The Exchanges

Q in case this is fraud, it was more than six years ago, so past the statute of limitations, can't get me. On second thought, I need to atone for my sins and repaid Chipotle the 21 dollars I stole from them by purchasing 21 dollars of their stock. I am sorry, Chipotle. Another resignation has hit the timeline. The co-founder of XAI is out. You want to read through it?

A Yeah, so he says, I resigned from XAI today. This company and the family we became will stay with me forever. I will deeply miss the people, the war rooms, and all those battles we have fought together. It's time for my next chapter. It's an era with full possibilities. A small team armed with AIs can move mountains and redefine what's possible. Thank you to the entire XAI family. And Elon, thank you for believing in the mission and for the ride of a lifetime. Some of the executives at XAI were offered cash instead of staying around, and so it's possible he just said, cool, time to, uh, time to move on. This isn't looking good, and it's the original XAI co-founders. There was one, two, three, four, five, Five, six, seven, eight. There's three remaining. Elon plus Manuel and Toby.

AI assessment note: “Yeah, so he says, I resigned from XAI today.”

Q that had negative gross margin and are all now pouring cash into both the like AI application layer companies and like, you know, foundation models that all have like ridiculously, I mean, I forget, I think it's girly is nonstop, you know, not my favorite person in the world, but girly is nonstop talking about like, you know, what is going on here? They're selling a buck for 90 cents.

A So I think, I think it's, it's an important example because you had that, um, uh, You know, plenty of examples of these chained losses during that, uh, that era where a restaurant was selling something below cost to a platform that was selling something below cost to a logistics provider, an individual contractor that like maybe wasn't actually making money if you factored in depreciation and fuel costs of their vehicle. And that ultimately worked out, right? DoorDash is a, is a massive, fantastic business, uh, based on the power of the American, uh, consumer. But when you compare that to today, where a lot of the conversation on the timeline this week has been the margin profile of this new generation of software companies that has to pay a lot for sales and marketing, but also inference. And so I think like the debate should really be, you know, continue to be around just how quickly will, uh, the cost per token fall. And I think a lot of people are, have a lot of confidence around that, but I think that That is the key thing that Everett's sort of, like, broad investment thesis right now is dependent on.

AI assessment note: “the debate should really be, you know, continue to be around just how quickly will, uh, the cost per token fall.”

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 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 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 one hundred and eighty seven billion in line with analyst expectations. Net income rose 88% to twenty billion higher than predicted. So very good year last year, a little bit rougher going forward. Revenue from Amazon's cloud computing unit, AWS, increased 19% to 28.79 billion, slightly lower than expected. Analysts said they were closely monitoring this number after disappointing cloud computing results from Alphabet and Microsoft. What you thinking, Jordy?

A Uh, I'm thinking that Amazon has been weirdly out of the headlines on all things AI CapEx. It's just not something that you're thinking about and not really hearing about much. I mean, obviously people like Dylan Patel are spending a lot of time writing about it, but it hasn't been top of mind. For a lot of people, but given how, how much of their business is in cloud, you would think that they would be using that to drive the narrative and trying to build momentum around, um, you know, the narrative, the Amazon narrative around AI. And it just doesn't feel like. It doesn't feel like, you know, they obviously have like the actual, like core data center infrastructure and cloud leadership, but it doesn't feel like there's no, um, They don't, they don't have their like sought yet, right? Like somebody who's coming out and, you know, going on CNBC, trying to get on technology brothers, likely, uh, things, things like that. So they just don't feel like they're, um, while they are like critical and they're running a lot of this, you know, work, they don't feel like they're a big part of the conversation right now.

AI assessment note: “I'm thinking that Amazon has been weirdly out of the headlines on all things AI”

Q Wait, what is this photo? That's not, what is that? The team just accidentally put in some random car.

A Okay, so, so the car, the car is strange. I love the interior, but the car overall is strange. It's still unclear to me who it's really for, but they are finding buyers. The idea that, that Buying the Luce, like, Ferrari is saying we're not forcing any dealer to push this car or whatever, but the idea that it's not going to have some, whether or not you bought a Luce is going to have some weight on your future allocations to me is just insane. There's just no way that that's true because every single dealer is going to look at their client list. They're going to look what cars have they purchased. Like, we know multiple Ferrari collectors that are buying Two separate cars that they don't even want of the same style in order to gain status within the dealership and show that they're a proper, proper collector and they're properly sort of cherishing the brand.

AI assessment note: “the car is strange. I love the interior, but the car overall is strange.”

Q like, well, that's like a stupid technical feature. Like, why can't you just make a, uh, a combined checking and savings account or a, a yield bearing checking account? But it's like, well, there's so much cruft in the legal system around the American financial system. So it's like, maybe, yeah, you do just need to like, Have some sort of greenfield fresh start and that's enough. I don't know.

A Yeah. So at Capital we had, uh, we had a high yield checking account. So it's not that, um, it is a good, I mean, I think the, There's so much, um, platform and infrastructure risk in all of this stuff, right? Like one of the reasons that they maybe had to buy Bridge, I'm just speculating, is that Stripe's existing bank partners had no interest in taking on that level of risk, right? We, at Capital, we were rolling out a Stablecoin custody product when we were informed by our bank partner that we, we were gonna have to jettison a lot of our Digital asset oriented customers. And so our entire product strategy like fell apart because we couldn't do the thing that our customers wanted. And in fact had to be like, oh, you guys should like leave basically. Um, so there's so much, um, that, that is, I feel like the whole bridge story is such a good example of risk taking, right? There's so much that bridge was trying to do that when they started was unclear If it was even going to be possible. And so oftentimes Opportunities like that attract unsophisticated founders that don't know what they're getting themselves into, and then founders that are sophisticated and already successful and comfortable with the risk, right?

AI assessment note: “at Capital we had, uh, we had a high yield checking account.”

Q Also like this is kind of a nitpick, but isn't that a V six, right?

A Is it? I don't know. Is this good for video explainer channels on YouTube? Bad for video explainer channels on YouTube? Certainly commoditizing the production of video explainers. I've seen a lot of these video explainers that will show you, like, inside of a rocket, or inside of a, an RPG, or, or an AK-forty-seven, or a Glock, and those get, like, tens of millions of views. They can be viewed in any language, but they're very intense from a, from a CGI perspective. You have to go and model every little detail, every pin in The, in the weapon or whatever the object is that's being visualized in this particular video explainer close to being on command. And then the question is, where does the value set? Does if you prompt YouTube and you ask for a video explainer of, uh, you know, uh, a chair, break it down, explode it, show me the innards. Will it just do it on demand for you? Will it just generate that or will this still sit below the creators?

AI assessment note: “Is it? I don't know. Is this good for video explainer channels”

Q This is interesting. It's brave. The problem is cultural. I, I, I, I don't quite get what he's saying with, is he just saying that, like, there's too much, like, rah, rah, okay, we need to bring manufacturing back and not enough people actually doing it?

A Yeah, I think he's just alluding to the fact that, like, the deindustrialization of America is something that should be unwound. Like, we need to focus on industrializing, reindustrializing, reindustrializing, however you want to put it. But, um, yeah, not every single category is, like, conducive to a new venture-backed startup or roll-up. Um, and, uh, anyway, so Jai is somebody, I don't know him personally, but, uh, you know, Good investor. I think he's back, uh, with his own company. Uh, he actually had a fund and, and decided to return capital at one point because he felt like everything was too overvalued at the early stage. Uh, but he's back to building himself now, and, and, and, and, uh, we should try to learn more about his company.

AI assessment note: “I think he's just alluding to the fact that, like, the deindustrialization”

Q It's pretty safe, right? You don't, you don't have this startup, you know, you're not sure if it's going to work or not.

A Everyone's focused on the AI wars, not enough attention going to the Sana wars. The real heated rivalry is at the bathhouse. Yes. From bathhouse to other ship to alter a wave of bathhouses. In New York City are popping up just blocks apart, igniting a war of Zen. This is especially relevant to the TBPN team because we've been in somewhat of a sauna war ourself, which we'll get into at some point in the story. The Flatiron District in Manhattan has been a center of Nouveau Wellness for around 15 years with its many boutique fitness classes, gyms, acupuncturists, and stretching and recovery centers now wave of bathhouses that offer dry heat and cold plunges face off In a few blocks. There's bath house on west 22nd with other ship two blocks away and alter set to open this winter. You could walk between all three in mere minutes. Williamsburg has its own cluster, right? Parallels.

AI assessment note: “Everyone's focused on the AI wars, not enough attention going to the Sana wars.”

Q I know, but that, that's, 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 is making a lot of money on a new company thinks it is fair use.

A But, but here's, but here's, yeah, yeah. And, you know, these, Companies are making money providing a tool, and I'm not, I'm actually not taking aside 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, 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, the normal way. So I would argue, I would argue in some ways that the music industry and artists are, yes, they, their, their music is being used to train models that, that then create other music, but they are also beneficiaries of that.

AI assessment note: “I'm actually not taking aside one way or another, but they're making an art”

Q Do they have a comically large baton? Like, like we have our scoop?

A Yeah. Oh, Mark Gurman, the scoopinator, he's a scoop doggy dog, scoop athlete, the scoop, the scoop, the scoop is on fire. Yesterday evening, Mark was the one with the scoop. Tim Cook will assume the role of Apple's executive chairman, and John Ternus will take the reins of the company. Mark followed up with a scoop with internal memos from both Cook and Ternus announcing the transition. I don't, I mean, I understand, uh, I, I don't know, I don't know, maybe I don't understand what it's like to be a 65, but I was always optimistic that the Warren Buffett 65 to 95 would be the new trend, and that people would just say, you know what, I'm, Tim Cook's healthy. He, he's, he's going, he's an outdoors guy.

AI assessment note: “Yeah. Oh, Mark Gurman, the scoopinator, he's a scoop doggy dog”

Q Who's at A-Six-Teen Z Games? Uh, I wonder if he, I would like to see the cold email that he sent to get that job. Share it, Jack.

A I, um, hear the story. It's funny because everybody has, you know, I would hope that everybody listening has positive stories around cold emails, but you always remember the negatives. There's this one guy, it wasn't even a fully cold email that I met in college because there's one company here in Santa Barbara, Decker Brands. They own Hoka and a bunch of other companies. Great business. Like Twenty billion dollar company. You know, shoe companies, when they have hit shoes, do really well. And I met him at the gym, and he's like, here, just, I was like, I love, like, let me, like, intern for you, work for you, whatever, I'll do anything, like, here's what I'm good at. He's like, yeah, just follow up the email, and like, longest, most thoughtful email, no response. Kept seeing him at the gym.

AI assessment note: “everybody listening has positive stories around cold emails, but you always remember the negatives.”

Q Can we run through your guys' style? Like how are you guys so well dressed?

A Well, we had to come out the gates. We, we were calling ourselves, you know, uh, we tech, tech bro is sort of derogatory. We were the technology brothers. We needed to kind of reclaim it, elevate it. And part of that was, was dressing, uh, dressing nice, but you've had your sort of, uh, hands across the whole sort of, uh, Elon empire, obviously have a relationship, uh, with Elon. I kind of want to go company by company and just kind of get your take on them. Uh, right now I think Tesla's very interesting. It's, uh, it's not a pure play humanoid bet, but it does feel like humanoids are the next platform for Tesla, especially when you look at, uh, sort of gen, you know, generalized EV sales, uh, for Tesla have not been performing great. Uh, talk about kind of the humanoid market. I'm sure you've gotten pitched by a lot of these, uh, companies. I'm guessing you're still, uh, uh, you know, a Tesla shareholder, but, you know, talk to us about that category because it seems to have, Everybody's attention for good reason.

AI assessment note: “We needed to kind of reclaim it, elevate it. And part of that was, was dressing”

Q become modality that people really want? Like live overview, uh, on their screen, on their phone? Like what's the, what's the way that people are going to be interacting with AI generally? Um, cause a lot of those use cases, like it's, they're already smart enough. It's not about making the models like, Way smarter at whatever. It's like, how do you have the model be useful or fun, engaging?

A There's a bunch of paths here going back to the clearly thing where one Roy is like right about the UX and like wins the market. And the other option is like, he's right about the UX, but like doesn't win the market. And then there's like, you know, it's just not the right form factor or whatever, but any of, at least the first two outcomes are hilarious. And that, and that Roy Lee ushers in the new, the new paradigm of, uh, for, for engaging with With language models. I'm curious, uh, any, um, is all the stuff around every B to B SaaS player descending on this sort of like single interface, like a chat interface that generates software? Was that predictable to you? Do you think that's, do you think that that's like part of a multi-year trend, or is that just FOMO?

AI assessment note: “I'm curious, uh, any, um, is all the stuff around every B to B SaaS”