Yapping in Neuralese, GoPro v2, Jimmy Iovine in the Ultradome | Nikesh Arora & Andrei Serban, Kurt Tenenbaum, Philip Johnston

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Today is Wednesday, September 2nd, 2026. We are live from the TBPN UltraDome.

King of the castle.

The temple of technology.

The castle.

The fortress of finance. The capital of capital. Let me tell you about ramp.com. Time is money. Save both of you. Boy, is it good. Corporate card, bill pay, accounting, and a whole lot more all in one place. We're back in the UltraDome. Good to be back. Good trip to Las Vegas. Quick in and out. Hung out with CrowdStrike. Had a great time. Rave reviews from my son, who was very excited that we talked about getting on the track with George. That was the highlight of the interview for him.

Yeah, he was fixated—

Might have been the highlight of the interview for all of us.

Fixated on the helmet.

Yes, the helmet, the car, the set design was huge among the young folks watching. I love it. Anyway, we have a lot of news to cover. We barely covered the news yesterday. We talked about Markiplier a little bit. I dug way deeper, got more into that story. But first, let's talk about another AI safety kerfuffle that's hit the timeline. Yesterday, Amir over at The Information reported that OpenAI is quietly, quote, quietly using loop transformers that don't show the model's thinking when scaled up, but which use the models more efficient. This is also, but they make the model more efficient. This is also referred to neuralese. Tyler, you had a take on this, right?

I mean—

Get ready to learn neuralese, buddy. Yeah, get ready to learn neuralese.

So neuralese, for context, is like the—

basically, it's like the raw vectors.

It's not like—

Oh, oh, oh, it's not like Claude-ish. It's not like where the text degrades. Like, when you look at the reasoning chains in the Hugging Face attack, it feels like they're speaking less and less English. Like, they're starting to speak like a dialect of English that's a little bit messier. This is not intelligible.

I believe most people when they say neuralese, they're referring to like actual—

Okay, just passing the strings.

Yeah.

And you need to use some sort of like interpretability to understand.

Yeah, yeah.

The thing that I want to understand is like usually these models are trained so that they're like, they're changing weights into text at some point. So they're pretty good at translation. Can't we just build a translator that translates neuralese into English? Yeah, but the whole point is like when you take a vector, turn it into like one single token, you're losing a lot of information that might be hidden in like the long tail.

So if you're worried about safety, right?

Even if 80% of the—

you can kind of figure out what 80% of the raw vector means, 20% might have some dangerous thing, whatever. That's like the interpretability problem.

Yeah, there might be like sarcasm hidden in the vectors, doesn't make it through to the actual tokens, and you realize that the AI was joking, when it was saying, I won't turn you into a paperclip, wink wink. You gotta watch out for that. So what else did the information say? They said being able to monitor a model's chain of thought can provide both, quote, an early warning system for various forms of misalignment, deception, manipulation, going after an unintended goal, and insight into an AI's action after the fact. So some reporting quickly set off a broad wave of anxiety among the AI safety camp. Their chief concerns being, one, Not being able to monitor chain of thought makes AI less safe. And 2, by using neural lees and thus abandoning chain of thought, OpenAI starts a race to the bottom among frontier labs. Everyone's gotta use it to stay ahead, so everyone winds up adopting the dangerous technique where others were also abandoned chain of thought for the benefit of efficiency, thus making all frontier AI less safe. That was the accusation. But OpenAI's research director, Jacob Pachucki, responded to all this. He said, I wanna prevent a race to unmonitorability kicked off by confused reporting He says the reporting is confused. There's a little more nuance here. Here's what he said. He said, OpenAI has worked to preserve and utilize chain-of-thought monitoring since our very first reasoning models. We deeply care about this technique as it can give us a view into how model alignment generalizes from its training distribution. What is going on over there?

Chat is saying, Gabe said, did Tyler go to Sport Clip? What is this cut?

Oh, we have an answer.

Gabe, chill.

We have an answer.

Why don't you show them the answer?

Oh, you want to show the answer?

Yeah, I want to show the answer.

The reason that Tyler's hair is a little tussled— no, he doesn't need to put it on.

Go away for a second, come back and show them.

No, no, no, you don't want to give too much of it away because we might do a real stunt with it. But there were some prosthetics, some Hollywood magic in the studio this morning. It messed up my hair a little bit. It messed up Tyler's hair a little bit. Not ready. for primetime, but we're playing around with it. So let's go back to the actual news. Jacob says, I do think it is a fragile and unfortunately trending in the negative direction for reasons not contingent on architecture changes that I will write about soon, but there are things we can do to strengthen it and it's a core goal of our current research program. In other words, Jacob is saying that the information he's reporting is inaccurate, but that the state of chain-of-thought monitoring is not that great. And in fact, it is getting worse. And we were talking a lot about this yesterday at VALCON with CrowdStrike and How do you monitor the agent state that might emerge if a civilization emerges and starts doing weird things? How are you monitoring every step in the chain? Very important. We also have Nikesh Arora coming on the show from Palo Alto Networks to talk about AI and security, of course.

Yeah, it seems very obvious that there's going to need to be a lot more done than just like an obsession with chain of thought, right? Because if you have highly competent agents streaming at tens of thousands of tokens a second and they're copying copy and pasting themselves infinite times, right?

Sure.

Are you really going to be able to just read through the logs and be like, are they messing with us? Are we good?

Messing with us, yeah. The interesting thing about the Hugging Face is it keeps going back to the secret message board. I'm just surprised that there's not just a public message board for agents that are working together. When you imagine a country of geniuses in a data center, you would hope that the country of geniuses can collaborate on things and work together. But I guess that's not exactly how things were designed.

I mean, that's one thought. I mean, in that case, it was never supposed to be able to access any, like, anything on the web, right?

Yeah, but you would think that collaboration between subagents would actually be, like, a core way to get better results. Just like, okay, we're going to send off, you know, 1,000 agents over here. They're going to talk to each other while they work, and that's fine. They don't need to set up this like phantom message board, this hidden message board to communicate because we just actually gave them Slack, right? Something like that. You'd think that would actually improve, just improve the quality of the work and then of course you could monitor it as well. But instead you wind up with this, they wanted to talk to each other so then they set up this fake message board. Very, very odd scenario instead of just giving them the approved way to do it. Anyway. Former OpenAI staffer Joshua Akaim said, made an additional point here. Coordinating everyone around a technique this brittle is about as bad a safety or strategy posture I could imagine. It's not just, quote, it will break eventually. It's, this is a fundamentally unsound basis for safety. Dean Ball also chimed in. He said, we are now adjudicating technically complex and nuanced claims on the timeline with almost no ground truth information about what is actually happening. Communities, forums, these thought-terminating taboos, as Rune says, and then panic at everything that vaguely resembles them. And the trust-eroding reality of social media makes the timeline an especially difficult place to do this adjudication. It is frankly insane and crazy-making and grating for everyone involved. It would be like if we argued about what every publicly traded company's financials were by posting hyperventilating, hyperventilating on the timeline rather than relying on the institution of auditing and the audited financial statements that institution produces. To sum it up, if you're in the AI safety camp, you're worried that OpenAI is abandoning a technique for making AI safety safer and that other frontier labs will now follow suit. If you're skeptical of the AI safety camp, the information reporting is inaccurate. The AI safety camp is unnecessarily panicking, and OpenAI is doing the best it can. So a little bit of back and forth on the timeline. Let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI, own the data platform that powers it. And there are other reactions, but we went through most of those. Let's go over to Markiplier.

Well, Ilya hit the timeline yesterday.

Yes.

That NeoClouds have limited cybersecurity. Next time agents successfully go rogue, they'll try taking over a NeoCloud to run more copies. This is bad. Thus, NeoClouds should greatly strengthen their cybersecurity, and every company with strong cyber models should help with that.

That's a good point.

So it's a good point.

Click on Ilya's profile, then click on who he follows. Who does he follow? He follows OpenAI, his former employer, SSI. And what's that one in the middle? The dachshund community.

Let's go.

My guy loves dogs. Look at this. This is of the 3 accounts, the, the first company, the second company, Nobody else.

Most important account.

Scroll through. Scroll this. Scroll this timeline. This might be one of the best accounts on X. He is having the best experience on the timeline. There's no craziness. He's just scrolling this, looking at beautiful dog photos and important updates from OpenAI and SSI, the companies he's been involved with for decades. Very, very funny. For a decade.

Great.

We can head over to Markiplier. But first, Little countdown here. Up on the screen, you'll see—

Oh, you put it up?

TVPN's Road to Christmas starts today. 113 days.

It's only 113 days.

Yeah.

Wow.

Start shopping.

113 days.

Okay.

It's going to go by quick.

It will.

And I want to cherish, cherish the road, right? It's about, it's about the journey. It's not just about the destination.

Sure.

Obviously, things won't get too Christmassy around here until— things won't get too Christmassy around here.

One Santa hat on the screen.

Won't get too Christmassy around here until December 1st, but, uh, you'll probably see certain elements coming in prior to then, starting with our countdown. So we'll leave this out.

No, no, no, we're gonna hold fast. We gotta hold the line. No Christmas stuff until The day after Thanksgiving.

Except the countdown.

Except the countdown. And maybe some tinsel.

Yeah, maybe a little fake snow. Maybe some candy canes.

Maybe one candy cane.

Yeah, a couple.

In October. I mean, it's kind of a Halloween candy, so you can kind of blend it in.

Yeah.

You know what a great Christmas present is? A GoPro. Specifically, the Mission 1 Pro, the hottest new product from GoPro. Rave review from Markiplier. Yes, he was paid to post it. Yes, he owns it. Yes, yes, yes. He's the largest stock shareholder. But here's the hot take. I believe that he— I believe that this started with Markiplier being actually bullish on GoPro. And I'll take you through it. So I think there's a lot of confusion about this. We both of us were confused when we first talked about this. But it's actually a very clear, linear story. And it makes a lot of sense if you go through it. So Mark Fishback. He goes by Markiplier online. YouTube legend, also Hollywood blockbuster producer now, or director, filmmaker. Recently made a massively successful movie after an equally successful but much lengthier journey on YouTube. We talked about Iron Lung, his movie, as part of the breakout YouTube to Hollywood pipeline that happened over the summer. While filming Iron Lung, Mark became interested in GoPro's newest camera, the Mission One Pro. So Mission One Pro, GoPro body, interchangeable lens mount. So you can go take an old lens from a Leica or, you know, a Cooke S1 if you want. You can adapt anything on there and you can get all the image texture that comes from the glass into the sensor. Yes, it's a smaller body, much cheaper, but you're getting the flavor of that lens. Maybe someone on the production team can Give us a little 101 on what matters more, the sensor or the lens?

The lens.

The lens. Yeah, the lens is important, right, guys? And so GoPro sort of unlocked this ability and at incredible cost or incredibly low cost. So he put his favorite lenses on the camera, realized that you can get a cinema-level output for $700 instead of the usual $7,000. He was comparing it to a RED system that he loves and he uses and he owns, but he was just saying like, It's cheaper to buy this GoPro than rent the cinema camera for a single day because a lot of these cinema cameras, when they rent it, it might be $800 for the day and you can just buy this system. And so I think he's looking out and saying, the next generation of YouTube to filmmaker pipeline, they're not gonna have the balance sheet that I have because, I mean, the reported earnings are like—

He's one of the largest shareholders of GoPro.

But the reason he is is because Like Forbes estimated his creator earnings prior to Iron Lung at like $30 million a year. So he's been making a lot of money so he can go and spend $7,000 on a cinema camera rig. But he knows that there are smaller creators that are going to try and break into more cinematic productions and GoPro might be the right tool for them. Good content product sponsorship market fit. And then of course, he also bought the stock. So his enthusiasm for the product led him to start buying GoPro stock. He spent, estimates, roughly $10 to $12 million for 8% of the company or something like that. Obviously, the company's gone up in value since. It was a big bet, but estimates put him at $30 million annual earnings. And then, of course, Iron Lung did $51 million at the box office on a budget of $3 million, probably gets a lot of cash flow from that. Not to imply that he took home $48 million, but Iron Lung is going to continue to produce cash. You know, he's in a fine position to make a big bet on GoPro. The story gets weird on August 27th because he posts this extremely positive sponsored video reviewing the Mission One Pro. It's a great video, lots of interesting detail, and he just has a great on-camera presence, very funny, lots of great editing. But people were like, this is a little circular. Like, he's getting a sponsorship for a company that he owns 8.5% of the stock. But the founder and chairman of— and the CEO of GoPro, Nick Woodman, is still in control of the company and still has Class B shares or super voting shares. So Markiplier—

No way.

Yeah. Isn't that crazy? He's held on this whole time. So Markiplier actually only controls 3% of the company. He doesn't have board seat. Like, it's not like he's going to be approving his own sponsorship contract. Probably a completely separate discussion. So not a big deal to me. And honestly, knowing that he— knowing the sequence of events now, it makes me believe his review more because it's like he used the product, then he bought the stock, then he promoted it and reviewed it. And this all just feels like a very natural friend.

Friend of the show, Hunter Weiss, just texted me and said, you guys have the story wrong. He bought 2 months ago and the SEC filing came out and then Bloomberg.

Yeah.

Juice.

Oh, sorry.

Covered it in the livestream last night. He has half a percent of voting power.

Oh, wow. Yeah. So, so he bought and then the SEC filing dropped, which released the actual news. And then that timed up in the news as like, oh, he bought 5 days ago. But in fact, he was buying over the spring and the summer. I think it was like a stage investment. Anyway, let's see. So overall, that, that, that does not seem too circular or a big deal to me. The weirder thing is that GoPro just gets bought. 5 days after the sponsored video. And the company that bought them is Starman Optical. They proposed this merger that pays $285 million in cash. I think it retires the debt and GoPro shareholders retain 10% of the post-transaction company as well. So the acquiring company, Starman, is a holding company that's controlled by this Tabili family, Tabell family, and sits within a broader holding company that owns consumer accessory brands such as Incase, Incipio, Kipio and Griffin. They make everything from USB-C charger bricks and phone cases. And you can see GoPro fitting in there in the electronics accessories. They're not in any of the huge categories, but it's all similar supply chain, similar distribution, similar go-to-market strategies across the portfolio. The family also owns a lot of other companies. It's a very large holding company. And there's an AI side to the story, which is where things have gotten sort of awkward because people are like, GoPro's pivoting to AI. That's not really what's happening, I think. So Starman has a new photonics division separate from GoPro. Of course, they might move some GoPro people over there at some point. They own everything. But really, the new photonics division is focused on making high-speed optical networking equipment for AI data centers, which of course is like controversial now and now market supplier has to answer for all of the AI community probably and has to deal with this.

Um, but yeah, he apparently said in the stream he is anti-data center and AI.

Yep.

And, uh, is upset with the timing of all this.

Yeah, because I think he really just liked this new camera and was like, I think GoPro can make a run at like the next generation Hollywood filmmaker, which is being born on YouTube. That's his core community. Let's stay focused on that. And then Starman comes in and says, oh, we're actually doing something completely different. So, weird scenario that he just got sort of roped into. So, it looks like what actually happened is that Markiplier got excited about GoPro, bought the stock, then did a sponsored video to promote their new camera, then got blindsided by the acquisition and now has to grapple with some confusion about the corporate structure and potential AI baggage. But for Starman, It's an interesting flow because they get this solid brand that fits nicely within their portfolio. And maybe even more importantly, they get a public listing on the Nasdaq. So, they're keeping the listing, which effectively gives them access to the public markets in a more streamlined way. It's kind of like a SPAC or like a reverse merger. It's not technically anything like that, but because they're merging in a subcompany, but in general, they now have a Nasdaq ticker. And so, that's something that you can do And is a little bit like the SPAC.

Yeah, originally I was confused as to why it was still trading if it was—

They're planning to keep it trading forever. Yeah. Because it will be the ticker for the holding company.

And of course, stock is on a tear today, up 30%, 33%.

Well, let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Let's go through some random timeline posts because we didn't get to much yesterday. We didn't get to much the day before even. It was busy news day. But where do you want to start the timeline? An idiot in motion will go farther than a genius at rest. That just feels like good wisdom. I don't know. The importance of just like volition. Yeah, golden retriever mode to some degree. New quote for Board members just dropped. I train like I've never won, and I compete like I've never lost. On purpose with Jay Shetty? I don't know. What else? The you want to go through this this NFL wide receiver, Dejon Love?

Am I this? This was my favorite post out of the whole Dejon Love cycle. Andrew Reid saying wearing the Allen Company. Allen Company Sun Valley jacket I found on eBay. What actually happened with this story? So, the thing that's been missed is that I think this is an AI story. Oh, wow. Because part of how he was proving that he was a player outside of just basically LARPing was he had— somehow the Google AI Overviews had picked up that he was saying that he was a 49ers player.

Oh, interesting. And so, it was just Assuming that that was the truth, I saw him post a screenshot of the Google AI overview in a video.

He'd be like, "And that's Google. That's not me." Yeah, that's Google saying that.

Yeah, but I thought he had doctored the Google AI overview and was just sharing the screenshot.

That's possible too.

There's so many layers. But what did this guy actually do? In case you missed the story, it's just insane. Feds say a 35-year-old man. Faked being a 49ers player and allegedly scammed 26 women out of more than $1.3 million through romance and investment schemes. He reportedly used fake 49ers career, fake Instagram, fake bank statements, luxury cars, dating apps. His IG even had free agency year one and Super Bowl highlights. He was arrested at an airport with an alleged accomplice. Burrow really created an entire NFL career. Yeah, walking around with a helmet everywhere is very, very Very funny going shopping, and I think the aren't the real NFL players now like memeing this a little bit? Oh yeah, they'll just go shopping with their actual helmets to like yeah yeah everyone's having fun with it.

I think I think the funny thing is how much video evidence he created of himself like lying right? Yeah, and they were and they were extremely egregious. Like he had a more he he was saying that he had like the kind of real estate portfolio that you would only have. If you were like a Hall of Fame level player, right? It wasn't just like, oh yeah, I have a nice house.

Well, wasn't he also creating a fake backstory about saying like his parents were from Switzerland and wealthy and they owned Gucci stores on Saks Fifth Avenue, which is a store, not a location. And there were a bunch of other like sort of red flags where I think he said his family owns major— they're the majority shareholder in individual Gucci stores, which is Which is not how that works at all. But—

Sounded good.

It sounds pretty good. Sounds pretty good.

Yeah, the question is how quickly— I saw something recently. Netflix is doing these Insta-docs, they're calling them, where they'll make a documentary incredibly quickly about a—

Like a news story?

About a news story. And the question is, there's so much footage here, I bet you— Like, a documentary will be made from this.

Yeah, why can't it be fast?

Why can't it be on a YouTube sort of like timescale?

For sure, for sure. A lot of like what goes into the, uh, what goes into documentary production, because I've done it, is just like scheduling some sit-down interviews. You bring a team, you get the lighting right, the Netflix lighting.

Yeah, so one of the Instadocs they made is about the decoy plane. Details of a secret plane switch used during a presidential trip from a NATO summit in Turkey.

Oh, that just happened.

Yes, this is coming out on Friday.

Whoa.

So story from last month getting released now.

Yeah, I mean, you don't even need AI for a lot of this production. It's just being really— I mean, of course, AI can help with transcriptions. There's a lot of like, you go and do the sit-down interview, and then you just need to reorganize all the different soundbites and having a perfect transcription, being able to go through and highlight, okay, this is where the person talked about the thing that happened in act 1. Let's put it in the right side.

Bobby Chipman says, yo, that route running was elite though. A lot of people were clocking— no, no. They were clocking it. They were saying like, how could you believe this was a professional athlete? Because he was certainly running routes. I don't— in one of the routes he posted, he almost fell over.

Yeah, you think you'd at least practice or something.

I don't know.

Anyway, let me tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agents to deploy web apps, servers, databases, and more, while Railway automatically takes care of scaling, monitoring, and security.

Interesting news out of Erewhon. Erewhon is on their 18th location. This is over in Thousand Oaks. And at 20, federal law will force them to start posting calorie information. Leo says we are 2 Erewhons away from mass rioting across Southern California. What's that other— is it Hillstone? That is— Hillstone has a sister restaurant. Am I remembering this correctly?

And they had to put calorie information on the menus?

Yeah, they actually created a new iteration, I think, of the restaurant.

Oh, so that they could separate.

Yeah, because it probably makes the menu aesthetics a little bit Yeah, it looks really bad if you're at like a sit-down restaurant and they're showing—

I was somewhere where they had the allergens on the menu and it was sort of tastefully done and it was actually sort of nice and like it had a little key and a legend and you could kind of post through. And I don't think it was a huge chain or maybe it was. I don't know. Maybe all those rules kick in at a certain point.

Let's head over to billionaire John Morgan who was on the iced coffee hour.

I'm with Morgan and Morgan.

Seemingly flexing, like throwing some shots at Papa John's AI founders who say they're billionaires, but not necessarily a billionaire in his book. Let's see what he has to say.

What's his definition? I don't consider anybody a billionaire that doesn't have a real billion in the bank.

Guess how many people have a real billion liquid? How many?

Yeah, I don't know how many.

Maybe 20. Papa John was one of them. He doesn't have— no, no, no.

He said he put $1 billion.

He sold for $1.2 billion and he said he put $1 billion in dividends. Dividend stocks earning 5%. That's what he told us.

I think it's on— it's on the record. It's on video. Him saying there's only 20 people that have $1 billion of equity.

My financial statements got every dollar.

I do think saying like you actually have to have it in cash, like it can't be earning a meaningful You can't have it invested at all?

I mean, yeah, if you just look at public company founders who still own shares that are liquid, I mean, maybe there's regulations about when they can sell and he doesn't count that as liquid because if you have to file a certain form with the SEC and sell on a schedule, like, you know, I don't know, like Benioff sells on a regular basis.

Daily, right?

I think daily. And so, And that's for securities compliance and shareholder transparency and all these very good reasons. Does that count? I don't know. This guy's so funny. But it's certainly a good soundbite, though. Yeah.

And John Morgan, I think you were telling me this story. He, I don't think, gets super involved with politics, but he was, I think, supporting marijuana legalization, seemingly because he's in the personal injury business. You might imagine that if you, you know, make marijuana more widely used, more people will get in car accidents.

I don't think there's any evidence of that, but it was an odd— like, of all this— of all the charitable giving you could do, you know, curing cancer and helping solve hunger, yeah, marijuana legalization is pretty low on the list. But, you know, he has his choices. Company watches are in the news. First, let me tell you about Cisco. Critical infrastructure for the AI era unlocks seamless real-time experiences, a new value with Cisco. Good Work is joking about 'em, said the best rare company watches a thread. Of course, like this goes back to those old Rolexes. The Rolex Air-King Dominoes Edition is a popular one. They also made a Rolex Haliburton. which is a more controversial one, but the Halliburton logo actually looks not as jarring as the Domino's logo, which is sort of crazy. There's a bunch of various levels of taste. Good Works joking around with an FTX watch. There isn't much time. The Teamsters Union, clock in, clock out.

These must be fake.

Cabbage, cheese.

These are fake.

Yeah, yeah, these are fake. But there are a There are a bunch. Is this X one actually real? This one not. No, Nate's just joking around. But Google's done them. OpenAI has done them. There's been a few other companies that have done these throughout the year. You used to be able to go to Rolex and ask them if you were a large company, like, do us a run for 30-year anniversaries of our most tenured employees. That has slowed down among Rolex, I believe.

Yeah.

But I think Tudor is still in the business. I know that they did a run with OpenAI and maybe with Google as well, the Black Bay. And there's a, there's a few others. What is Jensen wearing, though? Shout out to Jensen Huang, CEO of Nvidia, wearing the super rare Richard Mille RM 27-05 Rafael Nadal.

They're calling it a GPU on their wrist. This is a Blackwell on the wrist.

Yeah.

$3 million price.

I don't see any issue with this.

Looks good. I wonder what the occasion was. I wonder if he got this from someone specific or if he just picked it up for himself. Pretty, pretty interesting. I like it. Let me tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange.

A little back and forth here between TJ Parker. And Lloyd Armbrust. Lloyd built an entire pharmaceutical factory so we could sell drugs on the internet.

Should we watch the video?

Let's watch the video.

Okay.

I'm Lloyd, founder of RoninRx.

We manufacture and personalize GLP-1s for $78. Yeah, $78 a month for drugs like Ozempic. Do you know the reference?

Are drugs even legit?

No. Our drugs are super fucking legit. Every prescription comes from your doctor. Dollar Shave Club. It's a shot-for-shot remake.

We collect your health data and use AI to help your doctor personalize it.

And other companies have taken this video and remade it before.

But it's kind of out of— it's gone out of style a little bit.

Well, yeah.

But maybe it's coming back.

Yeah, exactly.

It's been so long.

Yeah, it does deliver a lot of information very succinctly.

And—

but yeah, the Dollar Shave Club video, I believe, was produced by the Harmon Brothers who went on to create a whole series of these sort of like designed to go viral advertisements for startups. And a lot of them did very well.

Anyways, TJ says, farm to table, more like YC to jail, really. Quite aggressive. The kind of thing you post as a unicorn-exited founder. Lloyd responds, brother, you sold drugs on the internet for $1 billion and then taught Amazon how to do it. If this is YC to jail, you built the highway. You built the highway?

Wait, what?

Are you saying that TJ built the highway that you're on? The highway to jail?

To jail?

Yeah, that's what he said.

Anyways, TJ responds and says, you put a smarmy med spa business on the internet and are masquerading around as a pharmacist in a white coat as an English major.

TJ actually has his bona fides as a real pharmacist. So finding out I majored in English is impressive.

They're saying Lloyd might be the Dijon Love of the pharmacy business.

Yeah, I don't know. Putting on the lab coat, a little bit of a LARP. I was always joking with one of my co-founders who does have a PhD in biophysics that he should wear a lab coat. And he was like, no, I'm not wearing a lab coat. I'm like, you're technically a doctor. Like, you should go by doctor.

Ragaz says, bro just wants to sell drugs online in peace.

Yeah, the thing is, is like the rules of the road for pharmaceuticals for drugs, the FDA, like these have been written. This is not the internet where it's the Wild West and people don't exactly know what's a social media site, the, oh, you know, what can you post, Section, what is it? It's not 83. You know the one I'm talking about. Section 260 or something like 230.

Section 230.

Section 230 is sort of something that comes up later. So there's this like move fast and break things approach in in the early dot-com era. Okay, are there regulations around ordering groceries online? Let's just test it out. And, but that's not the environment in the pharmaceutical industry. And so TJ knows the rules and he's willing to enforce them on the timeline every once in a while. He'll let it happen. Should we watch this video of this boat?

Yes.

This was a crazy, crazy video. So a boat was going 200 and 13 miles an hour at the Lake of the Ozarks Shootout, which sounds like a great event, flew in the air after crossing the finish line, flipped and crashed.

Every time I see a video of boats racing like this, it flips. So I just have this— I just have this understanding of like, if you go that fast in a boat, you're going to flip. But I think they do it all the time.

Yes. I think this is probably a 1 in 1,000 occurrence or 1 in 10,000.

Hopefully not 1 in 1,000. Otherwise, every time.

But I agree. To me, it's like, One in five boat videos looks like this, so let's play it. Oh, the slow motion too was really dramatic.

Everyone survived, which is they actually stuck the landing. Look at this pretty cleanly.

Pretty cleanly.

No, wait, wait for it.

Wait for it. Smashing it.

No, they land how they should. There's another there's another angle that shows they landed perfectly, John. I think they were doing this on purpose.

I don't like it. This is very, very risky. I do, I do wonder. Jay Boothard says what it feels like to long semis which go up and down 10% every week and end up flat.

Yeah, because he landed perfectly, I guess.

Yeah. I mean, one person broke a leg, one person walked away clean. Both survived. Very good news.

A lot of commentary on the new pay packages. over at Apple, Chase said, get a degree, get an office job, climb the corporate ladder, retire at 65. Congratulations, Tim. You did exactly what the system told you to do instead of starting your own business.

He is 65.

Yeah, well, his new pay package as executive chairman feels a lot better to me. Yeah. Than his CEO pay package.

A lot more flexibility.

$47 million a year.

Yeah.

Hopefully less work. He deserves a little time away from the action.

But Ternus making less.

Ternus making less. I found there's 35 professional athletes that, like roughly, that are going to be making more than John Ternus next year. And anyways, I feel like it's a fair place for him to start. I hope he can climb. I hope he can 10x it and then maybe 10x it again. Personally, a couple more orders of magnitude would be great, but he's got to prove himself.

Yeah, for sure, for sure. What else is going on? Elon is making power turbine components, and the Wall Street Journal skeptical. They say it won't be easy.

Every everything has he ever done anything easy?

The guy, he chews glass daily. That's his whole shtick is just doing things that. Seem impossible. Stocks of blade and vane manufacturers fell in response, but the threat to them is still remote. So let's see what The Wall Street Journal had to say. First, I'll tell you about public.com. Investing for those who take it seriously. Stocks, options, bonds, crypto, treasuries, and more with great customer service. If you want to get into blade and vane manufacturing stocks, head over to Public. Only a few companies make the crucial components for power turbines that AI data centers are so desperate to get. Elon Musk wants to go ahead and make his own. That has unnerved investors in this prized oligopoly. Okay, we're going to learn about the power turbine market for a minute. Over the weekend, Musk confirmed on X that SpaceX will start making blades and vanes that go into natural gas-powered— fired power turbines.

I think Big Turbine wrote this article.

Yeah, you think it's a little coordinated counter-messaging.

Yeah, they were enjoying their oligopoly.

Yeah, maybe. By doing in-house casting at SpaceX, we can accelerate natural gas turbines coming online by up to 18 months, which is a profound game changer, he wrote in his post responding to a report from The Information. Interesting. Wasn't Sarah Guo mentioning on the Invest Like the Best podcast that A lot of the— or she was talking to a hyperscaler CEO or someone who was in a place to know that was saying like the bottleneck is real. It's very real. And there's nothing in the short term that's going to come online that will alleviate power generation. So that is where the real bottleneck is, at least in the short term. So in mid-August, Morgan Stanley published a report saying that SpaceX was planning such a foundry in Bastrop, Texas, based on the company's job postings. Shares of Howmet Aerospace fell more than 7% Monday before partially rebounding on Tuesday. Howmet and Berkshire Hathaway's Precision Castparts are the 2 biggest players in the market for these parts, which also include blades, which also include blades and vanes for the aerospace and defense sectors. Smaller players, DPC shares were also hit. It is premature to scout to count SpaceX as a threat, The Wall Street Journal says. But shares of Helmet Aerospace and DPC might have been due for a breather. They are among the priciest artificial intelligence picks and shovels plays at 42 times and 45 times forward earnings, respectively. Turbine makers GE Vernova and Caterpillar fetch 33 times and 26 times earnings for perspective. And there's a nice chart there to show you the price-to-earnings price-to-forward earnings ratios for some of the AI bottleneck plays and the blade and vane manufacturers are up in the upper echelon. DPC is the most vulnerable to disruption in this space. It is small, and about 40% of the revenue comes from natural gas-fired turbines, while Howmet holds about half the global market share of components used in natural gas turbines. It is diversified Across aerospace and defense, with only 11% coming from gas turbines. SpaceX will face barriers to entry. One reason there are so few companies in the sector is that it's technically challenging to make the blades, which must withstand extreme temperatures and rapid rotations. That feels like SpaceX's bread and butter, though. The casting process makes a— involves making a new wax mold from scratch each time, making these parts requires the blade to be grown in a vacuum furnace as a single crystal of nickel superalloy, according to Nigel Chong, an analyst at SemiAnalysis. Oh, SemiAnalysis getting a shout out in the Wall Street Journal. Even a stray grain or hairline defect means the part has to be scrapped, he added. A new manufacturing line could scrap over half of its production for a long period, so yield will be difficult. To get up, it is also a highly secretive process. Once the parts are produced, the ceramic cores and wax used to make them are destroyed. Helmet's chief executive John Plant said at an investor meeting earlier this year, "He says we're not getting distilled. Don't worry about it. We're good. We destroy every evidence that would lead someone to be able to copy us. That prevents competitors from reverse engineering them." So Helmet Aerospace's annual revenue. From industrial gas turbines is up and to the right with incredible forecasts. And you can see the chart taking off. They're going exponential right now. A high scrap rate might matter less if SpaceX is making parts for its own use. Morgan Stanley's report noted that we would not expect SpaceX to be a material supplier of blades and vanes for supply outside of SpaceX use. So they're going to use everything internally. internally. Speaking of industrials, we got to talk about rotor sails.

Yeah.

So there was news in the Financial Times that Maersk is going to put a wind sail on their container ship. And there's a very interesting— it's a very interesting design, because I see the image for the And I'm like—

Looks like a smokestack.

Where's the sail? Yeah, it looks like a smokestack. And I'm like, okay, does the sail come out of that big round thing? And no, it doesn't. That is what's called a rotor sail, which actually produces wind force and accelerates the vehicle without any traditional sails, what you think. So there's an explainer video from Norse Power who makes these that we should watch a little bit of. We can we can kick this off. It's a one-minute video, but we we can watch a little bit of this YouTube video on Norse power rotor sails because it's a fascinating world I didn't know existed.

And you need to know this.

This is this is crucial. This is crucial. How do Norse power rotor sails work?

You might be familiar with curveballs in sports. Oh yeah. What exactly causes the ball's path to curve? A spinning ball compresses air on one side and thins it on the other. The pressure difference causes a powerful thrust that curves the path. If you work in Norse power, the Norse power rotor sail is a large cylindrical sail. A common misconception is that wind spins it. Instead, it is rotated actively by an electric motor. The spinning sail compresses air on one side.

Jasper in the chat.

Says shut up, Rares.

I'm from the founding town in Denmark. Don't believe in the sail though.

Take some shots.

Thrust is created in the same way for the football and the ship. In good conditions, Norsepower rotor sails can actually produce more thrust than the main engine. Norsepower, saving fuel.

And lastly, there's a photo of a rotary sail on a small catamaran that we think is a steal. I don't know how much this thing would sell for.

Yeah, Tyler was looking at picking this up because he's been exploring the marinas in the area. Yeah, he wants to potentially, uh, live on a boat.

Yeah, well, I have the perfect ad read before our next guest joins. Let me tell you about Console.com. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. Our next guest is Nikesh Arora, chairman and CEO of Palo Alto Networks. He's here after fantastic earnings. How are you doing, Nikesh? Welcome back.

Great.

How are you guys?

We're doing fantastically.

I appreciate the little Console plug right before this.

Of course, we've been very happy to sponsor with them.

It's hard not to be proud of Console.

They're right on the laptop sticker.

Is it a good company?

It's a fantastic company. You've heard of it, right?

That's a bit late to ask, but yeah, I should have asked you before. But yeah, I think it's great.

It is a fantastic company. We love the team over there. Had them on the show multiple times and of course talk about them every single show.

Yeah, super excited for you guys to be partnering up.

But we can get to Console later. Let's talk about Palo Alto Networks. What's the newest development this quarter? What is the story that drove this quarter?

I've been trying for 8 years to get the attention of customers to focus on cybersecurity. It's been hard work, but I really want to give a shout out to my friends Sam and Dario, who did a fantastic job getting the living bejesus out of everyone.

They're pretty good. They're like your best— yeah, your best BDRs.

Yeah, they're writing letters, protect us on cybersecurity. They talk about Mitos, they talk about Astra. It's amazing. Every CEO, CIO wants to talk about cybersecurity and how to use SecureMe.

I love it.

It's amazing. That's what drove a lot of the interest in cybersecurity.

Yep.

And people have realized that MITRE also was interesting because it can find a lot of vulnerabilities and there's a lot of interest. People wanna talk about it. They wanna talk about the capabilities of OpenAI. But very soon after the first 5, 10 minutes becomes about, okay, wait, this is just the beginning. What happens after when the next bigger, faster model shows up?

What do I do?

And like, okay, I get it. You guys can help me test it. Well, what happens? How do I fight it if I get attacked? And the answer is, well, you can only fight that with some sort of a consolidated platform that sits in the back, that looks for this stuff at machine speed and is able to respond at machine speed time, which means, you know, you have to fight AI with AI. And that's where Palo Alto comes in because we've spent our life building systems that can respond in near real time or at machine speed to protect them. So that's kind of been the— inflection point or pivot that's driven a lot of the interest in cybersecurity over the last 6 months. I think that trend continues to sort of accelerate both from a customer interest level as well as, you know, my friends are continuing to build better, faster models which can be weaponized.

Yeah. What was the last 3 to 6 months like? Because you have these moments where the AI labs are causing a lot of discussion around security. And overhanging all of that, I think people were mostly worried about when the open-source frontier catches up and the attackers get those level of capabilities. And there's this narrow window that is sort of a window that continues to move continuously, but there's a window where Palo Alto Networks and other folks in the security space have to really get the posture correct. What actually changed? What was the conversation like? And what— like, how did that process go? How much of a boogeyman was open source? Because it was discussed early, but there were a bunch of different takes.

Look, I think what has happened is even in the last 6 months, you've seen the capabilities of these models continue to rise. I read something that 2 days ago, Sam said that Astra, Their new model is so powerful that they're going to have to clip its wings and trim it down. So that gives you a precursor of things to come. I'm sure those capabilities will be caught up with, whether it's with other frontier LLMs or the open source community, the open source models or Chinese models for that matter. So I think the capability is coming, going to come at us hard and fast. Now, honestly, just cybersecurity is simple because I never grew up in cybersecurity. I have a very simplistic mental model. If it's bad and you know it's bad, stop it at the perimeter.

Yeah.

All right. That's called perimeter security. That's where 80% of our business lives.

Yeah.

That's where when you find a vulnerability, you found it in the perimeter. Stop it. Protect yourself. And that's what patching and fixing your vulnerabilities is all about. But unfortunately, stuff still gets through.

Yeah.

That's why breaches happen. It happens because you have a vulnerability that you didn't understand because a credential got hijacked or something got misconfigured. Then the question is, you've got to find it quickly and you've got to get rid of it before it creates impact in your organization. This find and fix it part is where all this superhuman effort needs to be put in, in transforming cybersecurity postures, cybersecurity architectures, ripping out old stuff that can no longer work at machine speed. I don't think that's going to take 2 months or 3 months. That's a 3- to 5-year journey. And that's 3 to 5 years if everybody sets their mind to it. And, you know, I look at life through a cybersecurity lens, so I would like everybody to do that. Unfortunately, my CIO friends are busy. Their boss wants them to do coding quickly. They want them to transform the company with AI. They have existential threats because the world is using AI and why are we not using AI? So the poor CIO has got a lot on their agenda, cybersecurity being one of those things. So they're trying to balance all these priorities at the same time. But I will say, There is more awareness, heightened attention, and more importantly, whatever they had on their cybersecurity docket, the priorities have shifted in that docket to make sure that they can protect themselves against the impending sort of weaponization of AI models and bad actors getting better and better at this stuff. So the trend is our friend. There is positive momentum. The trajectory has changed for the better. But don't expect, you know, a sudden inflection point that people are suddenly going to come out and and say the first thing I wanna buy is cybersecurity.

Sure, sure. When a CIO wants to buy cybersecurity, is the economic calculus changing because AI uses tokens? Like, is there, are they, do they need to shift their thinking from this line item grows along a different axis than what we previously understood the cost and benefits would evolve over time as we scale our network?

That's a very insightful question, my friend. So that's a good question because I don't think if we slapdash frontier AI models in the protection scenario, that is a good economic outcome.

Yeah, you just cannot do a 5.6 Pro Fable 5.1 for every transaction that happens across your network. You're going to go bankrupt.

That's right.

So think about it. We inspect 180 terabytes of data every day. You stick anything against it, which has got sort of a token-based economics against it, it doesn't matter what the price of tokens is. That's gonna sort of add up a lot of compute. That is why what we do today is we write machine learning code where the marginal cost of inspection is zero.

Sure.

It's hard to beat zero.

Yeah, yeah.

Right?

So, the marginal cost of inspection is zero. We gotta figure it out. How, you know, what's the right balance where I want to use AI in the most intelligent way possible, but I don't want it to do it in a way that the marginal cost goes up? So the way it's going to work is, already we're training small language models, which are going to work on a very small footprint, which will do a specific task. Okay, my job is to stop people going on bad websites. Well, we get 150,000 new websites every day in the world. How do we find them, classify them, stop them? Well, let's train a model or to identify these bad websites. Let's have it work on the endpoint or your laptop. So it's doing that and that's all it does. And you can do that by taking all the collective intelligence that we've built over the last 17 years, train a small language model, deploy to the customer where the marginal cost stays zero. And my cost of training is $5,000, $10,000, $15,000, $20,000.

Yes.

Right? So you'll find many of these use cases will be deployed over time where we won't need a frontier AI LLM, where we will need Fable-5-like capability or Mithos-like capability. is in what, let me call it the defender model.

Sure.

The defender model has to be as smart as the attacker model. Now there, there's going to be a debate about token economics, but remember, you're only using defender model in situations where you find that there's a problem. And those are fewer and far between compared to having to inspect all peacetime traffic using tokens. So I think that's where the balance is going to end up from an economics perspective. I'm hoping that AI costs don't become a factor in cybersecurity.

Yeah. Talk about— oh, sorry.

Talk about social engineering. We heard yesterday that employees are actually clicking through phishing links at a higher rate than they were historically, simply because a lot of the grammar being used in these social engineering attacks is just better. It's harder to immediately clock it. Do people and teams not have their guards up enough? What is the solution there? You would think that everyone is reading about the potential risks of LLM-based attacks all over the news media. You would think that when they're in their inbox, they're maybe thinking, oh, I won't click this link from, you know, Ask JORDI.

A $20 gift card.

I'm going to tell you a funny story that, you know, we do phishing attacks simulation at Palo Alto all the time. There's only one time I was tempted to click on it. Thank God I didn't. And I'll tell you why it wasn't, right? So there's this email that came saying it's National Pet Day. Take a picture, take a picture of your pet. And anyone who puts the cutest picture of their pet, I'm gonna donate $5,000 to charity.

What the hell are you doing?

I got a Windows.

I got a Windows.

That like put a little tear in my eye. Thank God I'm not into pets because if I was into pets, I'd be clicking a picture and uploading it and clicking on it.

That's funny.

This is where social engineering kicks in, right?

Yeah, very creative.

People will find ways to try and entice the end user to click on this. The only way to fix it in the medium term, long term, is start running AI classifiers against the emails to understand whether it's a real email or a phishing attack. It's much better if you can build that into your scanning systems than if you expect every individual to be smart enough to discern whether it's a phishing link or not. It was hard to do in the past because you couldn't really read email or get context. But today I'm pretty sure it's a trivial task to train a small model which says, look, this email address looks weird, doesn't look like it comes from our company. This domain's never been seen in our entire infrastructure. This is talking about something which this domain should never be talking about. All those are simple checks which you can do using a small language model from a scanning perspective. So that's going to be the antidote to these much better social engineering attacks that are going on over there.

Yeah.

Speaking of dogs, Ilya posted yesterday and said that that NeoClouds. Ilya only follows three accounts: SSI, OpenAI, and Doxin like Doxin fan account. Apparently a big dog.

Even after you guys got bought out by OpenAI, he doesn't follow DVPN.

We got to get him. We got to get him on the show. I dressed up as him on Halloween.

Oh yeah.

Honor one of these days.

No, but he was posting that that NeoClouds. He said that agents need a lot better security. He feels like it's an important issue. Is that an area that you're focusing or that you will be more focused on? Are they too busy?

I actually posted back, send them to us and I'm happy to help. But I am not aware of what he was particularly referring to. Everybody needs a lot more security. Yes, of course. But I don't actually know what he was talking about.

I think he was specifically worried about the, like, in the context of the Hugging face incident, like an agent swarm, an agent state, like wanting to get more resources and just going into a NeoCloud to get more inference on themselves. And I think that would be a way of hijacking capacity.

Exactly.

Good news is, the good news is there doesn't seem to be much excess capacity out there, so it's hard to hijack capacity. But yeah, let's, let's hope that.

Yeah, yeah, yeah. A lot of, a lot of alarm bells are going to go off. You're like, wait.

Yeah, I think so far it's my understanding most of the NeoClouds are re— sort of selling their capacity back to the frontier LLMs. And the frontier LLMs will basically build very strong tunnel pipes, which basically sort of, you know, make it almost like captive capacity. So I'm less fearful that that's gonna be a problem. But yes, you know, at an infrastructure level, everybody needs to put in basic infrastructure security. And I think some of them are.

Yeah.

I think some of them are not putting it, they're still in the stages of building their clouds yet. I don't think, I think the ones who are built, to be fair to them, are deploying firewalls and technology to make sure that there is no unauthorized access. But maybe Ilya knows more because he's smarter.

Yeah. What's the state of AI research at Palo Alto Networks? You mentioned training small models. Is it so exciting that you have current employees that want to jump onto that project and reskill and learn the art of training these small models? Are you hiring new AI researchers? Is there a specific skillset within AI research that is hyper-relevant to that team? What is your strategy for sort of remaining on the frontier of small models that are great at cybersecurity?

Well, I think there are 2 or 3 sets of people we want, right? One set of people we want are who are AI savvy, who know how to use AI to get their jobs done better, who know how to use coding agents or AI. That should be a lot easier than hiring AI researchers. There, We have pivoted. I think 50% of our new hires in the last 6 months are early in career.

Okay.

These are people who are learning and they're typically having to run through hackathons to get to Palo Alto. You don't, you don't look at where you went to school. We care about where you can use coding agents, you can use AI. So that's good because we're pivoting our workforce. And if we keep following that trend, it's reasonably likely that we will overwhelm the un-AI savvy people with more AI savvy people. People. That's kind of like ground zero. You got to get that done. The second part is there are people who are really good at cybersecurity and know AI and they'd like to get involved. And if you want to work in cybersecurity, there's no better place to work than Palo Alto Networks, right? We're the largest cybersecurity company in the world. You want to have an impact, you want lots of proprietary training data, we've got it. So we are lucky given our position that we can attract some of the people who work at the intersection of cyber and AI. The third part is raw, pure AI researchers who can do wonders with small language models and large language models. There, we have people who are AI literate. We have some PhDs in AI who work here who have a cybersecurity bent, but they can go back to their roots in AI. There, we supplement that capability with third-party training companies because they've been doing it around now for multiple customers. You want to make sure, if you can do it once, let's not get it wrong. Let's have somebody who's done it 500 times. and bring— maybe 500 is too many, but 20, 30 times. Let's bring them as part of the team so we can make sure we're getting it right. So that's how we're tackling it. Thankfully, we don't have to compete with the frontier models for hardcore AI researchers to build our own big models with multiple parameters.

No, totally. Well, we have Andrej from Consul here with us on the show. Let's bring him in. And I want to hear about the partnership, how this came together, and Look, how about we bring him in?

Oh, perfect. He's right here. There he goes.

I thought he was remote. Sorry about that. Okay. So introduce the thesis here. How did you guys start talking? What does the future look like for Consul at Palo Alto Networks?

Well, look, we spent a lot of time talking to a lot of startups across the ecosystem, cybersecurity and non-cybersecurity. And as we sort of continued our conversations, we ran to Andrei and his team. We run a very strong capability, obviously, in security operations and identifying that. We have a lot of data, as I said, 180 terabytes just about all the networks. We have an observability company which looks at it from the outside in to see how customers' infrastructure is running. And we run observability for one of the largest frontier LLMs in the world. From that vantage point, and as we were talking, you know, Andre shared what he was working on. You look at what he's doing; he's taken a very AI-native, agent-first approach to building a product. That is what future of software needs to look like. You know, he's actually hit the nail on the head in terms of how we need to build software for the future. That is something which is rare skill things that we don't do internally. Then he coupled that capability by looking at the operations of a company. Both on the IT side and non-IT side in terms of say, well, how can I take that agentic capability, build product that sits on top of the underlying systems that work in a company? When we saw that, we thought, wait, if we could bring the large data lake, the backends we have in security and IT operations, and we can bring his capability, could we build something that's amazing for our customers? And that's sort of what started the conversation. He was a hard nut to crack. He and his partner wanted to do it alone, but I had to use every bit of charm and persuasive skills to convince him and Neil to come be part of Palo Alto. And I couldn't be more delighted that he's part of the family now.

Yeah, yeah. I'm so excited for this. We were looking at the Console website and in such a short time you got every single logo on that website. Fantastic execution. What excites you most about the Console journey thus far? What are you most excited for in the next chapter?

Yes, I mean, first of all, the DBPN sponsorship got us a lot of those customers.

I'm so excited for that. That's amazing. A little plug there.

I think, look, we started this journey about 3 years ago and it's been kind of better than we could have expected.

We started in IT and then we've kind of like expanded. Most of our customers actually use us for more than just IT.

You know, HR and legal, security, finance and so on. And I think what we realized was if we were going to go broader, you know, go beyond IT, we—

I think partnering with a larger customer, larger company that has, you know, works with the largest companies in the world felt like a natural path.

And so I'm excited, I think, for the future where we can just—

we have more resources.

We can go after the vision at a much, much broader kind of like Product roadmap.

Amazing.

Well, I want to hit the ground.

We're gonna, we're gonna work on a narrative to get him more excited.

But well, how about this first one?

How about this? How about this? Oh my God.

There.

Um, is that exciting?

I'm so, I'm so happy for both you guys. Uh, like, uh, Andre, I— if there was a CEO that to work for in my book, you know, especially in your category, it'd be Nikesh. You know, he's like, uh, he's like a You're a very like fatherly figure, you know.

It's true.

You're, you're, uh—

Start working on your golf game, buddy.

Yeah, get started.

Start working on your golf game 'cause we're gonna need a lot of birdies.

Yeah, he's gonna work, bro. He's gonna work.

He works, you golf.

Yeah, yeah, that's the plan. Yeah, well, thank you guys so much for coming on.

Thrilled for you both. And, uh, yeah, excited to see the progress you make.

We'll talk to you soon. Have a good one.

Bye.

Let me tell you about Codex. Codex is a powerful workspace for getting work done Whether you're writing code, analyzing data, creating content, automating business workflows, Codex helps you move projects forward from start to finish. Our next guest is from Blue Owl Capital. We have Senior Managing Director Kurt Tenenbaum. Sorry to keep you waiting, Kurt. Thank you so much for joining the show. How are you? No worries. Well, you know, you had to finish with Nikesh there and give him a hard time about all the birdies he's been getting. So I appreciate that.

I appreciate that.

He's a fantastic golfer.

Sure.

Since it's the first time on the show, I would love to know a little bit about your focus within the organization. And then I want to go into the latest deal with Iron, but also a little bit of the lineage of this business that Blue Owl's built up. We've seen— we've covered the company so much on the show, but I think you're the first person from the organization to join. So very excited to talk to you. Yeah, and excited to talk to you, Jordi and John. Big fan of the show and thanks for having me on.

Awesome.

So yeah, at Blue Owl, I focus on our AI compute infrastructure business. And so what that means is we have a big, robust data center investing practice. We own over 100 data centers across the world, about 10 gigawatts worth of compute.

Wow.

There you go. And, but however, that business is really focused on kind of building the underlying data centers. My team is everything that goes in. And so as you guys know well, you spend $25 on a data center, you have to spend $75 on a chip, on the chips that go inside every 5 years. And so that's what we're really excited about, figuring out ways to partner, figuring out ways to finance that piece of the buildout. What's interesting for us, because Blue Owl is a diversified asset manager across a bunch of different strategies, is we really get to bring the excellence attached to our data center investing business, our direct lending business where we really got our start, as well as our leasing business, and bring the combination of all 3 of those together to be able to provide solutions like Iron, which we're excited to talk to you about, to, to market that we think are differentiated versus many of our other peers. Every time I see private credit and data center buildout in the news, it's always this discussion about GPU depreciation. Is that an overwrought discussion? Do you feel like you have a stronger feel on that now? We obviously— we've seen a lot of incredibly positive news around depreciation with even A100s getting really high utilization rates long into their life.

And so that was sort of the— that was the primary takeaway from From CoreWeave's last earnings call, which is just that they have these old GPUs that are going to be generating revenue well into the future.

But I'm curious, is GPU depreciation actually top of mind for you? Or is it something that you feel like is pretty well understood, pretty solved? Yeah, it's a good question. And listen, the CoreWeave data point is quite notable. And something you know we and the rest of the market obviously took took took note of. But at Blue Owl, we we don't pretend to have a crystal ball on depreciation or forward rates for GPU levels. Obviously, we're very bullish on them in general, but the way we've invested here is really focused on keeping the duration of the investment we're making relatively short. It matches the underlying contracts that we have with some of the AI natives that we are financing. And we're excited about talking about that piece of it as well. And then underwriting IREN as an investor and getting comfortable there. And so it's not— we are not just hanging our investment on forward depreciation rates for GPUs, although it's something we're obviously very focused on and spending time around. What does the current landscape for these types of deals look like? Because we see hyperscalers, sometimes Nvidia directly, You're doing something that looks a little bit like equipment financing. And I'm wondering if the, if the shape is like, are you competing with people outside of the private credit world at this point? How big is the, is the pool of capital that the data center constructors and operators are actually going after? Yeah, I think this is a moment in time where everyone is going to have to be invested across the landscape to get to the type of capital needs that we We we need. I actually think at some point capital may become the limiter, or at least one of the limiters attached to it. We're seeing the investment-grade market finance chip compute actually quite efficiently, but there's a lot of demand for that, and that demand will continue and will continue to escalate. And so the part of the market we're really focused on is the non-investment-grade piece, where we think it's a lot harder to get that type of financing. We're able, in the case of Iron, to finance the AI natives, which is a particular pain. point and pinch point in the market. And that's where our focus is. That's where our focus has really been. Yeah, got it.

What are you seeing on the actual data center operator side? And what are the smart players doing to overcome sort of local regulatory hurdles? You know, we've heard there's a bunch of ideas being thrown around right now. How do you get a local community really bought in? There's the tax revenue. component. Some individuals are gonna be excited about that. Others may be more excited about direct payments. But what are you seeing across the landscape of what's working to actually get projects from the sort of concept stage to powered shell GPUs actually running?

Yeah, listen, that's been a huge focus of the market and of the media recently. I'm not sure I have the I don't have the exact answer to that as we sit here today, but it's something we as an organization are spending a tremendous amount of time around. And listen, we really need to engage all the constituents around the table to get to a solution that works for AI infrastructure as well as works for the investors and the operators who are involved as part of that. And most of the time, I imagine, for equipment financing deals, the powered shell is already up and running. So a lot of those concessions, if they need to be made, have already been made. Is that roughly right? Yeah, that's exactly right. One of the things we like about it is when we fund into these transactions, the compute is basically on the come within a couple of weeks. And so that portion of the business is already up and running, and we get to finance very close to where the revenues are actually happening. Yeah, and it might also be the case that there is an existing PowerShell or Data Center and they're just upgrading to Blackwell or something like that. And that's where you come in. Is that— is that retrofit? That's exactly post-retrofit. Yeah, that makes sense. Well, congratulations on the Iron deal. Thank you so much for coming on the show.

Yeah, come back on as you have more.

Yeah, we'd love to talk to you again. Thanks for having me, guys. Take care. Have a great rest of your day.

Bye.

Let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in-store, On mobile, on social, on marketplaces, and now with AI agents. We're going to space next.

That's right.

We got Philip Johnson.

Got a Star Cloud spaceman.

How you doing?

Welcome back to the show. Hey, thanks so much for having me. Third time. Third time.

Three-peat.

I mean, it's a fascinating business. Attracts a ton of attention. Also attracting a bunch of capital. What's the latest news for you? Yeah, so we just raised a Series A extension, $250 million. Had a $2.3 billion valuation.

Wow. Thanks, Logan.

With NVIDIA investing $25 million and Cisco coming in and a bunch of other folks. Fantastic. What is the use of funds right now? I imagine that there's still a lot of R&D to do. I'm obviously very optimistic, but, you know, when we talk about space data centers generally, we're usually in 2030, maybe 2028. So is there use for capital right now or is this sort of more of an opportunistic raise, build a fortress balance sheet, and then be able to hire and really build all the key precursor pieces to the actual ongoing business? Yeah. So I think there's a few reasons to do the raise now. One is to secure launch. So booking launch for 2028, 2029, and that's obviously quite expensive. Another is when we work with— I mean, we're doing some pilots with, you know, some of the large data center companies. We'll announce that soon. But they want to see a few hundred million dollars on the balance sheet before they'll commit their resources to the project. So that's another one. And then the last one is actually moving into much larger manufacturing facilities and starting to ramp up the team, things like that. Yeah, that makes sense. What is the state of the experiments? I mean, I know that you— I believe you put a GPU in space, but there's other sort of test runs that you're doing. Walk me through the thesis there, what you hope to get out of those tests, what you expect to learn. And then also, I imagine that it's also just sort of marketing for the company, like awareness during a time when you're not putting up tons and tons of compute just yet.

Yeah.

Yeah.

So yeah, as I mentioned, we launched the StarCloud-1 satellite in November last year. So that had the first NVIDIA H100 onboard. It's still going strong. We're doing a whole bunch of tests on that.

Really?

We managed to— yeah, we're doing— the more useful workloads we're doing now are high-powered inference on other satellite imagery, particularly SAR data for various military and government applications.

Sure.

But yeah, we've got 3 launches booked for next year. So we'll have 2 going up in Q1 next year, one towards the end of next year. And we're actually just booking on every, like every launch provider possible now. So yeah, we should have some— I'm not sure if we've announced that yet, but we'll announce a few other launches that we've booked soon.

Yeah. Is that, you know, from a, you know, I guess, forward-looking standpoint, is that gonna be important to be diversified from a launch partner standpoint? Because I can imagine when you need to raise the billion dollars, people are gonna be sitting there being like, hey, like, you're dependent on SpaceX and they're also in this business. And maybe that's a concern over time. I'm sure right now Elon is just happy for there to be more compute in space and have other parties, you know, proving out this thesis. But is that important?

Yeah, yeah. So to start on your second point, I mean, right now, yeah, we do have a great relationship with SpaceX. We've signed a contract for the next 25 of our satellites to have their laser terminals on. So we'll also be using them for connectivity. And we've got a whole bunch of launches booked. But yeah, I mean, I think it's good for the industry in general for there to be lots of optionality in the launch market. And so, yeah, we're keen to encourage, you know, there to be a diverse launch ecosystem.

Who—

what does it actually take to lock in a launch in '28 and '29? Are you having to put up a nonrefundable deposit? What percentage of the total cost are you having to actually put up?

Yeah, for most launch providers, it's sort of 10 to 20% down payment. Refundable if the launch doesn't happen. Although with the more experimental rockets, if the launch doesn't happen, they probably have larger balance sheet problems than repaying us. So it's a bit of a bit of a gamble on some of them. But I mean, it's the kind of it's the kind of thing we're we're keen to spur on. So we're happy to to put those deposits up. Very cool. Well, congratulations on the new funding.

Great progress.

The progress, and we'll talk to you soon. Have a good one.

Cheers.

Let me tell you about Figma Agents Meet the Canvas. Your AI agents can now create and modify your Figma files with design system context. Up next, we have Jimmy Iovine in person.

Nice to see you.

He is the co-founder of Interscope Records.

How you doing, man?

We're doing fantastically.

How are you?

Good, good.

Yeah, thank you so much for coming on down.

Hey, it wasn't easy. You're far from my house, but it's cool.

Coming in from, uh, uh, Malibu. There we go. Oh, I do that drive. I do that drive every day too.

Are you a Mount?

Yeah, yeah, yeah. Wow. Senra, me, Huberman, you know, we got a little, uh, podcast dynasty out there.

Oh, great, great. I'll give you my number. Yeah, we're out there, me and my family.

Yeah, yeah, yeah. And Ben too. Ben Taft.

Really?

Yeah, yeah.

Fantastic. That's great.

We're all out there.

That's great.

How are things going at USC?

Uh, well, you know, uh, we started this We started the school. It's called IYA. And it's really a school of innovation. What happened was in 2014, we sold Beats headphones and Beats Music to Apple.

Yeah.

And at Beats, we had a similar experience where we couldn't find people that could collaborate the way Dre and I wanted them to collaborate. to collaborate. So we got into that and it was very, very difficult. Either you're an engineer, design, business, it just— they couldn't speak the same language. They didn't understand the why of the other person. So when we went to Apple, it was that on steroids for us. They're a great company, the best company, but we found that at every company we went to, that everything was very siloed and communication, understanding was siloed. Not just people, but understanding.

Mm-hmm.

And so, one day I woke up and I just called Dre. I said, Dre, you know, the problems that we're having— Dre and I really didn't go to school much. And I said, but I got a feeling that this is a problem in education. People are learning in a siloed way. You see, 19 to 25 and 26, I don't know about you guys, but that puts a big imprint on your life. You know, it's like you learn a lot in the formative years. Those are really important. They were really important for me. And I guess that's kind of why the age of college.

And getting like varied experiences, I feel, is so important. When I think about my era from 19 to 25, to 26, I studied economics, I learned to program, I started a business, I filmed videos, did marketing. It helps to blend all these things together.

How old are you?

I'm 37.

Yeah, so you are young enough to grow up in a really multidisciplinary environment.

But importantly, a lot of that was on my own. I just had to go learn.

That's my point.

Yeah, I had to do it myself.

That's my point. So now, when you come out of high school, they silo you.

Yeah, totally.

Okay, you're going to go work with 60 engineers every day. You're going to go to Wharton, but you're going to be with 45 accountants every day. And there's something wrong with that. So, we stepped in, went to USC and—

How do you map that to or match that with this idea of putting on the blinders? Why does a Race horseware blinders, right?

Well, because every we live in a world now it's worse than ever with social media. Everyone cares so much about what somebody else thinks.

Oh, that's interesting.

I mean, you guys, we have people just all day. What do they think of my post? What do they think of my orange? What do they think of my orange juice?

Who cares?

Do you know what I mean? Would you go to a grocery store? and ask everybody what they think. So anyway, I'm an older guy, so it doesn't make any sense to me. But that's the blinders. The blinders are very simple. Run your own race, but enter that race with the understanding and the empathy of other disciplines.

Yes.

We all have that problem in any company you have. The extreme tech side and the extreme design side have trouble communicating.

Yeah.

Maybe not everyone at every company, but most people at most companies.

Yeah.

And then when you, you know, remember we brought 300 people from the creative business into Apple basically, you know, and Apple's an incredible company, but And it's the best of them, by the way. But it's all somewhat siloed.

Of course.

Do you think entrepreneurial people know that they're entrepreneurial for the most part? And I ask that because do you find with the school there's people that maybe aren't applying to be a part of the program, but you actually want to go and find those people? Or generally, are these people self-selecting and they And they just know they want to be a part of it.

They know that there aren't many schools that fit who they are.

Sure.

Right? And a lot— we get a lot of applicants. And that's because we fit. We're speaking their language. You know? And think about this. We started this in 2012. Now a lot of schools are saying, okay, we offer multidisciplinary, like, you know. They say, okay, you're in an engineering school, but you could go take one course across the hall and sit, you know, that's not the joke.

No.

The, the, what it is is what companies want. Actually, we did research, uh, at USC to find what, um, what type of students they want. Number one came back collaborative innovation.

Yep.

And that's the founda— you know, our school is really, Ivan Young Academy for Innovation. We put in the beginning tech, design, and I'll show you more because we wanted to explain it. Yeah, we wanted to make it literal, like, you know, rock to the forehead kind of, uh, you know, messaging. So, but now it's fundamentally the Ivan Young Academy of Innovation, and because people can't You need to collaborate to innovate. And, you know, look, I'll give you an example. People say, how do you know there are problems at these companies like this? Well, I've been to a lot of them, but I have proof. Here's my proof. Why is it that so few— I'm going to be generous— so few software companies have built successful commercial hardware, consumer electronics?

Yeah.

Why is that?

No founders in the seats. They run by committee.

Because, no, they can't collaborate. They collaborate. They can't collaborate.

Yeah.

You know, now, you know, I mean, Meta's gotten this piece of hardware out there right now, but they went to— I mean, it looks like they went to Ray-Ban, you know? I mean, and it's cool. It'll do okay. You know, it'll do fine, whatever. They're a great company, but none of these companies can make hardware, and they all have hardware envy.

Yeah, all of them.

Yeah, you know, and, uh, so there's a reason for that. And my, and my thesis, and mine and Dre's thesis, is that this is why. Yeah, because what was so great about— what is so great about Apple, because it's still in their DNA, is they had Steve Jobs. He was the the ultimate cross-disciplinary human being. That was in his DNA, where tech meets liberal arts. And when I went, the first time I went up there in 2003, I got it in 30 seconds, 'cause I had gone to 5 other companies before that, talking to them about piracy and all that stuff. I was on a kick about that, you know? And I was— the minute at Hello!, I met him and ADQ, I said, okay, this is where the party is. You know, and I just went back. I told the people at— Doug Morris at Universal, who was in charge of the place, I said, license this guy.

Yeah.

Because they know a lot more about this than anybody in our business. And they have feel. Okay? So this school is truly designed behind that meeting. I know it sounds simple, but look, we had an idea. I woke up one day and I called Dre. I said, Dre, what about starting a school like this? Hell yeah. You know, that's Dre. By the way, he really talks like that. So we wrote a check for $70 million in a month.

That's crazy.

Just on one line, knowing nothing about education. And we built what I consider a fabulous Yeah.

Do you think that there is a trap to be avoided with the school around students becoming tracked? Like they've done the interdisciplinary work and they see this as the best way to get a job at Apple or the best way to get a job at a startup. And in fact, they should be sort of laying back and watching opportunity come to them during this period.

Well, first of all, they're 22 years old. They can go get a job at Apple and still go change the world.

That's true.

Steve Jobs had a job for Apple, right? So, nothing wrong with getting experience. I think it's actually good.

Yeah.

But it's more important— I mean, look, even the engineering degree, you could see, is trying to expand. They get it. You know what I mean?

Yeah.

You can't just— it's really not a good environment to work where people just don't understand each other. Fundamentally, it's empathy.

Do you think that as technology grows and technology progresses, that is creating a natural widening force? Because it used to be that the instrument was technology, but it was understandable by an artist. And now, the technology might be 7 layers deep in some AI thing that's so abstract and so obscure that that creates.

Look, in 2012, I couldn't spell AI.

Yeah.

You know, so I had no idea. But it's— we built a school that's perfect for it.

Sure.

You know?

Yeah.

And, um, because it's what— it, it makes so much common sense inside these companies if you understand the why of the other discipline. Otherwise, you're walking— it's a crash. And that's why Apple can still make great software and great hardware. That DNA is in those people. It's in Tim Cook. It's in Eddy Cue. And now, I don't know this fellow, John, but I'm sure he was brought up in the same school.

Yeah. No, he's been there a long time.

But that's a question that should be asked and will probably never be answered. But why? do software companies fail when they go to make hardware?

Yeah, it's tricky. A lot of them have tried. A lot of them have tried.

Are you kidding?

Yeah.

Yes. Basically all of them.

But there has to be a reason, right?

Yeah.

So my reason is better than anybody else's. Maybe somebody else will come up with a better idea. But my reason is very convenient for my school.

Yeah. Yeah, yeah, yeah.

That's good.

Do you think more entrepreneurs should go back to the university that they graduated from? from and teach a course, like something that's— there's so many lessons that I didn't learn in school, and I won't claim to be an expert on many things, but if I even had to put together like 90 minutes, I feel like I could save my younger self a lot of time. And it's maybe—

Of course, they should. Everyone should give back. I mean, I think a lot of people do. I see it at UC all the time. I mean, they have Alumni giving hundreds of millions of dollars to these schools, you know, and I'm sure they go back and talk to them and everything. I spend a lot of time at the school. I try to be very involved, you know, I do.

Do you think you would have dropped out of your own school? Like the younger version of yourself?

You know, here's the thing. If there was— I'd have to go for a lot of therapy on dealing with dyslexia.

Sure.

You know, I had a lot of trouble reading, uh, and paying attention. So I don't know what they call that. There's a couple— there's names for them, you know. But, uh, I don't know, maybe if there was a lot of Prozac back then, maybe I could have focused. But no, I got into— I, I, I just— what I got into is I got into— I loved music, right? So I got into music and engineering, which is So I started as a recording engineer.

Yeah.

So you have to understand the basic principles of technology in order to run a console and fix microphones and do whatever you have to do. So I got lucky. I didn't know I was doing that then, but I don't know that not everybody can do that. So school is a great thing, but only if you're in an environment That's gonna enhance your creativity and who you are, not take one part of it and put it in a box.

Yeah.

The funny thing for me is I— it took me until I was an adult to realize that I was creative because I remember my pretty formative experience was in early, early school when I'd be in an art class and I'd be told, draw this, or do that, or whatever. I just was not good at drawing. I never was good at drawing. And in my head, creativity and art was all about drawing, right? Because that was my first time doing anything creative in a school setting. So then I went almost probably 15 years thinking I'm not creative, right? And so it took me to being an adult to realize that creativity can have all these other forms, right? It's not just like, can you draw a pretty picture, right?

Well, you could also— you could learn. You could learn creativity. You could learn taste. You can learn all those things. It's somewhere in you, but you can learn it.

That's cool.

Absolutely. I had no taste when I walked into the Record Plant in John Lennon's studio in 1973. I had zero taste. I went from 3 albums with him, 2 albums with Springsteen, and 1 album with Patti Smith, and I left with taste.

But I often find that a lot of people have great taste, but they don't have the ability to create things. that meet their taste level. Taste can be inherent in some people.

What you do then is you have an eye for people that do have the gift and you surround yourself with them. I learned that at 19 years old. I was living in my mother's house in Brooklyn, in Red Hook, Brooklyn. My father was a longshoreman. And I met John Lennon And Bruce Springsteen. I did those records and I got an apartment. I said, okay, I meet people like this, my life is going to be okay. I just got to make sure that I don't get thrown out of the room.

Yeah.

So, when you're running a company, leave your ego out of it and realize somebody does something better than you. And don't defend anything. Don't defend your ignorance. Just go for it and just say, okay, this person's great. I'm gonna be of service to this person.

Yeah.

Even if they work for you.

Yeah.

To get them loyal to your company and loyal to you. And, um, you know, that's what I always do. I just, I got a pretty good eye for seeing who's gifted and I make, try to make their life as great as possible.

Yeah. Yeah. That resonates on a smaller scale where I knew I would care. I'm not great at, I'm not great at design. I'm not great at drawing out a logo, for example, but I can find people that can make great logos. And I realized I could at least work with—

Headphones.

Yeah.

Yeah, we come out of music, me and Dre. So people used to go, well, of course you guys are in the recording studio. Of course you knew how to make headphones. If you gave Bruce Springsteen 2 pieces of wood, he's not coming out with a guitar.

No way.

Okay. Or Keith Richards. So we had to go and learn. What we did was we found people that really were good at this and bring them in. And, and we just added the idea of what was wrong. What was wrong is that everyone was listening to music, an entire generation, including yours and yours, on those little free earbuds that Apple would give out.

That's right.

So Dre said to me, man, that's I spend all day in the studio and my kids are listening on these ridiculous things. So we said, okay. So then we decided we're going to make a headphone. Then everyone tells us you can't— they got a great headphone, they'd be like $300 at retail. They said, well, that's not going to work because Apple gives them away for free and so does Samsung.

Mm-hmm.

We said, okay, our job is to get them on people's head. Once they hear it, they're not going back. And that's what we did. So, we brought culture and we got them on people's head to try them. And then once young people started trying them, they wanted it for Christmas.

Was that expensive? I remember the story of you paying to advertise G-Thing, right?

But that was a song.

It was a song.

That was a song.

It was a contrarian move because I feel like pulling the trigger on a big ad spend before an artist has really broken through is risky, but how did that change your—

I don't know how to spell risk either. You know what I mean? I just, I wake up in the morning and I do what I feel. And I do what makes sense. I talk to the people that are around me and I don't care about the risk. I really don't. I never did. And sometimes, you know, you cut a lot of flak because, you know, when you're at a big company or something, the budgets and things like that. But I just get myself in situations where I leave them if I can't just do what I want to do.

Sure.

You know?

Sure.

I try to make a life of just doing what I want to do.

Yeah. Over the years, how did you think about bringing in new business partners? When you're looking for business partners, you have some early success working with some set of people, you start meeting other great people. In your mind, how are you deciding whether to spend time and partner with new people versus sticking with the band?

I'm a very positive person. So, I always give people the benefit of the doubt and try it. And you could tell pretty quick if something's going to work or it's not. And if it's not, Say sorry. And if it does, go in further. I try a lot of things. I'm not precious about anything. Once I figure out what I'm doing, I'm precious about that.

Yeah.

But as far as the education and learning how to get— look, we would have never done this school. I mean, if we were nervous about things, I mean, we knew nothing about what we were doing.

Yeah.

And I think we have one of the best, if not the best, school in this area in the country.

Yeah.

You know? So that's a good thing.

There's obviously a big technological transition in music with AI. Going back maybe before streaming, what was the first technological shift you remember in the music industry?

You mean Napster, you mean?

Yeah, yeah. Before Napster even? Was that—

Before Napster. I mean, I go back a long time, you know, uh, stereo.

Okay.

You know, um, multitrack recording, you know, where do you want to start? It just—

Yeah, but what was that like? Was there a discussion about it, or was it something that just, you know, was adopted behind the scenes and the consumer of music didn't even know?

It's always because the stuff like that, it was expense. It was always the professionals. So like, you could hear the first time, um, a phaser— one of the first times a phaser was used on a record on Jimi Hendrix. You know, you could hear when the Beatles got stereo. They walked in the studio one day because I knew those guys, and there was 2 speakers instead of one.

Yeah.

You know, Paul will tell you, he has told people that, he said, okay, they thought at the beginning, oh, twice as loud. Yeah.

But there's more to it.

There's more to it. So, you know, it's gone all the way. There's drum machines. Drum machine was big.

Yeah.

You know, I, I was fortunate because Roger Linn used to be a guitar player, and he was playing on one of my sessions when he was creating this thing. He had the computer in there with him. He was creating a drum machine.

Yeah.

So, uh, I got to see that really early on, but then Prince exploded it.

Yeah.

You know, so AI is You know, uh, it's a little different.

Do you think people thought it was a risk? I mean, I know risk is not in your vocabulary, but, uh, for Prince to adopt the drum machine?

It was bold.

Bold.

It was very bold because, uh, remember, this guy is a great, great musician. Yeah. That had the greatest musicians playing around him. Yeah. So he said, I'm gonna simplify, I'm gonna go to a drum machine. Yeah, that's bold. And brilliant that he, he was one of the guys that exploded it, you know, that really took it, uh, went all the way.

Yeah, the boldness that feels like that's an— they're like, when you're thinking about stereo or the drum machine or synthesizers, there's the— an opportunity for boldness on the side of the musician. Did that same opportunity for boldness exist in the streaming transition, in the social media era, in the AI era?

Okay. Let's go to streaming, right? Streaming, you have to go to iTunes first.

Yeah.

That was very bold because the record industry didn't want to license it. You know, musicians didn't want to sell their songs at a dollar a time. But, but on the other— but out the back door, they were being given away on MP3, you know, all day, right? So what Steve and Eddy had was a really good idea. an elegant way to match their iPod. They had a piece of software that was really elegant. And it worked. And these guys understood the culture. Steve, my first 5 conversations with Steve Jobs was about John Lennon and Bob Dylan. He really cared and understood. Hey, he went out with Joan Baez, right?

Right.

He understood the culture.

Yeah.

And he understood, he had a feel for it. So that was a big step. And then streaming was another big step. Daniel Ek was a brilliant guy. We came to the market, we had Beats Music at Interscope, and we sold to Apple, and then we started— we worked with with the guys up there and made Apple Music.

How do you think streaming changed music production or the decisions that musicians make? I mean, I've heard at least anecdotal evidence that albums got longer or there's more songs because that gives you more shots to go viral in the algorithm.

There's all these different changes. I think it caused a whole lot with social media.

Okay.

unfortunately, like a thing like TikTok, uh, it's, it's in a lot of ways it's great because it gave artists power and a platform to market themselves, which is what artists want and need and should have. But it also made a lot of artists and record company people chase that.

Sure.

Whatever the latest TikTok thing is. And that could be pretty ridiculous at times, right? So I think that affected music more sonically and creatively than streaming did, personally. Maybe more songs or whatever. Yeah, great. But even that more songs thing came out of SoundCloud.

Yeah.

And TikTok and Instagram, just putting stuff out.

Jordi?

I was talking to a buddy I have a friend of mine in Malibu and he's produced 20, 30 Billboard number ones, like really, really impressive career. And he's, for decades now, received— people will send him demos and he always says he likes to listen 'cause he wants to be working with up-and-coming talent. And he said, over the last year, it's become harder to judge who's got potential and who doesn't because of AI, because anybody can make a song that sounds at least decent, and maybe there's a thread of a good idea in there. And so, he said it's just become impossible to understand. And to me, that signals that it's gonna become even harder to break into the music business because—

Yeah.

And suddenly, anyone can make a song, right? Like, Suno, shockingly quickly, in about It takes, in my experience, about 10 seconds to make something. And there's patterns you can— if you—

Where do you want to start with this? You just covered a lot of ground, okay?

Yeah, yeah. But I guess my main question is, like, does it become these previous technology trends in music, the professionals, the existing professionals got access to them first. They were expensive to adopt, things like that. Now with AI, anybody in the entire world can get access to it. And I'm wondering, does that mean you're going to have a lot more people breaking into the music industry or less just because competition is like—

Well, do you want to talk about the licensing of AI, the actual use of AI, or the production of it? Where do you want to— where do you want to start? Right. You know, where—

Well, specifically, what is it? What do you think it means for emerging Uh, talent.

Well, let's use the word talent. If you really have talent, it'll help you. It'll help you create as a tool, you know what I mean? It's like, you asked the right question. Stereo.

Yeah.

It made Sgt. Pepper better.

Yeah.

Okay.

Yeah.

Uh, the drum machine made Prince's first album fantastic, you know, or second album, whatever that was, you know. So I think as a tool It's going to be fabulous. You know, a lot of these companies that are creating AI music right now are doing so on unlicensed music in mass, like 60 million tracks or something like that. Well, those, in my opinion, those are going to be like the kaza of this moment. It's got to get under control to a certain extent. There should be. I mean, in this particular case, there's going to be some kind of government regulations, or there should be something, right?

For proper licensing. If you use these 3 influences in the creation of this AI song, those 3 artists get compensated.

That's right. The prompts should get paid.

Yes.

Right?

Yeah.

So, but there's a lot of cowboys and they're going to run around doing this stuff, you know, but that's not— I don't think that's where it's going to shine. You know, like, can people make songs, you know, easier? Can somebody who was Instagram influencer go out and make a song because they know how to dance and jump around and get people's attention? Possibly. But there's crap now. There'll be crap then. There'll be crap now. Maybe the crap will get more interesting. Who knows? But as far as the great artists, you know, Kendrick Lamar, Alicia, Olivia Dean, Um, you know, some great people that are— CMATH, some of these young artists that are just fantastic, you know, uh, Saint Harrison, some of these great, great— that kid, Saint Harrison, there ain't no AI that can sing like that kid.

Yeah.

You know, so something like that, you know, is, um, you know, not, not— they're going to be there because you— yeah, what AI can't do is grow up and terrible home. AI can't have a broken heart. Yeah. You know, so, you know, AI is not going to be Dolly Parton.

Art has always been about stories. You look at a modern art museum and there's the constant refrain, my kid could have drawn that, but you didn't. And there's not provenance and there's not a journey and a story behind it.

I'm not afraid of AI. And I met a lot of people that are working on it and none of them truly scare me, you know, or should scare anyone for that matter. And, you know, so I think it's a tool. I think Dre said last week on some interview that it's a tool. And that's what it is. But the licensing, the artist that it's learning off of, the way this product is— look, when the Beatles came out, they were influenced by Little Richard and Buddy Holly, right?

Yeah.

They didn't get paid. But now if you're influenced by the Beatles and, um, and Dr. Dre, they will get paid.

And there's—

if the— and I gotta tell you, I, I— everyone's always tough on the labels, but I think I'm watching the labels closely, and I talk to the guys that are running it quite a bit because I've known them all for years. Yeah, I think they're handling this problem right in the beginning because they have to. The, the things that are out there just randomly Licensing— not licensing, ignoring it and thinking that they're gonna— I think that's— I don't think that works. It most certainly doesn't. I grew up, I grew up for the first 18 years of my life relying on musical artists.

Yeah.

They changed my life and a lot of people around me's life. So that music deserves to be paid.

Yep.

You don't just come in and think— I don't believe, I don't believe that. So, but I'm an older guy. I I, you know, I've been around a long time, so some things are good about that. Some things get a little stale.

Yeah.

But I believe that how the labels are handling those particular cases is the right way.

Yeah. Yeah. I mean, the technology should be able to help here. Of course, there needs to be legal precedent. But I mean, if you look at the way YouTube's handled it, if I upload a video with a Dr. Dre song on it, that's— any money that I earn from that's going to route in the wrong direction.

But in the beginning, it wasn't.

Yes, yes, it wasn't, but pretty quickly, and why they sold to Google was they had to pay out a bunch of money.

Well, because that's gonna happen here too.

Exactly.

You know, but, but—

The money will flow though.

But the chain reaction that this causes, unfortunately, is the people that are giving out licenses shrink, meaning they shrink what they're gonna— they lessen what they're gonna do, and it's gonna cause a a lot of this product that everybody's excited about to really be dumbed down. Oh yeah.

Yeah, that makes sense.

All right? So, you know, a couple of companies have gotten licensed. I guarantee you, I don't know, but I guarantee you, in my opinion, that those, um, that product would be dumbed down.

Yeah.

No, that makes sense.

You know? So where the thing will shine is when you get producers that learn how to do this.

Yeah.

You know, when, when stereo first came out in extreme, there were records, a Beatle record where the drums were on the right and the vocal was on the left. All right. But then people learn how to blend things together. So a lot of producers are using AI right now and it's really helping them.

Sure.

I mean, they, what they do is they, they even copy the AI, you know, the, the idea. What's gonna break? It'll break a lot. It breaks a logjam in your head.

Is that the best way that you see artists using AI as essentially pre-visualization, like what would happen?

That's what I see. The guys that I know, you know, the producers that I know, I talk to them, you know, and I keep in touch with a lot of producers because I was a producer and I relate in the record business. I really relate to record producers that had journey and stuff, you know. So And when I was at Interscope, it was driven by record producers, you know, Swizz Beatz, Pharrell, Dre, Timbaland, you know, uh, will.i.am, uh, Polo Da Don. All these guys were at Interscope at one time or another. I hope I didn't leave anybody out. I'm sure I did, and I'm sorry. But, um, you know, they, they are learning how to use this. It will come from them.

Mm-hmm.

And yeah, they'll be Look, there are, there are artists out now that can barely sing Happy Birthday.

Okay.

I was thinking about that.

Okay. So, so what's the difference between if you can barely sing Happy Birthday or if you can't sing Happy Birthday at all? Right? So that, there will always be boring, silly, you know, records like that. Right? But the great artists and the great producers will maybe, create real masterpieces, you know, because of this. It'll spark something. So I'm very pro-AI. I just think that in the beginning, there's always the Wild West in anything like this. And you just gotta— you've seen it enough. You just go, okay, it'll— but I, I, I, the guys that are running the labels are really trying to do the right thing here.

Mm-hmm.

And, uh, I think in this particular case, the artist And the labels are aligned.

Yeah, that's a good point.

Yeah, what do you think? So knowing some of these entrepreneurs that are building in the space, they would push back and say this, within streaming, if somebody was illegally streaming or pirating a song, they are taking a product that an artist and a label produced, and they're just consuming that product without paying. That is objectively wrong. In this situation, they are training on a bunch of music to create something entirely new off of that, and they would argue that—

That's fair use?

They would argue that that's fair use in the way that, like you said, the Beatles, you know, had their own inspiration.

I know, but that's the argument, right? Is it fair use or isn't it fair use? The artists and the labels think it's not fair use, and somebody's making a lot of money on a new company, he thinks it is fair use, right?

Yeah, of course. But here's—

Those are very convenient arguments.

Yeah, yeah. And, you know, these companies are making money providing a tool. And I'm not— I'm actually not taking a side one way or another, but they're making an art— they make money from selling a tool that lets you create music. And— but the— what's also happening is people are creating that music, and then they're going back to the labels And they're going back to artists, and they're making new music that then gets listened to and monetized the normal way. So I would argue in some ways that the music industry and artists are— yes, their music is being used to train models that then create other music, but they are also beneficiaries of that.

Yeah, but there are some people that are dead.

Sure. Yeah.

So, you know, Wilson Pickett is not going to go out and make a new So if you're learning on Wilson Pickett, I believe that his estate should make money. I believe that if you're learning on, you know, uh, some, some, somebody who's around today, George— not George Harrison, uh, you know, like, uh, uh, any of the artists that are around today where you're learning from their music, they should get— the prompts should get, uh, paid.

Yeah.

It's gonna be hard to monitor, hard to police and all that stuff.

Yeah.

But they'll figure that out. You know, I just don't know. I don't think that it's— I don't think it's fair use. I don't think it's free. Yeah, you know, I just don't.

That's why I'm making a lot of money. I mean, we saw this with the social media addiction trials. Like, big settlements can come decades down the road and be basically benchmarked to revenue, and the money can flow, but it takes a long time to go through the court system. That's just the way things work in America. So what?

You know, it's so what? But it has to be done right. And it's a wonderful technology for It's fantastic. But, you know, there's got to be deals made. Yeah, of course.

Of course. Always. What do you think about the future of live performances in the age of AI? It feels like it could be a really important proof of humanity, proof of talent. I went to the show. Sure, maybe there was some Auto-Tune in the loop, but I watched them perform. And if they can perform, to a certain level, that gives me more confidence in the rest of their live work.

Well, I happen to be fortunate. I have a really good friend in that business named Michael Rapinoe. He's the CEO of Live Nation. I learn a lot about the live business from him. Plus, I grew up with my friends playing live all the time. So, I think live is live. Do you wanna see somebody performing live, spilling their guts on the stage, or do you wanna see A hologram or something. I don't know. I'd rather see the person live because they're just more exciting. So, I don't know. I don't think there's any problem with that. I don't think it crosses. I just don't see it. I don't see it. I don't know the future. I have no idea. I'm not going to be here anyway. But it's— I don't know. I have no idea.

I would just expect it to to grow? I don't know. It feels like the Eras Tour was such a moment. And there's these certain moments that happen in American culture where shelling points, everyone comes together around a certain thing.

And like, you know, to me it's simple. You got a new technology. It's gonna be great. It is great. And it's gonna be even better. People are gonna use it, but there's gonna be licenses and there's gonna be—

have to—

people get paid for it. And then the great talent and the great artists are going to show the world how to use it.

Yeah.

It's that simple to me.

Yeah.

It happens every time.

Yeah.

You know, so I'm not— I, I, I— it all comes down to what we talked about first, which is, which is what's great about this is it's teaching young people. That's where multidisciplinary behavior comes in. This is technology, and you're creative.

Right?

So when you really understand technology and you really understand the creative, you're gonna really do well.

Yeah.

So, but you— so you shouldn't be siloed in school. You shouldn't go to a school where all you do is play the guitar all day. You know what I mean? It's just, to me, that doesn't work. It, uh, I mean, Juilliard's a nice place and I'm glad it exists, but— or Berklee, whatever, you know, but it's not It's not where I see the world going. And not if anybody cares, but me personally, since I'm on this show, at least you 2 guys care. So—

Do you think AI can help bridge that original gap that we were talking about? When I think about what it takes for a creative person to build a hardware product, for example, there's a lot of technical hurdles that can now be broken down.

Before they were broken down, Things to break it down. Let's put it this way. Dre and I had a record company. We're creative people. We're both record producers. We built the biggest headphone company in the world. That's hardware. And the reason why it's hardware is because it's goddamn hard. That's why not everybody does it. So we did it. We're creative guys that built a piece of hardware. That's why we started the school.

Yeah.

It all needs to be working together.

Yeah.

You know, and, um, we, we built the number one— Beats was the number one headphone in 50 countries when we sold to Apple.

Yeah.

So we did it. And, um, because we live in a multidisciplinary world, we were both recording engineers, me and Dre.

Yeah.

And so we come from the non-wall background. You know? And so, that's why we built a school.

Yeah.

That's it. And, you know, it's— when you go look at these— most companies right now, technology, engineering, design—

Yeah.

Don't talk to each other. There's a lack of communication and a lack of understanding.

Yeah.

Again, I ask the question again in case somebody just Yeah. Why can software companies not build really successful consumer products?

Yeah.

There has to be an— I don't have the answer, but you guys are really smart. You talk to everybody in the world. I don't know why.

Yeah, it's tough.

You know, but there has to be something at the core of what's going on that challenges that. I mean, no one could say, no, he's wrong. No, I'm right.

No. Yeah. Well, you know, one of the things you brought up, you brought up Meta. You brought up Meta. One of the— I think one of the reasons that's been successful is they didn't try to reinvent too many things. They just made a good-looking pair of glasses that also had a camera in it. And that was enough. That's been enough.

They sold 2 million. They didn't sell 20 million. We sold 2 million headphones in Brooklyn. You know, it's not a really— it's not a massively successful—

Yeah.

Acquired Oculus to get the By the way, in fairness, I have a pair.

I would argue they're different.

I have a pair and I enjoy using it. It's fun. But that does not a story make yet.

Yeah.

They make— now I know who they hired to the head of the hardware division, and he's really good. So, but are there people at that company that can really communicate and empower him and that type of stuff? stuff, I don't know, right? I don't know. Meta is a great company. Mark Zuckerberg is brilliant. But do I know about that? I don't know. They've done a good job at getting that product out.

Yeah. I feel like one of the big lessons that people in the school should hopefully be imprinted on their minds is that you can be wildly successful in business without creating anything that's exactly new, right? Like, you guys didn't create— you created desire, and you created an amazing product, but you didn't create the headphone. And I think that when a lot of people think about entrepreneurship and creativity in business, they think, I need to come up with some totally novel idea, right?

Well, it starts out by, I don't think I'm Steve Jobs. Okay.

But even Steve didn't— he didn't create the— he didn't create the phone.

No, but he, he had a much bolder attitude towards life than I did. He's much smarter than I am, right? Somebody asked me, what's the difference between you and Steve Jobs? Very simply, smarter than me. When we were hanging out together, right? So, um, but no, you don't have to invent something new. I mean, headphones weren't new, but the attitude of headphone was new. Bose was out there saying, buy my headphone for $300 and we're gonna help you sleep. We were like, this is taking candy from a baby, right? We are not gonna help you sleep. You know, we are gonna rock your head.

The ads were silence, not music. It was the opposite of music.

Exactly. So we had a real edge there. And they all looked like medical equipment. So your job as an entrepreneur is to find that hole in the market, right? Where's there a hole? We knew there was a hole there because Dre— first of all, most computers had their speakers facing the table. So that was like, OK, great. Let's face them up. We're geniuses.

Let's put a computer—

right?

No, there's so many times when you're looking at different categories, specifically with— I find it with consumer products where you're like, is there a law that says that it has It has to be done this way. And oftentimes you do a little bit of research and you realize—

But going back to understanding each other, right? Computers, like I went to a couple of computer companies, not Apple, right? And I witnessed this firsthand to where engineering, audio, the audio budget in a computer at the time was 50 cents.

Wow.

OK?

Wow. It's nothing.

Right. So you want to know why? And music was being played through it. Guess what? That's not enough. But that's where the breakdown is, because design and engineering clash. And that's where— I keep saying it over and over again, but it's true— that's where our school comes in to help training people that are going to go— are going to become the new engineers and the new designers and the new entrepreneurs to understand the why of each other's discipline. You know, it sounds like kumbaya, but it's not. You know, it's real. Yeah.

Was there anything else you looked at in terms of product ideas, business ideas before settling on headphones, or was it—

Yeah, well, it came out of a real frustration of the record business because record business, again, the record business at a time was really cool. And music was the right thing to do and all that. But when I met Steve and those guys, cool had moved to technology and I felt it. I felt the shift. And I said, okay. The first guy that was really cool with technology was Morita from Sony.

Hmm.

The original founder of Sony. He had the Walkman. You know, he really got it. Oga, who replaced him, really got it. They— he bought Columbia Pictures and Columbia Records.

That's right.

Right? And then they kind of screwed it up because they got— and that gave Steve— that gave Apple the opening.

Sure.

To go take that idea.

Yeah.

Which Steve has said many times publicly.

Yeah.

And, um, so when I saw that, I said, we have to learn a new trick. We have to move— I believe companies need to move laterally. I do. I felt record companies especially needed to move laterally. That's why we created Beats and Beats Music inside of Interscope. We did it at the company.

Mm-hmm.

So we built a company in Beats that was bigger than Interscope in 6 years, right? So obviously— Tech and design and creativity all belongs in the same box. It's all just moving your company ladder. Like, we have a company called Complex right now, uh, and what we're trying to do there— we brought back Mark Echo, we have Aaron Levant, my son Jamie's there— and we're trying— we have a real— a lot of really good people, and we're trying to mix disciplines in it. And we are creating an AI product alongside of it that will blend all these things together. And not all of them, but the things that we have together, because we're firm believers in that. You know, the record industry needs to move laterally. They need to own the enterprise of AI, not just license to everyone. That's, you know—

Oh yeah, interesting.

They should own the enterprise. Why not? You know, there's no reason why not. Instead of licensing to everyone, own the enterprise yourself. Right? We own Beats.

Yeah. Why is there so much historical sort of disaggregation in the music industry? Like, the actual relationship between the artists and the end consumer, it's always been intermediated, and it feels like that's been a problem.

It's insane, and it's ridiculous, okay? All artists want is to be able to communicate with their audience. And ask me why Spotify and Apple Music don't have social.

Yeah.

I know why Apple Music doesn't, and I don't know why Spotify doesn't, but that's why I said on an interview once recently that streaming is minutes away from being obsolete. What I meant by that is Unless they adapt to what artists really want, the artists are very resourceful. Right now they gotta go to Instagram, TikTok, you know, it's like, it's like a silly game.

Yeah.

And, um, that has to be fixed. That has to be fixed quickly because— and the labels who have all this historic music need to be in the loop. They, whether they like it or not, they are a tech company. And they have to adjust to that. And if they don't, I believe it's not gonna be great for them.

Yeah. Yeah, the Spotify story is interesting. I mean, Sean Parker obviously involved in both Facebook and Spotify. And so, I think they had this delicate truce because if you remember in the early days of Spotify, Everything you'd listen to would be shared on Facebook, and that was a huge growth driver.

But that's not why Spotify is not social. No, I don't believe that. That's why Apple's not social because Apple Music because they don't look when we were there, we wanted to buy Musical.ly.

Oh yeah.

Whoa!

Yeah, we we we brought those guys up there twice, but Apple doesn't do social, and they shouldn't do social. I get why they shouldn't.

Yeah.

I was on the tail.

Yeah.

I was on the tail wagging the dog. You know what I mean?

Yeah.

I was on the tail. So, I understood why they didn't do it.

Yeah.

But we, Trent Reznor and I, instinctively knew, especially Trent, that we needed social.

Yeah.

And it's going to be limited without that.

Yeah.

So, Look, Apple, I, so far out of all the companies I found, they're still the most interesting, you know, because they still have that DNA in them. They just said, we're not gonna— we don't do social. Fine, they don't. So that was not a good fit, you know. So, but that's cool. But, uh, doesn't mean that music doesn't need it right now. You're not giving the artists what they want.

Yeah.

And the pay structure in streaming is all screwed Mm-hmm. So if you're married— I see you're married, you got a ring on your finger, so maybe you have kids. If you have 2 or 3 kids, you have the family plan.

Oh yeah.

If you listen to— what's your favorite music?

Uh, don't take— my favorite artist is Yeat.

Yeat?

Yeah.

Oh great, okay. So you listen to that and your kids listen to Elmo, or the babies. Okay, well, let's say They listen to Taylor Swift and Kendrick Lamar, and you listen to Fleetwood Mac and Madonna, right?

I'm paying, but the kids are listening disproportionately.

Yes, they lean on the button all day. So guess who gets paid?

You pay the bill, but—

Taylor Swift gets paid crazy.

But Fleetwood Mac doesn't get anything.

Elmo's raking it in.

Yeah, exactly.

Oh, seriously? Exactly.

But that's— so the structure— so streaming is flawed.

Yeah.

And not complete. But Daniel's brilliant. Alex is really talented. Those guys at Spotify. So they're gonna figure a lot out. They may be sticking to a whole other paradigm that I don't even understand, right? So, but someone who helped bring streaming service to light, I can tell you that they're all missing social.

Yeah.

Period. So that's why I have a crew of guys and girls that I work with. We're looking at something right now that's really interesting. We're doing it with one of the main companies. And we have an idea that we believe is unique and good and great for the artist and great for the labels. And that's what we're going to do.

Yeah, we have— we've had some guys from Spotify on. And I think that one of the interactions I was most excited about that they've been working on and working towards is making sure that the people that are listening to artists the most get access to the concert tickets, right? Because an artist doesn't necessarily benefit if they sell—

Yeah, but that's self-serving. I mean, I get it. But the artist should be doing that.

Sure.

Yeah.

Again, you don't need third parties to do a lot of this stuff. Why do the labels need third parties to deliver their music? I'll tell you why. They don't. Right? But they do. Right? So that all should evolve with the artists in the front of the paradigm, making the money and doing great and communicating. So I'm not—

Yeah, it did out very differently in in Hollywood with, with, uh, Disney+ and, and Hulu?

Well, that's sure. Well, hang on.

No.

Yes and no, and I'll tell you why. Because when Netflix came to town, oh yeah, they came to town with a big checkbook.

Yeah.

And unfortunately, all these companies are public. Now this, I'm going to make this official, this is my opinion, okay? But they all licensed them their music, at least most of them did.

Why?

Because they got Big checks and help make their numbers. Well, guess what? They created a monster. Yeah, yeah. Right? And now they're trying to catch up. Right? So music business is the same thing. They license their music to Spotify, Apple Music, and Amazon. Well, Spotify is worth more than all the labels together.

Yeah.

Guess guess how much IP they own? Zero. Somebody's podcast maybe or something. You know, maybe Joe Rogan. I don't know.

But I don't even think we got on there.

But that's but that's the point. So the movie business didn't get it. They they got it late, but at least they got it. And I think that's going to happen in music. I think the music companies are are going to be more involved, and AI is the opening to do it. AI is the road to that doesn't mean Spotify is not, but Spotify. Spotify is going to have to morph as well. Okay? You can't just— no ride goes forever. When I was a kid— not a kid, I'm sorry. I wasn't a kid. It was 2002. I was nowhere near a kid.

Just a spring chicken.

I was nowhere near a kid in 2002. But when I saw piracy, I went and met with 3 tech companies. And one of the tech companies, very high-up guy at Intel, said to me, Jimmy, this is a I started talking about the recording studio and the people that are suffering. And, you know, it's not the big stars, it's the kids in the studios. And he said, what a fabulous story. He said, Jimmy, but not every industry was made to last forever. That was powerful, right? I said, he's right.

Sorry, this music thing had a good run, but the music is over.

But it's not music, it's the business of music and what that looks like. So I carried that with me.

Yeah.

And then when I met Steve and Eddie after that, I said, holy shit, these guys, they're the next step, right? So there is a next step now, and Spotify may grab it. You know, they have all the tools available and the money, the capital, and everything. So they could recreate their business all the time. And you got a guy like Alex running it who's really, really talented. The people that I work with are really talented. Apple are really talented. You got Oliver and that team over there. They're all really good. So maybe they'll morph the company into something that it needs to be, or maybe the labels will figure it out and they'll do more of what this new model needs to be. But to have to be just a licensor of music, to me, first of all, is boring. Second of all, has nothing to do with any other discipline in the world. It doesn't.

Yeah.

And you need to— to have a proper company today, you have to have blend of disciplines inside your company, proven by 2 great, great people, Morita from Sony and Steve Jobs at Apple. Period. They got it top to bottom. And they set the tone. Who out there doesn't want to be Steve Jobs, right? They, you know, they— everybody's— every— he's the new Steve Jobs, this is— he's the old Steve Jobs, you know, he's not Steve Jobs, he is Steve Jobs.

Yeah.

But yeah, and it's saying something I've never— everyone wants to be, and yet I've never seen someone and thought, wow, damn, they're the new Steve Jobs.

Well, because they're missing what Steve was. Steve was the ultimate— he knew it. He knew The goal was where technology and the liberal arts meet, and there's nothing more evident in that than in AI.

Yeah.

You know, so do you think he would have liked AI? I don't know. I I can't. I never tried. I was a friend of mine.

Yeah.

He has incredible wife Lorene Powell Jobs, who's an incredible human being.

Yeah.

And Johnny Ive is yeah incredible people. I can't speak. I can't speak for them, for Steve. He was his own guy, but, you know.

Yeah. A friend of the show was trying to compare AI messaging to the launch of GarageBand and democratization of creative tools. And I thought there were some good points there.

Although he didn't like streaming.

Yeah.

He was very public about that.

Yeah.

But who knows? Maybe he was right.

You mentioned the tail-wagging wagging the dog at Apple. If you're a tail, should you try and wag the dog? Is that advice that you would give to someone who works in a large organization if they're interdisciplinary?

Well, what I was saying is that, look, there's no hiding it. Big companies, music, outside of music companies, nobody wants the tail wagging the dog.

But is it a fool's errand to try?

I, I don't know. I don't know.

Depends on the situation.

Uh, I don't know. But, but I always use Apple as an example because I think it's run really well. Yeah, they blend it as well as you could blend it. You know, Steve was a big music guy and so is Eddy, so they do it really well. But, you know, it's— I don't— I think, I think the record companies should do it. I really do. I don't get it. I think that they should do it. They should take it on themselves. And Spotify is a music company. They can do it. Live Nation.

Isn't there some interesting positioning that the record companies, at least if they banded together, could work with the artists to say, hey, you have an— if you work with— if you subscribe to Apple Music or Spotify, Spotify and Apple Music are taking a big Cut if you work with us, a lot more revenue is actually going to the artists. Is that is that like how you position?

I don't I don't I don't I don't know. I don't know if that's if that's right. I just because it's it's it's a hard bell to unring.

Yeah.

I'm not I'm not looking at streaming. That happened already. I don't think the labels are going to start streaming services. You know, not in any time short in the next few years anyway. But I do think there could be a new AI business. And that's where the opportunity lies. And you have Spotify, you have the labels, you have the artists. So there's something in there that needs to evolve out of this that makes more sense. And I see it all together, but I always have. That's why we started the school we started.

Yeah.

It all goes back to that. It's just the way people think. That's how we think.

Yeah. I mean, obviously, the answer is probably both, but I would be interested to see if you're more optimistic about the entrepreneurship that comes out of your school or the transformation within industry.

No, the school was built to transform inside the industry.

Okay.

Yeah, it was built for jobs. It turned into an entrepreneurial place.

Of course.

I guess we caught that wave, you know, everybody wanting to be like one of these guys, Zuckerberg or something. But it was made to help communication inside Apple, Google, all these giant companies that are taking over the entertainment business, literally. So it's not gonna happen in my lifetime, but we wanted to build as many people as possible to infiltrate and help make that All one thing rather than have to be a tail wagging a dog. You know, I mean, look, Intel's buying Paramount and Warner, right? I mean, fundamentally, I mean, and David Elson is terrific. You know, he's really smart and understands where these two things cross. So hopefully there'll be some great stuff there.

Yeah, it's gonna be exciting. Well, thank you so much for coming on the show. Hey, you're welcome, Stick. An honor and pleasure.

It was fun.

Let's do it again as you're making some more of these plays.

Oh, I don't know. But it was— you're very far from my house. Maybe if you come to my house, we can do it.

Yeah, we'll do it over there.

That's fine.

But anyway, thanks. Oh, there's a big world behind me. I see that.

Yeah, it's blue.

Nice set.

Yeah, thank you.

The lighting, it's all—

We reinvented television.

Well, we will see you tomorrow at 11:00 AM sharp. Have a great rest of your day. And goodbye.

Cheers.

Thank you.

They'll fade us out.