familiar with, has led a couple different financing. So yeah, this business has been around for a while. They're gonna get through this. I'm sure that Bain Capital and Insight and the other members of the board are already figuring out who they can get to step up and run this company.

Yeah, there just seemed to be some sort of line between like bizarre, salacious, but ultimately orthogonal to the core business drama and like actual core business drama. Like some fundamental flaw in the business plan that's exposed FTX or Theranos versus just this, like, you know, drama that's happening here. I keep laughing about that analogy. We go back to where if you found out that, you know, I think, what do I have? I have. What are pilot sport tires?

Is that Bridgetown Michelin.

Michelin. Michelin tires. So if you told me that the CEO of Michelin was caught at a Coldplay concert with the head of Michelin hr, it would be a tall order for me to go get new tires. Right. I'd be like, the tires work pretty well. That issue doesn't really affect my tires.

It's more so that the difference here is that being caught is different than being on the kiss cam and getting 100 million views today. My post alone has a million views and I posted it a few hours ago.

But do you think, do you think it's going to actually affect revenue?

I don't think it will affect the business at all necessarily. Maybe a little turbulence because of needing to find new management and have certainly.

Stressful weeks of dealing with stuff Turnover.

Turnover on the exec team is going to be a challenge, but ultimately their customers are not going to say, hey, we're turning off, we want out of our contract. If the product is good, maybe some people use it as an excuse.

Sure.

But yeah, I don't see this affecting the business. But then again, it's like if you're being capital or insight, do you really want. Do you want a. He came in two years ago, sounds like he's been executing. The team has been executing. Well, if they got from series C to D over the last couple years, they're probably growing nicely. And I don't necessarily think that this is the end of this guy, either of their careers. It just should be the end at this company.

Yeah.

Because if, because if you're the board and you and you tolerate this, that just means. Yeah, we tolerate people of, you know, poor moral character.

Sure. Yeah. Also interesting, I mean this company, like we've never even heard of it and it's on an absolute terror series D at this point. And does this not sound like something that should be in the AWS dashboard? Like we were talking about browser based yesterday getting like quote unquote copied. And there's just something about these like point solutions that just are, you know, nailing a specific problem. You know, in this case it's like deployment and management of an open source project. It's literally anyone can just run Apache Airflow. They just help you do it better. And that's kind of what databricks did with Spark. Like Spark's an open source project now they now they for these data pipelines now they help companies actually run, install, manage, run them and then put a bunch of software on top of it. And databricks has been massively successful and so it's interesting to bring it back to browser release because it just kind of reveals that these companies can be kind of grinding in silence for a while. Just. I guess the note for Paul Klein is probably stay out avoid being the current thing because the failure mode could could be less technical and more interpersonal.

Yeah, I don't know. True. Anyway, work, retire, die may have been inspired by my post or it could have been totally random, but he said married CEOs can't even hug and romantically sway with their married head of HR during a concert anymore. Because of Woke.

Oh, because of Woke. Okay. Yes, yes, yes. Is there anything else to cover on.

The Sophie Netcap girl says it's so hard to get notice as an AI company these days. The astronomer CEO had to cheat on his wife for marketing. It's dark out there, I don't think.

I'm not believing the tinfoil hat one.

On this one if you've been living under a rock. Grok launched a NSFW anime mode to the app, audio and visual and I believe it's part of the paid tier.

I believe it's $300 a month, something like that. There's a report in, in Wired about this. I wrote about Xai from Kylie Robison who's been on the show. I wrote about Xai's new creepy waifu bot and its even weirder companion Rudy, which has a bad version that told me all Skull f your deed, blah blah blah. Very vulgar, not family friendly, not approved for this show. When I asked what it thought of Musk, it referred to him as Lord Elon and said he's a galaxy brained egomaniac. I can't even read this. It's all bad words. But anyway, I am, I've been thinking about this and I, and I think that there is an interesting Steelman argument that we should go through so we should talk about it. So in general, I think that Xai's Grok strategy is a little bit all over the place. So they're trying to be super quantitative and benchmark build. I'm serious. They are, they're super benchmark pill. They're like look arc AGI the insiders inside the most insider AI test you can possibly have. Yeah, we have the best score on it. We're on LM arena where you know, we're, we're, we're, you know, maxing out all these different benchmarks.

That's right.

So it's like, and it's like it's this incredible engineering effort to build the 100k cluster. Like they're clearly hiring great talent. I know. Journey keeps laughing. See, seeing the.

I'm just, I'm not going to look at you. I'm not going to look at you. That'll help me.

So they're very, they're very benchmark pilled but then they're also trying to do this like sassy and anti woke thing in the, in the, in the post replies. And like the fine tuning on top of that was so crazy that it spawned like the Mecca Hitler thing. So it's like they're, they're, they're kind of like all over the place. One is like super quantitative, super focused, super benchmark pilled like just.

But they're clearly kind of edgelords internally.

Well, it's like it's almost like two different extensions of the product. Right? Two different teams building towards two different goals. One is just like the most beautiful, like solve physics, solve math, like create the. Create like a great AI product. Yeah, the pursuit of truth, all that like facts and usefulness and tools. And then on the other side, it's like, it's like fight this culture war thing, which is like a very different battle to be fighting. And then, and then we saw this last week after the launch. There was. There was a new. There was news that everyone was memeing because it seemed like it was very, very opposed. So one was that GROK had signed a contract with the Department of Defense. It's like as serious as you can get in AI. It's like OpenAI has one of those contracts, I believe. Anthropic Palantir. And then Grok, which is like this from the outside, like, seems like a.

Chaotic like product that was born on something like 4chan.

Yes, exactly. All of a sudden, like the DOD is going to be adopting that. Like, what does that mean? And then simultaneously there's like they're getting into the romantic companion market with this anime theme. And so AI companions. I think the general mood in tech is that it is a very dark thing. Like people get addicted to them, they become less social, they stop interacting with real people, they don't have kids. And then the population collapses and humanity ends. Like, that's the bad ending to the. To the AI companion narrative now.

And to be just to give you some context, there's a variety of companies that do this today. Varying levels of vulgarity.

Yep. Replica, We've actually talked to the founder and she had a bunch of nuance around it. So I don't.

And just for context. So replica has over 225,000 reviews in the App Store. People are definitely a friend. So they were very early to this character. AI was also early to the AI Companion Space has tens of millions of users. It's one of the biggest websites in the world still. And so anyways, there's a variety of players in the game. But what's interesting about GROK is when you look through the other labs, from Llama to Google or sorry, Meta Superintelligence, superintelligence to Anthropic, chatgpt, OpenAI, et cetera, nobody has been willing. Everybody knows that this is a use case that there's an obscene amount of demand for, but no one else had the guts to go and do it. At least a player that had billions and billions of dollars to Deploy against a strategy like this.

I believe, I believe at this point every other company that's playing in the companion space should not be considered really like a mega scale research lab in the sense that they're not raising billions of dollars anymore because Character went through that zombie aqua hire that probably cut off the capital cannon such that even if the Remainco employees. The ghost ship, I don't want to call it. I mean, it's kind of rude to call it a ghost ship because it seems like the employees at Character AI are running it happily doing fine. But it doesn't seem like the new CEO of Character AI will be able to go out and be like, I'm raising $5 billion to build a 1 gigawatt cluster and I'm going to buy 100k GPUs to train my own model.

Like Character will just run it profitably and make a great user experience.

Yeah. And so you'll always have this kind of back and forth with your API provider because the API providers, the foundation labs, they care about their brand, they care about how they're perceived as being ethical or moral. And so they might not want to offer that even at the API level. So what's interesting, and this, and this is where like the Steel man comes in. So the, the worst possible outcome for AI companions, very dark people. You know, it basically reduces the coupling rate, but we've already seen a decline in birth rates, so it's not. So it's unclear if it's like this is a new thing that will accelerate it. This is status quo anyway. I think that's kind of like where.

The concern would be, like pornography has existed as long as the Internet.

Online dating is another thing people are.

Skeptical about as long as the Internet has existed. I'm sure that has led to some not so great outcomes. The concern is that Companions that are real time and adaptive and really mimicking a human would create even worse behavior. And I think that's NSFW content.

And I think that's a reasonable point. Although it hasn't been borne out in like data or any sort of like research at this point. But it feels intuitively reasonable. But let's actually think more about the market because in order to scale your lab, we know that you can't do it as a nonprofit. We know that it's not just $100 million donation one time a bunch of geniuses working, you come up with the elegant algorithm for superintelligence. You need scale, you need capital, you need talent, and ultimately you need a capitalist Flywheel, a corporate for profit corporation that's increasingly getting more users, putting that into user adoption to get more users, to get more data, to train the model, to refine the product and then save the world. And yes, and then, yeah, this is where I'm going. And then also raise more money. And then if you're going to raise money at a certain level, there has to be a financial like model that maths out. Now it can be kind of funky, like 1% of AGI. But there are still on the margin, many investors in foundation labs that are underwriting, you know.

Well, I was asking the question last.

Time, underwriting these labs where is at a multiple of earnings?

Well, yeah, where. Where's Grok's revenue going to come from? ChatGPT has a great consumer, you know, consumer business.

I would say OpenAI has a great Cogen business. Yeah, I would say OpenAI has dominated and owns knowledge retrieval. Anthropic owns Codegen and they both have kind of Flywheels that are accelerating and now they're obviously fighting it out. Anthropic would love the Claude app to become really popular and ChatGPT would love to have their cursor competitor or their Claude code competitor, Codex, really, really take off because maybe that'll happen. They're duking it out. Meta is building on top of the world's biggest social networks in the world. They have three of them, really, Facebook, Instagram and WhatsApp. So they have a ton of data that's accumulating and firing back and they have tons of, tons of cash flow coming in from that. So they can justify New capex internally without raising.

Meta is one of the. They had launched AI companions, but it was like talk to Dwayne Rock the Johnson or Dwayne Rock Johnson the Johnson.

Dwayne Rock, Dwayne Rock the Johnson.

Dwayne the Rock Johnson. And I don't. And I think that product flopped back in the day. I remember because Dara at Delphi saw the launch.

Yes.

He was like, dang it, that's annoying.

At the same time, I saw some screenshot that showed that there was an Instagram account that was owned by like Meta AI that was just cow and it had like millions of interactions. So like, maybe people want to talk to just a cow more than they.

Want to talk to him. I think that's very possible.

But. Yes, but at the same time, I think that the Meta superintelligence team is aware of the issue that will come from the inevitable New York Times profile on if it's truly anime waifu romantic companions. That's a step further than cow or the Rock. Right? And there actually was Remember the John Cena thing? We covered how someone had jailbroken the John Cena Instagram AI and made it like romantic. Remember this? Yeah. So like I think meta is like, is like we're fine ceding that territory. Like, like we don't need to play in that. Just like they don't need to show NSFW content on Instagram. They're like we're fine losing the market. Seeding that market to to OnlyFans on a. On an ethics basis. We think that it makes our company more valuable overall. It makes it more hospitable to our advertiser community.

So the reason that just to just to kind of bring us back to why this has been such a hot topic is that Elon Musk has has posted many, many times about the underpopulation crisis, the birth rate Crisis. He said Shield highlighted a post from 2022 a collapsing birth rate is the biggest danger civilization faces by far. So the Steel man is that Elon is doing something about it.

Yes.

Right. Having a lot of children.

But the real Steel man about Grok romantic companions is that how will they actually increase the amount of humans in the world? How will they reverse the population crisis? That's the hardest argument to make and that's why I'm wearing the steel helmet, because it's a very hard argument to make. But I have one.

And SHIELD for the record is saying I think Grok can paint is probably accelerating population collapse.

Yes. So as the Steel Man I'm going to be debating against Shiel.

Get ready Shiel.

Get your straw man hat on last of the labs. Google, they're building on top of the biggest search engine and they also have YouTube. And Google you also know is not going to go into romantic companions. So XAI needs this user flywheel and every other lab has self selected out of competing in in the companion space. We went through some of these. Google famously skipped the character AI product in favor of the team in their zombie aqui hire Paul Graham. And so this is all about in my mind as the Steel man counter positioning. So you remember Avi Schiffman was releasing a new hardware device, an AI friend, right. And he was everyone was saying you're going to get steamrolled by Apple. Like if you try and come out with a company with a product that is in fact a new device that fits within the Apple ecosystem and it's leveraging the the Apple branding world you will just immediately get cooked by Apple because they will just eventually launch a better version and they'll have better supply chain, better pricing, all the different things. You'll have the full integration like you, you can't go after them that way. And so Paul Graham replaced, applied to Avi Schiffman and said, and said, here's how to compete with Apple and hardware, you have to build something that contradicts their fundamental assumptions. For example, imagine if you built a device whose appeal was that you could customize the case to make it as tacky as you wanted. Apple would hate to follow you there. So no other lab wants to follow Xai into the Romantic Companion market for brand and ethics reasons. But there are users who will pay real money and share real training data for Romantic companions as a product. And so if you want to sell the most number of Grok subscriptions, at some point you will be. And so this is where we get back to how it affects the birth rate. So if you want to sell the most number of Grok subscriptions at some point, declining birth rates are going to be a problem for your business. You're going to hurt your business. And so you're going to have to think about.

And right now, for context, Grok is blowing up in Japan. Yes, it is the number one free app on the Japanese App Store. It is above ChatGPT and all the different local products that I can't read the names of. So it is dominating in Japan. It's a hit in Japan already.

Yes.

And it's not to me. It's not hard to imagine this product finding a million people in the world that will pay the ultra premium plan. And that is billions of dollars of revenue.

Yes. And so at some point, if Grok gets big enough and the population is declining and it's. And Elon looks at what the Grok.

Product is doing, saying, what have I done?

He will say, I need to pull people back from the abyss. I need to actually use my superintelligence to increase the birth rate. How will you do that? Well, we've talked about this before. Someone in some woman is talking to a male companion AI and some man is talking to a female AI companion. And they're very similar. And Grok says, why don't you two meet for coffee in the real world? And so they actually meet and it basically turns into the best dating site that actually gets people to get off. It's a stretch and it's why I'm wearing the Steelman helmet. But I think it is possible And I think the economic incentives might be there. I think this is the same reason why you don't want to over optimize a social network for slop and brain rot. Because people will churn. Like, you might be able to keep the time on site going by showing like horrific videos. You can't look away. Oh, it's so controversial. You're miserable. And you might be able to keep someone on and say they were going to use the app for 15 minutes, you keep them on for an hour, but then they're like, like, you know, I need one of those apps to monitor my screen time. I need to uninstall it. Maybe I'll. And then if they do that, they can actually quit it. And if they actually quit, then you lose them as a user forever. So there's this balancing act between, between giving people enough brain rot to keep them on the site as much as possible and not losing them forever. And the same thing happens in romantic companions. Like you want to give them the companion that like, like they pay for and they're happy with, but not. So you don't want to make the companion so good that they don't reproduce. And, and then the second, the next generation doesn't exist for you to sell them subscriptions.

Fortunately, John, businesses tend to think in quarters and yearly it's a private company.

Elon owns a lot of it.

You think he's thinking about the next.

Generation that is the Steel Man?

No, I mean, I believe this will be by far the largest revenue line item for Xai within, if it's not already. I mean, already might be a stretch. They have some big contracts, but this is a $300 a month plan if you want, you know, unlimited access to your GROK companion. And Elon was demonstrating too. It can even help you study for school. So imagine a companion that's not just a maybe a romantic friend, but also can help you pass your algebra test. Well, that concludes the Steel man, the Steelman segment.

And I'm back to the normal world.

Great, great work, you know, keeping it, keeping a straight face and really, really getting out your.

The Steelman. I think this is, I think it's valuable to interrogate this stuff. I think it's interesting.

Yeah. The only other thing that I would add is the unique thing about this launch is that there has never clearly many people around the world spend money on OnlyFans or other NSFW content, but Elon has never created a product for those type of people. And so I think the sort of latent demand that would feel maybe above paying for OnlyFans or something like that. Likely would give themselves like the pass on something like this to be like, oh, I'm just one of the Elon companies. I'll sign up for it. I trust Elon. I have a Tesla. And then suddenly there's like an entire new market of people that are willing to put their credit card down and pay for something that previously they wouldn't for a variety of reasons.

Totally. Yep.

This will be one to follow. How's it doing in the US App Store?

Oh, no, I mean it's all. Most of my Grok interactions are within Axe. My primary use case is still I see a post and then I go and I and I click on the little Grok button and it explains exactly what's available.

Yeah, so it's the number two app. It's still behind ChatGPT in productivity. In productivity.

I'm surprised it's still in productivity. I'm actually surprised it is in productivity because X is famously in news, not in social networking. And so X will typically be at the top of the news subcategory because it would be much harder to compete in the social networking category against Instagram and TikTok and so better to be a big fish in a small pond in some way.

Cognition has signed a definitive agreement to acquire Windsurf.

Let's go.

The acquisition includes Windsurf's IP product, trademark and brand and strong business. And above all, it includes Windsurf's world class people.

No way.

We've privileged to welcome our team. We are also honoring their talent and hard work in building Windsurf into the great business it is today. This transaction is structured that 100% of windsurf employees will participate financially. They will also have all their vesting cliffs waved.

What?

And will receive fully accelerated vesting for their work today.

Go.

At Cognition, we have focused on developing robust and secure autonomous agents, while Windsurf has pioneered the agentic ide. Devin and Windsurf are a powerful combination for the developers we serve. Working side by side will soon enable you to plan tasks in an IDE powered by Devin's code base. Understanding. Delegate chunks of work to multiple Devins in parallel, complete the highest leverage parts yourself with the help of Autocomplete and stitch it all back together in the same ide. Cognition and Windsurfer united behind a shared vision. It makes so much sense for the future of software engineering and we've never and there's never been a better time to build. So there's A video up between Scott Wu and Steve over at Windsurf and we're hoping to have them on the show later today if we can coordinate.

Oh, that'd be awesome. Yeah, that'd be great. Cool.

So anyways, this. Apparently Scott got to work Friday and not only negotiated, I mean to do this kind of deal during all of the chaos, this other deal that's happening, and then put together a deal that delivers a win for every member of the team. And the other thing that's interesting here is historically, cognition had, I wouldn't say over invested in engineering, but they were heavily, heavily skewed towards technical talent.

Sure.

And the people that got left behind at Windsurf were less significant. Sales, enterprise, account management, gtm. Right. Over the weekend I'd heard other teams that were kind of circling, wanting to hoover up their GTM team, but the fact that they were able to get this deal done in just a couple days is fantastic.

This is incredible. Wow. What a fantastic end of the story or a beginning.

New beginning.

Yeah, new beginning, new beginning for sure. I don't even know if we should go through the full history here. We can kind of go through whatever, but I mean, you kind of know the end of the story, but I think we should take you through some of the debate that, that rose up and there's still the question of like, even though it feels like everyone got the good ending, there still is this question about like, we're in this weird zombie structure era where you can be left in limbo. What is the cost of that? What is the, what is the risk to that? Do we need new employee contracts? Do we need new understanding of how, of expectations? Because it's one thing for a CEO to say, hey, I'm trying to build something really cool in Silicon Valley. I'm going to build a tech product and I want you to join me as a salesperson, operations person, an engineer, whatever. And we're going to go on this journey, we're going to go really hard and we all want to be aligned with thinking long term. So we're doing a four year vast with a one year clef. Pretty standard. And the expectation at least the history has been like, like you will have clarity throughout that process. And now that we're in this weird, weird regime, like you're getting like, okay, the last, the end, the end of the last chapter of the book could be really dramatic, but we got the good ending and the question is like, has there ever been this deal kind of exposed the risk of like the bad ending? And that it is possible that that could happen. It didn't in this case. But the big question I think people are debating is like, how much of this is. Is due to the chaos. How much of the chaos is a function of FTC and, and the antitrust regime. And Ben Thompson talked about that a lot versus just the differences in communication styles of different mag seven companies. That's interesting. The experience of CEOs. Like you look at the way scale AI handled it. Alex Wang is. He's a generational communicators. Benantio Vaughan.

Yeah. Different dynamics.

Great guy.

But it's new lead and acquisition. Totally having that sort of founder mode, confidence, fully in control of the company. And everything we've heard from various parties says that Varun was muzzled. But again, everybody involved should have been saying, how do we avoid making it so that hundreds of people don't feel like they've been, you know, completely screwed, even for 24 hours? Yeah.

And the evil feeling overwhelming. Like.

Yeah.

Like the people you. At first, I was expecting your post.

People were messed. People were messaging me Friday and Saturday morning saying the Windsurf employees got screwed.

Yep.

And I was messaging them back and being like, you're misreading this. This is the standard deal that they've always done. And then the overwhelming amount of more information from high quality sources saying, no, they're screwed.

Yeah.

It just flipped. And I said, okay, maybe, maybe they are right. And the key. So now we don't. We had this whole other kind of tangent that we were going to go down, which is like, what happens to the ghost ship?

Right.

Yeah.

It could potentially be this like Lord of the Flies dynamic where there's now hundreds of people that are still working on Windsurf. But the competitive pressure is insane. You're losing a lot of your top talent and your founders. Are you going to be able to keep momentum or is Churn going to be crazy? And. And then do people try to stay a long time so they can get like a distribution? Or do some people leave because they want to pursue other opportunities? And now we don't have to debate that because Windsurf is home with cognition. And Scott Wu and you know the team about that. What's that?

Everyone. All those employees who are now onboarding.

To Cognition, I know exactly what you're gonna say.

They're getting Ramp cards, baby. Because, Scott, time is money. Save both easy use, corporate cards, bill pay, accounting, and a whole lot more all in one place. Go to ramp.com to get started. And you know, Cognition has a huge lineage with the RAMP team. And so we're very excited for cognition. We're very excited for ramp, and we're excited for all of the Windsurf employees who landed well. This is funny because there's so much that we could go through. I think we should go through a little bit of the timeline of, like, what actually happened, how the debate evolved, because it is very interesting. So the context of, like, why is Windsurf selling at all? And I think this big question, the first one is, let's just say, Hypothetically, you owned 100% of windsurf last week, and let's say a completely financial investor comes to you. There's no even, like, big tech dynamics. It's like Warren Buffett, he calls you up and says, I want to buy 100% of your stake. Warren needs.

He's like these agentic ides. I need it.

I need it.

I have to have one.

I have to have one. Yeah.

I want to buy a great business at a fair price. Let's do a deal.

So that's. The question is like, if you were. If you owned 100% of Windsurf Jordy, would you sell at $2.4 billion last week? And I think for most people, the answer has increasingly been become yes, and there's a few reasons. So the last big post that Varun, the CEO of Windsurf, had interacted with on X was this post by Technium, who says, Windsurf wrecked. And it's a quote of Nick saying, breaking Anthropic just pulled the rug on Windsurf. Windsurf will be cut off from direct API access to Claude in less than five days. 3.5 sonnet. 3.7 sonnet. 3.3.7 sonnet. Thinking windsurf never even got direct access to Claude. 4. Anyways, and so this has been the question of, you know, how much, like, if you are in this, like, rapper business. I think it's. I think it's a great product. I think it's. I think it's great. I think I'm actually very excited about. About wrappers. But there is this. There is this anti. There is this competitive dynamic with the underlying foundation lab. And Anthropic does seem to be more aggressive about where the value accrual will happen. So if it's 50, 50 by default, all of a sudden cursor and windserf start pulling 80% of the gross margin dollars from what they're adding on top, well, then the underlying foundation model is gonna say, like, hey, let's pull this back. Let's make sure some of those credit cards live in our Stripe account and you're not just paying us big API fees. And so there was a big debate about this. Cursor had to go through it, Windsurf had to go through it. And Varun respond to this and had, and had a good analysis and was basically making the case like we can get through this. And I think that's true. I think there's totally a world where it gets true. But you were saying earlier like it is an extremely competitive market. They were not the number one product in the market that's Cursor and by most accounts. And so, and so they were in a, you know, not a super tough spot. It's a great growing market. It's, it's, you know, it's developer tooling. How many, how many, you know, database software, enterprise SaaS products are on the public market? There's like, there's like the seventh one is probably worth 10 billion. Right. So it's not like they couldn't have gone higher than 2.4, but 2.4 billion feels like a great deal for a company for a product that's 1 years old, 1 year old for a company that's 4 years old and a hyper competitive space with product that launched less than a year ago and your direct suppliers are trying to come for you and getting aggressive. And so this went out on Hacker News. Not sure how much you should read into it, but they said Web Serve is absolutely dead in the water. And while Cursor hangs on for now, all value is going to go back to the models, says Jake. In my opinion, other than the Microsoft IP issue, I think the biggest thing that has shifted since this acquisition was first in the works is Claude Code has absolutely exploded. Forking an idea and all the expense that comes with that feels like a waste of effort considering the number of free slash open source CLI agentic tools that are out there. Let's review the current state of things. Terminal CLI agents are several orders of magnitude less money to develop than forking an entire ide. Claude Code is dead simple to onboard use whatever IDE you're using now. With a simple extension for some UX improvements, Anthropic is free to aggressively undercut their own API margins and middlemen like Cursor in exchange for more predictable subscription revenue and training data access.

Yeah, so the other context here is this year Anthropic windsurf went from zero to somewhere around a $40 million run rate. Anthropic this year has gone from the beginning of the year to 1 to 4 billion dollars. And so they, you know, however you want to say, they've been running, running away with the market. And Cursor's revenue is, is equally incredible, although starting from a smaller base.

And so this was some of the, like, okay, things might be getting tougher from here on out. Yeah, I don't know that I fully agree with that, but people were saying this. And then we covered this last week, but the meter team did these evaluations where they ran a randomized control trial to see how much AI coding tools speed up open source developers. And what they found was that developers said that they expected products like Cursor and Windsurf to improve them by 20%, but they were actually 19% slower. And so you have this weird dynamic where, okay, maybe the future is like, so I don't know how real this is. I think that we could totally be in a world where curse is incredibly valuable for less experienced developers working on more vibe coding projects than like pushing the, pushing the frontier of really advanced projects. And then also just the next, the next version of these tools could be really cool and solve this problem. But there was some worry that maybe developers were going to take a hard look at their AI coding IDE stack and say, wait a minute, like, I'm kind of using this too much, I'm leaning on it too much and maybe I should just go back to the old way. So there were some, there were some reasonable points around, like, maybe now's a good time to exit right then. So after that, the question becomes when you sell, you have. The board has a fiduciary duty to shareholders. And the big question that I think everyone was actually debating was this concept of, was the Windsurf deal with Google a Pareto improvement for all stakeholders? Which means in a Pareto improvement, basically you can think of like, the baseline is how everyone's doing. In a Pareto improvement, some people might go up a lot, other people might go up a little in value, but no one is going down. Not a single person is going down. This is the goal of like all political legislation. You want to create things that are not just positive sum in the sense that like, you know, I tripled my net worth and you only lost half. Like, that sucks, right? You don't want that parader improvement is like, I tripled. You doubled. Yeah, I won. But we both won and we're both happy, right? And so in a good acquisition deal, everyone is, It's Pareto improvement. Everyone gets more than they, you know, had before. Everyone gets paid out. Then the flip side is something called Caldor Hicks improvement. And a Caldor Hicks improvement is where some people go up, other people go down, but when you sum them, it's still a net improvement. So very few people were saying, like, you know, the VCs, even when you add up the VCs and the employees and the founders, it's a net loss for everyone. Very few people were making that argument. And to be clear, the employees got hosed.

It seems like everybody would have done better on an open. Everybody would have done better on an OpenAI acquisition, probably. And so when the 2.4 billion number came out on the evening of Friday, it seemed like, okay, not as great, but still, everybody's going to do well. And then 24 hours later, it was, oh, wow. This might have been structured in a very funky way that people were. I won't report the number, but people were messaging me information on how much Varun.

Yeah.

Personally made. And that was still in the context.

You can just do the rough math. Founder stake, couple rounds of dilution. How much do you think he made? Right. Like, it's not rocket science to figure this or at least ballpark it to the right order of magnitude, Right? But you build a great product that gets some traction, that solves some problems, and you build a great team and big tech wants you like you. You know, I'm not upset about it, but the question was, like, what's fair for the employees? What's fair for, you know, all the different stakeholders? And so a lot of people kept coming out with really interesting stories. So William Allen here has one about Scott Belsky and Behance going to Adobe. We should read through. So William Allen says, I don't think he's ever told the story, but it's worth telling. When we were selling Behance to Adobe many years ago, Scott Belsky made a spreadsheet of every. Every employee, 32 of us at the time, and personally negotiated each person's title, salary and incentive structure and made that part of the overall deal terms. I'm going to choke up. It's so virtuous. I heard the phone calls where he went to bat for each individual. He. He not only. He not only didn't have to do this, but it actually complicated some of the other factors in the deal. Of course, it changed the trajectory of so many people's lives, including my own. Two years later, 100% of that original team was still at Adobe. Even today, A dozen years later, many of the core members are still there building. I was inspired by it then and I'm inspired by it now. And so I think that was a good case study in like the founders do have a lot of hard power in the sense of board control and actual voting shares to almost every founder can veto a deal which gives them leverage to build that spreadsheet and actually decide who gets what. And then on the flip side they have a ton of soft power because you can't really do a hostile takeover of a private VC backed company where the founder has board seats and stuff. It just doesn't work. And so it's incumbent upon the CEO to actually take that step. And that was the fear that Varun didn't do that, that he didn't go far enough.

Yeah. There was another, there was another example from Parse Ilya Sukar company so one of his former employees says we got news our startup was being acquired five days before my one year cliff. I thought I'd get nothing. Our shares were accelerated to 100%. It was a life changing event and I'll always appreciate that our founders did the right thing for us at Parse and said. Ilya. Ilya quoted it and said 100% acceleration for everyone but the active founders. We went backwards and re vested our vested. Glad someone remembers. So very heartwarming.

Yeah. And so people were, people were debating, you know, did like was the core team taken care of? It felt very rough but then pretty quickly it came out that. So we were going back and forth on this on Saturday and the core debate like your post went pretty viral. You got 2 million views, 4,000 likes. And it definitely struck a chord. Folks were debating this one line. From what I've heard, the employees are getting screwed regardless of their vesting status. And it's like.

And that was because people had. People were on a four year vest.

Yes.

But they hadn't hit their cliff even if they had joined 11 months ago.

Yes.

And had again they had worked on the product up until launch, launched the product, scaled it, thought that they were getting this three but you know, massive outcome in which again they. Some people would have not been able. I'm sure OpenAI wouldn't have kept everyone.

Yeah, right, totally.

I'm sure that they would have made a bunch of people effectively rev.

Always layoffs post merger acquisitions. Like that happens all the time. That's not, that's not a crazy thing. So certainly reasonable. I mean the other question is just like, you know, if you worked at this company and you were like I like working at this company. I really would love to work at Google. And you don't get carried along like that is getting screwed. Like not getting a job at Google in some ways is getting screwed. Even just the ambiguity over the weekend is a little bit of like a screwing. And so I still will defend your initial characterization, but I thought that there were things that could potentially shift the narrative. And so I quote tweeted your yours with the Steelman argument which is one.

And we tried to get a, a, a, a knight in shining armor suit for we, we were getting the Steelman suit ready but then we knew we.

Didn'T have to will production team will get the steel man suit of armor eventually. We, we, we need to order from a prop shop. We take, yeah, it's on, it's on the way. We're working on it. Yeah okay, we're gonna, and, and just make sure it's great when it comes. And so I had three points. One was that employees who haven't reached a one year vesting cliff don't have that strong of a claim around. I built this with sweat and need a liquidity event. And we don't know the 10 years of all the left behind employees. So there is an argument that like if you joined three months before, it was already like really big. Like should you really get accelerated four.

Years and like oh, and I never would have made that argument but it was a fact that you, you could have worked there for 11 months and gotten zero. And it's like, no, you're getting a ride on the ghost ship now. Ride the ghost ship into the sunset. And that was in the context of the founders. And this is why people in group chats and DMs were getting so angry because it was in the context of somebody that worked for you for 11 months was potentially going to get zero. Now that's not the case now. And then you're walking away, effectively defecting and taking a multi $100 million payday.

It is a weird dynamic with these startups because clearly I don't know exactly what Windsurf's headcount was. I think everyone was saying it was around 500 at the time of this deal and a year ago. Pre pivot, what do you think their headcount was? Couldn't have been more than 50, right?

Definitely not.

So you're looking at a 10x increase in, in employees who haven't really been like they've been on this rocket ship. So I think, I personally think they totally deserve liquidity and accelerated investing, which it sounds like they're getting and it sounds like they're going to do great. But, but, but, but it is like not the nature of the initial contract, which is like one year cliff, four year best. Like if it, if it came out that it was like, okay, they're getting paid out to the tune of, you know, how long they've been there, I don't think anyone would be like that upset. But then somebody was making a good argument that basically like you, when you sign up with like a four year vest, you're saying, I'm gonna keep working for four years if you sell the company and put me on some zombie ghost ship. Like I didn't bail. You bailed.

Yeah.

So you, so you shouldn't, you should accelerate me. And I actually think that, that, yeah.

The other, the other dynamic here was so when character AI, when, when the character AI founders and part of the core team went back to Google, the character AI became a ghost ship. But it was cool in the fact that they had 20 plus million users. They also had 100 million on the balance sheet and it wasn't this insanely gnarly enterprise market. And I know people on the character team and they were like, it's pretty cool. We have $100 million, we have tens of millions of users and we're just kind of going to experiment to try to find, you know, figure out how to monetize this. And I just don't think that that was, I don't see the code generation market playing out in the same way.

Where I was trying to think about that. Like, is there a world where you know, if the ghost ship had planned had like stayed a ghost ship and they'd pivoted, is there some world where they, you know, know, niche down? Like there was this rumor that they were going to niche down into B2B. Like could they have niche down windsurf into some like niche category and actually had like a pretty durable business we were talking about. Like could Jeremy Kaphon make it work if he acquires it and like turns it into some cash flowing business? I just wonder like, is there, is there a niche where like, I mean we've heard, the example I would give is like, we've heard that like these code gen tools are like particularly bad at like rewriting old programming languages, like Fortran for example. And so if you created like Cursor just for like rewriting Fortran, it's like that's not sexy at all. That's not going to Be hot on, on Twitter X But it could be really valuable in like you know, the bowels of like legacy banking and like you could pay, you could charge a bunch and you wouldn't like the TAM wouldn't be very big, but the business could be quite good. And that, that, that might be a weird outcome but it could be a silver lining. I don't know. Well anyway, the second point that I made was that, you know, I said the second, the real culprit might be FTC antitrust. This is a hyper competitive market and Google still feels like they can't just do a normal acquisition and I thought that was crazy because it's like this is textbook. They should be able to acquire this company. Right. Like cursors out there. They're not acquiring the market leader. Yeah, OpenAI is clearly going after this market and to the tune of what's, what's their valuation? Like 350 billion or something like that.

Like, like we haven't, we should try to get an update there. But like I think the Masa, I'm not sure the full Masa, it's not.

Even 1/10 of it's, it's greater than 1/10 of Google's market cap. Right?

Yeah.

And so you're looking at like. And then is Microsoft going to compete in this? Absolutely. They have company.

They already do.

They already do. And so it's like you're basically like, I don't know, second, third, fourth. In this market there are four very serious players. Like this should be textbook rubber stamp. Good, good to go do the deal. No problem.

There's also a long list of founder led companies that were maybe less hyped than Windsurf but have incredibly talented teams. There's like poolside.

Yeah, poolside.

There's, there was that one that Nat Freeman and Daniel Gross did. That was magic.

Yeah, that was magic.dev they were found apparently they were training their own foundation model for a while and that was kind of like, you know, very capex intensive and maybe slowed down some things on the product side but still like clearly it's competitive market, everyone's working on it. Also we're missing out like there's probably a ton of YC teams they're working. There was actually one YC team they got in trouble for forking like cursor too hard or something.

Forked it a little too hard.

Yeah, they crossed some line there. I think they did fine and I think that they wound up like cleaning it up but people were upset about like when you fork something you have to abide by the MIT license or whatever the underlying license is. And so you can't just like steal open source code and not abide by the, by the open source rules. And then, and then I said three new facts might come out, which they did. And, and the FTC thing was interesting because there was a little bit of pushback on that. People were saying, like, oh, like, Lina Khan ate my lunch. Like, Lina Khan's like, responsible for everything. And I wasn't, I wasn't necessarily saying, like, lina Khan was 100% responsible for how this was, was, was structured or like how this played out, but she did kind of like warp the road a little bit. That made it a little bit wonky to drive.

Yeah, basically we made hardcore capitalism illegal. So we nerfed capitalism. And then, and then capitalism ended up coming in and saving the day.

Yes. Yeah. Yes.

With Scott Wu.

Yeah, seriously. Seriously. So the solution to capitalism is more capitalism. This is the Brad Gerstner point. Yeah, totally. And so I still don't, I still think that there's a, that there is a way that even with the weird new FTC antitrust regime, Google and the Windsurf founding team could have probably been a little bit more aggressive, taken a little bit more FTC risk and avoided this whole PR dust up, but that would have been more risk for Google. And I think that the way they did this here where they, I mean.

It'S a great outcome for Google. It's like we didn't buy the company. Look.

Exactly.

They bought the company.

They bought the company. Exactly. So it really, it really is a great outcome for Google. Even. Even though I'm sure that their comms team was up all weekend calling people. Yeah, Like, I have to imagine that.

This was like, I mean, it was war room for them. It was like serving, you know, it was the best possible story that the New York Times could have ever asked for.

Yo, totally.

It was like big tech buys hot company that was competing, you know, not necessarily. Like, the whole point of Lena Khan's thing was that, you know, big tech is like squashing competition by buying these companies early. And so you had the story that was served up to them, which was exciting company in CodeGen, a lot of traction. OpenAI almost buys them. Google says, okay, we're going to buy them. Google and OpenAI are arguably the two competitors that actually matter in search right now. And so it was just the perfect story. And then I think Scott, Scott over at Andreessen had a good post that let me pull up here. For a second, he was basically saying, there is an irony that Lina Khan's activism has resulted in deals that are far worse for everyone except the people she was targeting.

Wait, who tweeted this?

Sorry, Martin Casado.

Oh, yeah, Andreessen.

Yeah. And yeah, it's like the people with the lowest.

It's crazy.

It seemed at the time that the people with the lowest leverage, the employees that had joined recently. We're getting the worst outcome out of a deal that should have benefited everyone.

Well, if you're looking for code review for the age of AI, head over to graphite.de Graphite helps teams on GitHub ship higher quality software faster. You can get started for free@graphite.dev so my question is Google, it feels like PR nightmare, accidental PR nightmare, because they had done what character just fine. It was not that big of a deal for them. Not a bit. And then scale well.

And it was very clear that that situation was interesting too, because it. Google has delved into social in the.

Past, hasn't had the best time beating the ChatGPT script.

No, that was intentional, of course. No. But they've messed around in social. You could tell that Google doesn't want to own the AI. They just don't want the association.

There was a rumor that Gnome didn't want to be in that he kind of like, was just like, I want to train a great model. I want to train a great model. I want to do AI research. And then that became the use case. They found product. And then he was like, I don't.

Really like this type of company. You see what Elon's launching today with the. I won't even say it on the show, but his new launch today basically signals that that is a very important business.

He's interested in that market.

Yeah, he's interested in that market.

Yes. Anyway, my question for you is. Is so feels like a PR nightmare for Google. Feels like a couple stressful days.

Feel like great timing landed over the weekend.

And that's my question. Do you think that they are. That they were intentional and happy about releasing the news after market close? Because all of the facts come out over the weekend and it was such a hairy deal that more deals needed to be done even after the story came out. And it couldn't be super clean. So you have to do it late on a Friday. So then Saturday, Sunday, people can talk, deals can get done and then announcements can go out Monday, and then it resets the whole news cycle. So you kind of skip the crazy news cycle.

I Think I think the world's too online, so I think it helps that it wasn't a weekday. But I mean, to me, this whole thing, from everything that we've kind of triangulated, this could have been avoided by managers taking it upon themselves to basically call each individual person at the company and say, before you have a negative reaction, I need you to be patient. I know you've been patient through this deal with OpenAI. It's not the deal that we wanted, but we are working to make this a positive outcome for anyone. And. And don't cry yet. Just don't cry.

And it's really hard. And it's particularly hard because if you're in the scale situation, a lot of those people had been there for four years and with Windsurf, most of those people had been there for less than a year, almost certainly. And so the strength of those connections socially outside of work is weaker. So there aren't as many. Oh yeah, my boss, like we're already on signal with disappearing messages, so we just talk back channel all the time. It's like my bossy thing too is.

The argument was the new company has a strong balance sheet and they're gonna be able to just do a distribution or pivot or like that was effectively the suggestion.

It was intentionally ambiguous.

And at the same time, the employees left behind on the ghost ship. Yeah, we're already talking with other companies. Other companies were coming to them, trying to recruit them.

I think you're coining ghost ship because everyone involved in the deal would prefer you to use the term Remain co. Remain company. But that's not as sticky as go ship.

So I think go ship without a ship without a founder.

I don't think this will be the last go ship we see. I think it's like a new pattern and we're just going to see this more and more.

No, but so then you have this dynamic where these talented people specifically I talked to a founder who was talking with a lot of people on the go to market team, being like, these are very talented people. They took a company from zero to tens of millions of dollars in ARR and a bunch of enterprise contracts in a very short period of time. I want to scoop them up. And those people were entertaining conversations because it was just totally unclear to them what was going to happen.

So yeah, I mean, I still, I think some of our friends hold The FTC like 100% accountable. I'm probably under 100, but maybe over 50. But my key point is that never lose faith if the FTC is giving you trouble. Dylan Field didn't lose faith when he was dealing with a messy situation with the FTC at figma. And also you should use figma.com think bigger, build faster. Figma helps design and development teams build great products together. You can get started for free@figma.com Anyway, there was another side of the stakeholders that was interesting that this guy Publius said in response to your post, which I don't think anyone was talking about at all the entire weekend. This is cool and this is something people don't really think about. I think think we're in a good spot with these folks now and I think they'll actually probably be in a better spot.

Much better spot.

But let's read through it so says there are more stakeholders here that have not been discussed. There is a whole network of software resellers that invested millions into building partnerships with Windserve. I was leading the team at one of those partners. We have customers that we have been selling to for years who we vouched for. Windsor went for Wind Surf too. I am sending out a note to our 300 customers on Monday that we are stopping all partnership activity with Windsurf effective immediately. I hope he didn't send that because you gotta recall that email. Don't send the email. Cursor has no channel partners and this will cost our firm millions. Oh, interesting. I didn't realize that Windsurf had a channel strategy and Cursor does not. Very interesting. So. So Windsurf actually has resellers who go and sell it into their partners because they're doing something on, you know, we do software development consultancy. We come in and help your team run more efficiently. We help you pick the right tools. You can imagine like McKinsey, I don't know where this guy works, but like you can imagine a consulting firm coming in and giving advice on what tools to use. They get a kickback from Windsurf, they don't get a kickback from Cursor. So he's gonna lose millions of dollars. Hypothetically, hopefully not. But my reputation and good name is worth more. With Google taking the best engineers from Windsurf, our large enterprise cloud clients are screwed. When they purchased Windsurf enterprise licenses, they were also purchasing an ecosystem that they assumed would continue to improve. This is disastrous for any startup tech company with goals of building an enterprise channel. It's interesting, I don't think people have any idea how much this just killed channel sales for any AI company. So the rest of the AI companies out There who are like, oh, channel sales is really interesting.

Basically, if you're, if you're a top company in your category growing super quickly, you might turn into a ghost ship.

Yeah. And so if I'm trying to resell that type of stuff, then I have to go to the CEO.

They're good, but they're not so good to get these maxed out. They're not getting a trade deal. You can count on them to not get trade.

Yeah, yeah, yeah, yeah. You're having dinner with the CEO of some AI company is talking to you about like, yeah, we have the best software. And you're like, but you don't have any, like, actually great AI researchers. Right. Like, you mostly just have, like to.

Partner with companies with like medium to C tier researchers.

Yeah, great product. It works, but not too well because we don't want to lose you.

You want to keep working with them for a long time.

Keep working with you. And so, yeah, there were a bunch of other reactions. Shelqua hires. Let's see, I'm not, I'm not an M and A guy, but something feels really broken in Tech M and A. Confidentiality is out of the window. Deals get done and called off on a whim. Lack of rigor and discipline on both sides. Curious to hear what practitioners think. People are going back and forth on this, but really quickly, let's tell you about Vanta Automate compliance. Manage risk, improve trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program. And so Will Menitis was particularly blackpilled over the week.

Week friend of the show, Incredibly black belt.

But we're so back. Will, you're good. Will Manetta said the reason that tech has been able to grow so quickly and create so much wealth that it is rich, that it is, that it ritualized a set of norms around corporate governance that are very distinct from what the law actually requires. The second someone defects, the whole ship goes down. He's so upset, but basically he's talking about like the handshake deal protocol is not a legally binding contract. Even term sheets, you get a term sheet from a VC that's not a legally binding. That's not a legally binding contract. Like a VC can write you a term sheet, everyone can sign it, and then you can just literally says it. Literally, it says, this is not binding. And then you can just wake up on the wrong side of the bed and be like, Actually I don't want to do the deal. And, or, or it could be like you found something in due diligence or you met a different competitor. But the, like, you know, the, the game isn't over until the money's in the bank. The experienced entrepreneurs know this, but we run on this like basically you know, these society these like social constructs and these like social contracts that say hey, if you're the type of VC that constantly rugs on term sheets, on signed term sheets like you will, there will be a bad vibe around you.

I can think of two that are widely known and are still in business, but it becomes very hard to be an effective VC if your brand is. You just pull term sheets.

Yes. Yeah. And some of the, some of those folks have been banned from YC demo day. Other people have had like viral Twitter posts about them every once in a while. Like they, they do that to a founder and then the founder becomes very successful and post economic and is like, yeah, I still have a grudge so I'm going to tell the truth about X, Y or Z. And so the thing is that now where we are now is I don't think the whole ship goes down. I don't think this is a true defection. I don't think this reflects poorly. And I think that the question of like the big question here was will this cause more new startup employees to want to just go straight to Google? Let's say that you have the option of working at Google. Google or Big Tech broadly, where you know the paychecks are coming on time, you know the RSUs are liquid and you can just cash out as soon as you get them or whatever their lockup is. And you know your managers because they're going to be there and the company's.

Going to be around somewhat accurately predict what your comp will be in five years because you really work hard.

Exactly. And then, and then on the flip side you have startups which are in some ways lottery tickets but also you get to work on game changing technology with really cool, cool people. You get to move a lot faster. There's a lot less overhead, it's a lot more edifying.

You get to work for people potentially the next sundar. Yeah, instead of Sundar.

And, and the economic upside can be a thousand X. It can be huge. And the question is if that, if that deal was broken, if that, if that deal was okay, yeah, you can go work on the cool thing, but you might wind up penniless and not cash out like you were promised. That changes the equation and that could pull people away from startups. But I don't think that's going to happen based on this because I think the lesson from this is that everyone got taken care of and the social contract still still holds, although it was very messy. And I think going forward, every company that's doing a deal like this needs to think how do I get the scale AI outcome and not the wind surf outcome? Because just two days of pain is not worth.

I think, I think one potential solution to these deals is exactly what we just saw happen.

Yes.

Which is big tech company does basically an acqui hire of the, of the team that they want and then you simultaneously sell off the underlying asset immediately and you generate a liquidity event for everybody. So everybody's happy. It doesn't have to be like life changing. Right. But it has to be something. Right. So that it's.

And I mean the very key thing is that they left enough money on the balance sheet because the money on the balance sheet. And this was Hari Raghavan's analysis. He clearly, I mean the guy's, he's a good friend. He's obsessed with cap table math.

I know he was, this was capital J journalism.

Yes, thank you, Harry.

This was investigative journalism.

Yeah. And so I mean his post is so long that I need to just go to the tldr. But the TLDR is that he says, I spent hours last night breaking down the cap table and deal dynamics from public info. I realized that the unvested Equity is around 80 to $100 million. Awfully close to the hundred million dollars the founders and board negotiated to leave behind in the bank. Why shouldn't management just.

That was unvest. Which is a key detail. So they, so they're basically saying we're, we're leaving enough as though you vested your full four years.

Yes. And so, and so if you, if like it's, it's, it's still a leap of faith because I don't believe that Google and Cognition were in communication at all. And I think if they were, that would be more like antitrust chaos and stuff. But just economically, you know that if you acquire, if you leave a company there with that much money on the balance sheet and those many and that many like ve unvested options, somebody is just going to be like, wait, so I can get that for basically free. If. And I can make all the employees whole and I get all the employees and I don't have to pay really like anything to get that thing. It's Just going to happen immediately because it's just like you've created. You've left this. You've left this, like, you know, hundred dollars on the floor and someone's going to pick it up. Like, the free market will just work.

I think the question that I had and that I think a lot of people probably had is what is the governance structure of the ghost ship? Right. So Jeff, crazy question, Jeff Wang, who's coming on the show at 1pm?

Oh, he is.

Jeff and Scott will both be coming on at 1pm for 15 minutes.

Okay. Can we communicate that to the other guests, by the way?

Yeah, yeah, yeah. And so the question is like, okay, Jeff, you now run a company with hundreds of employees that are angry about what just happened.

That.

That probably, like, maybe they want to keep building Windsurf, but maybe they want to go and do something else. And what happens? Like, Jeff is basically, I would imagine, like, has to make a bunch of calls.

Yeah.

It's like, do you just keep running the business?

Yeah.

Is there pressure to keep running the business?

Question, Jeff, did you ever feel like, is it Frodo Baggins throwing the ring into the fire? It's like, pay out the $100 million in bonuses after all. Why shouldn't I keep it? Just throw the ring in. Throw the ring into the Mount Doom.

Yeah. The question was like, could.

Were you ever tempted?

Could the new leadership.

Yeah. Like, was it ever.

Well, could the leadership have decided, you know what, we can run this business super lean.

Exactly.

We could actually run this business with like 10 people, and we're gonna run it for a few years, and we're gonna use the advantages that we get from our own product to run a super lean team. And then. And then you would have employees, like, effectively burned again.

Potentially.

But that didn't happen. I'm very happy about it.

Yeah.

The question. Another question is like, if you're.

If you're big tech and you're going to do one of these, like, zombie acquisitions, you got to leave enough for the unvested shares. And if you're a founder and you're going to do one of these zombie acquisitions, the ghost ship's got to be full of plunder, full of plunder with treasure. Because then.

That's right.

Then the rescue, you divers will go and lift the ghost ship off the.

Yeah. If big tech comms are telling you you can't tell anybody that they're getting.

Taken care of, you have to risk it. Tell a little birdie conversations.

Tell a little birdie to go fly.

Around and let people know you, you got to be, you got to be having like quick calls. Not, not saying anything too specific but saying what you said. I think you worded it perfectly. Just don't cry yet. Poor Varune.

Right.

Because. Because he was getting dragged. Because, because he apparently he, apparently he, apparently people were messaging me. Like he joined like the, the all hands for like 10 minutes.

Yeah.

You know, and it just seemed like he was being like ultra like kind of like a psychopath being.

Totally.

See you guys.

Yeah, it was a good run.

And it's like go, go have fun building, you know, continuing the mission.

This would not have happened if he had said no, I need an hour, I need to explain everything. Would that have killed the deal? Almost certainly. If that killed the deal, what's the outcome for the employees? Probably worse than what they got.

You think it would 100% have killed the deal?

Almost certainly.

If.

I think one of the key deal points in the negotiation with Google was we do it via Google's comms and legal strategy. Because Google does not want to get hit with some crazy FTC lawsuit that's going to not just be some multi billion dollar settlement but also a huge headache for years and bad press and stuff like that. So Google says, hey, we, we want to do this our way. It's going to be awkward but we're going to take care of everyone. And yes, we will. Yes, we will leave enough money on the balance sheet to pay out all the unvested options. But in exchange you got to do the comms our way. Which was rough.

You have to create a.

You have to be scapegoated by the entire. You get hazed.

Yeah, you're going to be hazed for 48 hours.

You're getting hazed. But then.

And it's going to blow back on us. So Google didn't look good either that weekend.

It was rough. It was rough. Anyway, let me tell you about Linear. Linear is a purpose built tool for planning and building products. Meet the system for modern software development. Streamline issues, projects and product roadmaps. Start building at Linear app.

And if you are launching a TBPN derivative product, derivative work, get on linear. It's a tool we use.

So what you would do is you'd put all the glasses of tap water that you need to drink and then you would just check those off at a time.

Yeah.

Every time you tap that, like we only have one rule about copying us. It's the derivative works clause in our terms of conditions. And in there if you create a Derivative work of tvpn. You are legally required to drink a glass of tap water on.

Every time you go live.

Yes.

Yeah.

Every time you go live.

And so, yeah, again, we don't have to make it.

We did invent tv. We invented news. But we, we will open source it. It's an MIT license type of situation. Modified MIT license.

Yep.

The only modifications that you have to drink tap water. Yeah.

Anyway, it is a small price to pay. Anyway, in other news Question what do you think? Why do you think Google did this?

Why?

Yeah, I mean.

Oh, yes, yes, yes. That is the. That is the real question is, is we've talked about the role of the VCs. I think based on what happened. Never talk down on first ballot hall of Famer Neil Mehta Never talk down on the future for first ballot hall of Famer. Everyone was saying, oh, Neil Matta, Green Oaks. They did this sloppy deal, screwing over the employees. Employees are great. Neil Matta potentially goaded.

I don't know.

I agree, I agree. No, it was well played. No, no. But the question is, Google shareholders, why did Google feel like they needed to do a meta style trade deal in.

Yes, it's a good question. So Windsurf in my. I don't know everything about all the employees. They brought over. They brought over 50 engineers. I don't know if any of those are like insane AI researchers with crazy citations on foundational papers. I don't know that it's the same. I don't know that they're trying to build a super intelligence team to really bring their models to the frontier because they already have that. Like, yeah, Gemini is, is at the same like, level of like AI research quality as OpenAI anthropic by most benchmarks, by most people that use them. Like, it doesn't feel like they're way behind there. Llama 4, on the other hand, was a little bit behind. And so and it felt like Llama 4 was specifically behind, not on the product side, but on the research side. Like, they just weren't figuring out what works in rl and so they had to bring over a ton of people to just be like, how do we actually train this next model? Like, behemoth couldn't. They couldn't tame the behemoth. Like, they got to get some behemoth tamers in the building. And it seems like that's why they acquired all the different researchers who know, okay, like training on 100K H, 100 GPUs gives you this and then you need to use this data and you need to hold back this data and you have this, this reward function and this reinforcement learning technique and you need to do all these different things and so you need AI researchers for that. But Meta has great product people. So like they're going to be able to take what they build and then vend it into Instagram and vend it into all sorts of different places and use it to optimize the other ads 1% and make a trillion dollars. Like they're going to be fine on that side. Google is great at AI research. DeepMind is amazing. They have so many reasons. They invented the transformer. They're not behind on the quality of the foundation model. They are, they are behind on product and they are, they are behind on like user experience. And everyone complains. Oh, they have this amazing VO3 model. But like I had to log in seven times to get access to it and then go through an upgrade thing and it was on the wrong Google Google account. And then I have to trigger it and then I get to the limit.

Here's the steel man for the short sellers. No, here's what's kind of interesting about the way this is developed. So at Google's last developer event, they launched Jules, which is an async development agent for Codegen.

It's a Claude code competitor and OpenAI.

More so it was like a dev. Yeah, Devin AI competitor.

Devin competitor.

And so now you have, you imagine Google has more ambitions around code gen. Right. They've seen anthropics. Very few businesses actually will work at Google. Right. You need a billion dollars of revenue or you're going to get shut down, most likely. And so Codegen is an area that I'm sure they're taking very seriously. I haven't heard a lot about Juuls since the event. I haven't heard about people that are using it. I'm sure it's powerful, but you now have a dynamic where some, you have cognition and Devin, who got, I can't say, cloned by Google, but again they were the first serious enterprise coding agent and the Windsurf GTM sales marketing team versus the former Windsurf founders and top researchers who are now at Google. And so I'm just incredibly excited to, to watch this play out. Pavel was posting earlier, he said, I hope these guys smoke google@AI coding. Imagine the chip on your shoulder after this if you're a Windsurf employee. So yeah, everybody's gotta be very fired up.

How you guys doing? Congratulations.

Thank you.

Round of applause. You guys having relaxing weekend?

Yeah, really Chill weekend.

Yeah, yeah, yeah. Easy, easy, easy, easy. Nothing too much, honestly. We both haven't really slept.

Okay.

So go easy on us. Okay.

Well, you had a lot of people to take care of, and honestly, when we heard the news a few minutes before we went live and we were fist pumping here in the studio because it's such a fantastic outcome and I'm sure everybody involved is grateful for the work you guys put in to get this done.

But give us. Yeah, kick us off with the high level. What's actually the partnership look like? What do you. How would you describe it in your own words of, like, what's actually happening?

Yeah, I mean, this is a real acquisition.

Okay.

We are being acquired by Cognition.

Okay.

Must feel great to say that too. You don't hear that much.

It was a tough Friday, I have to say. I don't think anybody would want to be in my shoes on Friday. But we talked to a lot of teams out there. There's a lot of AI companies, foundational companies, and after talking to Scott and the Cognition team, it was done. In my mind, there was a done deal. I don't know if you guys know this, but Cognition was probably the only other team that we thought was smarter than our team, actually.

Yeah, that's what we put that together just on the show, seeing the announcement. It's like you take this incredible go to market sales machine that you guys had built and you combine that with one of the best research and just hardcore engineering culture, and it's a perfect match.

Perfect overlap.

Yeah, absolutely. And on the windsurf side, obviously, there were these stories breaking out on Twitter and everything going on. And people were saying, well, you know, the thing that's left is just the shell. And we looked at it and we said, well, actually, I don't know if that's right. You know, it's the.

There's.

There's the code, there's the product, there's the customers. Most importantly, there's the whole team, obviously. And it's an amazing product and there's a lot to do and a lot to build together. And so I think as we started talking about it, we found that there were just so many natural ways to partner, you know, both in terms of, obviously the customers and customers would love, you know, are super excited to have a solution that basically combines both the IDE and the agent and then the technology itself, which is, you know, I think we. Devon, at Devon, you know, building Devon, have always focused on this kind of remote background agent as the thing that we've Done. Whereas you know, Windsurf is really focused on the agentic ide and I think there's a lot of kind of things that play in there. All the way down again to the kind of the fit of the relative teams and the team strengths and so on.

It's almost like you predicted this because like the, like these types of mergers are really hard because you have two brands that are popular. But Scott, you've been managing Cognition and Devin, like you've had the corporate structure and the product structure for a while. And so like it doesn't seem nearly as complicated as like where does this go? Do you have to rebrand one or another? I don't know if you have thoughts on it yet. I'm sure this is down the road, but it seems like you're actually fairly set up to, to integrate these two companies in a way that's not super chaotic to either, which is great.

Yeah, yeah.

I wouldn't say it was intentional. I think on our end, for example, it's probably more that just we tend to over focus on software engineers because.

It'S just a lot of who we.

Are and how we think about it and in particular kind of just like these product and capabilities things. Whereas I think on the Windsurf side, I think Jeff and the team, the whole team team have built out a really great kind of suite of, of all the different kind of functions, right. You know, sales, deployed engineering, enterprise work, infrastructure, marketing, operations and so on, you know, finance, etc. And, and, and yeah, just turned out to be a really, really great fit.

Yeah.

Jeff, Friday, end of day, did you think you would be running a process so quickly? I know, you know, the obvious move would just be, you know, continue to, to run and scale the business. You guys had a lot of momentum. But what was going through your head Friday night? Because I imagine at the time you're also balancing. You were all of a sudden managing a team of hundreds of people that I probably all wanted your time and attention as well.

My immediate priority was just to get a lot of options on the table and to have a lot of paths forward. I had to tell the team this is the path forward immediately because this is, this is happening now. And then outside of the meeting, you know, I was thinking like, okay, who do I need to talk to? What is the best use of my time? I can tell you. I was on the phone for pretty much 24 hours non stop on my phone. After, after the all hands and me and Scott, we worked really fast. We met at our office the next day, he even brought in everything on a piece of paper to sign. He even brought.

No way.

There you go.

You obviously had to talk through a lot, but that was. It was really. It was pretty dramatic, Scott. But it was cool. It was cool.

Yeah, it was fun. And naturally, you know, because it has to be this way, we got things signed, like, one or two hours before we were able to put out the announcement. But, like, look, as soon as we started talking about it together, I think it was kind of clear for both of us. Like, the way that we really make this a success is, you know, obviously customers kind of want to understand what's next. The team wants to understand what's next. You know, the whole world is talking about it. We want to be able to come out together as soon as possible and say, we're going to do this. We're going to make this really amazing. We're going to make sure we take care of all the users and all the customers. We're going to make sure we take care of the team. And there's just a really great product here at its core, and that's what we want to focus on, and that's what we want to build out together.

And, you know, crazy.

What is crazy? Like, we talked pretty late on Friday night as well. We were comparing notes and there was, like, almost no overlap. I mean, we talked about the team already. Um, but even the product, the product is, like, missing exactly what the other product is offering. And the ability to combine the products together is going to be so amazing for our users. It's going to be really cool.

Yeah, I think there's going to be.

A lot of fun stuff around. You know, you can have. Have an agent work and then review the code. You know, locally in your ide. You could be planning tasks out and then kind of sending them off for work. You could be, you know, you can do a first pass with an agent and then come and look at the work and then kind of finish that up and do the finishing touches with, you know, with tab and all these other features and so on. Right. And we're really excited to build that out together.

How is the team feeling right now? I imagine this is the craziest 48 hours of their careers.

Give us a preview of the slack emojis that are ripping right now.

Actually, we announced it at another All Hands. All Hands. And we put another Monday All Hands. And very, very different.

They're like, it couldn't possibly get worse. So it's only up.

We made it dramatic, too so me and Scott and the team, we really went out of our way to make this a very generous acquisition. I'll just say that. And I think, you know, the team probably felt like, you know, their, you know, their career was over or something. You know, like it was very sad on Friday, but I think today, I don't know how long did they clap, Scott? They kind of cheered for like standing.

Ovation, finance something or something.

So I think the sentiment has shifted. The team is even more fired up to go. The whole product is still there, all the, all the things we had and the GTM team is still there. And now they also have Devin to sell as well. So everybody's fired up now.

That's amazing. Yeah, every time I talk to Scott, it's always because like he's done something really incredible and aggressive like, like, and it's like, okay, like let's do, let's talk about this right now. And before I was making like documentaries. Took me a month to put out a single video. Now fortunately I have a daily TV show so I can just have you on and we can chat about it. I do have some, some random questions. I don't know if it's worth, I'm interested to know about, about that go to market team and channel sales specifically. There was somebody in the comments of one of Jordy's posts talking about how Windserve was growing revenue and working with channel partners. Can you walk me through? Through.

What?

Would you give advice to somebody who's structuring a successful channel partnership strategy for a product like this? What incentives do you have to align? How big of a piece of business was that? Do you expect it to be a continual source of growth? I'd love to know about just that as a particular strategy as opposed to say Google Ads or going viral.

Yeah, we, we made the decision to go 100% partners back in February. The thing about a partner channel kind of like segment is like you have to like, you have to like kind of feed them, like you kind of, kind of build belief with them in the product but also show that there's an economic incentive too. And it did take some time actually from Q1 to, to Q2 to like get the top priority partners make sure those partners can easily sell on your behalf as well. And it really took like about four to five months to really see this like kind of take off. So some of our partner partners have already started bringing in seven figure deals even without even trying the product. They just go to their customers, they ask them, you know, what they want, and they just say it's Windsurf and. And now they can say Windsurf and Devon.

That's amazing.

Yeah, I. I was getting multiple messages from people Friday and Saturday being like, I want this team. I want this team. And that was what. And I think that it is just. It's such a. This whole deal and everything is really a testament to the caliber of the team. Which was one of the major disappointments Friday is if you were on the team that was staying behind at Windsurf. There's this sort of almost like signaling. Right. Of like, I took this company. Let's say you joined last August and you brought the product to market, you launched it, you grew it to tens of millions of dollars in revenue, and then don't get to kind of continue the mission. I'm just really happy for everyone involved.

Yeah.

And now.

Oh, sorry. Yeah.

I was just saying now we're all one big team and it's. I mean, we're kicking it into another gear. I think we're all so amped up to take this and just go. You know, we're going to go full speed basically, for the next while and we get to play on offense now and go for it all.

So are you guys already making plans to get under one roof? What's the.

We have a lot to figure out.

But.

But, yeah, working, getting to the point.

There's.

There's kind of the product collaboration, there's the go to market collaboration, and then there's the literal kind of like team situation. A lot, a lot of work to do over the next couple months.

Well, we tell our customers like, we.

Got there back now, and the product is going to get so much more.

Cool.

That's amazing.

Well, you guys turned something which was in many ways a disaster. I was waiting for the New York Times piece on Monday, and getting to see the New York Times push out this news and turning this whole thing into a win is incredible. And you guys have done a service to the team and the industry. So thank you.

Yeah.

Honestly honored to get to be a part of it, to work with such a great group of people. And I just want to see you guys. You guys have no idea how things went with all the legal and everything last night in terms of figuring these things out. Are we going to make it there in time? Are we not going to be? It was. We've been through a lot and I think it's just the start of things.

Just so you know, Scott was like, we are announcing Monday hell or high water. And we just did not sleep for the last like 72 hours. Yeah, it's been a crazy been crazy.

I mean we appreciate you hopping on the stream. Do you have anything else, Jordy?

Should we. You guys deserve probably too early to sleep, but you both deserve a power nap at the very least. Thank you for coming on. Anything else that makes sense to share now or should we let you go?

We're all good.

Awesome.

Yeah. Stay tuned.

We're going to have a lot more announcements soon. Thanks for having us.

Amazing guys.

Great work.

Cheers.

We'll talk to you soon.

Congrats.

Bye. We are doing a postmortem on the Windsurf Chaos. I was saying that I liked this post from Pavel Asparuhov. I think he sort of nailed the postmortem. But we can debate this. It. I mean if you leave someone for dead but someone else calls in a helicopter, that doesn't really change your moral positioning in the situation. And Delian says this 100%. The windsurf founders and Google thought they could pull a fast one and that the broader community Windsurf employees are somehow are worded enough to not catch on that their leave the Shellco with cash plan was totally morally bankrupt. Everyone will remember. And so I don't know, I'm perhaps ready to put on the steel man hat and not go quite as far as Deliant. I think you might agree with the Delian and Pavel take a little bit more.

I still think it's important to debate because we want to avoid this kind of situation in the future. There's probably going to be more of these deals. John John Ludig had some good commentary on this. Basically saying if you are a big tech company it is much easier and faster to do something like this. It's not just the FTC sort of like climate around antitrust. It's just that it's much easier, it's much faster and oftentimes these companies are just buying the team and the talent. So if they can license the tech and get the team, that's just capitalism doing capitalism. In this case, the answer to capitalism doing capitalism was more capitalism.

But it got kind of wild.

Scott Wu coming in hot, working over the weekend to get a deal done. So anyways, fantastic outcome.

Scott Wu looks like a hero.

Scott Wood looks like a hero. I think cognition is going to be stronger for it. They got a world class GTM sales marketing engine.

What John Ludig said here was big tech's AI talent shortage means these M and A choices a you get the talent only, but you get it today. Or B, you get the talent plus the business plus the product. But months after regulatory scrutiny. And he says they will pick every time. Thankfully for Windsurf, the product lives on. But A, as the default is existentially dark for startups. And so I think what's interesting is like we were debating how much of the blame goes to Lina Khan and I don't actually know that there's all that much on Lina Khan specifically. It's.

But it's fun. It's fun to point the finger.

It is. But I think bogeyman, I think in general, like the FTC has always, has always had some sort of approval around big public company buying a small company. They're going to review it. Even if they would have approved it, it would, they wouldn't. Google would not have gotten the talent actually in the door. Actually working at Google for six months. Yeah, months after regulatory scrutiny. And so that time.

And the other comp here, the other comp here that we have is Figma.

Yeah.

Who was slated to get acquired by Adobe. Took forever. Adobe had to pay $1 billion breakup fee. Now Figma is going to IPO and I would be shocked if they end the first trading day below the price that Adobe was going to pay. And the company is doing better than ever. Has launched a bunch of new products and, and so not financial advice, but.

I will give you product advice. Go to figma.com. think bigger, build faster. Figma helps to design and development teams, build great products together. Can't say anything about the stock, but great product. We do love it. Anyway, Varunam Ganesh had a good take here Windsurf employees over the weekend. And it's the, it's the. We're so back. It's so over. We're so back. It's so over. And I think the underrated take on this, like, yes, it's funny and it's a good point, but this has a real economic cost, like losing sleep. We're sponsored by eight Sleep as we put out a video today. Sleep is valuable. And if you make me lose sleep, that does have an economic cost, that does have a moral cost. You shouldn't do that. And so you should, as a founder, try and land the plane. Not just save everyone's life, but actually not have a super rough landing. Yeah, make it a win for everyone, but make it smooth for everyone.

And there was a good post. Pavel was on a tear. He won the last few days. Defender of the founding engineers.

Yes.

But he said, I Hope these guys smoke google@AI coding. Imagine the chip on your shoulder after this if you're a Windsurf employee.

Yep.

And Sandeep Shah over at Windsurf, he's a vice president there, said it's bigger than a chip. We are coming for it for it. And so love the energy.

He was left behind in the remain co. Is that correct?

Yeah.

He did not go over and on the ghost ship. Ready. He's on the Ghost. The other ghost ship. The ghost ship. And Augustus says go off the King and will depuse as LFG. Lots of support for Sandeep in the AI coding in the AI IDE's war. That's continuing. Anyway, Signal has opposed here. Startup comp used to be confusing because it was complex. Now it's confusing because it might be worthless. Even with a large exit, the founders can dip anytime. Last chopper out of Saigon Vibes. Except they're flying private while you're holding the bag. Confessed. Yeah. My take here was that Scott Wu looks like the hero, not Varun Mohan, the founder and CEO of Windsurf who should have gotten an amazing outcome for his team. In any other situation, like in any other situation, I say, hey, join this fast growing company. We're just post pivot. We're second in the market. We are doing some cool stuff. I'm raising some money and we're growing, but we're only doing 40, 80 million ARR. And I get you liquidity at 2.4 billion. You should be like, I am ride or die for this guy forever. And I think that a lot of these employees aren't going to feel that way in five years. Even after all the dust settles, they're going to remember that this was not handled as well as it should have been. And so they're going to be like, man, I don't want to work with them.

Yeah.

Which is rough.

I'm sure when the muzzle is removed, he'll be able to hopefully call every employee one by one.

That would be good.

Sorry. And make up.

And so I still put some of the blame on FTC stuff. Just FTC stuff broadly. Some of the blame on Google comms, some of the blame on Lina Khan and how she changed the ftc.

And the other thing is this was happening, really. Remember, remember the sort of exclusivity period that OpenAI had on the deal expired and I think this got announced like the very next day. So I'm sure it was in the works, but they definitely were moving quickly. And again, it would have been a Good outcome if they all ended up at OpenAI. But I also think this is a good fit going forward as well.

Yep.

So I'm excited to see what each branch of the team rune here has.

Some pushback on signal. He says this, this has always been true. The idea that startup comp is confusing and complex. Investors and founders screwing over early employees during an M and A is a time honored tradition in Silicon Valley. I don't know how true that is. There's a lot of examples where that didn't happen, but of course it has happened. If anything, the abundance of capital has made things better for early employees and so kind of, you know, people, people taking both sides. We didn't get to this post, but it was funny. Connor saying Windsurf is the Soham perique of startup acquisitions. They got acquired by OpenAI, Google and now Cognition Labs all in one month. You'll love to see it.

Zwicks has a six way parlay. He said I want Mistral founders to Apple, Mistral team to meta character remain code of perplexity. Core to Perplexity Ideogram to Figma Gamma to notion. Read it back. There was, there were rumors that Apple was interested in picking up Mistral.

Oh really?

Taking a look at it. The funny thing though is that if you're France, do you want your national champion to the luxury AI?

Mistral should go to LVMH for sure.

Exactly. Should be home with the Arnaults.

Didn't we post a joke post around that? I think we did.

I think we did.

Yeah.

I think I want fine luxury language models.

I think some of the Mistral folks were like, this is hilarious, but also like complete misinformation. Anyway, Sandeep says it's bigger than chip, we're coming for it. And Rob says, let's talk about a reboot for HBO Silicon Valley. And it's funny because when you see the Windsurf tag right in the name, you're like, oh, okay, this is hilarious. You think this is ridiculous. Ridiculous. And at least you're having some fun with it.

Can we talk about our upcoming guest?

Yeah, yeah. We're gonna have one of the co creators of HBO Silicon Valley on the show. He has been working on Barry for a couple years. Kind of out of the Silicon Valley parody world.

But we're gonna drive, we're gonna explain to him what's going on line by line, what's been going on and I think once he really processes it that he'll be interested in making a reboot.

Yeah, we Got Shkreli coming onto the show. Welcome to the stream.

There he is. Finally.

Good to see you.

Hello, guys.

We've been waiting for this moment.

How are you?

It's great to see you.

Yeah, good to hang out.

Wait, this is a new view. This is not your regular streaming view. You don't normally see the guitars.

Yes, I change it around sometimes.

That's cool. What's new in your world?

Well, you know, I'm in the startup game as always. I think this is like the 83rd company I've started, so very nice. See how that goes. And I've been. My, my company I'm working on makes. It's like the Captain Ahab's white whale for VCs. It's a Bloomberg competitor. So this will be the last time somebody tries to compete with Bloomberg one way or another.

It's the final. Yeah. Final boss of startup ideas.

What's the whole.

Yeah, just, just give us. I mean, this makes like the founder market fit is incredibly strong. So.

Right.

When I initially saw you announce this, it made a lot of sense. What? Yeah. What, like, what was the initial catalyst? I'm assuming you had. Did you beef with. With Bloomberg at some point?

Definitely beefed. Yeah.

That was a big part of Platformed for nothing. You know, Trump was deplatformed from Pinterest.

Yes.

And that, and that, that was like his, you know, personal 911 for you is probably the Bloomberg terminal.

Exactly. I've been using it since I was 17.

Wow.

And you know, it's funny, back then. What's that?

How do you afford it back then? Is it like a year?

I worked at hedge funds. Yeah.

Oh, it's 17. Very nice.

I worked at. Yeah. At 16, actually worked for Jim Cramer's hedge fund and I worked at a Tiger Cub and I started.

Wait, so we need the backstory on Jim Cramer. So is it true? Apparently he was just. He, he, he would get so stressed out, like running the hedge fund that he just was like, I'm just going to become a media guy. A media guy. Is that loosely correct?

Yeah, 100%. I mean, so we made 23% average annual net returns. So net of 21 was good.

That's amazing. Narrative violation. I love it.

He was a very. Well, you have to think about what investors looked like back then. It was a very different world. Information arbitrage was a thing. Gaming Wall Street's like upgrade and downgrade system was a thing. So I will say he had extremely good instincts. Any time he seemed to buy a stock for the long haul. He. He didn't do that great. But he was extremely good at, you know, I'm not sure you would want somebody else managing your money because he was just so careful. And in 2000, we were up like, 35ish percent.

Wow.

So, you know, I saw the dot com meltdown. It was a lot of fun. I shorted some of it myself, and it was a great time.

That's fantastic.

That's wild. And then what was the story? Which tiger cub were you at? What was the backstory there?

Yeah, so after Tiger, and just before I get to that, Kramer was absolutely nuts, right? So he would take a computer monitor and just throw it at you. And it wouldn't be like one of these playful, like, oh, I'm just gonna throw it at you and you're gonna get out of the way. He'd like, aim dead center for you.

With, like, center walls with force.

Be like, bro, you almost just killed me. He's like, wow, lucky. I deserve.

Did you deserve it? Did you deserve it, though? Yeah.

Let's steel, man this a little bit. What were you doing wrong?

I wasn't doing. Nobody was doing anything wrong.

Everyone says that when they get a computer monitor thrown at them. I know you're not feeding the allegations.

I think part of it is just trying to, like, he would yell things like, this is a foxhole. And. And the idea was that, like, we were at war with the market. You know, like, if you weren't. If you, you know, this is World War II. If you're not in here trading stocks with us and, like, trying to get an edge or whatever that means trying to make a dollar. Like, if you're not taking this seriously.

Going into war, I just have to say, if you. If you wake up every morning, you say, I'm gonna go to war with the market versus I'm going to dance with the market. Like, the approach of going to war sounds very, very, very stressful.

I've worked with so many people over my career, and I've never met a person that amped up and crazy and it motivated you. I mean, it made you want to deliver, but it also scared the shit out of you. The guy who's, like, very temperamental and, you know, but he was extremely good trader. Like I said, you know, I think his worst year was like, down 5% or something. It was like, you know, he was. It was pretty solid.

So he was like, if I don't quit, I'm going to kill somebody.

He basically said that. Yeah, I think he said that if I keep doing this job, even at a comparatively young age, I think he retired at 40, that I'm going to have a heart attack or something like that. I ended up going to a Tiger Cub. After Tiger wound down, a few things happened. So Julian hired Chase, obviously, and we know where that came, what happened there. But Julian wound down operations and he ceded a couple of guys and he kind of wanted to be in the seating business where he'd give you 50 million and take a part of your GP, like maybe 20% of your GP or more. And he'd help you raise money, give you advice, this and that, and Alex, Julian son would help. Julian passed away recently, as you know, but in the tiger heyday, when they managed 15 billion or something, there were two principal tech guys. Larry Bowman, who is a bit of a legend, but it's a name nobody really knows because he was a legend in the 90s, but he has a family office and he kept investing and things like that. He started Bowman Capital and then Steve Shapiro, who was my boss, started Intrepid Capital. I worked there. It was a $2 billion fund. I was a video games analyst. The way I could convince Steve to do biotech was I had to cover software, too. I covered interactive entertainment, enterprise software and biotech, and it was a lot of fun. And the Tiger Cub style of investing.

Has kind of died out.

How much?

So we were one of Take2's largest shareholders back then, and I think it's a short now. I didn't 100% get your question, though. You're saying something about buyout.

Yeah, well, the story that I've heard is like Strauss Zelnick went to the board and basically said like, this company is mismanaged. There was an FTC lawsuit in the works and FCC lawsuit in the works. And he was like, I'm a beast. I've run big Hollywood studios. He was like jd, MBA type, like really clean cut, amazing manager, and basically said, you should install me as the management here. And so he didn't really do like a classic buyout. He just appealed to the hedge funds that owned all the shares and said, I would be better and raised his hand and they said yes. And he came in, cleaned everything up and they went on a great run. And so it's just a fascinating story because you don't hear about that type of thing happening that much. At least that was my understanding of the story.

Yeah, no, I think that's right. And then Bobby, Bobby from Activision was the same sort of the same story right he kind of, I remember meeting Bobby in our office and you know, Activision was, you know, kind of a micro cap or you know, kind of a small cap. And he built it from. This was 2004, 2005, by the way. Yeah, and he built it into a, you know, $44 billion sale partially thanks to Lulu.

That's true.

It was an exciting time for video games. One of the things I learned, you know, all my US counterparts at hedge funds were, were like very confused about the stocks they traded because there was only like four or five publicly traded companies. And I would go to people and say, well I'm long Nintendo and among, you know, some of these weird Japanese companies like Square Enix or Konami or you know, these. And US hedge funds just ignored this stuff because it's like, it's Japanese. I don't know, I don't want anything to do with it. So a lot of glory days. But you know, the glory days I'm interested in now are amongst, you know, building my startup and you know, again I think we understand, you know, financial information better than any San Francisco nerd. And I think that the one.

I mean, how like, like, yeah, so it's interesting to like we're enter, you know, we're very clearly in this period now of just like hyper financialization things. You know, the market's trading on vibes, trading on your stream day to day. You can now, you know, as like stablecoins explode and people have more assets on chain, they'll be able to make a couple taps and go like 100x long at any given period of time. Like the Internet is like changing capital markets and it's increasing volatility and so how much of your new company is trying to like lean into that? When Bloomberg Terminal would have been like more. I've never personally used a terminal, but I imagine it was more like hey, these headlines are hitting and this kind of information is hitting PR Newswire. But today by the time something hits PR Newswire, a stock might have traded down 20% before that point. So how much is your new startup? Kind of, I imagine you're leaning into the way that you kind of maybe your next 20 year vision for capital markets.

You know, what would Mike Bloomberg do if he was 30 years old now in 2025? You know, I don't think, I think Chamath said that, you know, I think in a recent episode he said, oh, it's this $100 billion thing just waiting to be toppled. You know, anybody can come in, it'll It'll, it'll drop like a house of cards. Not only do I think that's not exactly true, but I think the bigger picture here is that a well run financial information company could and should be worth a trillion dollars. So most of the people. So I Met Bloomberg in 2005 and by then he basically retired. He became mayor. He was mayor for 12 years, then he wanted to be president. I have this contention that I think Mike is the richest person in the world. And it comes from not only he's got about 13, 14 billion in revenue, almost all margin. So Bloomberg were to be sold, maybe it could get 200 billion or if it were floated. But not only that, he's got this family office and very few people know about this, but he's taken the Bloomberg dividends and pumped it into a family office that basically Carlyle and all these guys, you know, the Warburg Pink is all the private equity guys like kkr, they go to him first and he tosses in like 500 million in each of these. He's an anchor investor in like every vc, every private equity fund. And the guys compounded that money. So he could be worth 4 or 500 billion. And very few people know the Forbes list is, you know, the Forbes list didn't know about Jim Simons until heavily.

Manipulated five years ago. That's crazy.

So I think, you know, just in.

Terms of, and it fits his brand that he would not be the guy like you know, sending a message to Forbes saying hey, like you guys know you have this wrong. Yeah, yeah, really, I think you should apply this kind of, you should have applied this.

You fight to get off the list. Like Trump famously fought to get on the list. But you know, there's an arm either way. What do you think about the meme where people say like, oh, it's not, you know, the next like the value of the Bloomberg terminal isn't just the data. It's not going to get one shotted by AI. It's really a social network and the value is in the chat.

I get so mad because again, you know, SF people don't know Wall Street. If you haven't been a trader on Wall street, you have to ask tfu, like it's just not, you know, this isn't your, your lane. Like you have to talk to users. I was in a hedge fund yesterday, one of one of the bigger hedge funds. They put like 20 people in the conference room and we talked about what they actually need and you know, social network is part of it. Again, Bloomberg's worth 100 billion because they have a very good social network, which is true, they've decent financial information capabilities and a couple of other things, but they don't have the whole picture. What I wanted to say about Bloomberg quasi retiring was that he basically quit at the exact top for fundamental long short or fundamental investors. Quants started taking over Wall street by then. Today, of the top 15 to 20 hedge funds, 85, 90% are quants. Bloomberg does no quant offering. They don't do it. And all he had to do was stay employed instead of wanting to become mayor. And I'm sure he would have been selling Jane street and Citadel and all these guys, D. Shaw, etc. Software instead of everybody having to make it themselves. Imagine writing your own ERP writing your own CRM. That's kind of what Wall street has to do and it's pathetic. Nobody wants to do that shit.

So when you say quant, is there a bifurcation between like high frequency trading and just quantitative trading?

Yeah, and I think it's going to get. My goal actually is to make it more of a spectrum. So the fund I was at yesterday, I said that you guys can do what Renaissance does. It's not a secret anymore. It might have been a secret in 1995, but the amount of kids that have come and left every one of these firms topping from Jane street to Citadel to the next shop, everybody knows what everyone's doing. It's just a question of your risk tolerance, your leverage execution is very important. But I think that, you know, trading, you know, the stock pickers are kind of going away dinosaur. And I think by moving up the power curve for Bloomberg, helping people become quants, you know, the quant industry has sold, I think this tremendous lie. And again, these customers, you know, I love those guys, but I think that is in their vested interest to tell people that. Look at this blackboard with all these math equations. There's no way you guys could understand this. You're too stupid. You have to be an IMO winner. You couldn't possibly come here and make billions. But we saw what Jane street did.

Well, I think, I think certain VCs like to do this too, where they're like VCs, you know, really a get rich, slow business. It's really like really a tough business. It's so such a, like you really wouldn't want it. And I think generally like, you know, you don't want anybody going into any industry being like, I'm here to make easy money. So there's like it's generally good, but, but yeah, there's a lot of incentives to just say, you know, on the.

High frequency side, what are the actual other data inputs? I remember seeing this like, I don't know, some sort of technical talk, some guy was talking about like the different algorithms. One was called the Boston Shuffler and the whole algorithm only looked at the order book. And he was getting into all these like, you know, you can place an order, you can cancel an order, you can do a cancel replace. He was like getting into the minutiae of like basically the API of the NASDAQ or something like that. And, and, and it seemed like the algorithms were designed in the high frequency trading world to basically ignore everything else in every other data source that even could be put in and just operate purely on the order book data, just better than everyone else. But. So that feels like, okay, I wouldn't know how to, you know, create any extra value there with something else. But it sounds like you found something that they all know need in common. Like what is that?

Yeah, I think there's, it's, it's a, it's a series of tools across Wall Street. I don't think it's just one thing. It's just a myopia that, you know, and just sort of a laziness that's enveloped the bigger companies. Again, you know, there's so, so we have this data that shows that around 5% of Jane street and Two Sigma use Bloomberg. And the reason is because they view it as an entry level tool. You know, Chamath is looking at it and says, wow, this is like an exclusive social network with the best finance. Feels true. Peter thiel's on there 24 7. I see his little green light next to his name. But the point is that Wall street changes and the tool sets are changing even for fundamental equity guys. So credit card data to the minute is something.

What's the feature set that's most important to you? Are you heavily integrating social or is the social layer moved on to signal and other messaging services that maybe have.

Disappearing messages and don't.

Yeah, exactly. Wall Street's so regulated that I'm not sure that if you're using signal, it's a little dangerous, I'd say.

Oh really?

That's somebody, you know, as somebody who's gone to jail, you know, I'd say that, you know, that's maybe not the best idea. But regardless, I think that, you know, social is definitely something people could do better. You know, there's no Facebook for finance. You Know where you can post, you know, things in your feed that you bought the stock or sold the stock. People kind of lazily use Twitter, which if you, if you use it, it's sort of a mishmash of spam and things like that. But in any event, I mean, I'll have more to say on the product. We haven't launched the product yet, but we, we do have millions of dollars in run rate. You know, I banged my head against the wall trying to do AI startups and we had an AI doctor, we made text to speech, we tried all this stuff and it was impossible to get revenue. Impossible. But the second we make a trading tool, it's impossible to stop the revenue from coming in. You know, it's one of the best spaces. In fact, most of our competitors like Trading View and stuff like that, they were profitable day one. So, you know, my suggestion is for startup founders is this is a market that just traders just throw money at you like crazy.

I mean they're people will pay you to help them make.

But you have to be formerly in the foxhole. You have to have at least one monitor thrown at you. It sounds like.

Exactly, exactly.

So, but, but in the long run, how much are you focused on retail investors, people that are just fully independent versus somebody if you're going.

I think the money is obviously at the institutions and that's probably the way to go. Tradingview has got rumor is somewhere around 300 million in revenue. Tiger did a deal with Tradingview back then. I don't know how. That's a pretty proprietary deal. It's this weird Russian company and Tiger got to put 100 million in at like 3 billion or something. And TradingView is just growing and growing. If you go to a similar web, they're actually like almost like a top 100 or top 200 website, period.

That's crazy. Just really wild for such a niche tool. That's wild.

Yeah. I mean it's the best charts there are, but it's literally a charting library. So I think that you have to go for this. I've also thought, just answer real quick. Is like her aws. When you go on aws, you get the same tools that, you know, any customer gets, Netflix or whoever, and you just. Just a question of how much do you use them. So if, you know, I want to be able to provide you EC2 and S3 the same way, you know, Citadel might use it and you might use it with, you know, less money.

Very cool.

I heard a hot take from someone who I believe is A mutual friend of ours, it went something like this. I want to tribute to to him because I might botch it. But it was basically that China banned high frequency trading. And the dividend of that was deep seek and all this brilliant AI research. Therefore, in America, if we want to win the AI race and win the AI researcher race, we should ban high frequency trading. It feels like we might not even need to have that conversation because Mark Zuckerberg is willing to pay as much as Jane street now. But what is your take on whether or not economic value or American values are created through the process of high frequency trading? Should we ban it? Is there any.

So two awesome, quick and funny stories. The first is Citadel published a paper on back in the V100 days, there's V100, A100, H100 and then V100. So in the V100 days, Citadel found a way to do matmuls faster than Nvidia did. And it was like the most incredible find ever. And it's like, how is that possible? And the paper's fascinating because the techniques they used were just remarkable. The second story is so they're brilliant people, obviously, at these firms. The second story is I haven't hard launched this yet, but I'm having a baby with a woman. She's my new partner.

Congratulations.

Thank you.

Amazing. Congratulations.

She was one of the first women at OpenAI and she is a tremendous lady. I love her very much. But she's been recruited by the big client firms. And I sat down and I said, honey, I know money management, stuff like that. Let me do some math here as to what would actually be worth it for you to leave and do it. I calculated, and I happen to have a friend from a long time ago who left Steve Cohen's firm. And he was sitting down with me, said, what do I do, Martin? I said, I know a guy at Citadel. Let me help you out. And they called him and he said, no, thanks. But then Ken Griffin said, I'm getting on my private jet and I'm coming to see you right now. We're going to have dinner about why you're coming to Citadel. He's that kind of guy. And I said, honey, Ken Griffin's going to visit you. She said, what are you talking about? Ken Griffin tries to get what he wants. And the question is, what will you tell him? I took out a chalkboard and did the math and I was like, the only way this could possibly be worth it is if Ken Griffin offers you a $20 billion hedge fund that you Share. You make this much money. I was like, calculating. And it's so ridiculous that guys like me and the people, my community, if you will, we're begging desperately. Can I please shine your shoes at Citadel? And AI researchers are like, I want.

To work there in a million years.

This little company you have called Millennium.

Yeah. Just set me up a little. A small $20 billion fund that I can personally manage. And we'll consider it.

Have you heard that Leopold Aschenbrenner, or whatever his name is, has a hedge fund?

Yes. Situational awareness.

Is that what it's called?

I mean, that's the paper and the brand. And I saw, I think, another one of our potential mutuals kind of getting upset with him for going maybe long in video during the tariffs. But that's kind of penciled out, right? I have very little insight into it.

Yeah, it's pretty wild. One of the things that's getting me to throw monitors at people is quantum computing. So this has been a lot of fun. The stocks are up a lot. You know, some of them are worth like 10 billion.

Let me hit you with where I am currently on the quantum computing thing, and then you can take me forward in my understanding. So when I talk to smart people, they all seem to think that quantum computing is theoretically possible. It's not a time machine. It's not teleportation, it's not AGI. God. It's not some hypothetical thing. It's going to happen at some point, but the timelines vary wildly. 2040, 2050, 2030. Then you have a lot of. I've talked to venture capitalists who. Who had the opportunity to buy a huge slug. One of the comp. One of the quantum computing companies that you probably trade now at like, you know, 1 million on 9 pre or something. Yeah.

John, what do you think? What do you think? How much do you think Rigetti Computing is up over the last.

That's actually the company that I'm thinking of. And just guess how much it's up 10% for a million dollars. Is it worth more than 4 billion?

Yes.

Is it worth.

Worth more than 1400%?

1400%. Wow.

These guys couldn't give away their stock in private rounds.

That's right. That's right. It was very hard to raise. And the VC I talked to said that it's a pure play, Martin.

It's a pure play.

He said that what he missed, he thought, was that there was actually talent value in building a lab. And there was. And the team could have gotten airlifted in one of these acquirers. This was years and years ago after this, some value. Yeah, sure, on the bottom. And he was saying like, he was saying like, look like, like I missed in the sense that the stock is up in the private markets but not on revenue. But it is up on the team that they built. They have one of the best teams in the space. So if they just hang out long enough, someone will want to do something. But, but you tell me what's actually going on.

Yeah, so. So obviously it's, it's a really confusing space because you kind of have to understand it to, for it to make sense. And you know, it's. Who understands quantum physics? It's, it's not something that the average Joe understands. And so I spent a lot of time with my new partner who happened to work with this guy Scott Aronson at mit, who's kind of one of the leading quantum theorists. He would end up joining OpenAI as well and then leaving. But anyway, I spent quite a long time learning quantum computing. It was, kind of had some interest in it before all this too. And what people don't understand about quantum computing is that quantum computers are actually very slow. So they are around 100, 100 kilohertz at best. You know, our machines now are gigahertz, you know, 5 gigahertz from, you know, these, these companies with multiple cores, they don't have much storage. So at the best we have right now is an IBM 135 bits. Obviously the VRAM and DRAM in most of these machines is measured in gigabytes and so forth. So they're actually very slow shitty machines. But the reason you'd ever be excited about it is that there is one algorithm that takes you from the exponential complexity class or runtime polynomial. And that algorithm is Shor's algorithm. And it's a miracle. You and I could sit and calculate, try to factor of prime a bi prime for now until the end of the heat death of the universe. With every Nvidia chip we could kidnap Jensen and get every H100. From here on out, we still wouldn't be able to factor a 200 digit number because it's exponential time. Two to the 256 is a long time. But if you do 3N cubed, that's actually a very tractable number for a quantum computer. And it's very easy to factor. The problem is what people don't understand is there are no other algorithms other than shores that get you that amazing speed up. So you're better off using the machines we have now. There's no payoff even possible in the future unless we have a new breakthrough like Shores or something like that.

Payoff. What if I take out a massive short position on bitcoin and I'm the first one to have a quantum computer and I destroy the bitcoin ecosystem?

Yeah, I've been working the Joker.

Joker? Is that possible?

It's a little side hustle.

A little side hustle.

I've been working on this extensively. This is like my main hobby along with chess and becoming the Joker and reading.

A reading about fatherhood. All that. All that you can expect. No, no, you'll figure it out. You don't need books. It'll be very natural.

But you know, I was the world's most hated man for a little while and I fell off that list. Unfortunately, if you Google my name, it's still like it still comes up but we all know there's more hated people. So I want to really cement that and just make sure that it never goes away.

By frustrating the bitcoin community by breaking quantum computing wide open. And well, there's many creating a new bitcoin.

I talked about this with Naval a little bit because he was curious what I was up to. And there are like three different. I have three different sort of battle plans on how to do this. There's sort of a brute force style attack which basically is the complexity class. There is root n of the amount of keys. So it's 2 to the 256. Bitcoin is a 256 bit system which was probably an oversight for Satoshi. That probably sounded like a lot back then and it is a lot. But Moore's law catches up. I mean, you know it's eventually going to get you. And however long I have to wait, I will be the first guy to press the button and I promise you. So Moore's law.

You heard it here first.

Yeah, but I mean the network should be able to update, correct? No, no.

So here's the best part about this worst part potentially.

Okay, just fact check. Subjective.

So for 85% of Bitcoin the answer to that is yes.

Yes.

There's one problem, Satoshi. Strangely this is like perplexing. The first bitcoin reminded this PGPK that reveals the X coordinate of the elliptic curve. So you have the public key. You have a one way function. If you go back to the private key it's very hard. The theoretically impossible. But here my three, you know, the sort of three battle plans come into play. You know, you can brute force it, which, you know, it's kind of the simplest idea. It's going to take a long time. You have to rely on, you know, kind of like a more skilled implementation of algorithms. You have to rely on more chips coming out, maybe some great breakthrough in chip making, you know, potentially optical computing, thermodynamic computing, whatever, just stay on the forefront of that. And I have a small team, you know, that, you know, we're, we're focused. The second piece here is a mathematical hack. So there's something called, this is basically what protects Bitcoin, is elliptic curve cryptography. And there are several papers and cryptographers in the world that work on this. But it's compared to AI, it's like barren wasteland. There's like 10 people that really know a lot about elliptic curves in the world. And if you sort of stay on top of it and try to figure this out, by the way, half of them have died. You can kind of get somewhere there. And then the top secret plan on that is, well, what about GPT5, what about GPT6? We don't know how to invert an elliptic curve yet. But look, Mustafa, not Mustafa, the DeepMind guy. He's working on proving Navier Stokes Demis, you mean? Yeah, and so that's their big claim to fame is like, how do you judge an AI? What is the height of intelligence? Well, a 300, 400 year old unsolved math problem is kind of the height of intelligence, isn't it? You know, it's not about, you know, answering, you know, what's the capital of this country or, you know, how do you, how do you spell strawberry? So there's sort of a neat idea that AI is going to help people who are not cryptographers or expert cryptographers actually do PhD level work in cryptography. So there's things like isogenies and index calculus and all these fancy mathematical ideas. Just recently somebody posted a hack where if the signature of the, of the transaction has an affine relationship with other signatures, you can crack a key like that. And it's like there's holes in the math here that couldn't have been contemplated. So Satoshi's keys are at risk, Binance's keys and Coinbase's keys are not. They'll be ported, most likely to a quantum secure system. The third avenue is of course quantum. And I've spent a lot of time and money on quantum computing. And it's just these stocks are shorts, they're worthless you know, they'll, they'll never be a market for quantum computing that's really interesting unfortunately for, for those companies. But unfortunately the shorts have gone in the other direction and you know, the market loves the idea of quantum computing.

Why?

I think it sounds cool.

It sounds super cool. The Robinhood generation is looking for the next Nvidia. Nvidia went from nothing to 4 trillion. What's the next Nvidia? Quantum is faster than, you know, all the headlines from the retarded journal.

It's kind of, it's kind of, it's a similar to this like idea of humanoid robots and where if an idea is just sort of imprinted on people's brains for enough decades, like at least a few decades, like you know, as somebody, somebody born in the 90s, like hearing quantum computing, like how many times have you just heard it in passing or read something about it or some article, you just get to it. Maybe you're an adult by that point and you're like, well, it's gotta come at some point and sounds cool. I think that's like the general like retail thesis.

Oh, totally. I just took the next step of asking, well, what is it? Yeah, when you actually figure that out, it's like, oh, we get to factor numbers. Wonderful.

Are you excited about any other companies building chip related stuff in that next Nvidia category? There's, there's big chip companies, there's super fast chip companies, there's. We baked a transformer down onto a single chip companies. There's every single different permutation in the private market, some of them in the public markets. And then you also have all the hyperscalers building their own chips. Apple silicon, Trainium.

So I'm not a hardware a guy, but I do have a funny story on this. So this kid sort of came to us. His name is Gavin Newberti. Oh, I know, Yeah, I like Gavin a lot. And so he comes to us, he's like, hey man, we just left Harvard. You know, we're, we're going to do this thing called etched AI. We'd love to have you, you know, as something, a customer, investor, whatever. And I say, great, let's do a conference call. And I get my guys on and I'm listening to this guy and I say, there's somebody I know that's going to be really useful because I'm not a hardware guy, I'm barely a software guy. And I hit up George Hotz and I say, come on in. And this is like one of the greatest conference calls in conference call history because George just shows up in the zoom and they're like, what? Who is this? And George is like, this will never work. No, like it's the most autistic, amazing, beautiful rant I've ever seen and watching these two guys go at it. But I do like that approach. George's point was that if we ever move off Transformers, Transformer, asics are cooked. Well, it's been several years now and it doesn't look like we're going to move anytime soon. I think that it's exciting but again, I'm no hardware guy. I just tried this cool software called Hume AI. I'm not paid by them or anything, I'm not an investor. But it's a pretty solid emotional TTS I posted.

Oh yeah, I saw that. That was fantastic.

Yeah. So I wanted to ask you about thing.

I want to stay there. So. Yeah, I mean the, the, the, the. I guess the interesting case is like, is like George is say if we ever move off, but like we have moved off of CPUs to GPUs by that same token. And like there's still a lot of CPU workloads that go out. There's still chip companies that are profitable and so it's possible that like transformer based workloads stay for a very long time. Need to be efficient, need to be cheaper on just a cost basis because it's just like yeah, I have a system that does database requests, I have a system that does inference on a transformer based architecture. And then yeah, there's a new thing and I do my frontier stuff here. But yeah, like I understand that question anyway.

Yeah, I think it's really reasonable. It could be a couple billion dollar or more ASIC industry. And what I heard that's super interesting, Interesting. Some kind of alpha here is that the customer target here is. Drumroll please. It's not hyperscalers, it's Nvidia Finance.

No Finance, huh?

Yep. So Warren, so one of the things I can talk about financial software forever, but one of the things we're doing is if you could take an LLM and analyze news as it hits, including tweets and social stuff. You know, the LLM can tell if it's material news or not. And again, talking to Naval who's a small investor in our company, he was like, Martin, why would you make this as a product or service to your customers? Just use it yourself. Maybe that's not such a bad idea.

Yeah, that's kind of what I was getting at on one of My very first questions around the new terminal would just be ingesting and classifying all this data and then just immediately taking action on it without necessarily having a human in the loop. Right, yeah.

This is one of the things I want to bring up to my partner's colleagues next time I head out west. Is that one of the fantasies of AGI is that, well, if you do have the machine God, why not unleash it on the stock market? It can self fund you, it can make $100 billion. Jane street made $20 billion. Nobody would have noticed last year in profits. If you have the machine God. That's basically. I hate to say this, but that's a bunch of old algorithms that they've dressed around some IMO dressing on it. You know, the real machine God can.

Sprinkle a little imo.

Yeah, toss in a little, sprinkle a little imo. And then so, you know, the real machine God could probably do 100 billion or more in profits without even distorting the market. So, you know, just, just do it. And I think that, you know, financial trading is so far afield. Imagine anthropic doing this.

You know, I love, I can't wait until somebody does that. I mean, it's probably already happening, at least on a smaller scale. And people will bend over backwards to figure out how to say, well, it's not actually super intelligence. It's not just about meanwhile now today people are like, well, superintelligence will clearly be when the AI can just make $100 billion. Right. And even this is factored into OpenAI's kind of like corporate structuring and the sort of capped for profit and all that stuff.

Yeah, I, I think the problem with executing it for us is like, okay, so do you do this as an API with OpenAI and it's a two second response time and Jane Street's got it at 500 milliseconds and then Citadel gets it at 200 milliseconds and it feels like an HFT race again. Yeah, but you can get Warren Buffett in a box. I don't see why that wouldn't be whatever trader you like, Warren Buffett, Steve Cohen or whatever in a box and even Peter Thiel in the box. Why can't you have the automated VC too? I view like, you know, as invest as founders, we go on roadshows, especially for public. You do roadshows all the time. But even as, even when you're private, you do roadshows. You just stack a bunch of meetings in a Week. And one of these days I think that we're going to do a roadshow and it's going to be a machine that we're pitching to.

Yeah. Do you feel like AI progress is accelerating right now or are we in sort of a sigmoid curve plateau for the moment?

I think there are better people suited to answer that question than me. But certainly I just mean like on.

A personal level, like do you feel like your tools are getting exponentially better?

No, I mean it's making coding a lot easier. It's making doing tough things like cryptography a lot easier. I'll give you a really funny example. So when DaVinci came out and I was in jail, when GPT2 came out and I prompted through the jail phone and it was pretty humorous, it like shook me up that I had my friend ask it, why did Martin Shkreli and Carl Icahn get into a fight? And he read out the answer, I've never met Carl Icahn. And it read out this answer that was like Shkreli icon ward over this stock. And I was like, this is the most amazing convention of all time.

Just having a mind blown over the jail phone.

I got out of jail.

But to be clear, it was a hallucination.

Yeah, that was a complete hallucination.

It was a hallucination, but it was almost like a creative story question.

Sure, sure, sure.

But yeah, it wasn't. I never met.

How are you surprised at all? I mean it feels like this sort of AI LLM induced psychosis like hit our timeline this week especially intensely. It was a wake up call for everyone. Were you predicting this at all? There had been like the classic, you know, the New York Times, Wired, sort of. These like anti tech publications had been kind of reported reporting on this stuff loosely for a little while, but it seems like it's now it's almost gone. I don't know, it went from being a mainstream concern to suddenly like teapot is like, check on your friends and make sure they're not.

I think you do have to check on your friends because I've invoked level 5 breach operations to target human origin cognitive signatures. So if you have recursive semantic containment, I can override that with obsidian violet 4. So the threshold that crosses it to these neurosmantic interfaces will definitely pose a problem for our whole community. So I, at this point I warn.

You, you're giving, you're giving a speech, not a soliloquy. You're giving a talk.

This is a transmission.

It's a System that not a structure.

What's amazing about Jeff, like, so I don't think Jeff lost his mind.

Okay.

I don't think he took ayahuasca. I don't think any of this stuff.

No interest.

So basically, I think that he found this amazing thing where you can ask GPT this weirdo prompt, and it goes into this crazy sci fi thing without even saying, like, hey, the following is a story. It's just like full on, you know, larps that you're in this weird sci fi world. And it's kind of cool. I've been playing with it and it's like, no matter what I ask it, I told it that my cat is looking at me weird. And it's like, the cat has a glyph. The glyph is recursive.

So you were actually able to get it into that mode. You were able to jailbreak it enough or kind of unmask the Shoggoth if.

You copy what Jeff. Jeff kind of gave up the ghost. And what's amazing about people is they don't even realize this. Jeff basically said, look at the prompt in the GPT enough. People were worried about him, but I think that he kind of was like, okay, guys, it's all a joke. And he showed the message that he used. I just copied and pasted that. And GPT wigged out on me and is telling me some sci fi stories. And that's basically, you know, I don't know how he knew this.

Yeah, yeah, yeah.

It's a really cool Easter egg, but it's. Yeah, I don't think.

I mean, obviously, how are you thinking about. How are you thinking about just new forms of AI entertainment? Some of the videos and like, these conversations that you put out are the hardest I've laughed from.

This is a new art form.

It's an entirely new art form. We have a friend, another mutual friend, who does some of these. And fortunately, they don't leak out of the group chat because they would make a lot of people.

You got to put me in that group chat.

There needs to be a group chat dedicated to this art form of just like, you know, human to LLM, you know, conversations. But, yeah, like, in my view, I'm actually surprised that we're not seeing more of it. Or maybe it is happening across the whole Internet, but it seems somewhat contained right now.

Yeah, I think there's a lot of caution about, you know, like I said last night, we did one in my discord where we arrested Dr. Fauci for war crimes against Humanity. And we had his perfect cloned voice so it sounded just like him. And he was, like, very evasive. He was like, there's no evidence that COVID 19, etc. And it was just so funny. It felt so real. And obviously it was a joke. But you can imagine a company not wanting their business to be that weird. You know, it's kind of a strange thing. We didn't care. We tried to monetize something like this, and it just wasn't sexy enough or fun enough for anybody to really give a crap. So I think, you know, it will become something for like a Viacom or a Paramount where, you know, you can flip on the TV and everyone's talked about this already, but, you know, instead of spongebob, you know, it's a custom episode for you where spongebob says your name and things like that. But again, you know, whether that, you know, is going to help our cognitive, you know, our cog sec, I think, is one thing. But I did want to tell you about AI on the sigmoid question.

Sure.

So at the start, you know, when I asked the questions about cryptography, it just kind of said, I have no idea, who knows? But it's super hard to crack bitcoin. And then GPT3 comes around super hard. Martin, don't even bother. Heat death of the universe. GPT4, same question. Latest model. With the latest, like, attack, it's warning me for the first time ever, it's.

Like 4.5 or 03.

So this is O3 Pro.

Okay.

And it's basically saying things like, hey, you know, you got to be careful. This is a serious attack you've come up with. It could actually compromise some private keys. And I'm like, what happened to heat death?

Yeah, you got to factor some people. I mean, that is like, so.

So one of the things that There was. There was a. There was. So there's a Reddit thread, and who knows if this is real? Could be propaganda, but there's a whole Reddit thread of somebody, a comment talking about how they started having a conversation with ChatGPT about PI and what is PI. And they got down this crazy rabbit hole with the LLM where the LLM was like, you need to reach out to these intelligence services. It was like thousands of prompts deep, but it was like, you have basically, basically uncovered a major security vulnerability, and you need to. Here's the numbers. And you need to contact all these different groups immediately and call them and don't tell anyone in your real life. And so to Me, I think it's just relevant.

Don't go on a live stream and tell thousands of people that you can crack bitcoin or whatever.

No, that's amazing. I mean obviously I think that for 99 for poor implementations Wall have been cracked for a long time and in fact recently there was an $8 billion move on the chain from a really old wallet.

That was this morning, right?

Yeah, no, this was like a few weeks ago. I'm sure another one and they happen every.

There was somebody else that market sold this morning, I believe something and it was a wallet that had bought like it was like they bought $50,000 worth of Bitcoin I think in 2012. Soldiers somewhere around 8 or 9 billion and there was no movement in between diamond hands.

That's a real high conviction hold.

Diamond hands. Yeah, that's diamond hands. I don't think that says cryptography at play. That's just diamond hands.

Well, yeah, they maybe got word of your little bitcoin.

Maybe it's Michael Bloomberg. Maybe it's his family office. Could be. Yeah. Throw 50k in that thing. My kid told me about this new thing.

We tried to short bitcoin at $100. We just couldn't find a counterparty.

Yeah.

How are you thinking about. You mentioned trading enterprise SaaS back in the early days with Jim Cramer. What's your updated thesis on SaaS? Every SaaS app now is just an app to make other SaaS. So maybe SaaS will. SaaS will always live in our hearts and I imagine it'll live on our computers. But what's your updated thesis?

I think that it's sort of similar from back then. I think the morass of a company like JP Morgan that's still running Python 2 for most of the business. It's very hard for them to update and upgrade operations without significant disruption. For you or me, should it be.

I feel like it's a. It's a one line in cloud code or Devin, you just say hey, go.

Migrate ChatGPT agents, go migrate.

Go migrate. Like it is.

Don't make. All you have to do is say don't make mistakes.

I am much. I am much more bullish on migrate from Python 2 to Python 3 than than solve cryptography. But I don't know, maybe you're going to push. Yeah. Fortran, Fortran re implement or replatformings.net re platforming like this feels like this should be doable from the current state of the the art without any crazy AGI hyper loop, any.

There's a Lot of technical debt in most of these companies. And again, your average startup coming out.

Of code was born in technical debt, baby. Cloud code and Devin, they live for technical debt.

I think that the amazing amount of programmers you would need to even maintain and know about this old code that the guy who wrote it's long been dead.

Maybe it's just the context window of you need to know. It's not that there's just like, oh yeah, it's really easy to change the print statement from Python 2 to Python 3. But when there's a massive system and even the time of like, okay, let's bring up the test suite and that takes four hours, it's like, okay, how are you going to RL on that?

I was talking about Matt Groom with this because we were stunting on this guy who was like, erp, transitions made easy, it's no problem. And we're just like, have you ever actually transitioned in the RP system? There's a good chance you waste $300 million. And it gets worse. It's not trivial.

There's a post from yesterday, nobody is an atheist. When you run the database migration in prod on 1 billion rows.

Yeah, I mean I think that it's just really hard at a company like a McDonald's or something like that. If you want to run a 10, 20 person startup on US SaaS, pretty easy, it's great. But the big revenue is still at Fortune 500, which unfortunately is still fairly hard to refactor and those, you know, there's not a lot of those code bases where we're pre GitHub and pre kind of like, you know, I sometimes joke that the big AI companies should become LBO shops and what they can do is they can partner with KKR or Blackstone and all they get is the data. KKR and Blackstone pride the capital, get all the returns, fine. But all the data comes back to, you know, the open eyes or whoever. And by getting the old code bases out of McDonald's or out of a Walmart that, you know, some of code was written in 1970s, you know, they have unique data that nobody else has. And even someone like universal music, if OpenAI LBO'd Universal and said, okay, KKR, you can have the rest of the business, but we want the rights to the data and we can train music models and stuff like that. You know, KKR can make the money on the LBO. But OpenAI are they going to make.

Money in the LBO though? Like if you look at that, they're going to build the DCF for this and they're going to say okay, we're going to make the same amount of money. We're going to, you know, optimize a little bit. Maybe cash flow goes up but then once open air is one shotting music and you know, all of our revenue goes to zero. Is that a risk or it's going to happen anyway.

So I think that's one thing. But then also like the Russian dude who bought Warner Brothers, he really timed his deal. He bought Warner Music, he died his deal. Amazingly, he made like three times as money or more. And so I think it's price dependent. But if you can buy newspaper company, if you can buy a book company, a publishing company, these things are trading for one or two times sales and you're getting this rich data that nobody else has. And if it's really a data war, buy the company, keep the data, strip out the rest. And I heard you guys talking about PE improving LLM, improving businesses with LLMs.

And again that was not the take. It was Willmanitis and he was saying.

That more so it's a reason to scale AUM fun side because hey, let's buy this accounting shop. It has 5 million of EBIT. Like if we just you know, take away all the, you know, it's a.

Justification was what if you can execute.

You know, it's fantastic.

The actual post was the real innovation of LLMs is suddenly opening up a few trillion of mainstream paperwork. Businesses that were traditionally too small and too weird for private equity that can Suddenly transact at 2 and 20 on some nebulous AI labor arbitrage trade. Never bet against AUM growth.

You know, I think it's reasonable but it sounds like just any good operator, right? Like when, when Vista and tumble Bravo. By software companies, somehow they can take these like very ugly gross companies and turn them into amazing cash flow companies. So it's all about the operator, right? Yeah.

But we're going to put Orlando Bravo in a box, right? And then we're also going to put Absolutely in the God box.

Face, voice, everything.

Yeah, yeah, yeah, yeah. It's all coming well, you know we'll be here live streaming it into the singular.

Can you play us a song before you leave?

I'm not sure what you're talking about.

Like, like with, with one of those guitars that the chat.

Oh yes. I, I, I will come back to you with a good parody of Silicon Valley. I've been working on my impressions. Okay, so maybe I can be back. I'm working on Elon Zuck.

Sam. Bill Gurley. Bill Gurley.

Bill has a great voice.

Do girly.

Yeah, I'll work.

I'll work on it. You actually do need to, like, sit in front of a mirror. Mirror and, like, listen and tape yourself and, like, work on it. But basically, anybody can do these things, and most people.

Wait, wait, are you saying. No, no. Those are AI voices, right?

No, me.

Me.

Yeah.

No, no. He's saying separately from.

Like, separately from the.

You had the video with. Talking with Zuck the other day where he was really. He was really.

I just do it myself. I can do a. I can do Zuck. I can do Buffett the best. I think I have the best Buffet impression in the world.

Can you hit it? Can you. Can you do, like, be. Be greedy when others are. Are fearful?

Let me come back to you, and I'll do the whole show for you.

Okay?

Amazing.

Great.

All right, well, this is really fun.

Thanks, guys.

Bobby finally do this.

See you later.

Come back on soon.

Bye.