You're watching TBPN, and today is Monday, September 28th, 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. Let's check in on the road to Christmas. How many days we got? I think it's 87 days until Christmas. 87 days until Christmas.
And you can feel it in your bones. You can. You can.
You can. You can. Well, thank you for tuning in to TBPN today. We have a great show. We have a bunch of great guests coming on. It's been too long.
Get down. It has been too long. Just a couple more sleeps, but good to have everyone here with us in the chat.
Anyway, the most viral video I saw over the weekend was the parody of Dario Amodei on SNL. That felt like it really took over the timeline. Martin Casado said honestly downplayed how ridiculous the rhetoric and broader situation is. It was a funny clip. There were a bunch of interesting nuances. I mean, first, it's like, okay, clearly the AI rhetoric and the public discourse is getting to like a new height to the point where a lab leader of a private company can even be parodied on SNL because the audience understands who that is. So it's interesting to see that, like, okay, yes, Dario's done enough on Oprah and CNN and NBC and ABC and all the major news networks to be relevant to the broader audience. Yeah. And because it only really works, like, you can't, like, they could never parody... There's a lot of people in tech that we know that wouldn't work as, you know, SNL punching bags, but he's made it. He's made it.
It says a lot that the, like, the sweater vest thing is iconic enough to be, like, a part of a character.
I wonder if he'll stick with that or switch it up. Because it's not his leather jacket yet. It's not his Hawaiian T-shirt yet, but there is such value in leaning into, like, a consistent thing, but I don't know. We'll see. The other interesting wrinkle here is that while Dario is at the point where he is enough of a name that they can do this bit and make jokes and it's relevant to the SNL audience. Obviously, it went way more viral on X than I think it probably did on YouTube, but when Michael Che is introducing the segment, he sort of stumbles over Dario's name a little bit. Like he's reading it from the cue cards and he says, like, 'And this is Dario.' And then he pauses and it seems like maybe Dario Amodei is not fully a household name in the SNL writers' room yet in the sense that they were like, 'Okay, who is this guy? Let's look him up. Okay, get him on the cue cards.' I don't know. Maybe I'm reading into it too much, but it felt like this was certainly like a crossing the chasm moment, like the first time everyone gets to know Dario. But very, very funny and it really illuminates a little bit of, like, the complexity of the discourse, the irony of saying, you know, somebody's got to save me from me, basically. But let's play a little bit of it. See what you think.
You know, thanks for having me, Michael. I may have been alarming in my recent interviews, but I want to assure you that if we can pressure lawmakers to create guardrails, we will be able to stop me. Dario, can you just explain how your company isn't going to kill us? So, so, so, so... Not the most flattering depiction. That's a really hard question. It shouldn't be. So, you know, come on, Dario. Come on, Dario. You can do this.
Is that an explicit reference to, like, the ring? Like Gollum, like where the voices in your head? AI, the devil, it maker. What? It seems like it, right? No. Well, look. Well, AI is the devil and I major AI players about this extensively and we are all on the same page here. We do not condone what we are doing. Shouldn't... it's very, very tough to thread the needle on this messaging. Cancer. Yeah. So, put it this way. In 10 years, there is about a 10% chance that cancer won't be a problem for anyone. For anyone? I don't like the way you're saying that, buddy. I mean, how is this a good thing? Look, so Jay, it's simple. If you could drink a milk that made your life easier, but there was a 10% chance it killed you, would you drink the milk? No. Really? Yes. Well, what if there was a button that when you push it, everyone dies? Would you push the button? No. Really? Dario, are you okay? I'm sort of blacking out every time I talk. I'd love to start this interview over or, better yet, you know, my whole life. All right, Dario, just tell us what are the pros of AI. All right, land the plane, Dario. I can't. You can. We can hear you, Dario. No one can hear you, Dario. Say something reassuring, like what? Try the milk thing. I really like that.
Then is milk a reference to something or is that just random? AI is not a weapon. It's a tool for building weapons. And I urge you to urge me to stop. Bar everybody. Ridiculous. Let me tell you about the New York Stock Exchange. Just want to change the world, raise capital at the New York Stock Exchange. No, but yeah, budget downstream stuff from this. I mean, obviously, getting pilloried by SNL, not the first time it's happened to a tech.
Yeah. Right. Rite of passage.
Yeah. Yeah, for sure. They've done this for all sorts of people. Also, there's a number of tech partners... Yeah. Yeah, going pretty hard on him in some ways. That being said, he's always, like, incredibly fascinating to listen to and he has incredible clarity of thought and he does at times, he'll, like, pause, you know, in a way that would maybe scare normal people a little bit. But the thing that I think he can do that will have the biggest impact is to stop.
No, I actually like the, I like the whatever kind of shawl sweater thing that is. Isn't it? Is it Brunello? Probably. Yeah. I think someone, I think someone clocked it, right? It's Brunello. So, you know, it's nice. It's quite a luxury. And I feel like a power tie, some shoulder padding would go a long way. Anyway, the biggest thing he can do is to stop smiling when he's talking about really bad, devastating things. Yeah. And so I'm sure that that's something... Yeah. There's something to be learned from, like, the way, like, Fed chairmen speak or the way, you know, the head of the FDA or the head of the military speaks. Like, we've talked to some of these folks and, like, they're very austere, very serious and our show is very lighthearted. We kind of have to, like, click into a different mode when you're talking to somebody like a Michael Khatsios or someone who's, like, dealing with the weight of something big and puts up a wall that is a, it is performance, but it serves a very valuable purpose, which is, like, I take this very seriously. Or you can go the opposite way, the Mark Zuckerberg way, and rip it and just be like, 'Yeah, I'm having fun with AI.' Which is honestly, like, it feels like people are, like, 'Yeah, I kind of want that energy a little bit. Just give me the white pill.' But I don't know.
Yeah. And again, I don't think that Zuck's approach is at all appealing to the people actually pushing the frontier. No. Right. No. Like, no, no one's going to, no one's going to take, no, no researchers, like, take... I mean, there are, there are some reasons, dating back to basically Demis being, like, you know, that moment where he realizes Zuck is just as excited about VR as he is AI, right? Um, anyways, um, I, I, I hope that, um, maybe VR will be bigger than AI, Jordi. Maybe one.
Wouldn't you like that, John?
I would love that. But yeah.
Anyway, so from SNL, headed straight into dinner with the president. Sunday. I mean, he wasn't actually at SNL. But yeah, it's like you wake up to that on Sunday morning and you have to imagine that Trump sees it. But Trump has been both, he's hosted, he's hosted SNL multiple times and he's also been made fun of on SNL for years. Like when he gets elected, they basically hire an actor to come and be him for four years, for the entire tenure, because they're going to be doing the cold open with him, like, basically every other week. And so maybe there's a little bit of camaraderie. They're like, 'Hey, we've both been through this, Dario. It's not so bad. It's actually kind of funny.' Or maybe they're both like, 'Yeah, the news really is fake.' We got, we got... But yeah, as critical as it is, at the same time I think it's something that all founders should aspire to, right? When you're starting your company and investors say, 'Well, where do you see yourself, you know, where do you see yourself in the company?' and getting on the biggest stage, perhaps, perhaps... Andrew Curran says President Trump has personally invited Dario to a private dinner tonight. That was yesterday, so that happened on Sunday night. This will be the first time they've actually met one-on-one. Big chance to patch things up or crash the plane into the mountain.
They're actually running it back tomorrow night. Tuesday night there's a dinner in D.C. for all the AI leaders with the White House again. So, I mean, the pace of this stuff is really, really, really picking up. There's meetings every week now, basically. And yeah, I mean, there's lots to work through and no one is going to get to put their head in the sand. Not even the comedians in SNL will have to chime in, as well as the politicians and the lab leaders.
And so, yeah, despite Dario being excluded from, it seemed like he was excluded from that White House dinner with Xi Jinping and that basically every top tech leader was invited to, he was noticeably absent. President Trump, you know, followed up with a one-on-one dinner with Dario to hear his side of the story. And I wonder what type of leaks or reporting will come out of that. You would think that that would be going on today. Maybe there will be some news or maybe they'll put out a joint statement. Maybe everything went really well. But I mean, both.
Or a joint. You could see Dario sign up for Truth Social.
Sure. Or UFC courtside or ringside.
Ringside would be pretty electric.
Doing the Nitro Circus thing before UFC. That... I want to see Dana White, Dario, Trump. Yeah. Yeah. Just squatted up. You think he'd be doing slap boxing before, too?
For sure. You got to do the full suite if you go all in.
Anyway, so there's also interesting timing that I don't know if this, how timed up this was, but every day there's another proposal for how to manage AI safety. This one feels like the most formal consensus exercise from a group of top AI researchers. It's published through the University of Cambridge and it's a good list that pulls from all over the industry. It doesn't feel like there's any lab that has, like, a finger on the scale. Not that that really matters. I feel like if Demis comes out with some great thing and Anthropic and OpenAI sign on and, you know, there's a lot of energy, like, people will just be like, 'This is great. We should take it seriously.' But this one was, this one was interesting because it was notably, like, diverse in the researchers. I didn't even know that there were this many researchers that didn't work at labs by now. But there, in fact, are a lot that signed on. So Geoffrey Hinton, also a Nobel laureate but Turing Award winner alongside Yoshua Bengio, Andrew Barto, industry leaders from OpenAI, Jacob, the chief scientist from Microsoft, Eric Horvitz, the chief scientific officer, and Jack Clark from Anthropic. So, this, you know, Sam was talking to... was it, wasn't Axios, it was, he was interviewed and he was saying that, like, maybe we're going to sit down and get beers. Basically, you remember this whole thing? 'Why don't you guys just sit down and have some beers?' That was the proposal. And he was like, 'I don't want to leak anything that's going to happen, but we are thinking about it.' And, you know, he's like, 'You can't just...'
Personal agents are talking about getting together for a beer.
Yeah. But it was very funny framing, but this is like the start of that, a start of more collaboration between the labs, between the academic community. And what's interesting is, like, they go a little bit further. You know, Tyler over there, his criticism has been, like, everyone comes out with an AI safety proposal and it's basically always, like, we got to talk about it. And this is a little bit more concrete. So the first one is they want to set in place the ability to monitor the level of AI-enabled R&D at labs. So what percentage of the code, what percentage of the dollars, what, like, give us metrics on how much of the AI R&D is being done by artificial intelligence. Anthropic, OpenAI, they've all sort of, like, mentioned this in blog posts that it's happening, but there's also this, like, vague jockeying because it's better to be further along on the RSI curve for financial reasons. So there's not really an apples, like, no one really feels like they have a strong handle on, like, whether there's more RSI going on at OpenAI or Anthropic. Like, it feels like they both have very different metrics. Like, OpenAI says, like, we have an intern level, and then Anthropic will say, like, we had Claude spin up a thousand ideas, and, like, you can't really apples-to-apples those. The proposal is, like, let's get some metrics in place so we can actually monitor this thing. Then they also have, again, it's sort of, like, we need to talk about it, but they want the government to create firm plans for responses to potential theoretical bad scenarios. So, like, if there's a big cyber attack and an agent goes rogue and brings down the internet and hacks into a bunch of stuff, like, what will the government do? What's the equivalent, like FEMA? Like, we have a response for, like, there's a big hurricane hits town, you bring in people, there's food, there's shelter, there's, like, a plan. And we don't really have that for, like, the internet went down because, like, an agent took it down. Same thing for biosecurity. They have a couple others, even, like, economic dislocation, that type of thing. So they want, they want the government, they're not proposing the solutions to those yet, but they're saying, like, this is where the government should be prepared. So, I don't know. It's a good read. They have an executive summary you can read and then the full paper is pretty digestible. It's not...
Did you see that China has places you can go to to simulate being in a disaster, like high, you know, super high winds and...
Flash floods, things like that? Should we have, like, AI disaster simulations where, you know, you can be in a data center that's going rogue and kind of work to shut it down with friends? Yeah.
Just a kind of, like, live-action role-play through it.
I like that. I like that. I'm kind of treating Modern Warfare 4 like that.
I feel like that's getting me enough cycles of, like, the simulation of, you know, you're already playing against bots. You're already shooting AI, basically. So getting some drills in.
Yeah, I know it's a joke, but I wouldn't actually be surprised that a future first-person shooter or, like, one of these open-world games is centered around the Terminator scenario.
There was a game, there was a game, I forget what it's called, but yeah, like, you drop in with three people and you're on this, like, planet. There's one that's Starship Troopers themed, so it's, like, the bug planet, and then there's another planet that you can drop into that's, like, the Terminator planet, and you're going up against, like, they basically, like, ripped Terminator's intellectual property. Like, they look exactly like T-800s. Why is Tyler not back in school doing the best internship in history? He turned it down. He actually turned it down just to grind for this. Yeah.
Well, the things will never be chill again. The doomers who shaped the AI safety freakout. The Wall Street Journal has an article here about some early Anthropic employees who are considering buying remote land in the United States to relocate to if AI goes seriously wrong. They're going bunkies. They're going bunker mode. Yeah. Employees also trained doomsday scenarios and preparation plans in a private Slack. While Anthropic workers have their own office space inside Berkeley's Constellation AI safety community, the wider safety scene has discussed iodine pills, remote islands, and electromagnetically shielded desert bunkers. Interesting that no one's trying to go to space. I would have thought that would have been... That was George Hotz's original pitch. He was like, 'If AI goes crazy, I want to be on a spaceship leaving the light cone as fast so AI can't catch up to you. Blast shield behind you and then you'll be safe from the intelligence.'
Could just say he's not very AGI-pilled because obviously the superintelligence would just figure out a way to just go faster than the speed of light and catch up.
Yeah. I don't know. I don't know. I mean, if you go the maximum speed, they can't catch up ever, right? So then you are safe, but you got to accelerate to exactly one c.
This is, like, an interesting example of, like, an actual answer to the Teller Count question, which is, like, if you really care about doom, aren't you making financial decisions? Cover up, get a lot of debt and buy a bunker, buy remote land with a massive mortgage.
Yeah, because usually the answer to the doomer thing is, like, well, I'm not going to be able to get to my bunker because the, you know, bioterrorism will already have killed me or something.
This is an interesting instantiation of this.
The thing that always just, like, breaks down with these scenarios is, like, I, you know, every guy has sort of played out the scenario in their head, right? And where are you going to be best off in some, like, remote area where you don't know any people that actually live there? Right? Let's pick Wyoming, right? You really think that the world is, like, falling apart and you're just going to head over to Wyoming and set up shop in a community that knows you've been building your bunkie there? Yeah. Right. And they're just going to be like, 'Oh yeah, like, there's a bunker over there. It has everything you need in it to survive.' And you know what? But, you know, they paid us to set it up years ago and let's not, we shouldn't just go occupy said bunker for ourselves. So the prepper community has a term for this. They say don't be a loot drop.
You're a loot drop if you do this. If you go and set up a really luxurious bunker with a bunch of supplies, but you don't actually know the community. You're not integrated into, like, everyone else.
Yeah. The fabric. So ideally, it's, like, you want your team and everyone else to all be in it together. And so that, you know, there's no squabbling. But yeah, you can just set up a loot drop and then everyone's like, 'Oh yeah, I installed a crazy safe over there. Let's go get that as soon as the crisis happens.' Yeah. I mean, there's a whole bunch of fun game theory you can play through there. I would personally, I think we need to regulate because I would personally hate to be in a self-defense situation with a bunch of rogue agents. And imagine if all the Waymos went rogue and we were just forced because of self-defense reasons.
You and all your best friends all just drive around and just have to shoot them out of the windows of our cars, like, all day long. Like, that would be a nightmare.
That is a nightmare. You would never... You've never even...
If I was in a self-defense situation, I would do it, but it would pain me.
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Also a Journal piece on... what else happened... on Jaan Tallinn. Skype founder. Skype founder. Big investor, early investor in the labs. Take a wild guess where he's from. Estonia. Yeah, Tallinn. He's from Tallinn. Anyways, also the primary funder of most of the sort of AI doom... the EA movement. He also dances hip-hop. I wonder how they got that scoop. It's interesting. Interesting. He warns about racing to build a technology that could end humanity. Yeah, there's a funny anecdote in here about champagne. I like that part of this. I didn't like the doom part, but I did like this. Said they debated machine consciousness at 40,000 feet over flutes of champagne. See, white pill. Anyway, that's enough of that article.
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Let's talk about some personal agents.
Noah Shinn, founder of Instinct, broke his silence finally with none other than our friend and legend Patrick O'Shaughnessy.
I was trying to listen on the way in to the gym this morning. I got maybe 30 minutes through. Patrick pulled out the highlights. He summarized his own podcast before you could summarize it. He beat you to the punch.
He said, 'A list of surprising and mind-boggling stats from this conversation. 1 billion a year in transaction volume, still invite-only.' I can't remember if that's total. I think that's actually total volume to date. I don't think that's, like, run-rate volume.
It says a year. So that would be...
Well, that's what it says in here, but I just remember from the episode, I heard it as...
Well, yeah. I mean, if it's today, then it's higher.
That's what I'm saying. Could be it could be, like, higher.
I read that as $1 billion of annualized... that they are at $1 billion of annualized transaction volume. Yeah. But I guess it's maybe even higher. I don't know.
Yeah. Interesting.
Growing 10% a day. Spent zero dollars on marketing. They have this, you know, pretty amazing flywheel where people post screenshots all the time. That's doing a lot of marketing and...
Wait, a lot of the screenshots are, like, a horrible accident, but maybe those actually drive curiosity and, like, people being, like, 'Well, I'm not going to make that same stupid mistake' and the service is probably getting better. You think those actually help?
I think those help. People are curious and they're, like, 'I want to see it and I'll be safe. I won't give it my login details, but I'll still...' No. And it can't be said enough.
A lot of people within tech have experienced AI doing things for them, like making a product.
Most people outside have not experienced that yet. And it's just a magical thing.
40% of users shared a personal credit card with Instinct within 3 weeks. Compute demand is doubling roughly every week. At 5 to 8% daily growth over the months it takes to bring new compute online, Instinct would reach about 100 million users on Instinct's own A/B test. It matches Opus 5 performance at a fraction of the cost. Noah spends about 40% of his time on compute. Buying compute at the last minute costs 3 to 4x more. Makes sense. Background work runs on setups that are 3x, 5x, and 8x more efficient on the same compute. 50% of Instinct's transaction volume is travel.
Instinct plans to take a cut of what users buy. Take rates. Shopify is 2.5 to 30%. Amazon is 15%. Apple is 30%. Noah's personal goal is to keep Instinct free for everyone for life.
Some small businesses run their entire back office on Instinct. That's interesting. Users who connect at least one piece of sensitive information retain at about 80%. Just give me one piece. Just one piece.
Just give me one piece of sensitive...
Tell me your darkest secret.
Some users send more than 90% of their messages...
Skeletons you have in your closet...
Say an app makes 70% of its money from ads and 30% from actually selling you things. Agents could wipe out the 70%.
But Noah thinks the 30% gets much bigger because people buy more when buying takes zero effort. This is a big question for me, right? Because already buying something on a Shopify store takes close to zero effort. Like, the checkout is actually down to if I land on the website and I know what I want.
I can check out within... And again, Shopify doesn't have an ad business. Are not fun to shop for, though. There's a lot of stuff, especially if it's like... I was thinking about, like, cable management. I wanted to get some cable management stuff for my desk. I'm like, I don't really care about the brand. I don't care about the flow. I just want, like, you know, a suite. I needed some, like, command strips, maybe, like, a little tray. Like, whatever, like, the modern solution is to, like, a couple cables, a power brick. Like, just go and get something that's well-reviewed and, like, a suite that will figure that. What kind of voice are you doing? Instinct launched to about 200 friends and family. Invites have sold on eBay for around $300. More than 50% of Instinct's traffic doesn't run on iMessage. Instinct has proactively called Noah three times. That's like when it's doing something and it has, like, a deadline. It's like Noah gave the example of, like, 'Hey, you really have to sign this, like, within the next 5 minutes. Are you available?' It'll just call you, which is cool.
Yeah. Yeah, less than a month after raising...
So Noah is 23. So very, very good summary.
Also same college that I went to. He went to Northeastern.
Yeah. So I guess initial reactions... I, they talk about, like, remaking, like, the entire internet, right? And the example that they talk about is restaurant reservations. And Noah made an interesting point about how restaurant reservations to date are all effectively, like, first-come, first-served. So, like, if you just happen to be the first person to get there, you get the prime time slot even if later someone else is making plans and it's, like, you know, he gives the example of, like, an anniversary or, like, a special birthday. And he's making the point that, like, the restaurant should be optimizing for the person with the special event happening and there should be more of, like, basically a negotiation in some ways or, like, the user should have an opportunity to sort of make their case.
For why they should get a table during a time where there's more demand than supply.
Um, yeah, and I think that makes sense. That being said, I think when everyone has a personal agent that's calling and, like, hammering restaurants and, like, trying... I think it's very possible, like, his argument is that the restaurant wants, like, the whole space to just be filled with people that are, like, it is the most special moment of their life.
25 proposals, everyone clapping for five seconds at the restaurant.
And it's been a while. I mean, it's been a very long... I mean, I worked in a restaurant in high school. And it's been a while, but my read on that was that it would be insane if every single table was, like, it was, like, the anniversary or the birthday. Like, restaurants are not generally, like, set up to, like, give that. So maybe it's, like, a feature, not a bug that the reservation, at least some of the tables are, like, 'Hey, this person's a regular,' like, they're just... sure... they just plan ahead. Like, maybe that's, like, actually, like, a higher-quality customer on the average night than somebody that's, like, coming in and this is, like, their special moment. So, okay, I got a question for you.
Yeah. If you're at a restaurant and it's someone's birthday and the host brings out a birthday cake and they're singing, how close do you have to be to join in on the singing? If you're at a table over, will you start singing Happy Birthday?
I could be at the other end of the restaurant.
Oh, you're a birthday singer no matter what.
Okay, I like that. I might be belting over four or five tables.
Yeah. Trying to get them involved. You don't necessarily need to be at the same table.
So potentially this creates the opportunity for a restaurant that's just constantly singing Happy Birthday on repeat the whole time you're there because everyone's having a birthday.
Yeah. I mean, there are some restaurants that sort of lean into, like, they're romantic. So they're the place where anniversaries and proposals happen. And then there's other ones where it's, like, yeah, birthdays happen there and there's, like, kids' birthdays. Like, you go to a CPK. I'm sure there's, like, many more, like, kids' birthdays than, like, proposals all...
Yeah, it is interesting, though, because a lot of our, like, so much of being a consumer, like, the benefits, the highest-quality experiences typically go to the people that plan the farthest in advance, right? So, like, if you're booking a hotel right now for, like, the Christmas holiday, you're at a disadvantage, right? Because there's some people that were booking, like... hence why we tell you about the road to Christmas, start planning ahead.
And so, anyways, it will be interesting if personal agents kind of rework that. I don't think it's sustainable for, like, every single basically reservation or booking to be, like, a, um, open to basically, like, negotiation, right?
Completely disagree. I completely disagree.
Because I think that the reservation system will be an agent as well. And there might be a country of geniuses in a data center negotiating against another country of geniuses in a data center. It sounds crazy, but I'm not joking. Like, I actually think this is what will happen every time. If you say, 'Get me, I want to have dinner right now. I want to have dinner tonight with Jordi.' Like, there will be, it will spawn a bunch of agents, call a bunch of restaurants. It will be annoying for the restaurants that aren't on board, but very quickly all the restaurant, you know, phone systems will be equipped to handle it. On the other side, they will all share all the relevant information, negotiate, find the answer to any questions, oh, food allergies, oh, birthdays, how many birthdays are there? You want to go for your birthday, but you don't want that many birthdays to be there. Whatever your preferences are, all of that will get penciled out and it will be just more seamless matching. And I don't think that's a problem at all. The thing that I'm uncertain about is, like, are we going to move into, like, a SeatGeek regime where it truly is, like, surge pricing and the best restaurants might wind up being, like, 'Oh yeah, you're sitting down, but you had to pay, like, two grand for that reservation.' And then there are some that are, like, 'We're selling the food, like, 1% above cost because, like, there's no... we want to fill seats right now.' And this...
Yeah, I'm just thinking about, like, I'll use a... there's a restaurant near where I am that people will plan months and months and months and months out for, like, a special occasion.
So, like, if you go there...
There will be a lot of people that are, like, celebrating an anniversary or a birthday.
And then there's maybe four or five tables every day that the manager kind of just has on lock.
And if you have a personal relationship with them, they're going to be offered up.
Those tables are never in a restaurant that has way more demand for tables than supply. The restaurant is not going to ever take those tables and be, like, 'Hey, we're just, like, handing these over to our AI agent.'
But they were never going in the booking system anyway.
Yeah. Yeah, like, they were never going on OpenTable or whatever.
But I'm just saying, like, in that case for that restaurant in particular, like, the system is working as intended, which is, like, if you want to be with us for your special day, plan ahead.
And we also want to take care of, like, friends.
Yeah. This is a good point. That's a good point.
And it's just, like, that extra inventory is not going to shift over just because you have an agent that can make your case.
Yeah, I think some of the friction in hospitality is designed to reward people that plan really far in advance and people that develop a real relationship with the business and the people that work there. And so I'm just wondering how this sort of new dynamic fits in where everyone... In the first case, I have my agent book my birthday dinner, like, six months in advance very easily because it knows when my birthday is and knows that I want to go out to dinner and get me... And that, but that's using the existing... And then for the other one, it's tracking the owner of the restaurant on Instagram, sending him cigars and champagne regularly and potentially hacking and blackmailing him if he needs to go... No, I'm very bullish on telling your agent, 'Hey, I know that this special moment is coming up. Make sure that the second bookings open up.'
But that again, that fits into the sort of long-term planning category.
And it's like my... but it's not reworking the fabric of hospitality.
It's just sort of, like, reducing friction.
Yeah. I'm just saying, like, Resy and OpenTable and Toast and all these things, they're going to build the sort of counter infrastructure for the onslaught of agent inbound that is coming to every business.
That, yeah, it will quickly be resolved as soon as these things scale and they are scaling. And I'm sure that, yeah, I mean, I guess a good prediction is, like, there will probably be several breathless op-eds in the various newspapers about, like, 'AI agents are super annoying for my small business,' you know, and it's, like, now I have to get some tool to solve this.
Which is kind of funny because we've all been through this phone... How much sympathy are people going to have that business owners being, like, 'I'm being flooded with demand for my service?'
It'll be, like, fake demand because the agents will be, like, checking and they'll be, like, 'Oh, well, there was nothing available at 7 p.m. on Resy via this API, but, like, maybe if I call I can get an extra thing.' So they're going to call everyone all the time and it's going to be very annoying. There will be, like, some frustration that is justified from this. Like, anytime that there's a transition, there will be frustration. Yeah. I think, I mean, a good preview of this is, like, what we all went through with our phones where, like, you used to be able to have a cell phone and basically just pick up the phone when it rang. And now it's, like, I have my phone in Do Not Disturb 24/7. You can't call me unless you're already in my contacts. Like, I can't just pick up the phone randomly because I get so many spam calls. And even Apple, like, clearly admitted that, like, the phone lines have fallen, like, because they have a separate tab in iMessage for, like, unknown now and, like, it gets filtered off because they know that, like, the rails have truly broken, like, the spammers have won unless you wrap it in a filter. And so there will be significant spam filtering that goes on at the phone level. And that's probably already happening with, you know, just there's so many services that are calling restaurants and saying, like, 'Hey, do you need more supplies? Do you want to switch to this point-of-sale system?' Right? And they don't want those to go through their... they don't want cold calls and sales calls going through the reservation system. So they probably filter those already. Anyway, Josh Constine.
This is the whole Instinct pitch deck, by the way. And it's Christian Kyle saying, 'My three-month-old son is now twice as big as when he was born. He's on track to weigh 7 and 12 trillion pounds by age 10.' Very funny.
Such a viral post. This went super viral on Reddit. It goes viral, like, every couple months on Reddit and stuff. It's a wild post.
But I did want to set some comps around the Instinct growth numbers that are interesting. So, a billion dollars a year in transaction volume. We're not exactly sure if that's annualized or to date, but it's kind of the same. For reference, it took Stripe around 18 months to hit 1 billion of annualized transaction volume. Although Stripe also spent two years building in beta before launch, Instinct got to 1 billion transaction volume in closer to six months. But it's important to note that with Instinct, the transactions flow through third-party cards. So they're not making any money off of these transactions yet, but it's very clear to imagine where monetization might happen.
Yeah, at the very least they could just launch a credit, like, their own card.
Yeah, of course. And sign up, then they're getting that interchange fee and they don't need to get... they don't even need to get anyone to opt in.
Yeah. And you might be able to... and it's an easier pitch, too, because you're onboarding this AI agent. You're, like, 'I've heard some pretty crazy stuff about this thing. Like, yeah, I'd actually like it if you used your card,' as opposed to, like... it already has, basically, a computer, a phone number, email.
Yep. Give it a credit card.
And so I'm sure they're working on that. And when they do, they're not going to make 3% because you do have to pay Visa and Mastercard, like, the underlying rails. But earning 1%, half a percent, a quarter percent, even 0.1% on, you know, they grew to a billion. You know, you're talking about getting into, you know, tens of millions of dollars of revenue pretty quickly. And the team's just 14 people. And so you can sort of see why they raised a billion at 10 billion from Benchmark, Sequoia, Coatue. There's, you know, yes, you have to believe that they won't be, you know, killed by Muse and that they will continue to scale, but if any of the growth rates sustained for even a limited amount of time, it's going to be a lot of transaction volume, great business, and you can underwrite it pretty safely. And then there's still the offshoot into Amazon world, I think, because Amazon doesn't really have a strong play there, but could fit in very well with...
Yeah. They have a lot of potential dance partners and ultimately things grow really fast because they don't just, like, grow really fast for no reason.
And people have been trying to do different personal agents for specific things. There's definitely been other pitches for, you know, doing commerce, doing flight booking. I'm shocked by that 50% travel. That number seems really, really high. What was the exact stat? 15. He said, Patrick summarized it as 50% of the transaction volume is travel.
Okay, so volume, because when you book a flight, you might be spending a grand, but when you book a restaurant, you're maybe putting down 10 bucks, 20 bucks, maybe 100 bucks. Like, you might not put down anything, right? And so travel, it's not that 50% of, like, economic activity, but that's where they're making money. And so, yeah, that's another way where they could build, like, an Expedia-type business where they're earning fees on top of booking.
We got to give a round of applause to Tate Hacker who says, 'We're so early. Everyone will be using a full-time assistant of compute like this within a year.' And the reason I'm clapping is because it's a parking ticket for not just any car that Instinct took care of. It's for an R, a blue R8.
And I just thought this was a wonderful...
way to sort of share wonderful car potentially flex. Hopefully, yeah, hopefully it's a V10 with the gated manual. But very underrated, underrated car.
What is this? This is a very detailed parking ticket, but let's get taken to this. Paid 50% on your personal visa. Pretty cool.
Like, we get it, dude. We get it. You got a parking ticket in your R8. We get it.
Yeah. Anyway, let me 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 powers it. There's drama in MongoDB world because poaching.
You want to get to that later?
Um, let's get to that later. Let's just let's let's close this out. So, apparently Adidas is running anti-bot software on their store. You ran into this like pretty recently, not even with with Muse or or Instinct, but just researching with with Codex.
Um, and you were thought it was pretty funny because you were actively trying to give a company business. Um, I think there's a bunch of historical reasons you would want anti-bot software.
And then there's now a bunch of very real new reasons why you need to update that and and figure out a way to to prevent sort of like bad bots.
Um, but but support like actual consumer bots.
So, um, Gary Tan says, 'Anti-bot is for losers.' TBH really got him with it. He really owned him right there.
Just slow. It's ridiculous.
Um, other people, uh, the chief economist at Apollo is warning that mass adoption of AI agents could trigger a bank run as they optimize user investments. Uh, Gary Gensler spent his last few years as SEC chair warning that the exact same problem will hit the markets. The pursuit of algorithmic perfection at scale destroys system stability. Personal finance agents making simultaneous optimal decisions could potentially cause a massive flash crash.
Uh, agent causal coordination with no messages passed between them will show up in a lot of places. Markets will get the big headlines, but the huge number of clever advisers making very similar choices will impact all of human society. Um, blah blah blah blah blah blah blah blah blah. Um, human laws were not written for this. They were not written for a lot of what is coming.
It is uh it is about to start happening very fast. Uh, credit to Catrini for basically being the first.
That was a different thing, but yeah.
I don't know, it's the exact.
No, it's just it's this idea of like there's a lot of aspects of our economy that are that that currently like businesses that work because of friction.
Sure. That friction in some ways will be removed when you have an always-on agent that says, 'Hey, you haven't touched this product in a very long time. Do you still want to be paying for this?' etc., etc.
I I don't think this is I don't know like my my banker will just hit me up and say, 'Hey, I'm going to I'm just clearing this with you. I'm going to sweep funds into money market account or or T-bills.' Like it's not like like a good banking experience is already doing this proactively for you.
Now there's of course people that maybe they just are set up with like a simple checking account and they could be moving those into a higher yield account of some sort that aren't doing it and maybe the agent starts doing that. But like great like fundamentally a great banking experience. They're like doing this on your behalf like they are they are aligned to you.
Yeah. So, I don't think it's I don't think it's as like.
Yeah, I would be very like hesitant about how fast this adoption can happen because when someone says, 'Dang it, if ordinary people get fair deals and aren't ripped off, it's the end of...'
Yeah. Um, I Yeah, because I I I wonder like the personal AI agents are taking off, but like we're still in like single digit millions of people doing them. It's going to take time for people to adopt them and then they need to actually authenticate and add these things, link their bank accounts, and then presumably the first version of this will be the agent coming to you and saying like, 'Hey, is it okay if I do this?' Second order will be like, 'I just did this. I know it's okay. You trust me.' And that relationship, that trust, I feel like that's going to take like years to build up and diffuse through.
Um, there there are still like there's still plenty of friction in the economy. I think uh I think it's going to take a while for people to to onboard the onboard to this fully. I mean people were it's the same it's the same idea of like when ChatGPT came out people were like Google search is dead like Google no one will Google search Google's search revenue is going to go to zero like next year and it was like yeah it was a reasonable replacement but it took a little bit longer even though it was growing so fast faster than any consumer product ever incredible revenues blah blah blah blah blah it still wasn't that fast and so it's the same thing where it's like okay if this happens over like a couple of years like banks adjust money market funds adjust like it's not the end of the world potentially, but we'll keep monitoring it.
Anyway, let me tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more. Well, Railway automatically takes care of scaling, monitoring, and security. Zuck, what happened?
We believe superintelligence will create significant new opportunities for all people and businesses. Meta already serves billions of people at scale and helps hundreds of millions of businesses reach customers. Today, we are starting the next major pillar of our business, Meta Enterprise Platform to help businesses use AI to grow and transform in new ways as well. Meta Enterprise will use our strengths that few other companies have, advanced models, leading agents, large scale infrastructure, and years of working closely with many businesses. Initially, we will focus on bringing our full technology stack, including the Muse Agent, Meta Business Agent, Muse API, Muse Code, and more to businesses and developers to help them grow. To lead this effort, I'm excited that uh CJ Desai, former guest of the show, will join Meta as chief enterprise platform officer reporting directly to Zuck. CJ is an experienced enterprise leader um with a track record of building full stack software and delivering results in AI infra business applications and security uh blah blah blah blah blah blah blah.
Um anyways uh so here's how I think this is going to go. I think that they created this new business unit.
They still have a lot to prove on if they can.
Sorry if you scroll down there's some wild comments. Um anyway, continue.
Uh anyways, they created this new business unit.
They're talking about apps and agents and all this stuff. I think what's really going to happen is they're going to do big compute deal.
And then and then it's going to look like the the this sort of unit is doing it. It'll quickly go from let's say zero to 10 billion a year of revenue. They can sort of use that. They don't have to necessarily break out initially all the what where that revenue is coming from, but they can say like our enterprise platform is is gone from zero to 10 billion in.
Yeah, this was like the joke SemiAnalysis was was sort of trolling with around like oh like all the growth in Google Cloud Platform is selling TPUs. It was like a little bit more nuanced than that. But uh but there's a bunch of ways to like wrap up revenue into a uh into like an enterprise platform that could be tokens, could be doing inference, could be selling compute raw bare metal deals, could be could be actually selling services. Uh will be interesting to see where it goes.
Um, it's still an interesting off-valve off-gassing valve because uh there there's some people and we're going to have a niche from Andre and Horowitz on the show at 12:35 to talk about personal agents because there's been a lot of debate over like how compute intensive is the average Instinct user is the average Muse user. Is it like $10 a month? Is it a $100 a month? Is it more? Obviously, everyone knows it's going to get cheaper, but then people will be in an arms race for, oh, well, like this one gives you like the best possible intelligence, so it's more expensive. Um, and so there's a lot of business model considerations there, but uh it's interesting that if like if Muse doesn't fully take off, then you do have the the enterprise offtake for that compute. So, you have so shareholders are maybe more uh reassured that okay, we're really optimistic about Muse, things seem to be going really well, but if it doesn't I think I think it's important I think I think because he finds it important to to not when when he sort of capitulates and has to sell compute he wants to be able to position it as like yeah we're we have this massive enterprise AI business.
Versus when xAI did it was like oh wow they don't have demand for their models.
They have to do this compute deals. And I think that this positioning is smart.
For because it even if he is selling compute.
It's not like he's doesn't have the same broader long-term ambitions of like actually building a a durable, you know, AI business here with their own models, their own agents, etc.
Yeah. So, I just think it's a better, you know, in SpaceX needed to make a lot of moves really quickly to to be in a good spot for the IPO. Had they not needed to move so quickly, they could have positioned it more like this and I think it will sit better with people.
Yes. Yeah, I agree with you on that. I just think uh there there could be a tension like like imagine if they were like, 'Hey, we're really good at video hosting from Instagram. like we're going to start like a video hosting platform. Like wouldn't the Instagram team be like wait like we need all the resources we can for you know building out our...'
Yeah. But that was the same exact tension that that xAI and Cursor have had with their own teams that are building models.
Yeah. But this is like injecting that tension right unnecessarily potentially.
Not unnecessarily. I think.
Why is it necessary? Why is doing this necessary at all?
Yeah. Why not pure play it? Why not say, 'Yeah, we want to have the whole company aligned behind Muse, behind the products, and yeah, we have a bunch of compute. We're not selling that at all because we're the best to monetize it. Why would we ever give it away?'
But of course, if they're if they're deep in the enterprise and and uh and they have a product that flows through, there the margin will be there and it makes makes a lot of sense. But uh you are you are kicking off tension, right? Like uh we've seen this with other companies. I don't know. We'll see. Um.
Uh poor MongoDB down uh 16%.
Oh, it popped. It was down 26% earlier. So.
Yeah, it recovered a little bit. Um uh yeah, CJ hadn't been there long.
That's a very great sign of respect, right?
Well, again, we like to see the the the you know, the stock chart nuke as when a founder retires, right? End of an era. Just but but you want to see that recovery instantly. You don't like it when a hired gun CEO leaves before even investing into their grant um.
Yeah. Um you don't like to see that. Um.
Okay, maybe maybe Buco put it better than that here. Very perplexing move by Meta. It took Google a decade plus to become an enterprise company. Can Meta even get there? Much muddier story that already includes an eye-popping level of capex and existential battle to be the front door to the new internet. So yeah, it is a little bit complicated. Uh at the same time, I mean, I like SemiAnalysis's breakdown of, hey, if you're buying from Meta, you're getting all of the Meta data like the there's a ton of Meta engineers. They've been, you know, their keystrokes have been tracked and so like that's going in the training data. And so if you are trying to do something they might be good at, they might have a really good model for it. Basically, that was that was the idea uh at least as it was uh broken down in SemiAnalysis. Uh anyway,
Speaking of what else is going on?
Speaking of Meta, I want to try to find that video that I sent to you.
This guy uh investing in in Scale right now.
Oh yeah, that's good. Um well, while you're pulling that up, Sonnet 5.5 is out. The second model in the Claude 5.5 family. Clear upgrade over Sonnet 5. Runs 30% faster. Costs up to 30% less for most most work. Did it make this video? because they've been doing this thing where the where the models have been actually responsible for assembling the video. It's always a good demo. Um but uh good results on agentic coding obviously uh cheaper and uh will be interesting to see what people build with it. Um.
Yeah, big week for all the labs. Uh pull up this video of uh somebody pitching.
Okay. Scale AI Scale. Raise your hand if you know about.
Wait and pause for a second.
Uh, so this is a group of investors getting pitched SPVs. Let's play this.
Let's talk about Scale. Raise your hand if you know about Scale AI. Probably very few of you. It's my guess. Okay. I didn't know about it. These guys um what makes them amazing is these are the folks that are training the AI models, right? So they provide software that helps train ChatGPT and uh Claude and Grok and the major uh apparently 90% of the world's leading generative AI models are using Scale AI. So Meta says, 'Oh my gosh, you know, remember if you're running Meta, your biggest problem right now is you don't got enough cash, right? We need hundreds of billions of dollars to invest in data centers and developing our own AI system.' But they they thought enough of this company to take $14 billion and put it into Scale a few months ago. And so that's about as good a sign as you're going to see that sophisticated people on the AI scene believe in this business. Um lots of AI and technology companies use them. Meta Frontier AI developers like OpenAI, Microsoft, other major major model builders, robotics companies are using it. Because remember, you build a robot, you got to train the the system that powers the robot how to operate, right? So they're using Scale to do that. Uh lots of enterprise clients from the Mayo Clinic to.
French fries with misinformation.
Yeah. I mean, we we we've had Scale on Business. The Remain Co is is is still in business and and and you know continues to uh produce revenue and do deals and do all sorts of things but uh very odd way to represent the Meta deal which was you know a lot of the talent going over to Meta obviously the founder.
Well not to mention they they I think it instantly lost like most of the they lost a lot of customers after that deal because people were like I don't want an exclusive deal with with with Facebook or.
So so so yeah anyways positioning a sort of regulatory arbitrage right uh Meta needed to buy uh Scale without uh setting off kind of alarm bells from a from an antitrust standpoint um and so uh yeah very very concerning there's got to be I mean imagine early Scale investor somebody that's like I have all this stock what what am I going to do with it I'll sell uh at at at almost any price.
Well, the early investors got paid out, right? That was the structure of the deal. They all got like a dividend. So, you still own the shares.
But you still own the share. They're sitting there being like, 'This company has no future prospects.' If some guy in a hotel will will buy them, I guess, maybe sell them, but.
Book me a Best Western conference room right now. I need.
They're probably not exact They're probably not sitting there. Whoever is providing the share is not exactly happy that he's putting those kind of videos. It is crazy that it's hitting the the hitting the Instagram reels. Did that just get served to you or is that like uniquely viral content?
I think it I think it knows that I'm.
It knows that you've interviewed the founder.
Anyway, uh we we'll talk about SpaceX and Starship 14 splashing down Pacific Ocean later in the show. In the meantime, let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. And we'll bring in our first guest of the show, the founding and managing partner of Plexo Capital.
How you doing? Welcome to the show.
Hey, doing well. Thanks for having me.
Thanks so much for hopping on. Since it's the first time on the show, would love uh to give everyone an introduction on yourself and uh just break down a little bit of your background, a little bit of your day-to-day, and uh and then I mean we have so many questions about the firm and the strategy and we can go through all that.
Sounds good. So I founded Plexo Capital while I was at GV, Google Ventures. So I was a partner on the investing team focused mainly on marketplaces and mobile. One of the things that we had done at GV was to identify GPs that were fund one micro VCs typically investing at the pre-seed stage that we could partner with. Then what better way to partner with them than by kind of meeting one of their needs, which was helping them with their fund raise effort. So, we invested into about five funds that were emerging managers with unique perspectives and access to deal flow and it worked for us and I looked at it and said, 'Hey, I think I can build a strategy around this.' So, this was I think about 2016.
And I switched over to an entrepreneur in residence role.
Focused on building out the strategy.
Spun out in the spring of 2018, brought on Alphabet as our anchor investor for our fund one and also brought on some other big tech companies, Intel, Cisco, brought on some financial institutions like the Royal Bank of Canada and some traditional institutional LPs like Ford Foundation and Mass Mutual.
Can you explain the evolution of the the relationship there with Alphabet? Because uh GV, formerly Google Ventures, was uh had it had it had all the benefits of a venture capital firm financially, but also a lot of the benefits of a corporate venture arm uh with partnerships and potential acquisitions. And that's always been uh something that corporate venture arms have sort of grappled with and and evolved over time. But going from Alphabet to a fund of funds into uh into emerging managers, is there any conversation of dialogue and value add there or is it purely we think this is a great allocation of capital? This is purely financial investment.
Yeah. So a couple of questions there. So first I think it's important to just think about the corporate VC position within the ecosystem because there's there's almost a spectrum right there's kind of at the far end there are purely strategic and then at the other end of the spectrum there are purely financial and GV was at the extreme end of the purely financial so much so that it really operated as a a separate unit. It's part of the the other bets umbrella. Got it. And the investors at GV invest for financial return just like a traditional firm on Sand Hill Road. So it's all about identifying amazing opportunities with the best entrepreneurs that are typically one of one and then coming into those firms companies as early as possible and continuing to support them over time. If there is an opportunity to be able to do something within the broader Alphabet ecosystem or relationships, then GV will make those introductions. But first and foremost, the focus was on just identifying the best companies. I would even say so much so that GV doesn't really think of itself as a corporate VC. Yeah. It thinks of itself just as a traditional financially focused VC. Yeah.
And so then leading to the second question that was in your in your uh opening, the ability to be able to identify the best deals. You know, there's multiple paths to be able to to get there. Obviously, there's the existing relationships with entrepreneurs. That's very helpful. There are folks that operate at GV uh that you know have good relationships based on prior working at Google. And so there's a lot of Googlers that do angel investing. They're great sources of deal flow. And then you also have, you know, these GPs that are on fund ones that usually bring some kind of unique angle or some edge that they have to allow them to see opportunities that other folks don't see. And the beauty of being a Fund One GP is that you don't have to really do any fund management. You know, you got your lawyers to do your LPA, you've probably raised your fund, you've got a back office, so you can just focus on investing. And that was the opportunity that we saw at GV was, hey, why don't we partner with some of these folks and then it'll allow us to get access to some deals that we might not have seen on our radar.
So, uh, walk me through the evolution of the thesis, the pitch, uh, the the the sweet spot for emerging fund manager. Was there a background that were that you were looking for, whether it was entrepreneurial or spin out from a traditional venture capital firm? Were there sectors or sizing criteria? How did you think about narrowing who you were going to back?
Yeah, I love this question because the most important thing for me was having a perspective having worked across a few different roles. And when I had conversations with people that were in the venture space for my own personal journey, the thing that I continued to hear was, 'Hey, if there's an opportunity to get experience as a product manager, take it.' And if you can do that at a company that's known for doing something with excellence within the ecosystem on the product side where they have great engineers where they have a history of you know identifying some of the best talent that spins out and does great things take that opportunity take that role because a product manager is like a mini CEO within an organization and has ownership and usually works across engineering works across engineering to help identify features and functionality and how those should be prioritized. Works with marketing to think about the positioning and how to get access to distribution. Works with the finance team thinking about what the business model is going to be and what's the best way to monetize this opportunity. So it's great training ground to both I would say be an entrepreneur be a founder plus that playbook for product management is very similar to early stage venture capital. You know what do VCs do at the early stage? Well, they think about what's the problem that's being solved. What's the existing solution set? What are the shortcomings of those solutions? What are people actually doing? Is there an opportunity to kind of rip something out or is this kind of people have solved the problem with duct tape and Excel? And what are the best ways to be able to get distribution? All of those things that a GP thinks about at the early stage, pre-seed, it's kind of the same playbook as a product manager. Yeah.
It's it's interesting to to think back on the 2010s and it really felt like the the the sort of like star power that researchers have today, product managers really had in the 2010s where you had somebody that could have been just coming out of college, landed at a company, but then five years later they were like running a core business at at one of these companies that that again they they did their basically like tour of duty at a company that was like you said, you know, excellent operations, techn excellent talent density, and then they were just in such an amazing position to understand what what great growth looks like, understand what like insane, you know, market pull and and product quality and all these things. And then understanding like the tech stack at these companies at a deep level so that they would see all of these opportunities to invest in other software and infrastructure and things like that. And it feels like the the the humble product manager today is is um has a lot less attention than like let's say like the star researchers, right? You see that the researcher spinouts are getting kind of all the headlines. But it actually makes me think like there's probably a lot of alpha right now in ex- or ignoring like the new Neo Labs and just focusing on like who are the actual you know great great product managers today at these you know high growth companies um because uh yeah how are you balancing that transition?
I got to tell you, it's it's really a fascinating question right now because what ends up happening is after you get a few funds under your belt, you move to this more operational focus as well, right? So, the thing that people might not think about a lot as they decide to transition to being a fund manager as opposed to working inside of an organization is that when I was at GV, it was amazing. All I had to do was focus on finding the best entrepreneurs. We had great finance people. We had great legal team. We had all this back office ops. We had marketing. I didn't have to think about anything. But when you are starting your own firm, now all of a sudden that's on your plate. And so I think that's one of the most difficult things is balancing it. But I'm going to tell you one of the most beautiful things that's happened and the timing could not have been better is AI. Yeah.
You now have the ability for a lot of these work, you know, things that I have on my plate that are really non-investing. It's amazing how much leverage I can actually get from AI, which is great because you're a limited budget when you're a startup firm and so you don't really have the management fee to be able to build out a big team to give you that leverage. But the beauty of today is that, you know, AI gives that opportunity. I can remember talking to my LPs when we were looking at Anthropic back in the fall of '23 and it just opened my eyes to the fact that my god I told my LPs I'll never forget the AGM where I said hey my objective is to use the AI tools that existed at that time you got to kind of rewind and take yourself back but at that time my goal was hey if I can just have AI do the work of one junior analyst I'm going to be super happy and now you can have AI do the work of a whole team.
Yeah. No, it makes a lot of sense.
Yeah. Just just even just like the deep as soon as we had deep research that was like the same thing as throwing basically a project over to a junior analyst type and saying hey I want you to spend a week and really understand the evolution of this technology set understand the market and even if what you get back today is still like has like some AI slop in the writing at least it's still like will communicate the ideas and get you being able to get up to speed on something you know 10 times faster is is amazing and such an advantage for Yeah. These emerging managers with smaller teams where it might be one or two partners and maybe no no analyst or associate types.
Yeah. So so I mean the the teams can stay so much smaller. At the same time we've seen you know the the funding rounds get so much bigger. Can you walk me through how the knock-on effects of the the the ballooning seed series A series B valuations and actual funding round sizes has cascaded through to your strategy? Have you had to evolve? Has it just been you're in the right place at the right time because you're growing your firm so you're just growing into the new normal or have you actually had to step back and say, 'Okay, things are structurally different. We need to evolve our strategy. How we think about maybe more tangibly, you know, we have friends that have funds that they raised in 2024 where the strategy was like we want to own five to to 10% of companies at pre-seed and then follow on from there. And then almost all of those folks are like now being like we're happy to get 3% of this round uh you know before and then the the markups can be quite intense and the follow on capital can come quickly but it feels like even in the span of span of like one deployment period managers needing to like fully update their strategy on ownership targets and things like that.
And that that was my answer. I mean, you hit the nail on the head because it's you couldn't have spoken a better truth. I just had this conversation with one of our LPs and her question was, you know, what are you seeing as the changes and the challenges within the ecosystem? And I went back to a point I made earlier which is these GPs that are the best usually they have especially in the age of AI. The thing that I really have noticed is that the GPs that are just getting started in their career the best GPs are much more technical even within the last 10 years. I think that's the biggest evolution that I've seen. And when I compare the profiles of not all GPs that are more experienced and deeper in their careers, but a significant number when you just look at their backgrounds, they don't necessarily have the depth of the technical side. And when you look at the GPs that we see today with the smaller funds, these are folks that are coming in with a very unique perspective and the edge I think translates directly from their technical understanding of a problem they had to tackle within one of these technology companies. And so what that does is it opens their eyes to this really unique set of problems that they know can't be solved, but they understand the technical limitations of the current solutions as to why those problems can't be solved. And they kind of have an a somewhat of an idea about the perspective of hey, this is how I think this problem could be solved, but maybe there's one aspect that's missing. So maybe it's the compute horsepower or maybe there's a certain problem that hasn't been solved in an architecture side. There's something that's just missing and so they know what to look for and then when they see it, they can pounce on it immediately.
And I think to your earlier point around being inside of a company, you understand two things that are really important. If you're in one of the big hyperscalers or you're inside one of the big tech companies that's, you know, really known for producing great employees, you know what excellence looks like in employees. You you know what a teams look like. You also know what an A organization looks like and how that organization should scale and some of the challenges that it's going to get. So, I think this new batch of GPs just has a really unique perspective that allows them to get in early. Now the flip side is being able to scale and keep that ownership stake as the companies now move so quickly through the financing rounds. That's the biggest challenge that we've seen. The fact that they don't have the ability to hold on to that pro-rata like they used to. And look, GPs were very creative even within the last 10 years, right? If I look back to some of the deals that we were doing pre-COVID, the GPs were doing things like going out and raising SPVs and getting existing LPs and new LPs to come on and help them keep as much of their pro-rata as possible. Then they graduated to doing, you know, kind of these, you know, these massive funds that were just for kind of follow-on investments. But now that's much more difficult because you've got this combination of these rounds are increasing in size so fast plus you've got the bigger shops that come down earlier and earlier and so those big shops are kind of already there and ready to scale up. So this is the challenge that a lot of these firms have now.
Well, for you for you the the big question I have is like how how do you manage and prioritize your set of co-investment opportunities because you have this big base of managers that you've backed now and I imagine every single month you're they're bringing you co-invest opportunities and we're in this dynamic right now where you know you'll have the the top five companies in a category getting marked up like crazy and then even the five five through 10 are still getting marked up and and showing momentum and growth and so um I imagine it's like a a massive headache but also big opportunity of like sorting through those and but also like managing expectations with the managers on like when you'll actually lean in and and um uh make a make a direct investment through their vehicles and when you have to sit stuff out.
Yeah. Yeah, I mean you clearly have been looking at our deck cuz you got you don't understand it really well.
I don't I don't deck but I.
He only invests when it's Anthropic.
As long as it's a really.
No, but it's just like swing at the grand even on a personal level being invested in some funds. It's like I don't you know I do this like recre, you know, recreationally to date and it's like well I'm not going to just you know I can't possibly do every deal even if they look like great. Yeah.
Yeah. Well, this is this is the benefit of having that level of expertise where you can even apply it to a side hustle and you professionalize your side hustle because that's exactly the approach that we have to take which is partnering with this amazing GP network that we've earned their trust. And the beauty of the GPs we work with is they invest so early. You know, an entrepreneur never forgets that first check or who took the bet on them. So that's the biggest thing for us is, you know, how do we go through all of these different opportunities? And I do go back to Anthropic because that's the one that really the light bulb went off on my head cuz you had a couple of dynamics that we've discussed. We it was the first time we had done an SPV and this was the Series D that closed in January of '24 that Menlo led. So it started to come together at the end of '23. One of our GPs brought us the deal. A GP we had worked with before on on Reddit. Actually, we had worked with that GP on Reddit. That worked out well.
And so, I was excited because I wanted to get more exposure into AI and had a chance to dive in deep. But the challenge was, I mean, this was like an $18 billion valuation and we had never come close to anything that expensive before. And so I think there was this combination of you know getting our arms around that and you know thinking my god for this thing to actually really come together to give the return this has got to be like a one two trillion dollar and now here here we are here we are.
That's amazing. Uh you you you alluded to uh the emergence of tranched rounds of more complicated financings of uh a ton of capital marshalling at the very early stages of some of the new companies. And I'm interested in the dichotomy that's emerging between the the the company builders versus the financing partners, the inception rounds, and how GPs and emerging GPs are are clarifying their position in the market. Do are you seeing GPs have a good answer to where they sit in the market? Are they just starting to understand how to position themselves? Then is it how accepting how acceptable do you think a uh like a wait-and-see approach or or maybe we'll do a little bit of one and a little bit of the other versus there are some firms right now that are positioning themselves as like we are the company builder firm we're in the inception round don't come to us with the second or third tranche if you're an entrepreneur.
Yeah and I think that latter piece is where the the GPs that we've seen really clarify their position. That's I think the level of granularity that's necessary today that wasn't necessary I would say you know five ten years ago but today it is again I just had this conversation with one of our LPs an institutional LP that sits in a pretty unique seat and that was part of our conversation when we started talking about how do GPs really kind of make their position within the industry and you know now it is definitely being able to leverage some technical aspect that leads them to an edge they have and identifying an opportunity, but then even moreover really focusing in on exactly the profile of company that makes the most sense, where that company sits within product market fit and what I've even seen the specific needs of a company. So, we've even got GPs that have a specialty of being able to have a network of product managers and they can tap into their product manager network when necessary. We've seen a GP that is, you know, has a partner. It's a it's a two-person operation and the other GP has a history of working in PR and public relations and understanding how to position a company which is increasingly important because you know one of the things I don't really think people understand is that one of the risks of the rapid acceleration that we see in companies achieving this incredible scale. I think I just saw Higgsfield is now the fastest company to a billion in revenues. You know, one of the things people don't talk about is when you look at the history of a lot of the entrepreneurs, you know, you look at the Jobs, you even look more recently at the Larry and Sergeys, they had time to be able to develop that muscle memory of how to develop into the shoes of being a high-profile CEO and having to deal with a very, you know, prickly board at times or having to deal with a state dinner with the president of the United States. You know, you you you never saw that need to understand how to enter those environments when you you know, you had like maybe 10 years to get there. Now, you know, companies are getting there in 10 months.
I'll give you I'll give you the best example is Noah uh Noah from Instinct going on Invest like the best to to announce the new round.
There was one question on security. You know, Patrick was basically saying like, look, like a lot of people just don't, you know, don't trust aren't going to trust a new product like this with all, you know, their email and payment information, all this stuff. Um, and I I thought his answer was fine, but it it didn't it didn't it wasn't like it wasn't like it wasn't like he he hit a hit a home run. Uh, but I was like, I got to you got to give him like some time. He's 23 years old. The company's like less than a year old. Yeah, it's a $10 billion company, but like you know, give him like 10 more of those interviews and he'll probably answer wildly differently. Now, now you don't get 10 years. You get three and then within three years of starting your company, you're getting made fun of on SNL while you're having dinner with the president. It's such a weird scenario, right?
How do you VCs love to talk about taste and how taste is important, but how quickly do you clock a man? Like how many can you clock a manager's taste in companies over the fund cycle? Because every manager comes out and they say we want to back the most important companies in the world and you know back visionary founders, right? It all sort of like blends together. But then my manager friends, you can just tell usually maybe it takes me a few years, but I have a friend who like loves to back all the hyper controversial founders on X. Like almost every single one he's in. And if you can think of somebody that like went viral for doing something crazy or saying something weird, he's in all those companies. And then I have like other, you know, another set of friends that are that are managers and they love to back the like super earnest, really kind. And they're both saying the same thing to when they're doing their fundraisers, right? They're like, 'We want to back visionary founders.' And yet they sort of self-select into these like very.
What kind of vision are you talking about? Vision archetypes.
Well, I I love that because it also comes back to the personality of the GP and kind of the the type of dynamic that's going to be most interesting for them kind of intellectually cuz I you know everyone I think the best GPs that I've met they're just so smart and they're so intellectually curious and I think when you really break it down birds of a feather flock together and so you see like the most interesting pairings with GPs and founders and you really know it holds true when you start to look at the deal flow that they're getting. So, it's like people kind of can immediately identify, oh my god, this is like the perfect company for a GPX over here, right? And I think that's another piece that speaks to the edge and how a company um or how a GP can should position their firm within the ecosystem. And you do start to see part of the the taste as you call it. I think that's a great way to describe it. I work with my son and you know we kind of track and monitor GPs and one of the things that's a telltale sign is hey are these GPs just kind of chasing the next hot thing or is there some consistency in the approach that they're taking not only within a certain sector or a certain problem that's being solved but also with the the personality of the founder that's going after this on this uh opportunity and you can definitely start to see that certain GPs kind of always go after a certain profile of founder and to be honest for us at least those are the GPs that we like the best because it means that they're they're consistent.
Yeah. Yeah. And it's you don't want to like especially if you're evaluating new managers if you if there's a personal if you think they're going to be going after a certain personality type that and then that personality type is not represented in the in the portfolio in your portfolio already. Then it actually starts to be interesting because you're not just going to get sort of an average of everything else you already have going to have exposure to.
No, see that's exactly right because our objective is to cast as wide a net as possible and the best way to do that is to have unique approaches within the GP network that we've developed which now allows us to have this great source of deal flow that's not very overlapping. So we see more unique opportunities.
Yeah. How uh how are you processing if if a manager comes to you and uh like how are you processing like vice specifically right now or managers that are like principled about not touching certain categories because over the last five years it seems like every major platform VC has made investments in gambling and and uh maybe multiple forms of gambling but also some of those companies don't look like gambling at all when they start. It's like, oh, crypto the election billions of dollars, billions of dollars deployed from a bunch of firms that historically wouldn't have touched these sort of more more vice like categories. And so I'm imagining a manager that comes to you and says like, hey, I want to invest in the best companies in the world, but there's going to be some companies that their financial performance will be amazing, but based on my values, I don't want to touch them. Right? That in some ways could be not good for LPs because you theoretically should back every company that's going to generate a great return that's operating within the general laws of the United States.
The worst possible manager is like I'm morally opposed to AI. I sat it out for ethical reasons.
Like that's why I passed on everything.
No, but that'd be insane. Anyways, so I'm sort of rambling, but I think you get the general idea. To do with the LPA and the vice clauses and whatnot.
Well, that was the first place I was going to start, which is the first thing is to always go back and check the LPA because usually there are some vice clauses in the LPA and you want to start as broad as possible. But there's always going to be an LP or two that you kind of are balancing: do I really want this LP, but they've got these vice clauses? And so you have to balance that. If you're balancing that correctly, we can put that aside. I have seen a couple of GPs that actually focus on vice, like their whole point of view and their whole approach is to go after the vice opportunities, particularly because there's not a lot of capital chasing them. They're often really good businesses, and with the limited number, you keep the valuations much more reasonable, and then that preserves a lot of the upside.
And I think there's another thing that just naturally happens as we evolve. When you think about the United States and where we've been historically over the past hundred years, we've almost had a little bit of a pendulum swing for certain things that are considered vice and now they're not considered vice anymore. And then it also kind of just depends on the general mood, I think. When the economy is doing well, you kind of have a little more leeway with some of the things that could be a little bit more in the vice category. When things get a little more restricted, or when there's a certain administration in, then you could see things kind of moving in the other direction.
You know, I think one of the things that I've looked at right now, I wouldn't consider it a vice per se, although if you go into certain gyms in Southern California, it could probably be a vice, which is peptides.
Right. So when I start to think about peptides and how the pendulum is swinging with peptides, you know, we've got the GLP-1s, which are peptides. People may not know they're peptides, but they are. And now we're getting a little more open to thinking about having peptides be a little bit more regulated, but regulated in the right way so that we can get the research necessary so that people can now buy these on the regular market as opposed to the gray market. So that's one where I think the pendulum is swinging in the right direction, partially because of the administration. It's RFK Jr. who's really a proponent of peptides. So I think there's opportunities there, and you just have to, if I'm sitting with my LP hat on, I've got to think about what parameter I want to put around the LPA and how restrictive do I want to be, because there's some great opportunities that I don't really think of as vice anymore in the 2020s.
Well, yeah. The other thing is if a VC invests in a vice company and loses money on it, then if you're going to do it, at least put up good returns. So that's the other thing that's been driving more LP friendliness around a lot of this stuff, just because a lot of these companies have been performing quite well. But anyways, this was great.
Yeah, this is fantastic. It's great to meet you. Thanks for coming on.
Thanks so much for having me. I appreciate it. Great conversation.
This is great. We'll talk. Have a good one.
Let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on market — reading that now with AI agents. I don't know, I got too much going on today. We have a few more guests joining in just a minute. We'll see who's here next. We can give you the high level on the SpaceX launch for Starship's first orbital mission while we wait for our next guest to join. Elon Musk...
Next time there's a launch.
Yeah. And we know that Starship's going to be landing in the Pacific. I say we try to get Tyler out in the splash zone.
In the splash zone. In the GoPro.
What does that do? They already filmed these.
No, but it would hit way harder if it was Tyler behind the camera. If my life was at stake.
Yeah. I mean, it would be a way to put anybody who thinks it's fake, thinks it's AI video, but we filmed it ourselves. We know it's real. Anyway, speaking of AI video, we have Zach London from Gossip Goblin with us today. How you doing?
Welcome to the show. Where in the world are you?
Oh, cool. There you go. Oh, sorry for staying up so late. Thank you for staying up so late. Please introduce yourself and what you're working on specifically. It's fascinating.
Yeah, thanks for having me. I'm Zach, better known online as Gossip Goblin. I make some AI videos that you guys hopefully have seen. And I have a feature-length film coming out in a little over two months.
Yeah. What was the process for making the feature-length film? I imagine there's AI tooling that can help at every step of the way, but it feels like there's still an incredible amount of human involvement. Did you start with a title? Did you start with a concept, a genre, a logline? Like, what was your process?
Yeah. So contrary to popular belief, you're not yet able to just type in 'make me a movie' into a box. Although there's plenty of people trying to make that happen. No, I mean, depending on how you look at it, this is like four years in the making, maybe.
I mean, I've been making AI videos since that was really a possibility, like four years ago. And at first, you know, it looked pretty terrible. But I thought there was a there there, that there was actual potential to do narrative storytelling beyond just Will Smith spaghetti memes or, you know, just Twitter clickbait.
And I'd say about a year and a half ago is when the tools really hit this inflection point where it became clear that you can actually make stuff that people want to watch beyond just the shock value of this new taboo technology.
So yeah, I've been kind of building out this sci-fi universe for several years now, in public on social media, and it's garnered enough interest that I was able to quit my day job, start a little studio, hire a team, and for the last eight months, nine months, we've been working on this feature film, which has been... and it's coming out, it's premiering in two months.
Yeah, December 4th. Pretty good timeline. But talk about — what can you share about the movie, like concept and general story?
Yeah. So, you know, everything I do, it's like I would say leaning on pretty dark, sardonic, twisted sci-fi stuff. And there's a bit of an allegory edge to it. It's not just wild out there sci-fi. Hopefully it's not too on the nose. But I think one of the fun parts about AI is the actual — I still write the script, or myself and a co-writer write the script. We used a dozen voice actors in the film. We have musicians scoring the film. We use ElevenLabs for the sound effects. We have a whole post-production crew. So it's not just me in my dark basement in Sweden. There's a full crew of people. And so I'd like to believe there's still that level of craft and detail and authorship involved. We haven't just relegated this to a pipeline of tools to just render it out. But it's been a pretty arduous process to put it all together. But even with that said, the actual production time is still pretty fast and lean relative to how you would make a sci-fi epic of this scope in the past.
So I'd like to believe that the topics are a lot timelier and more tuned to the present. And that's all paired with — we put out 10 minutes of short-form content a week. So that's not quite the same caliber, but that keeps us relevant and front and center. And now we've caught Elon's attention recently with some videos that may or may not have to do with Claude's wet lab in San Francisco.
No, to me, one of the biggest opportunities of the moment is taking something like a very timely topic and then creating something that looks like it took months and months and months to produce.
And I mean, South Park — part of why South Park always was super topical and would become part of the conversation. It was like the first thing out of Hollywood that was scripted, that was commentating on what was happening in the relative near term.
