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You're watching TVN. Today's Tuesday, April 28th, 2026. We are live from the TVP Ultra on the Temple of Technology, the Fortress of Finance. We got a quick show because John Gray from Blackstone is joining in 20 minutes. We're going to run through a bunch of stuff. I wrote about this in-car surveillance thing. It's going viral. It's sort of fake news. We got to sort of truth zone it, but also it's coming and it might not matter because if you get in a robo taxi, there's definitely going to be a camera on you. But the fear is centered around this idea that there will be a requirement from the federal government that every new car sold in the United States will be required by law to have technology. Uh-oh. That puts constant surveillance on the driver. And this is happening sooner than you think. By 2027, that's just 12 months away. AI in your car will determine if you're sober and fit to drive, automatically turning off the vehicle.
It's almost May, by the way. I know. We're what, eight months away, I guess, from 2027. This is the real AI 2027 problem. This is a big... We are having audio issues. It's most likely a nation state. Potentially. Possible. We are under attack, but we are working on it. It's like watching a dubbed foreign film. Well, maybe we can play this video of what happened the last time America tried to pull back on driving a car while intoxicated, and some of the response, some of the backlash from any attempt to restrict drinking and driving here is viewed... Can we pull this up? Okay, we're working on it. Production team is being humbled this morning. Humbled. Anyway, let me read through some of my take and then we'll play that funny video. So, sounds scary. Okay, John actually says, 'Audio sounds good to me for what it's worth.' Let's go. Let's see. How about this? Does this sound okay? Does this sound okay? Does this sound okay? Does this sound okay? Hopefully, it all sounds good. Yeah, let's play this video.
Drinking and driving here is viewed by some as downright undemocratic. It's kind of getting communist when a fella can't put in a hard day's work, put in 11, 12 hours a day, and then get in your truck and at least drink one or two beers. They're making it laws where you can't drink when you want to. You can't, you have to wear a seat belt when you're driving, and pretty soon we're going to be a communist country. Communist country.
What? What? When was that? Was that the... Apparently that's real. I've seen that video before. I always thought it was fake. I didn't realize that that was real. That feels like 80s, 70s, something like that. 80s. Okay. Well, there was backlash then and there's backlash now. Some of it's a little bit overblown. This sounds very scary. You know, constant surveillance. The real crazy version is a camera that's watching you at all times. The government, the police, and the automaker can just turn off your car whenever they want. That sounds bad. What's actually being proposed? What's actually on the timetable? So, the rationale for this is good and I think most people would agree that it is a reasonable thing to do to try and curb alcohol-related vehicle accidents, drunk driving. There's more than 10,000 alcohol-related deaths each year on US roads. That's a ton. Anything we can do to stop that, reduce that, totally worth working on, totally worth pursuing as long as it doesn't violate a whole bunch of other liberties or create more problems than it solves, right? We want net positive impact here. Technology is getting better at detecting intoxication and it's getting a lot cheaper. So, why not just ship drunk driver detection systems with every car from the factory? That's the proposal. There are a bunch of potential downsides that we can get into, but it's important to get the facts straight about where we actually stand today. So the core concept here is generally correct. Congress did pass a mandate directing the NHTSA to create a standard for advanced drunk driving prevention technology in new passenger vehicles. Now the 2027 date that people are citing, that's not a hard deadline. The law was passed back in 2024 and in the actual law it basically allowed for delays. So they said the NHTSA will only issue a binding mandate requiring automakers to actually roll out this tech when the tech is ready. And the NHTSA currently says that the technology is not ready. So in theory, the tech feels close, but the scale of the problem is so big. You can see why there's a delay here. Alcohol detection systems exist and are typically deployed for drivers with DUIs. You're familiar with blowing in the tube probably. Hopefully not personally, but the problem is that those little hoses that you blow into, those are active systems. They require you to actually sit there and do that for a minute. The government doesn't want that. That's not what the proposal is. They want passive, which means breath sensing. So there's just like smell vision. Basically, if it smells alcohol, it doesn't turn on the car. The other one is fingerprint reading. So, you put your finger on the start button and it scans into your finger and sees how many alcohol particles are inside. I guess that sounds sci-fi, but we're close, I guess. There's a couple other ways you can solve that. And then camera system. Just look at the driver. If they look drunk, then don't turn on the car. So, all of these seem like they could be close to being roughly accurate right now. Like you can imagine an AI startup or a university lab putting something together at a hackathon that's 90% of the way there, maybe 99% of the way there, maybe even 99.9% of the way there. But the problem is that Americans drive a lot. The rough estimate is that there are almost a quarter trillion driving trips per year in America. It's basically every American, all 350 million of them basically, taking an average of two trips every single day of the year. So 224 billion trips a year is what the rough back of the envelope I did was. And what that means in practice is that if this system is 99.9% accurate, you're still looking at tens of millions of incorrect results every year. And the fact that probably 99.9% of these trips are not inebriated. Like drunk driving is not 50% of trips. It's not 1% of trips. It's a very small amount.
Think about how people would abuse this new system. It'd be like students being like, 'Sorry, I couldn't make it to the exam.' Exactly. I ate my lunch. My car wouldn't start because of a false positive on this. And so even if you're at 99%, you're still looking at tens of millions of incorrect results. The vast majority of those are going to be people who were sober. You know, somebody wants to get in their car for their morning commute. They're a little sleepy or they wore some cologne that triggered some sensor system, flags them as intoxicated and prevents them from starting their car and it's infuriating. The tech will probably get there with enough time and effort. So it's worth looking into who supports this and opposes it. The mandate was actually bipartisan but there's starting to be a backlash from libertarian conservatives who are worried about Orwellian government controls. There's an idea that there will be a remote kill switch which leads to a bunch of dystopian possibilities. That is not in the current provision. That's not what's actually being proposed right now. But you know, it's possible that the end result of this process of back and forth, you do wind up with that exact capability. And so people are worried about the system going off while you're driving at speed on the roads and then the car just shuts off and you get in a crash and that's like actually more dangerous than potentially the alternative. And so the middle ground seems to be what's called pre-drive lockout.
We need a tinfoil expert because haven't the tinfoil enthusiasts... Have been saying that the sort of remote... Are you using tinfoil enthusiasts to mean conspiracy theorists? I've never heard that before. It's good though. That's a new one. Okay. Yes. So tinfoil enthusiasts. Yes. Will definitely... Well, have been claiming that the remote shut off button has existed forever. Oh yeah. Since 1985. So when some sort of witness or something like that just gets in a very inconveniently timed high-speed wreck... Oh. That is shut down. Okay. I was unfair to the conspiracy theory. It's interesting though. But yeah, so I mean the current consensus is around maybe pre-drive lockout being the more moderate solution than actually shutting the car off once it's driving. Still incredibly inconvenient if there's false positives. And then you also do still run into some potential negative outcomes where you go to the beach, you have a couple glasses of wine, you're not planning on leaving, but then the tsunami warning goes off. You need to get back in your car and your car says no. Like, I don't care that there's a tsunami. Oh. I don't care that there's a tsunami. You have had two glasses of wine. You're at 0.08. You can't drive right now. And you need to tell the car, well, in this case, I'm okay with driving drunk because the tsunami is coming and I'm at the beach and I had a couple glasses of wine. And the car won't be able to, you know, potentially deal with that nuance, right? And there's a whole bunch of other scenarios that could potentially play out where just judiciousness is difficult, but potentially unlocked. You know, AI agents, I don't know. You know, you ask these models, what would they do in some certain scenario? Maybe there's a solution.
Yeah, I think there's a much stronger argument for rolling this out as soon as the average vehicle has full self-driving capability. But then you don't need it because you can be as drunk as you want. No, I still think there's going to be this big window where you're not going to be able to... Paul specifically because if you need... I don't know, as long as somebody needs to sit in the front seat of their car in any type of situation. I like the idea of level four self-driving. You get in the car, there's one button you push to say, 'Hey, just put it in self-driving mode. I've had a couple drinks. Don't let me take the wheel. No matter how hard I try.' It's not negotiable. It's just Playmobil level. And then there's a second button. And for that you have to do a full blood transfusion. They centrifuge your blood and make sure that you have the purest blood possible to take the wheel and be able to actually drive the vehicle. I don't know. Maybe something there.
I did have a take on this though, which is that Doug DeMuro, friend of the show, founder of carsandbids.com, has always talked about the eras of cars, you know, the air-cooled Porsches, then you have the fully manual, no electronic systems, no stability control, no traction control, those types of cars. Then you get into the manual gearboxes, the no turbos, no hybrid systems, and then the modern supercar era is just a bonus if it's not a full electric car. It's like, you know, it's going to be a hybrid, but is it at least there's an engine of some sort. And that's what car collectors are sort of marking these moments where it's like, it's the last manual, it's the last non-hybrid supercar made by Ferrari or something like that. Yeah. And there's going to be a world where you're like, 'Oh, that was the last one that didn't have the camera that looked at you 24/7' or whatever. And I think it creates this new class of vintage... Investment grade. Maybe not investment grade, but certainly something that people... I mean, you can already see people reacting to this even though the post is a little bit overhyped. You can already see people reacting to it being like, I got to buy a 2026 and hold on to it forever and keep it in great condition because I don't want that. But anyway, there's been a pushback on this stuff for a long time. Tyler, do you have anything on cars? Are you old enough to drive? I was just thinking, like, what do you think the premium is for a car that you can still drunk drive in? I think your car is going to go... This is not even worth joking about. Yeah. No. Anyway. Bad joke. Move on. Moving on.
What else is going on? Oh, we got to talk about the GPT-5.5 prompt for Codex which seems to have a duplicated line trying to get it to not talk about creatures. Tyler, you dug into this. What is actually going on? Yeah, so it just seems like there was some emergent property of the new model where it always tries to talk about kind of creatures and goblins, raccoons. Yeah, ogres are in there. Trolls, ogres, pigeons. And so... So then they have to counteract this, right? You have to put in the system prompt to not do this. Where is this creatures? 'Do not talk about, never talk about goblins, gremlins, raccoons, trolls, ogres, pigeons, or other animals or creatures unless it is absolutely and unambiguously relevant to the user's query.' This reminds me of those old image prompts where there would be a negative prompt that specifically said like, do not put six fingers on the human's hand. But what a weird one. And what an odd line to throw into a coding agent. Like, do we know anything else about this? Have people dug into what is actually going on here? I mean, it might not be just the coding agent. It's probably just the model in general, but... It's the model itself. It's goblin mode. The model itself yearns to discuss creatures, goblins, raccoons. It is an emergent property of superintelligence. Vi says they had to put this in due to my effect on the company. Goblins and creatures sort of followed me in through the front door when I joined and we are only just now starting to understand the downstream effects of their presence. And Thibault says, 'Never talk about goblins, gremlins, raccoons, trolls, ogres, pigeons, or other animals or creatures unless it's absolutely known. There's so many. If you know, you know.' So, somebody says, 'My 5.5 Codex said goblin with a flashlight when referring to a bug fix yesterday.' What? There's a billion goblins inside your model weights. You just have to get them out, says Tyler Cosgrove. Anyway, we can dig more into that.
There's a whole bunch more OpenAI news that we can go into throughout the show today, but we are very fortunate to be joined by Jon Gray. He is the president and COO of Blackstone and he's in the waiting room and we will bring him into the TBPN Ultradome. Jon, how are you doing? Welcome to the show.
Great to be with you guys. I've never had a preamble on ogres and goblins. Very exciting.
We are in odd territory, odd times with the AI boom. I'm sure we'll talk about all sorts of different elements of it, different ramifications in the global economy. But I'd love to start with a little bit of background on you. I know you've been with Blackstone for a long time. I'm fascinated by the decision to join, what the firm was like when you joined, and how it's evolved over your tenure.
Well, I came here in 1992, straight out of college, straight out of Penn. My senior year in college, I met a young woman in romantic poetry class and a month later, I got a job. And now 34 and a half years later, same woman, same firm. So very simple, very boring. And when I joined this place, it was small. We had 75 people. We had a small M&A advisory business and then we had an investment business with 750 million of capital. Wow. And it was exciting because we were doing the private equity business and investing. And you flash ahead to today and we've got a firm that manages over $1.3 trillion. And it's been a remarkable ride. Exactly. It would be hard to imagine because when we started at the firm, when you go to meetings, you'd have to tell people what Blackstone is and what we do. And that's obviously changed quite a bit. And credit to the founders, Pete Peterson, Steve Schwarzman, who continues to drive things today. They just had a vision that they could do more. And the alternatives business, private markets was a tiny industry and it started in private equity. But Steve in particular had this idea that we could do other things. So we went into real estate where I moved after about a year at the firm. We expanded into hedge funds, ultimately into credit and later on into infrastructure and growth equity to the point now where we have this massive scale and can give almost any sort of capital solution in the private markets. And I'd say the key thing that's really changed is what was very much a niche business serving a small number of endowments and pension funds and just doing high-octane investing in private markets, private equity, real estate, has evolved today to serving insurance companies and individual investors and sovereign wealth and all different people around the world and doing things at high-returning strategies and low-returning strategies all around the globe. So, but the most exciting thing I'd say is that the firm has stayed remarkably constant. That the commitment to excellence around the place, the drive, the entrepreneurial spirit, that's what allowed it to grow. And it still feels like even at this scale like we're running a small business which is not what maybe your viewers would expect but we still have tons of pride of ownership, doing the right thing for our customers, and we know at the end of the day the only thing that ultimately matters is that we deliver great performance. Yeah. If we don't deliver a premium to our clients, they're not going to come back and so everything's focused around that and obviously operate with integrity as well.
Yeah. I want to talk about the entrepreneurial DNA of the firm. It feels like the partnership is extremely entrepreneurial. That's definitely a core value as Blackstone's grown from one strategy to 80 strategies, 80-plus strategies, I think. What is the process for standing up a new strategy? How organic is that? We've seen venture capital firms go from they were doing Series A's, now they're doing growth equities. They just sort of bleed into the other strategy. And I'm wondering if there's a more deliberate process where there's someone on the team who's going out and exploring, finding a new opportunity, or you notice that, hey, we're engaged in a strategy and we actually need to sort of split this off and it's like cell division.
I think it's all of the above. There is no master plan, but somebody comes along to us. In fact, yesterday we got a call about an opportunity in an area that's adjacent to something we do where we don't have a focus. It was somebody who wants to give us a serious amount of capital and said, 'Hey, would you be willing to do a business?' So, in that case, it came from sort of reverse solicitation. Obviously, when we were a smaller firm, you didn't get a lot of those, but I would say it was always this sort of basic idea of adjacency where we were doing something. You know, you're doing private equity, you're doing real estate, and infrastructure sits right in between those two. Or you're doing higher-risk debt capital, but maybe we can move a little more senior. And then ultimately, you move to very senior capital. And the same thing in real estate, opportunistic, then more stabilized, then debt. And I think the key is can you use the intellectual capital? That's really one of the great assets. It's the people here and all the insights. And if you think about investing as pattern recognition, which is you connect dots. If you have a broader platform and you can connect a bunch of dots, then you can be better at these adjacent things and you end up serving the same customers who would prefer you to show up and say, 'Oh, you can do private equity really well and you can do real estate and you can do credit. I'd love to work with you. We really trust your organization.' But the key is there's got to be a market opportunity. You've got to be able to deliver that return and then you've got to have the people to do it right because the worst thing is to say, 'Oh, there's a great opportunity. I can raise money for SPACs,' right? And then you raise tons of money and you end up not delivering for the customers. So the standard has to be, can we deliver a premium return? Do we have the expertise? And do we have the people to do it?
Yeah, I'm sure we're going to talk about artificial intelligence, but is there a second macro trend that you have locked on to that is an overarching thesis? I mean, we've been following the peptide boom and what's going on in GLP-1s. Like there are big stories in financial markets broadly, or manufacturing is another one. A lot of interesting... And I'm just wondering if there's anything else that's actually...
Yeah, I'd give you a bunch. Yeah. I mean, and we spend a lot of time trying to be thematic. You know, one of the things I've learned over time as investors is you're so focused on your model. What is page 52 of the model, this assumption, whatever. But when you look back over time, I often say it's the first paragraph that matters. What's the basic business, the industry you're going after? Definitely matters who your management team is. But doing it in the right theme, right? The theme, the right neighborhood makes all the difference. I don't care if you're the greatest investor-operator in the world, if you buy department store chains or legacy media companies, right? There are just businesses where the winds are in your face and you'd love to do things where the winds are at your back. Now, you can still overpay. You could have the wrong business model in a good neighborhood, but your chance of success is much higher. So, as an organization, we're constantly saying to ourselves, what are those things? And so to the question, I'd say there are some basic ones. There's a global shortage of housing since the GFC. We've been investing against that. We've been selling goods obviously really now for 25 years, increasingly online. Owning last-mile logistics has been an incredible business because every time you buy something from Amazon, it goes through one of these last-mile logistics hubs. There are geographies. India has been moving towards capitalism, you know, more physical legal capital markets infrastructure and so building a great team there, investing in the right sectors, that has been an unbelievably successful theme for us. Japan has really reemerged in the last three or four years as a place that's open to foreign capital, that's allowing companies to restructure, allowing people like us to take companies private, and that's creating a lot of energy and excitement. You mentioned life sciences. I mean, if you think about this AI and a number of products that can be created and yet it's all still going to have to go through phase three trials and we've got a big business that does just that. We love that. That's an area where obviously human beings are going to continue to invest a bunch of capital. The physical world, the reindustrialization is massive. Probably the biggest theme beyond the data centers for us today, which we can talk about, is what's happening in electricity. I mean, all of the things, the data centers, the robots, the autonomous vehicles, that reindustrialization, it all needs power. And it's everything from LNG to renewables to pipelines to electrical equipment to utility services. The way to think about it is you try to find some great thing like data centers. Yeah. And then you turn it upside down and say, what are all the inputs that go into that? Or today, sadly, defense feels like it's going to be a massive tailwind business, right? Every country around the world is going to be spending more on defense. And so, I think as investors, getting your heads around that and positioning your portfolio in private markets or public markets to say these are the areas I have the highest conviction. The best is when you can find something one derivative off. Because today, as you guys know, the hottest things tend to get really high multiples. But can I find that thing that's not quite as sexy? And for us, of course, the data centers have been an unbelievable way to play it. Then you get the benefit of this without necessarily having to pay a huge price.
How are you grounding your thesis around artificial intelligence and the growth there? Like, obviously there's a million data points about revenue and multiples and valuations and there's a lot of good news no matter where you look, but do you ever zoom out and look at how you at Blackstone are using artificial intelligence, the value that you're getting for it, where it's working, where it's not working, and use that to sort of level set on how real, how impactful this technology will be?
Absolutely. I mean, I think the thing driving us is seeing the power of this technology as it gets deployed. Now, I think all of us are frustrated that the technology is so powerful but getting it inside of companies is hard. Yeah. It's sort of the beaker-to-bedside problem in clinical trials, right? Like we've got this great medicine. How do we get it to the patients? How do we turn it into something usable? That is the challenge. But we are definitely finding more and more use cases. The first thing I'd point out, and our companies, their LLM spend, and we have, by the way, we have 270 companies, 13,000 pieces of real estate. It's massive in its scale. Our companies' spend on LLMs was up 15-fold Q1 of this year over last. Now it's off a small base, but it tells you what's happening. And all of these companies are trying to find ways to be more efficient. We own an accounting firm. They're trying to make obviously tax and audit much more automated using this technology. We own ancestry.com and they're trying to do things with content creation which is telling an immersive story based on your family history as opposed to just giving you a bunch of dates and geographies and so forth. And by the way, content creation in a lot of ways is the easiest. You know, coding, music, movies, because the rules aren't as important. Probabilistic works better than, you know, software is great because it's deterministic, there's yes or no. But content is the easiest place we're seeing pickup. But I could go through, we have a company that does lab-grown diamond grading and of course reviewing these things visually with the AI is improving the efficiency of that company. At Blackstone, we're trying to make our investment process better, take in all this data from what we have in the outside world, look at our historical memos, read the diligence that's here and say to the teams, these are the areas you should focus on. It's not making the decisions, but it's a tool that's making us much more efficient. So I would say to us on the compute side, it still feels like it's very early days in the implementation, but we can see particularly in rules-based businesses, you know, transaction processing, legal, what is a billable hour going to be? This feels like the path of travel in a big way, but I think it's taking more time than most of us would hope.
Yeah. How have you been processing the idea that certain moats might be eroded? There might be more competition in certain sectors of the economy going forward. Is the moat section of every investment memo getting longer these days? How are you investigating that?
I would say the uncertainty section of every one of these memos is getting longer because investing is hard and what you did historically was look at a 10 or 20-year history of a business and industry and it just may not apply, right? And we've seen this in the past, right? The yellow pages, which I may be dating myself with you guys, but you used to get a plumber opening up your yellow pages to find them. When the internet came along, they disappeared. Taxi cab business which still exists but obviously when Uber and Lyft showed up it changed the world in a really profound way. Now the issue is in 50 different verticals there are going to be impacts and how do I think about it? Autonomous vehicles which reduce the accident rate by 95% on serious accidents, like won't that happen and what does that mean for collision repair? What does that mean for auto insurance? So I would say the areas of greatest risk today are obviously in sort of the white-collar world. It's the software, it's professional services, information services and there you're spending a lot of time trying to understand what the world may look like. And as a result, what you're beginning to see both in the public markets and the private markets, I describe it almost like the Red Sea parting where obviously there are companies viewed as AI winners, could be LLMs, application software, could be the digital energy infrastructure. That's easy. Then there are companies in the physical world that are pretty unaffected. We took a company, Medline, public at the end of last year. It's in medical supplies, manufactures, distributes them. No impact basically from this and that's easy to underwrite. And I think what you're going to see, I think you'll see a recovery for instance in an area like real estate that's been very much out of favor the last four years because of higher rates and a bit of overbuilding that's going to come back because people are going to say, oh, that warehouse, that's going to exist, that hotel is going to exist. I think sports obviously. And so I think there's definitely a tendency from investors now to look at this physical unaffected AI world, certainly the AI benefiting world. And then this other area is fascinating because some of these companies could end up being very attractively priced and they may need to change their business model, but they have real incumbency. So we have a business that does revenue management for hospitals, helps them with their billing, basically what do you charge for certain procedures. Now they need to incorporate AI into the business. But if they do that, they should be a winner because they have the trust of their customers. Yep. And that's super valuable. Yeah. So I would just say the risk levels on investing have gone up, but I also at the same time the opportunities have gone up as well, the upside.
How's your recall on your thinking around the dot-com era? There was very similar fears around how the internet would disrupt different businesses. We had Rick Caruso sitting here yesterday and we were asking him about this and he's like, I never thought my category of retail would go under even though at the time everyone was projecting that, like, hey, why would somebody go to the store to get something if they could get it shipped directly to their house. And so yeah, I'm curious if you've reflected back on that era when you started your career and kind of tried to understand where you had good intuition, where you were maybe off.
I think it's a great analogy and Rick is a very good man. It's funny if you look at retail, I think that does resonate with what we're talking about in software. So if you go back 25 years ago, just as the bubble's bursting, as Amazon's starting to become a marketplace for everything, you could have said retail will be an apocalypse. And by the way, Sears, Kmart, Toys R Us did not make it. Yeah. On the other hand, Walmart, I think it's up sevenfold. Costco's up like 25-fold. TJ Maxx is up 40 times and has a $180 billion market cap. That's crazy. And for those companies that won, they either had something that was infrastructure-like, groceries, or had a great value proposition, really understood their customers. They found a way to navigate it. And I think that is the kind of way to think about what's coming to so many businesses, which is if they just sit and operate the way they have, they have enormous vulnerability. If they do something and have a market position that's protected, you know, they can end up doing much better. In terms of my own accuracy, I think I probably at times may have been too negative on some of the retail if I look back at it. And some of it obviously ended up thriving and doing quite well. And so you try to have a little bit of mental flexibility. Yeah. Well, it's good to have a mental model of like, am I looking at a Sears management team or a Costco management team? Yeah. And it makes all the difference in the world. I've been the chairman of Hilton now for almost 20 years. And when Airbnb came out, which is an amazing business model they built, a bunch of people are saying it's the end of Hilton, whatever. You know, the stock has been a rocket ship. Chris Nassetta, the CEO, has done an amazing job. It had a differentiated business model. It offered something fundamentally different and so both of those companies ended up thriving and doing great. So I do think that is the hardest part today because the technology is moving so quickly and is so capable, it's making it harder. What I would say as investors is anything in this AI uncertainty world, we'll see these multiples come down because people are, until there's a sense that there's permanence, that hey, this business model is going to survive or may end up thriving, but right now I think people are taking a step back and I do think there'll be some baby thrown out with the bathwater. There'll end up being some software companies that you could buy at very reasonable prices. But this is the sort of stuff. The other thing I would just point out for us because of the risk that exists, one of the easiest ways is to be in the picks and shovels. So invest in that electricity, invest in those data centers because you don't know who's going to win of the incumbents, who's going to win of the new model companies, but you do know they're all going to need AI factories, are all going to need power. And that for us has been really the biggest strategic pivot we've made and we think it's going to pay huge dividends for our investors.
Well, we appreciate you taking the time to hop on the show today. We've kept you already 5 minutes long. We would love to have you back and go way deeper. This was a fantastic conversation. Do it again soon. Have a great rest of your week. We'll talk to you soon.
Hey, it was an honor to be with you guys. You have a great show. Take care.
Thank you, man. Up next, we have Colleen Aubrey from Amazon Web Services. You know it is AWS. She's the SVP of Applied AI Solutions here with us in the waiting room. We'll bring Colleen into the TBPN Ultradome in just a minute. Last question I wanted to ask, we didn't get a chance, was the barbell strategy. I wanted to hear his take on this idea that you have Josh Kushner buying the Giants, the most legacy thing possible, and then the AI labs, and then you have Ellison owning Bugs Bunny and a bunch of data centers. And it's this weird new normal of you buy the oldest possible thing that is resistant to any sort of disruption and then the exact opposite. But we are joined by Colleen Aubrey from AWS in the waiting room. Let's bring her into the TBPN Ultradome if we can. Let's give it a try. Hello. Welcome to the show.
Good morning and thank you.
Thank you so much for taking the time to join us. Please introduce yourself and tell us a little bit about what's going on today with AWS.
Sure. So, Colleen Aubrey, been at Amazon for over 20 years now and joined AWS 2 years ago. Okay. And I've been on this journey of looking at how can we bring to life some of the operational expertise that we've developed at Amazon into agentic products and put them in the hands of AWS customers. And today was really sort of great to announce two new products, Amazon Connect Decisions, Amazon Connect Talent. We announced Amazon Connect Health a couple of weeks ago. And this really expands the family of Connect products that we have, adding to Amazon Connect Customer which is a 9-year-old product that we've been developing.
So can you help me understand? I think most people will be familiar with AI chatbots and many people will be familiar with AI agents and coding agents that they fire off a prompt and maybe it goes for five, six, eight hours sometimes and then comes back with a fantastic response. But when you're deploying an advanced model, a frontier model, an agent into an enterprise system that's deployed on AWS, what are your clients looking for? How are they thinking about integrating an agent into a platform? Is it that they're vending the agentic workflow to their customers in turn? Can you walk me through some of the examples of how enterprises are actually deploying agents in practice when most people are probably familiar with the more point solution they type the prompt themselves.
Yeah. Well, let me first start by saying that I think we're early in that journey. Yeah. And certainly in my conversations with customers, a lot of what I hear is people looking to automate processes. Sure. And for me what that triggers is that the mental model is looking at how work gets done today and then putting AI to work to do that same process. And personally my point of view is that that misses the bigger opportunity. I think the bigger opportunity is much more transformative and we can't assume that how we work today is the sort of gold standard for how we might work when we have this new capability in our hands, which is to be able to develop fairly complex agentic teammates. Yeah. That can work alongside people in the business. So we're really going after this mission of how do you develop an agentic teammate which is in the business with people and is actually transforming how work gets done and do that in a way which is intuitive and natural so that transformation doesn't come with heavyweight change management. And so we really have gone back to the drawing board and trying to think about how will work happen in a number of different areas, in decision-making, within supply and demand planning, in healthcare, in recruiting, and in customer journeys.
Sure. Sure. I feel like AWS's strong suit has always been understanding complex systems, being able to deploy a ton of resources, but then also being able to monitor, understand everything from cost to performance. How is that changing in the age of AI agents? I imagine if I have a bunch of digital workers doing stuff, I want a water cooler where I can tap someone on the shoulder and say, 'Hey, how's it going?' I want analytics on how different work processes, even if they are fully automated, are continuing and progressing. What does the analytics stack look like in the future?
Yeah, I think it's a good question and certainly in the agentic teammates that we're building, there's a good amount of thought that we put into the observability, the trustworthiness, like an AI agentic teammate's ability to explain why they've taken some action, why they've come to some conclusion, the reasoning that they've gone through. And an example of that is in Amazon Connect Health. In this case, we're working on behalf of providers preparing sort of summarization of a patient's history before they meet with a patient. And in that case, every reference, every conclusion is traceable. Yeah. Into labs, into previous visits, into medications, so that the physician in this case, versus a builder and SDE, has the opportunity to be able to observe the work, to be able to reason over the work, to be able to also course correct as necessary. And so for me, I'm really much more thinking about how I make an agentic teammate trustworthy and part of the team and that observability comes to life in different ways. Of course, under the covers we have to solve for price performance, we have to solve for latency, we have to solve for managing the efficiency of deploying many agents under the cover to actually be able to deliver the experience and that's some of the hard work that we're doing on behalf of customers.
Yeah, I feel like it's potentially underappreciated and maybe this is an outgrowth of the fact that the first AI models that most people interacted with were sort of low-powered chatbots that did hallucinate. But the hallucination problem has, at least to my experience, basically gone away. And it feels like the next challenge is actually educating people on the reliability, the traceability that you mentioned. And of course, I'd be interested to hear a few different... there's a whole bunch of different projects that you can embark on to build confidence around the traceability and reliability. I did have one last question though. Since you've been with Amazon for 20 years, I'd love to know how has the company changed? How has it stayed the same?
You know, I think certainly for me this sort of passion for inventing on behalf of customers has remained pretty consistent through the time that I've been at the company. And so really going deep to understand a customer problem, but then also pulling back and asking ourselves, is there a better way? Can we invent a way of solving this problem which is meaningfully better than what exists today? And do we have a new unique point of view about how we would do that? And that's really what we're trying to do with this Connect family of products is really ask ourselves honestly what is the unique capability, the unique operational experience that we have that we can bring to life and I think that has remained consistent. Otherwise, you know, Amazon's always evolving, always changing and, you know, our businesses go through inception, they go through scale, they go through reinvention and now is a great time for all Amazon teams to be thinking about reinvention and how do they deliver their products and services to customers now we have this new AI capability in our hands and it's exciting to see the energy around that and I feel sort of like a freshness in the organization as we go through this next phase.
That's great. Well, thank you for coming on the show and congrats on the progress. We'll kick it over to Anthony next. Have a great rest of your day. We'll talk to you soon. Up next, we have Anthony who is a VP and distinguished engineer at AWS as well to continue our segment on AWS and detail a little bit of the OpenAI integration and new stateful runtime for agentic systems. And so we have...
Anthony in the TVPR. Anthony, welcome to the show. How are you doing? What's going on?
I'm doing great. Thanks for having me.
Thank you so much for taking the time to join. There's been a lot of discussion back and forth, and I think it'd be helpful to start with just like a 101 of what is a stateful runtime? How are you thinking about agentic systems? I think everyone knows LLMs are next token predictors. Maybe they're stochastic parrots, but how are you thinking about the capabilities that come from this?
Yeah. And then how does that tie into the announcements today around some of the new models being available?
That's great. Yeah, the best way I would describe it is that we've seen kind of an evolution of how folks interact with these AI models over the last few years. It started out exactly as you mentioned with just token prediction. The early completions API from OpenAI was exactly this. You give it a string, it gives you some more strings. These APIs have advanced over the years to where that string starts to get parsed and you get tool calls. Or you get reasoning or you get other kind of capabilities. And what we're seeing now with agentic development is that folks are taking those tool calls, executing tools, performing things like compaction or extracting memory. And this is a super powerful mechanism and this is really the thing that has caused at least like my career to dramatically change in terms of productivity and what can be accomplished now. And I think the next phase for AI, I truly believe, is taking a lot of what we've learned in the coding space where most of what's happening is happening locally on a person's laptop or maybe their development machine and making that be deeply integrated within the cloud where like real enterprise applications live and getting all those same benefits. And so what we announced with Amazon Bedrock managed agents powered by OpenAI is a new API that really has three parts. So the first part allows you to create what we call a runtime and you can think of the runtime as the definition of the agent. This contains skills which tell the model how to do new tasks. This includes like tools like MCP servers that you want to configure or other built-in tools and a memory policy so you can tell it how to maintain short-term memory or long-term memory or whatever new memory mechanisms might come over time. And then the next part, and this part is really the special bit, is the environment. Today when most people are using tools like Codex, they're running them on their laptop and the agent effectively lives on your laptop. That's good and bad. It means you can do all the things that that person can do. But it also means that agent doesn't have its own identity. You can't create agent-specific policies. And a lot of enterprises are trying to figure out how to strike the balance of enabling these agents to work but also making sure that you can set the right guardrails on them. Environments in Bedrock managed agents really solves this. It allows you to give a dedicated compute environment for that agent. It allows you to create specific policies around governance. And most critically, it gives that agent a unique identity within AWS. So as a security team or an administrator, you can create policies around what that agent can do. We think these things are absolutely critical to enable agents to be used in real-world enterprise applications. And then finally, there's the inference API, the thing that you actually talk to the agent through. And that API is very familiar to existing APIs like the responses API from OpenAI. And so a lot of existing applications can just work once you've created this agent.
Can you reflect a little bit as a distinguished engineer on...
Wait, before we move on. If I'm an AWS customer today, what should I do to experience what you just described? Because it was a lot of corporate lingo, which I love. I'm an enthusiast. But I want to, what would be your recommendation given this new set of capabilities, what should I try doing to start? What kind of value might be unlocked in the organization in maybe a more straightforward way?
Yeah. Today Bedrock managed agents is in limited preview and that will expand over the next coming weeks and so you probably have to wait a couple weeks. But in order to actually use this, it's really as simple as making two API calls. So you can go into your AWS account and make an API call to create a runtime. And then once you have that runtime, you decide what type of compute you want to associate with the agent. And then you make another API to create that environment. Once you've done those two API calls, that's it. You now have an endpoint that you can take an existing tool. It can be Codex, it can be like a web chat-based system or you can just use the OpenAI SDK and integrate it deeply within your application. But it's really that simple. It's just a couple of additional API calls and then you're off to the races.
Interesting. How are you thinking about the different roles of engineers right now? There's been this trend of managers and CTOs becoming individual contributors at labs and then simultaneously there's been individual contributors who are effectively becoming the manager of many agents and so we're sort of going both ways. But where is the highest leverage point for someone who is on the distinguished engineer path, like the ultimate individual contributor, but the world is changing?
Yeah, I can tell you that like in my role, I am coding almost every day. I took the day off today to come and do this event, but I'm spending almost all of my time coding. I'm having probably the best time of my career. What my experience has been with all of these coding tools is that once you make coding fast, once you make the actual art of generating the code quickly, what really matters is your understanding of algorithms and data structures, architecture patterns and things like that. So I think what you're finding is that a lot of very senior ICs, folks that have a deep understanding of software architecture are now able to do really amazing things because they understand how to prompt these models in a way to be able to generate new things.
Is it less frustrating? Are you having the most fun you've ever had?
I've always felt in my career that I was limited by typing. Like I don't care. I don't mind typing. I don't mind writing. I love writing code. But you know, you can think about a problem and you can think about solutions and then you're like, okay, this is going to take me weeks to actually implement. And that's just something I had always become resigned to is that it's going to take me weeks to solve that problem. Now I think about the solution to that problem. I do some prompting in Codex. And I have the solution by the end of the day. And that is so incredibly rewarding as an educator.
Yeah. That's amazing. Well, thank you so much for taking the time to come chat with us. We'll talk to you soon. Have a good one. Cheers. Goodbye.
Up next, we have Colin Zima from Omni. He is the co-founder and CEO building the semantic layer powering AI-driven analytics. Do I blink? Apparently not, but I was blinking at them once I saw that. Oh yeah. You weren't... I was communicating. Have you been picking up on the drink Coke with two thing? They demand that you drink the... I wasn't gonna do that. You stared them down. Said no. But I obliged every once in a while with the two-handed Diet Coke. If I see somebody who's like, 'Oh, they're not reading the chat. Drink the Diet Coke with two hands.' If you're reading, I'm going to sip a Diet Coke with two hands. Anyway, our next guest is in the waiting room. Let's bring him into the TVP Ultradome. Colin, how you doing? Welcome to the show. There we go. He's reading chat. This is great. Um, introduce yourself. Introduce the company. Tell us the news.
Yeah, Colin Zima, CEO at Omni Analytics. We are building the next great data platform. So, a product that can do everything from AI to spreadsheets to dashboards. We're trying to consolidate all of BI into one tool. And we're doing it on top of a semantic layer. So, a layer that can explain how everything in the business works so that AI does stuff reliably.
How generalizable is the semantic layer? Like this has got to be some trade-off because different businesses have different ontologies. How are you thinking about creating something that's flexible but simultaneously uniform?
So I mean on the one hand a semantic layer is actually pretty straightforward. It's just a bunch of text about the business. So if I'm going to go write a semantic layer for ChatGPT or Claude right now, that is what the skills framework looks like. It's a document that has lists of stuff about the business and that is completely unique to every single company. On the flip side, we've had semantic layers in data for 50 years at this point. And it's the specifics of how all the tables in a warehouse fit together. And what we're doing is just bringing that, like bridging those two worlds together. So it is completely specific to every business.
Yes, exactly. Like a Snowflake or a Databricks. So I mean I imagine that there's still a world for databases in the future. How are you thinking about that? Do migrations get easier or changing schemas get easier in the future or does this get harder because the data is just so much more? How are you thinking about the evolution of databases and how you'll use them?
Yeah, I mean using sort of public trading as a proxy for this, it seems like the data warehouses have found like a nice middle ground in between the SaaS apocalypse and the pure-play AI companies. Like we need somewhere to hold all of the data. And so I think that databases will probably be here for a long time. I think what has gotten interesting is that picking up your data infrastructure from one tool and moving it to another tool has gotten substantially easier. Like SaaS used to have a good bit more lock-in than it does today. And yet you still need a database that's holding all the stuff, but the portability of it, I think, is the new question.
Yeah. Is there a piece of this pitch that's like cost-driven? Because with some of the advanced models, it feels like if I just threw a million dollars of compute at a problem, I can have it go and parse through every PDF and use an API to turn it into text and turn it into CSVs and write custom Python for it just to answer the question of like what was revenue last month, right? And that feels inefficient. It feels like this is a good solution, but is that the goal or is it something faster? Speed, cost, everything.
I don't think that we started there. But I think that to your point, like savvy people are sort of coming around to this because on one side, these models are smart enough that you can just sort of throw it at, you know, Google Drive and Slack and your warehouse and you can actually answer every single question. So you can get 80% of the way there with literally no thought, which on the one hand is a little bit scary building a data company because it's sort of like, again, why don't you do this? I think to your point, you probably don't want to reinvent your ARR metric every single time you query. And ultimately, if it's a one-off, you don't want to build a dashboard on the fly every single time. So people are starting to come around to realize that this is a cost-performance optimization problem. And it turns out that the analytics products that have existed for the last 20 years or 50 years or whatever it is actually do have some sort of good solutions to these things. I think at the same time trying to fight the idea that you can just bring ChatGPT to the warehouse and get an answer is a naive version of building product. Now, every single person is going to compare your SaaS product to sitting the thing on the warehouse or just setting it up yourself and doing it in Claude. And so figuring out that balance is like the goal of every SaaS company now. And cost is a part of it.
Okay. Like a bit of a hot take I want you to respond to. There is like a muttering around like AI psychosis in the enterprise, like people vibe coding, like things that don't actually create value yet, and there's a question about like where's the useful token spend versus just the explorative sort of performative token spend. I think there's a lot of real stuff to be done, but there's also some crazy internal tools that are just like, you know, self-perpetuating. And it reminds me of people had dashboard psychosis like a decade ago. I worked at a company where somebody was like, 'Oh, we need all the dashboards. We got to have every metric.' And I'm like, you oftentimes you have a question and you just need to go answer that question. You don't need to be checking like what's the website traffic on my website every single minute. Like sometimes that's not useful. Sometimes there's already a dashboard for it. So how do you think about rolling out like dashboards or analytic products that are actually effective and like what coaching needs to happen versus just like raw consumption.
It really comes down to pragmatism. So the example I love to give is Guitar Center is a customer of ours. They have sent spreadsheets to every single store for the last 30 years that have every single SKU and like the week-over-week, day-over-day sales. That's not a process that needs reinventing. Like they're going to send the spreadsheets to the stores for the next 25 years. You need products that can do that. You're also going to have a dashboard like I want to know what our plan is and I want to go compare like our ARR on a weekly basis to where it is relative to plan. You're also going to just have a question that you need answered that you didn't predict in advance and need to go answer questions. And I think the challenge is that every vendor sort of has this point of view that's like, you know, dashboards are the way or Tableau was visualizations are the way to do everything and then I was at Looker and semantic layers were the way to do everything. And I think what you see is that there's a little bit of truth in all of these things. And quite frankly, right now it's AI is the way to do everything. And we're into, you know, how many billion tokens can you spend to go answer your question. We probably want a tool that does all of those things and actually makes them fit together. And it's sort of like the, it's not the sexiest pitch. You know, every single thing that you are doing is right and you need a little bit of all of it. But I think that there is space for pragmatism in the world where we can invent things on the fly sometimes and that is a great way of doing it and we don't need UI and we have good UIs and they do things and you know websites are good and we can go back to them again. So it's both.
It's not the sexiest pitch but it was sexy enough to get the Series C done. How much did you raise? Tell me about the round.
We raised 120 million out of a 510 post.
Massive. Quick, could you give us a quick history of the company? When did you actually start the company?
Yeah. February '22. So 4 years and a little bit old. We raised about $27 million as we got the company started. Did our B about 12 months ago at a $650 million valuation. So we were building for about a year and a half and we've been selling for two and a half. So business has been pretty good.
Fantastic. And what were you doing before this?
I was at a company called Looker that got acquired by Google. So a direct competitor to my previous company.
You know what you're doing. Well, congratulations on the progress. The chat loves the pink, by the way. I love the pink. Are you guys like fully just, are you going to own pink?
We embraced the pink. We sort of fell into it. We were going to a conference that was all blue and gray. And one of our marketing leaders was like, 'Hey, wear some pink. People will notice you stand out.' And then we just turned into a pink company, so we embraced it.
Fantastic. I love it. Very smart. Well, congratulations. Thanks so much for taking the time to come show us. We'll talk to you soon. Have a good one. Goodbye.
Thanks for having me, guys.
Up next, interesting username. I didn't get to ask him about it. At drink Zima. It sounds like some type of like cool caffeinated beverage. Yeah, that does say Zico coconut water. Get a very cool caffeinated energy. Maybe that's the next job. The next thing he can buy so bring it back. Up next, we have Alex Epstein, the author of Fossil Future, live in the TVP and Ultradome, taking us through what's going on in the world, what's going on in energy markets, what's going on with OPEC. Great to see you again, Alex. Thank you so much for taking the time to come on down to the TVP and Ultradome. Please get us up to speed. What should we be paying attention to? You look fantastic. Good with the hair, too. Oh my god. Do you guys remember what we talked about last time? The Strait. Yeah. Yeah. Yeah.
So, by the way, interesting fun fact about AI. So, I think most of what I said last time was vindicated in terms of the main thing was the Strait needs to open and there's no substitute for it and there's all these other little things you can do, but nothing compares. And that's still true. I would add you need to enduringly open the Strait. So if you cut a deal with Iran and they have control over it, even if they give you control for a year or whatever, that's not, then you've actually made the situation way worse than it was before the war where everyone figured we really have control over the Strait. But fun fact, since you're talking about AI tokens, so in preparation for that, in addition to consulting experts and thinking about the issue, I have my own internal AI called Alex AI Pro, which I've invested over a million dollars in. And it's nuts. So to talk about, and one of the things I've invested in is I don't get enough compute. I don't get enough compute from off-the-shelf AI. So you need, you know, if you can run your own agents then you can do it. So that query which I think led to very valuable content was 48 kilowatt hours. So that's half a Tesla. Think about that. That's three Powerwalls for one query. So, yes, I know.
How long was that running for?
What? Oh, that's crazy. And what is it doing? Like pulling data from the internet, pulling it together, writing?
It's really god mode. I'll show it to you sometime. Well, actually, so here's an announcement for the first time. That a version of that AI is now free to everyone who works in government. So, it's gov.alexpstein.ai. Yeah. So at some point it's free. We're going to, if you use too many tokens, we'll have to just charge you cost beyond that. But yeah, I mean I have my lobbying firm which is the only pro-freedom lobbying firm, the Energy Freedom Fund, which is a 501c4 that I'm the unpaid president of. And I figure like one of the best ways to spend those dollars is to give people a pro-freedom AI. So I'm not going to make any money off those queries, but we'll at least cover our compute cost. So this is a real-world example of I believe that if you know how to intelligently integrate AI, you can make use of a lot of energy. And very profitably.
Sure. Sure. Sure. Yeah. Of course. Because like the results that come from good research or good policies and good consulting fees and all sorts of...
But you need to train it. So a lot of the work is just literally breaking down everything I do and my researchers do. So I just built one today which is the policy validator which is anyone is free to send us policies and we'll lobby for them in proportion to merit, not in proportion to payment. We don't take payment for this kind of thing. But I needed to replicate, hey I have these two really brilliant researchers and then I'm pretty good and we have some other pretty good people, like how do you break that down? And it turns out there's about 25 questions you need to ask to get the credibility of the people. Is this a pro-freedom policy? Is this going to increase energy abundance? Are there better ideas? And if you know how to really do it, you can get a, and you have human validators at the end of it. It's wild in terms of what you can do.
Okay. Let's start with there was a, on the Strait, there was this interesting piece in The Economist that was arguing that the market was simply not processing or digesting the fact that even if the Strait were fully open today there's still a massive shortage of energy that is effectively delayed and that that would have ripple effects on the economy, inflation, all sorts of things. How have you processed the impacts, the downstream impacts? I think a lot of people see it at the pump when they go and fill up their cars if they drive gas cars. It's starting to show up in other places. But how are you thinking about just what's at stake, why the Strait being open is important from first principles?
Yeah, I'm very sympathetic to that argument. It would be just miraculous if it didn't get a lot worse in terms of prices. I mean, you're dealing with a situation we talked about last time. You have a certain amount of spare capacity. So, you know, international agencies released a reasonable amount in terms of their oil reserves. But these are all very temporary measures. It's like 30 days here, 90 days there, 180 days. And there was already a bunch of supply. No one's sitting on 5,000 days of oil. And the thing you have to realize is, you know, in America, we're very America-centric. So, you know, we don't even think about Canada, let alone Asia. And a lot of what's happening with the Strait is oil that is intended for Asia and Asian consumption. Now, the Chinese are in an interesting situation because they did build up a bunch of spare oil. Now, there's questions of other things they need like sulfur and helium that go through the Strait and I've heard interesting claims about that. But we're already seeing in Asia various shortages. And you know, one analyst that I like likened it to, okay, one part of the Titanic is starting to fill and not everyone on the Titanic realizes this is happening, but you're cutting off a huge, whether it's 14% or 20% or whatever, you're cutting off a huge percent of global oil supply and that cannot last. And even if you solved everything today, it takes a while to bring it back. And right now we're in ceasefire mode, which is not creating enduring... That doesn't enduringly open it up.
Yeah. I heard I think it was Rahm Emanuel was saying that the Gulf states do not want Iran to have a veto over the Strait even if the Strait is opened. Now the conversation has shifted to what does it take that America is potentially responsible or is being held responsible for removing that veto, right? Is that your perspective?
Yeah, my perspective is it needs to be enduring. So in advance of this there was the idea that hey if America ever goes into Iran obviously we're going to keep the Strait open, obviously we're going to prioritize that. That unfortunately did not happen to the extent that it did. I mean, you know, they're different people in the administration, but overall, I mean, we have to just be objective. I'll praise them where they deserve praise, but like they were not prepared for this in terms of whatever the final decisions were. I think within a week of our last interview, not because of our last interview, but I just talking to people in the administration, they all became very clear that Hormuz is non-dispensable. Before that, there had been people saying, 'Oh, we have Venezuela, we have all the...' just all nonsense. So, they understand. Yeah. One. You might get to one. At some point you might get to 1% and we're talking about 20%. So we're talking about are there 30 Venezuelas that we do business with? So it's like they understand the importance but it's still in this mode where Iran now is known to have, look Iran has proven that they can control the Strait of Hormuz in a way that the US cannot obviously counteract. So if we cut a deal with them where they again, where they have, where they can use the same power to stop us anytime they want then it's not open, right? Open is a little bit ambiguous, like it can be open momentarily but it's open on their terms. So basically you need, without giving any strategy because I don't know the exact strategy, it needs to open on our terms. That's the only way you have a victory.
Let's shift to OPEC. Can you give me a primer on OPEC? It's the Organization of the Petroleum Exporting Countries. OPEC Plus. So yeah, take me through the history and the impact.
Cartels. I think the easiest way to understand this, no, it's important to understand cartels and I think people have a uniformly negative view of cartels which is plausible but a little bit exaggerated. So you take the people that aren't a part of cartels, there's no like... Well, you think about the, if we go look at the early oil industry where, you know, Rockefeller is criticized as a monopolist and we created this thing, the Sherman Antitrust Act and other things to prosecute so-called monopolists. And I'm totally against these laws for any number of reasons. I don't think the government should be able to create monopolies that it enforces by force, saying, 'Hey, there's one producer. Nobody can compete.' But nor should it be able to say, 'Hey, you're really successful in this market and so I've decided that you're too good.' And one of the things that people will counter with is, 'Well, what about economic dead weight loss?' Just the idea that if you actually do control 100% of a resource, you can charge dramatically above market rates, which reduce demand and wind up having like less human flourishing because you have less energy produced in fact. So what happens in practice is like if you look at what happened with Rockefeller. So Rockefeller took, his focus was refining. You look at the early people in the oil industry, the different producers. What would happen is oil prices are decent. Then you get a flood of new oil on the market and people just get wasted. They get ruined. And so what does that do? That disincentivizes people from investing over time because the volatility is so high. So what Rockefeller was basically able to do is he said, 'Okay, I'm going to buy you up. You're exposing yourself to way too much risk. I'm going to buy you up. I can run everything much more efficiently.' And so in the long term, we can have something that is a profitable and b has much lower prices on average than the very volatile situation. And in fact, he dramatically lowered prices. So the interesting thing, so you could think of Rockefeller, they call it, it's in a sense a cartel, but it's a free market cartel, which I think should be able to exist, but you can call it... And I believe that's in part why the Sherman Antitrust Act in some ways like you have to prove consumer harm and this is why there's later versions. I mean it's very vague. It's like no comp, you can't do restraint of trade, which what the hell does that mean? And then later they have these different things. And I have a lot of reasons for being against it, but it's notable that the volatility is a really really big thing in oil markets historically. And that's why people, whether or not you think free market cartels should exist as I do, you have to understand why these things exist. Why any cartels, OPEC is not a free market cartel, but why these exist is because the volatility is just so so high and oil is so so valuable. So people want steady oil but and they want people to be comfortable being in the oil business instead of just getting wrecked all the time and getting thrown out. We had this era of Rockefeller and then that was broken up and then we have in the United States had something called the Texas Railroad Commission which basically cartelized. America was the dominant producer and so they did these things that basically rationed how much everyone could produce. So the term that's often used is swing producer. The US was the swing producer which meant that they could basically control the supply in the world. So if there were, in particular, if there was a cut in demand for some reason, they could cut supply and if there's a huge increase in demand, they could increase supply. So that happens until the Middle East starts to boom and then the Middle East starts to become the swing producer with the rise of Saudi Arabia and others having very low-cost oil. And so then you have the era of OPEC, but then you have fracking. And so for a little while, the US becomes the swing producer in the sense of we have unrestrained production. We add a lot of oil to the market and what happens at a certain point? Crash. There's overinvestment. Our US consumers benefit hugely from fracking. But like a lot of these companies just get wrecked and then they start doing what they'd call fiscal discipline which functions as a restraint on supply even though they're not doing any kind of cartel activity. They're basically saying, 'Hey, we're not going to produce if prices go below this. We're not going to keep increasing our production, etc.' So the reason if you take OPEC right now and OPEC Plus, they have a lot of reasons, even though there's a lot of unethical stuff and I don't think the government should own the oil and I think they stole the oil. So but if you just understand how they're thinking, they do not want a, they want to sustain a certain level of price. So you have the different swing producers particularly Saudi Arabia and then UAE who we're talking about, they want to keep like, what happens if there's excess supply on the market relative to demand, they will cut, this is the key, they will cut their supply as a swing producer to keep prices high because if they don't then prices will go low and that will have a ruinous effect on many people including US shale by the way because we have higher production costs, but including these economies that are dominated by oil. So you take Saudi Arabia, they're so dependent on oil and they have all of these alleged green ambitions that are totally fueled by oil and they have all these welfare schemes that are totally fueled by oil. UAE is a little bit less dependent. So the interesting thing about UAE saying they're going to withdraw is can they sustain this if there's a supply glut? Right now there's a supply shortage. So it's easy to say we're going to leave OPEC because there's no need from their perspective to cut supply and then everyone will take all the supply they get and Saudi Arabia doesn't really care if UAE produces more now. But when there's a supply glut, is UAE going to stay out of OPEC or is Saudi Arabia going to be able to pressure them back like they've done? Because Saudi Arabia can say we've got the most oil, we can just flood the market too and ruin...
Is there a history of major suppliers leaving and coming back?
I don't know. I mean, there's at least been threats like Saudi Arabia has been able to use a lot of force. Now, they've been able to do that in the past, but the argument, so there's an argument that the UAE won't stay out of OPEC because Saudi Arabia can pressure them back in when there's a supply glut. There's also an argument that UAE has become more disentangled from oil now than it used to be because it's diversified its economy. It doesn't have all the welfare obligations of Saudi Arabia and therefore it can call Saudi Arabia's bluff. Now, people will say both UAE and Saudi Arabia have incredibly low production costs. So it's very cheap for them to bring a barrel up from the ground. But they don't just have the production costs, they have all the governmental costs of actually how they're obligated to spend that oil. Like if Saudi Arabia spends $5 a barrel on oil, say, that doesn't mean at $100 a barrel they get $95 profit because they have to finance all these schemes that they're involved in. So that's going to be the interesting thing. The other interesting thing is so if UAE stays out, here's one. If they stay out, they're going to increase production. Let's say on some timetable this Hormuz thing gets resolved, then it's plausible in the next few years at some point you'll have a supply glut because you'll have added a million and a half barrels a day on top of everything else and you won't have a corresponding increase in demand and you won't have some other decrease in supply. So it's possible that this could dramatically lower prices which would be hardest for US shale. Now, long term, I believe what the best estimates I've seen is longer term, we're actually screwed in the other direction. We've had all of these anti-fossil fuel policies that have disincentivized long-term investment in oil. And oil is really hard to sustain. People need to remember oil depletes over time. So you don't just take the same well and keep tapping at the exact same amount. You have to do what's called reserve replacement. And there are many credible arguments that our reserve replacement has been incredibly inadequate in the ESG era. And that takes a few years to show up. But that's actually my biggest fear. Like my biggest fear, I'm afraid of Hormuz keeping prices high, but I'm really afraid of insufficient reserve replacement with high oil demand. Because you're talking like $200 barrel, you have to drill so much. You have to replace so much. And the oil supply is so politically driven. Like there's so much oil in the world that you could harness if everyone had the policy of the United States under Trump and under a friendly Congress. But most of the world has these national oil companies. We've had ESG all over the place. It's been hard to finance things. I mean, as recently as 2021, think about this. The International Energy Agency said there should be no new oil and gas development financed. So like we could be really screwed in terms of higher prices.
I mean, geographically, it's coming up on the map there. The UAE is directly affected by Hormuz. Like every barrel that they make will have to go through the Strait.
Well, they have a pipeline. They have one pipeline, but it's about a million and a half barrels.
Okay. So they can get some out. So if they become a swing producer, they are in effect, they are in fact important even in a world where their Strait is closed.
No, it doesn't matter as much right now because they're saying we want the right to expand our production, but they can't. None of them can produce nearly as much as they want right now. This is why they're doing it now. They're not doing it in the time of a supply glut. They're doing it in the time of a supply shortage because nobody really cares. It doesn't really affect things for them to say, 'Oh yeah, we have a million and a half spare capacity that we'd like to use and we're planning on using in the future, but right now we can't bring most of that to market and no one can bring anything to market.' That's different from a situation which we've had fairly recently where there's tons of supply on the market. Like there's too much and US producers are saying, 'Hey, we've got $50 a barrel of oil. This is really hard to sustain.' Imagine then a million and a half new barrels coming on the market.
Who wins? Who saw the news this morning and was fist pumping?
Well, I don't think most people understand the consequences of these things because I think many people think, 'Oh, it's going to be amazing for the US.' Like OPEC bad, US good. But like OPEC, the way it's set up, it in a sense favors our shale producers because they're one of the higher cost producers in the world. If OPEC collectively decided to just massively increase supply and flood the market, they could do real damage to our... And this has happened already. Right. This has happened in previous years.
Yeah. Like you were saying, if you're in shale and you're trying to make money at $50 a barrel is like very, you're really hoping, what's the sweet spot again? It's like somewhere between 70 and like 90.
Yeah. I mean, sweet spot is interesting, right? Because they'll take whatever they can get. But yeah, if they get to 70, 80, 90, it's a lot more profitable and basically not much changes about their cost structure when prices go low. So it's almost pure profit. I mean, a little bit they can squeeze what are called the oil field service companies. But you have to think when you're thinking of oil and particularly oil, you're just thinking like every $10 it goes up, that is almost pure profit for them and every $10 it goes down, that is almost pure loss of profit or loss in absolute terms. Now, in terms of policy, look, I think we should forcibly reopen the Strait and I don't believe that the US government should be directly trying to favor or disfavor its shale companies, but it's just important for people to understand these dynamics. And also you have to understand the UAE is doing this at an opportunistic time. They're not doing it at a time when there's already a supply glut.
Sure. Sure. Shifting gears, where do you want to go? I wanted to ask you about beaming sun. I had the exact same question. Into solar panels or something in space. They're going to put a mirror in space that shines light onto a solar array so that they can get 24/7 power to a data center potentially. They're going to do it on Earth. The recipient of the light will be on Earth, a solar panel next to a data center, but there will be a mirror in a specific orbit that is always in the sun and the sun will hit the mirror and the light will bounce down onto this particular solar panel in their solar array and so they will be able to get power from their solar panels 24/7. There's no weather that interferes with this. Weather might interfere a little bit. So I have not... closer to 24/7 than current.
I mean, so here's the dynamic is obviously in space you have 24/7 solar. And it's really hard to do things in space. So all credit to people who are willing to invest their own money to try to do this. There are a number of variables that might make it succeed or not. I mean, the more you're talking about chips that are evolving very quickly on Earth because we don't have this moon colony yet, right? You're talking about you're replacing chips every, you're doing these very logistically difficult things in orbit. That tends to disfavor the energy advantage you're going to get from having the stuff in space. If you're doing something that some of these solar things work if the energy cost is high and you don't need to change a lot about it, if it can run a long time. So my view is like my view of solar is always you need to recognize its strengths and limitations and use it accordingly. My argument continues to be on Earth with the solar that we have right now. Solar is primarily a fuel-saving technology, not a real on-demand power source. And I wrote a long article about this and it is, go to alexepstein.substack.com to check it out. And so, by the way, that means that in some places, solar is a lot more valuable than others. And in particular, it's valuable in places with very high fuel costs, which the United States is not really one of those places because we have really cheap natural gas and could get cheaper natural gas. But like in general, what we don't have, what the holy grail would be is if you got solar and batteries so cheap that you could have self-sufficient solar by sufficiently overbuilding the panels and having multi-day battery storage. So overbuilding the panels means let's just say round numbers, you have 100 megawatts of demand in a given location. So one-tenth of a gigawatt. Well, if you overbuild it by 10, then you have a gigawatt. Well, even when the sun is fairly low, you're going to be able to meet your demand and then you can get rid of it and then you can charge the batteries. So you have more to charge the batteries. But then to make that work because sun is not around at night, people really underestimate this as a problem. Night is a big, it's not as much of a problem for wind, but it's a big problem for sun. Like night is a huge, huge, huge problem. So you need to then, and you know, think about a winter day like we had during winter storm Uri. Even in Phoenix, you can have storms that disrupt the sun for a week. So you need lots and lots and lots of batteries and you need lots and lots of overbuilding. And the question is, how cheap can you get it? And China's not even nearly there yet, let alone the US, but it's not a bad path to pursue. It's not bad to pursue because batteries are valuable anyway. Batteries are valuable number one to store reliable power and dispatch it like that. And Elon is in favor of that. I've said on the show before, I'm in favor of that. So it's good to get the cost of solar lower. It's good to get the cost of batteries lower, but you have to recognize primarily it's a fuel-saving play, not a replacement play. But if we had 24/7, all bets are off. Then you get the benefits of solar all the time. That's the space mirror. But so I hope that as long as they're doing it in a safe way, they should be free to try. And it's interesting. The schemes I've seen in the past haven't worked. And I don't know if they have better energy people than they used to at Meta. So we'll see.
We'll see. Well, thank you so much for coming on the show, man. Good to see you.
Yeah, I wish you a great rest of your day.
Our next guest is already in the waiting room. We have Shira Lazar from What's Trending, who's the co-founder and host of What's Trending, and we'll bring her in to the TVPN Ultra Dome in just a minute. Welcome to the show. How are you doing?
Good. We're just diving in.
Yes, of course. That is the nature of the show. We dive right in. Why don't we dive right in with an introduction on yourself? How are you introducing yourself these days? What can you tell us about the shape of What's Trending, the platform?
Yeah, so I've been in the digital med— Yeah, sorry. I think there's a delay, but I've been in the digital media creator economy space for almost two decades.
I'm aging myself. We started What's Trending actually as a live streaming show in 2011.
So we were playing around with this tech and these tools way back, one of the first to live stream in a really high quality way. But, you know, the space in some ways wasn't ready. It was us, the Young Turks at the time.
Al Jazeera was doing a live stream and we had a weekly show. We went daily actually with YouTube.
Oh, is it— I look like I'm paused right now, but I don't know if that's—
We can hear and see you just fine.
Okay, I'll continue. Welcome to tech. In the future, I'll stop by your studio. Um, but yeah, then we went daily with YouTube and then it seemed like live just the platforms and the audience weren't ready yet. And then we went more into on demand,
grew more as a digital media brand and publisher. And that's who we are today. And we cover news, views, and culture for the social generation. And now, oddly enough, like seeing your success and what you're doing,
starting to rethink like how do we maybe go back to that? Who knows?
Yeah. Yeah, timing. Timing is so important. I mean, there's been—
like Jason Calacanis had TVPN effectively back, I don't know, the first year that he did it,
Yeah. Very, very early. Same kind of era when you started, but yeah, people need to be ready for it.
Yeah. I'm interested to hear about what is changing right now, what you are tracking. I was reading a piece in the Journal about sort of a K-shaped dynamic that's emerging where brands only want to partner with the biggest celebrities, the biggest podcasts, and there's sort of a winner-take-all market. Are you seeing that, or is there a way for a sort of middle class of creators to emerge these days?
Yeah, that's really interesting. I actually think that there's two extremes of opportunities. I think that definitely people that have scaled audiences and those big names that are the new wave of celebrity are definitely getting the deals as long as there's, I would say, conversions and they have that fandom audience. They're the new names that a lot of brands want to partner with. And of course these streaming services or the podcasts like to really have a successful, I would say, at-scale podcast or platform,
you need to have, you know, that audience, that big name. However, that doesn't mean that's the only way to succeed, right? So, we're seeing, as you might know, a lot of smaller creators that have niche audiences, the B2B creators now that are becoming big, the LinkedIn creators, the knowledge creators, and they've hunkered down on a very specific audience, and they're seeing high conversions even though they don't have a scaled audience. And so that creates a lot of success too where they could have, you know, or be making half a million to a million a year possibly. They're relying on brands, they're maybe having courses, they're maybe having, you know, paid events, etc. So what I think is really interesting right now is we are at a time that there could be opportunity for big names but also not such household names.
But again, it's really about understanding your why as a brand and what you're trying to go after.
Yeah. Do you like the term NIMIL? Niche internet micro celebrity. That's been one that's been—
I've never, I've never heard.
You never heard that? Yes. Like an— Yeah, it is a weird knockoff. But I think it does capture something that is real, which is that there might be someone who is incredibly influential in a particular sub-vertical or industry and they might be a household name, gets stopped for autographs at that industry's conference, but never at a random Starbucks, right? And so this is just an interesting— who was it? It was Colin and Samir we were talking with and they said that something like 80 to 90% of the next generation, maybe Gen Alpha, is a super fan of someone that no one in their high school has heard of. So they all have individual relationships with someone that they're a super fan of, but they don't cross over. It's not everyone likes Tom Cruise, it's everyone likes their own individual unique Tom Cruise or whatever.
Yeah.
Yeah. I was talking about that with someone actually recently because it creates, I think, again, so much possibility, but then it's harder to figure out like if you can just find one name that everyone knows that will have that popularity again. Like in the past there were how many cable channels or even before cable, you know, TV channels, cable channels, and then shows that you watch. You know, we have such a fragmented audience right now and so there could be someone that is so popular and you might have never heard about them and that's like the beauty of social media and the internet right now. And actually, you know, you were mentioning the middle class. I do think there's something about the middle class that is difficult right now when it comes to the creator economy because I see people when they're at the 1% making a ton of money. I mean, not everyone is MrBeast, right? And then niche creators are making a lot of money. When you're kind of stuck in that gray area, that's becoming, I would say, more and more of a challenge because you're getting underpriced. But then also, you know, the prices that you want, they're not necessarily being able to hit it because they're keeping that for like more of that macro creator.
Yeah. Yeah. Yeah.
Yeah. The other challenge is that there's going to be new creators that are growing, that are growing quickly, that are hungry, that maybe have figured out formats so the algorithms are rewarding them more intensely. And if you're in that middle zone and you don't adapt quickly, you can quickly become irrelevant. I used to—
I used to talk to YouTube creators that would try to— this was back in 2018— that would try to set pricing based on the number of their subscribers because there was a period where you could basically say like, I have this many subscribers, like you can assume that at least half of them will click through and watch the video. There was a moment like that and then it changed pretty rapidly. And I would talk to them and be like, hey, like unfortunately, like over the last couple days, take your last 10 videos and take the average, and like that— for some creators that's higher than their subscriber base, but for a lot of creators it's 20% of their subscribers actually opening the videos.
But then, you know, I think pricing is really important to talk about because, you know, I do think there's different types of creators that require different things. Like, you know, now there's a lot of the affiliate creators and I liken that to like a QVC host, right? They're really good at selling through and having that affiliate model and that's the only way they work and they're really good at that. I don't think that's for everyone. And just because something works in the creator economy for a group of people doesn't mean it needs to be the end-all, be-all.
Do not tell that to Gary Vaynerchuk. If you get him going about TikTok Shop, it's over for you. He will—
Like, not everyone is meant to be a TikTok Shop.
I agree. I agree with you completely.
And then where's— wait, on that note, I love Gary. Where's Gary Vee's TikTok Shop? I want to see him and he— like, okay, so TikTok Shop is hot. What are you selling? I want to see you selling, which he does these moments where he'll be selling or he'll go live for a week or okay, we're doing this again. VeeFriends TV and like okay by week two or three he's like, okay, I have other stuff to do.
No, no, 100%. I mean, I think part of his benefit is that he's sampled from the smorgasbord of content creation and can speak to, okay, well there is a gap here for some people, but it's not all going to be one-size-fits-all. Just like I don't think everyone's going to be, you know, doing IRL streaming in the future even though that's having a moment and we could see many more creators do IRL streams outside of the Kick streamers and the controversial folks and the political folks. You could see that instantiated in a whole bunch of other categories, but it'll just take time to get there. We've been seeing with TVPN, people have made a version of this show for car dealerships or what's going on in Europe or what's going on in crypto and there's like all these different twists on this format and that happens whenever there's a new thing, but it's not going to be perfect for every single vertical. But yeah,
Exactly. And that's— they'll jump on it because it's a trend and then there's a difference between the people that jump onto something and then build it as actually like a substantial career.
Yeah. So, for instance, like I like to say like I'm looking at a career like I'm here in the digital space. It's something I'm very passionate about and now on my personal brand I cover creator economy trends, emerging tech, AI, even mental health. We could get into that when it comes to the digital space. But I've been now working in the space for 20 years. I get to look at trends and how they've changed and not just report on them, but I've actually lived through them. So, it gives it a different approach at least for me and an edge when it comes to my coverage. I also think just sidebar, if you're a creator or someone looking to be in the space, like I do believe as long as you get the right representation, agents or managers are important as long as they don't take advantage. There's a lot of predatory behavior out there because they have other talent. They could see content.
How much should you share with a manager? Like 90% or where they want—
Well, they want more. No, I'm kidding. No, no, no. Um, usually agents, and I'm going to say this, someone said, 'Don't talk about this.' I was on a panel at the NAB Show last week, and someone's like, 'Why are you revealing?' And I'm like, 'These aren't secrets. These are kind of industry standards and we need to talk about things more and not cut people off from information. Like, I do not want to be that person.' So, yeah. So, agents typically take 10%, managers 20%.
But again, this day and age, managers, people are just becoming salespeople and they're saying they're managers, which is crazy.
Whereas in the past, a manager would actually build your strategy and help you with your career and like your longevity. Now, they just run your email inbox and like that is not a manager. But anyway, that's just my hot take on that. But I think things are, you know, things are changing. What?
Yeah. No, no, no. I like it. It's a good point. And I think it is important for these to— for the— yeah, just the benchmarks or any sort of relative information getting out there is always good. Uh, Jordi, anything else?
What's your outlook on clipping? It feels like the legacy media just woke up to this.
Well, it just started. The first clip I think went out like last week and so that's why everyone's talking about it.
The first clip from a legacy media company.
We're joking. Clipping's been around for years and it's now like having this big moment and it's just sort of funny to reflect on this thing that everyone's been aware of for a long time.
Yeah. So it's interesting because I think when you Google even clipping and I was trying to find the platform that does it, there's like two sides of clipping. It's like you're clipping up all your clips obviously and distributing them at scale across everywhere. And then there's the clipping farms like where you can pay people to post on their platforms and try to get views. Those are kind of two sides to the clip industrial complex.
Yeah. And I find that fascinating. Like a lot of the streamers are doing that.
Yeah.
IShowSpeed and—
well, for a long time Joe Rogan would be clipped, but just by people that were watching the show and were like, this was an interesting moment, organic, authentic, farm-to-table clipping. Now you got the industrialization of clipping. And so thousands of people are being paid to clip a single streamer and it's part of a marketing process, but it seems to be effective for people. So it is becoming a trend and people are paying attention.
And that— how— like is it Calacanis?
Calacanis has been a massive beneficiary of the clip industrial complex. Apparently he has a hundred people working for him.
Yeah. It's interesting because people like analyze his whole strategy and they seemingly put like 80, 90% of the success and the growth of his personal brand, whether you believe it should grow or not,
on the strategy. When he was a unique figure and a controversial figure, and if he had been saying there, just, yeah, a little bit of sleep, diet, exercise, don't worry about it too much, you're going to be fine, and he had a billion clippers, no one would know his name. Instead, he's out there with the craziest hot takes possible, the craziest stunts, crazy getting in jail and stuff, like insane stuff. And so the clips really amplify that, but there's a seed of virality there already on day one, whether or not the clippers are paid or not, I think.
Yeah. No, that is the thing. So, I think it's interesting as a new marketing strategy that it'll be interesting to see if traditional media jumps on board. I don't think they will because they have a hard enough time building out their social strategy right now, let alone doing a whole, I would say, clipping strategy like that. I think that definitely benefits the individual personal brand, the person that's willing to take the risk. Again, there's still money that you need to spend on this, but if you want to become a social media celebrity, one, yeah, you need to have the basic, I would say, controversial hot take and then being able to tap into this other stuff. But it's something to look out for in terms of the phenomenon of social media right now. And putting more out there, right? And how do you do it faster? But then some of these, I would say I use Opus for instance, I know the team there. They're great if you have long-form video and you want to cut it up, but some of these tools, they do need to be better. It's like you can't just throw it in and spit it out.
