You're watching TBPN. Today is Thursday, September 3rd, 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 all in one place.
It's model mayhem, folks. It's model mayhem. We got tons and tons of new AI model releases. It's a great week to be into AI. I think all the lab leaders, they got together. They said, "You know what? People just love AI. Let's give them more. Let's all team up to launch new AI for them the same week so that everyone has something just to be happy about, you know."
Uh we got Anthropic Fable 5.1, we got Muse Spark 1.3, we got Gemini 3.8 Flash, OpenAI's tease of Astra as a GPT-6. There's a six where the S goes in one of the videos. People will figure it out. But the model mayhem is continuing. Everyone got back from their long summers, their vacations. They said, "We got to, we got to launch something new. We got to update this stuff."
And Grok, Claude. Yeah. And we're all down this morning.
People thought Astra might have escaped. Kind of a DeepSeek moment for AI maybe. What do you think's going on?
Do we actually understand why all of the different models went down at the same time? Because it's easy if it's like AWS went down and it took down a bunch of... US East one.
Why is Gemini down then?
No, no, Gemini wasn't down.
Oh, Gemini was never down.
Oh, okay. Okay, okay, that makes sense. So, Amazon clearly very critical to the global internet. Uh, good luck to the folks over at Amazon that are fighting the good fight. Keep going.
Couple big announcements. One, which we got... Shiman's birthday. It is the big 5.
Should we sing full happy birthday? I think full happy birthday.
Happy birthday to you. Happy birthday to you. Happy birthday, dear Shiman. Happy birthday to you.
Fantastic. And All-In Conference is coming to Los Angeles, I believe, in a couple weeks. Very exciting. Sign up.
Wait for our invites. So, wait for our invites.
I think we... I think you've been invited to pay and go if you want to go.
Good to know. Uh, equally important.
TBPN's Road to Christmas. Christmas. How many days? 112 days out. 112 days out. 12 days out. 112 days.
I got to say it's feeling like it's going a little slow. Yeah, it... I wish there would... I wish I was feeling more pace.
Okay, think about it this way. We're only 13 days away from double digits. That's a big moment. That's a moment everyone's gonna be talking about on the road to Christmas.
When we get to 99 days till Christmas, that's when you can start a countdown. That's big.
If you get a really big advent calendar, you can basically start that. Yeah.
Typically advent calendar starts December 1st. Why not 99 days away?
A Q4 advent calendar would be pretty elite by TBPN. Little treats along the way help you hit those KPIs.
That could work. That could work. Uh, let me give you the roundup on the model mayhem that's going on. First, let me tell you about CrowdStrike. Your business is AI, their business is securing it. CrowdStrike secures AI and stops breaches. So, uh, Anthropic launched Claude Fable 5.1 alongside the restricted Claude Mythos 5.1. Google released Gemini 3.8 Flash and a cybersecurity focused version. That's good news. Uh, Meta released Muse Spark 1.3.
So, uh, it might not be that much of a surprise that Anthropic seems to have the strongest model of the three with Fable 5.1 scoring 66 on the Artificial Analysis Intelligence Index. Uh, that is the bar chart that everyone has been posting uh in this cycle. It feels like uh we're sort of maybe getting to the end of the benchmark era. It feels like when these models are released, it's much better to solve a novel math problem or do something else. The pelican on the bicycle is still one of my favorites. Yeah, I love that one. But yeah, um...
It does. But the benchmarks, you know, there've been accusations of bench hacking, hard to interpret many of them.
Very, very low trust in benchmarks. And at this point, everyone has had enough experience using various models. Yep.
They have their own sort of internal benchmark.
Yeah. And so the demos of like I built this game, I did this thing with it. Uh, and then also just the trusted voices of people who, you know, use a bunch of these models and they kind of give you the breakdown of what they like, what they don't. Uh, that has been where people lean a lot more. But the Artificial Analysis Intelligence Index, this bar chart that you see, has been a good way to kind of compress down a bunch of benchmarks into one meta benchmark. So, uh, Fable 5.1 got the highest result ever on the index. The score is also ahead of Opus 5, which got 63, and Fable, which got a 62. Anthropic says, "Fable 5.1 is also cheaper and more efficient, made possible by an improved caching system. Should make ordinary workloads 25% cheaper and long-horizon agentic jobs 45% cheaper." The company says that's good news. Uh, interestingly, as Ben Thompson pointed out, Anthropic is also sort of dropping its no-zero-data-retention policy, um, which there was a whole news cycle around a few weeks ago. People were saying, you know, why is Fable not taking off in adoption? It's really a great model. And there were a bunch of different explanations. One of them was companies demand zero data retention. They don't want closed-source AI labs to be hoovering up their private information.
Yeah. And I think they said functionality that will allow for data retention, but it's on servers and infrastructure that the company owns. Yeah.
So, you do keep some of the data. You still are monitored for hostile usage, but it's not going straight into Anthropic's databases. So Alex Karp and Sautinella both warned against this idea that companies should have data sovereignty. So the policy is going to be replaced, the no-zero-data-retention, no-ZDR is going to be replaced with something called EFS, Enterprise Frontier Safeguards. Uh, and that may have contributed to lower Fable adoption among enterprises, and it sounds like it was a direct response to user feedback. So good news that, you know, the people spoke and the companies listened.
So, uh, over in Google world, Gemini 3.8 Flash is the company's third Flash release in six weeks. They are flashing out these Flash releases. It scored 73.7% on DeepSWE, just behind Opus 5 and competitive with models that cost several times more. Uh, independent testing gave it a 59 intelligence score, which isn't the absolute frontier, but it's a great result for a model generating roughly 300 tokens per second. So very quick and very good at coding, at least on this particular benchmark, DeepSWE. We'll see what adoption looks like and where enterprise spend goes.
Uh, Arash Ferdowsi has some very interesting data from the Ramp Economics Lab you can go check out. He also has a new post that's very interesting that we can talk about in a second. But, uh, last model, Meta Muse Spark 1.3 did very well on benchmarks, scoring 75.4% on DeepSWE, higher than Gemini 3.8 Flash, beating both Opus 5 and GPT-5.6. It didn't sweep the board. Opus still beats it on several professional work and computer use evaluations, but it got 62 on the intelligence index, which is only behind the newest Claude models.
Uh, tons of stuff to think about and discuss here. So, um, the interesting post from Ferdowsi, and I don't know if we have it in the timeline, if we can pull it up, but he was saying that there's a lot of concentration in the enterprise AI revenues right now. Uh, OpenAI and Anthropic, 80% of their enterprise revenue comes from just 1% of the companies. And I was like, 1%? That seems crazy. And he notes that this is uncommon for software categories. Like if you look at CRM, if you look at databases, if you look at all sorts of different software spend, typically you don't see as much concentration, you don't see 1% driving 80% of the spend.
And I was wondering about this. And so I started looking up like where else do we see this type of inequality, if you can call it that, this distribution, this power law. Power laws are everywhere, but where else does this exist? And you might go to hiring, like is AI a drop-in replacement for hiring? Is it going to be proportional to hiring? And in fact, the top 1% of biggest companies in America, they do hire a ton of people. The top 1% of American businesses employ 65% of the total workforce, uh, not 80%. But interestingly...
There is concentration risk there, John. 65% of jobs are tied to just 1% of companies.
There is. Yeah, there is. And I mean, yeah, you definitely see that. Uh, although the top 1% companies tend to be pretty lindy, you're talking about...
No, no, I know. I'm joking.
Yeah. The government and whatnot, but um...
The interesting 1%/80% correlation comes from sales. So the top 1% of American companies by sales generate 80% of total revenue. And so there's this weird dynamic where I don't know exactly how correlated it is, how causal it is, but uh there is an interesting dynamic there where it feels like if you look at the total AI spend, it's around uh $150 billion a year, something like that. Uh, and then you look at total revenue for all US businesses. AI is roughly a quarter of a percent of total US business revenue and it tracks fairly closely to the revenues of those individual firms. So you see that that 1% of the top businesses generate 80% of the revenue, they also spend 80%, they also generate 80% of the AI revenue.
And so there's this interesting dynamic where because enterprise AI particularly, you're not going to be on the $20 plan, you're not going to be on the $200 plan, you're going to be consumption-based and you're going to look at it a lot more like a marketing line item that's proportional to your revenue potentially. That's at least one interpretation of this. Uh, another fellow over at Ramp said that this is a Rorschach test for how you feel about AI. Either you look at this and you're like, it's great, or you look at this like, it's over. Um, but fun, fun, fun chart to dig into. Anything else on this? You guys read any of this? No.
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Uh, our guest today we forgot to cover. Uh, Pablo Torre joining at 11:30. 11:30. Uh, to talk about the Clippers and Kawhi Leonard.
I mean, so these are people that go, they watch live streams and they clip them and they put them out on social media. Yeah. I think that's why they named the team that. Yeah. Yeah. Kind of an homage because there's a lot of clipping that happens in LA. TikTok clips, Instagram clips. So they call...
Yeah. This whole Ballmer-Kawhi Leonard thing. Uh, you had an interesting pronunciation of Kawhi's name earlier because I don't think you'd ever heard of it.
Well, I was calling him uh, Steve Bal... I dropped the R because I thought it was French. Oh, nice. No.
Yeah. Uh, and then we got a bunch of others. Somewhat of a lightning round. We have Mohit from Cyphr. He's got a big funding round from Altimeter. We have Akshay from Pocket. Sold over 200,000 devices. Uh, we were talking to Jimmy yesterday. He was saying, "Why can't big companies do hardware while Pocket's doing it? They're making it work."
Jimmy did say that he sold... he was like, "Oh, Meta sold 2 million pairs of glasses. I sold 2 million pairs of headphones in Brooklyn," which was a great line. Um, and a bunch of other great teams joining.
And we'll cap it off with the CEO of Snowflake coming off a great quarter. Yeah, stock is way, way up. Uh, very exciting. 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.
So, uh, the other big story in the news, the open-source community is stronger than ever. We saw uh, three, four, who knows, five closed-source releases. All the big labs are duking it out. Meanwhile, Nvidia is going even bigger on open source with the $13 billion acquisition for Hugging Face. Uh, all over the timeline. This was leaked a couple weeks ago, I feel like. Rumored. What are you laughing at?
No, just every single day I would see a headline about Nvidia-Hugging Face and think, "Okay, now it's official." Yeah. Now it's official.
Today is the day. They can talk about it. They can explain it. Uh, and there's a lot that makes sense. There's not too many questions. It's just a great outcome generally. But it's an interesting story because it's a true 10-year overnight success. Um, and they're having fun with the acquisition price. Uh, Nvidia agreed to pay $12.93 billion for Hugging Face, which just happens to be the exact decimal code for the hugging face emoji, which of course is the icon used by the company. Uh, and then also if you take that number and you turn it into a color code, I think you get a green that sort of hints at Nvidia. So, they're having fun both ways. Like, ah, this was always in the plan. Uh, symbolism. Uh, and it's just funny to be having fun with a price this big.
I remember the Instagram acquisition and the idea of a billion-dollar outcome as being insane during the social media boom. And now uh we're seeing like decacorn liquidity events every couple weeks. Uh, I'm of course thinking of OpenRouter and...
It's honestly an incredible time to be investing in AI. Seven years ago. Yes. Yes. Best data point. Three to seven years ago was an amazing time to be investing in AI.
It was, um, and so obviously this shouldn't come as that much of a surprise because Jensen has been probably the loudest voice on open source. He put out that open letter that everyone signed on to, uh, and uh, he wants to maintain Nvidia's dominant position in the AI ecosystem, uh, both selling chips to closed-source labs, uh, who might wind up making their own chips as well. And there's a whole tug of war there. But for open-source AI development, uh, he wants to be the place where developers and companies go to pick their models and then hopefully rack them on Nvidia GPUs.
Uh, the simple distillation is just Hugging Face is the GitHub of AI. It's a little more complicated than the Microsoft-GitHub deal. Um, but it still makes a lot of sense. So, uh, Hugging Face doesn't own the smartest models. They don't even try to build them. And there's some interesting financial dynamics there about how capital efficient they were because of that decision. Um, but they created this nexus for people to upload, discover, test, modify models. And the numbers are good. Uh, they have over 18 million developers, 200,000 companies using the product, 3 million models, and over half a million datasets. And so, uh, they have certainly created this vortex of activity that's really valuable. Uh, how strong is the network effect? It's, you know, it's certainly cooking and it's certainly driving a lot of value here.
So, um, the interesting thing about Hugging Face is that it did not start as an AI GitHub. It started as a completely different idea. The founder worked at a French computer vision startup called Moodstocks that was eventually acquired by Google, and in 2016 he teamed up with two co-founders. One who was a mathematician and the other one who was a scientist who had worked in patent law apparently, uh, and they started building an AI that could basically talk about everything. So, this was post-Siri, post-Alexa, but instead of focusing on like, tell me the weather and be an assistant, uh, you know, set a timer, he wanted just to be able to talk to you and...
Still not solved, by the way.
Wait, which one? Siri. Yeah. Yeah. Yeah. So, yes, it's pretty good at setting timers.
Um, but so the goal was to build something like a Tamagotchi, something very cute. Hence the hugging face icon. Uh, a funny, emotional digital friend targeted at teenagers. Uh, the app let users name the bot, text it, send selfies, trade emojis. Uh, it was explicitly marketed as an AI best friend, um, for bored teenagers. And they scaled it. I think this is pretty significant. It was doing a million messages a day. They had more than 100 million messages in total by 2018. That seems pretty significant. That doesn't seem like, you know, you're languishing in the app store with no downloads.
Because how many messages a day can a bored teenager possibly put up with an AI agent? Even if it's like a thousand, you still have, I guess, a thousand users, power users. I don't know, probably the average user is doing 20 messages a day. So, you're seeing pretty significant adoption. Um, and so they were able to raise a series of financing rounds. The big one that grabbed headlines was Kevin Durant, uh, was in the $1.2-$2 million. I think it was a pre-seed round. Uh, Betaworks and SV Angel were also in there. That was 2017. Then they did a proper $4 million round, uh, led by Ron Conway's SV Angel in 2018.
Uh, the company had raised money and the technology worked well enough to feel sort of magical, but it was still 2018. This is pre-GPT-3. Um, and it didn't become a durable consumer business. So in 2018, Google released BERT, which was sort of the first language model, very primitive, but uh, people were really excited about it. But it wasn't delivered just as weights that you could download on the internet. It was delivered as a paper from Google. Um, and the paper was implemented in Google's TensorFlow framework and people like PyTorch.
So the Hugging Face team converted BERT from TensorFlow to PyTorch and released the conversion for free. And so developers really liked that and that became sort of like the initial go-to-market flywheel for developer adoption. Uh, and eventually they added more and more models, eventually thousands. Now I think they have millions of models, which is sort of crazy, but when you think about all the forks and fine-tunes it makes sense. Uh, eventually the team stopped trying to build this one application and focused on building tools, became the picks-and-shovels trade. So instead of trying to pick a winner, you just host every model. They became the Switzerland of AI to some degree. Um, and so the flywheel started compounding: more models, more developers, more model creators, more companies.
Uh, and it was the same basic network effect as GitHub. You know, GitHub was the default home for open-source software. Hugging Face very quickly became the default home for AI models. Over time, Hugging Face grew from a code library to a place where developers could publish models, version them, attach datasets, uh, discuss changes, and they even allowed them to build demos. Hugging Face eventually launched a Spaces product where you could demo these different models. Um, companies could maintain private repositories. Same GitHub strategy.
Um, so 2019, Lux comes in with $15 million. Then yeah, Lux got in early, Series A, 15 mil. Uh, they also came back for the Series C in 2022. That was $100 million at a $2 billion valuation. Sequoia and Coatue were in that round. There was also a Series B in 2021. Uh, that was 40 mil. And then the big step up was in August of 2023. Hugging Face raised $235 million at a $4.5 billion valuation.
And it's a murderer's row of potential acquirers. You got Salesforce, Google, Amazon, Nvidia, AMD, Intel, Qualcomm, and IBM. So you're, you know, it's not like they were doing a road show to sell the company, but it's very much like, we want to be the Switzerland of AI. We want good partnerships with everything. We're going to be chip agnostic. So yes, we have Nvidia on our cap table, but we also have AMD and Intel and Qualcomm. So, you know, you can count on Hugging Face as being like an independent place. We're not purely Nvidia-backed, which is maybe one of the things that they'll have to deal with now, but they're not purely Nvidia-backed at that time.
So, it's very much like, oh yeah, we'll host a model that runs well on AMD, we'll host a model that runs well on Nvidia, we'll host models that are from Google, from Amazon, etc. Uh, and so it looked like this peace treaty moment from the major AI infrastructure companies. You get everyone around the table, everyone's aligned with the mission. Uh, and Hugging Face becomes this neutral territory where it supported competing clouds, chips, frameworks, models. No single company could control the platform.
And so even though they did a number of rounds, Hugging Face, I'm going to say, only raised under $400 million, which is a lot of money but not at a $12 billion outcome. Uh, and it's pretty small considering the outcome, and it was very capital efficient because they weren't actually buying chips or serving models directly. Uh, and they had this flywheel that sort of spurred growth through the network effect naturally. So not a lot of cost in the business. They became profitable in 2025. Still had half the money that they raised. So Nvidia came in to offer $500 million late 2025 at a $7 billion valuation, but they turned it down.
Whoa. Turned it down because they said, "Hey, if we're going to go deeper with one particular area, it's got to be the whole shebang." And so, uh, that's what wound up happening. So, pretty high revenue multiple.
My question is, um, I wonder what Jensen's vision for Hugging Face is. Uh, they do offer model routing. Yeah. Uh, and you know, they rank a bunch of inference providers. Is this something that could we see Hugging Face and OpenRouter and Ramp's router competing more and more? Yeah.
Um, sure. I think it's two things. I think one is if like closed source is already its own business line, sell chips to the labs, but the labs are building ASICS, they're doing a lot of stuff and there's this whole back-and-forth tug of war there. But on the flip side, you have open source which is continuing to grow. And if you can be sort of the front door to that and then say, hey, you found your best model, your framework on Hugging Face and now you're ready to go and buy chips or buy inference or buy compute and Nvidia's right there. That is a very logical flow.
And anything that they can do to make open source powerful, exciting, a place where you can build a career, have a great outcome, I think that's beneficial to Nvidia because a lot of people will see this and say, yeah, like you can go and build a great company and have a fantastic outcome. I mean, the retention packages are apparently a billion dollars for a pretty small team. I think it's in the hundreds still. And so, uh, if Nvidia is just trying to send a massive signal to the world that you can make it in the open-source world, that's a really good signal to send. And it feels like it's landing loud and clear, especially today.
Um, what else is on your mind regarding Hugging Face and Nvidia? And while you think about it, I'm going to tell everyone 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. What do we got on the timeline?
Uh, people are still waiting for an official launch of Astra. Lisan Algib is sharing some Astra benchmarks. ARC-AGI-3, 98.6. They had previously said, "Are you ready for a nuke to hit ARC-AGI-3?"
Uh, so almost fully saturated. FrontierMath Tier 4 v2 gets a 97.6. DeepSWE, 74.1. ExploitBench also saturated at 100%.
So, wow. Uh, seems pretty good, but still no official announcement.
Okay. Well, we will keep monitoring it. Let's go through what else is in the timeline. What is John Palmer saying these days? He says, "I actually think Snapchat for work might be a good idea in today's big companies. Work communication platforms have always followed what teenagers were doing 10 years ago. I did use IRC when I was a teenager." Unst... Tyler has to look it up. He doesn't know what internet relay chat is.
Wow. I, for what it's worth, I didn't use IRC either. No. What did you use? AOL. You didn't use AIM? AOL Instant Messenger. Wow.
What was your first communication platform on the internet? Email. Email.
I remember being inundated with emails. I remember there was like a summer, there was a summer... He's laughing at me because I had a Hotmail. Wow.
Well, I just remember spending a summer as like, not even a teenager yet, just being super stressed about my inbox because like every kid had just started using email. Yeah. And so they were just sending these super long emails and I would be thinking, I'd just be like playing outside in the grass and thinking, man, I got to check my email.
Do you think there's anything actually to this? It sounds like he's being serious. In the age of AI slop, the most efficient form of communication is just short videos of yourself speaking. What do you think?
I would love to use Snapchat for work. So if we said, "Hey, as a team, we're going to communicate through short selfie videos." Yeah. With the filters. You got to have the dog filter or whatever, the hot dog filter, whatever those were.
Uh, he says he's serious. A two-minute demo video. Yeah, I guess in terms of actually just taking a video of your screen showing people what you're working on. You know, there's a lot of different things you can do.
Uh, there's a town that's for sale. 6 million bucks gets you an entire city in California, no less. Not a place to live.
You know what I'm thinking? What are you thinking? Data center developers have been having some issues, right? They try to move into a town, start building the data center. The town says absolutely not. Well, here you go. Buy the whole town.
Buy the whole town. Who's going to tell you no if you are the king of the castle? The town next door. Maybe they might be annoyed. I don't know. Anyway, king in the castle. King of the castle.
There's a video here on Good Morning America breaking down the details. An entire town went on sale for... 2.6 is TBPN City. I did get excited about the potential of just welcome to TBPN, California, but yeah, I'm not super eager to move.
This has Riley Wall's project written all over it. Started with the street. He's got to do... Who bought the street by the way? Notion. Notion. The Notion way. I think that was what it's called. So Notion, California. Maybe it's right there.
Uh, it's official. Hot bot summer is over. Super Grok is saying goodbye to companions. I remember we were debating, you know, there's obviously a lot of people that had ethical concerns about AI romantic companions, but we were more discussing just like, is there actually a business here once you break the seal of like, okay, we're doing it. He did it. Um, would it actually be successful? Because Replika has seemed to get to scale. There's been other products that have played in this world and seemingly reached adoption and scale.
But uh, this is the same thing as the Sora discourse where everyone was caught up in Sora is either going to be the most powerful thing ever and we're not going to be able to stop watching it, or it's going to be good and so fun and it's going to be amazing and dominant. But no one was counting just like, oh, it might just go away in six months. And is the same thing here?
I don't know. I think I was saying it was going to go away just because I thought it was going to be a tool.
Yeah. And I think we benchmarked the market for this. Like if you look at other romantic stuff... first said, "Okay, I'm going all in on adult entertainment." I did think it was a potential path for Grok to get into the single-digit billions. I probably overestimated the market there.
Um, but it felt like one of the plays that he had to get back in the game at the time. Yeah. Um, but again, this was last year and back then if you could get into the single-digit billions you were doing pretty well. And then the game obviously, you know, really shifted to...
Yeah, it makes sense to wind it down, focus on enterprise software. That was what was in the SpaceX S-1, was the... what was it, a $13 trillion market he was going after, something like that. It was a shocking, shocking number, maybe $20 trillion or something. Absolutely huge, huge numbers. And it makes sense. There's a lot of value in the enterprise, much less in this controversial topic.
Uh, well, fish.audio ran a billboard campaign. We love out-of-home. This one sort of confused people. Uh, Heshi Brody says, "$100 for anyone that can explain what this company does without looking it up." This is on the New York City subway today and we'll read it to you and you can take a guess. Uh, fish.audio says, "We put voice AI on a silent sign. You see the problem." Is this one of those jokes though? Because...
I think it's a joke. I think this is an ElevenLabs competitor. We even know. But is this a real ad from a real company or is this a prankster making fun of tech ads? Because there was that prankster who put up a bunch of fake billboards. Remember like...
It really makes you think. It really makes you think. Uh, it made me go to the website.
Okay. They make uh text-to-speech, speech-to-text, audio separation, voice changers, translation, and they partner with global innovators, John. They're working with uh HeyGen. Okay. Uh, retail. Real company. Yeah. A bunch of games companies, it looks like.
Clout Kitchen. You ever heard of Clout Kitchen, John? No. You ever been in the kitchen cooking clout?
Okay. So, isn't it like they put voice AI on a silent sign? You can't... like if you have a billboard, you can't listen to it. But their product is audio. You can't listen to the billboard. That's the problem. Yeah, right.
I guess I would expect... your explanation is a problem. I would expect the application.
More importantly, we have our first... take a picture and it reads it to you. That's what I would expect. Anyway, uh, we do have our next guest in the waiting room. Let's bring in Pablo Torre from Pablo Torre Finds Out. He's a host, investigative journalist, and he's on an absolute tear. What are you doing? How are you doing, Pablo?
It's an honor to have you. I was telling John before the show started, we podcast for a living. I'm not a big... I don't follow very many sports very much, but every time there's a sports story, I go find your content. And when I watch your content, you make me feel like an amateur because you're just so good at what you do. So good at yapping, but then you're also an elite investigative journalist. And we wanted to take a victory lap with you. Feels like a...
My show is designed... Thank you. My show is designed for people who don't care about sports at all to find it even mildly entertaining and interesting. And this is a story that has immersed me in the world of securities law and the funneling of money and billionaires and especially one particular billionaire who used to run a certain company called Microsoft. And so all of this I think is actually in your guys' wheelhouse. So happy to be on with you.
Yeah. And I remember I watched some of your content around a year ago when you were originally breaking this story and then I'm surprised that the story at least went away out of the public eye for some time. I'm sure you were still following it, but take us maybe from back a little bit to first kind of uncovering this and then we'll get all the way to the present.
Yeah. So, this was an investigation that started with a tip. And the tip was there's a weird company out in LA called Aspiration. It was a tree-planting startup, aka a carbon credits company. The ESG thing, as you guys may recall, during the pandemic, was a real thing. We're going to be good guys, right? Everyone's going to be a good guy now. And, uh, endorsers...
Hey, hey, hey. I love trees. I love planting trees, too. I love what they do to carbon and oxygen reportedly.
Um, so Aspiration has all these endorsers that are public. There's Robert Downey Jr., there's Leonardo DiCaprio, there's Drake, there's Cindy Crawford, people who grew up in the '90s dig.
Toronto figures into the story in lots of ways, it turns out. But the point is that there are all these A-list stars, Orlando Bloom, I didn't even mention, all these A-list stars that this Good Guy company is paying to tell everybody about what they are.
And what I get a tip on is, hey, you should look into this company. It's kind of weird. Um, they just signed a deal, $300 million to be the jersey patch sponsor of the Los Angeles Clippers, and uh, you know, they have another endorser that you'd be interested in.
And when I look into this, it's not immediately obvious like what they're talking about, but when this company goes bankrupt because, and this is going to be in your wheelhouse again, they were going to go public via SPAC.
What a time, right? What a time. SPACs, ESG, we're all going to get rich being good guys and no one really needs to ask many questions. Just trust us, it's going to be fine. And what turns out is uh this company is co-founded by two people, two big Dem donors, plastic good guys, went to Harvard. I mean, I resemble the remark. I want to say that like this has been also awkward for me. Steve Ballmer, Harvard, all these guys, all of this, right? Pedigree, all of it.
The thing that's interesting is that when you dig in to how this company fell apart and they go into bankruptcy, you of course get to examine some public filings and one of their big creditors was a company called KL2 Aspire LLC.
And if you're a basketball fan who's aware of the Clippers, you may realize that KL sounds like Kawhi Leonard, 2 sounds like his jersey number. KL2 Aspire sounds like a vehicle you've invented to accept money from Aspiration.
And he was owed $7 million outstanding. And the weird part was that this dude had no public record of being associated with Aspiration personally at all.
And so when you dig in and you begin to ask questions of people who used to work at a company that has now gone into bankruptcy, in which the co-founder Joe Sanberg is now, by the way, serving 14 years in federal prison for fraud, you get people who are interested in explaining how crazy their life has been.
And what they say and what they provide in the tonnage of all the reporting I did for months, seven months before we came out with part one of the series, one year ago today, was documentation that attested to the fact that Kawhi Leonard was paid, according to this agreement, a total of $48 million, 20 in stock, 28 in cash, to do nothing.
For a deal that never got announced. And the question was why? Yeah. And so you follow the threads and...
You get to, oh wait, there's a massive salary cap circumvention scheme in which the richest owner in American sports, Steve Ballmer, is trying to use all of his wealth in ways he's not allowed to, to get money to a guy that he needed to take away from the Lakers and the Toronto Raptors in order to make his dream of owning a professional basketball team exactly the dream that he imagined.
So how strict are these rules? Because I can imagine that's a funny way.
Yeah, we covered the whole AI talent wars last summer every single day. It was crazy and we kept coming back to this idea. Part of why the talent wars worked in many ways is there's no salary cap, right? So Zuck could just spend exactly as much money as the talent would accept. But in this case, there's actual laws.
Yeah, I guess I just mean like if I'm a player and I know that the owner runs a hedge fund and I see the benefit of putting some of the money that I earn directly with their hedge fund, it gets me access, or I know that the owner of the team is friends with the CEO of Nike and I might be able to get a shoe deal. Like there's some level of just doing business above board that's probably acceptable, but is this a blurry line? Like how defined is this? Like how clear is it to you?
So two things to know. One is that this is a cardinal rule of sports in which you raise a very astute point. If you are LeBron James, it's kind of insane. No disrespect intended to the latest person who got bidded up between Meta and OpenAI and Anthropic or whatever. No disrespect. LeBron James is probably thinking to himself, why can't I make $100 million a year? Yeah, this salary is capped. And if you have problems with that, I get it. Sports is a fun mix of socialism and capitalism that is convenient, typically for the owners of these teams who are wealthier every time you check the news.
So point A, well taken. Point B though is that it's a cardinal rule of sports. Meaning that sports is one of the few places where your spending power is not automatically supposed to let you just buy whatever you want. Right? This is how big markets and small markets ostensibly get to some level of par. This is how, and this is debatable, of course, we're getting into more philosophy than I expected, but it's a fair point. It gets into the question of what's actually moral and not.
What Steve Ballmer did, given that blurriness around the ethics of it, was violate and really, I would say, blow past any semblance of plausible deniability that, hold on, I thought this was something that we could do here. And I say that because according to the NBA's investigation and my own, this was not merely a scheme that he ran to funnel money with one company, Aspiration. He did it with four.
He did it with the scoreboard manufacturer, multi-million dollar deal for Kawhi Leonard to do nothing. He did it with the insurance company, LockedIn Insurance, which was the insurance company on the buildout of the Intuit Dome. He apparently did nothing for that. And he did it with, and this is a fun one, Boingo Wireless. Oh yeah, which you may know as the wireless provider of the Los Angeles Clippers. And the thing you say to yourself, do I really need to pay for Boingo? Yeah, I'm like, oh, is my personal review of the product.
So when your original story broke, you got a bunch of pushback, even from a bunch of people that are pretty tapped in and knowledgeable. And some of that pushback was just that there's no way that Ballmer would be this dumb, right? So this story couldn't possibly be true because who would ever risk it all in this way. Is that somewhat accurate?
I think that's even the most generous defense. I think there are a lot of people who are just being told by the Clippers and Ballmer's crisis PR handlers, this weird podcaster is clout chasing. None of this makes sense. Steve would never do this. He's Steve Ballmer.
Yeah, the less surprising version though, which you just articulated, is a common one, which is you can't be this dumb.
Yeah. And I dare say that one of the things you learn when you investigate financial impropriety in our great country is that that is something that you should never assume. Sure. There are many phenomenally successful people who, because they are desperate to get the thing they can't just buy, do things that they think will never get found out. And the problem in this case across these four companies and across these employees and across my reporting is that he trusted people that he should not have trusted and also he maybe shouldn't have tried to do it in the first place.
Isn't there one weird trick that would have made this all work? Which is just Ballmer goes to Boingo Wireless and says, 'Yeah, we got this deal. It's expensive, but you will get some Instagram posts.' And then Leonard actually follows through on some of the promotions and would have been enough top market for CPM, like it could work. Yeah. If he had actually carried out the endorsements, would that have been enough or is that still crossing the line?
So, I've debated on my show literally Mark Cuban about this whole story before it became obvious what this was. And I appreciate the apology he gave me on Twitter yesterday, genuinely. Cool. But there's a Shark Tank episode we could do just like pitching ideas for how to circumvent the salary cap that would have worked. Yeah. And I think one of them, by the way, just to play that game briefly, it's like telling Kawhi Leonard about crypto. Yeah. There are untraceable flows of money that I am told are reliable at this point in the calendar that you could use. Right?
But what they did was actually almost too clever by half. What they really did was they created fake jobs for Kawhi Leonard and fake consulting agreements, consulting fees for the companies. So they were trying to create separation, okay, a familiar term in the investigation of financial propriety, but they're trying to separate where the money was going from A to B to C. The problem was that everybody in the course of doing it, people they trusted, left a trail of paper as well as testimony, as well as a lack of rational explanation as to why this existed if you never were to announce the deals. And Kawhi, and this is the great comedy that is sports in which salaries are capped, but egos are not. Kawhi Leonard said to everybody, 'I'm not doing a single thing for these off-the-books payments. I am not doing work for them, but I want them.' And Steve Ballmer said, 'Got you. We'll make that work.' And because these deals could not be explained as endorsements because he literally never endorsed them, it became this comedy of errors.
That's very, very odd. All right, let's get to the punishment. What's been your reaction to Kawhi got a $700,000 fine? Doesn't feel very significant, at least, you know, compared to the actual payments and what was received. And then you have a one-year ban for Ballmer. But what was your reaction to the verdict from the NBA?
Yeah. This was the biggest punishment for an owner in the history of, I think, American professional sports. And the NBA took five first-round picks, which is the most you could imagine. They took $30 million, which is a rounding error, of course, for Ballmer. They made him pay the $50 million legal fee to walk to Lipton, the NBA's outside counsel, which is also a rounding error, but still, pretty annoying, I would imagine. But the real thing that I thought was meaningful was that they banned Steve Ballmer from his own building for a year. He loves basketball. He sits courtside. He measured literally the toilets at the Intuit Dome when he was designing the whole building. He was a micromanager who knew everything about every piece of the building. And they banned him from being inside his own building which he funded for $2 billion privately to his credit. And they also banned his president of business for a year. And they banned his GM, his president of basketball for 6 months. And so Kawhi got effectively a slap on the wrist. And that is wild on the merits.
The reason they did it briefly is because when Ballmer now is rattling his saber, because he is the former CEO of Microsoft who, when presented with antitrust findings by the literal federal government, also fought, right, this is unsurprising if you know the trajectory of his life. What he has threatened is litigation and what he has not been able to pursue is arbitration, which is interesting because arbitration, briefly, in the world of sports court, which is another TV show we should pilot together. In sports court you have an arbitrator, assistant arbitrator, but that is an arrangement between the player Kawhi Leonard and his union as well as the league. And when Kawhi Leonard got a slap on the wrist, only $700,000, no suspension, no voiding of the contract, no nothing, he agreed to a settlement that was quite favorable. And the question was why? Well, Kawhi Leonard's settlement meant that the arbitration option was legally removed. So now they boxed in Ballmer, which is again no small thing. My reaction was, it's no small thing to be at war with a guy with $145 billion depending on Microsoft stock and to say you got one move and it's to enter yet more discovery when you know he doesn't want to.
It sounds like a nightmare situation for Ballmer at this point to get more of the details out. Like he kind of... there's more. So your read on it is he just has to basically accept the consequences and, you know, get to watch as a fan for the next year. But how much does this set back the Clippers? Like how impactful, you know, in many ways like he tried to cheat his way, you know, a couple steps forward, but in the process of that set the team back. Like basically took the team out of probably contention for I want to say a decade. Like what player would want to go to this organization now knowing that they're not going to get any first-round picks for the next five years? Like it just feels like a really tough situation.
The next Clippers first-rounder that they will be able to select hasn't even sniffed puberty yet. Like we're just in a timeline that is a nuclear winter kind of feeling if you're a Clipper fan. But I want to say that at a certain point perhaps things get so bad that sort of things almost need to reset. And so actually the thing I'm wondering aloud with you guys is as we contemplate what is Ballmer going to do next? He has now threatened personally with litigation Adam Silver by name in a letter through his lawyers. He is signaling it is wartime and we just gave you some of the stakes around what that would entail practically. But historically, if you're going to go to war with your sport and with the commissioner and with other owners, by the way, that's the sort of backstage politics of this. Adam doesn't do this as a crusade. He does this because he's read the room of other billionaires who own these 29 other teams. If you're going to go to war with the other 29 ownership groups and the commissioner and the league and journalism and everything, typically it stops being as fun for you. Typically. And so, does Steve Ballmer even want to consider perhaps selling and taking a punishment that is a humiliation on one level, but also, you know what the Lakers just went for, $12.5 billion. What could you make on the back end if money was a thing you cared about?
Yeah. What does this do to the value? Like, there's no way you could value the Clippers at least within 10% of the Lakers, right?
No. Doing back-of-the-envelope math, they're not getting eight figures. They're not getting 10 figures. What I think is interesting though is they're going to make more than people I think are prepared to intuit it based on the fact that Intuit is a pun, not even intended, based on how horrific this franchise has been. We're just at a place in sports where the scarcity is so clear that these are detached valuations from revenue. You know, again, there are a couple places in this world where that is true. You guys cover a lot of them. Sports though is on its own crazy ride that is getting divorced from the reality of things.
I don't know. I think sports and the private markets are pretty near each other, but I take your point.
No. And by the way, that's the story of the Lakers and Mark Walter, which we were also investigating. My point being that they're not going to get 12 and a half, they're not going to get 10. But for Ballmer, it's a trade-off between what do you really want? You have all of the money. What do you want? Do you want to fight? Do you want to surrender? Do you want to walk away with something like your, you know, ego or dignity? Whatever. I don't want to be too over the top here, but like he has a calculation that is not a normal calculation to make because right now it's signaling that he's going to fight.
Yeah. Fighting seems like going to war with you seems pretty rough. Do you feel like this has probably been happening? Do you think it's possible that Ballmer felt confident in doing something like this because it was happening at a larger scale? And if you actually look at a bunch of other teams, it's really much more widespread. And if you start looking at a bunch of these endorsement deals, there's definitely a better way to go about it. You said you could have a whole show about getting around the salary cap, and I just have to imagine there's so much money involved, there's so much ego. If you own a team, you want to compete, you want to win. And I would guess that there's a bunch of other owners and GMs and things like that that are kind of a little bit nervous now because they may have done something similar or even at a smaller scale.
I think two things are true. One is by degree lots of other examples of salary cap circumvention, funneling money to players, have happened, will happen, are happening. But the other thing that's true is that in terms of the scale and ambition and the paper trail and the sort of almost just like subplots, nothing is quite like a story in which a guy who doesn't want to do anything, who has zero discernible endorsement value, even when he does something, has leverage over the richest owner in sports, who is willing to spare no expense almost literally to funnel money through four different companies, one of whom, by the way, is a public company, Dtactronics, that is now acknowledged in yesterday the earnings call that their CFO, according to him, is now dealing with an SEC investigation. So there's also a civil suit happening in LA court against Steve Ballmer personally by 11 Aspiration investors about fraud. My point is there are lots of other examples about how to circumvent the cap that are I'm sure getting no attention and maybe we'll get to some of them. But in terms of what this one is, the reason it's the biggest punishment is because they found stuff that is singular in terms of all of the webs that it entails.
But now the person that is most incentivized to uncover all these other salary cap circumvention potential deals that have been happening is actually Steve Ballmer. Because you imagine in his war, he's got his back against the wall. He's sitting there thinking the only thing that I could possibly do to kind of clear my reputation is make it come out that... You think he's going to start feeding Pablo tips? Be your number one tipster.
I would gladly welcome back-checkable information from any source. I also welcome the idea that maybe the biggest consequence of my reporting is that Steve Ballmer becomes himself a podcaster, and that would be something that I welcome as well.
That'd be fantastic. Final job once you have everything. Well, he's got a lot to learn. It's only you and the mic.
I will say based on what I've learned from your show, that trajectory is also an increasingly common thing for a billionaire to do. So perhaps we're not so different, you and I.
Well, thank you so much for coming on the show. This was fantastic. An honor to have you and congratulations. I mean, it's a strange thing to say congratulations for a story that is ultimately quite sad and unfortunate, but credit you on display here.
Look, as always, comedy is when bad things happen to other people. So there are Laker fans who think this is the funniest story in the world. I do shed a tear for the Clipper fans who are like, 'Yeah, really, again. This again, another owner that we might not.' Anyway.
Last question. Is it possible that he sells the Clippers and overpays for another team just to get right back in the game?
Look, what he wanted from the beginning, what he was interested in, of course, because of Microsoft and geography, was a Seattle team back again. Now, I will advise this just as a podcaster to a potential future podcaster. I am told that one way to be approved to buy a new team is to not go to war with the 29 other ownership groups that will need to approve that. So, just a consideration as he continues to examine contingencies.
That makes sense. Well, thank you so much for coming on the show. Yeah, thank you so much. This was a week. We really appreciate it and congratulations on your overall run. Everything. It's fantastic. We'll talk to you soon. Anytime. Thank you. Have a good one. Goodbye. Let me tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. Up next, we have Mohit Aron from Sipin coming out of stealth live. How are you? Welcome to the show.
Hey, thank you for having me here.
Thanks so much for hopping on. I would love to start with a little bit of your background. This is your latest company, but not your first. Can you give us the career highlights thus far?
Yeah, absolutely. My last company was called Cohesity and the one before that was called Nutanix. So I'm the founder of two previous companies. Both of them fortunately are doing north of a billion dollars in ARR. The first company is already public. And this one, Cohesity, is yet to go public.
So you had a tough time raising your new company, I'm assuming. Sure. It was quick. You really had to do all the laps up and down Sand Hill, scrape together pennies to get this done, I'm sure. No, the round came together, I'm sure, pretty smoothly. But what were you laying out? I imagine it was like, I've gotten to a billion of ARR twice. Here's the plan to get to a billion of ARR really, really quickly. What is the plan? What was the pitch?
Yeah. The pitch was that look, in my first company I brought together or converged infrastructure. In the second company I converged data. I'm here to converge context for go-to-market teams.
Okay. Somebody had to do it. So yeah, to do it. I imagine with the connections that you've built through your previous companies, you can start up market with your go-to-market. Is that the plan? Are you thinking work with bigger companies, bigger deals, or do you still want to scratch the bottoms-up itch, the smaller, more agile, early adopter crowd? What's the go-to-market here?
You know, I'm very passionate about serving customers. I think the problem is all over the stack, both small companies and big ones. My sweet spot is obviously going to be the big enterprise, but I don't want to leave the smaller companies behind. So it's going to be all of them.
How do you think about the actual value that the product will bring to these teams? Because there was a little mini boom cycle for like AI SDRs which feels adjacent and a lot of people were saying, hey, it's way too early to let any AI, even if you're wrapping a frontier model, I don't want it emailing my customers who I might have been golfing with this weekend and you don't have that context and so I don't want you embarrassing me. But it feels like that's where we're going. How do you see the process developing over time?
Yeah. I focus on the problem and the problem is something that we describe as the context gap. And I've seen this problem, you know, running my previous two companies even pre-AI, right? We execute our go-to-market operations without enough context. The context is all over the place. It's sitting in multiple tools, people's heads, and it's not even accurate. It doesn't reflect reality. And we are trying to make decisions without it, right? And the way we try to do stuff is we maybe do a lot of meetings. 80% of the time spent in meetings is to gather the context, not change the news, right? Gather the news, not change the news. And so this is a unique opportunity especially with AI to actually solve that problem.
So how much, yeah, because I feel like if you were able to create an eighth day in the week and sit down the whole team and say everyone dump everything into some voice notes and some shared text files, the frontier models can summarize and put all of that together, but it's really a data acquisition problem. And so how much of this is about enabling teams to do change management the way things work versus autonomously going and gathering data? Both, what's the actual solution?
Yeah, the actual solution is all of that. So automatically gathering the data, making sure that humans are in the loop so that AI is not just hallucinating and putting garbage. It is also helping people in real time, real-time coaching and stuff where they can ask any question or know anything they want from the context. So the solution includes all of that.
Well, it's... Oh, sorry. Please. Key lesson from the first company that you brought to the second company and then key lesson from the second company that you're bringing to this company.
Key lesson from actually both my companies I would say is it's all about the people. It's all about the people inside the company. It's all about the people outside the company which is our customers. And so you focus on that and the right things will happen.
Bearish on AI. Just kidding. It's your third company, but it's your first gong hit here on TBPN. How much did you raise? I think it will be the last. How much did you raise? How much did I raise? $44 million. Well, thank you so much for coming on the show and breaking it down for us. Let's do it again soon. Great. Let's do it again soon. I'm sure there'll be many milestones. We'll talk to you soon. Cheers. Have a good rest of your day. Let me tell everyone about Figma. Agents meet the canvas. Your AI agents can now create and modify your Figma files with design system context. You don't get a lot of CEOs, a lot of successful founders that say, you know what, it's really not about the people at all. It's actually just the code. It's just the AI. It's just the AI agents. That's all that matters. No. Of course it is the people. And we have a great person next. Often the best advice is the most simple and straightforward. Yeah, it's true. Well, we have Akshay from Pocket. He has sold over 200,000 of these devices. Show you what they look like on the screen. Welcome to the show, Akshay. How you doing?
Hey, John. Hey, Jordy. How are you guys doing? It's great to be on TBPN.
I'm glad to have you here. We started hearing and learning about your company probably a year ago at this point. We're like, what's this company that's just selling a lot of hardware somewhat under the radar? I'm sure it doesn't feel like that to you, but you guys haven't really chased the spotlight as much as other companies that sell hardware that haven't sold any hardware. Yeah. I mean, the phrase in Silicon Valley, hardware is hard. Don't go after it. It feels like AI has unlocked new opportunities both in there's demand for new devices and then there's also AI that you can ask to help you procure things and help you design things. But what has the road to actually building the first device then scaling to 200,000 devices been like for you?
Yeah. So interestingly we actually built an app before we actually built the hardware. And the simple thing was that hey, it's the most obvious thing to do. It's the easiest thing to scale, so let's just go build an app. And we built a meeting notetaker app. And we released it to a bunch of people and there was not a lot of response. And being surprised, we thought to ourselves, hey, what about that device that we were all thinking about that we should go do? That'll be like a necklace. And that's kind of what we did with open source work at OMI. We went and did a bunch of Kickstarters and we printed a bunch of these devices and gave it to people and we actually saw that people were using the device 10 times more than the app. There were a couple of other challenges regarding being always on and being a variable. So when I started Pocket my first immediate thought was this should not be always on. People are still not comfortable. There's still dialogue that needs to happen before always-on wearable becomes a thing and we said let's go build something that's a wearable for a phone so the people on Wall Street are happy to use it and it doesn't augment their style of their suits and coats that they wear and that's kind of where Pocket came around.
That's very cool. So walk me through the current product specs, price point, what the favorite features are, sort of like how you think about where you are now and then where you want to go.
So currently this is Pocket and this retails for $129. The hardware comes with a premium subscription. So you kind of get to do unlimited summaries, unlimited transcripts. You get three messages you can ask about your conversations per day. If you would want more like speaker tagging, advanced speaker recognition, all these kinds of things and advanced AI models for reasoning and summary agents that can make better details out of your summaries and have access to 300 plus professionally sourced templates like SOAP notes for doctors, case notes for lawyers, and CRM entries for salespeople, you can get on our Pro plan for $20 a month or $200 per year and that's kind of the whole product basically.
So the thing that stands out to me is like you launch the initial app, you're not seeing the kind of growth that you wanted to see. And so then you're thinking, okay, we should launch, the solution is to launch a hardware device. Let's turn up the difficulty level, which normally you'd think like, okay, the product's not working. Add a hardware thing that functionally does a lot of the same stuff. It's probably not necessarily gonna... I don't know. My intuition would be that it wouldn't solve the problem, but I keep coming back to, why does it make sense for this to be a separate device from the phone? Because I'm sure you know if you met with investors, a lot of investors would be like, I have a device that's a hardware device. It has battery. It has a microphone. It has a screen. It has all these things. So why are your 200,000 plus customers saying like, no, I want this. I want this separate device because clearly the customers are right.
Yeah, absolutely. It's 300,000 now. And we got to hit back up. Founder, right? So when we actually went and asked these people like, hey, why are you using this 10 times more than the app that we had? We actually had one of the users who was actually using a different phone he just bought for recording conversations and he also had a battery attached to the phone on top. So that's kind of what Pocket ended up being, a product by just watching how people use these recording apps on the phone. There are a lot of limiting factors for recording on the phone. You cannot record your own Zoom meetings in Google Meet if you're already on the phone. You cannot start another recording. So there are a lot of people who have issue with that and there are people who get incoming phone calls all the time. So if you're recording something and you get an incoming phone call it interrupts the recording and if you take the phone your recording is stopping essentially. Apart from all of these technical reasons, the real reason is actually that the people who take 10, 15 meetings a day, these doctors, consultants who are like, you know, patient goes out, another patient comes in. The client goes out, another client comes in and there's 10 to 15 back-to-back meetings. They feel awkward in the first 8 seconds to take their phone and start a recording by unlocking their iPhone and setting up the recording and hoping so that the operating system doesn't kill background running apps for a long time. So people just felt that, you know, this is much more reliable thing, a quick access thing that can immediately start recording and I don't need to feel awkward on placing it on a desk so people don't take their attention, oh why is this guy looking at his phone, we just met. So that's kind of what we came around, that, you know, convenience beats intentions. So if your users have intention to record and you don't make it convenient enough they will not record. But if you actually make it convenient enough to record and they want to record even a little bit, they'll 100% record.
Interesting. Should more people be taking notes and recording their conversations? Oh, yeah. I haven't recorded a conversation in years. Yeah. But what am I missing?
Yeah, absolutely. I think like there... I guess I've recorded hundreds of hours of conversations through the show. So you have to... We have people recording, you know, tens of conversations almost daily and most of these people are actually field workers, you know, consultants, salespeople, real estate agents who are showing people's homes that are noting down requirements, places where note-taking is actually useful. So for example, DoorDash is one of our customers. They use Pocket to go to restaurants for the salespeople to record their pitches and then come back to their HQ and sync with everybody else in a knowledge base of, hey, how did my pitch go with this vendor, with that restaurant owner. So I think there's definitely a use case for field note-taking and that's kind of where Pocket comes and sits in. But yeah, I think in a broader sense, your AI needs a lot of context about you to help you. And every single time you essentially use Pocket, you can connect your cloud MCP or OpenAI's API and your ChatGPT already knows about all your conversations. And you can pretty much manipulate all your transcripts and understand how people are talking to you and all these cues. For example, if you go to a VC meeting, the VC says 100 other things like it actually sounds so interested, like I felt they almost invested in the startup but they never said the word invest. So the founder going back thinking, oh, I have a term sheet or something, but the truth was it was just a hi.
Yeah. No, I've seen that play out where someone comes away and they say, oh yeah, this VC said they're going to invest. They tell that to another VC. They call each other. I didn't say that. And it becomes a who said. Are you broadly bullish on new AI hardware? Because I think one of the reasons that people have been generally bearish is you've had the Rabbit, you've had Friend, you've had a bunch of these shots and attempts at Humane. So there's been a handful that haven't got the level of traction that you have had. But given your experience so far, do you think there's a lot more devices to build that are AI-native in the real world?
I think so. And I think like, you know, Rabbit and Humane died so, you know, Pocket could live and we learned a lot from all these other devices that essentially died and they primarily died because they were trying to replace the whole smartphone game. Too much, too much stuff. Yeah. Exactly. And they were actually just going against, going towards real world work, you know, the way that the workflows work for real people. You know, they don't want all the other things like ordering Uber Eats from AI. All they want is like that AI to fit in their existing workflows. And what we did was like we looked at a lot of people who had a lot of meetings and we didn't go into things like personal note-taking for example. All these others are like, you know, dead basically. Whoever went and did anything other than note-taking and note-taking was essentially a product market fit. It was almost like fitness for Apple Watch kind of product market fit and everything else was basically like people didn't want them.
Yeah. When I saw Rabbit R1, I never got a chance to actually use it, but I was thinking like it's such a beautiful design. And I thought it would be perfect for kids where if they're just going around taking some photos and learning a little bit about the world. And I actually wound up buying a different product that's a circular device with a screen and a camera on it and it has little games where the kid can go and say, it'll say like find something flat, find something round, and they'll go and find it. And then that other company, Sticker Box, that we've had on the show, is doing really well in what I would call AI hardware, but you push the button, you say a prompt, and then it prints a cartoon for the kid, and it makes a little sticker. And it's these like very focused things that have, it's just do you want this at this price? It'll do this for you. It makes a lot of sense. What are you doing or what do you need to do on the regulatory side? Because I imagine if it has a radio in it, it needs FCC approval. But you mentioned the medical discipline and HIPAA, is that relevant to you? How have you solved that problem?
Yeah. So, we're HIPAA compliant and we essentially have HIPAA compliant servers that we run HIPAA workloads on specifically for medical use cases. And yeah, like from day one, we thought about being HIPAA compliant and SOC 2 compliant for enterprise as well. So FCC is definitely like if you're making a device with Bluetooth radio, you pretty much need FCC. So from day one, you would need that as well. So yeah, in terms of like, you know, consent is what comes up, you know, most of the time for these kind of recording devices. And what we did with Pocket was we said we would like to bring the risk level down to almost a user action. So everything happens with a user action. So you're supposed to like tap a button to start and stop recording. Although it might be a friction step to this, but we would love for the user action to be the risk level where we are for Pocket. So everything starts with the consent of the user, at least it starts with one party, one-state consent. And then, you know, it's on the user to basically ask for, you know, other people's consent. And surprisingly enough, people actually are very open when you actually ask them to record. And they're actually happy...
that you would share the transcript and the meeting notes of the recording.
Do you think you'll ever launch something like a co-worker agent or assistant functionality? Because I imagine if you can give your device a bunch of context, hey, I want to do this thing, eventually it could get to the point where you can send off tasks in the background that the user can check on, maybe on their mobile device.
Yeah. So that's actually our own roadmap in the next three months, that we would actually like to build agents that would actually take context directly from your conversations and actually act on those, make reports, make docs, PPTs, presentations, slides, all kinds of things from your meetings. So this is increasingly becoming like the regular workflow from all kinds of consultant sales pitches that people take the conversation and make slides out of them and come back for the next meeting. So we would love to make an interface for that. So in the next few months...
How do you think about picking different AI models for various pieces of the workflow? Because I can imagine you're selling something pretty valuable, so cost might not be the most important thing. At the same time, you can just wait and things get cheaper often. Switching from one model to another might inject a different flavor or vibe sometimes. So how have you thought about this? Are you fine-tuning your own models using open source, bouncing back and forth between whatever frontier models are available? What's your decision criteria right now?
So surprisingly, we have the highest margins in the subscription industry for AI. I can imagine roughly 75% margin in software subscriptions essentially. So we do this with different kinds of routing. Oh, yeah, so we have our own version of OpenRouter where we essentially route to different kinds of providers and models. We use a section of open source for transcription.
Because people love to choose what model they would like to use for summarization.
Yeah. So transcription is pretty much left to us. So we do it ourselves. So that's kind of why our margins are super high because we get to use whatever we like. And we use our own models that are fine-tuned on top of OpenAI's Whisper, because a lot of these online models were trained over YouTube datasets like Wikitext, which are extremely clean datasets and work really well for Zoom meetings and meetings of online notetakers. But when you come for offline, there's like a train going next to you, there's a bunch of things happening, so they actually go crazy when there's like an offline recording. So we need to fine-tune for them to work for offline recording. Essentially...
That makes a lot of sense. Thank you so much for coming on the show. I forgot that I am a featured customer on the Zapier blog from 2015 because I developed a workflow that would record all of our conference calls, send them to a human transcription service, and then upload the transcription into Google Drive. And then you could search by keyword just using Google Drive search. Nowhere near the power level now, but...
Interestingly, Y Combinator actually currently uses Pocket to record all their interviews.
And send them to their online systems through our APIs.
Well, congratulations on the progress. Thank you so much for coming on and breaking it down.
Have a great rest of your day. We'll talk to you soon. Cheers. Let me tell everyone about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web app servers, databases, and more, while Railway automatically takes care of scaling, monitoring, and security. Who we got next? Our next guest is Hari from Aura. He's the founder and CEO with a great update for us. How are you doing? Welcome to the show.
Hey guys, good to see you.
Since it's your first time on the show, we'd love an overview of the company and yourself, and then we can go into the actual news.
Sure. The company Aura, we're in the consumer security, consumer safety space. So basically we thought about all the various different ways that a family could get impacted by using services online: scam, spam, transaction fraud, all the way from that all the way to making sure that if you have teenage kids, for example, if they're using devices too much, we have the ability to kind of figure out how best to sort of guide and navigate them around digital detox, etc. So yeah, that's the core of the product. And I've been an entrepreneur my whole life. This is my third company now.
Awesome. How big is the problem? Because now that I'm thinking about it, I mean, we were just at CrowdStrike's Falcon on Tuesday and we heard that phishing email open rates have jumped from 12% to something like 60% in the AI era. And when I actually go back to the number of cybersecurity scams, I have just as many examples of friends who thought that their grandmother was asking for gift cards as I do in a corporate setting. And so how prevalent is this? What's the data that you monitor to understand the scope of the problem?
Look, I think that over the years, both the breadth of the problem and sort of the number of people it impacts has gotten astronomically bigger. Basically, where certain scams used to be, I don't know, a few thousand worth of scams, now we see that's gone up to like $25,000 per scam on average. The incidence rate is quite high because now that there are a lot more AI-based tools, the bad actors also use the same tools to do deepfakes, to do ID theft with a lot more data out on the dark web that ends up becoming a precursor to basically being able to use that to do nefarious things to families. And I think the other big thing is if you thought about kids, where when I was growing up we weren't native to phones and native to online services. My kids, I mean, they are digital natives. So they basically, you know, are on their devices all day long, which means the incidence of them putting information out there is just much higher. And so as a result, there's just more and more and more of this happening, which is pretty scary.
Talk about the recent hack leak. There was some ID verification service that had a breach, and I think from what I could see, it seemed like half the people in the US were impacted, something like that, with their now, you know, image of their ID out on the web. But break down the breach and then what people should do.
Yeah, look, I think, you know, starting with even a couple years ago, there's the NPD breach, the national level of social security number, etc. Now there's a lot more ID, digital image theft, etc. I think that the key thing I would say is the incidence of these is so high now that when people hear about it, you just start kind of immunized, like you're like, okay, well, whatever, like, you know, I'm sure my data is already out there is what's going through people's minds. The trouble with it is this is just an early tell for the next set of things that are going to start happening. So, for example, at Aura, we have a fully trained foundation model that is looking at sequences of stuff, right? And you know, hey, like, what's the first thing that happens and what's the second thing that happens, what's the third thing that happens, and how can you sort of analyze risk with systems. And we see that with data breaches and information getting out in the dark web is a pretty early and good tell. If it's happened multiple times, you see that the incidence of actual identity theft is bad at the back end. So the very tangible things I'd say, you know, monitor your credit, make sure that you're looking at your credit card numbers and statements. Don't wait for the whole statement to show up. If you start seeing odd things on physical mail, like, you know, keep an eye out for that as well. We've had even, you know, weird situations where people have stolen information and, you know, it gets sold to folks for physical crimes as well. So we see a lot more intersection of physical and digital happening a lot more these days as well.
Interesting. What does the industry side of the business look like? Like, I imagine that as you're protecting homes, schools, individuals, identity theft, there's the flip side, which is if I'm a business, I don't want someone purchasing with a stolen identity. And having a clear communication line between those two parties probably makes sense. But what does that actually look like in practice?
I mean, that's a great question, right? Because if you thought about your own life, like as or me, the surfaces I spend time on are my home, my workplace, and as a parent, my kids' school. So there's a lot of data that kind of goes across that stack. And even more than just, you know, are you using a nefarious card for, you know, for purchasing something from me, even more basic than that is a lot of the enterprise scams, like the ones you were talking about, even with Falcon, for example, many of those originate on the consumer side. And many of the breaches that happen on the enterprise side are social engineering attacks anymore, right? So it's basically going through people who are employees and then kind of using that to get into the enterprise. So on both those pieces, I think getting the consumer to be more aware of these issues ends up becoming pretty critical. We see a lot more overlap now where, you know, we do sell our product through large enterprises as well. And so we talk to a lot of CISOs of big companies. And the feedback we get is, look, the lines are very blurred between what's at home, what's at work. And so even besides sort of the loss prevention piece of it, which is, hey, you use a fake credit card to buy product, it's even more imminent that they want to make sure their enterprise are kept safe. And sometimes, you know, keeping the employees safe is the best way to do that.
Yeah. How much time do you spend working on streamlining onboarding? When I think about these security products, we've talked to the CEO of 1Password, fantastic product, but onboarding can be like a stumbling block for people that, you know, want to secure their life, secure their identity, but the actual integration of getting deep into all the accounts, collecting everything, making sure everything's set up properly, that can be a hurdle. I imagine you have low churn, but the conversion to, I heard about this, to actually I'm using it properly, has got to be a hurdle. How much are you focused on that?
We spend a lot of time on that. Time to value is a huge metric for us, which is, you know, how quickly can you get the customer to something of value, basically. But I'll say two things. One is on the way that the industry works today. If you thought about a product you bought, you know, for either of you guys, right, it's going to look the same. Like you buy something to kind of keep your identity safe, or you buy something to keep your passwords locked up, or even something for kids, for example. The solution doesn't really understand or know you. It knows the problem, right? And so one of the things we have done, which is very different, is we're probably the only product that puts the actual family at the center. So there's actually a large sort of family graph that maps out all of the relationships for people who are, you know, who are the people that you sort of, you know, connect with. And then all of the reasoning and the inference systems that we run on top of that have good ability to have a view of you end to end, which means that when you go into onboarding, we can do a better job first getting you on board. And then as we're watching and observing, we want to make sure that, you know, it's very personalized for you and your digital footprint.
We have a massive gong here. Any recent revenue milestones or growth milestones you could share that we could use to hit this gong for you?
Oh yeah, sure. We hit, we're about 340 some odd million of ARR. So...
Thank you. Thank you. Not too shabby. And thank you for coming on.
Great to see you on the show. Have a great rest of your day. We'll talk to you soon.
Let me tell you about public.com. Investing for those that take it seriously. We got stocks, options, bonds, crypto, treasuries, and more with great customer service. GPT-6 Astra has landed. The blog post is up. You can go check it out on openai.com.
To the stars. And the headline, I believe, good performance on a bunch of things, but the ARC-AGI-3 number is crazy. The score is 99.9%. So it feels like they just beat that. They just beat ARC-AGI-3. So that's the video games, the ones that Tyler was briefly...
Globally ranked. You're out of a job, Tyler. Say goodbye. Hang up your ARC-AGI-3 hat. Don't worry. The team over at ARC-AGI is working on V4. We're going to move the goalpost soon. We're going to move the goalpost soon. But this is very impressive. If you've played around with ARC-AGI-3, it requires some real creative thinking to actually learn how the games work, how to be efficient. What else is sticking out? Has anyone been able to monitor the timeline at all?
Very chaotic launch. So I think it's hard to get a real reaction yet. Tyler, what are you seeing?
Yeah, I mean, there's still no actual post on OpenAI's X account. It's just the blog post that's now live. Okay. But I mean, there's a bunch of benchmarks in there that are...
Terminal bench, science. We're going over into the world of science. GPT-6 Astra scored 64.6% on reasoning effort max cost 26 bucks. I'm sure there will be a lot more. Also, the exploit gym honeypot, lower is the better. GPT-6 Astra 0%. So good performance there. The world's best computer use model. I'm putting that to the test ASAP. Let's see if it can 1v1 me on Rust because if it's good at using a computer, it should be able to no scope, right? That's the bar. That's where my goalposts are. Agents last exam, good performance. So you can go check it all out. I'm sure it's going to be on Bloomberg just a few minutes over with our buddy Ed Zitron. So it'll be fun. So we'll be digging into this and we have some special guests lined up to talk more once we've been able to digest, take it for a spin and have a lot of fun with it. We have our next guest joining in just a second. But first, 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 marketplaces, and now with AI agents. Very exciting. We have two guests joining at the same time. Matt Caldwell and Jordy Leiser from the Minnesota Timberwolves and Lynx and Jump. They're both CEOs and we're going to have them both on at the same time. Let's check in on Ed Zitron, see what his reaction to Astra is. Is it any better or is it just more of the same junk? Because he has been a bear for a long time. He's coming up on the three-year anniversary of the bear posting. Dan Lou has collected all of Ed Zitron's positions.
You think he has sort of a gambler's mindset? Like 80% of gamblers quit right before they're about to hit it big.
Yeah. I think it's just an entertaining stick to tick. It gets views. Kevin Roose, formerly of the New York Times, now independent Hard Fork co-host, who's writing The AGI Chronicles, on sale October 10th. He says, 'Anyone who has interviewed Ed Zitron or had him on their show in the name of AI skepticism has made their audience dumber and less prepared for what is actually coming.' Wow, that's a crazy thing. Eric Newcomer chimes in and says, 'It's his audience. They follow him around.' Which is interesting because I believe Eric's best episode of all time was with Ed Zitron and the Ed Zitron fan base stuck around for a couple more episodes and was like, I don't like this guy at all. I came here for... I don't want reasonable AI. And Eric, of course, is...
I don't want to see both.
Eric's skeptical. Sometimes he's optimistic, but he uses these and he doesn't believe that it's like a...
RSC says when you ask Ed Zitron where he keeps writing all his predictions when all his predictions are wrong. And there's a quote from Dion Waiters: 'I'd rather go 0 for 30 than 0 for 9.' Because you go 0 for 9, that means you stop shooting. That means you lost confidence.
That's pretty good. I like that. Well, speaking of basketball, we have the CEO of the Minnesota Timberwolves, Matt Caldwell, here with us and Jordy Leiser joining as well. Welcome to the show, fellas. How are you doing?
Hey guys, good to see you.
Great to have you. Thanks so much for hopping on. I would love to start with the news. Can you both introduce how this all came together and the various roles, how you guys see yourselves working together?
Yeah, Jordy, you can kick it off.
Yeah. Well, great to meet you. Thanks for having us on. Big fan of what you guys have built and been doing here. Basically, I started this company, Jump, with Marc Lore and Alex Rodriguez. I think you had Marc on, actually. I saw...
talking. You also had Alex, one of our boys with Jump, too.
Yeah. Nice. Love him. Yeah. So, the whole theory was that Marc and I were going to buy a team, and if they were going to buy a team, these guys are not sort of in the business of doing things the old way. And so buying the team, actually, I just saw the Shopify plug. We're trying to do for sports teams what Shopify does for merchants, which is basically totally unlock the direct-to-consumer proposition for a sports team. And so Matt was hired, you know, right when Marc and Alex took over the club. And so we got to know each other, and then we were able to launch our platform in the NBA with the Timberwolves, with Matt, who's an unbelievable leader and sports executive, under the ownership of Marc when they finally took control of the club.
Yeah, when you think back to sports ticketing generally, just the different eras of technology, the risks, what they unlocked, what do you draw on as, you know, things that organizations got right? Any organizations that jumped on waves early and saw success? Like, what are you pattern matching against when you think about where you want the team and the organization to go from here?
Yeah, sure. Thanks again for having me on. You know, listen, traditionally teams outsourced ticketing, right? If you look at it from a team perspective, like there's a lot of work to be done. You're trying to win games, you're signing players, you're marketing the brand, and, you know, to create your own ticketing system that's, you know, transacting and selling season tickets and single game tickets, you know, it's a lot of work. You know, Ticketmaster has built a great business on this with both concerts and sporting events. And, you know, I think the last 10 years or so, teams are saying, okay, we have a lot of season ticket holders, but we don't really have data on people that just come to like one game or, you know, pick up a couple games during the year. And, you know, when all that data is outsourced to another provider, you know, it's hard to figure out the behaviors of that fan and how do you market to them? How do you make them a season ticket holder? You know, essentially just grow with that fan. So, you know, what Jordy has done with, you know, Marc and Alex, built a ticketing system that's in-house, you know, that, you know, when someone goes on our app now, and, you know, traditionally we've had like, you know, our schedule and some content highlights on the app, but now you can just scroll and buy tickets on the app, you don't even know that you're on Jump's platform. It looks like the team's app. So, you know, it's a way to have the data on your side of the table on your app, and you're working with a great partner, you know, with Jordy and John.
So, how do you think about actually scaling the marketing now that you have more data, more of a direct relationship? I've thought about times when I've gotten invited to a sporting event and my friend might have bought all the tickets. Occasionally they'll say, 'Oh, to get in, you actually have to download an app and claim the ticket, and then you'll have it on your phone.' And then I should be getting retargeted to return the favor. Maybe I should buy them a round of tickets next time. And I have probably been served a few ads. I don't know. In one ear, out the other a lot with this stuff. But how do you think about building your marketing organization internally? You know, Shopify has some buttons where once you're set up, you can just say, 'Oh, yeah, run some Facebook ads.' You're at a much larger scale. How do you think about the rest of the organization internally executing this strategy?
It's a great example. And traditionally, you know, the experience you talked about, your friend transfers your ticket, you download Ticketmaster, StubHub, SeatGeek, you know, all that data, that person's information, cell phone, email, all stayed with the third party. Now we're getting access to it. So we can have our sales staff call them. We can have automated emails going to them. We can go visit them in their seat. You know, we know someone came in, we know their name. But, you know, something that's really helped for us, you know, going to the next level is, you know, we've gotten to the point with Jump where, you know, even if someone puts like a ticket in the shopping cart, you know, but doesn't close it out, or even just browses over a game, you know, we get that information, we get an automated email to that person. 'Hey, these two tickets are still available.' Or even better, 'Hey, those two tickets were just sold, but there's two other ones that are similar.' So you just have more engagement, especially with, you know, what I would call the casual fan, single game buyer. Like our season ticket holders, we know them really well. They sit courtside, they're in suites, you can visit them at the games. Every season ticket holder has their own individual concierge sales rep. But it's the people that, like yourself, got a transferred ticket, come to a game. We want to make them longtime fans, and now we just have so many ways to reach out to them.
Now, I went last time I went to an NFL game and I swear I had to download three apps to get the actual ticket. And even by the end, I'm like, I hope I got all the apps I need to get in to use my ticket.
The parking ticket, hot dog app, and...
And it was a free ticket too. I was like, it shouldn't be this hard. How are you...
Lot of work. I was committed though. Jordy, how are you thinking about using this to deepen the fan engagement? Knowing Alex, like he's, you know, obsessed with collectibles. I imagine by having that direct relationship, you can unlock, you know, different products and things like that for fans based on their actual engagement with the team. So that, you know, fans have to actually earn certain things. But what does that look like?
Yeah, you nailed it. And actually this hits the problem of, you know, the three apps and the new login and the Lakers do some deal with some startup and then you got to create a login for that thing to like you. It's just the whole thing is just one Frankenstein tech stack, you know, mess. And so again, Shopify is the best comp, like it sort of consolidates that into one seamless experience, then everything else plugs into you. So in that same vein, collectibles, merch, concessions, add-ons, parking, you should have, you know, the Timberwolves login, the Timberwolves account, add to cart, cool jersey, add to cart, cool collectible. Oh, hey, I know that you are a season ticket member and you came to, you know, KG's coming back for the Wolves this year. It's a big part of the story. So they should know that these people who were there during the KG era, you know, it's not just that they know the CRM, like we know Bob Smith and we know where he lives and we know it's like, did Bob go to those games? Was Bob, you know, kind of there during the era? And then you can nudge and you can sell and you can upsell and you can engage. So it's content, it's merch, it's media, it's everything sort of in one system.
Are you thinking about cross-selling across different sports? When I think about the Shopify example, they've launched the Shop app, you know, oh, you bought this pair of boots, maybe you want this pair of pants. Is there a world where you bought this ticket to a basketball game, here's, you know, it's the offseason, here's a football game or a baseball game. Is that something...
That's a little bit more the market. That's kind of the marketplace model that, you know, there's a bunch of ticketing marketplaces and there's YC versions of that and there's stuff, you know. And I think that's the thing that, you know, Jordan, you were saying is just kind of the beginning of the mess of this whole thing where if I want to buy, you know, Delta Airlines, like if I'm going to fly on Delta, I got the Delta app. They know everything about me. They went direct to consumer 20 years ago and like that's it. And so I think that's the missing piece in tier one sports at least. But it's really like if you're in Minnesota, you've been to a Wolves game, hey, let's kind of get to know you as a Wolves fan just like you were, you know, a customer of any other brand.
Yeah. How sharp are the elbows of the other players in ticketing? I mean, I can't imagine they're thrilled that a platform that's allowing people to go D2C popped up with a bunch of backing.
What do you think? Yeah, I imagine they have got like little knives right here and they're just... But yeah, it feels like something that's so aligned, so aligned to the team, so aligned to the fan, it's just misaligned with the legacy players that no one actually, I think, likes.
