The Exchanges

Q Ok, so it's not good for the consumer if the model is tied to the application. Ok, cool. But bluntly, we are seeing codex and claw code eat a huge part of the market. What does the market look like in three years in terms of market maturation?

A This is going to be different from cloud. I think cloud, a lot of people suffered because, you know, the cloud providers came and said, Hey, look, sign this three year deal. We're going to give you a big discount. We'll get everything good for you. It'll be all right. Come on in. And then they would do that. And then they would jack up the prices. And once you're standardized on one, it's going to take you two years to switch to something else. So good luck. You're stuck with us and we're going to charge you more. Everyone has scars from that. So now, every CIO I speak to is really keenly aware of, we cannot, you know, throw our lot in with just one model provider. We're gonna need to be agnostic. And so, you know, you could be agnostic by saying, hey, every engineer, we're gonna give you Cloud Code, and Codex, and Gemini CLI, and all these other tools. Um, but then the problem is, now you're asking your engineers to use 10 different tools, or you can use someone like Factory, where you can use one tool, and you can kind of decide, Um, kind of like in an auction on a task-by-task basis, which model provider do we want to use? Do we want to use an open model? Do we want to use Frontier? You know, which one of those?

AI assessment note: “every CIO I speak to is really keenly aware of, we cannot”

Q In terms of, like, being there in person and the sales process, You got Sequoia very, very early on. Sequoia obviously one of the best and most prominent investors. Can you just tell me the story of how you got Sequoia having never had a job and only being paid to do physics?

A Yeah. So I was obsessed with physics basically since I was 12 because, um, I was a bad student, uh, and my geometry teacher told me that I had to retake geometry in high school. And like, I never tried in school, but I always prided myself on being good at math and When she told me that, I was like, are you kidding me? She thinks I need to retake geometry? Like, I'll show her. And so my first order on Amazon ever was textbooks for Algebra II, Trigonometry, Precalc, Calculus I, II, and III, differential equations, um, and maybe a linear algebra textbook. So I bought those textbooks, and then the summer between middle school and high school, I studied all of those, like, did all the problems in all of them, um, and then in high school took exams to place out of all of those classes. Um, and then I asked my dad what the hardest math was. He said string theory, which is technically physics, not math, but I was like, okay, I'm gonna be a string theorist. And that was literally all I cared about for basically the next 12 years of my life. All I cared about was math and physics. Um, ended up going to, uh, to Princeton because they had a great physics professor I wanted to work with. Um, he's, uh, this famous professor named Juan Maldicena, and I was like the first undergrad to work with him and write a paper with him. Then I ended up coming to Berkeley to do my PhD and, you know, work…

AI assessment note: “So I was obsessed with physics basically since I was 12”

Q What's the best way someone's tried to wee?

A I mean, there are just some people, I don't even know, I don't, I don't want to name names. There's this one investor in particular who's like, Still in the game, but more of the old guard, I'll say that much. Um, and I remember beforehand, people were, like, people told me, like, by the way, he's really good at making you feel good about yourself, and I was like, yeah, whatever, I'm, I can deal with that, that's fine, and then I remember leaving the meeting, being like, I'm the fucking man, like, I am, like, this is my destiny, I'm gonna build a legendary company, like, I got this, and then, like, 30 minutes after, when it wore off, I was like, oh my god, he got me, like, he did it, like, he did the thing, he made me feel special, and like, A lot of investors, when a company is hot, are going to do that, and they're really good at it. That's why they're great investors. Um, I think for me, what's really important, as we've built out our board in particular, is people who have, like, deep conviction when it's not obvious. Like, that's what really, really matters, because when a company's hot, everyone's going to be excited. Um, it matters when it's not, and there are going to be tough times. How, how do they behave then?

AI assessment note: “he's really good at making you feel good about yourself”

Q What problem is not currently being solved with software that will be enabled By this new technology. Because everyone's like, climate change. And I'm like, great. You know how many people I've found doing climate change technology? Well, none.

A Yeah. Well, and maybe part of that is because all like the Googles have been hiring all these engineers. So distributing great engineering talent to more problems, I think is going to be a good thing. The economy has to match though and properly incentivize them. And that's something that I think will take a little bit of time, which is like the intermediate period, but like so many health problems, like so much of pharmaceutical research. Can be advanced with better engineering. And like the thing that really upsets me with some of the people who are talking about, you know, pausing AI development or any of this like, oh, it's, you know, it's a bad thing and it's gonna, you know, harm society. Dementia is kind of a go-to example where everyone understands how big of a deal that is. That is something that can be solved with better AI and better software. Like it's a matter of time. Like we will solve it and we can solve it. And by saying you want to slow down AI, that's saying like, These people who have relationships with loved ones who have dementia, you're like, no, no, no, sorry, you guys, you gotta maintain that relationship for a little bit longer. We're scared. We don't know about AI. I think it's like, it's pretty, it's pretty harmful, and it's pretty selfish to say that it's something that, to me, it doesn't make sense. It doesn't make sense.

AI assessment note: “Dementia is kind of a go-to example... That is something that can be solved”

Q Do you worry about the public backlash to data center development that we've seen? I think it's like 40 out of a hundred data centers post approval don't actually get built out in the end. Do you think data centers will be seen as a symbol of wealth concentration and technology superiority?

A Yes, but I think that's, at least in the United States, the beauty of having states, uh, is we get some, like, selection where we can have different experiments of like, what's it like for a state that says no to all data centers? Well, okay, there won't be as many jobs that get created there. Whereas the states that do allow for data centers to be good, to be created, you know, people will prosper. They're gonna have great jobs. They'll, you know, see the, the downstream benefits of it. Um, but it's nice. It's like we have little petri dishes to test out and see how things work. That is the beauty of the United States. Um, and I think In Europe, I mean, it's a, it's tough. I think that there were some, there was some good positioning that Europe had, you know, a few years ago, a few decades ago with nuclear that I think hasn't been, you know, delivered on as much as of late, but that would have been a world in which Europe would have a way to bounce back a lot in AI on the, on the energy side.

AI assessment note: “Yes, but I think that's, at least in the United States, the beauty”

Q But if you think about agent to agent, agent to agent doesn't give a shit about UI or design, but it does fundamentally care about data structures, um, potential integrations, uh, documentation. Do you know what I mean?

A Yeah, yeah, yeah. So I think one thing that if you don't have careful, um, standards in place, it can get bloated pretty quickly. But I think the best organizations who are the most agent native actually put in a lot of guidance on like, here's like the UI side of things and how things need to be. Um, Being very aggressive about, like, pruning anything that's unnecessary, making sure there's not, like, you know, bloated, like, I don't know, comments in all of your code that's, like, kind of gratuitous, or, um, there are ways around it, but that's kind of where the human's job changes a little bit. Where their job goes from, I mean, part of our name, our name is Factory. Um, part of why it's called Factory is because the future of software development is where these organizations, instead of having engineers, That build the software. They're going to have engineers that build the factories that build their software. Visually, whenever I say this, I always think of Tesla's factories. I don't know if you've ever seen videos of the inside of Tesla's factories. It's all these like robotic arms going and you have the assembly line going through. Um, and there might not be as many humans in that assembly line, but you know damn well that humans, uh, designed this process to optimize the throughput to, you know, produce more Tesla's in this case. Um, and so in this new world of softwar…

AI assessment note: “if you don't have careful, um, standards in place, it can get bloated”

Q Totally get that. In terms of the market maturation, what happens to the lovable and replo market? We saw OpenAI kind of release a competitive product last night. I just don't know what happens there. Can you help me understand that?

A It's not obvious to me, um, and part of it is because not too many people that are close to me use those tools frequently. Like, most of the people that I know either don't use, like, AI tools, or they're, like, technical and using factory. Also, like, I'm not gonna be, no, none of my friends don't use factory. Like, what do we, come on, we wouldn't be friends. Um, uh, so I need to understand a little bit more about that user. My sense is, They're probably, and we're still in the early ending, so I'm sure they're quite agile to figure out what is the exact niche that they want to occupy. Um, but it's not super obvious to me what the kind of focus is, because my understanding is some of them have been pivoting towards the enterprise a little bit. Um, but I think from the enterprise perspective, the like.

AI assessment note: “It's not obvious to me, um, and part of it is because”

Q How did you get Ivanka Trump as an investor?

A Through, so, one of the best hires that I've ever made at Factory was, ah, this woman, Francesca. And so, the way that Francesca and I met, um, was at a random conference. I was seated next to her and Alex Paul, who's one half of the Chainsmokers. And obviously people know them as the Chainsmokers. They're also incredibly good investors. Incredibly good investors, which sometimes people are surprised by. Um, and, you know, we got along quite well, and Um, and for, weirdly enough, Francesca and I also grew up in the same hometown, which is a whole, and had a ton of, that was another kind of weird coincidence, but, um, she's like, just in the process of, like, them wanting to put a check in, and the way she did diligence, and just the way that she kind of carried herself, so clear, like, she was a killer, and they wanted some allocation, I was like, no, no, no, sorry, like, you know, it's gonna be this, and she was fucking relentless, like, came to our office, like, was like, hey, like, we need to get to this much, how can we do it, I'm gonna make these, if I do this, and this, and this, The business value that we provide to you is going to make it worth this more so than giving that allocation to someone. She was like, kind of, hounding. You know, we were having a conversation. I was like, look, Francesca, like, if you want more ownership of a factory, you could just join us. An…

AI assessment note: “Through, so, one of the best hires that I've ever made at Factory”

Q What problem is not currently being solved with software that will be enabled By this new technology. Because everyone's like, climate change. And I'm like, great. You know how many people I've found doing climate change technology? Well, none.

A Yeah. Well, and maybe part of that is because all like the Googles have been hiring all these engineers. So distributing great engineering talent to more problems, I think is going to be a good thing. The economy has to match though and properly incentivize them. And that's something that I think will take a little bit of time, which is like the intermediate period, but like so many health problems, like so much of pharmaceutical research. Can be advanced with better engineering. And like the thing that really upsets me with some of the people who are talking about, you know, pausing AI development or any of this like, oh, it's, you know, it's a bad thing and it's gonna, you know, harm society. Dementia is kind of a go-to example where everyone understands how big of a deal that is. That is something that can be solved with better AI and better software. Like it's a matter of time. Like we will solve it and we can solve it. And by saying you want to slow down AI, that's saying like, These people who have relationships with loved ones who have dementia, you're like, no, no, no, sorry, you guys, you gotta maintain that relationship for a little bit longer. We're scared. We don't know about AI. I think it's like, it's pretty, it's pretty harmful, and it's pretty selfish to say that it's something that, to me, it doesn't make sense. It doesn't make sense.

AI assessment note: “Dementia is kind of a go-to example... That is something that can be solved”

Q But if you think about agent to agent, agent to agent doesn't give a shit about UI or design, but it does fundamentally care about data structures, um, potential integrations, uh, documentation. Do you know what I mean?

A Yeah, yeah, yeah. So I think one thing that if you don't have careful, um, standards in place, it can get bloated pretty quickly. But I think the best organizations who are the most agent native actually put in a lot of guidance on like, here's like the UI side of things and how things need to be. Um, Being very aggressive about, like, pruning anything that's unnecessary, making sure there's not, like, you know, bloated, like, I don't know, comments in all of your code that's, like, kind of gratuitous, or, um, there are ways around it, but that's kind of where the human's job changes a little bit. Where their job goes from, I mean, part of our name, our name is Factory. Um, part of why it's called Factory is because the future of software development is where these organizations, instead of having engineers, That build the software. They're going to have engineers that build the factories that build their software. Visually, whenever I say this, I always think of Tesla's factories. I don't know if you've ever seen videos of the inside of Tesla's factories. It's all these like robotic arms going and you have the assembly line going through. Um, and there might not be as many humans in that assembly line, but you know damn well that humans, uh, designed this process to optimize the throughput to, you know, produce more Tesla's in this case. Um, and so in this new world of softwar…

AI assessment note: “part of why it's called Factory is because the future of software development”