I see a large IPO on the horizon.
You're surrounded by journalists. Hold your position.
Overnight success.
The place 3000.
Double.
Right.
Information. According to clearing order inbound.
Let's just roll.
We are surrounded by journalists. Hold your position. Get up.
Trust the experts here. Five.
We are experts. Founder Mel. Five.
I see multiple journalists on the horizon. Stand by.
UAV online. Blaze. Double blaze. Triple blaze. Double kill. Fight.
Coke is coming, please. Team deathmatch.
We are experts. Triple blades. Let's just roll. Right.
Clearing order inbound.
We are surrounded by journalists. Hold your position. Strike two.
Activate golden retriever mode.
Mark clearing order inbound. Five.
I see more journalists on the horizon. Stand by. Founder.
You're watching TBPN. Today is Thursday, March 19th, 2026. We are live from the TBPN Ultradome, the temple of technology, the fortress of finance, the capital of capital. Let me tell you about Ramp.com. Time is money. Save both. Easy to use corporate cards, bill pay, accounting, and a whole lot more. Don't test me with the soundboard. Don't go soundboard for soundboard with me. You know, I got you.
That's a narrative violation.
Uh, we're having some fun.
We're out of control.
We got a great show for you today, folks. Carl Eschenbach is back at Sequoia. We love to see it. We had the pleasure of chatting with Carl a couple months ago and I've always been a big fan of his, but we'll let him introduce himself. Let's pull up the Linear lineup. Linear, of course, is the system for modern software development. 70% of enterprise workspaces on Linear are using agents and you should be too. We also have Mark Cuban coming on the show. What a fantastic return to form for us because the first time we had him on the show, we discussed and we can talk about Cuban in a second, but of course we have our Lambda Lightning round and Alex Conrad from Upstarts Media is joining as well. Anyway, last time we had Mark Cuban on the show, we were debating ads in LLMs. And since then, we've gotten a bunch of data points about ads in LLMs. And I think that some of his takes have probably aged well, some of our takes have probably aged well, and it will be an interesting time to re-evaluate what's actually happening. There's been a lot more points.
I don't know, John. I said that ads would be fine.
Well, and now the world is ending.
Yes. Now we add. Now we add.
It's not because of the ads though. It's not because of the ads. It is much more complicated than that. But here's a white pill. Samsung is investing $70 billion to advance their fab capacity. They're getting back in the AI chips game. They've always been in the AI chips game. So brief history of Samsung. You probably know them from the phones, from the TVs. They of course are a major player in HBM, high bandwidth memory. They are a massive company, over a quarter million employees. They're close to touching a trillion dollars in USD market cap. They pull in around 200 billion USD a year in revenue, maybe 250 billion this year in revenue. Really good. All that's USD. When you look up Samsung, you get South Korean won, but I like to think in USD because I'm an American. And it's actually kind of complicated to think in foreign currency. They're the global leaders in memory and OLED displays as well. So a lot of the displays that you see in other electronics, even if it has a different brand name, it's still Samsung actually making that OLED display. But they're second in smartphones to the iPhone and Apple and they're second in the semiconductor foundry business to TSMC. Semiconductors still make up 30 to 40% of their business. And they supply HBM to Nvidia for the H100 and Blackwell systems. So, it's not like they're sitting out the AI bull market. They are doing great. They are definitely participating. They're incredibly important in the AI buildout. But if TSMC is bottlenecked and TSMC is sort of risk-off and they're not going to be guiding to insane capex numbers while every American hyperscaler is, well, that creates an opportunity for Samsung. And so Samsung's stepping up and they're announcing that, hey, we're going to put another 70 billion to work on this particular business. So, Tesla has been working with Samsung on the foundry side in AI for a while. So, Samsung's never really been on the frontier with a direct competitor to the H100 or the Blackwell chip. That's been more of like AMD's game and AMD also fabbed at TSMC. So, there hasn't really been this neck-and-neck battle between TSMC and Samsung. But it's like you can do AI inference on a Samsung chip. And we know that because Tesla went to Samsung years ago and said, "We need a chip that can take in pictures from the road, decide where the lines are, and decide..."
They want their chips with the dip.
They want their chips with the dip. And now Samsung does, too. That's all you know. And so the FSD system, if you have a Tesla, you might be familiar with like HW3, hardware 3. That has been deployed into millions of cars and it was fabbed on Samsung's 14 nanometer process which is a lagging node. We're not in the 3 nanometer, the crazy frontier stuff, but it's working and it's on the road and according to a US regulatory probe there were 3.2 million vehicles, Teslas on the road in America with FSD systems that were basically all running Samsung chips inside. And so now to be clear Tesla just like any foundation model lab company they have training and then they also have inference. They're a little bit different than many of the labs that you know and love because they do training in a data center using what's called the Dojo chip and that is fabbed at TSMC. But so they train the system, they take all the data in from every Tesla camera, every road, all the information that they have every time that there's a disengagement that's feedback to the reinforcement learning system that says, "Hey, we were in FSD mode, but then someone grabbed the wheel or someone stepped on the brakes, you made a mistake, understand what happened to get you to that point where you made that mistake." And so all that data gets collected in a Tesla data center, runs on these Dojo chips. They do the training, and then they deploy the model onto the Samsung chips in the actual cars. So if you're driving a Tesla, you have a Samsung chip in there that was trained, and the model was trained on TSMC chips. And so the Dojo D1 is one example of their training chip that was fabbed on 7 nanometer. And it's completely separate from the in-car FSD chip. So with the backdrop of Nvidia's massive GTC news cycle, they've done so much press around GTC and so many different launches, you know that Nvidia is just going to suck a lot of the air out of the semiconductor discussion this week.
Out of the clean room.
Out of the clean room. Yes. Which is recycling all of the air every 3 seconds or something like that. So Samsung dropped this update. It was pretty quiet. We were actually struggling to find it. There was one Wall Street Journal article about it. But it has not SEOed well. Maybe they need to do some more podcasts or something. But they did in fact, I mean Jensen's doing a whole fleet of shows and interviews.
Podcaster says companies should podcast harder.
Yes. Yes. Yes. Yes. The solution to everything is more podcasting. Talking my book here. No, but I think this is particularly important, especially this morning. I guess the CCP put something out in the last 24 hours basically saying, "Hey, Taiwan is going to have an energy crisis due to the broader global energy crisis."
We need to reunify peacefully. There's an opportunity for peaceful reunification.
But peaceful reunification, even if it was completely peaceful and all the Taiwanese people just say, "Hey, we want to be part of China." They all vote for it democratically. That's going to be rough for the American chip buying industry if you're a buyer of chips that are fabbed there. And so having another chip on the board metaphorically to make physical chips is probably a good thing. I was writing yesterday, I'm very excited about Samsung, very excited about Intel, very excited about all of the new fabs. The Gigafab, the Terrafab is the one that Elon's talking about.
Launches in five days. Oh, wait. Five. Did he actually say that?
He said seven days.
Seven days.
Days ago. Wait. Five days. Like the plan launches.
He just said Terrafab launches in seven days.
Okay.
So, I don't know what launches mean.
And Tyler, what's the lead time for an ASML lithography machine?
Yeah. I mean, it's at least like, you know, three, five years. Yeah. Depending. It depends on which tool.
So, the Terrafab will be ready in five and the ASML machine.
ASML. It's alien technology.
It's possible.
Elon's going up and back to space all the time. Maybe he got some of his own.
An extreme ultraviolet lithography machine on the moon, on the back side, on the dark side of the moon. They just had them stacked up there in crates potentially. So yeah, Samsung's been doing well over the last 5 days. Stock's up 11% during a time when the NASDAQ is down 2.2% and geopolitical tensions continue to rise. The compute bottleneck, we know it's important. We've been discussing this constantly and it's going to be very constraining over the next few years. So every increase in capex in the supply chain is a step in the right direction. And so Samsung gets the first gong hit of the...
Congratulations to everyone over at Samsung making a big bet. Who else is making big bets? Cursor is making big bets. Before we talk about Cursor, let me tell you about Phantom Cash. Fund your wallet without exchanges or middlemen and spend with the Phantom card. And let me also tell you about Labelbox. RL environments, voice, robotics, evals, and expert human data. Labelbox is the data factory behind the world's leading AI teams. So...
Cursor is out with Composer 2.
Composer 2.
It is frontier level at coding priced at 50 cents per million input tokens and $2.5 per million output tokens. It's also, they have a fast version. They say we're able to significantly improve the model quality and cost to serve. These quality improvements come from our first continued pre-training run providing a far stronger base to scale our RL.
So it performed quite well on, what is it? Cursor Bench.
Yes.
Which a funny bench but...
Which is well, yeah, yeah, TBPN performs quite well on TBPN Bench too.
Yes. It's a little silly to design the bench and then publish the bench that you score on your own bench. But I mean to be fair like they're putting GPT 5.4 high and medium above them. So it's like they didn't, it's not one of these graphs that's just like, oh look we made some arbitrary X and Y axis and like we're in the top right corner of course because the axes are like good and cool. The TBPN Bench is like technology podcast publish at least three hours of content every week naturally.
Exactly.
Naturally we are...
Right at the top.
Right at the top. Right at the...
And it's actually, there's no one else on there. Yes. But...
But yeah, I mean this seems fair. It is a little bit odd to read this because the cost is on the x-axis and it's inverted. So the further you are to the right, the cheaper you are. Which makes sense because people associate an x and y graph with you want to be in the top right quadrant and they certainly are. And it does seem like in terms of this Pareto frontier, you want to be on the frontier. You want to be pushing out across every single curve. Maybe if you are interested in sparing no expense, you'll go with the GPT 5.4 high or medium model and you can align Cursor to GPT. I'm sort of surprised that Opus is not doing as well on Cursor Bench. That feels surprising based on the general vibes around Opus 4.6 generally, but Cursor has specific needs for specific customers and I don't know, what else do you think is going on here?
Yeah, I mean the cost is really big like this is basically like 10x cheaper than Opus.
Yeah.
So I think also, you know, Cursor has kind of been like not really a dark horse, like everyone knows about it, but in the coding race it's like everyone's like, oh okay, there's Codex versus Claude Code. But like, you know, if you imagine that, you know, Claude Code and Codex are kind of like these environments for getting a ton of like really good data for training coding models, like Cursor has had that for way longer than OpenAI and Anthropic. Yeah.
So you should imagine that like at least, you know, in the near term like they actually have like really really good data that they can train these good models on. And obviously like this is a very specific model. They've said it like you're not going to write poems with this model. It's this very specific kind of almost like point solution model where it's just...
Don't listen to them Tyler. Write a poem with the model. Poem Bench.
Poem Bench. Yeah, I would be interested to know like how many sacrifices were made because it's at a certain point like I remember talking to an AI researcher, actually a semiconductor entrepreneur who was saying that like he actually does believe that importing like the Odyssey and like Homeric epics is key to humanoid robots learning to walk. Yeah. Well, I think like if you look back at just like the general history of like machine learning, AI, like the lesson is that like big general models always beat these small specific models. But if you kind of zoom in on the time scale, like you can still train GLM, some open source model on a very specific task like accounting or something and you can hill climb and you can actually make it better than the frontier models right now...
At that specific thing especially at cost. Especially at cost.
Yeah. Yes. Yeah. Very much so. But like on the long term if you zoom out what actually wins here it seems like it's basically always going to be these big general models. But...
And I wonder if that's true. I mean we talk about this a lot where the big general model outperforms the smaller model. But at the limit like if you were to think about like a Python if statement just like flow control that is truly deterministic like yes if you piped the same question of like the if statement like is this number bigger than this number. You pipe that into 5.4 it's going to get it right all the time. It's going to be very expensive compared to an if statement which takes like no compute whatsoever. Right? But the if statement is 100% accurate like unless there's some bit flipped from cosmic radiation like it is deterministic. And so if you're in a world where the small model that you've built, the classifier that you've built, whatever machine learning pipeline or small model you've built is actually functionally at 100%. Well, then there's this upper bound that even like the bigger smarter model doesn't get you any benefit at all. So you're just purely in cost control mode, I would imagine. But I don't...
Yeah, that's reasonable, but I think...
This is not a great example because coding is more...
Coding. We're not at 100% saturation on just coding. You can't just...
One. I mean, look at the chart like the best performing models are sitting at 65%, 60, 63, 64%. So there's clearly more room to saturate this particular bench. I'm actually super interested to know about what goes into Cursor Bench at this point because I feel like when I see every benchmark it's like 100% now but that's just from the old models.
Legendary poster Sen Kalp says all [__] ts and giggles on that headline till Anthropic or OpenAI decide to cut off their access to Cursor referencing the Bloomberg article Cursor is taking on Anthropic and OpenAI with a new AI coding model. Would that matter like at this point if they have Composer 2 and it's a small model but it's good at writing code and it performs well on Cursor Bench and the Cursor users are satisfied with the Composer 2 model and Cursor does get their access cut off and when you install Cursor you roll it out to your organization you just get Composer 2 and you know what it's maybe there's taste that would pull you...
At this point right now I don't think we have any visibility into like how much of Cursor's revenue right now...
Is tied to using OpenAI and Anthropic models?
Well, I think like in some ways all their cost is all their revenue. It depends on the perception of the user base because the revenue might be well I pay for Cursor like I don't really care what they use under the hood. There's a lot of people, this was Ben Thompson's argument for a long time was that for a lot of people they just show up to chat and they wouldn't care if the model was powered by Gemini because they're just like I just ask it a question and I get an answer and so if you're a Cursor user it's possible that you're in the same boat where you don't really mind what happens under the fold. What else is going here? George says, "I'm hearing tons of complaints from Cursor customers at enterprise companies. A silent change put almost all models Cursor uses behind max mode. Devs who used to manage to spread out monthly credits over a month see all of it used up in one to two days."
Oh, interesting.
Are furious and switching.
It does feel like there's a little bit of an economic war here.
Yeah. And this is what came up, you know, earlier this month around the labs sort of subsidizing.
Yeah.
Well, you know who's...
They're not in an easy position, but they're such a talented team.
Yeah.
Well, you know who's great at Pareto frontier pushing models? Gemini 3.1 Pro. It's here. And it has a more capable baseline. It's great for super complex tasks like visualizing difficult concepts, synthesizing data into a single view, or bringing creative projects to life. And let me also tell you about Graphite, which is owned by Cursor. Correct. Code review for the Age of AI. Graphite helps teams on GitHub ship higher quality software faster.
Nikita says, "We're rolling out summaries for articles now. Just tap the summarize button if you want to know if it's worth your time to read it."
Yes.
And yeah, it's basically Grok, turn this into a regular tweet.
I am excited about the listen button. I've had this, you know, on my commute, there's so many moments where I'm like, I wish I could just have somebody read this article. I actually wound up doing this with a number of Will Manidis' long form essays. I would copy them, put them into 11 Reader from ElevenLabs and have it read it to me in sort of a silly voice. A silly voice. It was a good time.
Well, I was trying, I was actually trying to use Grok in the X app.
Yeah.
To just take an article, paste it into Grok and say, "Hey, can you read this to me?" It said cannot find...
The post.
Like it couldn't kind of...
Get it. It is sort of crazy reflecting on the fact that there is so much software out there that...
You know, we talked about DoorDash, like how can you completely reimagine the experience with agents on the platform and there's so many different things that you can do to sort of rearchitect what your product is if you've built a successful software company. But then there's all these little things where like yes, every product probably does need an LLM that can summarize text and expand it. And that's what Grok does. And also everyone wants text to speech and everyone wants speech to text and everyone wants that, okay, if there's an image, I want you to have a text version so it's searchable. Like I've complained about if I see a funny meme on X and then I want to go search for it later. Impossible. Like there's just no way you could ever do it because that is stored in Twitter's database or X's database as like image number 762542. And someone's comment was just like this changes everything and I'm never going to remember what they said. But now you can run every image through an image model to understand what's actually going on and then potentially service that in search. Now that's going to be a long project to actually implement that. Make it fast, make it cheap, make it affordable, make it fit within the business model of X or whatever social platform is out there. And I mean you can see Instagram struggling through these things right now as search becomes more important and as ranking becomes more important. Meta is already seeing the lift from machine learning applied to ad ranking and whatnot. But this is a response to, you know, every article people would post, people would always say Grok summarize this and now there's just a button. I wonder if this button will be gated by X Premium because I recently learned that you can only ask Grok like at Grok is this true? You can only do that if you're paying for X. And sort of underrated how well X has seemingly, I don't know how big the subscriber base is, but that was a crazy idea to have a paid social network. Dalton Caldwell from formerly YC partner actually launched a competitor to Twitter back like maybe a decade ago that was paywall only and the whole pitch was like better content, more Substack model, no ads and he never really got it to perfect product market fit but it was an interesting idea and...
Yeah, and I think it's because people are deeply addicted to X. Yeah, it is very valuable to them to be on there to participate.
And the paid functionality, the way that it was marketed and the way that it generally worked was like you were going to have a bad time on X. Like if X was valuable to you and you didn't pay the $10 a month, yeah, it was going to be like significantly less valuable to you probably. You know, depending on what kind of business you're running or what you use X for, it might be the equivalent of like losing thousands of dollars a month of value or you could just pay the $10. So, it was a good trade.
Yeah. But...
It was also just, it was weird how the targeting never seemingly got dialed to the point where you could actually target the CEOs of companies who were on X. Like I mean, you see Travis Kalanick on X like replying to things. It's like he's raising money, he's growing a business. Like there's a lot of value in advertising to him because he's going to be picking a corporate card soon or he probably already has or might be in that market. He might be picking a payroll suite. Like there's all these things where if you could deliver that to that audience, it would be incredibly valuable and the CPM should be like through the roof. But I think for privacy reasons and for a variety of other reasons and sort of like that really monetizing that long tail has been very difficult across every platform. So they've just gone with scale and the products that have sold the most on social networks have been very broadly marketed and the criticism that we saw from the Oscars was always like YouTube ads are generic. It's just like for a pillow or like injury or like something that applies to every single person. But there's always this hyper-targeted opportunity there.
Yeah. The other thing is the paid program with X has seemingly worked in that we know a lot of people that happily pay and have no plans to churn.
But it would be a failure in the context of like Meta scale, right? I think the last reported number that I saw was something like they had like one to one and a half million paid subs at $10 a month.
That's...
Oh, on X.
Yeah. So you're talking about somewhere in the range of 100 to 200 million of like ARR.
Yeah.
And if Zuck could launch a product like that, he would just wind it down, right? Reels went from zero to 50 billion of run rate in like a handful of years, right? That's what a home run looks like.
And so I think it makes sense for X, but it certainly is not a home run from a consumer application standpoint. And they still need the overall business.
Yeah. Olivia Moore had some extra context there around monetization via ads versus subscriptions. So Neil Patel who is the founder of NP Digital, a New York Times bestselling author, shared this is how ChatGPT ads...
Guy I think.
Okay. He said the data is only from five businesses but these businesses also run Google and Meta ads. Compared to Meta, ChatGPT's rough lead quality is 256% higher. On the flip side lead quality is 49% lower than Google. I mean that seems like a miracle to be in between two hyperscalers on day one basically. But on the bright side due to ad costs it's substantially cheaper from a CPA perspective than Meta. And this was sort of what we were talking to the good folks over at Ridge about was that at least in the early days like being early to a new ad platform that you can potentially scale on can drive a bunch of new conversions. But Olivia Moore said a big story that most people are missing in the AI race for the consumer ChatGPT versus Claude is ads. Right now most consumer AI revenue is coming from power users who are willing to pay high subscription costs. This currently skews positive for products like Claude, but this will not be the end state. Google makes $460 per user per year in the United States more mostly on ads. I didn't know that their ARPU was so high. Meta makes around $250. I mean I guess those Google ads are really really valuable. And it's so intent driven that it makes sense. I would argue or she would argue that ChatGPT's ad-based ARPUs will be even higher as they will ultimately have deeper, more frequent user engagement. Even at the $460 level, monetizing everyone in the US via ads is 152 billion in annual revenue. By contrast, if you're able to monetize even 5% of the population at $200 a month subscription, which is a stretch, that's only 40 billion. That's actually a crazy difference because $200 a month subscription is super high. Like you're talking 20 times like Netflix or something else that's premium and really important.
Yeah. The $200 subscription at the time was crazy. But even at that point, some of the people that were more kind of just like AI pill generally were like, "Oh, it's actually possible that someday you could spend $20,000 a month."
I was like, "Give me the $20,000 monthly." And it sort of came via API but it was heavily subsidized. So she says I suspect this will be even more drastic outside of the United States where users are even less willing to pay or directly pay for subscriptions and the earliest data from a very small rollout shows ChatGPT ads are already outperforming Meta in effectiveness. This just gets better over time. So interesting the question about Will Manidis and the article summaries should he move to Substack? He's threatening Nikita. He says, "I'm defecting to SBSTCK." He won't even type it out. He says, "They pay more." And Nikita didn't reply. I think people would follow Will over there. I think people would read his articles anywhere potentially. But if you're looking to advertise, why don't you head over to AppLovin? Profitable advertising made easy with Axon. Get access to over 1 billion daily active users and grow your business today. And let me also tell you about Gusto, the unified platform for payroll, benefits and HR built to evolve with modern small and medium-sized businesses. So...
Carl says, "It's time to return to the place where I know I can have the most impact. I'm beyond excited to be rejoining Sequoia as a partner. Here is what I shared with the team on how I am approaching my next chapter." He wants to...
Serve the ecosystem. Fire to win. Let's see what this means. Being a servant leader does not mean I have lost my edge. In fact, the fire in my belly burns brighter than ever. The difference now is that I'm not using that fire to light my own path. I'm using it to light the spark in others so their fire burns brighter. Leading from behind. I have no interest in the view from the front of the room. I will leave that to our great leaders Pat and Alfred. I want to lead from behind. Empowering each of you. Egoless impact, contagious energy, mentor and build great leaders. Always ready to serve. Carl's the man. We will have him on in just 30 minutes so we can wait to cover more of that story.
But first, we got to go to his Allen & Co photo shoot. Dual wielding coffee, jump rope, and a faded Sequoia t-shirt. Andrew Reed says, "Immediate overwhelming response to the VC push-up debacle. Welcome back to Sequoia, an all-time great partner." That's a great photo. He's looking great there. Let me tell you about Plaid. Plaid powers the apps you use to spend, save, borrow, and invest. Securely connecting bank accounts to move money, fight fraud, and improve lending now with AI. This is an interesting story. This is an interesting story.
Apple is way behind in AI and still making a fortune from it. Let's see.
Begs the question, are they actually behind?
AI revenue is set to top 1 billion this year, reassuring investors wary of rivals' sky-high spending. And keep in mind...
We have a chart here showing gross revenue from GenAI apps as well as Apple's commission. So...
Look at this. The beginning of 2025 was really the boom of GenAI app growth. 400 million. Is this monthly app store revenue? Wow. They're really cooking. And then sort of a flatline.
Yeah. It's so interesting that it actually dropped.
Yeah.
Well, we did read that article a few days ago about how Apple has been pushing back against some of the vibe coding apps and there's this question about, you know, where are the bounds? Obviously, Apple's had pretty strict app store rules around adult content and, you know, what else you can do? Even just the app reconstituting itself, pushing changes because they want to review every line of code that goes into the app store. If someone's pushing 10, 20, 30,000 lines of code a day, that's a lot of code for Apple to review, it's going to slow things down. So, that could be a little bit of what we're seeing. Maybe they've capped out on their ability to review all the vibe coded apps that are flooding the app store. But, let's go to the Wall Street Journal and dig into this.
Apple's on pace to surpass 1 billion in AI revenue this year. A tidy sum that demonstrates the company's AI advantage. Even as it struggles to deliver an AI strategy of its own, its Siri chatbot is still weak by modern AI standards. What Apple does have that the other AI players don't is a dominant position making devices. However fancy OpenAI, Google, Anthropic, and xAI make their chatbots, iPhones are still a primary way to deliver them to customers.
That means they typically pay the App Store tax roughly 30% of subscription fees in the first year and 15% a year thereafter, though rates vary. GenAI apps paid Apple nearly $900 million in app store fees in 2025 with almost a billion of revenue and very very little capex. Three-fourths of the revenue Apple rakes in from GenAI apps in its app store come from ChatGPT.
Oh.
Next at about 5% is xAI's Grok. There we go.
I mean there's so many different funnels. They did the essay competition, they did the video competition and I mean I've talked to people that are just still, they're like, you know, like people that are in the Apple ecosystem, they're like in the Tesla ecosystem and so they're like, yeah I talked to Grok on my way to work. I'm not kidding.
Grok in the iPhone app store did 12 million last month. Yeah. And I know like the true AI heads will be like Grok's behind on this benchmark or model or whatever. Tyler, is that a correct characterization?
Yeah, Grok did more revenue. Grok did more revenue last month than Claude in the iPhone app store. But I've started having conversations with, I mean I'm using ChatGPT, but I wanted to get up to speed on Taiwan and just what was the reason for the original civil war and stuff. And so I was just having a conversation back and forth and at no point was I like, oh it really needs to be like GPT 5.4 Pro. It's like these are things that exist just like with one search to Wikipedia or one search to any, it's probably baked into the weights of 3.5. But so if I'm just going to be like chatting with someone who's like reasonably smart, like I would say Grok is there. And so what do you think?
Yeah, but like you could be talking to someone who's really really smart. No, like not if you're asking like basic knowledge retrieval questions that like any model is going to one-shot and just be...
Yeah, but you're describing stuff that you could just actually Google.
Yes, but I can't Google via voice in my car on the drive. And for someone who's driving a Tesla and has a Grok integration right there, they're just like, "Sure." Like this is great.
Okay. Yeah, that's fair.
It's like not like the frontier use case is important. Like that's where the action's happening. That's what's driving the next order of magnitude of growth. But like there are plenty of people who are like Google's search overviews are amazing, you know, and they're like that's my level and like that's good and they're like...
Yeah, but like I don't think those people have actually tried like GPT 5.4 Pro, but I...
It is good but it's slow and truthfully like you can fire off the exact same query to 5.4 Pro and 5.4 Fast and if the query is simple enough the answer will be exactly the same because if I ask 5.4 extended thinking like what is the capital of California and it thinks for 10 minutes and it just tells me Sacramento.
See you there. That's why you need to think a lot of people...
I told you I run my life on GPT-2.
I hallucinate a lot. But...
People have said I have the mind of GPT-2.
It's true. It's true. But so I think for some use cases, you know, a smaller model, something that's a little faster, something that's not absolutely frontier is fine. So I don't know, what do you think?
Okay. So imagine that.
Do you think there's something else 5.4 Pro Spark? So, it's on, you know, Cerebras' chip.
Yes. Yes. Yes.
Would you hit that every single time?
When would you not use it?
I would not use it if I was doing like a deep research report necessarily.
Because I just want extended reasoning for certain things.
No, but I'm saying like you could have that...
Oh. Oh.
Spark, which is like super fast extended reasoning, but it's still super fast because it's on Cerebras chips, right?
If you had that money is no object. Absolutely. Like I'm happy to pour out the glass of water to get the best intelligence possible.
Like I just think that even if you just care about speed, there's still better, I think in my opinion like right now there are better models than usual.
Okay. So walk me through it. Like 5% of app store revenue seems really high. What's driving that?
Yeah. Not everyone is like extremely tapped in to like the current model that came out two days ago. You got to use it. So you agree with me?
I think you agree with me...
About...
About the fact that good enough intelligence is still like a good business to the tune of 5% of app store revenue from GenAI apps.
Yeah, but I'm saying that like you because you know about the stuff you like there's...
I'm not, I told you I'm talking to ChatGPT. Look, don't shame me. I'm not the one. But I'm just saying like I don't even think you should be shaming someone who's talking to... shaming them. I think I'm saying it could be better. Like you could have a much better experience.
Okay. Okay. So, you want to evangelize the frontier. You want to evangelize the frontier. But I mean I'm just wondering like if we did, we need a new Turing test. So we need to have random people come in and they get to talk to 5.4 or you know 4o or something. And can they tell the difference?
And which one do they prefer?
They might.
They might prefer 4o. This is the new New York Times writing test. We should put one of these out and be, can you actually tell the difference? This is interesting because I feel like a lot of people say they can, but they probably unless they're really grinding and they're trying to do something that requires like a really long reasoning chain. It's totally possible that they're just like, yeah, it gave me the right answer. Like it looks good.
That's a narrative violation.
Anyway, let's continue. Apple's revenue from generative AI apps rose from about 35 million in January to a high of 100 million in August.
Do nothing win.
Do nothing win. Create an app store over a decade ago and just keep reaping the rewards. They sowed and now they're reaping. Sales have fallen from their peak partly because ChatGPT downloads have declined according to the data. As a proportion of Apple's total sales, $1 billion is small yet GenAI apps are a growth driver for Apple's services business which investors have focused on in recent years because it has grown faster than device sales and boasts higher profit margins. Apple's dominant share at the top of the smartphone market affords it another luxury. Time to get its own AI strategy right. So, they're making money while they figure everything else out. Apple's AI plan runs counter to strategies of competitors that are spending hundreds of billions of dollars on chips and data centers to build frontier language models. Apple is spending a fraction of that, aiming instead to use all of the personal information people store on their iPhones together with the chips that it designs itself to power an on-device AI strategy. That strategy could prove a winner if, as some AI researchers have suggested, access to user data and strong privacy makes on-device AI the dominant way consumers access the technology. Apple investors want to see progress from Apple's own AI strategies. Such, said Charles Reinhardt, chief investment officer of Johnson Asset Management, an Apple shareholder. Quote, "If they can act as a toll road for providers of AI, then they'll probably end up looking good long term for not having the big capex overhang." Now I have to imagine that Apple is not capturing any revenue from enterprises, developers, Claude...
Of those developers. They're probably not, even if they are winding up using like a ChatGPT subscription in Codex, they're probably setting that new subscription up on desktop.
Toll road on the actual...
Yeah.
But it's a toll road on consumer which is consumer sales. All the more reason to get into ads honestly because Apple does not tax those.
And AI is exciting for Apple because they need a new product that they can just randomly bill you like $2.99.
Yeah. Anytime they need some additional cash...
$2.99.
Like don't you get just random bills from Apple like here and there...
$2.99, like $2.99.
Yeah, like I feel like every time I check my email it's like Apple's charged you like some random amount for some subscription.
No, I do get emails from Apple but it's always like two days after I bought or rented a movie on Apple TV and it...
Just says like you rented this movie and I'm like, yeah, I know, I clicked the button. It's fine. You don't need to email me.
In other news, okay, Rolls-Royce has scrapped plans to go all electric by 2030 as quote, 'Drivers prefer V12 engines.' Would you look at that?
I mean, and this is just a total shock. Total shock. Yeah, total shock. Yeah, drivers totally had to experience, you know, being forced, EVs forced upon them for the last few years to know that they preferred combustion engines after all. Now, of course, I'm kidding. I think a lot of people were just, you know, sort of saying this over and over and over. Manufacturers were not listening.
Everyone said Elon has been saying the Roadster reveal will blow your mind if it has a V12. People are going to be going crazy if he drops a V12. That would be, that would completely break the internet.
Yeah, it'd be incredible. Anyway, let me tell you about public.com. Investing for those that take it seriously. Stocks, options, bonds, crypto, treasuries, and more with great customer service. Let me also tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. Own the data platform that...
Let's talk about this Tesla that you were following yesterday.
Oh, yes. Did you drop this in the chat already? I sent it to you. Oh, no. We shouldn't share the actual picture. But I saw a Tesla that was a very funny mix of it had the anti-Elon club on it, but also an 1199 license plate and it was a Plaid and it just like mixed every possible political ideology.
And it had a vanity plate that was very sci-fi.
So it was mixing like, I do want to go to Mars, but not with Elon.
The license plate basically said, 'Beam me up.' Beam me up. So they want to go to Mars, but not with Elon. They support... They have an incredible amount of disposable income. Baseline law enforcement. They enjoy high trim levels, but they do not agree with Elon's actions.
Well, maybe they work for a rival AI lab or something. And so they are extremely sci-fi pill, but they just don't like, they just feel like they're competing with XI.
California has now spent over $100 million on a new bridge to nowhere.
It is a wildlife bridge which I have driven by hundreds of times. I've been seeing it. I've been experiencing the traffic that it causes. I'm not against the concept of a wildlife bridge. In fact, I think it's fantastic.
It does feel like in a concrete jungle. This is beautiful. Totally. This has a lot of opportunity to actually improve the visual aesthetics of this particular part of the state.
Caleb Hammer says, 'Bro, this state cannot be real.' Isn't Caleb Hammer... It's very real. Isn't Caleb Hammer, he's like a finance... Yeah. He's got like the number one... He's like the one person you'd come to to be like, 'Should I spend $100 million on a bridge?' And he would say like... And it's actually quite a bit more than 100 at this point. And the funny thing is like it's just kind of a bridge, but it doesn't, it's lacking the entrances to the bridge.
I feel like just like even just a little bit of wood to like smooth it out so that it looks like there's at least going to be the start of a ramp to get on the bridge. Like the bridge looks solid. The actual center part looks solid. It doesn't feel that hard to finish this bridge. I'm optimistic that this gets done in the next hundred years. Like tops.
Apparently, Colorado built a wildlife bridge for a low cost of $15 million. Oh, that's not bad. Like functionally something very, very similar. The interesting thing is apparently the bridge is in some part for cougars. Cool. And the wild thing is like on one side of the bridge you have a bunch of like residential homes and on the other side you have a bunch of cougars. And so they're now gonna, the cougars are gonna be able to go hang, basically hang in all the backyards.
So we'll see how this goes. But I'm excited for this to be finished up. It's been as long as I have lived in Southern California, they've been working on this bridge and it's about time.
Well, former partner of TVPN, Fall, a generative AI model hosting service that you know and love, is in talks to raise $300 million to $350 million at an $8 billion valuation. Annualized revenue has hit $400 million, up from $200 million in October. That's the fact.
No, they've executed incredibly, really, really. We're good friends. Insane. So congratulations to them on growth and look forward to having them on after they move past the advanced talks phase.
Yes. Yes. Yes. What is Miles Brundage saying? He says, 'I'm a bit worried that Anthropic is an org-wide case of AI psychosis that makes them think Claude is good enough that they can ship random product features without breaking things, but they in fact do keep breaking things and they're not online enough to notice people complaining.'
I don't, yeah, I don't know about the last part. They seem very online. Yeah. And I don't know too much about the issues, but there is like, if they're truly competing in consumer, like there are like low-hanging fruit like text-to-speech on deep research reports is not a feature that exists yet. Feels very obvious. But it's so interesting being in this dynamic where you know you can ship things so fast and yet there's some obvious product improvements that are just sort of stuck in the queue because there's a lot to do and it's an exciting time.
What else is Anthropic doing? They're hiring for a policy manager who will be in charge of chemical weapons and high-yield explosives. This reads like you're going to be building high-yield explosives, which sounds like an Anduril job posting, but it is in fact for a policy manager who will be hopefully stopping people from...
No, no, no. I think I read this as somebody whose job it is to decide how Claude is used to create chemical weapons and high-yield explosives.
I think it's, I don't know. I think it's probably like this person decides like where's the edge. So if you're asking like, 'Okay, I have a firework and I want to make sure it doesn't go off, like should I, you know, throw it in the trash or put it in the recycling or take it to a special place?' Like, Claude should answer that. But if you go to it and you ask it like, 'How do I build C4 or something like that,' like there's all these like policy edges where if you're talking about Counter-Strike and you say like, 'Let's plant the bomb,' it shouldn't flag that as, okay, you're actually trying to plant a bomb. It's like, you know, you're asking about a video game. We know how to interpret that appropriately. But there needs to be like a human in the loop to decide like where that frontier is and where that particular trigger is.
Anyway, Orf says, 'What terrifies me is if AI were to cure cancer and save 50 million Americans. Imagine the backlash from hardworking scientists who wanted to cure cancer themselves.'
They will be involved for sure. Well, it's interesting that that was, yeah, that was like at least one person's response to the Australia dog story where they were like, 'Yeah, this, we've been able to do this for a while, but like don't do this.' Which was, you know, an interesting response to somebody who, you know, went on a multi-year journey to try to save their dog and seemingly is having some good outcomes.
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PG says, 'Anything made before 2028 is going to be valuable,' and he's quoting an OpenAI employee who he says implicitly discloses their timetable. 'Anything made before 2028 is going to be valuable.' That is such a vague... Someone was hanging out with Paul Graham and was like, 'Let me vague post IRL.' So, I require content. I require content. This is going to be very valuable. I wouldn't give this up.
We are working on something that will be incredibly valuable. One of our team members had a major breakthrough and it could be the blockbuster product of the year. I'm very excited for this. This actually, we were just messing around this morning with an existing product that we had... had a breakthrough. We had a major breakthrough. We, I had nothing to do with it. And when I say that, I mean Ben had a breakthrough that I think will change one of America's pastimes forever.
I think so. Actually, it'll be before and after. I'm actually so confident in this that I'm willing to vague post about it. Get him a patent for sure. Get this young man a patent. I'm on a patent. I have a patent. It's great. Yeah. When you get a patent, you can also like frame it, get a little tombstone. It's very nice regardless of what happens with the business. It's like a good moment in your business career to like have a patent.
Do you have a tombstone for your... I don't, I need to order one. It has been issued, like my name's on it. I'm like the, you know, seventh name on the list or whatever, but I'm technically on it. And so I should get my, you know, plaque or whatever. I'm sure you can just buy them. There's probably something out there.
What did PG give? He gave some more context. He said, 'This was after I mentioned the idea of buying rare old things as a hedge since the one thing AI won't be able to do is go back in time that we know of.' I don't, I mean that's the whole plot of Terminator.
Say you're not just, say you're not AGI. Like just everyone's saying it's going to be like Terminator. It's going to be like Terminator. Well, what happens in Terminator? They invent time travel. And so you're going to be able to go back. You're going to be able to go back.
Yeah. I feel like after we get AGI and we can like build incredible things like those will be really valuable too, right? Yes. Yes. But yes, I mean time is correct that like, you know, images in ChatGPT and V3 and Midjourney like don't decrease the value of the Mona Lisa. Like that's just like obvious and everyone agrees on that. Except you, you're like, I would actually like to go to the Midjourney Louvre. Maybe that's why Banksy sort of intentionally kind of revealed himself.
I don't, I didn't follow that story. Like how did that happen? Because I feel like most people would just... I think somebody just caught him with a... hopefully Scott is watching and can fill in. But I think he was just kind of like caught in the act really.
But maybe he's confident enough. Hey, AGI is coming. AGI's here. My stuff's still going to be worth a lot. Yeah. Even I don't want to be in the shadows anymore. Yeah.
That's very interesting. So anyway, Paul Graham clearly does not believe in the Terminator thesis of the AI future where time travel is possible. Imagine being in the Terminator future and creating the time machine and just being, okay, I'm going to go back in time and paint new paintings that then I can acquire over time and have new Mona Lisas. He's just like, 'No, we sent you back to save the human race.' It's like, 'But I gotta hang out with Leonardo da Vinci. I gotta build my art collection.'
He said, 'I don't put too much weight on the specific year, but the shape of the idea is interesting.' And I agree it is an interesting thing to noodle on.
Similarly, CrowdStrike, interesting idea. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Let me tell you about Turbopuffer as well. Serverless vector and full-text search built from first principles and object storage. Fast, 10x cheaper, and extremely scalable.
Martin Scrowley, what does he say? He's coming on Monday with a great debate. The great peptide debate says good music is the last mile of AI and Lil Wayne has some thoughts on AI music. Let's play this clip.
Let's play this two-minute clip from Lil Wayne on a podcast. Let's see. Here we go.
How you handle AI in this business now? Challenge. The challenge, bro. That's wild. I love it. AI is a better... I love that AI is what it is. Yeah. Cuz man, I love to be able to stand right next to whoever AI is. He, she, they, whatever or whatever AI is standing right next to right now. I'm still better.
So going to keep telling what you do again. Yeah. Ring your list. I do this, I do that. Still better. I love it. I love the challenge of it. The first time I seen it, somebody was there, my friends was a little worried. They was like, 'Man, bro, they got this AI stuff where you couldn't just ask it to give you a verse like Lil Wayne.' And so I did it. I said, 'Let me have a verse like Lil.' And it gave me her best shot.
I did it on a couple devices that, you know, not only a phone, a computer, even for a commercial. I was shooting for the Alexa thing. I want to hear... I have a thing called Proto at home. They got his own little robot thing. Ask her to give me one and they all, you suck. So that's, we going to be okay. I [__] with that guy.
Been seagull. I think he had to start using it cuz he like was losing his voice a little bit. Yeah. Another rapper to mo... basically. That's his take. That's so funny. That's great.
Well, how are designers feeling about AI these days? Samir says, 'Bro, it's so over for designers. Google Stitch is insane.' Google launched a new generative AI design tool where you can sketch something out on a piece of paper, turns it right into an image. And there was a lot of back and forth over how this debate is playing out between Google and Figma.
Hadley Harris's 12 years later, the VC who passed on Figma's seed because Google could kill them is finally feeling seen. Lots of amazing work done, of course, in the interim. Very, very silly. Will be interesting to see how Google pipes this into the other tools. I was on Google.
Apparently this is an engagement bait. Yes. Other people are testing similar prompts and getting much, much, much worse results.
Yeah. I don't know. I was on ai.google.com or just ai.google, not even ai.google.com, google.com looking at all the different Gemini features and it feels like the next challenge is just integrating all these different things. They have like so many great models. Nano Banana, VO3, NotebookLM, Gemini Flow, AI mode, there's so many. And actually piping a workflow from one to another is certainly going to be like the next question. And does this all live in the Google search box? Is it in Google apps or something? Either way, they're certainly investing in AI across the organization.
And Ryan Peterson says whoever named it Gemini at Google really named it in the mythology the immortal twin gives up his immortality to save the life of his mortal twin. It's just like Google giving up 100% of its free cash flow to make sure DeepMind survives. That is not actually the reason for the name Gemini. But do you know the name for why they picked Gemini?
Because they had two internal teams that they brought together. Together. Yeah. The twins. It's a good name. And it's really, they were suffering from a bit of a naming crisis for a while with Bard and Palm and they were definitely shipping a little bit of like, not necessarily shipping the org chart but shipping some of the internal naming schemes that were like abbreviations.
Even like Nano Banana Pro, like the image models used to just be like Gemini 3.1 image, yeah, or whatever. They didn't get 3.1, but there we go. There we go. Like Nano Banana was famously just like the internal name used, right?
Yeah. And sometimes these internal names can really fly in consumer context. Mostly I don't know what it is, but something about like Nano Banana really sticks out. It's so funny. It doesn't sound like an AI product. Like when you have Siri and Alexa and then you have Rufus and Argus or something, Sparky from Walmart. Like doing another human name can actually be a disadvantage because you just get lost in the clutter. But if no one's really using the Nano Banana name, I know Strawberry was used by OpenAI before, but no one had really used that as a public name. It certainly helped them break out.
But Gemini has been an interesting name. It's good. It's good. It balances both. It sounds like a product, but it's just one word. It doesn't anthropomorphize too much, but a little bit. It is reference. There's a lot of deep knowledge there.
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So without further ado, we have our first guests of the show, Pat Grady and Carl Echinbach from Sequoia Capital. In the guys. Carl, Pat, how you guys doing? We're doing great, man. We're doing great. It's great to be with you guys.
Yes. Thank you so much for hopping on the show on this day. Walk us through the decision. How long have you guys been talking about potentially reunifying? What's the thinking? What's the role? Sort of break it all down for us from the moment Carl left Sequoia. Yeah. Come on back. Come on back.
Yeah. No. Well, maybe I'll just start and then my partner Pat here can jump in. And I say my partner because I've been his partner for 10 years. Like I joined almost 10 years ago at Sequoia, which was an incredible journey at that time to join. And then I decided to step away back into an operating role.
You know, after an eight-year total journey at Workday, five years on the board and then back into the operating role. And I remember quite honestly when I left Sequoia three years, three months ago, I said to Pat and the team, you know, I'll be back. You'll have me back because I always had wished, I dreamed and envisioned of coming back here and I thought it would be a great place to end my career and provide impact to the partnership, my partners and companies that we work with.
And you know, when I stepped down at Workday now two months ago, we started talking without exaggeration that day. Yeah. Typical Pat fashion, the news was out and it was within no exaggeration five minutes I started getting texts from Pat Grady, every single partner at Sequoia. Not only did I get him, but my wife started to get him full.
And they were like, 'When is Carl coming back? We want you back.' And I will tell you, it's a blessing to be back and here we are today.
Okay. Walk me through the bull case for becoming or, you know, going back into venture capital in 2026. There, you know, it's maybe a little bit crazy narrative, but there's a narrative around like AI is eating everything. AGI is here. The big labs are dominating. They're going to eat everything. You know, Google's going to beat every company. Now, OpenAI is going to beat every company. Sequoia has investments in the labs. What's the opportunity that you see for new startup formation, new growth rounds? Where do you want to see opportunity either in AI or in software or outside of AI? Like what is your thesis for why it's going to be a rewarding experience to be a venture capitalist now?
Yeah. Well, it's a great question, but let me step back and go back two months ago first. When I sat down at Workday, I did open the aperture up. Sure. And look at everything. Yeah. I looked at everything from going back into an operational role at very large companies, big public companies. I looked at operational roles in private companies.
And some of those private companies are the AI companies that our friends here at Sequoia at the time had invested in and being part of it. And then I also started to think about, well, what would it be like to go back into venture, go back to Sequoia at a time of what I would describe as the most massive technology disruption we've ever seen in the history of mankind.
And to be part of it across many companies as opposed to a company is something that really excited me. Joining some place like Sequoia. And I'm biased when I say this, guys, the greatest venture capital firm on planet Earth ever. Mission-driven, the greatest partners in the world, people that are smart as hell that even I at this age get to learn from every day.
And to be part of something so iconic in the midst of this massive tectonic shift and get to explore across so many different companies as opposed to a company is something that really excited me.
Just in my first two weeks, while I haven't been fully on board yet until today, I met with so many companies for Sequoia, right, and got to experience the vibrancy of what's happening in the AI world. And I just felt like Sequoia is a place that gives me the opportunity to stay engaged, partner with incredible people like my young man here next to me, Pat.
And just be part of a generational shift both as Sequoia inside the building and outside the building when it comes to building tectonic technology companies that will stand the test of time. And I get to be part of it across all different dimensions of this crazy environment we're living in.
I love it. It's amazing. So you talk about this massive technology shift, which you know we can all agree on. Is part of your thesis of coming back and judging from the letter that you sent to the team, it felt like to me like some element of your approach is like, hey, a lot of stuff is changing in terms of technology and markets, but a lot of what you're trying to bring is kind of wisdom around maybe what isn't changing, which is human nature and leadership and how to work with people and how to get the most out of your teammates. Is that like part of your mindset at all in just coming in and helping both portfolio companies and the entire team at Sequoia just level up?
Yeah. No, clearly I think that's a big part of my personal mission going forward. If you read the letter that I sat down and wrote one evening to Pat and Alfred in the partnership, and by the way I wrote that letter after looking at a lot of operating roles and talking to a lot of other venture capitalists and firms. And I kept coming back to myself and saying, why not Sequoia? Why not Sequoia? That was always my grounding point when I was thinking about what to do next.
Fast forward, I wrote that letter because I have a mission in life. A mission in life to give more than I get. A mission in life to not focus on success, but focus on significance and impact to others, including my partners, the partnership and founders.
And now being in the industry for 38 years and having been here for six and spent 32 years in operating roles, I felt like I was uniquely positioned to bring wisdom, to bring advice, to bring coaching, to bring mentorship to younger founders, right, to help them achieve their personal professional goals.
And the Sequoia platform and my incredible partners like Pat and Alfred and Andrew and the rest of the team here give me that opportunity to bring what I'm most interested in, and that is serving others, to the table at a time that while yes, technology is moving at a pace and rate that we've never experienced, there's also a need to help people understand how to build, scale, grow, lead, inspire, motivate others.
And that's something I'm super passionate about. And my incredible partners here at Sequoia said, hey, this is a place for you to do all of that both inside and outside the building. And that's why I'm here and I couldn't be more excited about it, guys.
Nowadays it feels like, and also in the data, companies are growing faster than ever. And you get, you know, what would have been maybe 10 years ago, like five years of company building compressed down into two years. When you're kind of mentoring CEOs or leadership teams, you know, in the portfolio, what advice are you giving them around that new dynamic, which is that hey, you might raise three rounds in a year, you might be adding headcount at a much higher rate than you had to. And meanwhile, again, the technology is shifting at this insane exponential rate as well.
Yeah. So it's a great question and I'd have Pat chime in because they're seeing this, you know, obviously every single day companies are raising a round and one, two, three weeks later they're raising another round and then they're trying to figure out what the hell to do with that capital.
But let me go back and just share with you one of the principles that I've always focused on when it comes to business strategies. And I always have talked about speed as being one of the best business strategies ever. This is long before the current environment we're in. And I say that because I use a, if you will, a sports analogy. If Pat is faster than me, is operating or executing faster than me or running plays faster than me, it's hard to defend. Speed is a business strategy.
And right now, we're in the midst of everything happening very, very quickly. So speed becomes more important. But you can't be sloppy. You can't do things in a wasteful way. You can't just spend unlimited capital because at some point that capital will have to be replenished and now have to come to people like us and others.
So I think there's a dimension of how to leverage speed as a winning business strategy, but also be smart about how to do it and where you're spending those dollars. And I'll let Pat chime in and what they're seeing. I saw it today on some of the calls that Pat was leading across the partnership.
Yeah, I think that's well put. Speed is, you know, one dimension of a vector. The other is direction. I think the other thing that's interesting right now, it's not just how quickly things are happening. It's how dynamic the entire market is. You know, our partner Constantine has this framework that there are some revolutions in computation and some revolutions in communication.
A revolution in computation is about the way information is processed. A revolution in communication is about the way information is distributed. Cloud, mobile, internet, all of those are revolutions in communication. It was about the distribution of technology or of information. This is a revolution in computation. It's about the processing of information.
Like the result of that is that the raw ingredients that you have available to build your product change every day or at least every possibly every month, but they're changing fast, right? And so you can be running like heck in a particular direction. If it turns out that that technology floor shifts underfoot, all of a sudden you got to change direction.
And so I think one of the big sort of things we have learned from the founders who are doing it best, the Daniel Nadlers and Winston Weinbergs of the world, is that talent density matters so, so, so much. It's not about being bigger, it's about being better. It's about having the densest possible talent pool so that when the world shifts, you're not caught flatfooted. You go in the right direction.
Makes sense. It feels like an amazing time to join Sequoia. The technology industry is bigger than ever. Venture capital is bigger than ever. We're in an AI boom. But I'm wondering if you could turn back the clock for me and tell me what the vibe was like when you joined VMware because it feels like a very different time. And what was that like? You know, was that? Yeah. 2002, right? Yeah. Wow. You're taking me way back. Yeah. I joined VMware in 2002.
And when I joined, I think there was a couple hundred people with probably 95% of them being engineers. I think it was a deeply technical company by great, great founders out of Stanford and Diane, you know, the founding CEO, great people. And I remember joining, you know, this young little company, basically no revenue.
And saying, 'Hey, we're going to go change the world.' Like every startup says, 'We're going to change the world.' And I remember Diane Greene saying to me, 'We're going to virtualize these little x86 computers and the entire world's going to run on top of them.' And I remember talking to Diane at the time. You mean like mainframe partitioning? That's where we do... No, we're going to do it on these little toy boxes. And I'm like, well, who's going to... who the hell's going to do that, right?
And then I went home and I thought about it. And then I had to go quite honestly to my wife and say, all right, I just left working for a Bay Area company living in Pennsylvania computing. I committed I wouldn't do that again. I thought about this more and I said to myself, wow, if Diane and this incredible technical team can do what they say they're going to do and turn that slideware into software that virtualizes these servers and allows you to run multiple applications and operating systems simultaneously.
I said to myself, if they can do that, the next thing I said is I can figure out a distribution strategy and I can sell that [__] silly. Yeah. And the journey began there.
The first year or two, no one was buying it. It's like all startups who go through that phase like, wow, you want me to take all of these 10, 20 servers, physical servers separated by physical computers and put them on one? And if that server goes down, then everything goes down. And I'm like, yeah, that's what you should do. Yeah, it didn't go real well at the beginning, but then we'd hit an inflection.
And then once we hit an inflection with this technology at the time that they brought to market was called Votion, which would actually allow you to take a live running virtual machine and move it across physical servers without the application ever going down. So now you had some redundancy and backup.
And when we started to show people that, first they're like, wait, this isn't really working. So we had to unplug cables to show things were actually working. And then it inflected. And quite frankly, one of the greatest, you know, professional journeys of my life being there 14 years, a couple hundred people to 20,000.
And I was so blessed to be there because I got to do so many different roles in the company. I was never CEO. I was always, I guess, number two guy at the time across three great CEOs between Diane, Paul, Mitch, and Pat Gelsinger. And got to be a CFO for a while of a public company. Got to help run product when our CTOs left. It was just an incredible journey.
It gave me a view into a startup and it gave me a view of how to scale companies and it really helped me get a deep understanding of how to build global operations and build them at scale at the enterprise level.
Yeah. And why did you... what made you push through that one to two years where you felt kind of silly even selling the product, just given that there wasn't... it didn't feel like you weren't feeling that pull from the market? Eventually you got the breakthrough with Votion, but what was the signal that made you keep just running down opportunities?
Great question. Very simply, the engineering talent at the time. And if you look at now, the industry is proliferated with incredible talent from VMware. It's everywhere from CEOs to head of sales to head of engineer. It's everywhere.
What gave me the conviction and belief to keep pushing through is whatever that engineering team said the product would do, it would do. And I kept saying, I remember at the time telling people, right, we moved from forecasting numbers or revenue or bookings to forecasting literally our forecast calls was how many proof of concepts have we started because if someone tested it, it worked.
It literally worked and we were having... So the market was like, we don't believe you and you just had to actually convince them to let you show them.
Yeah. Well said. I had passion, I believe, I had conviction and I witnessed the technology working as advertised. A lot of times it doesn't in startups and it takes a while to get there. And I knew it was not if, I knew it was when the market would tip and come our way.
And then when it tipped and it inflected, it took off very quickly. And then we started to see all this competitive pressures come in with open source technologies like KVM, you know, OpenStack, Hyper-V by Microsoft. But we just stayed focused, we stayed convicted about the technology and we proved it time and time again to anyone who tested it. It was an incredible journey and I'm so grateful for that 14, 15 years.
Amazing. Yes. It's such a wild ride. I mean, you've at various points been working at organizations with a hundred people up to 20,000. Do you feel like you have a good calibration on when you're talking to a founder or an executive just asking yourself the question, can you see this person thriving in an organization that's three orders of magnitude bigger?
I don't even know if that's a relevant question anymore for a venture capitalist to be asking, but I'm curious if you feel like there is a set of patterns that you've discovered or a set of skills that are on display from younger, more up-and-coming executives and founders that sets them up for success at massive scale.
Yeah, I think I can identify patterns and I have enough experience for the six years that I was here with Pat and the team learning from them about what to look for in a founder and whether or not they can scale.
One of the things I absolutely look for is self-awareness in founders and are they honest about what they're good at? Because a lot of these founders quite frankly are just incredibly intelligent human beings and sometimes they think they can do everything when in fact they can do everything but not great and they have something they're really good at.
And do they have self-awareness to say, but I need to go get the other people as part of the company to help me scale so I can focus on what I'm really good at? Do they have the ability to know when to turn things over to others is critically important and I've seen that happen time and time again.
And then the other things quite frankly that I personally look for, I'm sure Pat, I heard Pat talk about this this morning. There are attributes and characteristics of people that I look for that are way beyond the intelligence side of the equation. You can't teach grit. You can't teach strive. You can't teach a great attitude. You can't teach determination, right? All of those are things that are innate and part of people.
And you want to see that in these founders. And when you find someone who has that passion, drive, desire, relentless ability to fight through challenges, issues, and opportunities, and then they have the intellectual horsepower on the other side. When that comes together, that's a beautiful thing.
I actually reminded the first time I... I don't know if Carl remembers this. First time I met Carl was 2010 and it was Doug Leone, Fred Luddy, who's the founder of ServiceNow, and I went to visit Carl to get some advice on scaling ServiceNow. And I was probably in my... I was in my late 20s. Carl's in his early 40s, still in his late 20s. Look how young this guy.
And it bothers the hell out of me, guys. How good, how young, how smart, helping run one of the most iconic, you know, partnerships in the world. And here I sit turning 60 this year. Pisses me off every time.
But so I have like pages of copious handwritten notes from this meeting, which I'm sure exists somewhere around here. But the one-liner that stuck in my brain, which is very consistent with what Carl was just saying, was attitude determines altitude and will determines skill. And I always think about that and we kind of morphed that into the expression attitude is the ultimate input.
And I think when you see these founders, I'd also kind of use the Ray Dalio line, you know, pain plus reflection equals progress. When you see these founders who are willing to take a risk and experience the associated pain and then reflect very honestly on what happened and what they can do better next time, progress is inevitable.
And so I'd almost say there's this, and like you have to have the right attitude to put yourself in that position. But if you're willing to take risk and experience a little bit of pain and then if you're willing to be intellectually honest with yourself and self-aware and sort of clinically diagnose what you can do better next time, like those founders are just going to keep cranking.
Yeah, really well said. Introspection. Yeah, taking a side on the introspection gate.
I was going to try and tee something up, but you really delivered. Talk to us about both of your agreements or disagreements maybe. I'm sure you've been debating the future of enterprise software, the future of what's going on, the SaaS apocalypse, public companies, like just the nature of business changing.
What remains true now that hasn't changed and won't change for decades versus what maybe has changed in the last few years and needs an update in terms of how people think about how businesses grow, how businesses flourish when they're working in the technology industry.
Yeah, I'll let Pat and then I'll give you my perspective because I've answered this question about 17 million times in the last three and a half years at Workday and I have a different perspective than probably most.
So you know, it's funny the first thing that comes to mind is a line that I learned from a man named Carl Echinbach. Okay, who was a partner at Sequoia from 2016 to 2022. And the line is people do business with people.
And I think there's a foundation model maximalist point of view that the labs themselves are going to do everything in every nook and cranny of the economy. Yeah. And I just have a hard time imagining that version of the future coming to fruition because people do business with people.
Yeah. And I think that between a job to be done and the raw capabilities of a model, there's a lot that needs to happen to like shape it into the path of least resistance for you to travel down as a user. Yeah. To get to the right answer with the least amount of pain. And there's probably a person in between who's going to do that work. And as a customer, you want to do business with that person.
And so I think people do business with people is going to remain true. The shape that that takes in terms of what the businesses are is probably going to change. I think in the world of software, you know, the first wave on the on-prem to cloud transition was this transitioning of systems of record. You know, the Workdays and Salesforces and ServiceNows of the world.
The second layer on top of that was the systems of engagement. You know, those systems of record might own the core database, but then there are a bunch of different workflow applications that reside on top. I think what we're going to see with this wave of AI software is this third layer on top of those which some people call system of intelligence. I don't want to call it that. It's the layer that does the work.
You know, it's the agents getting deployed that may or may not need those workflows beneath them, but certainly need access to everything that's sitting in that system of record. I think that's what we're going to see. And as a result, I think those system of record companies are relatively safe.
They may not catch a lot of net new workloads because a lot of the net new workloads might go to the AI native companies, but I think they're overall pretty safe. I think some of those workflow based companies in the middle are in trouble because they're neither the system of record nor the agentic capability that's getting deployed. And so they'll have to figure out how to become like that agent harness so to speak for whatever job needs to be done.
And then I think those AI-native companies on top, the basic thing they need to achieve is figure out the context of this organization, figure out the guardrails, come up with some sort of an eval framework, come up with some sort of a value function. Basically wrap all the context around the capabilities of the foundation model to achieve the outcome that the business person wants. And so I think there's a very important job to be done for that new layer of companies. And again, people want to do business with people. Like there's a lot of value in, you know, having somebody you trust take your hand and lead you into the AI future.
Yeah. Yeah. I love it. So first of all, it's the first time I heard someone else ask this question to someone else other than me, and then use you. Actually, it's so funny. I was sitting here thinking I am going to respond, but you're going to hear something very similar from me. Sure. I'll start in kind of reverse order. I do think there is power to use Pat's exact analogy of a system of record, a system of action, a system of engagement, and I will use system of intelligence because I think if you have the bottom three and you can layer on an agentic or agent strategy and you back that up with the data, the context of the data, and you own the business process workflow, you're in a unique position to have a great enterprise AI software company that stands the test of time.
I don't think we're in a world where does AI win or do the incumbent SaaS companies win. I think we're in a world of and. I think some people are the beneficiaries of AI, like a Workday, like a Salesforce, and then others maybe have more headwind because they can be disintermediated because there's AI and you don't need access to all that data. I personally believe all of the challenges with software companies at scale and what's happening in the stock market are completely overblown. I've been saying that repeatedly. They're not going anywhere.
Incumbency is incredibly powerful in the enterprise. Incumbency is even more powerful when a company like Workday, who I was blessed to be there for over three years, has a 98% gross retention rate of 11,000 customers, 65 plus percent of them being Fortune 500 companies. Yeah. Not going anywhere. And the other thing we can't forget is why I say and is because what matters in the enterprise is scale, security, and compliance. And some of these big SaaS companies have that. That all being said, the pace and rate of change that can happen outside of the big incumbents and big SaaS companies who are innovating like crazy, we're innovating at Workday like I've never seen, have an opportunity to start completely fresh, can start from scratch, get to leverage all the technologies and all the models that are out there and build agents and agentic solutions faster than anyone else. And they're going to be able to go in the enterprise and provide value day one either on their own or on top of and through some of these SaaS companies. So I think it's an and opportunity that's going to happen in the enterprise and the market as a whole. There's going to be some winners, there's going to be some losers, but I think the current narrative out there of these SaaS companies being overblown or being in trouble is completely overblown. And obviously I'm biased. I think Workday stands in a very unique position to completely, you know, continue to crush the ERP market both on the HR and finance side, and I couldn't be more bullish on the opportunity ahead. But at the same time, I'm super excited watching these young talented people now that we get to invest in and how quick they can iterate leveraging AI and just completely disrupt markets, legacy markets that don't have all of the data, don't have the context, and don't have the workflows.
What advice would you give to a Fortune 500 CEO that maybe is an incumbent that's thinking about buying versus building these agentic products? I tell them to do both. I think if you have all the data and you have the context of the data and you can build a great engineering team, right, that comes with an AI background, build as much of it as you can at the same time. Go do acquires. Go buy technology companies that are completely AI-native from the beginning and bring them into your organization. I wouldn't say do one or the other. It's both. You know, at Workday in the last six months I was there, we bought four AI companies and they become part of the core fabric of the company that Neil and Garrett and the leadership team there get to take advantage of. At the same time, they bring in their talent on their own as they build out their organization. So I don't think you say it's one or the other. You have to do both.
I think it's also one of these classic questions of what do you want your best people focused on? You know, do you want your best people building the same sort of stuff you can get out of the box from somebody else who spends all day long thinking about that thing, or do you want your best people creating competitive advantage for your company? Like I think if you're a Fortune 500 company right now, kind of a no-brainer to go with Harvey for everything related to legal. Kind of a no-brainer to go with Sierra for everything related to customer support. You know, you should probably try something like Expo to work on pen testing. Like these are excellent companies with excellent people who spend all day obsessing over a particular problem. Why take your best engineers and ask them to go do that? Go do something that's going to be unique to you.
Okay, last question. Pat, by the way, Pat makes a great point. Having spent a lot of time with CEOs of Fortune 500s around the world, there's this whole narrative: we're going to do it ourselves. We're going to build our own agents, and they will do some of that. But why? If you can go to a Harvey, right, get what they've already built and leverage it and very quickly get a return on that investment. So there's a time cost to value equation here for the enterprise. Go with that solution and let them go focus on financials or insurance or retail or whatever CPG. You know, let them focus on what their core business is. Why build that technology if someone could do it much faster outside the company? Okay, last question for Carl. A few years ago, you were spotted at the Allen and Company conference sporting two coffee cups. You have an incredible amount of energy. Are you a two-coffee-in-the-morning guy, or were you bringing an extra coffee for a friend?
Well, the answer, I hate to use the term again, but both. Okay. I was bringing coffee. I was bringing a coffee back to the room for my amazing wife of 35 years, Hannah. And yeah, and I used to drink probably 8 to 10 to 12 cups of coffee a day. There we go. Wow. That's all I have all day. That's amazing. And that's all I have all day until I get to dinner. When I eat dinner, it's my one meal a day. That's fantastic. Wow. Incredible amount of energy. Well, it's clearly working. Thank you so much for taking the time to come chat with us. It's so good to see you guys both back together. Yes. No, thank you. And I just want to say, listen, I just want to thank Pat. Yeah. I want to thank Alfred. I want to thank the entire partnership here at Sequoia for allowing me to join them and serve alongside them. Yeah. Our partners, our customers. Yeah. Our companies we're investing in, our founders. It's a true honor to be back. I'm super excited about the journey ahead, and I think, you know, Sequoia is uniquely positioned to continue to be one of the most iconic mission-oriented venture firms of all time, and I'm proud to be back part of it. Yeah, we're excited for you. Thank you so much. Incredible stuff. We will talk to you soon. See you guys. Have a good rest of your day. Goodbye.
Let me tell you about 10 to 12 coffees a day. That's incredible. They're the makers of Devin, the AI software engineer. Crush your backlog with your personal AI engineering team. And let me also tell you about Fin, the number one AI agent for customer service. If you want AI to handle your customer support, go to finn.ai. And without further ado, we've been running along, but we will bring in Jim Cantrell from the Phantom Space Corporation. Sorry to keep you waiting, Jim. Thank you so much for taking the time to join the show. How are you doing? Please, you have a fascinating background. Give us a little bit of your background leading up to this company, and then I want to talk about how you're thinking about the business and also just the orbital economy more broadly.
Yeah. So I've been in the automotive and aerospace industries for north of 35 years and had positions everywhere from the French space agency to early SpaceX. I was the guy that took Elon to Russia to buy Russian missiles. And when that didn't work, we started SpaceX. And after that, I'm on my 12th space or automotive startup. And Phantom Space is the last one of them. But several of them have gone public since then. And, you know, Phantom Space was sort of the ultimate of all these startups that are looking to solve the problem that really needs to be done. Yeah. That story of going to Russia to try and buy the ICBM has been told and written about in books, but what does the current narrative get wrong? What's your side of the story? What were expectations like going into that meeting? Was it seen as a long shot at the time, or did you think that it was likely to work?
Yeah. No, it was a complete long shot. You know, when Elon called me, he had just left PayPal and had this idea of, you know, trying to inspire humanity to become multiplanetary, he still talks about, and he wanted to do what amounted to a stunt to, you know, show that we could send creatures to Mars. That turned into something that we put together, which was a growth chamber to land on Mars on a lander, and we needed Russian rockets to buy it. So by the time we got done dealing with the Russians, they didn't want to sell it to us. They were just being Russians. And Elon announced to all of us in a sort of shocked way, we heard that he wanted to start the company SpaceX and build the rocket ourselves. So I will tell you that very few people gave us a snowball's chance in hell to make that happen. Now we can see 25 years later where that ended up. But, you know, everybody bet against Elon and the rest of us. And, you know, what the story's gotten wrong and what it gets right. What it gets right was, you know, this determination of this guy who knew nothing about rockets who decided to learn everything he could, and he got a bunch of space cowboys around him, and most of us were sort of revolutionaries in thought at least and wanted to stick it to the system and do something that everybody said we couldn't do. What the story got wrong, sometimes people write and say I was never part of it. I don't know why that got written in, but I was definitely an employee and had founder stock and the whole nine yards. So, here I am.
There you go. What's the modern version of the long shot in space? We've heard about colonies on the moon, colonies on Mars, space data centers. What do you think is the most practical problem right now in space that people are maybe undercounting? So, I think there's three tracks that it's going down. One is, you know, the military use of space, which we see ongoing today, right, wake up and read the news every morning. The second one is planetary settlement, which is what SpaceX is trying to accomplish, and everything that Elon does, I believe, is aimed at that planetary settlement goal. And then the third is kind of more recent, even though I've been thinking about it for almost a decade, is putting compute in space. So now AI is the killer app that enables this, much like the internet came along and was the killer app that enabled Starlink. So I think what we'll see is the next generation of AI in space, these so-called space data centers, but not in the way that the common narrative is going to portray it.
Okay. How will it be different? I mean, Jensen Huang at GTC earlier this week was standing on stage saying that, you know, he will be providing chips. Elon has given some outlines around what that might look like. We've talked to StarCloud, a startup that's planning to put data centers in space. There's a whole bunch of other people that are approaching this problem, but how do you think people are getting it wrong and how do you think you fit in? Yeah. So, you know, Nvidia, to just address that, has nailed the silicon, right? So they're going to be the winners on that, I believe. I think so. Among others, right? But they're going to be one of the primary winners, and thank you for doing that, Nvidia. Number two is there's going to be a camp that I think is mostly hype that says we're going to put, you know, these large language model hyperscalers into orbit. If I'm generous, that's maybe 20 years out, right? And it's like flying a big factory on a huge rocket that doesn't exist there. So everything that's going to happen in the future is going to be distributed data centers on a much smaller scale. Everything's more expensive, right? So we're at least 10 times, maybe a hundred times more expensive to do something in space today. So the really killer app I see is to put AI inference in orbit close to where the data tsunami is being generated, and today it's a tsunami and tomorrow it's going to be a mega tsunami. And what the problem is is being able to get that data back. So there's this funnel that restricts how much of that can get back. So AI is a natural way to reduce that data load and get it back to the earth. Maybe later we'll solve the issues with, you know, with the earth power and heating. But, you know, Phantom, you know, we've been at it for 10 years, one form or another, writing patents, writing about it, speaking about it. It's nothing new for us, and we're putting together micro data centers to address exactly this, along with data backhaul from the satellites to really exploit what we think is the next killer app there and create a space app store environment and ecosystem for others to implement their creativity on.
So where do you think in the supply chain or the rest of the orbital economy there is enough maturity that you will never really need to build? I imagine you're not going to build a new rocket. But are you planning to do connectivity through Starlink? Like where will the partnerships happen? And then where will your core value prop live within the supply chain? Yeah, it's a great question because this is exactly where I think all the differences between the approaches become evident. So it's my belief that in order to be successful in this, you really have to vertically integrate, much the way we did in the early days of SpaceX. We saw that building the rocket and building their satellites and then implementing, in their case, Starlink and now, you know, their version of xAI in orbit. You really have to have that, and, you know, SpaceX is going to dominate a lot in that. Phantom Space, we have exactly the same playbook. So those who don't have that vertical integration are always going to be at the risk of what amounts to a very scarce launch supply. Even today, you know, there is a perception that there's more launch than we need. And it's not true at all. It's very scarce. You know, Phantom, we're building something we call the Daytona, which is quite a bit smaller than anything SpaceX builds. So we're more the taxi, they're more the, you know, the freight liner. And so, you know, we find a real market for that. People are buying our things. And there aren't that many people that can actually build launch vehicles that work. It's a really tough business and it takes 5 to 10 years. So that's going to always be scarce. The rest of it is really a matter of supply chain control. So the, you know, the silicon, Nvidia, you know, all the rest of the satellite parts, suppliers, but, you know, you have to have somebody put it all together, operate it, and manage it. So we think of ourselves as building the railroad to space and then ultimately a space app store on top of it so that people can build their own code.
Yeah. Talk about some of the trade-offs of the launch vehicle decisions. Are you thinking about reusability? Is that less of a factor at this scale? How frequently do you want to be launching? Like I imagine taxis, they go everywhere. They launch from everywhere. Like how else, like play out the taxi analogy for me a little bit more. Well, so launch is like the critical cost of getting any data system into orbit, period. And so, you know, it's incumbent on companies to control that cost. And if you can build it internally, if you can gather the capital and the talent to do it, you're in better shape. So there's a trade on getting that cost down between building them super large like Starship and reusability and then mass production. So mass production, like the car you drive, probably cost $100 million and you maybe paid $100,000 for it, and there's a huge cost reduction through the sheer number. So at Phantom, we're going to apply both reusability and the mass manufacturing because we're smaller, we can do that, whereas Starship, as an example, won't necessarily be mass manufactured but probably mass used. So reusability is a core thing more for the logistics of these things. And then the other side of it, here's the other choke point in the business is launch sites. We are really out of range capacity, launch range capacity in the United States. And we will be, I think, at that limit within 5 years. And so companies that control that range capacity are going to be in a position to control, you know, the railroads or the shipping lanes as it were.
Interesting. So are you looking at who's working? What's the process to create more capacity? So it's very complicated. It's very bureaucratic and it's very political. So we have five different launch ranges in the United States. Yeah, exactly. Just what music to my ears. Yeah. Right. So most of them are all federal ranges that we built during the Cold War. And there's one in California, one in Florida. We know at least about the one in Florida very, very nicely, Cape Canaveral. And so there are so many pads you can put on there. Most of what we're using today is legacy from what was built in the Cold War. And we're grandfathered into the bureaucratic process that approved those pads. So any new ranges, you're going to run into huge opposition. There have been people who tried to build new ranges on the coasts of this country, and everybody not in my backyard comes out of their home to oppose it, right? And even in California at Vandenberg. Yeah. You know, SpaceX recently got into a lawsuit. We had about half their capacity, which was governed ultimately by the Coastal Commission in California, and, you know, SpaceX had to sue and they got a little bit more capacity, but that's what we're heading into. So that's why you see these launch ranges around the world coming into play, and the problem for US companies is we're restricted from taking our launch vehicles to these foreign countries without government approval.
Yeah. Yeah. It's so tricky because I can imagine living next to, you know, a launch pad, and the first time the rocket goes up, you're like, wow, that was amazing. And then if it's like, we're going to be launching those every 20 minutes, you're like, my windows are shaking a lot. I actually would like the novelty wears off pretty quickly. So yeah, and so yes, obviously as a country we need to figure out where these go that are not disruptive and are scalable and are tied to the supply chain, maybe actually near railroad. Who knows? A physical railroad. Give us any predictions around the moon economy. I was going to say moon over the next decade. Yes. Yeah. I have to say I'm surprised by the SpaceX pivot to the moon. Okay. It's been something, you know, since I was first in this business that a lot of us saw as a logical pivot, and there was almost like a religion between do we go to the moon first? Do we go to Mars? So you thought it was logical like 20 years ago, right? Yeah. And so you're surprised at how late the pivot happened. Yeah. It doesn't really matter, honestly, in terms of their technical capability. It's more incremental in terms of the development of the technology, which is probably why they did it. I really don't know why they did it. It could be a business decision. There's certainly, I think, a more near-term economy there. I think of Mars, you know, as being so far away eventually that economy will have to form on its own, kind of like this new world where we all sit formed as an independent economy from Europe 500 years ago, it began forming, and Mars someday will have its own manufacturing bases, and, you know, you might have products labeled made on Mars, right? But that's a longer-term thing, and that's really where Elon's mind always was, you know, from the early days that I was with him, that it was all about Mars. And to me, the moon's just a stepping stone on that way. And I think there's a lot of people who see that as a, you know, sort of effectively a theological choice, where it's really not. It's just a technical issue.
Mhm. Economic opportunities on the moon. Yeah. That you think are interesting. We've heard about regolith and maybe like a mass driver, but there's so many opportunities obviously besides tourism. The most obvious one is helium-3. So this is pushed out by the sun. There's something like 18 kg of it in the United States, and it's a strategic resource. It's a byproduct of nuclear weapons manufacturing. Now, what are you going to use it for? Well, you can use it for a couple of things. Clean fusion energy. It's one of the few fuels that doesn't create radioactivity as a byproduct. So that's obviously desirable, right? The second part is for quantum computing, which a lot of these have to be near zero. So this is one of the few substances that you can cool to near zero temperature, and the other is an absolute zero in temperature. So there's a huge demand on that. Now, once you start mining it, does that price collapse? Probably to some degree. The second one that I see is this mineral, this rare earth mineral kinds of deposits. And we honestly don't know enough about what's up there. We have a pretty good idea from the Apollo missions, but there's probably a lot of rare earth deposits. My guess, and I'm no geologist, but I would guess there's probably some rare earth minerals that, you know, mining from the moon, which would be more palatable than tearing up our beautiful Earth would be, as long as we can solve the transportation problem. It all comes back to the rocket, by the way.
Yeah, makes a lot of sense. Well, thank you so much for taking the time. Yeah, great. Congratulations. And we'd love to talk to you soon. Yeah, come back soon. Have a good rest of your day, Jim. Let me tell you about Cisco. Critical infrastructure for the AI era. Unlock seamless real-time experiences and new value with Cisco. And let me also tell you about Console. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. And without further ado, let's bring in Tom Hume from GV. Tom, how you doing? What's going on? Hey guys, can we hear you for a second? Can you hear us? You're back. You're back. Where are you calling in from? Can you hear us? No. Yes. No. Check. It's okay. Check. Can you hear this? I'm going to tell you about Sentry. Sentry shows developers what's broken and it helps them fix it fast. That's why 150,000 organizations use it to keep their apps working. Could you hear that? Because I can also potentially tell you about the New York Stock Exchange. Because if you want to raise capital, Tom, you got to do it at the New York Stock Exchange. I'm sure a lot of your companies are aiming for IPO. Let's get them live on the exchange. We'll get Tom back as soon as he's ready.
There is some breaking news that we do got to talk about, which is that Jeff Bezos more fired up than a personalized ad. Okay, breaking news.
Jeff Bezos in talks to raise a hundred billion for AI manufacturing fund. The Amazon founder has traveled to the Middle East and Singapore in a fundraising effort linked to Project Prometheus.
That is incredible. We have the red lights breaking news. Advanced talks. I don't care if it's just advanced talks. I'm hitting the relations to Jeff Bezos.
He's meeting with some of the world's largest asset managers to raise funds for the project. A few months ago, he traveled to the Middle East to discuss the new fund with sovereign wealth representatives. More recently, he went to Singapore to raise funding for the effort as well.
Uh, he's, it's being described as a manufacturing transformation vehicle.
I... going up against TK, right? I mean, TK is not as directly focused on manufacturing like this, something as...
Vehicle, right?
No, no, he's saying manufacturing transport, like it's a vehicle, a fund for transforming manufacturing.
Yeah, yeah, yeah, it's like an investing vehicle.
It's aiming to buy companies in major industrial sectors such as chip, aerospace. Let's try again with Tom. Get out of here, Tyler. It's Tom time.
Here we go. Hey Tom, can you hear us?
No, we don't have audio. We don't have audio.
Okay. Okay, guys. Try it out. Nothing.
Okay. We, we, you can hear us. We can't hear you, but we can tell you about this post that we enjoyed from La. Got my horse to water. Now for the easy part. I'm going to continue. Uh, the fund is aiming to buy major industrial sectors laughing about that.
Such as chip, defense, and aerospace. It would dwarf the size of some of the world's largest bio funds and rival SoftBank's hundred billion dollar fund. I got to wonder how much, how much do you think, uh, how much do you think Jeff is pitching in himself? I could see him, you know, anchoring. He's like, I'm good. I'm good for 30, you know, something in that range.
Yeah. Uh... Yeah, he's, he's got some fun stuff.
But this is such a white pill.
Yeah. Why? I mean, the whole, this is like, you know, we, we need to manu-, we need to manufact-, you know, basically we need to re-industrialize America. We're not going to do it by just copying everything from the past. There's some element of transformation that needs to happen as well as new efforts.
And uh, this is, uh, this is tremendous news.
Yeah, and I mean, there has been like a venture capital boom in re-industrialization, but most of the funds that we talked to that are in that category are 50 million, couple hundred million, certainly nothing at this scale. And this has got to be, uh, incredible news for, uh, the, the founders that we talked to that are part of the re-industrialization effort because they, they, they have a new potential investor.
Uh, did you see that OpenAI has acquired Astral, who will be joining the Codex team? So finally, OpenAI has Astral Codex, which of course is a great play on Astral Codex 10, the, uh, the blog, which has some fantastic articles. Let me tell you about Octa. Octa helps you assign every AI agent a trusted identity. So you get the power of AI without the risk. Secure every agent, secure any agent.
Uh, will OpenAI increase the cost of ChatGPT? This is a Kalshi market out there. It's at a 46% chance if either ChatGPT Pro or Plus have a price increase after January 2nd, 2026 and before January 1st, 2027, so in the...
Based on the current pricing of $20 a month and $200 a month.
What do you think? I, I feel like, I, I, this isn't financial advice, but I feel like they're not going to move the price points because they're focused on so many other things.
Yeah. The only, the only thing is I could imagine an, an additional plan on top of it. Yeah, but that would be an incremental plan. Max is right there. We got Pro, we got Plus, we got Pro. Sign me up for the Max plan. Uh, and I think they also have a Light plan and, and I, I would imagine go. Yeah. So, I would imagine that there's more tiers within there. At the same time,
Give Tyler the goat.
Ripping the band-aid off of price adjustments is extremely painful. And the, probably the earlier you do it, the better. Like Netflix. Yeah. Yeah. Like Netflix has been increasing prices and when they're at $9.99 a month or something, it's very normal and then when you go up it's start everyone, oh, you raise the price, but you just raise it every couple months. Anyway, we're good.
Third time.
Third time's the charm. How you doing?
