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You're watching TBPN. Today is Tuesday, July 14th, 2026. We are live from the TBPN Ultradome, the temporal 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.
IBM is absolutely nuking. The stock is down 25%. Let me see if I can pull this up. Boom. IBM. Well, that is a crazy chart. What is that? That's the one chart. It looks better on the five-year because the stock is actually way up in the AI era since the launch of ChatGPT. IBM has done really, really well. The stock has basically doubled since the introduction of ChatGPT during the AI era. You know, are you going to be a winner or a loser? Are you going to get steamrolled, slopped, something like that. But it's been doing well up until today when the company reset the narrative around their server business specifically.
So the high-level reason that IBM is not well positioned in the token path, to use the Brad Gerstner and Gavin Baker parlance, is that AI spending is currently flowing into GPUs, memory, networking, hyperscale cloud computing, and frontier model inference. IBM is not a major winner in those categories. So, just to refresh on IBM, because it's an interesting business with a great name, International Business Machines, the first business machines they made were punch card systems. They made clocks. Like, it's like you're running a business, you need a machine.
You're going to need a great clock. You're going to need a clock. No, really, it was part of any... Not just any clock. Like a clock that works really well. That's right. Professional clock. Clock Pro Max, you on time. Exactly. Clock Pro Max. Lighter, thinner. It's the lightest, thinnest, best looking, fast... not fastest. You don't want a fast clock.
But tabulating machines, basically a bunch of different ways to process information mechanically. And that foundational insight, you know, was pretty simple. It was businesses will continually pay forever to automate recordkeeping. And at a high level, that's sort of been working forever. And they're continuously... you know, if they ever tried to sell a clock as a SaaS product, time as a service.
If you really, really squint, Red Hat, Kubernetes, it's keeping time between distributed systems. Maybe there's something there. But when you're running a database across a bunch of different servers, there's some timekeeping aspect that's important. But no, I don't think they ever did.
The IBM that people know, the mainframe business that started in 1964, System/360. It was a compatible family of devices, which is interesting. It's not just one, people think one mainframe, but it was actually a whole bunch of different systems that you can upgrade piecemeal without redesigning the entire workflow. So you need a little bit more storage, you upgrade that. You need a little bit more compute, you upgrade that. And this turned IBM into the dominant supplier of corporate computing. Banks, insurers, airlines, manufacturers, governments, they all used IBM as the central system for their hardware and software. This was the mainframe era.
And the whole reason that IBM in particular became dominant in mainframes was they focused on high reliability, long customer relationships, expensive switching costs. It's very difficult once you're in the IBM ecosystem to weed your way out. Proprietary software tied to the hardware. Certain software would only run on IBM hardware. So you couldn't replatform. You had to rip everything out, which is very difficult for a large bank or a large airline in the '60s and '70s. Good for business.
And they also had huge, huge support and consulting contracts associated with all the software and the hardware that they were delivering. Sort of a precursor to the forward-deployed engineer if you squint a little bit. But the PC era was the real turning point. So the IBM PC launched in 1981. This legitimized the personal computing market and set up two new companies, Intel and Microsoft, to capture immense value during the next computing boom. The IBM PC ran Windows and used an Intel chip. At the time, IBM was doing $30 billion in revenue. Intel was doing less than $1 billion and Microsoft was only doing $17 million in sales. And so, I think Microsoft had like 120 employees. And all of a sudden, those two companies became ultimately way, way bigger, like 10 times as big.
So the market eventually fractured and proposals to break IBM into separate companies started to pop up. The market fractured because once you had, you know, an Intel chipset and a Windows operating system, you could run Windows on a different chipset and you could have a different chipset with a different operating system. And the value capture piece, there were just other PC manufacturers that came in and then obviously Apple with their, you know, anti-IBM, like, challenge the man campaign. So the market was fracturing and there was a bunch of proposals during the '80s and '90s to break up the company into separate units.
Lou Gerstner, who became CEO in 1993, rejected that idea and he said, quote, 'We do not necessarily need to manufacture every piece of technology. We need to be the company that makes all of it work together.' So we have to work together. We're going to be the integrator, the systems integrator. His strategy ultimately produced three things: IBM Global Services, large outsourcing contracts, and a vast consulting organization. And that's a lot of what we know about IBM today.
So services businesses do have limitations, though: lower margins, higher headcount, slower organic growth, price competition, etc. In 2019, IBM acquired Red Hat for $34 billion and spun off its traditional managed infrastructure outsourcing business in 2021. So today, you can think of IBM as sort of three key businesses. They have software, which is 44% of the business. That's at 80% gross margins. Great business. 31% of their business is consulting. That's under 30% gross margins, though. And then 23% of the business is infrastructure, which is just shy of 60% gross margin.
And so for the last three years, the stock's been doing really well, up 77% before dividends. And the Red Hat acquisition started paying off. And the Z17 mainframe cycle was surprisingly solid. But the problem is that they just called out a shift away from mainframe spending, with customers shifting capital spending towards the physical AI buildout. Demand for AI and associated hardware is strong, but IBM is losing share of their customers' technology budget. IBM still does have a strong asset for the AI era: Red Hat OpenShift, which is their enterprise Kubernetes platform for orchestrating workloads across multiple computers. But there are so many other companies offering AI capabilities up and down the stack that they're getting a little hammered today with the worst, the biggest share drop in its 115-year history. Rough day for IBM, but an interesting story nonetheless.
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. We have a great show. We have seven guests coming on, lots of fundraising news across VC firms, and... I'm thinking we're back. We're totally back. Dylan Byers is also coming on from Puck to break down the Warner Brothers Discovery news. It was over. We had no fundraising news. Yeah. Today we're back. I think it's just like slow weekends. People like to want to announce Tuesday, Wednesday, Thursday. News on a Monday. Yes.
But Demis Hassabis from DeepMind, the DeepMind chief, he has called for a US-led body to test frontier AI models. He says society has a precious window to prepare for technology advancing at historic speed. He's a Nobel laureate. The Financial Times has the story and there's an article that he posted on X that will sort of click through and give you the takeaways. From the Financial Times: Google DeepMind chief executive Demis Hassabis has called for the creation of a US-led standards body to test new frontier-class AI models for national security threats, arguing that urgent action from international regulators is needed to address the risks posed by rapidly advancing technology.
I'm surprised. Has he never proposed this before? This feels like something that has been proposed many, many times. But maybe I'm just misremembering the AI 2027 people and the AI 2040 people and the OpenAI white paper and what Anthropic said. Like, it feels like we've seen this before of like we need to have a regulatory body of some sort. All the way going back to when the All-In podcast was talking about an FDA for AI back like two or three years ago. But it's now here and it's coming from a DeepMind executive, which hits a little harder.
The warning from Hassabis, a Nobel laureate who leads Google's AI efforts, follows the White House's abrupt export ban on Anthropic's most advanced models last month, alongside a fresh wave of warnings about the potential for AI to disrupt the global economy and financial system. We talked a little bit about The Economist that got together with a much more moderate proposal, I think, because it wasn't actually calling for any sort of change to the development of AI whatsoever or the rollout.
Just saying it could get... AI could get better in the next 10 years. Yes. Which is a very sort of... could get a lot better. That's what they said. They didn't just say... they said a lot better. But the actual pitch from The Economist was we need to have economists and government officials think about responses if there is job displacement from AI. What is the impact? What will the reaction be? So to sort of like prep the legislation so you can be more ready when things start to happen, whether that's retraining or stimulus or jobs programs or all sorts of different things.
So this intervention from Demis is the most detailed proposal yet for AI regulation from Google, which is vying for AI leadership with Anthropic and OpenAI. Quote: 'We've already seen the challenges frontier models pose for cybersecurity.' Good point. 'And other threats, including nuclear and bio risks, may soon emerge as capabilities continue to advance. The rapid progress we're seeing in AI requires a new approach to testing frontier AI model capabilities that is dynamic, adaptable, and rigorous. The US is well positioned given its economic and technical standing to take the first step in developing such a framework.'
My big question is, it seems pretty easy to go to the leading labs and say, hey, you have to go through this process. But do we have a good framework in the United States for reviewing code that China just sort of throws over here, open-sourced? Because if you... I mean, as we've seen with the Kimi K2 and GLM, like, if you tie someone up in an FDA-like review for even six months, let alone a year, let alone what the FDA timelines are for drug development, five years, ten years sometimes, you are going to have open-source models that are way, way more advanced. So like, you either have to review very quickly. Here's the dynamic new frontier model, it's going through a six-month review, let's say, maybe it's really like a one-month review, and then there needs to be... with AI it could be a two-minute review. Yeah, who knows. But let's say it's like a three-month... a three-month delay or six-month delay. Then when it eventually does get released, it gets distilled likely within even less time than that is publicly available. Yeah. Open weights. Yeah.
I would like to see... So we keep seeing these like letters and proposals, and they always come one with a request for urgent action, but they rarely come with super concrete scenarios, like near-term scenarios. I want: here's what's going to happen in six months. Here's what's going to happen in 12 months.
Or even just a like a trigger. Like it would be interesting if somebody said, if the unemployment rate goes above 10%, I would recommend a stimulus check of $1,000 be sent to everyone and means-tested so it only goes to the middle class and lower class. Like that is a very reasonable thing. That's basically what happened during COVID, right? Like the unemployment rate went to 15% and then boom, there were checks in the mail for everyone. And that's a very concrete proposal that you can say if this happens then this happens.
Yeah. I want someone like Demis, basically the world of LessWrong and AI 2027 and 2040. They're willing to lay out super complex scenarios and they can at times come across as very sci-fi, but there's always at least so far been some element of reality in them. I hear what you're saying. I want somebody who's like generally more like kind of moderate to come in and just say like here's a few potential scenarios and this is what I think.
And because I don't believe it's, you know, Demis could suggest what he thinks that the government should do, the US government in this case, he's encouraging like US watchdogs. He's in London though, so I think it's going to be on our lawmakers and our government to understand in these different scenarios, at least start thinking through in these different scenarios, how would we approach them? Mhm. Yeah. I just... I always have a problem with the timelines and predictions because those can get so nitpicked and they're so hard. I'd be more interested in less of like... No, but don't you think that'd be helpful if... I don't think it's helpful. No, no, no. I actually don't. I think it's much more helpful to say if the unemployment rate goes to 10%.
Create a new government body that hires people to do something like create the next TSA. I just think send out stimulus checks or lower interest rates. You tell Washington DC AI models are very good at hacking computer systems and they're going to get better at hacking computer systems. There's not really much for them to do with that because hacking computer systems are already... it's already illegal. Yeah. And the solution there is for companies to beef up their own cybersecurity, make sure they're using the most advanced models, right? Yeah.
And so if you play out again more concrete scenarios where like here's a timeline for the trucking industry and potential job displacement within trucking or any of these other categories. I just think it allows people in Washington, actual lawmakers, to start thinking about... I just think that's always wrong. Like they're always wrong about those predictions. It's so much better to just say, look, if the trucking industry goes through mass displacement, then here's what I actually propose. Here's the solution. As opposed to just saying like there might be a problem and I think that there's a problem coming down the pipe. I don't know. Like it's like what are you actually advocating for other than just being like the sky might fall. I have a p(doom) of this number and it's your job to go figure it out. It's like you're smart. What do you suggest? UBI, higher taxes.
I just don't think predictions are always wrong. There's been so many examples over the last decade where people have gotten predictions like dead on. Yeah. Yeah. Situational awareness. Tyler, what do you think about this?
Yeah. I mean, I'm probably in the camp of like productive regulation, like usually it has some bad consequences. It doesn't really work out. But also, I was just going to say like what he's describing is basically just CAISI, the Center for AI Standards and Innovation, which is under the Commerce Department. Yep. And it's like a slightly beefed up version because right now CAISI is like very much you opt in. Yeah. But it seems like he should just have said like you should specifically beef up CAISI, add these policies, do these like specific things. And I think that would be much more, you know, palatable or well-received or like something like... like what do we actually do with this letter?
It's kind of very, you know, like I'm not sure what we actually do with this. Yeah, it feels like if... I mean to go back to cybersecurity, it's like if it's a national issue, like the NSA works on this stuff, increase their budget, maybe raise taxes to increase their budget, issue more debt to increase their budget. If it can be solved by the private market, it's like go support CrowdStrike or start a new company that can help with cybersecurity. I don't know.
The actual concrete recommendation boiled down from what Demis wrote is something along these lines: create a US frontier AI standards body that's like CAISI but probably more beefed up. He's also advocating that it's overseen federally but funded by AI companies. Define and regularly update benchmarks to determine which models and labs qualify as frontier. So that's something that doesn't exist yet. Require frontier labs to submit models for testing up to 30 days before release. That's sort of nice because that would allow someone who's just going and building a recommender system on Netflix that's actually using AI technically, but it's not a frontier model because it doesn't qualify for that. So then they can just go and ship the latest recommendation algorithm on Netflix. No big deal.
Test models for cyber, biological, nuclear, deception, autonomy, and guardrail-passing capabilities. Require strong cybersecurity, personnel vetting, model cards, watermarking, and substantial safety research. Use national labs, federal agencies, and independent third-party auditors to conduct evaluations. Develop independent confidential tests so labs cannot train specifically against the benchmarks. Require labs to fix serious vulnerabilities discovered after release. Apply the rules to all frontier models deployed in the United States, including foreign and open-source models, while exempting smaller models.
Okay, so he wants to apply it to foreign open-source models. That feels very tricky, but I guess you could get like sort of DMCA notices to Hugging Face and GitHub so that it doesn't proliferate across the web. But yeah, I mean there's probably some power play to like where people are actually downloading and inferencing the model. And I guess if you go to all the NeoClouds and all the open-source folks and you're like, okay, this model is actually a bad model. You got to go, you got to stick to GLM 5.2. Yeah, it's much easier to regulate the compute. This is going to be very controversial to the open-source fans. Yeah, this is kind of like the George nightmare take, taking every single GPU. For sure. For sure.
Coordinate a slowdown among frontier labs if testing reveals sufficiently serious risks and turn the US framework into an international system of shared frontier AI standards. Well, I like the general direction. I like the idea that he's just sharing his viewpoint more broadly. I think all of that is good. I'm not sure that there's enough to dig into here exactly how this would... like where the rubber meets the road, how this would be implemented or what effect this would actually have on the industry. Like this could be really good for open source because it could just slow down the frontier closed-source labs. It could also be really bad for open source if it's much more cumbersome because an open-source project might not have a regulatory budget to actually massage a model through the approval process.
Like there's a reason why small biotech companies get acquired by big pharma before they launch their drugs. It's because like the big pharma companies have offices in Washington DC and can walk the legislators through the whole process. So in general I'm sympathetic to the view where people say, oh, regulation benefits the biggest companies in the world, because historically that's how it's played out. Maybe that's different this time. Who knows? It could just slow down the frontier. But you know, he does work for a leading lab. So interesting.
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. And let's move on. What's going on in New York? I will tell you what's going on in New York. Today, New York Governor Kathy Hochul signed an executive order placing a one-year pause on new AI data centers in the state.
But the order establishes a moratorium while New York develops a regulatory framework and conducts environmental impact assessments examining data centers' energy demand, water use, water quality, air quality, and effects on the electric grid. You would think that there's a decent amount of oversight around those things generally already, like air quality, like whether you start a new barbecue restaurant or a coal plant, you would imagine that there's just a general rule about not polluting the atmosphere. That would apply to data centers by default, but it seems like there's a little bit of a special case here. And so, they're working on this in particular.
The move immediately drew criticism from the tech industry, which argues that restricting data center construction will cost local communities jobs and weaken America's position in the global AI race. Earlier this year, Maine considered a similar moratorium, but Democratic Governor Janet Mills vetoed the proposal after concerns it would block a major data center planned for a town still struggling after the closure of a local paper mill. Hochul's Republican challenger, Bruce Blakeman, also opposes the moratorium, arguing that local governments, not the state, should decide whether to approve projects that promise significant economic benefits. If it stands, the order would make New York the first state to impose a broad moratorium on large-scale AI data centers.
The Associated General Contractors of New York State is already condemning the decision. So, the contractors who are going to be working on this project and see it as a form of job creation are upset about this. But let's see what president and CEO Mike Elmendorf had to say. He warned that halting permits for as much as a year in this fast-moving sector will not simply delay projects, it will send them permanently to Virginia, Texas, Georgia, and other states actively competing for these investments once those projects break ground. Elsewhere, he argued the jobs, tax revenue, and economic opportunities are unlikely to return. So, there hasn't been that much of a data center boom in New York State that I'm aware of.
I'm trying to find... the largest campus that I can find is the Lake Mariner campus in Barker or Somerset. Yeah. And it has around 205 megawatts active. Wow. Yeah. It's pretty big. And there's a proposal out to do another 500 megawatts. But it hasn't been approved yet and certainly the new ban would stop that, as it's any data centers requiring 50 megawatts or more.
I know a lot of IT infrastructure data centers, if you can call them that. They're usually smaller scale for financial institutions in Manhattan, often are built in New Jersey, but that's basically purely for economic reasons that the land is cheaper and the buildings are cheaper. But I do wonder if this will have any like knock-on effects where the, you know, like Netflix's content delivery network that was just, you know, planning to build a small data center to route, you know, video streams to Manhattanites, yeah, would be delayed as well. Like, it'll be interesting to see how they define AI data center. Will they do it on energy or what type of GPUs you're racking or what's going on there? But more to dig in.
Ken Griffin was on Goldman Sachs's podcast, The Exchanges Podcast, and it was circulating this week, even though it was, I think, recorded last month. And he was talking about how, yeah, in his view, what an error this would be. His view: the data centers are going to get built. And if they're not built here, that means hundreds of billions of dollars of revenue basically flowing through other countries, right? And other countries. I mean, it probably go to other states first, right? Well, he was talking about if it goes national, you know, if New York does it, there's going to be a lot of other states. Yeah. The meme is like China wins in this scenario. US Senator John... we did this with nuclear, we did this with manufacturing, both of which can all agree were mistakes. Mhm.
I was trying to find if any of the hyperscalers operate their own data centers in New York. Well, the funny thing is that when Mark Zuckerberg proposed the Hyperion data center, the visualization he used was we're building a data center the size of Manhattan, which was very cool to see. But now Dylan Patel is sharing an image of a proposed data center that takes up all of Central Park. Of course, the most controversial data center you could possibly build in the entire world. Tyler's in favor of it. But it's funny because that image probably stuck in some people's mind as like, 'Oh, Mark Zuckerberg's trying to build a data center in Manhattan. I don't like that idea.' Even though no, he was always going to build Hyperion in a very remote location for a variety of reasons.
There's also an article in the Wall Street Journal, 'Can a prettier data center curb the community backlash?' People have been batting this idea around for a while, but let's pull up this image and you tell me, would you be okay with this going into Malibu, the Malibu Compute Company? Would you be cool with this? If it was puking out diesel fumes 24/7... if it was clean and it didn't drive up energy, didn't use any water, it was all closed loop and it looked like this, tolerable. I wouldn't just be okay with it being in my town. I want it in my backyard. Yes. True YIMBY over here. That's right.
In an effort to soothe local opposition, architects plan data centers that resemble tech campuses or art museums rather than bland boxes. You have to imagine that the money that they're spending on the data center for a facade like this has got to be very, very cheap by comparison. It looks like a percent less. And all of a sudden just every time it's screenshotted, like there was that odd Google presentation where they were in front of those crazy tanks and they put the logo on there and it made it look like they were taking like a brewing facility and turning it into a data center. But it was just for the press release, like the data center was actually somewhere else, but it was just sort of like an odd image.
Americans are up in arms over data centers, of course we know this. They worry how much water these buildings use and fume at the amount of electricity they consume. People hate the way they look, too, says the Wall Street Journal. Now, a small number of builders are on a mission to ensure that new data centers don't have to be eyesores. Gensler, one of the world's largest architecture firms, is leading the charge. It's drawing up plans for data centers that look more like Silicon Valley tech campuses or art museums rather than windowless rectangles that neighbors often grouse about resembling prisons. 'It's no different than any other building and it doesn't deserve to look any worse than any other building,' said Jeffrey Diamond, a design director at Gensler.
Yeah. See, this is just very rough. Yeah. Not good. That is underground. You got to do more. Yeah. Yeah. People will push it to the limit unless there's some pushback.
But in other aesthetically pleasing AI development news, Clanker Media shared that researchers built a soft floating robot for indoor interaction. And for so many of the AI robots, the humanoid robots that we see on the show, are Lovecraftian and horrific. This is so cute. I want one. Don't you want one just floating around answering your questions? These have the... this has the potential to be a massive hit as a consumer product. It uses helium and flapping fins instead of propellers. Extremely cute. The result is quiet, lightweight, and safe to touch. It can follow people, give reminders, and act as a study buddy. So you can be studying and this whale can come up next to you and answer your questions about your math homework.
See, I don't even need it to be smart. No. I just want it to fly around. Yeah. Load it up with GPT-2. It's good enough. No, we don't even need any local models. Just have it fly. Just have it fly around. Oh, you don't even want to... Yeah, I just want it for the... I personally would demand that they install Codex on this thing.
Let me tell you about Codex before we bring in our next guest. Codex is a powerful workspace for getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codex helps you move projects forward from start to finish. And our next guest is in the waiting room. We have Dylan Byers from Puck. He's the founding partner and he's here to get us up to speed on Paramount, Warner Brothers Discovery, and the acquisition. How you doing, Dylan?
I'm good, gentlemen. How are you doing?
Have you been on vacation? You look incredibly tan. Very tan. Yeah. What's going on? What's the secret? I'm tan. I'm unkempt.
I'm in the Pacific Northwest. I've been traipsing around the Pacific Northwest for the last month.
You've been traipsing. Business or pleasure? Yes. Like a logger? Little bit of both.
Business and pleasure. I was in Sun Valley during the Allen & Company conference to meet with a bunch of folks who were there. And then I'm... I thank you. And then I'm from here. I grew up in Seattle. So, you know, what better place to spend the summer?
We had a question about Sun Valley. Who had the bulkiest security guard? Who, you know, historically physically... Oh, yes. Bigger.
Historically, it's Bezos. I know Barry Weiss has some beefy security guards. I read about that in the New York Post. Yes, I did. I didn't see them. I didn't see any security guards there. You know, here's what I will say about Sun Valley, about the Allen & Company conference. It is remarkable how little... I mean, they create a security perimeter, but it's very subtle. And it is remarkable how comfortable all of these executives who are used to security details, how comfortable they are just moving around the property. They really feel like there's minimal attention even to the fact that they're there from the locals. Other than like myself and reporters from Bloomberg and CNBC, they are largely left alone and they feel that.
Sure. What is the interaction? We always see those photos of like the line of microphones at the fence for the, you know, ad hoc interview. Obviously, there are scheduled interviews with CNBC and Bloomberg sometimes and sit-down interviews, but what is the day-to-day of actually reporting on Sun Valley like? Are you grabbing quotes from people or are you meeting with...
No, I go... different strokes for different folks, right? I mean, historically there have been like New York Post reporters who go there and once in a blue moon try to breach a security line and get color and quotes. I go there to meet with people off the record. That's like for me, that is the world I cover, those executives, be they in media, tech, entertainment, whatever. And I have off-the-record meetings with them at a cafe on the property. There are others who go there and do get interviews, like Julia Boorstin of CNBC always gets three or four interviews. It depends. But what I do not do, thankfully, gratefully, I do not stand there at the front and shout questions at people who then just sort of like wave at you, which is really their way of giving the finger, save for David Zaslav, who's like a moth to the flame of a microphone and will come over and always give a good quote.
I love it. How real is the meme that like this is where the mega mergers are birthed? This is the place where the ideas come together. The merger that you'll hear about in a year for a hundred billion dollars, it all starts at Sun Valley.
Well, look, here's the deal. I've tried to set the record straight on this. Deals do happen there. Oftentimes they happen as the culmination of conversations that happened well before Sun Valley and occasionally like conversations start there. And I don't want to downplay that, like it is true. Like if you just... you know, this year there's not much that I know of at least yet. Sometimes we don't know about it till later. If you look at last year, like yes, Apple got the rights to F1 at Sun Valley and there were meetings between Liberty and ESPN and Apple and Apple won. Sun Valley last year was where not only David Ellison but also Mathias Döpfner, Axel Springer, and the Murdochs came and tried to court Barry Weiss and of course David Ellison won that one. So yes, deals do happen.
I think what I reject, and I've written about this, I reject the notion that all of these people with their private jets who basically run on similar circuits throughout the year, that somehow like if Sun Valley didn't happen, they would have no way to make deals happen. Somehow these brilliant people, these brilliant entrepreneurs and executives who have managed to run their businesses successfully and are always thinking not just months but years if not decades ahead are like, 'Oh, I happen to be in Sun Valley with this person and therefore I will buy the Washington Post.' Sorry, that's not the way it works. But that said, everyone loves coming here because it is the same reason I love going there. It's shooting fish in a barrel. It's just like speed dating with everyone you want to see and it's just extraordinarily convenient. And then going back to my point about the Pacific Northwest in the summer, there are worse places to be than amid the quaking aspens, you know, in Ketchum in July.
Yeah, that's great. Well said. So get us up to speed on what's going on with the Warner Brothers Discovery acquisition. Maybe a little bit of the prehistory just to refresh on where the deal stands and then the latest back and forth that emerged last week trickling into this week.
Yeah, look, David Ellison has had to jump hurdle after hurdle to try and get...
this deal done. Obviously, $111 billion deal, bring Warner Brothers Discovery into the fold with Paramount. And the last hurdle that he might face some challenges in the UK, but really the last hurdle here in the states now that he's cleared everything with the Trump administration are these Democratic state attorneys general led by California AG Rob Bonta.
Finally, Bonta came out this week, sort of very cinematic. He was like on a trail in front of the Hollywood sign and effectively said like, yes, we are suing. We are trying to block this deal. Here's why.
We can get into it. It is very hard for me to see that he has a strong case for blocking the deal, that he and the other AGs have a strong case for blocking the deal. Because if you think about it, like David Ellison wants Warner Brothers Discovery to have some semblance of the scale that would be required to compete in a world that is dominated by, you know, like pick your brand, Netflix, YouTube, TikTok, Apple, Amazon, like the list goes on.
And so what Bonta and Co. are doing is sort of presenting this like very strict definition that is rather archaic, right? It has to do with like theatrical distribution, cable distribution, issues like that. And I get from a political perspective why he feels the need to do that. And I think there are probably political ramifications for him if he didn't do that.
But the notion, I mean, like just think about it on its face. We all live in the real world in 2026. The notion that somehow a combined Paramount Warner Brothers Discovery, a combined CBS, CNN, a combined, what are the streaming services? HBO Max, Paramount Plus, is going to be this like massive dominant business that is going to somehow corner every aspect of the market. That's just not real. That's not the world we're living in.
And so I think Bonta has an uphill climb in that regard. But he can certainly create headaches and certainly legal fees for Ellison for many months. And so zooming out, the like Hollywood is under attack loosely or facing competition from tech platforms, YouTube, Instagram, and so time and attention is more broad than just Hollywood.
And so with that backdrop, while consolidation might not be good within the view of Hollywood, there's less buyers for movies. It might be a defensive move in a world where you're facing extra competition for attention across the internet.
Yeah, that's right. I mean, it's just how do you define the competitive marketplace? And if you're talking about, you know, the fact that look, Hollywood is in decline. I don't think anyone can dispute that. And frankly, like there are comparisons to Detroit, you know, of decades ago. And I don't know, you guys are in Hollywood. I live in Hollywood. Sometimes it certainly...
There's this notion that okay, we used to have six studios and then we have five studios and if we have four studios that's going to be a problem. And so all of this sort of, you know, there are all these negotiations over okay, well we'll release 30 films a year, we'll keep both studios open, we'll have a 45-day theatrical window. And I'm sorry, but that's just, that is not where the...
That is not where consumers are. That is not what consumers care about. That's just not what the market cares about. Like, people don't think that the one form of entertainment that they have in the world exists in a theater and they care about a 45 theatrical day window. Like we live, I mean to even say that we live in an era of like Netflix and YouTube almost seems p when you think about everything coming down the pipeline in terms of AI platforms and everything else.
So it just seems like remarkably outdated, which I suppose is an evergreen commentary anytime you have Washington going up against business, entertainment, media, tech.
And again, I just don't see how Bonta wins that case.
Jordi, do you have a question?
Yeah, I was just, how did the threat to leave California? Because it feels like there's a short-term incentive to stop consolidation in Hollywood, but if you wind up with, you know, studios leaving Hollywood, well, you've lost the war, even if you won the battle. But how...
It's just reminding me of the Getty Images Shutterstock deal, which was announced in January of last year. It was a $2 billion merger at the time. Now, both companies are worth roughly like 300 million in the public market. So, two companies that are under attack.
And I'm sympathetic to the idea that this does create like a stock photo monopoly. But in the world of AI image generation, like a monopoly in the real world, stock photos actually taken with a camera is probably the only thing that can go up against just random image gen. And so, it's a very logical move. But yes,
Well, look, let me just say first about the threat to leave California. One, everything that you, every headline we see needs to be viewed through the lens of brinksmanship, right? Everything is basically trying to win the hearts and minds of anyone who's paying attention to this deal.
And the threat to leave California all of a sudden would seem like, if you take it at face value, would seem to reverse the narrative. It's like, okay, Bonta's, you know, ostensibly coming out here to try and fight on behalf of Hollywood and like lo and behold, his measures are going to drive Paramount Warner Brothers Discovery out of Hollywood.
A lot of people, I think, looked at that and thought that that was a bluff and there's no world in which, you know, Paramount WBD can leave Hollywood.
I don't know. I mean, look, I do think it is a bit of a bluff. I do think it's brinksmanship. On the other hand, as folks I spoke to reminded me, like David Ellison did not get into this business either to just have like an old-fashioned Hollywood business that couldn't really compete with the big tech players, nor did he get into it in a David Zaslav kind of way to just like flip the business in three years.
He's young. He's into like, he has ambitions of grandeur. He has ambitions of empire building. He really does believe that he can position this company to compete with all those other companies we've already mentioned. And if you think about it through that lens, is he nostalgic about Hollywood itself and like the actual location of Los Angeles? No.
If you look at what his father did with Oracle, he moved Oracle from Redwood City to Austin. I believe now it's moving from Austin to Tennessee. And there's other precedent, right? You have Tesla, you have Chevron, you have Packard.
Disney too moved a lot of people to Florida during COVID and there was a lot of backlash and not everyone moved and they still have a huge presence. And now it's like, you know, 30 years ago if you said, yeah, I'm going to have one of the biggest entertainment companies in the world, it's not going to be based in Hollywood, you would have been laughed at. But now you talk to anybody here that's like actively making movies, TV shows, etc. And they're already traveling a bunch. So, it truly doesn't need to be here.
No, you're traveling a lot. Different states have different incentives for filmmaking. And by the way, like go back to the Oracle Tesla examples, like you still have businesses here. You could theoretically have a Paramount Warner Brothers Discovery based in Austin or Nashville or anywhere else that still had studio lots in California.
And to the folks in the writer room, the showrunners, the talent, they wouldn't know the difference. So like, and the only person who would feel the difference is Rob Bonta who suddenly would not be on the end of what David Ellison is touting as a $30 billion investment.
Yeah. And at a certain point, Bonta is walking a very fine line because he's trying to fight for Hollywood, but he's running the risk of alienating one of Hollywood's most valuable players right now. And so it's just, it's politics. It's pure politics.
And another point I brought up this week in my writing is like just to underscore how much this is politics, I want you to imagine that David Ellison, who by the way is not some like right-wing MAGA guy. Like he's not, he's donated to Biden, whatever. He's really just a pragmatist who's trying to get a deal done. He would...
He took Trump to ringside at the UFC. He went to the State of the Union address. He held a private dinner for Trump and his administration before the White House Correspondents' Dinner. All of that to like the folks in the newsroom at CBS News looks like, you know, he's like the new Rupert Murdoch. Sure.
The truth is, is if Kamala Harris or Joe Biden were in power, he would have done the same thing. It just would have been at like, you know, the US Open or Wimbledon instead of a UFC match. And the fact of the matter is, is that in that scenario, Rob Bonta would probably not be bringing this case and it would probably be Republican AGs who would be trying to bring this case. And I think we have to be honest about the politics there.
Yeah, I like the idea of tennis at the White House. Maybe that'll happen soon, right? Yeah. US Open on the White House lawn. Yeah, maybe just all sports should be a sports venue and they should just have the hockey and then basketball and then baseball.
Was there adequate sponsorship? I didn't watch the UFC match on the White House lawn. Was there adequate sponsorship? Like did they milk that for our...
Not nearly enough. We could have gone way further.
There were a lot of sponsorships.
Yeah. I remember a specific image of Justin Gaethje, the American champion who won his fight, doing a backflip with a Polymarket logo and you can see the White House in the background.
It was a very iconic image.
Yeah. Can you talk about the debate that sprung up, I think a little bit earlier once the merger was confirmed around the duplicative studios, Paramount Warner Brothers, they have two. When we say studios, there's the abstract concept, but there's also like the physical historical locations that are very meaningful.
There was this discussion over is one going to be turned into apartment buildings and that feels like sad from a I love Hollywood perspective. Also if you're a housing person, it feels like maybe it'd be good to bring down housing. But at least the reporting that I saw from Puck was there was a lot of pushback towards like don't ruin this amazing financial historical institution.
Is that chip still on the table? Has that been resolved? Because there's been a lot of like, okay, we're making this pledge. We won't do this. We won't cut. And I'm just wondering if any of those chips come back on the table.
Well, here's what I would say to the one thing that Bonta has gotten right. Forgive me because I forget verbatim what he said, but effectively in spirit, it's I can't regulate pledges, right? And that's true.
There is so much that is going to be said which you should effectively take with the same grain of salt that you take from like a political candidate who tells you everything they will and won't do in office. Like, yes. Is he committed right now to 30 films a year? Is he committed to a 45-day theatrical window? Is he committed, again, I don't have the latest on this, but to keeping both studios open? Sure.
Once you've got the deal and once all of this is behind you, are there ways in which you can sort of finesse one of those lots into something else for your business and then maybe finesse that real estate out of the portfolio to save some money?
Yes. And that will 100% happen. I think about this, you know, I cover this deal a lot at the news level and the sort of like tie-up of CBS and CNN. The minute this deal happens, folks at Paramount are going to start looking how to offload the real estate that is currently used by CBS News and move CBS News operations into Hudson Yards at CNN.
And why you do that? Because you have $80 billion of debt and because you have promised synergies and there's no world in which you're sitting there with two lots that are duplicative that do the exact same thing and think like in order to honor the history of Hollywood, we will continue spending twice as much money as we need to. It's just not going to happen.
Especially not in the news business. Like no, and definitely not. Like you can sort of make the claim around specific film studios being historically important to Hollywood. Hollywood means films, but when you think about what it actually takes to run CNN and CBS News, like there are tons of overlapping pieces of equipment that you're like, oh, that teleprompter there and that backdrop and that lighting is like all the same.
Sure. And look, I am sure there are some Scott Pelley types who have very warm feelings about the labyrinthine halls of the CBS News headquarters up in uptown Manhattan. But there was a group of folks from CBS News who went to Hudson Yards, who went to Atlanta to tour it and they're like, holy [__], these facilities are a lot nicer than ours. These are great. It would actually be a lot easier to create TV here.
So that will be really easy. And look, I think there's, as someone who covers change in the media space, there's always so much panic and nostalgia anytime anything changes because you think that thing that changing is sacrosanct. And the truth is that it usually takes a matter of weeks or months before everyone sort of comes around to the new status quo and gets very comfortable with it. And that inevitably is what is going to happen here.
Speaking of change in the media industry, have you noticed, I mean you report and operate at what I see as like a very very high level, the executives, the mega deal makers. But have you seen any knock-on effects from the summer of YouTube blockbusters that we've been talking about here from the creator economy perspective?
You have Iron Lung from Markiplier, Obsession, Backrooms. There's a number of YouTubers who sort of labored away in obscurity and then just put up incredible numbers at the box office. It feels like Hollywood might be looking for more scripts, more interesting IP, less sequels, less bought-in things, but is there any individual studio that's excited about that trend or anything that you're seeing that's actually rising to the level of your reporting?
Here's what I say. I do not have as good of an insight into this as I do into other things we've been discussing. But here's what I will say just from a distance.
Every studio is thinking about how do we, like all the way to A24, right, which is sort of like the belle of the ball when it comes to quality content in Hollywood, is thinking about like how do we incorporate AI into what we are doing. And I think the signal that those creators sent with films like Obsession and others is like this can be done and this can be successful.
Does it mean that, you know, like every human being is going to go away and we're going to stop? Like no, it does not.
I think that most folks will find ways to incorporate this in ways that does not significantly degrade the value of the content that they're making. But I think the sky's the limit. Like I really think that those examples have shown that this can be done and that there is more opportunity here than the folks who are sort of like clutching to Hollywood's past have realized.
And by the way, that doesn't need to be disruptive in a bad way. That can represent like extraordinary opportunities in the same way like you guys talk about this day in and day out. AI creates extraordinary opportunities in every aspect of business, industry, commerce, everything else. And like that can happen here too in ways where the human element remains.
How much are you tracking these AI short-form vertical drama apps? There's, I'm counting three in the top 25 of the US iPhone app store right now. There's Vibe Shorts, AI Comic Dramas, Net Short, Exclusive Short Drama Video, Space Exclamation Point, and then Story Reel, Exclusive Drama.
I'm not following any of this. It sounds, just hearing you say it, read it, it sounds like, is this just Quibi AI?
Yeah, it's AI Quibi. Katzenberg entirely vindicated on the format. But yeah, I've just been, I don't know anyone that uses these apps. I think we need to have Tyler on our team just spend like an entire weekend watch every single one of these and review them for us.
But it's funny to me that these apps are seemingly being created not within the tech industry. They're technology products and not within Hollywood. So it's like entirely just, you know, outsider groups that are ranking the hoverboard, that are ranking like Net Short and Vibe Short are both outranking.
Kashi, Paramount, Polymarket, like during these massive sporting events, right? I mean, I guess like, and like Vibe Short is outranking Gemini and Anthropic by a very meaningful margin.
Yeah, I guess here's what I'd say. And I'm granted, like I'm a very poor authority on this because my entire content has been like World Cup and Wimbledon or just staring at the quaking aspens in Sun Valley. Here's what I would say. As in every other industry, like the technology has democratized the ability to do things, right?
And so to bring this conversation full circle, there's no real reason anymore that this has to happen in Hollywood. Now I'm not suggesting that like, you know, every institution just goes away obviously, but what I am saying is like there is, you cannot look at something like the success of the YouTube creators or the engagement that these short-form platforms you're seeing, like the engagement that they're seeing, and just dismiss that as a fad.
That is a total reorientation of the possibilities that exist for people to come along and just create something that is going to be a massive hit. And again to bring this back to Ellison and to Bonta, you cannot argue that people who can put movies in cinemas on Hollywood Boulevard are somehow in a different business than the people who are making AI-generated shorts.
It is solely a question of where people are spending their time and then whether or not that time and engagement can be monetized. And it does not matter what category that falls into. It's just a matter question of eyes on screens.
Do you have a view on how US-China relations might evolve with regard to Hollywood? Because it feels like some of the video models coming out of China are a little too good and they might be training on some Hollywood intellectual property across different studios.
And it feels like in order to actually take a lawsuit to the finish line or have any sort of settlement or retribution or some sort of even just truce to not allow you to put Mickey Mouse or Spider-Man or Batman in an AI-generated open-source video model or something like that, it might require Hollywood sort of teaming up, going to Washington, asking for some sort of concession or deal within the construct of like the larger trade negotiations around rare earth, and it could be one of many bullet points in a new deal.
Yeah. Yeah, I mean I do say like, and we're here and we've been here for a long time, like China somehow seems to be the great unifier when it comes to businesses saying like basically as the antithesis, right? Like the...
It has been years that I have been hearing tech executives invoke China as a way to try and push back on regulation of US companies. Oh, I can certainly see a world in which China becomes like the, you know, what's the term, the bugbear, like that gets Hollywood to basically come together, work with regulators and say like we need to protect this because this is American, and that is a very palatable argument for the folks in Washington or the folks in Sacramento.
Yeah, I can totally see that. I guess the thing I would say though is I think what businesses really want is to be able to play in that market. And I don't, I think at a certain point like your ideal outcome is a way to protect your own IP, your own technology while also being able to open up what is obviously like an incredibly robust and large market and work with them as well.
And that is, you know, that's a negotiation that obviously like Tim Cook has been involved in for a long time. A lot of this when it comes to the US-China stuff is above my pay grade, but that is sort of my sense of what will happen.
Last question.
Quaking aspens, you've mentioned them twice. Are you arbor... what is arborist?
Are you into trees or is this just something everyone that goes to Sun Valley recognizes about the trees?
Here's what I think. Thank you for asking. I've been wanting to talk about this for a long time.
No, here's what I think. I wish I could convey to people, I'm very privileged in my position as covering the world that I cover to get to go. Like it is sort of a treat of the media tech entertainment space that these guys all sort of choose to convene in the Mountain West.
So depending on where you are in the sort of hierarchy, like you're either going to Sun Valley or Jackson. There are many retreats sort of in Colorado. A lot of these guys own ranches from like Montana down to Utah. There's of course like the Aspen Ideas Festival.
It is just like a real pleasure that these guys chose to convene there as opposed to say Cleveland, right? Or like just do everything in New York City.
Like CES is in Vegas and that would be, you know, where you'd be if you were on the electronics beat probably.
Thank God I'm not. Thank God I'm no longer the politics beat and have to go to like Iowa and New Hampshire every year. And I just, if there's any way to just sort of convey the atmospherics of that world, I know of no better way than like the lull of the quaking aspens and the occasional sound of like a Gulfstream jet taking off on the tarmac.
Beautiful. Are you writing a book right now?
I think you should be. You're tan. You're hanging out in the mountains. It seems like you have an incredible energy.
Maybe an audiobook since the last time we were on here through it.
Maybe an audiobook. And it's just a recording of the quaking aspens and the sound of Gulfstreams passing by. There you go.
To fall asleep to. Thank you so much for coming on the show. This is great to see you.
Have a great rest of your summer. Hope to see you soon and we'll talk to you later. Have a good one.
Cheers. Goodbye. Let me tell you about Figma. Agents meet the canvas. Your AI agents can now create and modify your Figma files with design system context.
The quaking aspen tree. They're defined by the natural feature of Sun Valley, Idaho landscape. Famous for their pale white bark and shimmering autumn foliage. The quake is a flat leaf stem that causes the leaves to flutter and rustle at the slightest breeze. So when you look at...
Dan says, Gulfstream ASMR.
Gulfstream ASMR might be a market.
Tyler, I need you to watch a few Vibe Shorts, a few Net Shorts, and a few Story Reels by tomorrow.
Deal. And we're going to...
I don't know if we can watch them on the show. We can probably play a trailer on the show, maybe.
But yeah, pick your favorite on the three apps and we'll circle back tomorrow.
Well, our next guest is with us in the waiting room. We have Noah from Terrairma. He's the co-founder and CEO. Welcome to the show. How are you doing?
In the safety vest. Looking great. With the flag in the back, too. I love it. Please introduce yourself and the company. Tell us a little bit about Terrairma.
Yeah. So, Terrairma was founded by my co-founder and I after we were working at SpaceX and we were trying to build Starship rockets down in Boca Chica and the construction was just too slow. We're like, why are we able to build rockets the size of skyscrapers at like one a month, but like building a road or a factory is taking years and years and years. So, we quit our jobs to start a company to change all that.
We're basically becoming a new type of construction company, like a full-stack construction company. We build our own robotics software and we actually operate as a construction company ourselves.
Okay. Robotic software. So, how deep in the supply chain are you going to buy equipment? Are you buying from Caterpillar and retrofitting them? Are you buying from the people that make the tracks and the treads and the motors and then building your own bulldozers and cranes?
Are you using, you know, custom software and robotic automation just as a harness for the project management layer? Like at what level of the stack are you operating now and where do you want to go?
Yeah. Yeah, on the hardware stack, you can probably see behind me, we take existing Caterpillar machines and we retrofit them. Caterpillar, John Deere, Komatsu. Those machines, they're pretty good. They're robust. They've been around for hundreds of years, 100 years. They're pretty good. Everything else we build ourselves. So, we're building all of our own software from scratch. Kind of the manufacturing engineering software that we built at SpaceX in order to operate large-scale factories. We're building that for construction.
And how did you actually go from zero to one? At this point, you've raised $115 million. What was the first project? Was it find the customer, just sort of do it all manually, or did you actually build robotic tools first and then go and prototype them? What was the flow?
This is a great question. So, 12 months ago, we were only four people. So, for the first year of the company, it was just my co-founder and I. We wanted to make sure we had a product-market fit before we started like raising a bunch of money and spending it.
So, we actually built a bunch of robots using Tupperware containers that our lunchbox came in and like Raspberry Pi and Arduino from our college kits and we got robots working and then we went around asking like who is willing to let us make some money with these robots?
And our landlord's like, hey, I got a building for you to demolish. You think you guys can do it? We're like, I mean, it's not rocket science. So, my co-founder and I literally operated the robots ourselves, like the brain was a little Tupperware container, and we knocked down a couple buildings and got paid our first check, and we're like, whoa, you could just become a robotic construction company there. It's Texas. Like, you could do whatever you want down here.
That's awesome. I feel like you'll quickly get to the point where permitting is like the gating factor, where like you get to the point where hypothetically we could build this, you know, we could build this whole, you know, shell in like the shell that you're in right now, we could build something like that in three weeks, but then you're limited by sort of local government and approvals and things like that. Is that right? And if so, how are you thinking about approaching that problem?
It's a great question. People bring it up a lot. For starters, I just want to say like permitting is an issue, but it's not the issue. Like at SpaceX, once we had the permits, theoretically it should go super fast, but construction still took longer than it should have. Like we're operating at maybe 25% of a work week, 9 to 5, 5 days a week. We could operate at 168 hours a week. We could be at 100% utilization rate and we're not. So, you can make construction four times faster once you get the permits before permits are the issue.
Now our approach to this is very similar to like how Elon approached building rockets. Like, okay, we have to solve manufacturing, we have to solve supply chain, we have to solve testing the rockets and designing them, and now the rocket's on the launchpad, fix the permits. And like I believe in the bureaucrats of this country wanting to make the country better. If you have everything else ready to go and you make their jobs easy and you chew the food for them, they'll start approving permits faster and faster. They're not currently the main bottleneck most of the time.
I imagine that we're firmly in the centaur era at best. I imagine that every robotic piece of equipment has a human in the loop somewhere at this point, but walk me through your vision for where this goes. I imagine that in the long term it's sort of, you know, you create a spec for what you want to build or destroy or the construction project that you're working on and all of the robots go off and do everything.
But before that happens, it'll probably be one human overseeing two machines. Like, how does all of that? Another way to think about it is like you probably don't want to be like taking the co approach to like same approach as like vibe coding with like building a building because it's like, hey, go build this ditch and then it builds it like slightly in the wrong place and then you have to like, you know, fill it back in and you know, it feels like not as forgiving as the software domain.
This is a great question. Do you want the economics answer or do you want the sci-fi answer?
Both. Let's do economics first. Sort of like short-term. I mean, we're familiar with Waymo. They have, you know, Overwatch drivers that might see four screens. They can sort of beam into one at a time. What are the economics of that? And then where do we go from there? And then let's talk sci-fi.
So, in terms of economics, you have two curves that cross. You have the cost of autonomy, which becomes exponentially more expensive as you go from 90 to 95 to 100%. Waymo spent $30 billion or whatever it was over 20 years. And you have the value of automation drops off a cliff. When you have one person controlling one machine to one person controlling two machines, wow, 50% production in labor.
But when you're at one to four changing to one to five, it's the difference between 25% of your labor and 20% of your labor. So I think those two curves cross in construction at about one person controlling three or four machines, about 75% autonomy. That's the goal for us. 75% autonomy. And then you add a new machine and then you add a new workflow and then you go from dirt works to subsurface utilities to concrete to steel. We're building up the tech tree.
Yeah. And that sort of makes sense because I imagine that when you're actually just one like old-school piloting a construction machine, there's probably about 60% of your time is like downtime. Like I know I need to get the crane from here to here and I've now, you know, put my finger on the button and I just have to hold it there while I get there. So while that's happening, you can sort of beam into a different machine, do something else and sort of queue them all back and forth.
Yeah, it's a little bit more video game than that. You ever play like StarCraft or Age of Empires or Victoria?
So we're able to say excavator dig here and you design a task for a minute and it will run for 20 minutes. Then you say bulldozer run here, roller run here. And this is actually our teleoperation center.
We have like 20 desks behind me and these 20 desks allow us to operate like 80 machines at a time.
That's very cool. So what are your... Yeah. On the sci-fi front, timelines to, you know, you have a piece of dirt and robots arrive to the piece of dirt autonomously and you have zero humans in the loop and you just get a structure in a very short period of time.
You don't want zero humans in a loop. It's not cost-effective. There's so many edge cases in construction.
Yeah, but I'm saying like, but if you continue to execute in the way that you're doing right now, wouldn't we be able to get to that point in 10 years, 15 years?
I'm not sure if construction will ever fully be without a human in the loop. I think you'll have like a very small team of people that's very efficient building larger and larger projects and it doesn't ever make sense to get rid of a human. That's my personal belief. Even on Mars, I think we're going to have a small team of astronauts conducting like a large fleet of robots.
There's just a lot of things that, edge cases and things that the robots have never seen before. You can't collect enough training data to simulate every possible thing in the world. But if you're asking me the SimCity moment when I can say I want a road here, I want a restaurant here, I think we're like 5 to 10 years away from that. I think it coincides with our Mars ambitions.
Mhm. Coincides with your Mars, five years to Mars. What are you thinking?
We are technologically capable of going to Mars today if we had the political and economic desire.
I mean, we've actually sent robots to Mars. Like America has sent robots to Mars. So it's possible.
He's like, send me. Send me.
Yeah. It's not a technology problem. It's more so like an economics problem. But I think we will solve both within the next 10 years.
But I imagine that the machines that you build for the moon and Mars will be much more highly specialized. When I think about the helicopter we deployed to Mars or the rover, like those are science experiments meant to take samples and test specific factors of what it means to move around on Mars.
But I imagine even in terms of building, you wouldn't just plop down a Caterpillar, would you?
No. Diesel engines won't work in vacuums. So, you got to redesign the hardware. But at the end of the day, it's like a smart shovel. Like you're moving dirt. It's not the most complicated thing in the world.
Sure. Sure. Sure. Very cool. Well, let's hit the gong.
Yeah. Last question just because the crowd is loving it. And I wish we had more time, but do you expect any changes to like the material side, like building materials side, as robotics become, you know, much more a part of building various types of structures? Or is it like let's just change one thing at a time because I feel like...
This is an awesome question. Are you familiar with the term DFM, like design for manufacturing?
Like at SpaceX, we literally had to, the materials were pretty simple. It's like stainless steel, like the most common type, but you had to change the inputs to your system to be assembled by a robot. Like Starlink couldn't take V1 Starlink and make it at the speed that they're building V4 Starlink. They had to change the piece parts.
I think we're going to change the way we connect pipes. I think we're going to change the chemical formulations of concrete. We're going to change how we weld steel structures. We're going to redesign the building codes to match something that can be built quickly by a robot.
Tell us about the round. How much did you raise?
So, we've raised $15 million.
There you go.
Who did you raise it from?
So, our Series A was $100 million led by Kleiner Perkins.
We got Bain Capital, Banner VC, Saga Ventures, Trust Ventures, Magnetar.
Wow. Murderous, bro.
Clay Capital. You got a bunch of great folks around the table. Congratulations. You have the capital to build. We need it more than ever right now. So, thank you for everything you're doing and have a great week.
Do us a favor. Raise another massive round.
Maybe take it up from nine figures to the next zero.
Come back on this year.
You deserve that. But great to meet you. We'll talk soon and we'll host our next one from the Mars base.
Fantastic. We'll talk to you soon. Have a good one.
See you.
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Our next guest is returning to the show. We have Saam from Greylock Partners. He is a partner there. Saam, welcome back to the show. How are you doing?
I'm doing great. Great to see you guys. Thanks for having me back.
Thanks for hopping on. Let's kick it off with another gong hit since it's warmed up. Tell us what happened. Give us the news. What's new in Greylock?
World?
We've got some big news today. We're announcing Greylock 18, our 18th venture fund. It's a billion and a half billion.
Go for stage founders.
Early stage founders specifically. I want to know opportunities created in AI. I'm interested in the next generation of AI companies. Obviously there's so many huge private now SpaceX is public. So like there's a number DeepMind. There's a number of like first-gen AI companies that are huge. But there still is a lot of opportunity. Where are you seeing the opportunity? There's early stage companies that are going deeper in the stack selling to the big labs. There's also niche players. Like how are you viewing the market? How are you mapping things out?
Yeah, I'd say overall is we're very early in this wave and we think there's going to be winners up and down the stack and I think the only mistake you can make in AI is underestimate the size of the wave and think it's binary and outcome. So, you know, we've invested up and down the stack at the foundation model layer. You know, we're investors in Anthropic and OpenAI in infrastructure. You know, we invested in Base 10 back in 2019 before generative AI was a thing. Today, they're the leaders in influence, right?
Braintrust. I remember in 2023, no one was using the word evals, right? Notion was using their product and today fast forward evals are the core IP of AI and most of the valley is using Braintrust for it. Right? So, we've done a lot in infra and then of course a lot in applications. We're going to see new opportunities up and down the stack. So on the infra side, I think you know you guys are talking about agents every single day. There's going to be a new set of abstractions around infrastructure to actually power agents. Of course, inference and observability is going to play a big part of that, but there's more to do there. There's new things in data structures, databases, runtimes, etc. On the application side, I think we're just getting started. It wasn't until you know the model set of model releases in December of 25 that you actually had robust agents. And now like and I seen our portfolio like we led the initial round in Resolve which is an agentic software reliability engineering. Today at companies like Coinbase it completely automates on call. So engineers are no longer getting woken up because there's an incident because the Resolve agent fully handles it autonomously or you know we're in 7AI which does the same thing for security teams. Those products are like coming to life because the underlying models are finally there to really support these long running agent workflows. And so you're going to go into different application categories and be able to build new agent offerings. So I think that that's going to be really big. And then of course things outside of software like we you know we were some of the early investors in autonomy like Aurora which is I think the largest standalone public company in self-driving. You know we've led the initial round in Neuro others. We're now going to see a whole new wave of things happening in robotics and I think the underlying model capabilities and the data sets that we're building are finally going to get us there where we're going to see a like proliferation in the real world economy as well. And we've made some new investments are still in stealth we're excited to talk about soon.
Yeah, we talked about Aurora yesterday because they bought ATG from Uber, the advanced the autonomy group. I'm interested in hearing. Are you noticing any categories of company that have shifted from venture-backable to more likely to be successful as a lifestyle business because they are so capital-light in the AI era that you if you have a friend that comes to you and says like I want to start a video game company or I want to start a niche SaaS company you're like yeah 20 years ago you'd need to raise $10 million to rack a bunch of servers a couple years ago you'd have to go through YC or raise a million bucks to hire some software engineers, but this you can just build it this weekend and go get customers and be profitable tomorrow. And so are you noticing that trend? How is that changing your investing philosophy or is that just a ruse?
I think the lens on whether or not something should raise venture capital is more about the ceiling, not the floor. So, I think it's absolutely correct that you can get a lot more done with less capital. But what's also correct is that the size of the prizes that are available, our whole brand around the new fund is the map is blank again because we think AI just resets the entire map.
The size of what's possible now, the size of these categories is so enormous.
Yeah.
That venture capital dramatic even if you can be capital-efficient and get a lot done on a given dollar, if you can increase the size of your capital base, the aggression and speed with which you can move is just much faster. And I think like I think it's an interesting kind of observation. You take the last 3 years, there's a lot of discussion around what you can get done with AI, etc. At the same time, the capital velocity in companies is faster and at a larger order of magnitude than it's ever been. Like we look at this in our portfolio, you know, we're primarily doing the first rounds and the speed at which companies we raise their series A, series B, series C, and you know, the size of these rounds, which often are in the hundreds of millions, you know, very, very quickly. Like that's an interesting observation. You ask why is that? And I think it's because we're operating in such big like in such big new categories and opportunities that the prize to be the number one player is so significant that you need to do everything you can as a company. And so if you can be more efficient, the real lens is like what else can you go do and how quickly? And that's why we're seeing companies have much faster product velocity, have much faster revenue growth. They're spending, they're getting more out of that spend, but they're spending. And in fact, I would say they're spending more in this last three years than in the prior decade.
The map is blank. I love that as a rallying cry. At the same time, I see a new market map in every category and it's stuffed full with AI startups and it feels like it's more competitive than ever. I'm interested to know are there categories that are now more oligopolistic, more like less monopolistic? It feels like the software 2.0 era was very much, oh, there's a runaway leader in this particular niche and it's winner take all and they're just compounding. But now I've been so surprised when I check in with the third biggest or third most well-funded company in a particular area and they're accelerating revenue and they like tripled revenue last year and it's a great company by historical standards even though it's like a laggard in the modern era.
Yeah, it's a great question. And yeah, it's interesting by the way like we there's all these market maps. People crown these companies as winners and I think we forget that like the game's just beginning. I mean, you rewind the clock just 18 months and you look at what the foundation model landscape looked at at that time and then you fast forward to today and you know, we fast forward another 18 months and there's going to be more evolution. So, I think we all live in on Twitter where we're trying to clear everything over like every single minute like we should zoom out and remember these things are very nebulous. Yeah.
Yeah. I think you know the difference with AI is the size of the prize especially when you're automating labor and you're shifting these labor dollars to software and technology dollars is so dwarfs relative prior software categories that I think you can have more winners that can get larger much faster. And I'll give you just two examples in the customer support category. We you know led the initial round in Cresta. Cresta is north of 100 million in ARR, you know growing very quickly doing customer support AI there are likely there's at least two other significant companies in that category maybe more you know at similar revenue scale and I think multiple companies in that category will get to a billion of ARR in the coming years and the reason for that is just AT&T alone spends a billion dollars a year in contact center spend and you extrapolate that across all enterprises you think about what's addressable.
Yeah, it's way different than IT spend, right? Like because there was a war for Zendesk and Salesforce had a solution and there's a number of previous era, you know, software products, but it's a very different pool of spending to pull from.
That's right. That's right.
What are your first checks? What have your first checks been looking like? It's a $1.5 billion fund. You're investing. You want to be doing the first
Yeah. Just 750. No, but yeah. So how are you thinking about it? What percentage of the new fund is going to be reserves follow-on capital versus like you know net new investments?
So you know for us the north star is we want to back the most important companies of this era and we think some of those companies require much more significant checks when they get started because of the people who are starting them the ambitions the opportunity. So, as one example, you know, we 21 years ago, we backed Palo Alto Networks when it got started. It got started in our offices. I think that company today is almost a 300 billion in market cap.
When we wrote the initial check, I think it was a $250,000 initial check. Fast forward, the founder of that company Nir Zuk left Palo Alto last year.
He started a new company with Greylock.
Yep.
Right. That company is called Sila, right? It's building a really new important cyber security platform. Our initial check there is $36 million.
That's what I think. That's
we want to back the largest company in cyber security in history, a $300 billion company. We want to back him to go build something, you know, of consequence and that has a different capital requirement. And so we have a larger firm, not because we just got a goal. Sorry. World comes on.
There we go. There we go. Here you go.
