The Exchanges

Q and then by college, I was just like focused on startup stuff. So my, I didn't feel like I had a great experience, um, with my education, uh, how much better can it be? And sort of what's your broader vision, obviously. Synthesis can be a big part of, uh, a child, uh, and a kid's education, but you know, what is the full stack look like in the future?

A Yeah. Yeah. That's funny. I, I also had a bad experience with my education and it's, uh, you know, it's, I, I got like Psy opt into, uh, you know, devoting the rest of my life to changing the whole system because I hated it, uh, so much. Uh, so, so, so maybe similar to you in that regard. I, I think The big problem is you start with this original elite education is, is with one-on-one tutors. And I, I don't know, but I don't think it was like eight hours a day plus homework with, with one-on-one tutors. I think you can learn a lot more efficiently than that. Uh, then you have like the one room schoolhouses, which again, we're like, kids are like working on the farm and then they come to the schoolhouse, you know, a couple hours a day, maybe a couple of times a week and that's it. And then all the parents go to work and these, the school day expands. And instead of just sticking to that, like, well, we'll teach a little bit and then we'll kind of have fun for the rest of the day. They just expanded the teaching to make it, it somehow encompass all the hours from like eight to three, uh, eight AM to three PM and homework. And I think what we're going to see, I think AI tutors are going to drive this. Um, I think you could actually learn one E to 30 X faster. I don't think there's going to be a need for any homework. I think kids are just going to use AI tutors to learn the fundam…

AI assessment note: “I think AI tutors are going to drive this. Um, I think you could actually”

Q the, on the right might say, you know, that's, you know, it's just wrong to be changing the weather or have some concerns there. People on the left are just, you know, maybe anti-science sometimes. Uh, how, how has it been trying to thread the needle? Obviously you're not trying to make everybody happy, but you need to get people generally bought into what you're doing to make things happen.

A Dude, water's a nonpartisan issue. Whether you want ecosystems restored, or you want more water for your farm, or you want urban development in your city, we want to bring you water. We can bring water more cost-effectively than even desalination. Um, and then when it comes to, like, the real fringe edges, uh, because everybody in the middle is bought into that mission of abundance, right, for whatever their, uh, particular issue is, um, you know, I personally believe that, like, Genesis one-twenty-six is the first Uh, commission that God gives man at the beginning of time is to steward the earth, the seas and the skies. Rainmaker is trying to embody that value set and be good stewards of the world as we take dominion over the skies. Um, and so that plays to some extent with the more tinfoil hat conspiracy theorists on the right. And when it comes to the left, some people think that like, you know, anytime you modify anything on the planet, humans always make it worse. Um, and that's just like not true. Um, but even if you believe it to be the case, Like, we've, we've messed up the planet so badly already. We might as well take deliberate action to try to repair it. Um, and so people on the far left are generally more game with that.

AI assessment note: “water's a nonpartisan issue... when it comes to, like, the real fringe edges”

Q but like, is anyone working on that? That feels important if you're really thinking about like terraforming certain parts of America, uh, and like reclaiming and just improving different biomes. Like how does that play in? Is that just a different startup? Do we need another company to build that? Is that something that you would eventually expand into? How does that all play into this, uh, like whole plan?

A Yeah. Rainmaker long-term is the terraforming company, right? We want to take, Any ecosystem and make it both symbiotically flourishing for humankind and the environment. Um, there's no companies that I know of doing reforestation, although there's a bunch of university labs that are spraying seeds from drones. Really cool, weird, clever thing where when the seed hits water, um, it unravels and sort of acts as like a little natural drill to drill the seed into the ground. That's pretty cool. I haven't seen it commercialized yet. And, um, someday I do want Rainmaker in the business of All sorts of different terraforming stuff, like planting trees, literally boiling the ocean, by the way, if you boil enough of the ocean, then you can create more clouds. Um, so we'll- You heard it here first.

AI assessment note: “there's no companies that I know of doing reforestation, although there's a bunch of university labs”

Q That's two figures, two figs. Uh, that's two figure AI robotics companies. You take two of them. You get a Ferrari, uh, making it the most valuable car company in Europe, despite Delivering just 13,752 vehicles last year. So Jordy, why don't you break down, uh, what their strategy is with these, uh, super restricted hypercars? How do you get one? Uh, you know, just break it down, make it.

A So yeah, I, I've talked about, I don't think we've talked about this on the show that much. I know I've talked about it before on X, but, uh, Ferrari has this fantastic, uh, Business model that's similar to every other luxury brand that you'd be familiar with, Hermes, Rolex, Patek, all these different companies, they basically make, uh, no matter how much money you have in the world, if you want to buy these cars, watches, bags, et cetera, directly from the manufacturer, directly from the brand, you have to play their game. Now every single, uh, every single brand has a different version of their game. Uh, there's, there's plenty, you can look up online forums for every brand and see, You know, what game did you have to play? And the game is basically spending money on things that you don't necessarily want to get the thing that you actually want. And so Ferrari and Porsche does this as well. Every brand gets knocked for this because people say, I have 300 grand. I should be able to buy the GT three RS and Porsche. And what people don't realize is they're using these hyper exclusive cars. As top of top of funnel marketing for every other car in their portfolio or every other watch or every other bag or every other product that they make. Right. And so in the case of Ferrari, Ferrari, you know, has been playing this game for a very long time. It's been, you know, the most desira…

AI assessment note: “the game is basically spending money on things that you don't necessarily want”

Q calling, emailing around the clock. People will just probably start ignoring people that they don't know. Um, so it'll be interesting to see, but I would say like the other side of this is that you will still have the young tech kitty team that uses the AI tools better than the veteran who knows what to build and they have relationships, but maybe you can't build as fast, right?

A Yeah, I, I think it's a good thesis. I wonder if the age thing will hold because I'm thinking about the, the tech programmer kitty that the reason that they're good at programming is that they stay up all night and they code constantly. If you take someone who's 16 right now and instead of getting them obsessed with programming and scripting and writing little apps, they instead become obsessed with Industry research, understanding an industry really well, and they actually are going to like, they pick a very niche specific industry. They go to all the conferences. They're there. If they raise money, they're spending it on Tegas and GLG doing expert calls. They're networking like crazy. They go and do internships in this thing. Like, can they actually learn the true nature of that industry and gain the expertise of someone who's 40 in four years if they work Nights and weekends and constantly, and they're obsessed over it. I think it might be possible for, for, for a twenty-year-old to still check all of the SAM lessons.

AI assessment note: “I think it's a good thesis. I wonder if the age thing will hold”

Q What do you like? Okay, now I'll surface.

A Now that I see myself walking around like, like in the rain in LA, in downtown LA, and it's a photo real image of me in a red jacket and then a navy jacket and then a black jacket, I can say, okay, I think, I think I look best in the navy. Let's go with that. Let's look at some materials up close. It generates images of those. It finds that. And then it also tells me, okay, I want this material or this, or this material, and I wanted this price point and this one will ship and it's made in America or something like that. And then it surfaces that. And then, and then it's, it's like all of these things, like there's still like chat interfaces, but there's no reason why they can't be audio interfaces. They can't be video interfaces. So you could eventually get to a point where, where, you know, your, your shopping interaction is essentially like an AI avatar, like holding the thing up. For you and saying like, here's the jacket and it's purely in synthetic, but then the actual jacket comes to you.

AI assessment note: “I think I look best in the navy. Let's go with that.”

Q Or, uh, does someone go on one and then other podcasts reach out? Curious why YouTube feeds me the same 20 people all the time and wondering how they get on so many shows. For having no real body of work other than just being interested to listen to. Uh, that's a good post. Uh, that's a good way for, but it is true. Are you familiar with this strategy?

A Well, so the role of the modern PR firm, if you could pay somebody like, like the classic PR firm, you're paying them 10 to 20 K a month, and they're getting you plugged in with media. And now if you could pay, if I was an entrepreneur and I could pay somebody 20 grand a month to get me on Four podcasts a month. That's like the best money ever spent because you're just getting in front of these crowds of people. You're able to talk about your story and your company and your product and people get to know you and they like you and it's like the best marketing ever. So, but the challenge is like, it's not easy to get on podcasts, right? A lot of these interview shows, they do like 50 interviews a year and they have like 5000 people that would want to be on those slots. And so it's a bloodbath of competition to try to get onto that slot. What is true is, like, if somebody goes and they do one good interview, and then they can jump to do another one, and then they just end up becoming, like, a classic, like, interview guest, it does, I do think that there's, like, a bit of a snowball effect, but yeah, it's not easy. I, I think, um, everybody that has a podcast will, like, has, like, a long list of emails that they've gotten from PR firms, from, like, hey, like, I'd love to, it's, it's just some, like, super random founder or company.

AI assessment note: “if somebody goes and they do one good interview... a bit of a snowball effect”

Q Yeah. You have to understand, like, are you still going to want to do this product? If in the first year you do a million, the next year you do three million. The next year you do three million and then the next year you do 10 and the next year, like, are you still going to be wanting to play that game if it's not a rocket ship?

A It probably means less venture capital and it probably means higher ownership for the founders over the long term. You look at The stories of like Red Bull monster, like these guys, they grind for years and years and years, and then they pop because they're in a big market and they do have the, the branding and formulation cracked, but they're, but they own enough to make it worth it. And as long as you get, I think the real key for those consumer goods companies is like, you have to work super extra hard to get the first, to get over that first hump where you can actually be taking a salary that makes your life Like worth living basically. And then once you're flying business class and like covering your expenses, your kids are in good schools and stuff, then it's like, okay, well I can grind and compound for a very long time.

AI assessment note: “then it's like, okay, well I can grind and compound for a very long time.”

Q dollars. Um, and it's going to take a little bit of time to get there, but if you kind of, it really is, is it kind of a, uh, uh, uh, uh, it's, it's not, it's no longer a venture product, right? So you're sort of treading water and not embracing reality. Um, and going with Gafon and companies is a much better option than just shutting the company down.

A And people kind of like know this deep down at the later stage where, you know, if you're doing a hundred million ARR, it's like, okay, private equity exists. Everyone knows Bain, KKR, all these companies that are very obvious and they probably calling you, um, or strategic acquisition that could be very valuable, or maybe try and take the company public, but people don't realize that like this, This, like, kind of zombie stage where you've done series A, series B, but never really hit escape velocity. Those two options still exist. It's probably just something more like an acquihire and more like a special situations deal with somebody like Jeremy. So, uh, anyway, good luck to you, Ben. I hope you figure it out.

AI assessment note: “people don't realize that like this, This, like, kind of zombie stage”

Q with like devastating injuries because something blew up. And, um, there's a real, I, I, I don't think, uh, I'm all for giving smart young people lots of money to, to do ambitious things, but It's almost like they're, find the balance of it, right? So, but, so bet on, bet on the kid, bet on the dropout, but go get them somebody from Lockheed Martin to be their chaperone.

A That's the under discussed thing about Facebook. They had some like VP of engineering who was like 45, who was there very early. I forget what this guy's name is, but he was like, allegedly like very important in like stabilizing the company early on when it was a bunch of crazy kids running around. And And he had like just the right level of respect to be like, okay, when he speaks up, we should listen, but he's not trying to like, be like, oh, we got to bring in NetSuite. He wasn't like, he wasn't slowing anything down, but he was providing like just enough, like, you know, basic rules. Cause at one point, like Facebook was all just like one file on a, on a web server. And like, when you wanted to make a code change, you would just be like, Hey everybody, I'm pushing the Code like nobody make any changes. I'm going to update the file or whatever, like the files on the web server. It was like, it was like crazy. And he like brought in like cool stuff that like cool process that everyone's like, okay, yeah, this process actually makes sense.

AI assessment note: “That's the under discussed thing about Facebook. They had some like VP of engineering”

Q Go sign up first, Retechery. Read the whole article. There's a bunch of context, um, and we're gonna come back to the story, uh, with the Germinator. Rohan in Semaphore says Paramount Ways leaving California over Warner Brothers Rift. What's going on here, John?

A So this is, uh, on the basis that California is trying to block The paramount, uh, uh, the paramount acquisition of Warner Brothers Discovery. Rohan says, I'm told that if the states do choose to sue, they would have to assume the damages stemming from that action. Chiefly, uh, six hundred million to 1000000001.2 billion in ticking fees would potentially be paid out to state state taxpayers. So if, uh, if they leave those, uh, those fees would not be paid to the state. Paramount just issued this response to the state AG lawsuit. Brian Stelter is breaking it down. Uh, saying the complaint distorts settled antitrust law and is based on, uh, misrepresentation of competition in the, in, in the entertainment industry today. So, uh, Paramount is weighing whether to shift major operations out of California, uh, after Attorney General Rob Bonta and 11 other state attorneys general, I always get that wrong, filed today to block its one hundred and ten billion dollar acquisition of Warner Brothers Discovery. This story was back and forth Will Netflix get it? Paramount wound up with the highest bid, the most cash to offer. It got approved. Huge windfall for David Zaslav over at Warner Brothers Discovery, uh, but a very controversial acquisition.

AI assessment note: “this is, uh, on the basis that California is trying to block The paramount”

Q You can plug in a rack. But, yeah, big questions around where are they gonna get the compute? Where are they gonna get the, the energy Uh, it, will anyone rely on, will be willing to rely on them? Tons and tons of questions.

A This feels like an institutional investor who says, I want to participate in this idea that, uh, even older GPUs are trading above par. And so GPUs are sort of gaining value and they want in on that in some meaningful way, but they also want to wrap it in a public company that can sort of become a meme stock. Essentially. And then basically everything else about the business will be different because the entire shoe business will be sold off. And, uh, and this is basically just a use for the, of the ticker and the listing and the shell, and then probably an entirely different team, entirely different strategy, entirely different, uh, everything basically a new name. So here's the schedule for TNA that explains the pivot ahead of a shareholder vote on May 18th. It adds with respect To the renamed corporate entity, we are investigating potential opportunities in the computing infrastructure market, including the acquisition and monetization of graphics processing units, related high performance computing infrastructure, uh, capable to support high workloads, whether from artificial intelligence and machine learning, or other, uh, needs of potential future customers and, and other related assets. Also, uh, because the anticipated electronics infrastructure business would be less focused on the public benefit of Environmental conservation, which is stated in the company's certifica…

AI assessment note: “So here's the schedule for TNA that explains the pivot ahead of a shareholder vote”

Q this like behemoth kind of quietly hiding in a discord server. Still, uh, I saw some examples of video. It looks fantastic. Seemed like they hadn't added audio yet, but how, how do they fit into the whole, the whole piece? Because it seemed like early on, they, they developed a really great, um, feedback loop for the data that maybe wasn't happening with some of the other model providers.

A Yeah. So the mid journey model came out this morning, um, really conveniently, like 10 minutes after I put out my market map without the journey video because it's not yet available. Um, I was just playing around with it too. It's, it's really cool. They do image to video. Um, and they, and so they don't do text to video, which is actually sort of easier. They can start with their, the super high quality images that they generate on the platform and then animate those. I think they have like a low motion and a high motion setting. Um, From what I've tested so far, um, it's, it's better as sort of like a low motion scenery environment light interaction type thing. Like you have a photo of a person and you can then animate sort of rain and wind and them walking slowly. And it's not as good at like what I call physics heavy world model type things, like two cars running into each other and exploding. That sort of thing requires, um, Uh, a very, very large and costly, usually like text to video model that is more difficult to train. Um, whereas mid journey, I mean, I, I have no idea how they did it. It's a great model. They could have taken one of the open source image to video models and fine tune it on all their own data.

AI assessment note: “They do image to video. Um, and they, and so they don't do text”

Q And I'm sure there's reposts of, American videos over there. So it's not like even has a unique flavor probably can generalize pretty well, right?

A Totally though. Yeah. Like I was one of the very early users of all of the Chinese video models when you still had to access them on Chinese apps with Chinese phone numbers. And they were definitely very good at things that were more, um, China oriented than the U S models. Um, oh, okay. The other, the other thing that's important to mention on data is, Um, in video in particular, it's not just the volume of data, it's also the quality of data and the quality of data labeling, because essentially you can't just feed a video into a video model and assume it can understand what's going on and, and pull out the relevant info. You have to have really sort of dense labels is what we call them, or super detailed captions about like, this is this style shot, shot from this sort of camera, the camera is coming from this angle, This is the sort of character. This is how the character is interacting with the background, and that quality data is what drives quality in the video models. Um, and China has really benefited there because there are so many more PhDs than there are here, and it's much cheaper for these companies to hire them, um, to do these, these dense, uh, labels for the video data.

AI assessment note: “they were definitely very good at things that were more, um, China oriented”

Q Uh, can you talk about the extortion attack, how you handled it? And I'm particularly interested in going forward. There's a lot of tools in your toolkit. You can throw more money, more people, more technology at the problem. What's gonna, what's the next few years look like in terms of beefing up security?

A Yeah. Yeah, well, I, I mean, we've had a really good track record on security at Coinbase over the last 12 years, and even in this attack, you know, we didn't see any private keys or funds accessed directly by the attacker. So what they, unfortunately, they were able to do is they were able to bribe some of our customer support agents and to share with them, like, personal information on, on customers, like name, address, etc. And, you know, they want this information, attackers want this information, because they want to text people, call people, try to socially engineer them, and to get them to send their money. And so, Unfortunately, they were able to successfully do that with a handful of customers, which we've reimbursed a hundred percent at this point. Um, and then they sent us this demand once, once we were, you know, they realized they'd been found out and customers were kind of getting educated about this. Um, they sent us this demand for twenty million dollars, or we're gonna release all this information. And it was an interesting moment. We, you know, we came together and thought about it. And, um, you know, on the one hand, we could have paid them the money, right? But we were, we, we talked to a bunch of security researchers and people, and they were like, you know, there's really, what typically happens in these cases is you, if you pay the extortion, they're just…

AI assessment note: “they were able to bribe some of our customer support agents and to share”

Q waiting for it to drop, right? Or it's, or it's a, a group chat that only has 50 people, but it has, you know, maybe, like, more activity for that, those 50 people than any other social platform that they use. So, um, can you talk about, um, how you think about, like, sizing, sort of, like, projects, right? Because not everything that should be done should be massive, right?

A A hundred percent. Um, the. It's interesting. There's this business industry dive that really, um, taught me about something. It's a business that not a lot of people know about, but it's immensely successful. A lot of people, when they think about media businesses of last 15 years, they think about like Buzzfeed and Vox and, uh, it's kind of like, you know, Upworthy, these businesses raised a bunch of money in the 2010 and totally crashed, right? There was the, you know, there was a bunch of venture firms, uh, you know, this one included, do it, doing sort of You know, consumer media businesses and people thought, you know, they were going to ride the platforms and they were, they were big, you know, they were growing, but then sort of the, you know, as, as you alluded to the platforms, you know, took the value is where the value was. It was in the distribution, not in the, and these were just like content farms on top of them. But an under told part of that story is that business media has actually done pretty well. Uh, this company industry dive, which is just a collection of niche. Trade publications. So things like utilities, weight, HR, pharma, just like a valuable niche, like newsletters, um, sold for five hundred million dollars, I believe, to Informa, which I believe is like a ten billion dollar trade show company.

AI assessment note: “Industry dive, which is just a collection of niche. Trade publications”

Q Tell us about the inspiration. Tell us about why you did the episode. Obviously, everyone knows Ken Griffin, founder of Citadel, but, uh, what inspired you?

A Because I study psychos for a living, and I love them, and they're the most interesting, fascinating people to me, and so you guys actually made a video on this tweet that got like a 1000001.5 million views, right? It's John Arnold talking about, hey, what did Ken Griffin do when Enron blew up? And he talks about just like, you know, a lot of people are like, oh yeah, I know Enron was making money, uh, like all these, this talent is gonna like, you know, essentially go to the wind. Uh, you know, some people recruit. Maybe they'll build, like, a good commodities business. And, uh, he tells a story where the day it blows up, and keep in mind, in this story, Ken Griffin's, like, 33. He's, like, really, really young. And he immediately charters a Gulfstream jet, goes to Houston, and interviews every single person that was important in the Enron trading business. And then he winds up hiring all the best talent. And in the, in the talk that I used for the basis of the episode, because there's no biography written on Ken, he goes, And since then we've made about thirty billion dollars trading commodities. So the main reason I, I, I wanted to profile him is because, um, I get to meet a lot of really interesting people because the podcast and I always ask the same questions. It's like, who's the smartest person, you know, who has the best business, you know, and if they're into finance,…

AI assessment note: “Because I study psychos for a living, and I love them”

Q that isn't perfect, like is embarrassing, right? Like you look at the vision pro and it's like, well, the battery's big. Steve would have hated this, right? Like how he never would have shipped this and that being constrained and not being able to innovate because you're tied to this, like, Impossible standard of being on whatever generation 17 of the iPhone and perfecting every element is a real challenge.

A So I would say there's a corollary to that. One of the things I've observed over the years is I think technology products become obsolete at the precise moment they become perfect. And what I mean by perfect basically is like, yeah, it's like the perfect idealized complete product. Like it does everything you could possibly ever imagine. Everything a customer could imagine, everything you as the technology developer can imagine. It's absolutely perfect. Um, and there's, there's been tons of examples of this over, over the last 50 years, um, where it's like the absolute perfect permanent, it seems to be the permanent version of that product. And then it just turns out that's actually the point of obsolescence because it means creativity is no longer being applied. Right into that platform. You're just like, there's just nothing else to do. You're just like, you're, you're, you're done, right? The product has been realized. And then, and then the cycle is what happens to your point. The cycle is other people come in with completely different approaches, completely different kinds of products that are broken and weird in all kinds of ways, um, you know, but, but, but are fundamentally different. And so, you know, that is one of the time-honored traditions. And, you know, one of the, you know, one of the, you know, things you could say about, you know, Tim is his, you know, his wil…

AI assessment note: “willingness to kind of break the mold of Apple only shifts perfect products”

Q Uh, how is, how do humans kind of present a challenge to trying to like automate delivery, which should be in everyone's best interest?

A We get that question a lot, but we don't actually get a lot of vandalism itself. Uh, you know, the, the, the, the truth actually is that people really love our robots. Yes, I see that, you know, with like scooters and, you know, some of the other modes of transport, People don't really treat them nicely, but they actually do treat our robots really nicely. Like, for example, you know, you know, we often, you know, get the question that, oh, you know, are your robots stolen? Uh, and, uh, actually none of your, our robots have ever been stolen from the street, and we have done eight million deliveries. Like, we are doing millions of deliveries, and it's just not happening. You know, kids feed our robots bananas. So the, the, the, the treatment is completely different than with, you know, like scooters, for example.

AI assessment note: “none of our robots have ever been stolen from the street, and we have done eight million deliveries”

Q How much do we know outside of the trailer though? Like, we don't know,

A Well, this was leaked, ah, something like a year ago from a journalist who got the story, and it was widely denied that it was happening, and, ah, he was very upset that he wasn't getting enough credit for being correct here. He ultimately was, but, yeah, all we know is that they filmed the documentary in the lead up to her actually going to prison after sentencing. There was a pretty large gap before when she had to report to the prison. She gets out in 2030, so, Coming up three years, four years away. And so, uh, I believe even in a week you can get a lot of footage if you're spending the full, you know, every day with someone. And then there were a number of visits to the facility by Nathan that were recorded, probably talking through glass or talking at a table, something like that. So, uh, we don't know.

AI assessment note: “all we know is that they filmed the documentary in the lead up”

Q So what happened with the business to unlock the next round?

A Uh, I mean, we continue to go up into the right, but like the announcement of Adams was we are, we are going to do physical automation, physical AI. What we are calling industrial AI to transform these industries one at a time. We were, we did food, we moved into mining, we're doing transport, and it's working. And so, that's how you go, yeah, and then of course there's like going out of stealth, there's all the things, and it was just the right time. So, um, so yeah, we just went to market. We said, when I originally went to market, I was like, These were separate companies. Yeah. Okay. So our mining and transport was a separate thing. Food was a separate thing. And we had a bunch of other, you know, a bunch of subsidiaries doing cool stuff. And I said, which one do you guys want to do? Do you want to invest in mining? Do you want to invest in food? Do you want to invest in this? And they're just like, we want to invest in you.

AI assessment note: “we did food, we moved into mining, we're doing transport, and it's working.”

Q on day one of, of that YouTube channel, cause I know you've done media stuff before, but like the, the, the, the, the current media business, uh, what was the team like? What was the strategy? How much time were you putting into it? Cause I know you had exited some businesses. You had some space to breathe, but How serious were, and then what was the evolution of that?

A I'll walk you through as fast as I can. So, uh, the first thing was I found any media editor, uh, like an agency and they were like, uh, three YouTube videos a week is what we do. And I was like, all right, then that's what I'll do. And so I just webcams like, and I had a little suitcase that would open up so I could travel. Cause Layla and I were traveling for the year of the sale. Um, and so that's what I did. Wherever we were, I was like, open up. And then, cause at that time I didn't have really any work. So I had all these thoughts that I was like, I'm just going to Get them. I'm going to dump them all out. And so that's basically what YouTube strategy. One point it was, um, I had somebody cold reach out, like legit, uh, to when a redish short started, they were like, I'll do everything. You already have YouTube stuff. I'm just going to clip it. Just give me permission. And I was like, Oh, cool.

AI assessment note: “three YouTube videos a week is what we do. And I was like, all right”

Q I was just listening to him on the Brad Gerstner podcast. I think he chimed in on that, right? You brought him with? There we go.

A Yes, he did, but he did the work on SpaceX, so I thought you guys might want to talk about that. Um, But I do think, I'm not sure the story is as far out as you made it seem to be. I think there are two variables that are going to matter a lot over the next year. The first is just how quickly can they bring on terrestrial compute? It does seem like they monetize gigawatts at a higher rate than anyone else. And we know from Jensen that they bring on data centers faster than anyone else, per Jensen's words. And everyone in the ecosystem is really incented to get, um, land power in the hands of people who can energize it, because everybody starts making more money when the GPUs are energized. Um, so, you know, if they can, what, what are, what, what was the altimeter figure for how, what they were monetizing gigawatts at Foxy, do you remember? Well, I think it was like two to three, wasn't it like at least Two times higher than, like, average neocloud pricing, and that's partly due to scale and customer quality and things like that, but it was meaningful. Yeah, so they're doing fifty billion gigawatts on Google deal. So how quickly they can add gigawatts really matters, right? If you can energize two, three, four gigawatts in the next year, that's a lot of revenue. Now, you know, that prices may go up, they may go down, but That's really gonna matter.

AI assessment note: “Yes, he did, but he did the work on SpaceX”

Q Yeah, they either, they either think they're, they're doing a startup, and they should do this, or they think they're outside, and they're like, this is how bad startups are. Yeah, I don't think many startups are doing this, but if you've talked to VCs, is like quality of revenue coming up, revenue concentration, circular revenue deals, is any of that coming up these days?

A I think, I think investors deeply care about all those things, and good investors still do their due diligence when investing in companies. Um, especially when they're at a mid to later stage. Right. Um, but really like, where do you draw the line? Right. You, you see NVIDIA investing in a lot of Neo clouds that go buy their GPUs. Um, they help start these new, new clouds. And then you have, um, of course, like, uh, NVIDIA investing in, in AI labs that end up being like downstream consumers of these, of these, um, uh, these GPUs. And so like, I think in a, in a way, like, Yes. It's kind of like a revenue swap where you're investing in a company and then like, they're kind of like buying your product. Um, kind of like trading dollars. Um, but, um, so I think there's like, uh, in some places it makes sense in some certain context in the, if you're a founder though, any for the early stage founder, if you're just like going for this, you have to ask yourself like, okay, what am I really in this for? Like, am I here to like build a business and build a thing that people want? Or am I here to just like.

AI assessment note: “I think investors deeply care about all those things”

Q Yeah, they either, they either think they're, they're doing a startup, and they should do this, or they think they're outside, and they're like, this is how bad startups are. Yeah, I don't think many startups are doing this, but if you've talked to VCs, is like quality of revenue coming up, revenue concentration, circular revenue deals, is any of that coming up these days?

A I think, I think investors deeply care about all those things, and good investors still do their due diligence when investing in companies. Um, especially when they're at a mid to later stage. Right. Um, but really like, where do you draw the line? Right. You, you see NVIDIA investing in a lot of Neo clouds that go buy their GPUs. Um, they help start these new, new clouds. And then you have, um, of course, like, uh, NVIDIA investing in, in AI labs that end up being like downstream consumers of these, of these, um, uh, these GPUs. And so like, I think in a, in a way, like, Yes. It's kind of like a revenue swap where you're investing in a company and then like, they're kind of like buying your product. Um, kind of like trading dollars. Um, but, um, so I think there's like, uh, in some places it makes sense in some certain context in the, if you're a founder though, any for the early stage founder, if you're just like going for this, you have to ask yourself like, okay, what am I really in this for? Like, am I here to like build a business and build a thing that people want? Or am I here to just like.

AI assessment note: “I think investors deeply care about all those things, and good investors still do”

Q But, like, you know, maybe there's an angle where, like, distillation actually gets less important, because, you know, even if, you know, the Chinese can, can distill our models, they actually can't serve them, so it's like, You know, is that even important?

A Yeah. Yeah. And even if the models are exactly the same, if I'm able to put 10 agents securing my bank account against your one agent trying to break into it, I will have 10 times the amount of solutions. And so I should win that battle almost all the time. And you, you, it does, it does seem like we're shifting towards this, the incredible value of inference and capacity, which of course makes the whole data center slowdown ban so much more complicated because Uh, once you get into like the geopolitical considerations and what, what happens when large inference called clusters start coming online elsewhere. And you go back to the door cash, uh, the door, the door cash, uh, what was it? Probability density curve where he, uh, he says like, if AGI comes soon, America wins. If it comes over a longterm China wins because he's worried about China ramping up their capacity over time, but they're behind currently.

AI assessment note: “it does seem like we're shifting towards this, the incredible value of inference and capacity”

Q But the idea is to put more, Space data centers on these?

A Yeah. I mean, if you think about this in, like, the most grand project you can imagine, which is like the Dyson Sphere, basically, solar panels directly around the sun, all the way around the sun, to capture all of its energy, ah, you're gonna need to send a lot of solar panels to the sun. Making those on the moon is lower cost, potentially, than making them on Earth. That's the, that's the theory. But then, in the meantime, Elon's clearly thinking about making at least part of the satellite up there, and then, I mean, you could, you could ship up the chips and just make the, the, the housing up there, if that's the most, if that's the heaviest part. You could make the more economically precise, valuable piece up here, drop off a bunch of chips, drop them into the actual, you know, housing that's been made, and then launch those into orbit. There's a whole bunch

AI assessment note: “Yeah. I mean, if you think about this in, like, the most grand project”

Q I mean, that's always been the story. That's been the story of the Gulf, right? They're not going to, if they just flooded the market with every single barrel that they could possibly produce, they would be getting a worse.

A Yeah. And there's this cartel arrangement that does, I mean, in a sense, everyone has this on different timescales. You think about us shale producers, if, if, if prices were sustained at a hundred dollars, guess what? There's a whole bunch of shale deposits that they could produce at 75 dollars a barrel and make a fortune on that. They're not going to do four weeks ago when it was around 60 dollars a barrel, but, but in terms of the thing about the Saudi oil is it's produced at a much lower cost. So this is them saying, Hey, We have some of this on the table, and then the question is, you need to be able to produce it, and then you need to be able to transport it. So you have estimates around maybe you could get one to two million barrels a day. So that's one of them. Uh, in terms of emergency, if you look around the world, you don't have a lot of immediate spare capacity besides that. So we have what's called emergency capacity or strategic petroleum reserve. You know, it's, it's, you already mentioned that we didn't fill up our strategic petroleum reserve. I think this is unequivocally a mistake. I mean, if you look at the, the whole thing of the strategic petroleum reserve is you want it for when you need it. And the best possible time to fill it up is when prices are low.

AI assessment note: “Yeah. And there's this cartel arrangement that does”

Q Is venture capital eating the world? Or is venture capital scaling so much that it's eating into other asset classes? We're seeing mega funds. I'm interested to think about what's durable about your approach to investing. What's additional? What's substitutive? How is venture changing?

A I think from the minute I entered venture to, to today, venture has gotten nothing but more competitive. It's, uh, it, it, it, As an asset class, it's gotten more and more competitive, and people get more and more aggressive. Um, we're in a very interesting time where people have grown funds to the size of, of equivalent to the largest PE funds, and, um, they're moving money, um, especially, you know, you just had to call us on, you know, you look at the Stripe or the Databricks case, they're using those large funds to convince the companies to stay private longer, maybe forever, Uh, that's just a very different world than the one that I grew up in. Um, I think they turn around and the people that do those rounds turn around and tell the LPs, their, their investors, look, if you want exposure to these growth years in these companies, you need to come through us. And so you, they, if I were using cynical words, I'd say they've hijacked the, the, the, the growth years of these early IPO companies. You know, Amazon went public below a billion in market cap. Like, it's hard to fathom that, you know, today with, with what we have going on here.

AI assessment note: “grown funds to the size of, of equivalent to the largest PE funds”

Q lot of doom and gloom about companies that are out there, but it's a lot of bull, it's a lot of bull case for AI labs, and, but that can't happen in one day, because like rounds happen every once in a while, they're private, there's all these different things, but Uh, do you think that the world would change when the big labs get out in the public markets?

A I think it's absolutely going to change. I have a strong suspicion that Anthropic is going to go, you know, in the next three to six months. They just have so much momentum and there's a lot of value being first. Uh, P and L also just looks a lot better than anyone else. So, uh, I would think that gets public and it's going to be pretty interesting if it happens. Certainly labs are, are ultimately, they seem like they're very, we're very well positioned to win. Uh, I would wonder over the medium term, like, you know, what happens with some of the, uh, the Chinese models and whatnot, if people actually want just something that's More local and something that they own, but it does seem like the most likely outcome is going to be that the existing incumbents are going to get the most share. And I think Google is particularly well positioned since they already own all of those customers today and they can finance, uh, losses, uh, from inference a lot longer than everyone else. But I think ultimately like there's a world in which the labs are the biggest winners here. Uh, there's also a world in which like you end up with just a lot more competition and people trade and change. But the thing that seems very clear to me that the absolute, like, there's no way they won't be the hugest winners here is going to be the underlying tech, meaning the semiconductors. So, you know, everything…

AI assessment note: “I think it's absolutely going to change. I have a strong suspicion that Anthropic”