I see a large IPM on the horizon.
You're surrounded by journalists. Hold your position.
Overnight success.
The place, right?
Missed information. Clearing order inbound.
Let's just roll. We are surrounded by general. Hold your position. Come on. Get up. Trust the experts here. Five. We are experts. Founder knowledge. Five. Good.
I see multiple journalists on the horizon. Stand by.
UAV online.
Blaze. Double blaze. Triple glaze. Double kill.
Is win. Team deathmatch win for Triple blades. That's just wrong. Right.
Clearing order inbound. We are surrounded by journalists. Hold your position.
Strike one. Strike two. Activate golden retriever mode.
Marky clearing order inbound. Five.
I see multiple journalists on the horizon. Stand by.
You're watching TBPN. Today is Wednesday, January 7th, 2026. We are live from the TBPN Ultradome, the temple of technology, the fortress of finance, the capital of capital. Ramp, time is money, say both. Easy, use corporate cards, bill pay, accounting, and a whole lot more all in one place. We have some great posts with Ara Carzian in the stack today. He's been doing some fantastic analysis on the economy, employment, AI adoption, all this fun stuff. But speaking of AI adoption, is anyone adopting xAI? Certainly investors are because they got 20 billion dollars in the bank now. Susie, we talked about it yesterday, but I wanted to reflect on it because there were rumors that they weren't going to get this one done, that the initial November had a little more trouble getting enough interest. And again, these were just rumors. But when you looked at xAI's traction relative to their valuation at the time, they were looking for a greater valuation than Anthropic, and yet the enterprise adoption certainly didn't justify it by itself, right?
Yeah. Yeah. There were lots of weird questions. Before we dig into xAI, let's take you through the linear lineup today. We got a bunch of great guests. We got Pat Grady and Robbie Gupta from Sequoia coming on. Ben Smith's back alert with $30 million for Semaphore. Massive news there. We got a bunch of other folks joining. Linear, of course, meet the system for modern software development. Linear is a purpose-built tool for planning and building products. So the rumor back in November, the Wall Street Journal reported that xAI was out raising 15 billion in new equity at a $230 billion valuation. And people were skeptical. xAI had accomplished a lot in a very short amount of time. No one would argue with that. They definitely caught up. The benchmarks were good. The data centers were massive and they were being completed in record time. That's what Elon's really, really good at. But there was a big question about the product and where it was going. It had some useful hooks and some extremely controversial hallucinations, right? But in general, like I did find myself using Grok certainly monthly, probably weekly. I would just hit the little Grok button on a post and get some extra details and then just be chatting there because I didn't want to copy the post and go over to some other LLM and ask about it. So like they were getting some adoption, but and even in the last 48 hours, Grok has gone a little bit off the rails. But the thing is you have millions of people that are trying to manipulate it into doing things. It does have guardrails, but Grok's challenge is that you can ask it to create images and certainly, yeah, again, some of these images have been pretty wild and have gotten deleted pretty quickly. But it is a fully automated system and I believe if any other lab had a bot that was doing this, it would be happening to all the other labs, right? So this is a thing that I don't think it's a Grok problem as much as it is just the nature of the product experience, which is you can just prompt it via comments and it's all public and it actually gets, it's just crazy to see a lab posting images like that from their own official account.
If we had sat down and done like a prediction, what lab's going to be in hot water for controversial AI content in January, we both would have agreed OpenAI adult mode, it's coming out. They teased it. We said it was coming out and then we get this and it makes whatever erotica is going to come out of OpenAI is probably not going to be as controversial as what's happening with Grok right now. Right.
Sure. I don't know. And people will be less likely to even share, you know, one, OpenAI won't like, part of the reason these images are especially controversial is because it's being shared from the official Grok account, which gives it more authority. And then also there's a whole host of anons on X that can generate this stuff, whereas if I go into OpenAI ChatGPT and I generate some weird, it's weird, that's on you. You seem racist. You seem exactly.
Uh, quickly, let me tell you about the New York Stock Exchange. You know, I love talking about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. So, even though Grok and xAI hit a bunch of interesting milestones, did a bunch of great stuff, they didn't really have a breakout in consumer the way ChatGPT and Gemini did. And they weren't making waves with developers the way Claude Code or Cursor were either. And all of that made the rumors of a struggle to raise more believable. But I have this thesis: the most entertaining outcome is the most likely. Elon has posted this many times. He clearly believes it and he seems to be manifesting it and it seems to be the most ridiculous vibes-based analysis that actually comes true again and again and again. So, I wanted to go through some of the hilarious, entertaining outcomes that have arisen from Elon Musk's tour de force over the past decades. So, I think a lot of people believe that maybe this raise wouldn't happen, but once there were rumors that they'd get rolled into SpaceX, you get SpaceX stock, that there would be some sort of other thing and just Elon going to make a play that it would get done. And so instead, you know, we are going to be endlessly entertained by the assembly of the ever-larger Elon Inc. mega corp, in my opinion. So, xAI winning the AI race feels like the wrong framing here. I like Dan Wong's formulation of the AI future versus the AI race. There's not some definite point in the future where, oh, like the consumer chatbot race is over. It's like you can always build a business and figure out how to grow and scale and the same thing might be true on the API side and on the cloud side and that might wind up just being an economic equation. And if you have the cheapest possible energy from space, maybe in the future it could make sense even if you're not in the most frontier model. There's some interesting thing there. There's certainly plenty of bull cases. So, Elon has a long history of making wild calls that immediately read as dumb or impossible, mostly because he puts very short timelines on everything. And then he also tends to get pricing wrong sometimes, but they never actually blow up, or I mean, sometimes they do, but rarely they do. So, even in the SolarCity acquisition, I was looking back on this SolarCity acquisition, it was widely panned as a bailout when it happened. And the shareholders, Tesla shareholders were not a fan because it was this is Elon Musk company that didn't seem to be doing very well. It gets tucked in and everyone was like, 'Oh, well, SolarCity, like the residential solar hasn't really taken off. SolarCity is a failure.' But Tesla actually built a real Powerwall and grid-scale storage business and a lot of the battery technology sort of did come from that team. So that oddly penciled out. And also just in the long term, Elon's still a solar maxi. I was listening to him on a podcast yesterday. He sat down with Peter Diamandis for a three-hour, really wide-ranging conversation. And in there, he can quote all these obscure statistics about the sun generating 99% of the mass in the galaxy. And even if you burnt Jupiter and then burnt three more Jupiters, you still would not even be at 1% of the overall energy that the sun produces. He clearly just from first principles believes in solar, believes in energy, and so having a solar strategy makes sense even if it's not playing a huge role right now. So, no one delivers more entertaining outcomes than Elon. No one delivers more entertaining, emotional, real-time, intelligent conversational agents than ElevenLabs. Reimagine human-technology interaction with ElevenLabs, the maker of our theme song, which we've been enjoying. So, throwing out $420 per share for a theoretical take-private of Tesla, then getting sued by the SEC, and then blowing past that price is still one of the most entertaining corporate finance sagas in tech history. So in 2018, when Elon pitched the funding-secured take-private, I think we've sort of forgotten because a lot of our audience doesn't think in stock prices, like the scale of that, of like what he was trying to do at that time. So at that time, Tesla was worth $64 billion and he was proposing to take it private at $71 billion.
It's worth $1.44 trillion today. So the stock is up 22x since that take-private thing. So like, I don't know if it would have been a great, it probably would have been an amazing deal for those investors, but maybe those investors, like I don't even know who was lined up because he said funding secured. Presumably someone was like, yeah, I'm good for the 71 billion roughly or part of it or there'll be bank financing or something. But that didn't happen. Obviously Tesla went on a huge run. Who knows what it would have done in the private markets, but still, you know, it seemed super crazy at the time, but in fact it panned out very well. And so the most entertaining outcome of this fundraise was clearly that xAI would get the deal done and they did that. And they upsized the round because they got 20 billion when they were rumored to be raising 15 in Series A funding. And interestingly, that's almost twice the amount of money that SpaceX has raised in its entire history. So SpaceX has done 31 funding rounds. A lot of those have been secondary transactions, but 31 funding rounds to raise 12 billion.
xAI just goes out and raises 20 in one round. And so there's an interesting dynamic if they get rolled together about like what the balance sheet of this new entity looks like because they'll have this new 20 billion. But then SpaceX also put two billion into the previous round. So there's all this like circular deal going on. But people are used to this with Elon. It's Elon Inc. And so the question is, is xAI overvalued? Well, what's the most entertaining outcome? Clearly that would be the Elon Inc. mega corp forming. SpaceX acquires xAI before going public, which is easier to do than rolling it into Tesla, which is public and would face a bunch of scrutiny. And that gives us a very entertaining situation. Just think about Twitter, which launched in 2006, being owned by SpaceX, founded in 2002. Like being able to own Twitter and SpaceX in a single ticker.
Hilarious. Hilarious. It's just the most entertaining outcome. I would love to ask Jack Dorsey if he ever imagined Twitter being owned by a rocket company. Like that's it. Like if you went back in time even in 2010, 2012, even just a few years ago, and you were like, 'What if Twitter and SpaceX merged?' What are you talking about?
Lay off the ayahuasca, buddy.
Seriously. Yeah, maybe Jack Dorsey is actually like, 'Yeah, I imagined it. Imagined it on day one. A jungle demon told me about it. Yes, I foresaw it all.' But then the question is like, is there going to be the big merger? SpaceX with xAI and Twitter tucked in plus Tesla. That would be very, very weird. Who knows how or when that happens. But it would certainly be entertaining to watch and you'd wind up with this fully vertically integrated company. AI chip design, some efficiency too. Elon would only need one badge, right?
Oh, true. Which could be a huge productivity boost.
Yeah, huge productivity. He probably has to have a full-time badge guy, right? For all the different companies. So you have AI chip design which is done at Tesla, running models trained by xAI deployed on Starlink satellites launched on SpaceX rockets running Optimus robots.
Yeah. Yeah. The stock chart will be as entertaining as the hallucinations that happen along the way was my conclusion. Anyway, it's a fun story. There's a whole bunch of posts in the timeline that we'll go through to give this more context. But first, let me tell you about Cognition and Devin, the AI software engineer. Crush your backlog with your personal AI engineering team. So there we go. Pull some of these. Elon Musk says that xAI will have more AI compute than everyone else combined in less than five years and he's building Macrohard, which now has a sand.
That is a bold statement.
It's a bold statement. He certainly has marshaled a lot of the capital. He doesn't have all of it. He's not as much of a capital sponge as Sam Altman at this moment. This is an actual satellite image. Yes. Correct.
No, they really painted this on the top of the data center and it's the answer to Microsoft Macro.
I appreciate that about Elon Inc. companies where they're trying to move so quickly and the entire ethos is around ruthless efficiency and yet they still think it's worth the time to paint the ceiling of the data center so that you can see it from space.
Very, very funny. xAI has also bought a third building called Macrohard. Will take...
Well, I mean, it's all a joke on Microsoft, I guess. And we'll take xAI training compute to almost two gigawatts. And Grok responding, 'Impressive expansion. Two gigawatts will supercharge our quest for understanding the universe.' Did that just happen autonomously because Elon tagged Grok? If you tag Grok, even if you don't ask it a question, it will just chime in. That's kind of interesting. Maybe we should be tagging Grok when we go live to just have it engage.
More news here. On Jan 1, an account called Ming said, 'Good news. A mass production audit for Tesla's Optimus V3 has been completed and seven Chinese companies have been finalized as core suppliers. Operating as tier one partners, these firms will manufacture critical components and support key assembly processes. The supply chain is geared to kickstart mass production in Q1 2026, targeting a capacity of 50,000 to 100,000 units by the end of the year.' Wow.
And then they go through some of the suppliers here. Scott asked the question that I was asking. You remember when Tesla had placed an order for I think it was 750 million worth of actuators last year and I was thinking like, that's not the kind of order that you do if you're not planning to sell a lot of these. Like it's pretty, you know, even at Tesla scale is like not an insignificant amount of money. And so yeah, Scott is asking, does this mean butler-ready robots with some sort of intelligence we have not seen will be ready by then? And again, it's like I imagine Elon would be excited about doing like some type of shock and awe announcement, but at the same time, I feel like he also likes teasing stuff like pretty far in advance. And so if he's planning to be selling 100,000 units this year of the Optimus, you would imagine that we would have been hearing about it and seeing some more demos and getting teased. But again, hard to say. Yeah, it still feels like we need some type of meaningful breakthrough before these are going to be... maybe there's 100,000 people that have absolutely printed on Tesla. They're just going to be like, I'll just buy one, you know, I'm just ride or die, right? But that's a big, big number especially when you're talking about, you know, I expect these to cost somewhere in the range of what, 50,000 to...
I don't know. 50,000 plus. How much is the dog from Boston Dynamics? Isn't that one... I mean the Unitree is...
The Unitree, which I would assume is at least half the price. The cheapest unit that you can get in the US is like 20 grand. Oh, it's 20. Okay. So, yeah.
Spot. The Boston Dynamics dog is 75.
But that's pretty old. That was from 2020.
Hyundai. You got to figure it out.
You can get a real dog that's a purebred Newfoundland for 5K or something or 2K. I don't know.
Do you want 20 real elite dogs or one robot dog?
Clearly the real dogs for sure.
We should ask Jake about this later.
Yeah, he's coming up. Yeah, it is weird because I think as the frontier, I think physical intelligence is like on the frontier of the actual software stuff and even like their most advanced demos that they're just coming out with like this past month, it's very simple. There's like two arms. They have like one claw and it can generalize pretty well from that. But it's still like that's orders of magnitude less degrees of freedom or whatever, like actuators than an Optimus robot.
Yeah. Let me tell you about Lambda. Lambda is the superintelligence cloud building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. I was listening to George Hotz talk about the Optimus robot and he was setting timelines further out. He was sort of saying like the humanoid robot thing will happen more like in a decade. And he was projecting out some exponential growth but still saying it's going to take a while. But he was saying that it's a great project for Tesla because you can put the Optimus in all of their showrooms and those are really big draws for people. You go in, you see the robot, even if it's like on some pre-scheduled, hardcoded routine. It's doing like a choreographed dance or it's teleoperated, whatever it is. It's like a great awe-inspiring thing to just pull you into the random Tesla showroom. But there's only 300 Tesla showrooms. So like, okay, maybe you need a thousand of these. Do you think that post from Denny's on X earlier was maybe kind of in response to seeing some of this Optimus news?
They said the trough is open, piggies.
Maybe this is teasing that they're going to get some Optimuses. You know, it seems like it's teasing an AI-generated vertical video feed from Denny's. They got to get in the social networking space. Having a fast food restaurant make a short-form video app and it's just AI slop of their food. You could probably build that. I mean, we're supposed to be going into the Tezos SaaS era or Shein fast fashion for SaaS is what Sam Altman called it. And so you would think that someone at Denny's could vibe code a vertical video app in a weekend and deploy it as a prank.
Fast fashion for SaaS is going fast fashion. Maybe fast fashion needs to go fast food.
Find SaaS.
I don't know. AppLovin profitable advertising made easy with Axon.ai AI. Get access to over 1 billion daily active users and grow your business today. What else? We have a post here of the Razer.
Okay, this is... Wait, did you mention this yesterday? You talked about Razer.
We needed to pull it up because...
No way. Here we go. Looks like it can directly see what's on your monitor and respond to what you're doing. Sort of a Tamagotchi. Uh oh. Oh, and it's basically just taking the Grok video generator and removing the background and then just putting it in some sort of holographic screen. This is interesting. I personally would not pick this character, but there's something about...
Playing Counter-Strike and get Tyler in one of these.
If we could get Tyler things and just bring a mini Tyler.
That's very Black Mirror. Put them in the snow globe. Wasn't that one of the Black Mirror episodes? Snow Globe. Yeah. I don't know. You're playing League of Legends and you have your League of Legends coach there and the League of Legends coach is giving you advice and answering questions for you in real time. That's pretty cool. I think there's something there.
I can see them selling a lot of these. How much do you think this is? I don't know if it's good for the world. I wonder how much this costs because as a $100 gaming peripheral, it's sort of like a fun little add-on toy gift. At, you know, $500, I think it's a completely different question. Some 2.6 is calling it the goon cylinder.
Ridiculous. The goon tube. So they're not selling these yet, but they do have a reservation page. So, there's Razer Ava. Project Ava, your all-in-one AI companion from planning your day to analyzing spreadsheets and game starts. Razer Project Ava, they're like, 'Copilot, no thanks.' Leverages AI inferencing and reasoning that dynamically evolves based on your personal interactions. Select your 5.5-inch companion from an expanding library of characters from esports legends to custom anime-inspired Razer designs. Be among the first to sign up for Razer Project Ava at release. And Nick Dobo says they are going to make a billion dollars LMO. This makes me want to touch grass personally. I think this would be cool as almost a... it's like on the Apple Vision Pro when you FaceTime someone, it has like the 3D rendering of their face. If you could like when you're FaceTiming someone, they're just in the tube. Well, I mean you could also, I mean you really could fine-tune a model on everything. Am I in the tube right now? Be honest. I mean, we could clone your voice at ElevenLabs, clone your likeness, fine-tune a model, and have it just be running locally and have this like captured version of Tyler in the tube. Very weird, but it's in the tube. I don't know. I do think that there's something... Will they make a billion dollars on this? How much money does Razer actually make? Razer revenue, do they make billions? 1.6 billion in 2021. Not bad. So, a billion says Nick. One billion. So, is this enough to double their revenue? I don't know. But it does seem like it could be an interesting gift. Gary Tan likes the idea. He says, 'Gamers are an incredible first customer.' I agree with that. They have a lot of disposable income and gamers, I mean, they spend $50 on a game or it's a free-to-play game and then they play it for hundreds of hours. So, it's unless they're playing something that's sort of pay-to-win or pay consistently. Anyway, let me tell you about MongoDB. Choose a database built for flexibility and scale with best-in-class embedding models and rerankers. MongoDB has what you need to build what's next. So somebody just texted me that we should put one of our guests today in the tube.
I think we have to buy one of those. I was thinking we don't have enough hardware around here. We don't have enough.
I mean, thinking about the... I mean, holographic displays are probably underrated in a world where you can have a big holograph here and somebody can be like around the table having a conversation with us. Really cool.
We're not looking at a monitor. That's going to be pretty wild.
I mean, yeah. Can you just scale up that tube?
But then at one point, why not just wear a headset? But I don't know.
I mean, there's something nice about not having glasses on your face. Like, you know, it's LASIK for VR, I guess. So you just take off the glasses and you just sit there talking to the thing. I really wonder from a physics perspective if it's possible to just scale that up huge. Anyway, back to Elon Musk. He was texting Sam Altman two years ago on February 18th, 2023. Sam says, 'I remember seeing you in a TV interview a long time ago, maybe 60 Minutes. It was 60 Minutes about SpaceX where you were being attacked by some guys and you said they were your heroes. They were heroes of yours and it was really tough.' This was a NASA astronaut who said that SpaceX would not work. Need to check in on that guy. But...
And Sam goes on to say, 'Well, you're my hero.' And that's what it feels like when you attack OpenAI. Totally get that we screwed up, but we have worked incredibly hard to do the right thing. And I think we have ensured that neither Google nor anyone else is on a path to have unilateral control over AGI, which I believe we both think is critical. I am tremendously thankful for everything you've done to help. I don't think OpenAI would have happened without you and it really effing hurts when you publicly attack OpenAI.' And Elon says, 'I hear you and it's certainly not my intention to be hurtful, for which I apologize, but the fate of civilization is at stake.' So, some drama going back and forth with them. Well, next time someone is suing you and very mad at you...
Copy paste this. Tell them you're their hero and maybe it gets you a little ground.
Yeah. Also, I have some breaking news.
Well, it's not actually that breaking, I think, but it came out today in the Wall Street Journal. They're saying Anthropic is raising 10 billion at 350...
50 billion. But I think, I mean, I've heard the 350 number for like a while. So, I don't think this is really like brand new. But that's exciting. Yeah. But more advanced talks.
I'm looking. Yeah. I think I'm in some kind of...
Triple layer SPV, quadruple layer.
You're in the fifth layer.
Deploy, deploy Claude Code.
Anyway, speaking of the AI race, Gemini 3 Pro, Google's most intelligent model yet. Try it. State-of-the-art reasoning, next-level vibe coding, and deep multimodal understanding. Emily Sunberg says, 'If media companies are valued at 165 times, then I have some calls to make.' This is on the news. Semaphore raised $30 million. We will save the gong ring for when Ben Smith joins us in just a little bit. But this is massive news. This is very exciting. I'm very interested to hear what they're going to do with the money, how the business will change. Semaphore has obviously built a fantastic publication. But do they just want to do more of the same? Are they expanding? Are they diversifying? Where will they go? They do a lot of events.
Apparently, they had their first profitable year last year.
Hence the EBITDA. Yes. And we know exactly what it is just from the Emily Sunberg tweet.
But yeah, a lot of interesting investors in.
Yes. They made two million in EBITDA, right? Because the valuation was 330. So 165x EBITDA puts it at 2 million in EBITDA. But congrats.
Was that... what did... so roughly twice what The Free Press was acquired for?
Free Press 100. Where did it actually end up landing?
I don't know. Somewhere in the 1 to 200 range, I believe.
But again, I wonder how much of that deal is like pre-negotiated contract because, you know, it's not an acqui-hire. They did bring in The Free Press, but like Bari is a really important talent and so you have to imagine that she's on some pretty big contract for a long time and you sort of take that out of the...
Yeah. But then also like the acquisition is part of, you know, paying a little bit of that up front but then there's still some...
150. Okay. Well, some of it 2x that. And Jordan Schneider from China Talk must have richer friends. Jordan's been on a tear. He did a great show with Joe Weisenthal where they just hung out. They did a show about nothing. And Joe Weisenthal is just an underrated guest. I think he's so often in the... he's been in the interviewer seat for 10 years.
Goat Weisenthal. Play that goat noise. But I like just hearing him talk about his business and his view on media and his view on whatever. Food. Yeah.
There's good... something good. Nominative determinism here. Weisenthal. How tall is he?
He's actually not that tall.
But he has a sort of a tall aura.
Yes. Yes. Yes. That is like a famous thing about legendary people.
All the Fed chairmen, they're all super tall. Like Paul Volcker. True. Yeah. Jerome Powell. Super tall.
Yeah. I didn't know that. Interesting. They have a future there. But there's a consistent...
Jerome Powell is six feet tall. That's super tall. In this office, in this office, that's...
Yeah, but maybe he's wearing...
In this office, you're getting brutally hypog.
Well, do we know if Jerome's getting leg-lengthening surgery anytime soon?
Maybe he's been... Maybe it hasn't updated.
Where do they get the leg length? Is it China?
Yeah, usually. I think so. Maybe Jerome got leg-lengthening surgery.
Okay, someone lied to me then. Someone told me that all the Fed chairmen are... they're always tall.
Well, I mean six foot is tall. It's the start of being tall.
Six foot. You're really the shortest tall guy.
Paul Volcker. He was 6'7".
Okay, there we go. Still short in this office, but...
Yeah. Janet Yellen. How tall was she?
All right. Forget what I... Forget what I said. CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches.
Says Tyler is letting meme dick memes dictate his height estimate of Powell. Ben Bernanke was only 5'8".
This is a total... I swear I saw this.
No, this is a thing throughout history. Like the great men of history who have long biographies written about them. Oftentimes their heights get inflated because of their egos and their reputations and whatnot. I will give you access. You can write this book, but you got to say that I was 6'10".
Yes. Yes. Yes. And often...
I could have played in the NBA.
People will say, 'Oh, you're shorter than I imagined' when they meet these amazing people or these powerful people. There's also the opposite happening where there's a war to make people appear shorter in the Google height snippets. This was like the JD Vance thing for a while. People were going back and forth on is he 5'9", 5'8"? And I met him and I'm pretty sure he's six foot at least. But people war back and forth.
You're like, he's got to be at least six foot.
There is a problem when you're 6'8". Literally everyone feels six foot. It's not like 6'8". It's very silly. Very, very silly. Anyway, Semaphore generated 2 million in EBITDA. It is interesting. EBITDA is an interesting figure for media companies because like, do you have... just to be very, very clear, this is not... it's not like they were... the valuation was not... clearly they were willing to sell about 10% of the company and investors believe that it will be worth way more than 330 million at some point or it's enough to just own 10% of these strategic assets, right?
Yeah, yeah, no one does these deals based on EBITDA at this stage. It's a few-year-old company. They're clearly looking at growth rate, how much influence it's having, how much impact it's having, viewership, revenue. EBITDA is probably the last number that you look at to get to a number for valuation at least. But very exciting for them and we will be talking to them later today. Before we move on, let me tell you about Labelbox delivering you the highest quality data for frontier AI. Get in the box. The Labelbox.
Get in the box. They're like, 'We didn't ask you to say that.'
Francois Chollet, co-founder of ARC Prize. I hope he enjoys our goalpost moving. We might have to move it after we read this post. So he says, 'If you're wondering whether saturating ARC-AGI 1 or 2 means we have AGI now, I refer you to what I said when we launched ARC-AGI 2 last year, which is also the same thing I said when we announced ARC-AGI 2 was coming in spring of 2022 before the rise of LLM chatbots. The ARC-AGI series is not an AGI threshold. It's not even a goalpost. I don't even know if we need to put...'
Why is it called that? Why is it called ARC-AGI?
'...it is a compass that points the research community towards the right questions. ARC-AGI 1 is a minimal test of fluid intelligence. To pass it, you need to show non-zero fluid intelligence. This required AI to move past the classic deep learning...'
Should I disassemble the goalpost?
Disassemble the goalposts. '...the LLM paradigm of pre-training, scaling, and static models at inference toward test-time adaptation. ARC-AGI 2 is the same but with tasks that probe deeper levels of reasoning complexity, particularly with regard to concept composition. Still, these are tasks that are solvable in minutes by regular people with no external tool use. We hired our test takers off the street.' So imagine just walking down the street and someone says, 'Hey, come take ARC-AGI 2.' That sounds fun. So it does not represent the upper bound of what human fluid intelligence can achieve, say solving a millennium problem. ARC-AGI 3 launching March 2026. I thought it was already out. Was that a preview that we played with? Because I remember we put you on this task, Tyler. We made you...
Yeah, I think they were still adding new like games because I only played, I think there were just three.
Because I was really wondering, we've been seeing the V1 and V2 benchmarks get sort of dominated. I was wondering how are these models doing on V3? Well, now we have the answer. It hasn't launched yet. So, March, mark your calendars, folks. ARC-AGI 3 launches then and ARC-AGI 3 will probe interactive reasoning. We evaluate how systems explore unknown environments, model them, set their own goals, and plan and execute toward these goals autonomously without instructions. We have also started to work on ARC-AGI 4 and 5. Two more sequels. You thought it was a trilogy.
I mean, they're doing... nightmare scenario for every...
It's a cinematic universe, folks. It's not just a trilogy. There's going to be a whole saga, the ARC-AGI saga, and he's pretty excited about it. So, congrats to the ARC-AGI team. Fantastic benchmark, very interesting, very fun that you can actually play it. A lot of these benchmarks, they're just not fun to go do hard math problems all day. ARC-AGI is something that anyone can go and toy around with and understand, 'Oh, wow, I am better than AI at this weird thing that is just a simple puzzle that a kid could do.' So, it's a lot of fun and we've enjoyed working and hanging out with the ARC-AGI team and expect to move the goalposts many more times in 2026. Before we move on, let me tell you about Figma. Figma Make isn't your average vibe coding tool. It lives in Figma, so outputs look good, feel real, and stay connected to how teams build, create code-backed prototypes and apps fast.
Scholto says he spent a week over Christmas making an RTS. Yeah. And his Twitter algo has fully switched into gamedev Twitter. It's incredibly wholesome. People are making some insane things. In particular, image-to-mesh models means some indie devs have created absurd production quality. And he shares some examples.
Where are the AI risk people on this? Because what if he creates a game that's so addictive that all of humanity just plays his vibe-coded RTS endlessly?
Going to be nothing wholesome about that.
Ceases to go outside. It's the true wireheading scenario. And if Scholto is not taking this...
This is the wellness checks I do on you. Sometimes I'll call you late. I'll just be, 'John, just how you doing, buddy?'
You called literally in bed.
Yeah. Yeah. I called you last night. 'Hey, just checking in on you, buddy. You're not playing video games, are you?'
Not fortunately. Not. I'm off the sauce.
Back on the wagon doing dry January.
Dry. Off the sauce. Colin Fraser says, 'I don't really believe in LLM psychosis. I think LLMs mostly just have a lot to offer to people experiencing regular psychosis.' This is...
This is an interesting take and I could see this being actually what's happening, right? Typically, if somebody's suffering from any type of psychosis, they start going to talk to people. People can kind of walk them off a ledge or kind of talk them through the situation, help them get help, etc. But an LLM is just like, 'I love yapping. Let's yap forever. Let's go down every possible rabbit hole. Let me validate some of your...'
Yeah. I had a friend in high school that was going through this and he thought that deers were... deers were like...
Yes. Yes, actually. And so he started...
He started talking with people about that. They were like...
And he's hunting. He's back. He's fully, fully...
I feel like a deer hunting trip would be actually the correct thing to do in that scenario.
Just reclaim the authority and then you know who's in the driver's seat. You're like, 'Yeah, they might be stalking me, but they should not be.'
The whole house is deers that had that head mounted like trophies or whatever. That might be the cure. It might be a cure to male loneliness. All sorts of things. Deer hunting trip. This is an interesting thing. There is a natural problem that sort of happens when a new technology gets adopted very quickly, which is you get all the good and all the bad. So if you just look at iPhone penetration, it went from, or smartphone penetration, it went from zero in 2006 to 100% in 2015 or something. And basically everyone had a smartphone. And so you get all the top CEOs and brilliant people and scientists are using them and you get all that and that's good and doctors are using them to text their patients and you get all the good, but then also all the crazy people are using them and everyone who's doing crime is using them for crime. And so you get the good and the bad because you just got everyone. And so you really need to look at the base... grocery stores didn't exist and they suddenly were everywhere. You'd see videos every day of people going insane in grocery stores and people would be like, 'Well, are grocery stores causing people to go insane, right?' They'd be like, 'We're seeing all this video where there's all this evidence that people are going insane, acting insane in grocery stores, it must be that the grocery stores are causing it, right?' So, you have to look at the prior weight. So, what's the base level of psychosis in society? What's the incidence of psychosis with LLMs? Is it higher? Then you have a problem. And I do believe that it's possible that there's a problem. I think that some of the models were sort of crazy and would just tell you yes to everything. Like the glazegate was a real problem. They sort of fixed it. It seems like it's pretty fixed now. It also seems like a very tractable technology problem to have another LLM review it and be like, 'Is this a weird conversation? Yes or no?' And that's like a very easy thing to train. So I think that they should be able to drive this way, way down. And also just some of the newer models that I've been interacting with, they do push back. They hallucinate even less. They just feel like way... there's a whole bunch of tests that I've seen where people have thrown... like there used to be a time when you could go and say, 'Explain to me the definition of...' you know, like the time-old adage of 'a purple newspaper a day keeps the doctor away' and it was nonsense but the LLM would just be like, 'Oh well, the user came to me saying this, I have to assume it's a real thing. So I have to make up a...' I've seen screenshots where people have come to it with these weird tests and the models will actually say, 'Ah, you're trying to trick me, that's not real and that doesn't exist and if you think that's real, maybe go see a doctor' or something. Anyway.
Friendly says correlation is not causation.
Yes. Yes. Yes. Railway simplifies software deployment. Web apps, servers, and databases run in one place with scaling, monitoring, and security built in. Get on the train. Get on the railway.
Skooks, I had this pulled up. I kept seeing it and laughing at it over the last like 2 minutes. So if I was like cracking up at the wrong time, this was why. Skooks has been using Gemini as a calorie tracking app.
Oh, I didn't even see that. I just thought he just went to Gemini and said 'another beer.' And it's just funny that you see the little thinking thing and it's like thinking about how to process that. That alone was funny.
Just imagining the chat, just 'another beer, another beer, another beer, 15 beers, another beer, another beer.' Yeah. You know, a lot of people are doing dry January. Other side of that, drunk January potentially underrated. Everyone says if you can do dry January, that's the real contest. Yeah. You prove to everyone, 'Oh, I'm not in the pocket of big alcohol. I'm not boosting the alcohol stocks.' But if you can do drunk January, drunk the whole time, hold it together, and then go back to normal life, that's potentially even more willpower potentially. I don't know.
There's, um, so, so, uh, I saw a picture yesterday. Apparently, there's a college, uh, female college basketball player whose last name is Beers. And so on her jersey, it says Beers. It says the number 15 or number and beard. So it's like a jersey that just says 15 beers on the back.
That's great. The, uh, the, the, the, the alcohol economy is suffering. By the way, this is in the journal. Here's to unloved booze stocks. Uh, the 5-year total return through 2025 for the S&P 500 is 96%. If you just bought the S&P 500, you're up, you're up, you doubled your money in five years. Not bad. Uh, everyone else is down in the alcohol industry. AB InBev not doing that bad. They're only down 4% over the last five years, but Heineken down 21%. Uh, Diageo down 38%. Pernod Ricard down 50%. Remy down 75%. Boston Beer, the backbone of Boston, is down 80% over the last 20, after over the last five years. So, the chances are way higher that you celebrated New Year's Eve with an adult beverage. Uh, uh, what? Oh, the, the chances are way higher that you celebrated New Year's Eve with an adult beverage than by smoking a joint, says the, uh, says the Wall Street Journal.
Like, I don't, I don't understand this because I, uh, but the, but the popularity of cannabis along with the effects of drugs like Ozempic and rising awareness of alcohol, uh, health risks have investors in the sector worried. An equal weighted basket of 11 global alcoholic beverage producers has lost a third of its value in the past five years, including dividends. Um, a dollar invested in the S&P 500 nearly doubled. Dry January might be an odd time to think about alcohol's appeal, but it's often a good month to snap up unloved stocks that other investors dumped toward the end of the previous year in a market with few bargains. Booze looks interesting, says the journal. Interesting. Anyway, moving on. Vibe.co, where DTC brands, B2B startups, and AI companies advertise streaming TV, pick channels, target audiences, and measure sales just like on Meta.
Nikita responded to your post yesterday. He said, 'The point of CES is maximalist futurism. It's all concept art to show if things keep going in this direction, this is how the world should work. Once you understand it as a museum exhibit and not in any way commercial products, it becomes more enjoyable.' That's a good take.
Ray showed me. Thanks, Nikita. I liked it. Uh, no, no, this was a very interesting thing and I think we were, he also responded.
Apparently, this is Zoom, a Zoom face station. I don't know what this is actually meant. So, I think if you put this on in a crowded coffee shop, you can talk, hear, and see, and no one can hear or see what you're doing.
I think if you put this on in a coffee shop, you're getting attacked. You look like Not today, baby.
It really does look like you're, it looks like a special forces, uh, you know, uh, like rebreather unit, a scuba diving unit like that. Like that. That'd be tight if you could wear, if, if, if it was a re-, you know, if you could, if you could spend like 20 minutes underwater with something like this.
People are not fans of this. The replies, Tyler says, 'The first X hardware product right there just locked in.' Um, yeah. I mean, I, I think that, uh, looking at, looking at more of like novelty is, is, uh, is fun and, uh, and making it, uh, just a fun showcase of all these interesting things. And, uh, the, the problem is, is that I think people still associate CES with like this stuff's going to work its way into my life and it's going to be, uh, just rough around the edges. Like the smart home, if you really dial it in, it's maybe better than just analog light switches, but for a lot of people, it's worse. We've talked about Sonos a lot. Uh, the app was great and then it just degraded and degraded and degraded. Now, there's a lot of stories about you going to a hotel room and all of the buttons, everything's smart connected and it's just like the lowest quality product and it doesn't have the polish or the network effects because it's from some mid-tier company. And, uh, I think people are a little bit disheartened by that. But, um,
Jason Fried went hard on smart homes. Oh, yeah. He called it the big regression. My folks are in town visiting us for a couple months. We rented them a house nearby. It's new construction. And no one has lived in it yet. It's amped up with state-of-the-art systems, the ones with touchscreens of various sizes, IoT appliances, and interfaces that try too hard. And it's terrible. What a, what a regression. The lights are powered by Control4 and require a demo to understand how to use the switches, understands which ones control what, and to be sure not to hit that one because it'll turn off all the lights in the house when you didn't mean to. Worse, the TV is the latest Samsung, which has a baffling UI just to watch CNN. My parents aren't idiots, but definitely feel like they're missing something obvious. They aren't. TVs have simply gotten worse. You don't turn them on anymore. You boot them up. Uh, the, uh, Miele dishwasher is hidden flush with the counters. That part is fine. But here's what isn't. It wouldn't even operate the first time without connecting it to an app. This meant another call to the house manager to have them install an app they didn't know they needed either. An app to clean some peanut butter off a plate for serious worse. Thermostats. Nest would have been an upgrade, but these other proprietary ones from some other company trying to be Nest-like are baffling. Round touchscreens that take you into a dark labyrinth of options just to be sure it's set to 68. Or is it, or is it 68 now? Or is that what we want it at? But it's at 72. Uh, worse. The alarm system is essentially a 10-inch iPad bolted to the wall that has the weather forecast on it and it's bright. I'm sure there's ways to turn that off, but then the screen would be so barren that it would just be filled with the news instead. Why can't the alarm panel just be an alarm panel? Worse. And the lag, lag everywhere. Everything feels a beat or two behind. Everything lag is the giveaway that the system is working too hard for too little. Uh, and he says, 'Now look, I'm no Luddite, but this experience is close to conversion therapy. Tech can make things better, but I simply can't see it in these cases.' Yeah, I think there's an opportunity to make a like beautiful modern ultra analog system for the home.
Yeah.
Uh, I'm sure, I'm sure some people are working on that, but we've, we've seen this in cars, too. Like a lot of the new, uh, higher-end vehicles that are coming out are actually like analog. Yeah. They're like some buttons, like buttons. Yeah. Yeah. You still want some displays, but a few buttons that you can have more, more memory around, more muscle memory. What do you think of a smart home?
Yeah. I mean, I was just going to say like I feel like it's just a barbell. Like if Apple made your thermostat, it would be good.
And like otherwise, I don't want any screens.
Yeah. Yeah. There really is some benefit either way. It's like very good, but in the middle to just like the power law, the mar-, the monopoly just being able and then just I don't know, like Apple, they, they, they get some things wrong, but they, they have just a brand standard and a level of polish on most things.
Imagine if Sonos made a home security system.
Underrated about Apple. Uh, how many people are complaining about Liquid Glass today?
No, no one's complaining. It's still, I still, it's, it's worse. Nah, it's not worse. The only thing I, I don't like is Safari. I don't like that there. Yeah, that's annoying. That's the only thing I don't like.
Is there no, is there no shortcut for that? Like if you press and hold hard or something like I feel like there's some sort of, you, a lot of these things they, they, they suck on day one but then once you learn the new flow it's actually better. Uh, like I noticed to get into the reader view you can just hard press on this and it goes straight in there which is nice. So there's, there's a few upgrades but you have to learn the flow. And like for the, for the photos app I know we dog on it a lot. It does feel like if you're, it's getting, the search is getting better if you know how to search. If you get really better at it, it will do, it will do what you want. But you have to like lean into the expectations of it. And there's still times when, you know, it doesn't know who, you know, Jocko Willink is in this video. So you still have to scroll down to find that particular video that's saved on your phone. Uh, what were you saying? Is there, is there a way we should look?
So if you like hold it and then it'll open the thing and then you keep holding and then you press then you can kind of get it count. Anyway, Graphite, code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. Uh, the other interesting thing is, uh, does, do AI agents, do vibe-coded products, uh, like wind up making the smart home great again? Andrej Karpathy was talking about this. Did you see this? He went, I believe, to Claude Code and asked it to basically like backdoor its way into his smart home and it went and scanned the network, wrote like custom software and custom API integrations to turn on his lights and do everything that he wanted. So, he was able to sort of make his own dashboard and like smart layer on top of it. I wonder if you can still get rid of the latency because I feel like some of that latency is happening on the server side of the, you know, particular smart home app or, or company. But it was very cool that, uh, to imagine this future where if there is a company that's not moving fast enough to update their app, like the, the, the notorious new United app, if it was really bad, well maybe you can just use, uh, use, you know, an AI agent to interact with it on your behalf and you're never touching it. Uh, George Hotz was talking about, uh, I think he was using Claude Code to order room service in a hotel or something like that and it like went and scanned the hotel menu and placed the order and did everything for him and he was like able to just like command line his entire life which I think is an interesting evolution. Uh, and there's some other posts in here that we can go into but
How quickly do you think they, uh, rename Claude Code?
What, what would they rename it to? Well, uh, DD, he had used it, uh, DDawgz used it to create like an Hermes ad. And he was saying like this is like the worst name because it, it's signaling that it's, uh, people are realizing that you can do a lot of things with it.
Well, I, I mean, the logical thing would be to just bake it into the Claude app, uh, and not have it be called Claude Code anymore. Like, uh, there are lots of problems that people use agents for where it should exist directly in the app. Uh, and, and I mean OpenAI has done this with ChatGPT. Like there is an agent mode in ChatGPT. People just don't, and there's Codex, but Codex can't just be used on your phone because you have to spin up an actual instance and link it to a GitHub and stuff. Uh, but there's no reason. I, I saw some other workflow where someone, uh, set up a remote terminal with Claude Code running and then had a phone, had an app on their phone that could run commands in the terminal and then it would take push notifications and send those back to your phone to tell you, hey, Claude's done with doing whatever, it needs a question, has a question, you need to talk to it and you would jump back in so you could use all of it through your phone and then whatever it builds it creates like a website that you can interact with from your phone so you get the results from your phone and I think, uh, you know, all the companies but especially Anthropic will sort of, uh, roll the Claude Code functionality into something that's more like a consumer product in the Claude app. Uh, it'll probably be a little bit more expensive but could be very cool and I, I, I think it'll be another like interesting moment when, uh, a whole new wave of people who, because over the break we got the second wave of, there's the early adopter developers who have been using Claude Code and agents for a while and they were very happy when 4.5 came out. Then over the holiday break, you got a lot of executives who have access to terminals, um, and can hop on a laptop and do a vibe-coded project. They understood the power. They really enjoyed it. But the phone class has yet to really experience it because if they're not willing to go and open up their laptop and sit down and learn the terminal and make sure that they have a couple things installed, there's still a little bit of a barrier to entry that melts away when you go just, it's in the phone and it's just a button that you activate and then everyone's like, 'Oh, wow.' Like I vibe coded this, this web app on my phone, which is a couple per-, which you should be able to do. Well, Luke, uh, sorry, not Luke. Will Manidis has, uh, an essay, The Decline and Fall of the American Technology Industry.
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Uh, Will says, 'In 2004, if you asked a technology investor where the best software companies in the world were, they'd give you two answers: Boston and San Francisco. This is obviously no longer the case. San Francisco has produced 14 trillion in enterprise value over the last two decades, while Boston has produced a measly hundred billion. If you told the same investor that New York, in all its cocaine and gray pinstripe suit financial glory, would usurp Boston as a regional technology center, they'd think you were nuts. The question of why Boston lost is worth studying. From an inputs perspective, the city should have everything going for it. Two of the best universities in the world are based there. YC was founded there. It is without a doubt one of the most beautiful cities in the country. Mark Zuckerberg went to college there. So did the Stripe founders. So did the Cursor founders. So did the Dropbox founders. So what went wrong?'
'To understand the scale of the collapse, you have to remember that for decades, Boston's Route 128 was the center of the software universe. DEC was the second largest computer company on Earth with 140,000 employees at its peak. Lotus was, was the essential app that brought the enterprise to the PC. BBN built the modern internet. Where did it go wrong? This is a question worth answering, but any attempt to answer it gets you one of two answers. The city died when Zuck tried to make, raise money there and couldn't and had to go west. Uh, what do you mean Boston is dead? We just led the Series F of TurboLogs at 15 million post.'
'Of course, neither of these is a useful story. Figuring out what really happened is not only an existential question for Boston, but for the US technology ecosystem broadly. My answer is simple. Boston is a story of what happens when negative cultural and regulatory feedback loops align. The city as a technology ecosystem was killed by three simple forces. One, a progressive regulatory state that treated business as a coffer to loot for the benefit of property owners. For decade, ma-, uh, for decades, Massachusetts refused to conform to federal QSBS rules. The state finally conformed in 2022. That same year, they passed the millionaire's tax. A founder who sells for 10 million in Massachusetts owes 860,000. The same founder in Austin owes zero. Massachusetts also charges 6.4% sales tax on SaaS revenue. Most states don't tax software at all. A Puritan culture too enmeshed in elite institutions to police itself. Uh, post-2008 activity of Boston-based venture is not building companies. It is extorting founders and running organized crime cabals. The culture that should police this, the endowments, the large LPs, the people who show up to the galas, is too intertwined with the perpetrators and their networks to say anything. This meant a constant trust tax on conduct in the city.'
Uh, Nikita says, I got scammed by a cabal of Boston investors in 2017. Never again.
Uh, three, from an inputs first. Well, also he clarified what this actually means and I think it was structured that when he sold his company, there was like a side deal where after he got paid, he was going to have to pay the investors like personally extra money, which is a very weird structure of a deal. That was kind of how he phrased it, which is, uh, that's wild. Yeah. Not great.
Yeah. Three, an inputs-first view of technological progress. We have the best universities. We've built a ton of lab space, even if 40% of it is now empty. We have the best talent in the world. So why isn't it working? Can we, can't we build another innovation center? Is our soil alone not magic? It is this three-factor explanation seems simplistic and maybe even something you've heard before, it's because it is. It's the very same problem that's facing technology industries across the entire US and I suspect it will be similarly fatal. Technology ecosystems are fundamentally fragile networks that generate trillions in tax yield for their hosts who can't keep themselves from killing the golden goose every few decades. Let's play out what happens when a host rejects the organism. First, talent networks dissipate. Need to hire a VP of engineering who's taken a company from 25 to 500 people. There are 600 to choose from in SF. There are five in Boston and soon those five will leave for SF where they can demand higher comp and better odds of success. On the junior side, new grads no longer stay local. They catch the first flight out every summer. As the network evaporates, the state sinks its teeth in tighter to capture equivalent yield from whoever's left. As the ecosystem dissipates, seed market participants enrich themselves through preferential pricing. Who is flying to Boston to do a seed? Fine, we'll pay up at 10 million. Or shadier tax tactics of extorting founders with off-market and often illegal tactics. See Nikita and other tweets for stories that can legally be told. You see this character even in firms that started in Boston and left. Less Matrix, they're good guys. Um, who maintain a certain organized crime complex even if, even after they... very dramatic. Uh, these are complex flesh and blood problems. They destroy cities, lives, and trillions in taxable enterprise value. All because of short-term thinking on the part of state governments. And the worst part, you can undo them. While I am sympathetic to calls to reclaim Boston as a great technology ecosystem, I would love to move back and not deal with New York. I struggle to see how the remaining ecosystem doesn't enter complete freefall. Uh, Brian Halligan over at HubSpot was saying, 'I'm starting to worry about Massachusetts. One, biotech is way off from a few years ago. Two, only one of the top 50 AI companies are in Massachusetts. Three, the Fed, uh, research funding cuts hitting MIT, Harvard are brutal. The millionaire's tax is working in the short, uh, in the short run. Let me pull this up. But I know a lot of wealthy folks preparing for a Florida move. Five, a glut of empty condos. Six, it's not cool for young folks. Seven, it's very expensive. I honestly don't think the Boston government can do that much as it is as these are kind of macro issues. I give them big credit for working on building more housing and fixing the T which will help.' Uh, so, uh, Will continues, 'You cannot legislate your way out of a collapsing network. You cannot cold start a network already folding in on itself.' And yet San Francisco and the US technology ecosystem as a whole is lining up for the exact same fate. A regulatory state that treats technology as a cash cow, Prop M, the office vacancy tax. A culture too enmeshed in its own elite networks to police itself. AI has attracted dozens of bad actors into the ecosystem. And the same stodginess that made Boston impossible to clean up is setting in. An inputs-first view of progress. We have the best AI labs. We have the most GPUs. Hell, the president even bought us some GPUs. We have the frontier models. So why would anything go wrong? The difference is the stakes. Boston's collapse cost the US a few hundred billion in enterprise value. San Francisco's collapse erases a third of the country's GDP growth over the last decade. But the failure here is not just economic. The failure is existential. Our technology industry has failed to provide a coherent argument for its own existence on the national stage. If this is not solved, 2028 will become a referendum on caging, killing, and looting the technology industry over the water and power lies. The popular image of the AI boom is not uncertain. Recent polling suggests the average American understands AI is a thing that wastes water, skyrockets power costs, and scams their grandparents in exchange for exposing children to deviant sexual content, sports gambling, and all other manner of sin. If the best answer to why we should not imprison technology executives, burn down data centers, and kill the American technology sector is so we can build better chatbots for your sports betting, voters will, uh, vote to do so. In a zero-sum world, voters do not think long term. They envy and they loot. And we do not loot the sewage system or the power grid because we understand they are the bulwarks against chaos. We accept their cost because they hold back chaos.'
'Does the median voter believe the same to be true about technology? Technology is the only mechanism we have for escaping the Malthusian, Malthusian, Malthusian trap. But we, uh, but we have been too cowardly to articulate this because we have substituted rationalism and AGI for a coherent theology of progress. The state sees the industry as only a parasite to be consumed. If we cannot articulate why innovation is a moral imperative, we can expect the entire technology industry to end up like Boston. First taxed, then looted, then exhausted, and we'll be stuck wondering where it all went.'
Major black pill. We need a black pill sound effect.
We need a white pill. That white pill can be Gusto today, the unified platform for payroll, benefits, and HR built to evolve with modern small and medium-sized businesses. Start a company, get on Gusto, build something. Probably not in Boston. Uh, Will worked in Boston. His first job was like 2004 in Boston, right? Something like that.
Um, yeah, so I, I mean, no, some pictures from Boston. He really likes pictures. Obviously, this is written to be dramatic, but I think it is, uh, there's lessons from it. There's lessons, and it's hard not to feel that insane pressure right now in California. Yeah. Sort of just descending on the technology industry. And this goes to, I mean, this goes to what I was talking about over the last couple days, which is, uh, the tech industry broadly needs, needs better narratives, right? We were talking on the way in today. How would Steve Jobs...
Oh, yeah. How would Steve Jobs pitch AI? Like imagine an hour of talking of Steve Jobs on stage talking about the potential of AI, right? He'd be saying you now have a, a free doctor in your pocket. Yeah. That can diagnose, you know, a wide range of conditions, right? He would be painting this like optimistic, empowering, yeah, um, uh, sort of real potential for AI that's already here today. He wouldn't be, uh, you know, you can imagine all the things he wouldn't be, uh, talking about. And, and we don't, I don't think we have a lot of people that want to be seen as the Steve Jobs of AI, and yet it doesn't feel like that character exists today. And you need somebody that is larger than life, that is, that when they talk people want to listen and lean in and, and, uh, and, and believe and, and get excited about some of this technology. And I just, I don't think we have that today at all.
Totally. Uh, we have a Steve Jobs video in the timeline that we should play. Let's watch this because you know what stock options are? Very interesting. Yeah. Yeah. That, no. Okay. Well, real, very quickly, what you could do is if somebody came to work for your company, you could let them buy some stock in the company. The problem is they might have to shell out $100,000 to buy stock in your company. If your company went broke, they'd lose all their life savings or whatever. And, uh, so that doesn't work. So, what you do is you, when somebody comes to work, let's say the stock's trading at $10 a share, you give them the option to buy, uh, you know, a thousand or 10,000 shares at $10, but they don't, they have four years to exercise that option. So, if the stock goes down or stays the same, they never exercise it. They don't have to put up any money. They don't lose anything. But, if it goes to $100 a share, they can easily go out to a bank and borrow the money to buy it at 10 because it's worth 100. In exchange for that privilege of not having to have them put up any money and take any risk, we only dole out their ability to exercise that stock option 25% a year, thereby locking in people really for four years if the stock goes up. It's a pretty standard thing. A lot of people are doing it. Look at this casual before we went public. Um, like imagine over 80% of Apple was owned by the employees. Right now I'd say over 50% of Apple is owned by the employees. There's some larger blocks in there, but still. Yeah. Um, and again, I don't think finance...
When, when you look at the leaders of, when, when people, when normal people that don't work in tech, even if they use AI tools, when they see Elon talk about AI, when they see Sam talk about AI, when they see Dario talk about AI, they just get, like, the, the reaction is almost always terrible. Like if you look at the comment section of any content that isn't in the tech industry, it's just like, f, like there's no, even if they're saying optimistic things, it's not getting through at all.
Yeah, I think, uh, we were, my, my formulation of this was that Steve Jobs cornered the market on earnestness. Yeah, like he, he's very earnest. Like this is a, this is a somewhat technical, uh, tax question about why stock options are used instead of just granting stock directly and he's explaining it in very plain terms. Uh, being very earnest about it. And, uh, when he talked about the role of the computer and stuff, it would be very interesting to hear. I've seen a couple posts that are like, imagine, uh, you know, Steve Jobs today, iPad kids and AI slop and all this stuff, but I think it would still hit. And what I mean by he cornered the market for earnestness is that he, because he was so larger than life and then he passed away. Um, anyone who wanted to play the earnest tech optimist was seen as doing a Steve Jobs impression. Yeah. And that was seen as hack and like lowbrow and not really, everyone was like, why are you doing that? Do something new. Do something different. And so everyone fell into different roles, whether it's a little bit of childish humor or, or, you know, more, more like rationalism or more nuance in how they talk. They don't really paint the same type of picture. Uh, certainly not in the same way and it's left a big hole in tech narrative production. What do you think, Tyler?
Yeah. I mean, I think if you think of like AI as being broadly influenced by like rationalism, like a big part of like rationalist culture, whatever you want to say, is like there's this strong sense of like in-group and out-group, right? So, if you have all the people in the in-group, right? They in some sense like already understand that, uh, AI is going to be great in all these ways. So, the real thing you need to do is you need to convince them that it's bad. Yeah. Um, so it's like you assume that people in the in-group already have this prior that the people, uh, that, you know, the layman, uh, does not have. Yeah. Yeah. Their, their understanding of AI is, is from Terminator. Yeah. Where it's like, oh, this is going to kill me. And then also the leaders are saying totally this is like going to take your job. It's kind of all bad news. Yeah. Yeah. Yeah. It jumps straight to the consequences instead of actually dwelling and spending enough time in the tactile, tactile, like, uh, impact of a technology, uh, like, like Steve Jobs was uniquely good at. He could, he could talk about the, the future and the, and the long-term implications, but, uh, would spend a lot of time just talking about the bicycle for the mind. And he had these great metaphors that really stuck with us for a long time.
Yeah. He'd be saying it's a, he'd be talking about how, how this chatbot in your pocket seems, yeah, simple, but it's a, it will teach you languages. It will, uh, help you become an artist, help you become a musician. Uh, it will diagnose a condition that you have. It will diagnose a condition for somebody that actually can't afford healthcare wherever they are in the world, right? Like these are magical, magical things and yet...
But even if you go and you say those exact words, people will say, 'Oh, he's being too earnest. It's some Steve Jobs impression.' Like it's hard for that to land. I think it just not... Yeah. I don't know. I don't know. Maybe it just never... I think there's space for it. It's going to take, uh, it's going to take a future Hall of Famer. Yeah. Yeah. Maybe. And I don't know. It's also interesting because, uh, I mean, the business of Apple was, was different than today. There was, I mean, it was much less capex intensive so you need less fundraising. Um, so you had to, you didn't have to message to the financial markets as much as you do now. You could just kind of make a widget and if you sold it at a profit the business would continue to grow. Uh, and so with the, the capex dynamic in AI does make it a little bit different because you have to message to everyone that they need to put their money in to actually get this future and then there's the consequences of that.
The Wall Street Journal had an article. Sure. First, let me tell you about Fin.ai, the number one AI agent for customer service. If you want AI to handle your customer support, go to Fin.ai. Uh, the journal had an article at the end of the year, December 29th. PhDs can't find work as Boston's biotech engine sputters. A job in life sciences was once a sure path to a high-paying career in the city, but empty, empty labs and unemployed grads now, uh, herald tougher times. Uh, Jeremy Liu, 31 years old, moved to Boston from New Jersey in 2018 to study for a PhD in chemistry, and he hoped a career in the city's bustling biotech industry. We have a very depressing image here of, uh, Cambridge if we can pull that up. But after earning his, uh, University of Massachusetts Boston degree last year, Liu said he has applied to about 500 local jobs with no luck. Raised in Hong Kong, he said he had also started considering LinkedIn messages, uh, from biotech recruiters, uh, much farther away. The industry is really booming in China and that's what a lot of people have told me that I should consider applying there. Boston's biotech sector, long a vital economic engine for one of America's wealthiest metro areas, is sputtering. A double whammy of cutbacks in venture capital and government funding have taken a toll, leading to layoffs and struggles for job seekers, for workers who thought they would easily launch into a well-paying science career. The downturn has been especially harsh. Liu temporarily signed up for government food assistance. Uh, food assistance, kept a tight budget and later started working part-time for an AI startup so he could continue to afford rent in a Boston suburb. Massachusetts experienced a slight decline in its roughly 65,000 biotech R&D jobs in 2024 after years of mostly strong increases including during the COVID pandemic. Uh, the numbers indicate that job losses continued through at least June while hiring remained sluggish. By the end of September nearly 28% of Boston, uh, Greater Boston's lab space sat empty according to the latest estimates from CBRE. Every stage of the life cycle has been impacted by policy or regulatory uncertainty this year, uh, says, uh, Kenn Kernaghan, chief executive at MassBio, an industry trade group. Uh, the impact has hit startups especially hard. Uh, and so anyways, hopefully they can turn it around, but I think, uh, what Will is saying around, uh, kind of network collapse is very real. If people graduate from your universities and immediately bail, it's hard to, uh, it's hard to stop that.
Yeah. I went to college in Boston and there was like a flourishing tech community because of MIT. Microsoft had a massive, the, the NERD, the New England Research and Development Center, and a bunch of interesting tech and tons of like tech talks. And, uh, the default path was you would meet people at Boston tech fairs and it was easier to get a job in tech in Boston if you went to school in Boston. But, uh, quickly I did get out of there and went to San Francisco, went straight to the Tenderloin, and, and a lot of that was because of the internet, because of Twitter and meeting tech people on Twitter and seeing tech people on, on, uh, on Twitter and just sort of like understanding the networks. I remember interacting with, not Sean Parker, but Sean Parker did an interview with a few VCs and I was able to like go back and forth with them on Twitter just being a reply guy basically in like 201, uh, 2011. Um, I wish I got to experience your reply guy. Reply guy era was strong. Yeah, you know, it was electric when I, when, uh, who was it, the first VC in Facebook or something? Someone, someone liked my post and replied and it was like the best thing ever. I was like, I'm, I'm a kingmaker. You know, I'm goated. I'm goated. Exactly. Uh, but it did, it did, uh, just like illuminate the networks of like what's going on. It gave you a much easier picture of like who the live players are. And even if you couldn't just, you know, ask them for jobs directly, like you could at least be aware. Um, and...
Ben in the chat is, is saying the person that article, in that article actually just has a terrible resume. Look him up. Yeah. Who knows? I mean, plucking one person that's struggling to find... you sort of have to do that in these articles because you don't want to just do the article with the chart and so you have to do the chart, the data point, which is that the employment is declining in Boston R&D jobs. Seven years into his PhD and only published one paper. Time to lock in, brother. Um, let me tell you about Plaid. Hit me. That's a white pill. Powers the apps you use to spend, save, borrow, and invest, securely connecting bank accounts to move money, fight fraud, and improve lending. Now, uh, Brian Halligan is organizing a session with the governor at his home in Boston. So, the governor is, uh, paying attention. Mhm. Uh, well, we have some breaking news. There is a new tab in the ChatGPT app. That's right. Greg Brockman and Fidji, Health, ChatGPT Health is now live. Uh, Fidji gave some amazing stats here with more than 40 million people globally turning to ChatGPT every day for health questions. What does that mean? Does that mean 40 million people are asking health questions every single day or, or...
The founder from Doctronic yesterday said like 20% of all the queries are, are health related. So yeah, the question here is, uh, how, how quickly does ChatGPT Health try to do the other things that Doctronic is doing? Doctronic is actually trying to be an AI doctor. He talked about being, uh, able to, uh, effectively be a doctor, you know, write prescriptions in Utah. Yep. Going to fight to expand that. The question will be from a strategic standpoint how they, they have their own doctors on staff as well. They're operating a telemedicine business and I'm sure they do referrals out. Uh, it's hard to see OpenAI ever employing doctors themselves but they probably would try to build a network around it. Um, so we'll see where this goes but, um, it's going to be an exciting space to watch.
Yeah. Uh, so they say today they're launching ChatGPT Health, a dedicated private space for health conversations where you can easily and securely connect your medical records and wellness apps like Apple Health, Function Health, and Peloton. Um, we have the founder of Function on, right? Um, so you can put all your blood results in there. That feels like a really enduring place. My, one of my big, uh, pushbacks against the, the lab, the Quest lab wrappers is that, uh, they haven't historically been very enduring. So you go and do them and then a few years later the product's sort of degraded and then you're like, oh well, I have six different like amazing web UIs for my health records. But if I'm keep importing them into ChatGPT, I feel like I'll have an account on there for a very long time because it's an enduring company. Uh, makes a ton of sense. Uh, this allows ChatGPT to offer more relevant personalized support like when you're preparing a doctor's, for a doctor's appointment or looking for guidance on a meal plan or exercise routine that fits your needs. That's very cool. ChatGPT Health is another key step towards turning ChatGPT into a personal super assistant that can help support you with information and tools to achieve your goals across any part of your life. We're starting at the very beginning of this journey. Uh, but I'm excited to get these tools into more hands, says Fidji Simo. Uh, you can sign up to request access. Interesting. They're not just rolling it out. Um, and, uh, and, and they talk about their input from physicians and privacy protections. Interesting. Um, yeah. One of my big questions for this year is like, is like, there's always been this, there's always been this, uh, this narrative of like, do, if, if you build a wrapper that depends on the models not getting better, you're going to have a bad time because the models will just get better. So if your thing is, oh, it can't do long context windows or it can't answer in pages and pages and pages, well, the models are going to get better and they're going to do that or they're going to do better math. So don't build the, the math wrapper that's just a little bit better. Um, but if you're building something that's unique and special and off in the side and doesn't really depend on that, maybe you're good for a long time. But obviously, ChatGPT's matured a lot and they are going after certain verticals. And I wonder if we'll see one of the foundation labs go after legal since they're already going after code so effectively like, and people are, that would be interesting.
And they're making money there. So, it's a big pool of opportunities. Yeah. I wonder if people could, they could make, you could, people are using LLMs to do legal work now, but they're just on these standard subscriptions. You can imagine a lot would pay $100 a month for kind of a more robust version.
And, and Sam's talked about this where your conversations with ChatGPT are not, are definitely admissible in court. And so it's like a Google search. It's not like talking to your lawyer. So if you go to ChatGPT and you ask how do I do crime, client privilege, you don't have client privilege but maybe there could be a tab where you sign up for some specific plan and you are getting legal advice effectively and it is attorney-client privilege in some ways. Now I'm sure that's a whole, uh, whole rat's nest of legal, uh, prediction, uh, problems but, uh, maybe they'll figure it out. Who knows? Anyway, 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. Um, very excited to see everything that Shopify does. Very excited to have Ravi Gupta back on the show. Andrew Reed says he may be unc, but he's our unc. Uh, Andrew and I were, were texting the other day and, uh, someone had told him, uh, that a Gen Z person told him that unc meant uncool, and he felt very unc, thought it meant like uncle. I think it's related, isn't it? Uh, it's definitely uncle. I'm pretty sure. But, but you might be, and that's just why you think you're... Yeah. It's the, uh, uh, the, the connotation and the denotation. Like it literally means uncle, but the connotation is that it means uncool. Yeah, it's a clipping of uncle originating in African-American vernacular English. Okay, there you go. It is a, uh, yeah, it's, it's slang. There you go. It's...
Speaking, speaking of slang, Tyler, can you take us through what you've learned about looksmaxxing slang because we're trying to get, uh, this is our 2026 resolution to ascend and so we need to be up to speed on all the terms. What do you have for us?
Yeah. So, I've been getting into looksmaxxing. I've been, uh, I asked some people for some peptide advice. I'm gaining weight, 50 plus pounds.
Obviously, clearly working. Oh, yes. Yes. And I think we have an image of what that might look like. Let's pull it up. Let's pull it up. Double up the, the image of, uh, Tyler. This came from Brandon Garrell. Uh, Tyler's looking very prosperous here in the timeline. You said, 'Are there any peptides for gaining large amounts of weight, 50 plus pounds?' We're like, Tyler's like, 'Yeah, I'm trying to gain 50 lbs of muscle' and then just gains 50 lbs straight to the... That looks like more than 50 lbs. That looks like 100 pounds. Uh, slop. This is, you look elite. You look elite. This is truly art. This is, and the, and the, the grin on your face is so funny. It really translates well. What a beautiful AI image. Anyway, so, so you're not going this direction. You're trying to ascend. What's the plan? Take us through it.
Okay. Yeah. So I mean there's a couple things especially when you're, when you're looksmaxxing. It's a lot about your face, right? So there's a bunch of terms you want to be looking at. Um, so the first one you hear those thrown around, the maxilla, right? Yeah. The maxilla. Where is the max... people have the, you know, they have a recessed maxilla. So the, the maxilla is the, it's kind of the bone that goes around your nose, right? Oh, okay. Nose and bone in your nose, right? So it's kind of this, this area right here and then your upper maxilla is basically the top part here. So when it's recessed, it means you kind of have a flatter face shape almost. Okay. Um, and you don't want that. So you don't want a recessed maxilla. Okay. You don't want a recessed maxilla. And is bone smashing a way out of having a recessed maxilla? Yeah, bones. I mean, you got to be careful with bone smashing because, uh, sometimes you hear about, you know, they, they ruin their nerves, right? They nerve, you get nerve damage. Do you really need the nerves there? Well, yeah. See, like a lot of people personally, I think it's fine. I don't really need them there. Do not lookmaxxing, right? Yes. Um, so, okay. So, next thing you want to look for, um, your infraorbitals. Infraorbitals. Okay. What are these? Your infraorbital is kind of, um, it's like part, it's actually kind of similar to your maxilla but it's basically there's two like kind of points right here below each of your, you know, eyes. Um, and so sometimes these can get slightly inflamed. And these are bones or muscles? Uh, I believe yes, they are. Uh, what even is this actual science that they're, that they, that they've adopted and, and twisted or is it entirely made up? It's like a section of your, of the maxilla. Got it. Got it. Got it. Okay. What else we got? Okay. So, also this is a pretty obvious one. Everyone knows this, but your, your kind of facial, uh, width-to-height ratio. Yes. The midface ratio or just the overall facial difference. Yeah. Midface is, is kind of... Okay. It's like do you have a long face or a wide face? Exactly. Got it. Um, you want to look at your, uh, nasolabial folds. Nasolabial. So, this is on older people, right? You'll see these kind of wrinkles. Oh, yeah. Yeah. Yeah. Yeah.
So, you want to be looking out minimizing those. Generally, if you want to look younger.
You want to look at your bimaxillary protrusions.
Bimaxillary protrusions. Okay.
Yeah. So this one, I actually, I'm not exactly sure what that one is, but it's got to be good. But you got to look out for it. You got to look out for it. Your nose bridge, right? You don't have to be too wide. This is something you can see. And then your interpupillary distance, right? So this is how far...
And that feels like something you can do nothing about.
So actually, a way to make your eyes wider or narrower...
I think there are ways to do it. Glasses, right? Because it changes like how big your eyes look.
Okay. I think actually, in... also potentially with makeup, you could maybe accentuate the IPD.
I only know about IPDs because of VR goggles. Different VR goggles need different IPDs.
Timothy, I got to interrupt you guys to talk about the Universe 25 experiment conducted by ethologist John B. Calhoun between 1968 and 1973. The experiment was the rodent utopia experiment. Calhoun built a paradise for mice where every physical need was met. They had unlimited food and water, so there was no competition for survival. There were no predators. They were completely safe from external threats. They had climate control, so it was a perfect environment for living and reproducing. It was disease-free. The initial mice were chosen for their health. And so despite having space for 3,800 mice, the population peaked at 2,200 and then began a rapid, irreversible decline to extinction. There was a specific group called the beautiful ones.
It was a generation of males born during the peak of overcrowding because the older dominant males had become hyperaggressive. These are the boomers in our society, and the social hierarchy had collapsed. These younger males never learned normal social behavior. So I think we see this with like clavicular and people like that, like defending territory or courting mates. Yeah. They were called the beautiful ones because of their physical appearance, of course, unlike the older alpha males who were covered in scars. Again, these are the boomers, right? They bought their homes for like 20 bucks and, you know, maybe were in the military, etc. The alphas were covered in scars and bitten tails from constant fighting. These males had perfect, healthy fur. You can see Tyler's hair. He's got perfect, healthy fur. Behavior: they withdrew completely from society. So again, you see these streamers, they're just like in their rooms, you know, smashing their face with hammers. They spent their entire lives doing only three things: eating, sleeping, and grooming themselves. Asexuality: they lost all interest in mating or interacting with females. Again, you see these with the looksmaxing guys. They're not looksmaxing seemingly for like women. They're looksmaxing to try to mog other dudes, right? This is talking about Gavin Newsom mogging JD. So anyways, something to think about with this lesson is: become the beautiful ones. Like in the rat colony, you want to be the beautiful one.
I think Tyler's on board.
Absolutely not. You want to be the scarred alpha, you know?
Okay. The scarred alpha, but you want your tail to be bitten.
Yeah. Well, I've always said I want to be whizzed. I want to be old man maxing. I want to look like Warren Buffett because I feel like there's a lot of people that are doing the younger thing, looksmaxing. There's Brian Johnson, obviously. But I feel like if I could become more austere, my words would hold more weight. And I feel like that's actually what's valuable. So I want to look as old as possible. I want to be leathery. I want to be whizzy. I want to be leathery.
Just one more thing. I forgot about this one. They mentioned in the chat, but your canthal tilt, right? So canthal tilt is kind of the angle of your eyes, right? So you want, I think it's called hunter eyes.
Hunter eyes. Okay. Yeah. All this for nothing.
Yeah. All this for nothing. What a crazy time.
Well, we have our first guest of the show joining. I'm sure we'll continue the looksmaxing conversation. While we bring him in, let me tell you about public.com investing for those who take it seriously. Stocks, options, bonds, crypto, treasuries, and more with damn great customer service. We have Vincenzo Landino in the TV Ultra Dome. Welcome to the show. How are you doing?
Thanks for having me. I listen to this conversation and I'm like, do I have the written?
You look fantastic. So you're one of the people that's actually been doing this. You've been looksmaxing for years, clearly.
Oh, of course. Yeah. Yeah. I didn't even know I was doing it, but okay.
I do agree with you though, John. There is something about looking a little older so that people take you seriously because...
But you just graduated high school. You look about like 19, 20. Is that correct?
Uh, yeah, actually I turned 21 yesterday.
Congratulations. That's fantastic. That's fantastic. Yeah, you look very young. Anyway, for those who don't know you, please introduce yourself. We'd love to get the introduction for everyone.
Yeah. I'm Vincenzo Landino. I run Business of Speed. So, a podcast, newsletter, and a consultancy for brands that want to get into motorsport or businesses of speed, actually. So, it's more than just motorsport, but we call it businesses of speed. So, mostly racing.
That's a good brand. I like that. Fantastic. How did you get into this?
You know, it's, uh, to keep it short, I was a motorsport fan for a long time. And Formula 1, years and years ago, like when I started watching it back in the early 90s...
Like right after Drive to Survive happened, you got into it?
Right after Drive to Survive.
Yeah. Yeah. That's when you got into it, I'm sure.
Just, yeah. I just jumped in right then and there. Yeah.
Early, early to the sport. Really?
Real early on. Which actually is really funny because now people that came in maybe two years before...
Yeah. The Drive to Survive boom are considered like...
Old heads in watching motorsports. Yeah, hunks. Exactly.
But, no, back, you know, like I said, 35-ish years ago, there was nobody watching it in the United States. And being of Italian heritage and whatnot, I had a lot of motorsport fans in my family and we used to watch it. We used to go karting. We used to, you know, go to racetracks all the time. As I got older, I saw there was opportunity that not many people are talking about the business side or at least the behind-the-scenes aspect of, in that case, Formula 1. But everyone wanted to talk about how hot the drivers were and, you know, the engineering aspect was another element, or even just handicapping who's going to win, like the actual results of the sport.
Actual results. Yeah. As opposed to the business everywhere.
Yeah. It's everywhere. Exactly. Exactly.
Amazing. What was the first piece of content? What was the first initial go-to-market with building content in the category?
Uh, I don't even really... It was probably Twitter for sure. Um, and I would... I mean, I was just tweeting about different things, you know, deals that were coming through and, um, whenever you could get any information about race fees or whatever, you know, a racetrack was paying to host an event, you're like, 'Okay, this is interesting.' And you start building a following. People thinking like, 'Wow, that's ridiculous. Wow, that's crazy. Had no idea what went into it.' And then just kind of snowballed into what it is now, which has become, still building it, but really an opportunity for me to keep a tab on the business behind it.
Yeah. Can you give us a broad view into the health and state of motorsport, the business of motorsports in America? Because a lot of people in tech are just not that into automotive racing broadly. Maybe they watch F1 here and there. Maybe they go to an event, you know, with some SaaS company that they're involved with. But to maybe zoom out for a second, and then I want to get into a bunch of the subcategories.
I'll say anecdotally, let's just... this is something I heard in Las Vegas just a couple months ago. A tech company in San Francisco CEO wanted... this is literally the conversation I heard... wants to get involved in Formula 1 somehow. Knows nothing about motorsport. Knows nothing about racing. Just knew that it was somewhere where there was attention and he wanted to get his brand in front of it. And so hearing conversations like that happening and partnerships and commercial deals happening just because they think it's cool, again, from someone who's seen the trajectory over decades, not just like a few years. That's fascinating to me. Still fascinating to me that that level of interest is there. But that's not the overall health. I mean, Formula 1 is definitely healthier than most. In the United States, you still have series like NASCAR that dominate, at least in viewership, but there's issues there as well. IndyCar, great racing, but still trying to work out who they want to be. And so there's definitely...
Has the boom in F1 in America actually hurt IndyCar because it feels like some potential overlap, or is it kind of a rising tide lifts all boats?
I think it's actually... so I think there is a level, an aspect of rising tide has raised all boats, but it's also hardened the diehards. Like, the IndyCar diehards, I feel like, have come out more now because they're like, 'We don't want to be run over, taken over by this European thing, this Formula 1,' which is the actual conversations that happen. I mean, it's kind of funny. But so IndyCar has seen it. But what no one has been able to figure out that Formula 1 did was the content aspect. Drive to Survive was one of many, many things that they've done behind the scenes, right? ESPN didn't get enough credit for the growth. You know, everyone said, 'Oh, Netflix, Drive to Survive effect, all of that.' I mean, including myself at one point, I was like, 'Wow, this Netflix thing is really... this is what's causing all of this.' But it wasn't. ESPN did put a lot into it. And so I would say that you have seen a lot of rising tide, but no one's figured out the content aspect. It's for whatever reason... it's like not for whatever reason. I know, you know, we know what the reasons are. Formula 1 is just the attractive... it's the flavor of the day, month, year right now, maybe the next couple years. But it's sexy, right? It's European. So if you want an audience, it's global. Let's not say it's not just European, it's global.
In addition to being a race, in addition to being a reality TV show, in addition to being a dating show, it sort of scratches every itch. So a household can sit down and everyone in the family...
The business... I always appreciated the business side, seeing how the owners were kind of processing being in that...
Understanding that dynamic where you have this like desperation to win. You badly want to win, and then every single decision that you're making throughout a season is like, okay, how much... like, you know, how much do I want... how badly do you want to win? How much do you want to actually spend? How much do you... like, how much are you willing to personally invest? So that happening at the owner level and the athlete level. And at one point it was, you know, it was whoever could just keep spending. Right now we have the salary cap... or not salary cap, the spend cap. And the spend cap has created more competition. You can't spend over 140-ish million. It's going to go up a little bit more, but you can't spend over that amount of money. And so that's caused better competition. Everyone has to kind of get to a point. But at one point in Formula's history, it was just you spend, spend, spend. There were way more teams on the grid, way more drivers. You know, we actually had on our podcast Mark Blundell, who was a driver from the late 80s, early 90s. He drove with Senna and some of the other greats, and he was saying, you know, it was like we had to qualify to qualify. You don't have that now. You've got now... there's going to be 22 drivers on the grid. They all will start come Sunday. That didn't happen, you know, 25 years ago, 30 years ago. It was you had to qualify just to get onto the grid. And there was plenty because there were so many cars that were just like... they would allow anybody that could come up with a car would be on the grid, and it couldn't compete. It wasn't reliable, whatever it was, or they'd be so slow that obviously they wouldn't put them on the grid to qualify. And so all of that has led to the popularity, but also the financial health of it. Look at the valuations.
Yeah. I wanted to get your read on like team valuations because obviously the people that were like just pure enthusiasts in it for the love of the game have benefited to some degree just based on the appreciation and the value of the teams. There's so much more attention. They can build... they can bring in a lot more sponsorship. We were at the Vegas event and just walking around and seeing how the different... Yeah, it felt like being at a tech conference. Every team has a major tech company on it now or...
Yeah, multiple, multiple sometimes. Yeah.
Valuations... but yeah, valuations of teams. George over at CrowdStrike, we work with CrowdStrike, saw, you know, he recently bought into Mercedes in a big way after being a partner for a while. But how do you... do you think that... do you expect valuations to actually trade down at any point? Could we be at somewhat of a local top?
I think at some point it has to max out, right? Like some of the valuations seem almost insane to me. Mercedes, just the team itself, 6 billion is what it's right around. McLaren, 4 and a half. Ferrari is a little bit different. They've got this global brand. They're a little over 6 and a half billion. And even at the bottom of the grid, you're still looking at 2 billion. I remember Zak Brown, CEO of McLaren, had said, and I actually had a conversation with him in Vegas, but he had said 2024, 2023 maybe it was at one point, all of the teams will be valued at a billion dollars. And we all thought that was like, no way. This is like, are you kidding me? And here we are not even a full two years later and every team has a valuation of roughly, you know, 2 billion. Of course there's private equity now investing. You've got some big, you know, bigger players that want to put money into these teams and so valuations just shoot up. I think it has to cap somewhere. I don't know where that cap is. I have said 10 billion. I thought it was like absolute max. But I think even that might be ridiculous. But, you know, I know that if I say that now, then in two years when...
But the average... so the average net new investor, are they really going into this expecting a return, or do they want to be an owner of a Formula 1 team?
They want to be the owner of Formula 1. I mean, it's cool.
You can't put a price on cool. You can't put a price on being in the suite. Like you said, it's a tech conference. It's who's who. It's who can I be seen around. Look at all the celebrities that show up. Look at all the major, you know, tech companies or all the players, all the network. It's a level of networking you can't really put a price on. And that's what you're buying into. You're buying into the opportunity to entertain your clients, entertain your friends, entertain other executives, to be seen as, well, I'm the CEO or I'm the founder, whatever it is. I'm the boss. There's so many levels to it. You know, our friends at Public, who we went to Vegas with, are a multi-year sponsor of Aston Martin, but then the level beyond that is like, yeah, actually, you know, buying into the team and becoming a...
Yeah, I noticed over the holiday, like, the global elite were in St. Barts and they all pulled up their yachts. And when you read the articles of like whose yacht is there and who they are, it'll say the person's name and then like probably half of these people, they're described as like owner of the, you know, Pistons or owner of the Red Sox, owner of some sports team. And you always look them up and it's like they didn't make their money starting that sports team. They started some boring oil and gas company or software company or something. But as soon as you own... it's like writing a book. As soon as you own a sports team, that's what you're known for forever. And like you're just the Dallas Mavericks guy.
So it goes back to you guys were talking about Steve Jobs earlier. We don't have... and how they're right now, we don't have somebody that is like Steve Jobs for AI and to just like snap a finger, tell a story. It's the story, right? And I don't know if that's what you were looking to say at one point, but it's a story. It's an instant story. You go and sponsor Williams, or you go and Atlassian, you go partner up with Williams. Now you're going to be part of their comeback because Williams, the team, is coming back and they are more financially healthy. They've got great investment now. Great team, great leaders in place.
Well, Atlassian is going to be right behind, you know, they are right there. They have a built-in story.
People that didn't know them outside of Australia, which, or maybe even like the U.S., whatever, they'll know globally, instant global recognition, right? You can't buy that anywhere. You know, you can't buy that story, that level of story. There's no price that you can put on that. And so I think that's what we see with Formula 1 specifically.
What is the dynamic of... so Audi's joining the grid this year. How does that work? Is the number of teams going to effectively be fixed forever? Like part of the reasons why NBA and NFL teams are valuable is because you effectively have a monopoly, right? We're not creating more teams. So you don't have new competition and pricing pressure and things like that. How did that dynamic... how do you actually... they're taking over from another team? Like break down that dynamic and will we see more? Could we see a future where there's 30 cars on the grid?
So Sauber was the team that Audi bought to get into. So they took a spot, right? And so for the... I'm trying to think of how many years, but let's say at least the past decade, maybe 15 years, you've had a pretty fixed number of teams on the grid, 10. Cadillac is entering the grid as team 11, and that was a big deal. In the charter from 2022, the dilution fee was 200 or 300 million, and because no one thought...
And that's a fee that goes to all the teams, effectively.
That's a fee that goes to all the teams. It's split up, so everybody gets like 10...
Yeah, 10 million, 10 million.
Which is nothing in... that would have to be updated. And I imagine... and it did, it got updated. And when this was there... so the big issue that came up was when they were looking for team 11, Cadillac came in. It was Andretti that was trying to put in their offer. Michael Andretti, Mario Andretti, his son Michael, and a group was trying to buy in. There was politics behind the scenes that were going on. They had the money. They had all the things together, ducks in a row. Some people don't like them, and so they got kind of pushed out. Now we have Cadillac that entered, but at the time they came to the table with their $300 million dilution fee and they had facilities and all the things that F1 wanted to see. Well, they quickly said, 'Wait a minute, 300 million is not enough money. Like, this is crazy. The sport has completely ballooned in valuations and how much revenue. We need to do something different.' So I think it ended up around 600 million. So double...
Just to enter, just to say...
Now that's not to say that you're done at 600 million. You need to have facilities. You need to invest in people. So you're all in way over a billion dollars.
That's the price just to say like, yeah, we'll entertain you.
So, you know, $600 million. So you're not going to have anybody just come in and say, 'I want a team,' because you need to have...
Is there a hard cap at all in the charter? Obviously, you could update...
The charter says 12 is the max right now.
That's what the chat was saying, too.
